Businesses should opt for “hibernate mode”, economists suggest 

 

Shortage of capitals, high lending rate, increasing input costs and slow sales are among tough puzzles that chief executive officers (CEO) of local businesses are struggling with.

 

Economist Pham Do Chi said it was hard to estimate the interest rate in the second quarter and even the whole year of 2011 as the government would continue to tighten the monetary policy in the next three months starting from April.

 

The lending rate amounts 18-20 percent per annum and some lenders even offered the rate of 26 percent, Chi said. However, the dong and US dollar interest rate will likely to retreat if the government succeeds in curbing the accelerating inflation.

 

The consumer price index rose 17.51 percent in April from a year earlier after rising an annual 13.89 percent in March.

 

The April inflation rate was the highest since December 2008, and economists say it follows an over-emphasis on growth last year and inaction in the face of signs that inflationary pressures were rising.

 

The State Bank of Vietnam increased both the refinance rate and the discount rate by 100 basis points. Economists say high inflation has persisted in part because of double-digit increases in the prices of electricity as well as petrol, diesel and other fuels.

 

Businesswoman Nguyen Thuy Lien from a Ho Chi Minh City-based company said she was grappling to set up long-term development strategies for her firm due to many difficulties.

 

Lien also wondered how to make new business plans to boost her company’s sales and how to smooth out the information system between levels in the firm.

 

“Local producers are suffering the increasing input costs. The global crude oil price last year moved up US$150 per barrel before losing some grounds to $110,” said Bui Van, director of newswire FBNC.

 

“Local businesses, meanwhile, are not familiar with the constant fluctuation in input costs, so they have no preparation for that. Businesses in the state-subsidized sectors including gasoline, oil, electricity and coal will find themselves vulnerable once the government stops subsidizing.

 

Le Chi Hieu, chairman and general director of HCMC-listed property firm Thuduc House, said the “hibernate mode” was an appropriate strategy for businesses during difficult times.

 

“They should focus solely on their core businesses and reduce secondary investments. They should also reduce the operation, but still have to prioritize efficient departments,” Hieu told Dau Tu Tai Chinh Newspaper.

 

Economist Ly Truong Chien agreed with his counterpart, adding that chief executive officers should initially restructure their enterprises in order to survive from tough times.

 

“CEO have to always be confident that they can overcome the problems during the difficult time. They also have to opt for adequate business plans for their firm, which can be joint venture, cooperation or merger and acquisition. They can seek financial funds from credit institutions and investment funds,” Chien said.

 

Construction giant grapples with major projects in Thai Nguyen Province 

 

The investment and construction giant Song Da is struggling with major infrastructure projects in the northern mountainous province of Thai Nguyen due to its weak management capability.

 

Song Da Holdings is contractor of many large projects in Thai Nguyen Province, including the crucial project on improving the National Highway 3 with the length of 63 kilometers.

 

The Ministry of Transport has also permitted the construction group to carry out the project in accordance with two project delivery methods of BOT (Build-Operate-Transfer) and BT (Build-and-Transfer), which have seen Hanoi and Thai Nguyen Province provide lands for the contractor to build urban zones.

 

The Thai Nguyen Province People’s Committee submitted Prime Minister Nguyen Tan Dung’s approval on September, 2009, for allowing Song Da to be fully in charge of the project as long as the corporation ensured to have enough the human resource and to finish the work by early this year.

 

Song Da Holdings entered an agreement with the Thai Nguyen Province People’s Committee to become the contractor and the builder of many major projects on traffic and property in the northern province.

 

Under the agreement, the corporation will be in charge of the improvement on the National Highway 3 [section from Hanoi and Thai Nguyen Province], construction on the new urban zone Xuong Rong, construction on Tam Dao Irrigation and the belt road No.5 and construction on the 195-hectare urban zone Song Da – Thai Nguyen.

 

However, while the people’s committee started to clear sites and relocate households in the projects’ planning zone at the end of 2009, the work on the National Highway 3 were halted many times due to Song Da’s weak management.

 

As the traffic on the highway was getting much heavier with the increasing number of accidents, the Thai Nguyen Province People’s Committee on March this year had to step in to speed up the project’s progress.

 

The committee submitted the Prime Minister’s approval to cooperate with the Traffic Safety Project Management Unit and the Thai Nguyen City’s authority to be responsible for around 53 kilometers of Song Da’s national highway project.

 

Despite the reduction in the workload, the progress of the remaining work that the construction corporation is in charge of is still at slow pace.

