Financial shares stave off market losses

Banking and brokerage shares helped lift indices in the first trading week of April. On the HCM City Stock Exchange, the VN-Index halted its earlier correction and concluded the week at 447.44 points, a slight gain of 0.4 per cent over the previous Friday's close.

Market value of the four-session trading week averaged VND948 billion (US$45 million) per day on an average daily volume of about 65.8 million shares.

On the Ha Noi Stock Exchange, the HNX-Index closed at 74.69, an increase of 0.27 per cent over the prior week. On the northern bourse, the value of trades reached an average of VND729.6 billion ($34.7 million) per session, with around 79 million shares traded per day.

Shares in securities firms were the most noteworthy stocks last week, with the movements of these stocks becoming significant indicators for the entire market. By contrast, investors seemed to be hesitant with real estate stocks in expectations of meagre business results in the sector in the first quarter, although money began to pour into these shares in the final two trading sessions last week.

Late week gains seemed to stem from hopes that interest rate would be lowered.

"In fact, this is not a new expectation, since improved economic conditions have been repeatedly mentioned lately," said analysts for the financial information website vietstock.vn.

Affecting banking shares was word last week that the State Bank of Viet Nam planned to once again amend Circular No 13 which mandates prudent ratios in the operations of credit institutions. The highlight of the draft amendments is the reduction in the credit risk ratio for loans in the real estate and securities sectors from 250 per cent to 150 per cent.

Some commercial banks were also reducing interest rates to improve credit growth. Vietinbank has lowered lending rates to 14-15 per cent per year for businesses in exports, agriculture, support industries and small- and medium-sized enterprises.

Helping keep the market on an even keel, the Ministry of Industry and Trade predicted last week that inflation would remain modest this month, as fuel and food prices began to ease from recent highs.

After a month of extended trading hours, vietstock.vn estimated market liquidity had increased by 30 per cent, but the head of the analysis and investment division of Kim Eng Securities Co, Phan Dung Khanh, said that better liquidity was due to market trends rather than extended trading hours.

"If the market remains bleak, trading all day won't help," Khanh said.

According to Kim Eng data, orders were mainly placed in the morning session, while afternoon trading accounted for only 20-30 per cent of the entire day's orders.

In the coming week, PetroVietnam Securities Co analysts predicted trading would continue to be erratic, as investors waited on additional first-quarter earnings reports. They recommended buys in software developer FPT and real estate companies Vincom (VIC) and Khang Dien House (KDH).

Stocks rise on back of rate, gold market hope

Benchmark indices on both of the nation's stock exchanges closed higher yesterday, supported by talk of a likely interest rate reduction and tighter official controls over the gold market.

The deputy director of the State Bank of Viet Nam's monetary policy department, Do Thi Nhung, said that the central bank would soon lower the cap on deposit interest rates from the current 13 per cent per year to 12 per cent per year.

Nhung quoted State Bank Governor Nguyen Van Binh, who recently said that interest rates could be reduced by 1 per cent in subsequent quarters if inflation rate remained below a pace of 11 per cent for year. The consumer price index during the first quarter of the year continued to maintain that pace.

In addition, newly issued Government Decree No 24/2012/ND-CP, to take effect on May 25, will tighten restrictions on gold traders and, by discouraging investors to pour money into gold, is expected to provide an indirect boon to the stock market.

FCL Securities Co general director Pham Duc Thang said the market was often a step ahead of the economy and that interest rates had now peaked and were falling – an important signal for an uptrend in stocks.

"Looking at all of the investment channels available this year, if money doesn't flow into stocks, where does it go that promises an equal profitability rate?" Thang asked.

On the HCM City Stock Exchange yesterday, the VN-Index ended the session 0.74 per cent higher than Friday's close at 450.73 points. Advancers outnumbered decliners by 183-83.

Despite improved investor sentiment, they remained cautious in trading, pushing the value of trades down 37 per cent to just VND909.8 billion (US$43.3 million), while the volume of trades decreased by 27 per cent to just 66.3 million shares.

Twenty-two of the 30 leading shares posted gains, lifting the VN30 Index by 0.81 per cent to 515.64 points. Of these top shares by market capitalisation and liquidity, only real estate developer Vincom (VIC) and dairy giant Vinamilk (VNM) lost value.

Tan Tao Investment Industry (ITA) became the most-active share yesterday with 3.7 million changing hands before it closed up nine-tenths of a per cent to VND11,200 a share.

On the Ha Noi Stock Exchange, the HNX-Index advanced by 2.13 per cent to conclude the day at 76.28 points, with gainers overwhelming losers by a four-to-one margin. Volume dropped 22 per cent from Friday's level, however, to 70.2 million shares, while the value of trades fell 16 per cent to VND707.2 billion ($33.7 million).

Habubank (HBB) continued to lead trades nationwide, with over 8.3 million shares exchanged on ongoing conjecture about its possible takeover. HBB edged up 1.4 per cent to VND7,000 per share.

Foreign investors concluded yesterday as net sellers on both exchanges after a long streak of net buys. They unloaded a combined VND9.65 billion ($460,000) worth of shares.

Real estate slump hits construction industry
 
The slump in the property market has in turn led to stagnation in the construction and construction materials industries.

Sales was down by 40 per cent now compared with the same period last year, said Hoang Van Tieu, deputy director of the Hoang Thien Phat Ltd company, which sells luxury interior materials.

"Many importing companies like us are offering big promotions but we still cannot sell because construction has no hope in the near future," he said.

Nguyen Kim Thuy, director of the Hoang Son Ltd company, said: "We are looking at other markets like Malaysia, Cambodia and Laos, but if the local market remains at a standstill, we will have to trade other products."

According to figures from the General Statistics Office, unsold stocks in the construction materials industry have increased by 21 per cent this year.

Some, like electric cables (86 per cent) and cement (84 per cent), have seen stocks rise by an astonishing rate.

There are also 30 million sq. metres of flowered enamelled tiles worth VND2 trillion (US$100 million) and 400,000 tonnes of steel in stock.

The Viet Nam Steel Association predicts around a fifth of all steel companies to go bankrupt this year since many big companies have had to cut production by 50-70 per cent.

Besides, the prices of major inputs like coal and electricity have risen sharply, causing manufacturers more difficulties.

Falling demand for their goods has been exacerbated by the loosening of controls on imports.