 

Efforts to find out solutions for the problem have seen Deputy Prime Minister Hoang Trung Hai ask the Ministry of Transport and Thai Nguyen Province’s authority to quickly hold a meeting with Song Da.

 

“The Ministry of Transport used to be ‘disappointed at’ Song Da Holdings’ BOT project on the National Highway 2 as its management capability was very weak,” said Transport Minister Ho Nghia Dung.

 

“The ministry now still had to ask the construction corporation to try its best for the National Highway 3. If it fails to finish the BOT and BT project, it should switch to the project delivery method PPP (Public-Private-Partnership)”.

 

Most subsidiaries of the construction and investment giant Song Da specialize in building and operating hydropower plants. However, they are suffering heavy losses from their property investments.

 

Hong Kong-invested GreenFeed puts Dong Nai factory online 

 

Animal feed manufacturer GreenFeed Vietnam on Thursday opened a factory in the southern province of Dong Nai as the 4th facility of the Hong Kong-invested company in the country.

 

The new facility covers three hectares in Song May Industrial Park in Trang Bom District. The designed capacity for the beginning is 120,000 tons of products per year.

 

The factory is just 15 kilometers north of Bien Hoa, the industrial city nearest to Ho Chi Minh City – the country’s biggest southern economic hub.

 

The company currently operates three other factories in Long An Province in the south, Binh Dinh Province on the central coast and the northern province of Hung Yen. It also has a factory in the Cambodian province of Kompong Cham.

 

A total investment of US$80 million is set aside for the five factories, the company says, adding that it has set up its distribution networks across Vietnam and in part of Cambodia.

 

In addition to animal feed production, GreenFeed Vietnam provides Vietnamese farmers with free advice on livestock techniques and skills, as well as interest-free loans. 

 

The assistance program has supplied VND2.1 billion (some US$100,000) in loans for farmers in the provinces of Long An, Binh Dinh and Hung Yen.

 

French hotel chain to expand to Danang

 

The world’s leading hotel operator, French-owned Accor Group has said it would open its middle scale brand Mercure in Danang City by 2013.

 

Under the plan, Mercure Danang Son Tra will consist of 120 rooms and 20 villas and will be just 20 minutes’ drive from Danang International Airport and 12 km from downtown.

 

The hotel will also include a restaurant, a bar, a ballroom and several conference rooms.

 

Patrick Basset, executive vice president of Accor in Asia said Accord decided to expand Mercure to Danang after Hanoi and Hue because Danang was demanding accommodations with international standard.

 

Accor operates 4,100 hotels in 90 countries including 14 hotels of the Sofitel, MGallery, Novotel, and Mercure brands in Vietnam.

 

EVN’s debt tops $450 million

 

The Vietnam Electricity Group (EVN) owed VND9 trillion (US$450 million) in its electricity and coal purchases in the first quarter of this year, according to Sai Gon Tiep Thi Newspaper.

 

Of this amount, EVN owed Petro Power VND5.1 trillion ($255 million) and the Vietnam National Coal and Minerals Industries Group (VNCOMIN) VND552 billion ($27.6 million).

 

The figure owed VNCOMIN doesn’t include a debt for coal purchases, which would triple the actual debt to the coal supplier.

 

VNCOMIN said the actual figure was VND1.5 trillion ($75 million).

 

Ding Quang Tri, deputy CEO of EVN, said EVN suffered a loss of VND8 trillion last year.

 

EVN has recently asked for loans from the government to pay its debt.

 

New tool proposed for stock market

 

The Ho Chi Minh Stock Exchange has recommended to the State Securities Commission to adopt the market orders (MP) system from June.

 

The system is associated with continuous order matching which is popular worldwide but has not yet been introduced in the Vietnamese stock market.

 

An MP is an order to buy or sell a specified number of shares at a price close to the current market price.

 

Once the order is placed, it will executed at the next best available price or at around the stock's current price.

 

Generally, this type of order will be executed immediately, but the price at which a market order will be executed is not guaranteed.

 

It is important for investors to remember that the last-traded price is not necessarily the price at which a market order will be executed.

 

In fast-moving markets, the price at which a market order will be executed will often vary from the last-traded price or “real time” quote.

 

The adoption of MP would provide investors more tools to place orders, boosting market liquidity, HoSE said.

 

Firms invest $1.8b overseas in four months

 

With nine projects licensed last month, Vietnamese firms in the first four months this year invested nearly US$1.8 billion abroad, according to the Ministry of Planning and Investment's Foreign Investment Agency (FIA).

 

The agency said that most of the projects were in power, rubber cultivation and telecommunications. The latest licences were granted to the $800 million Se San hydro power plant and a $31.7 million rubber plantation in Cambodia.

 

Vietnamese enterprises pumped about $3 billion into 25 countries and territories last year, according to statistics from the FIA. Venezuela attracted the largest share of Vietnamese investment with $1.83 billion. It was followed by Cambodia with more than $387 million, Mozambique with $345 million and Laos with $132 million.

 

However, the rate of return on overseas investments has been poor, although the investment volume has risen steadily over the last few years, raising concerns about the efficiency of overseas investment.

 

FIA director Do Nhat Hoang said it was necessary to monitor overseas investment to regulate capital outflow as most of the investment capital was from State-owned groups and enterprises.

 

To better check the efficiency of overseas investment projects, the agency has recently required Vietnamese investors with projects in other countries to submit reports on their business performances.

 

Reviewing more than 20 years of investment abroad, the ministry said the country had no comprehensive mechanism to oversee overseas investment, which were mostly funded by the Government.

 

A lack of oversight might lead to inefficient use or even loss of that capital, it said.

 

Investment abroad has increased, but with a small economy, high trade deficit, an unstable international balance of payments and a low foreign currency reserve, overseas investment activities must be closely checked to regulate cash flows and ensure macro-economic stability.

 

LienViet Bank aims for higher growth

 

LienViet Bank has agreed to take part in the Global Trade Finance Programme with the International Finance Corporation (IFC), in the framework of the Asian Development Bank (ADB) annual meeting.

 

Under the agreement signed on May 5, LienViet Bank will receive a total guarantee worth up to US$5 million and have a chance to cooperate with more than 400 major banks in the region as well as in the world.

 

Trade support through the programme will be carried out under letters of credits (LC) including import LC and standby LC, guarantees and bills of exchange/notes.

 

Speaking at the signing ceremony, LienViet Bank Deputy General Director, Nguyen Thi Thanh Son, said the programme not only supplies the bank with more capital but also helps it enlarge capacity to support customers with import and export activities. Additionally, LienViet also receives technological support from IFC and widen relations with sub-agency banks, thus helping LienViet to make further steps onto the international market.

 

City gets $29 mln French aid for infrastructure

 

The French Development Agency has agreed to lend Ho Chi Minh City €20 million (US$29.1 million) for infrastructure development following a deal signed Thursday between Minister of Finance Vu Van Ninh and French ambassador Jean Francios Girault.

 

The money will be used to improve facilities for education, health care, and housing for low-income people and upgrade the waste collection and management systems.

 

The work is expected to cost a total of $140 million, with the rest of the money coming from public funds and private investors.

 

The Hochiminh City Finance and Investment State-owned Company, an investment fund established in 1996 to develop infrastructure, will be in charge of the project.

 

ADF is also providing two outright grants worth €1 million ($1.45 million) to the Hanoi University Medical Hospital and €1.5 million to the Federal Energy Regulatory Commission No.2 (FERC n°2), the agency that monitors the use of AFD aid to Vietnam.

 

ADF has committed aid worth €1.05 billion (US$1.53 billion) to the Vietnamese government for socio-economic development.

 

Firms invest US$1.8 billion overseas in four months

 

With nine projects licensed last month, Vietnamese firms invested nearly US$1.8 billion abroad in the first four months this year, according to the Ministry of Planning and Investment's Foreign Investment Agency (FIA).

 

The agency said that most of the projects were related to power, rubber cultivation and telecommunications. The latest licences were granted to the US$800 million Se San hydroelectric power plant and a US$31.7 million rubber plantation in Cambodia .

 

Vietnamese enterprises pumped about US$3 billion into 25 countries and territories last year, according to statistics from the FIA. OF this total figure, US$1.83 billion went to Venezuela, more than US$387 million to Cambodia, US$345 million to Mozambique, and US$132 million to Laos.

 

Vietnam’s overseas investments have risen steadily over the last few years, but the efficiency of its projects remains in question.

 

FIA Director Do Nhat Hoang said it is necessary to regulate capital outflows as most of them are from State-owned groups and enterprises.

 

To better check the efficiency of overseas investments, the agency has recently required Vietnamese investors to submit reports on their business operation in foreign countries.