The construction materials industry wants the Government to tighten control over imports and help them tide over this difficult period.

For their part, it is vital to restructure production, work together within other industry players, build strong brands, cut costs, and improve their competitiveness.

Mysterious Vietnamese buyer of US town identified

Following an 11-minute Internet auction that attracted worldwide interest on April 5, Buford, the US’ smallest town in Wyoming, was sold for US$900,000 to Pham Dinh Nguyen, a Vietnamese businessman.

Although the population of Buford is 1, as many as 26 bidders signed up for the auction, held online and on-site by Williams & Williams auction company based in Oklahoma, with the bidding starting at $100,000.

As the winner, Nguyen will own the second long-standing town in Wyoming located along Intestate 80 at 8,000 feet above sea level including 4 hectares of land with a convenience store, a gas station, a post office, a school used as an office, a warehouse, and a three-bedroom house.

The auction process of transferring the tiny Western town to the buyer is expected to last about 30 days.

"Owning a piece of property in the US has been my dream," Nguyen made a statement after winning the auction.

Nguyen is director of International Distribution Services Company (IDS) headquartered in Ho Chi Minh City. He and his friend flew to Wyoming’s state capital Cheyenne, just 60 kilometers to Buford to participate in the Buford auction.

Nguyen had to battle it out with bidders from Hong Kong, New York, Florida, Kansas and Wyoming in the 11-minute auction, which can be considered one of the longest real-estate auctions in US history.

Nguyen said though the value of the Buford auction is not high ($900,000), it brought huge attention from media outlets worldwide because of the town’s uniqueness.

“My company focuses on distribution and market development. Thus, owning a town like Buford is a stepping-stone for us to export Vietnamese brand names to the US,” Nguyen said.

Quickly dismissing the idea that he’s rich, Nguyen told Tuoi Tre that buying Buford is a quick decision. “It came to my head two weeks ago when I read news about the auction on a newswire. Honestly, I have yet to develop a specific plan about the town. But I think Vietnamese people should not have a sense of inferiority. Nothing is impossible.”

Relatives of Nguyen in the US would offer him financial supports to buy the town. They have only paid a deposit of $100,000 to the auction company, so the rest will be transferred within 30 days.

Major banks told to mean business in cutting rates

State Bank of Vietnam Governor Nguyen Van Binh has recently ordered the group of 12 major banks that hold 85 percent of the credit market to provide genuinely low lending rates to local businesses, a move insiders hope can curb the ‘virtual interest rates’ phenomenon.

The phenomenon refers to the fact that many banks ostensibly obey the Prime Minister’s order in early March to offer affordable loans for local manufacturers, but in fact they take every opportunity to reject the loans.

In the recent statement, the governor also said credit institutions are required to report their lending disbursement to the central bank via its Monetary Policy Department.

Most banks have cited inadequate loan application to turn borrowers down, said Tran Van Duong, director of An Thai Duong Co, an agricultural product exporter.

“The bankers appear to be fault-finders, and reject the application right away should they find a single mistake,” complained Duong.

Even when no faults are detected, Duong added, the bankers will excuse that their outstanding loans have met target, and borrowers thus have to wait for the final decision from the bank chiefs.

“An agriculture product exporter, we are eligible to borrow at 17 percent a year as offered by a bank, but still cannot make it,” he said.

Sharing the same fate, V., director of a Binh Duong-based wood manufacturer, said he was repeatedly rejected by banks, which announced loans at attractive lending rates.

“The company still had to borrow at 19 – 22 percent,” he said.

Meanwhile, Nguyen Van Lanh, deputy director of Phuc Thinh Vina Co Ltd, said he was told to completely settle the old debt, which he had borrowed at 23.5 percent a year, to be able to access another loan with lower interest rates.

“The bank officers said they have heard of the news of slashing lending interest rates, but have yet to be officially informed by their headquarters,” said Lanh.

Many banks have recently wooed borrowers by offering a rate cut on the first three months of the loan, a trick experts say involves high risk, since the normal interest rates will be applied from the fourth month.

Normal lending rate is usually the deposit interest rate for 12-month term, plus a margin of 6 to 8 percentage points, which means the final figure is more than 20 percent a year, experts warned.

Banks even do not deny the trick.

“It is the interest collected from old borrowers that mainly contribute to banks’ hefty profits,” revealed a deputy CEO of a major commercial bank based in Ho Chi Minh City.

Even when lending rates on the banking market fall down, banks will only cut rates for new borrowers, he added.

“They will offer a slight rate cut to keep customers, but the slashed amount is inconsiderable.”

Exchange-traded funds among world's best performers

Viet Nam's exchange-traded funds (ETFs) were among the three best performing in the world in the first three months of this year, along with Egypt and India, according to the ETF Trends report issued by the asset managers at Global Trends Investments.

The Market Vectors India Small Cap Index ETF topped the list of best performers in the first quarter, with an increase of 39 per cent in its net asset value (NAV), closely followed by Market Vectors Egypt Index ETF with a rise of nearly 34 per cent.

Market Vectors Viet Nam ETF (VNM), managed by Vaneck Global and with about 70 per cent of the fund allocated to Vietnamese corporations, ranked third. VNM witnessed a growth of around 30 per cent in NAV through March, largely recovering from a loss of 47 per cent last year.

Most of the shares in its portfolio climbed in value, of which shares of insurer Bao Viet Holdings (BVH) doubled in price. The fund's investment in Sacombank (STB) and Vietinbank (CTG) also contributed to its increased investment value. During the quarter, VNM bought 17 million STB shares worth US$20 million and an additional 5 million shares of CTG worth $8.5 million.

VNM's assets under management of VNM on Friday stood at US$306.1 million, according to the New York Stock Exchange Arca.

Emerging market ETFs could present investors with significant rewards, if they can handle the possible risks, Global Trends Investments president Tom Lydon said on the ETF Trends website. He said that risks facing Viet Nam included rising inflationary pressures, liquidity issues within the banking system and a growing trade deficit.

The London Stock Exchange-listed FTSE Viet Nam Index ETF, managed by Deutsche Bank, also enjoyed a high growth rate in the first quarter, with assets under management rising 47.6 per cent from $190 million to $281 million. The fund decreased its stake in real estate developer Vincom (VIC) from 24 per cent to 14 per cent, while adding 2.5 million STB shares to its portfolio.

Firms urged to protect intellectual property

Companies should use professional legal services to protect their intellectual property and popularise their trademark, a conference heard in HCM City yesterday.

Speaking at the conference held to discuss challenges and ways to protect intellectual property rights (IPR), experts said many Vietnamese firms were not even aware of the importance of protecting IPR, an important competitive tool.

Viet Nam passed the Intellectual Property Law in 2005, but piracy remains rampant.

The National Office of Intellectual Property of Viet Nam (NOIP) said the number of cases of industrial property violation in 2010 had increased by 40.5 per cent to 215 compared to 2009.

The country has also approved and enforced international IP conventions like the Madrid Protocol, the Paris Convention for the Protection of Industrial Property, and the Berne Convention for the Protection of Literary and Artistic Works.

Many bylaws to guide IPR-related laws have been introduced but only a small number of businesses realise the importance to protecting their IPRs, with the result many others lose their trademarks.

Focusing IPR protection was one of the factors for the success of Tan Hiep Phat, a leading group with revenues growing by trillions of dong annually, said its director, Tran Uyen Phuong.

The company, which has more than 40 beverage products in the market and an average of 40 per annual growth since 2007, had seen its products pirated hundreds of times and resolved them with the help of the law, she said.

Le Thi Nam Giang, general secretary of the HCM City Intellectual Property Rights Association, said IPR law violators could be fined up to VND500 million (over US$23,800).

"Vietnamese enterprises do not use legal services to help them deal with the violations or to protect their IPRs," she said.

However, enforcement of the law had been poor and there was a shortage of lawyers with expertise in IPR, she and other experts said.

Tran Quang Hung, deputy general secretary of the Viet Nam Electronic Industries Association, said few lawyers in Viet Nam, a member of the World Intellectual Property Organisation, had expertise in IPR, adding that most did it on the side.

The NOIP had been co-ordinating with the HCM City University of Law to train lawyers in IPR protection, said Nguyen Van Bay, head of the former's research and training centre, admitting the programme had been discontinued last year due to financial difficulty.

Enterprises also complained about the long and cumbersome procedures involved in registering for IPR.

But the low awareness of IPR protection notwithstanding, the number of firms registering for it has been increasing, going up from 5,600 in 1995 to 29,000 in 2009.

The number of IP licences issued in that period quadrupled, according to the NOIP.

The number of applications had been increasing by 20-25 per cent every year in the last 10 years, Bay said.

Though the NOIP has more than 300 staff, up from 140 in 2004, it still does not have enough personnel to deal with them.

"We are overwhelmed by the large number of applications," Bay said.

It was a good sign that more and more Vietnamese businesses were becoming aware of the importance of intellectual property, he said.

"But there remains a lot of work for us to make enterprises become fully aware of intellectual property," he admitted.

Medicines, milk products added to price stabilisation programme

The HCM City Department of Industry and Trade decided to add medicines, some milk products, and education-related items to this year's price stabilisation programme at a meeting on Thursday.

The programme will last from April 1 to March 31 next year.

Baby formula, milk for pregnant women, fortified milk products, notebooks, school bags and uniforms, and 13 groups of locally-manufactured drugs used to treat some common and chronic diseases join the list which already has nine essential items – rice, sugar, cooking oil, meat, poultry, eggs, processed foods, vegetables and fruits, and aquatic produce.

Besides, fragrant rice and jasmine rice have been added to the rice items in this year's programme.

Le Ngoc Dao, deputy director of the department, said the volume of goods sold under the programme would account for 25 to 50 per cent of their total supply in the market, a 15-30 per cent increase from last year.

Every month 5,650 tonnes of rice, 2,470 tonnes of sugar, 1,005 tonnes of cooking oil, 3,950 tonnes of pork, 3,150 tonnes of poultry meat, 1,315 tonnes of processed food, 1,700 tonnes of vegetables and fruits, 437 tonnes of seafood, and 24 million eggs will be supplied.

During Tet (the Lunar New Year) in early 2013, the supply of goods will increase by 10-15 per cent from a year earlier.

At the meeting, 48 more enterprises signed up for the programme to sell the four new categories of goods added to this year's list.

Some drug and dairy firms have even declined the interest-free loans offered by the city under the programme.

Despite the increase in the number of participants, the loan amount has dropped to VND332 billion (US$16 million), VND104 billion lower than last year.

Goods sold under the programme must comply with quality, safety and hygiene standards and help foster the "Vietnamese consuming Vietnamese goods" programme.

Heavy rains wreak havoc on garlic kingdom

Farmers on central Quang Ngai Province's Ly Son Island, known as the garlic kingdom, have suffered the worst crop ever due to torrential rains, the Ly Son Island District People's Committee said.

This year, farmers grew garlic over 290ha of land, but heavy rains during the past three months have ruined 80 per cent of the crops. Productivity is currently about 3,000-3,500 kilos per ha, reduced by half compared to last year, it said.

Ly Son garlic, a well-known local specialty, has been sold nation-wide for its special taste. Garlic crops are grown only one time per year, usually at the end of August.

"All the garlic was rotten. I've got nothing left this year," Vo Thi Mia, a farmer in An Hai Commune said.

Mia grows six sao (2,160 sq.m) of garlic. Last year, it brought her VND50 million ($2,400) in profit.

"It kept raining. We had to use nilon canvas to avoid too much water to reaching each bulb, but it was useless," she said.

Another farmer Vo Thanh Long was luckier in collecting 400kg of garlic, despite normally making two tonnes.

Apart from suffering from crop loss, farmers had to deal with fake products, Truong Nghia, chairman of the district's Garlic Manufacturing, Processing and Trading Association said.

"Some traders transport garlic grown in central Khanh Hoa Province's Ninh Hien District to the island and sell them under the name of Ly Son," he said.

District inspectors have kept examining products sold at the island's markets to find the fake ones. All of Ly Son's products were required to attach labelling. Last year, a trader was fined up to VND40 million ($1,920) for selling fake garlic, Nghia said.

Currently, farmers receive no support from the Government when they face poor crops, he said.

Vice Chairman of the People's Committee Pham Thi Huong has required border inspection stations to strengthen inspection on products transported from the mainland and fine those who use the Ly Son labelling for their products.