 

However, there is no comprehensive mechanism for overseeing overseas investments, which were mostly funded by the Government.

 

A lack of oversight might lead to inefficient use or even loss of that capital, it said.

 

Investment abroad has increased, but with a small economy, high trade deficit, an unstable international balance of payments and a low foreign currency reserve, overseas investment activities must be closely checked to regulate cash flows and ensure macroeconomic stability.

 

Eximbank opens Hanoi representative office

 

The Export-Import Bank of the Republic of Korea (Korea Eximbank) on May 4 opened a representative office in Hanoi, following the first one set up in Ho Chi Minh City.

 

The office will support RoK businesses operating in the Southeast Asian region while contributing to developing economic cooperation between Vietnam and the RoK through the effective use of the RoK Economic Development Cooperation Fund (EDCF).

 

With the two representative offices, Korea Eximbank plans to set up a credit support system between the north and south of Vietnam.

 

Addressing the opening ceremony, RoK Ambassador to Vietnam Ha Chan-ho said Vietnam and the RoK elevated their relations to comprehensive cooperative ties in 2001 and to a strategic cooperative partnership in 2009.

 

The ambassador underlined the concrete results of bilateral cooperation in numerous areas such as politics, socio-economics, culture and education.

 

RoK direct investment in Vietnam is on the increase with some 2,000 RoK businesses involved in a wide range of projects, he said.

 

Since the establishment of diplomatic ties in 1992, the two countries’ trade has risen from US$500 million to US$16.1 billion, representing a 32-fold increase.

 

Vietnam has, to date, had the largest number of EDCF-funded projects. By 2010, more than 1.4 trillion KRW had been injected into 36 projects in Vietnam.

 

350 businesses attend in Vietnam Medi-Pharm 2011

 

The 18th International Exhibition of Products, Equipment, and Supplies for Pharmaceutical, Medical, Hospital and Rehabilitation will be held at the Cultural Friendship Palace in Hanoi from May 11-14.

 

The annual event is organised by Vietnam Medical Products Imports and Exports JSC (Vimedimex) in coordination with Vietnam Advertisement and Fair Exhibition JSC (Vietfair).

 

The exhibition draws 350 exhibitors with 450 booths from Vietnam and 25 countries and territories around the world.

 

On display will be Pharmaceuticals, chemicals, medical equipment and instruments, orthopaedic supplies, teaching aids, and medical communication technology will be on display as well as health consultancy, insurance, healthcare services and publications.

 

Activities will include a seminar on Vietnam’s regulations and policies for pharmaceuticals and medical equipment, solutions for preventing counterfeiting and introducing high-quality healthcare services. There will also be a ceremony to present the Ministry of Health’s certificates to exhibitors, visits to the Central No.1 Pharmaceutical Enterprise and Hospital E, and an art performance.

 

Gas climbs to highest price this year

 

The retail price of gas surged by VND30,000 (US$1.44) per 12kg canister of household gas from May 1 – the highest price increase this year, according to the Vietnam Gas Association.

 

A 12kg canister from Sai Gon Petro, Petrolimex, Gas Sai Gon, MT Gas, Hong Ha Gas and Thai Duong Gas were being sold from VND378,000 to VND390,000 (US$18.09-18.66).

 

Deputy head of business department of Sai Gon Petro Do Trung Thanh explained the price hike was mainly attributable to increased global gas prices.

 

Thanh said the May delivery gas price on the world market increased to US$970 per tonne, up by US$87.5 per tonne compared to the previous month, forcing domestic firms to dramatically adjust prices.

 

Industry insiders said in addition to rising world gas prices, costs of other inputs including transportation and oil prices also pushed up domestic retail prices. Transportation costs doubled from US$80 to US$160 per tonne, while world oil prices continued rising as global political instability and natural disasters had led to unstable supply of fuel, including gas.

 

This increase spells the fifth occasion this year that domestic retail gas prices have increased. Gas prices only reduced once in early February by VND22,000 -25,000 (US$1.05-1.20) per 12kg canister, but this 10-day downward adjustment ended after the State Bank of Vietnam devalued the dong against the US dollar.

 

Local firms clinch VND1.5-trillion property deal

 

Two local companies entered into a contract on Wednesday to invest VND1.5 trillion (about US$72 million) to develop a multipurpose property project in downtown HCMC.

 

Vietnam National Sea-products Corporation (Seaprodex) and its partner Hanoi General Import Export Joint Stock Company (Geleximco) have worked with foreign companies over a deal to run the hotel as part of the project.