Vietinbank closes Long Thanh branch

The State Bank of Viet Nam (SBV) has allowed the Viet Nam Joint-Stock Commercial Bank for Industry and Trade (Vietinbank) to close its Long Thanh branch in southern Dong Nai Province.

Under the agreement, Vietinbank must settle all interests and responsibilities towards its customers and implement legal procedures in accordance with SBV's Dong Nai branch guidelines.

Vietinbank was additionally given the go-ahead to open a transaction office in Long Thanh District, once having met the regulations set by the SBV.

Tax on houses aims to limit speculation

The Ministry of Finance has mulled the Asset Law which will impose a tax on houses to create an explicit real-estate market.

Due to the low initial tax on houses, the law aims to reinforce people's awareness in the value of homes as well as help the State limit speculation, cash transactions and tax fraud.

Once the law is promulgated, all real estate transactions will have to go through real-estate exchanges and payments must be made through credit organisations.

Construction begins on Ha Noi skyscraper

The Ha Noi Time Towers project, invested by the PetroVietnam Premier Recreation Joint-Stock Company (PVR), is being constructed in the CT10-11 area of Van Phu urban area in Ha Noi's Ha Dong District, near important transportation routes such as Lang-Hoa Lac highway and Le Trong Tan road.

With a total investment of VND1.45 trillion (US$69.3 million), the Ha Noi Time Towers will include two 39-storey towers on a 7,023-sq.m site. The total projected floor area for the towers is 109,685sq.m, which will provide about 600 apartments reaching 84-216sq.m each.

Construction is expected to be complete in the last quarter of 2014.-

New highway bypass opens in Quang Ngai
 
The provincial authority of Quang Ngai inaugurated and put into operation a bypass which shirks the section of National Highway No 1A running through the town of Duc Pho yesterday.

The 10km-bypass aims to curb congestion on Highway No 1A, paving the way for turning Duc Pho into a township by 2015.

Thien Tan Investment and Construction Joint-stock Company began construction of the VND600 billion (US$28.7 million) Duc Pho Bypass three years ago under the BOT (Build-Operate-Transfer) model.

During the opening ceremony, the Minister of Transport, Dinh La Thang, awarded a certificate of merit to Thien Tan JSC for its efforts to complete construction of the bypass on time.

French railway builders eye city’s metro projects

Several French companies specializing in railway development have expressed interest in HCMC’s metro line projects.

Speaking at a meeting between the city’s leaders and the visiting French business mission on Thursday, Richard Fostier, president and CEO of Colas Rail Asia Sdn Bhd, said his company could offer solutions for reducing costs of metro line construction. He also sought to learn which investment portfolio and bidding packages his firm could take part in.

Colas Rail has developed many tramways in France and is currently joining a light rail expansion project in Malaysia, he said.

Gilles Péqueux, senior vice president for international business development of France’s tramway developer Egis, also showed interest in the metro projects that the HCMC government is calling for investment in.

Colas Rail and Egis are members of the French business delegation in railway and urban rail solutions that is paying a visit to Vietnam to look for investment opportunities. The delegation consists of some 20 enterprises operating in the fields of healthcare, infrastructure, transport and energy, with several of them already active in Vietnam.

The mission represents the Movement of the French Enterprises International (MEDEF International), with over 700,000 members being French business owners worldwide. The delegation has visited Cambodia and Hanoi before coming to HCMC.

According to Nguyen Van Quoc, deputy director of the HCMC Management Authority for Urban Railways, French enterprises can participate in a tender to build 9.5 km of underground track, nine stations, and an elevated section of Metro Line 2. The bidding package is worth US$400 million.

These investors can also join in a package to install an 11-kilometer section of the same metro line.

Since the German government will supply trains for the Metro Line 2 project, French enterprises can only construct underground works and supply tracks. Public bidding will be opened in the middle of this year.

Moreover, French investors can get involved in metro lines 3 and 6 under the format of build-operate-transfer (BOT) or public-private partnership (PPP), said HCMC chairman Le Hoang Quan at the meeting.

The city plans to develop six metro routes with a total length of 120 kilometers. Routes 1, 2 and 5 will be financed by official development assistance (ODA) capital.

Particularly, Metro Line 1 will receive ODA from Japan. Metro Line 2 will be funded with US$300 million by Germany plus additional capital by several banks such as the Asian Development Bank (ADB) and the European Investment Bank (EIB).

Spain will provide Metro Line 5 with 500 million euros. Earlier, the Spanish government allowed six Spanish firms to join the Metro Line 5 project, but they later pulled out of the project due to financial constraints.

Therefore, the metro project is now lacking 180 million euros. The city has petitioned the Government to call for investors in this project, said Chairman Quan

Meanwhile, a Thai investor is studying the possibility of developing the Metro Line 4 under BOT format. The municipal authority is still calling for investment in the remaining metro routes.
 
Duxton Saigon in a pickle

The four-star Duxton Saigon Hotel is being brought to its knees due to tax pressures.

Vinametric, owner of the Ho Chi Minh City-based hotel finds itself deep in debt as local officials have demanded the company transfer all of its bank deposits to the state treasury to collect unpaid taxes.

According to Ho Chi Minh City’s Tax Agency, Vinametric owes VND110.4 billion ($5.3 million) in back taxes, including a VND68.7 billion ($3.3 million) late payment penalty for 2006-2009. Most of the unpaid taxes relate to an electronic gaming business which Duxton Saigon Hotel already closed in 2010.

In early December, 2011 the tax agency clamped down on the Singaporean company and forced it to start transferring bank deposits to the state treasury. Duxton Saigon Hotel director Dang Di Nghia confirmed its situation to VIR, but declined to comment further.

In a document sent by Duxton Saigon Hotel to the ministries of Finance, Planning and Investment and Justice, the hotel claims the tax agency had brought it to the brink of bankruptcy. “The amount owed in back taxes plus the late payment penalty is more than the company can pay,” said the company in its document.

By March 19, 2012, the tax agency had issued three decisions in an attempt to collect VND45 billion ($2.1 million). A fourth decision is expected soon. The 198-room Duxton Saigon Hotel is one of the most luxurious hotels in Vietnam’s largest city. Since February 2012, Duxton Saigon Hotel has not paid for many of its staff and it collectively owes them about VND4 billion ($192,000) in salary, bonuses and insurance, according to the document. Meanwhile, the hotel owes 187 suppliers, including Coca-Cola Vietnam, PepsiCo Vietnam, Metro Cash&Carry and Phu Thai Group, with a sum amounting to about VND11 billion ($528,000).

If Duxton Saigon Hotel must continue to pay its back taxes in this manner, it would become insolvent, the document said.

Nankai tools up to think big support

We will receive the official investment proposal after this feasibility study.  Nankai Kinzoku’s factory will not only serve Vietnamese customers, but also supply components for other foreign manufacturers.- Le Huu Loc Vice Chairman of Binh Dinh Provincial People’s Committee.

Japan’s Nankai Kinzoku Company plans to build a machinery factory in Binh Dinh province to supply Japanese manufacturers. Zenrou Yanagi, general director of Nankai Kinzoku, last week visited the central province to eye up a site to manufacture agriculture, construction and automotive components.

Binh Dinh Provincial People’s Committee Vice Chairman Le Huu Loc said the Osaka-based firm had reported that Binh Dinh met all of its infrastructure, geographical position and labour requirements.

“We will receive the official investment proposal after this feasibility study. Nankai Kinzoku’s factory will not only serve Vietnamese customers, but also supply components for other foreign manufacturers, especially Japanese ones operating in Vietnam,” said Loc.

The project will be a shot in the arm for Binh Dinh’s puny manufacturing industry. The province has been developing an economic zone offering special incentives to foreign and domestic investors and upgrading a seaport to accommodate up to 30,000 dead weight tonnage vessels.

But, the carrot is insufficiently big to attract foreign companies. The Ministry of Planning and Investment’s Foreign Investment Agency statistics show that only 46 foreign investors dropped anchor in Binh Dinh, with projects worth $661.4 million.

A lack of supporting industries was a turn off for investors. But, Loc said Nankai Kinzoku would attract many Japanese companies to the province. In a bid to attract more Japanese investors, the local authorities plan to hold an investment promotion workshop in Japan in November and another one in June, 2013.

HCM City to give soft loans to price stabilizers

The HCMC government has set aside VND288.6 billion to make soft loans available for enterprises participating in two separate programs to stabilize prices of foodstuffs and stationery.

Prices of medicine and dairy products are still stabilized but producers in these two sectors are not eligible to get low-interest loans.

The price stabilization programs for essential foodstuffs, drugs and dairy products will last until the end of March next year, while the program for stationery will conclude on September 30 this year, said Le Ngoc Dao, deputy director of the HCMC Department of Industry and Trade. All the programs began on April 1.

Joining the foodstuff and stationery programs, participating producers will be given priority access to cheap loans to make and store these items to ensure stable supplies and thus help prevent their prices from being volatile, Dao said at a ceremony held in HCMC on Thursday to announce the two latest programs and sign loan contracts with producers.

Participating food manufacturers will be offered VND270.9 billion in loans, down by a staggering VND141.1 billion versus the similar program that was implemented last year and ahead of the Lunar New Year holiday 2012.

The volumes and categories of goods in the ongoing program, however, are expanded compared to last year and account for 25-30% of consumer demand in normal months, and 30-40% during Tet holiday. There are 25 companies joining the program, with seven of them first-timers.

Meanwhile, the stationery program has attracted 12 corporate participants, with eight of them lent a total of VND17.6 billion, VND8 billion lower than last year.

On the other hand, pharmaceutical and dairy enterprises will not be funded by the city’s budget. Goods volumes and participant numbers are higher than last year.

In this year’s price stabilization programs, prices will be discounted by between 5% and 10%, instead of 10% as in previous years. Prices may be revised up if input costs surge, specifically by 10% for foodstuffs and stationery, rather than 15% as applied last year.
 
PHI Group plugs into VHC vision

US-based PHI Group has acquired a controlling stake in a firm engaged in renewable energy technologies.

PHI Group chairman Henry Fahman last week announced it had grabbed a 51 per cent stake in Vietnam-Hungary Technological Application Joint Stock Company (VHC) for an undisclosed sum.

VHC was licenced by Phu Quoc Island Investment and Development Management Authority to build power generating facilities on 8.7 hectares in southern Kien Giang province’s Hon Thom Island, using solar energy clusters and wind power modules. The facilities will provide 1,270 kilowatt peak (kwp) of electricity to the local end-users.

PHI Group expected to start construction of the Hon Thom Island project in the next two months and construction would take six months, said Farman. The project developer expected to begin generating revenues from the sale of electricity directly to end-users, currently estimated at 21.4 cents per kwp, within 60 days following the receipt of equipment shipments.

With the initial capacity, VHC will also receive capital for six tonnes of CO2 per day at the price of $18 per tonne as stipulated by the Vietnamese government. After the project’s first phase is completed, PHI and VHC intend to increase capacity to 50 megawatts peak to meet the island’s growing demand for energy in 2013.

“The power plant will use solar energy clusters and wind power modules to create efficiency five times greater than projects using normal technologies. Moreover, the cost of design and installation are cheaper, but with higher capacity,” said Fahman.

Last month, PHI Group shook hands with Electricity Generating Authority of Thailand to invest into two coal-fired power projects in southern An Giang and central Quang Tri provinces. The projects are developed by PHI and two other Vietnamese partners with capacity of 2,000MW and 3,600MW, respectively.

Inflation expectations down

Expectations of inflation have come down sharply given a drastic slowdown in the consumer price index (CPI) growth in this year’s first quarter against December 2011, said Vo Van Quyen, head of the Ministry of Industry and Trade’s Domestic Market Department.

CPI in the first quarter this year only inched up by 2.55% compared to December last year, the lowest same-quarter rise in eight years, said Quyen.

CPI in March grew a slight 0.16% over the preceding month, continuing the trend of low growth in seven consecutive months. This shows that the economy no longer lets signs of inflation expectations push up actual inflation as it did in March and the first quarter of previous years.

Though fuel prices were hiked in early March, it only affected the last week of the month. Meanwhile, foods and foodstuffs dipped 1.21% and 1.25% respectively because of the ample supply and the dropping pork prices given the information about the use of lean-meat additives in pig farming.

The fact that CPI has mildly moved up in recent months reflects the actual goods price increases. This means expectations of inflation have eased despite the rise of 2-3% in global goods prices this January and February, said Quyen.