 

The final design of the commercial, office and hotel project at 2-4-6 Dong Khoi Street and 21 Ngo Duc Ke Street in District 1 is not available but a representative of the companies said the project would have a 20-storey building with 2,000 square meters for offices and 6,000 square meters for commercial services on the first seven levels of the building. The remaining 13 levels would be for a five-star hotel with 220 guest rooms.

 

The project is expected to get off the ground by 2012 and construction work will take 24 months.

 

Seaprodex is a state-owned company active in exporting sea-products to 30 foreign markets. Meanwhile, Hanoi-based Geleximco specializes in industrial production services, banking services, information technology training and property development.

 

A point was still enough for progression for the Hong Kong side but then came Thinh’s injury-time winner to break their hearts.

 

In the other Group F clash, V.B. Sports from Maldives surprisingly beat Sriwijaya 2-0 at home.  

 

With the victory, Song Lam now sit level with Pegasus on nine points from five games. Third-placed Sriwijaya are on seven points and V.B. Sports on four. 

 

Song Lam will qualify for the knockout stages with a draw in the final group game against V.B. Sports at Vinh Stadium next Wednesday.

 

Hanoi T&T, who were knocked out the competition after a goalless draw with Muang Thong United from Thailand on Tuesday, meet Victory SC in the Maldives next Tuesday.

 

Accor partners with Savico for Mercure hotel in Danang

 

Global hotel management group Accor on Wednesday announced its partnership with the local trade and real estate services firm Savico to manage and develop Mercure Son Tra Resort in the central coastal city of Danang.

 

Scheduled to be up and running in 2013, the 120-room hotel is expected to help attract more guests to Danang and its Son Tra Peninsula, a national park full of greenery and preservation of wild life and natural beauties.

 

Patrick Basset, Accor vice president of operations for Vietnam, the Philippines, Japan and South Korea, pinned high hopes for the success of the hotel on Son Tra Peninsula 12 kilometers from the heart of Danang City and a 20-minute drive from Danang International Airport.

 

“Central Vietnam is full of potential and still in demand for an international quality accommodation with personality and style to accommodate both domestic and international travelers,” Basset said in a statement obtained by the Daily.

 

Nguyen Vinh Tho, chairman and chief executive officer of Savico, said in the statement that the company had invested in Danang as it saw this city as a destination of many natural attractions and significant tourism potentials.

 

“This city is home to many famous attractions such as Ba Na Hills, Ngu Hanh Son Mountain, Hai Van Pass, and especially, Son Tra Peninsula,” Tho said, adding that Accor and Savico have agreed in developing Mercure Son Tra Resort in anticipating the peninsula as an upcoming tourist destination.

 

Basset said the Mercure brand translated well in Vietnam as it was a non-standardized brand designed to provide international-designed contemporary rooms of comfort and relaxation within local environment and surroundings.

 

Accor has its Mercure brand present in more than 50 markets. The group now operates 11 hotels throughout Vietnam under the Sofitel, MGallery, Novotel, and Mercure hotel brands. These properties have more than 2,000 rooms.

 

Accor is consolidating its position as the largest international operator of hotels in Vietnam with additional hotels committed to development, including three Pullman, one MGallery, three Novotel, three Mercure and two ibis hotels. It is planning to open Hotel de l’Opera Hanoi later this year as the first MGallery-brand property in the capital city and the second of its kind in Vietnam after La Veranda Resort on Phu Quoc Island off mainland Kien Giang Province.

 

Construction projects operating in Cam Ranh face certificate confiscation

 

The Planning and Investment Department of Khanh Hoa has announced that it might confiscate investment certificates obtained by the majority of construction projects operating in the Northern Cam Ranh Peninsula Tourism Complex because projects failed to follow planned schedules.

 

To date, only seven out of the 30 projects have been awarded with construction certificates while only six, having sorted out their land clearance issues, have not completed all documents necessary for construction certificates. The remaining 17 projects are still preparing initial documents.

 

Although only two projects, in the Green Hill Tourism Complex and Bai Rong Complex, have started construction, the process is very slow and no applications for additional construction certificates have been submitted, according to a departmental representative who added that, if project owners could not provide reasons for their slow progress, their investment certificates would be confiscated.

 

The 4,800 ha Northern Cam Ranh Peninsula Tourism Complex, located in Cam Lam District, is targeted to become a high end beach resort with high-end cultural, business and conference centres.