He said the strong decline in gas prices and falling foodstuff prices would make CPI edge down. “April CPI is unlikely to spike but inch up slightly. Enterprises will face no volatility in supply and demand this month,” Quyen predicted.
 
CJ wants to expand investment in city

South Korea’s CJ Group is planning to expand investment in various fields in HCMC after having developed some projects in Vietnam, said Lee Jay Hyun, president of the company.

Speaking at a meeting with leaders of the city on Tuesday, he said the investment expansion plan for HCMC was part of CJ’s globalization strategy. The company is active in sectors such as food, catering services, entertainment and communications, pharmacy, home shopping and goods transport.

The home shopping service of CJ is running well but the group targets to offer more products to customers instead of 70 products as at present.

CJ now buys Vietnam’s farm produce and seafood products for export to South Korea.

At the meeting, HCMC chairman Le Hoang Quan said he appreciated CJ’s plan and proposed the group study developing a pharmaceutical industrial park in the city.

Regarding the entertainment and communications sector, HCMC vice chairman Hua Ngoc Thuan said the group should consider getting involved in a film studio project of HCMC Television Station under way on 100 hectares in Cu Chi District.

CJ is now a major stakeholder of the MegaStar cinema chain and the owner of the Tous Les Jours bakery chain. It has facilities that supply meals for workers and is involved in a comprehensive cooperation deal with C.T Group.

Effective energy usage idea contest in hotel industry

A contest on effective energy and water usage and saving idea has been launched among local companies involved in the hotel sector.

The contest is jointly organized by the Vietnam National Administration of Tourism (VNAT), the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and “Mainstreaming Energy Efficiency through Business
Innovation Support (MEET-BIS)“ project.

The nation now has a total of 12,500 firms active in the hotel sector, one of industries consuming most energy, especially water, said Dao Trong Tu, representative of Vietnam in the Global Water Partnership South East Asia (GWP-SEA).

The country is facing the lack of water as its own water sources only account for 37% of the total volume of about 830 billion cubic meters at home, Tu noted.

Meanwhile, Vietnam’s average water volume per capita in 2010 reached 9,700 cubic meters, 2.4 times higher than 3,970 cubic meters in Asia and 1.3 times higher than the global number of 7,650 cubic meters.

The number of small and medium-sized enterprises (SMEs) makes up 90% of the total number of local companies and the figure has been growing, mainly in the hotel sector. Therefore, increasingly-rising energy prices have directly affected industry insiders’ business activity.

If each hotel uses energy effectively, it may save VND200 million a year, thus annually contributing VDN2.5 trillion to the local tourism industry.

Statistics by the European Commission (EC), the sponsor of Vietnam in the project MEET – BIS, showed visitors tend to favor those environmentally-friendly hotels. This is the reason why the scheme focuses on supporting SMEs access knowledge and solutions on energy conservation.

MEET – BIS is just one among many projects EC has financed Vietnam to look for energy saving solutions for SMEs in urban areas. Industry players will be assisted to renovate power and water saving equipments and master energy conservation knowledge.

The deadline for corporate participants to submit their ideas is slated for April 9. The contest’s result will be announced at the end of this month and GIZ next month will assist the winner to deploy plan and assess it in either June or late October this year.
 
Binh Thuan titanium reserves proven enormous

The south-central coastal province of Binh Thuan has huge titanium reserves that could be extracted over 200 to 300 years, shows a survey done by the Ministry of Natural Resources and Environment.

The survey puts the total titanium reserves at around 520 million tons, the biggest in Southeast Asia, so the province has asked the central Government to approve a zoning plan for titanium mining in designated places.

The ministry’s experts originally wanted to survey over 1,200 square kilometers of land in Binh Thuan, but later scaled down the number to 700 square kilometers to collect more accurate data, Nguyen Manh Hung, permanent deputy secretary of Binh Thuan’s Party Committee.

With titanium ores weighing five kilos per cubic meter, the province has a total of 520 million tons of titanium, said Hung.

Under the prevailing regulations, minerals can be commercially extracted when they are discovered. But world demand for refined titanium is now low, at only 17 million tons a year.

According to experts, if Vietnam does the good marketing on global markets, it will be able to sell as many as 1-1.5 million tons of titanium a year. This means it will take the province hundreds of years to sell up its titanium reserves.

In the meantime, there are multiple investors waiting for land to be allocated to implement their non-titanium mining projects. “Titanium mining must be reassessed to balance mineral mining and project development in other sectors,” said Hung.

Therefore, Binh Thuan has proposed the Government and the ministry give out zoning and mining plans so that investors could make appropriate decisions.

Hung said the State should let investors know which areas are for immediate titanium mining and which are not to facilitate the social and economic development planning process.

The ministry’s experts have thrown support behind a proposal to allow investors in other sectors than titanium mining to move ahead with their projects in the areas where this mineral will not be tapped 30 years later or beyond.

“Investors should be informed of zoning and mining plans so that they can decide appropriate investment plans. When deadlines come, the province can easily take back land from those investors for titanium mining,” said Hung.

Binh Thuan has a 192km coastline, with two thirds of it having high potential for tourism development. However, many lots for tourism development hold big titanium reserves as well.

Nguyen Thanh Tam, vice chairman of the province, said investors involved in some 30 tourism projects in Bac Binh and Tuy Phong districts were waiting for mineral mining by others to wrap up before they could execute their projects.
 
Big rice contracts fail to lift prices
 
Despite the reserve-purchase programme and larger rice export contracts won by exporters in the first quarter, the price of paddy went down last week, raising concern among farmers.
 
Paddy was priced at VND100 to 150 per kilogramme less than the previous week, with dried IR 50404 paddy fetching VND4,900-5,000.

Nguyen Van Tiep, a farmer in Can Tho's Co Do District, was unhappy because around 30 tonnes of paddy he harvested after the last winter-spring crop remains unsold.

"Saying my paddy is of low quality, traders tried to force prices down," he said, adding that earlier this week he had to sell some of it for just VND4,900 per kilogramme to get some money to prepare for the next crop.

Cao Van Nhi of An Giang Province's Tri Ton District said his high-quality paddy was priced at VND5,300-5,400 compared to the VND5,500-5,600 traders paid him in late March. Pham Van Bay, deputy chairman of the Viet Nam Food Association (VFA), blamed the limited warehousing capacity, large quantities of low-quality rice, and a decrease in export prices for the fall in paddy prices this week.

The association said in the first quarter Vietnamese companies signed contracts to export some 3.2 million tonnes of rice, a year-on-year increase of 15 per cent, mainly to Asian countries like mainland China, Indonesia, Malaysia, and the Philippines. However, exports to China have slowed down recently because there were not enough containers. The slow shipment of rice has affected storage capacity, with warehouses becoming full following the harvest of the winter-spring crop. With 1 million tonnes of rice (equivalent to 2 million tonnes of paddy) to be bought under the reserve-purchase programme, the volume of paddy to be stored in warehouses remains too big.

"VFA members have so far bought 650,000 to 700,000 tonnes of the 1 million tonnes of rice targeted under the reserve-purchase programme which will end on 30 April," Bay told Viet Nam News.

To facilitate the reserve-purchase programme, the governor of the State Bank of Viet Nam, Nguyen Van Binh, has ordered commercial banks to provide loans at low interest rates to enterprises joining the programme.

Consumers abandon street vendors for supermarkets
 
With supermarkets in HCM City offering a barrage of promotions, more and more consumers are abandoning traditional markets.

Many retailers like Big C, Sai Gon Co.opmart, Lotte Mart, and Maximart constantly offer discounts and freebies in what is a fiercely competitive market.

French-owned Big C, for instance, is currently offering discounts of 5-40 per cent on 1,000 items, including fresh food, garments and textiles, cosmetics, foodstuffs, and electronic products.

Saigon Co.opmart and Maximart are offering similar discounts on 1,500 and 1,000 items, respectively.

The discounts are mostly on essential goods and processed foods, according to the supermarkets.

Nguyen Thanh Truc, a shopper at Co.op Mart Dinh Tien Hoang, said: "I used to shop at Ba Chieu market. But I shifted to here several months ago because I can buy products at cheaper prices with clear sources of origin.

"Besides, I enjoy air-conditioned comfort here and do not have to be afraid of being cheated on quantity."

Market research companies have found that HCM City consumers prefer shopping at supermarkets to traditional markets these days.

The number of shoppers at traditional markets like Ba Chieu, Pham Van Hai, Go Vap, and Tan Dinh has dwindled to low levels compared to past years.

Dao Sy Long, deputy head of the Tan Dinh Market, said sales was down to 70-80 per cent compared to last year.

The economic situation has affected sales but the competition from supermarkets was undeniable, he said.

Le Ngoc Loan, a vegetable seller at Ba Chieu market, said small traders in traditional markets found it hard to compete with supermarkets since the latter launch promotions in which prices were sometimes lower than their own.

For instance, tomatoes retail at VND6,900 per kilogramme at supermarkets while even in wholesale markets they cost VND6,000-7,000.

Southeastern region sets export target

Officials from the Ministry of Industry and Trade and local departments in the southeastern region called for better government and commercial linkages in order to improve economic growth.

Participants at an annual conference on the industrial and trade sector held in HCM City noted that linkages among the industrial and trade sector of HCM City and the provinces of Dong Nai, Binh Duong, Binh Phuoc, Ba Ria – Vung Tau, Tay Ninh, Lam Dong and Binh Thuan had helped stimulate economic development in the region during the past years.

Deputy Minister of Industry and Trade Nguyen Nam Hai said the southeastern region had played a leading role in the country in the industrial sector.

Linkages among southeastern provinces and cities have brought benefits in production, investment attraction, trade and others.

For the 2012-15 period, provinces and cities of the region have signed a co-operation deals between HCM City and other southeastern provinces, and co-operation agreements between the departments of Industry and Trade in Tay Ninh, Dong Nai and Long An provinces.

Last year, the southeastern region was the industrial hub of the country, with industrial production value reported at VND555.4 trillion, an increase of 13 per cent over 2010.

The figure was equal to 45 per cent of the country's industrial production value.

Exports expanded last year, with turnover of US$61.8 billion, accounting for 64.2 per cent of the country's export revenue.

Nguyen Van Lai, director of HCM City's Department of Industry and Trade, said the region should focus on using high-technology to reach export turnover of $70 billion and industrial production value of VND635 trillion this year.

Ben Tre Province attracts more investments  

The People’s Committee in Ben Tre Province on April 7 held a meeting to promote further investments and also to grant investment licences to six projects worth around VND1,100 billion (US$53 million).  

The six projects that were granted licences are in the processing, agricultural products, exports and transportation sectors. Four out of these six projects are foreign direct investment projects.

To date, An Hiep and Giao Long industrial zones have attracted 24 projects with total registered capital of VND6,000 billion ($288.5 million), of which 12 are foreign direct investment projects.

Currently, the province is calling for investments in eight hectares of land in the industrial zones.

In addition, the province also wants investments of about VND4,300 billion ($206.7 million) in seven industrial zones with more than 813 hectares.

Cao Van Trong, deputy chairman of the People’s Committee of Ben Tre Province, has pledged to create advantageous conditions for investors to develop infrastructure in industrial zones. The province will give support for 30 per cent of land acquisition costs and offer free land lease for 15 years.

Earlier, the third ‘Coconut Festival’ opened in the Mekong Delta province of Ben Tre on April 5. The six-day event provides a good opportunity for domestic and international coconut growers to showcase their brands, discuss investments and promote new trading partners.

Ben Tre Province has the largest area under coconut farming in the country, covering about 52,000 hectares. Last year, more than 400 million coconuts were harvested in the province.

More development needed in key economic zones: Deputy PM  

Speaking at a conference, Deputy Prime Minister Hoang Trung Hai, said that achievements made by the key economic zones in Vietnam are satisfactory and contributed greatly to the socio-economic development of the country, but much still needed to be done.   

Import-export revenue in the key economic zones in Vietnam reached US$602 billion during the period 2006-2010 and attracted 12,478 foreign direct investment projects worth $162 billion, about 91.32 per cent of all FDI projects in the country.

These figures were released at the conference to review the socio-economic development in major economic zones during the period 2006-2010 and implementation of further plans for the period 2012-2015.

In the last five years, the gross domestic product (GDP) growth rate in major economic zones in Vietnam increased by 10.98 per cent, while average yearly income per person reached VND34.6 million.

Export revenue from major economic zones exceeded $280 billion, accounting for 89 per cent of the total export revenue in the country. Import revenue was over $321 billion, about 93 per cent of all import revenue in the last five years.

Many tasks like in environment protection, building of hostels, accommodation for workers and taking care of employees living conditions, were still inadequate. Many industrial zones in the economic zones continue to discharge untreated waste water indiscriminately into the environment.

Deputy PM Hai affirmed that the industrial and economic zones would   be upgraded in a sustainable and environment-friendly manner, so as to raise Vietnam to the level of other industrialised countries by 2020.

By 2015, the average yearly income of a person working in major economic zones should reach $3,000 per person, and import-export revenue should increase by 14-14.5 per cent annually.

Deputy PM Hai also outlined crucial tasks and solutions for the zones, saying that the zones needed to develop high-tech industries and high-quality services, such as in software and information technology, and improve on appliances, automation and production of new materials.

Currently, the country has four major economic zones that include the Northern Economic Zone, the Central Economic Zone, the Southern Economic Zone and the Mekong Delta Economic Zone.

Non-SJC gold owners face loss after new bullion policy  

After a decree was issued by the Prime Minister’s office on April 3 that gold bars would be traded by only state monopolies, concerns among the public and gold companies have grown, since there is still no clear roadmap or regulation for conversion of non-SJC gold bullions.

Owners of other brands of gold bars are worried and many people rushed to sell off their bullion investments. However, many brands have few takers or are offering very low purchase price.   

Many gold shops in markets like An Dong in District 5, Ba Chieu in Binh Thanh District and Go Vap in Go Vap District are taking advantage of a crisis sale and are buying other brands at lower rates, as they explained that these bars would only be melted down or converted into ornaments.

Meantime, Phu Nhuan Jewellery Joint Stock Company (PNJ) and Sacombank Jewellery Co (SBJ) maintained buying its own brand products at high prices equivalent to that of SJC.

Cao Thi Ngoc Dung, PNJ’s Chairman said her company still purchased its own products at listed prices and if clients required, the company will straight away exchange PNJ gold bullions to SJC, to protect customer interests.

Relating to the new gold management law, Dung said that it will eliminate hoarding of the precious yellow metal; hence, capital will be poured into production, expectedly pushing up the country’s economy.

The draft circular said that enterprises and credit institutions can continue trading gold six months from the effective date of the circular, but they must complete business registration with the registration agencies and submit a business licence application to the central bank for future gold sales.

For organisations that are engaged in the production of gold jewellery and fine art, the switch can be made 12 months from the effective date of the decree.

The State Bank of Vietnam (SBV) ordered five banks including Asia Commercial Bank (ACB), Dong A Bank, Vietnam Export Import Bank (Eximbank), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Vietnam Technological and Commercial Joint- stock Bank (Techcombank) and Saigon Jewellery Company to send detailed reports of expansion plan in every district in the country for meeting the demands of domestic gold consumers.

A director of a gold company said the state bank should set up clear roadmaps or regulations for the conversion of non-SJC gold bullions into a state brand.

Moreover, he added that the state bank should adopt measures to guarantee the rights of people during the conversion period since the producers of non-SJC gold bullions were previously licensed by SBV, and the central bank should be responsible for preserving the gold value for owners of non-SJC gold bullion.

Saigon Jewellery Company collected the metal at VND43.32 million at 11am Vietnamese time and sold for VND43.52 million as of 10.15am Vietnamese time. Meantime, Sacombank Jewellery Company quoted price of SBJ and SJC at VND43.5 million for buying and VND43.6 million for selling.

Southeastern region sets export target

Officials from the Ministry of Industry and Trade and local departments in the southeastern region called for better government and commercial linkages in order to improve economic growth.

Participants at an annual conference on the industrial and trade sector held in HCM City noted that linkages among the industrial and trade sector of HCM City and the provinces of Dong Nai, Binh Duong, Binh Phuoc, Ba Ria – Vung Tau, Tay Ninh, Lam Dong and Binh Thuan had helped stimulate economic development in the region during the past years.

Deputy Minister of Industry and Trade Nguyen Nam Hai said the southeastern region had played a leading role in the country in the industrial sector.

Linkages among southeastern provinces and cities have brought benefits in production, investment attraction, trade and others.

For the 2012-15 period, provinces and cities of the region have signed a co-operation deals between HCM City and other southeastern provinces, and co-operation agreements between the departments of Industry and Trade in Tay Ninh, Dong Nai and Long An provinces.

Last year, the southeastern region was the industrial hub of the country, with industrial production value reported at VND555.4 trillion, an increase of 13 per cent over 2010.

The figure was equal to 45 per cent of the country's industrial production value.

Exports expanded last year, with turnover of US$61.8 billion, accounting for 64.2 per cent of the country's export revenue.

Nguyen Van Lai, director of HCM City's Department of Industry and Trade, said the region should focus on using high-technology to reach export turnover of $70 billion and industrial production value of VND635 trillion this year.

Key economic regions to get preferential mechanism  

In the 2011-2015 period, the Government will issue preferential mechanisms for key economic regions, focusing on the restructuring of the economy and businesses, and training high-quality human resources, in order to improve their leading role in the country’s economic development.
 
Harvesting rice in the Mekong Delta which is one of the four major key economic regions in the country.

Deputy Prime Minister Hoang Trung Hai made the statement while chairing a conference in the Mekong Delta city of Can Tho on April 7 on the development of key economic regions.

According to the Ministry of Planning and Investment, Vietnam now has four key economic regions, including the North, Central, South and Mekong Delta, which account for 27.42 percent of the area and 51.27 percent of the population of the country.

They see dynamic development with modern economic structures and play the role as the locomotive in national development and international integration.

However, Deputy PM Hai, who is also Head of the State Steering Committee for Key Economic Regions, said the regions still suffer from low investment efficiency and the poor quality of planning, management and implementation work.

They are yet to have any products with high added values and competitiveness, he added. He instituted relevant ministries, sectors and localities to coordinate closer in planning and implementing key projects in the four regions as well as in strengthening linkage between them.

The conference set a target that the GDP growth rate of these key economic regions will reach 9-10 percent, about 1.4 times higher than the country’s average rate.

In the 2006-2011 period, the regions recorded an average GDP growth rate of 10.98 percent and a per-capita income 3.6 times higher than that of the country. Their export value accounted for nearly 90 percent of the country’s total.