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BUSINESS IN BRIEF 1/11

 VN strengthens investor protection, says WB; Phu Yen destined for Viet Nam Seafood Festival 2014; Vietnam-UK trade turnover sees strong growth; Vietnam seeks trade balance solutions; Vietnam opts for solid, feasible economic growth

VN strengthens investor protection, says WB

Viet Nam has adopted measures to strengthen the protection of investors and enhance businesses’ credit assess between July 2012 and June 2013, according to the World Bank’s latest report.

“Viet Nam has undertaken important reforms during the past nine years to strengthen its business environment, but much work still needs to be done to sustain its competitiveness, especially in adopting international best practices in regulating businesses,” said Wendy Werner, investment climate advisory services manager for East Asia and the Pacific at IFC, a member of the World Bank Group.

In the past year, Viet Nam strengthened investor protection by introducing greater disclosure requirements for listed companies in cases of related-party transactions.

In addition, the country granted the first private credit bureau license following the issuance of a decree in 2010 that laid down the legal framework for establishing such bureaus.

Viet Nam, however, made paying taxes more costly for companies by increasing employers’ social security contribution rate.

Across the globe, Singapore continues to provide the world’s most business-friendly regulatory environment for local entrepreneurs, followed by Hong Kong SAR, China.

Over the past year, 15 out of 25 economies in East Asia and Pacific region have conducted at least one regulatory reform making it easier to do business. The Philippines is among 10 regional economies that improved the most in reforming regulations.

The report analyzes regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes, and resolving insolvency. The aggregate ease of doing business rankings are based on 10 indicators and cover 189 economies.

Doing Business does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure the quality of fiscal management, other aspects of macroeconomic stability, the level of skills in the labor force, or the resilience of financial systems.

Its findings have stimulated policy debates worldwide and enabled a growing body of research on how firm-level regulation relates to economic outcomes across economies.

Phu Yen destined for Viet Nam Seafood Festival 2014

Under the theme “Viet Nam Seafood-Integration and Development,” the Viet Nam Seafood Festival 2014 will take place from March 30 to April 2, 2014 in the southern province of Phu Yen.  

The event aims to honor coastal tangible and intangible cultural heritage values on the national scale. It will mark the 55th founding anniversary of the Vietnam seafood sector (April 1,1959-April 1, 2014 ) and the 39th anniversary of Phu Yen Liberation Day (April 1, 1975- April 1, 2014).

The festival will see the launch of a campaign to breed fisheries varieties to renew aquatic resources and an Exhibition of Viet Nam seafood, Industry and trade.

It will also include a forum on seafood trade promotion and investment; a workshop of Improving the efficiency of tuna exploitation; a conference summarizing Northern fishing season, deploying Southern fish season; and others.

Vietnam-UK trade turnover sees strong growth

Bilateral trade turnover between Vietnam and the United Kingdom in the first eight months of this year hit 2.13 billion pounds (about 3.4 billion USD), representing a year-on-year increase of 25 percent.

According to data provided by the Vietnamese Commercial Affairs Office in the UK, Vietnam’s export turnover to the UK reached 195 billion pounds (about 3.12 billion USD), a growth of 28 percent over the same period last year, while its import turnover dropped by 2 percent against the first eight months of 2012, at 185 million pounds (296 million USD).

Vietnam’s main exports in the period included sound, image and data transmitting –receiving devices for radio, TV and mobile phones, components of data processing, auto and digital devices, coffee, footwear; furniture and synthetic resin wrapping.

According to the office’s forecast, total bilateral trade turnover between the two countries in 2013 will hit 3.2 billion pounds (5.12 billion USD), 17 percent higher than the previous year, of which Vietnam’s export turnover will be 2.92 billion pounds (up 20 percent).

Vietnam is now one of the UK’s 43 largest trade partners with the two-way trade turnover accounting for 0.34 percent of the total turnover between the UK and its foreign partners.

Last year, Vietnam ranked 34 th among 229 countries exporting to the UK, with the bilateral trade turnover reaching 2.73 billion pound (4.37 billion USD), up 35.5 percent over the previous year’s figure.-

Vietnam seeks trade balance solutions

The important foreign trade results Vietnam achieved in recent years have considerably contributed to the development of the country. Imports and exports have grown at a rather high rate in terms of value as well as the range of products. The trade deficit has been narrowed down. However, if Vietnam fails to take decisive measures, it will be difficult for the country to achieve the balance-of-trade goal set for 2020. The Vietnam Economic News reports.

In 2011, Vietnam’s export value reached 96.9 billion USD, a rise of 34 percent compared with 2010. Last year, the index for the first time exceeded 100 billion USD, reaching 114.6 billion USD. Based on the export results of the first nine months of 2013 and the fourth quarters of the previous years, the Ministry of Industry and Trade predicted that the export value of this year would reach 131 billion USD, up 14 percent compared with 2012.

There has been a longer list of products with their export value exceeding 1 billion USD. This list consists of products such as cashew nuts, cassava, fiber and yarn. Textiles, garments and mobile phones have their export value exceeding 10 billion USD. In 2011, the export value of mobile phones reached 6.8 billion USD, behind that of textiles, garments and crude oil. But last year, mobile phones moved ahead of crude oil, ranking behind just textiles and garments. In the first nine months of 2013, mobile phones moved to the first position with their export value reaching 15.1 billion USD, 2.2 times that of 2011.

The US remains the largest export market of Vietnam. Vietnam’s exports to the US reached 16.9 billion USD in 2011 and 19.5 billion USD in 2012.

In terms of export structure, Vietnam has followed the export and import strategy for the 2011-2020 period with a vision towards 2030. Specifically, processing industry-related products accounted for 69.7 percent while agricultural-forestry-aquatic products, materials and minerals accounted for a mere 22.7 percent. Other products accounted for a low percentage in the export structure but their export growth rate was higher than the average export growth rate of all products. Some products are ready to join the group of key exports.

For five consecutive years (2008-2012), the Vietnam Dairy Products Joint Stock Company (Vinamilk) exported to 26 markets and its export value grew an average 62 percent annually. In the first nine months of 2013, it fulfilled over 70 percent of the export contracts signed for the whole year with a total value of 230 million USD.

In 2011, Vietnam’s import value reached 106.7 billion USD, a rise of 25.8 percent compared with 2010. Last year, the index reached 114.3 billion USD, up seven percent compared with 2011. In a report on the import-export results and trade deficit of the first nine months of 2013, the Ministry of Industry and Trade predicted that the export value would reach 131.5 billion USD this year, up 15.6 percent compared with 2012.

These results were achieved thanks to efforts to promote domestic production of materials for making export products and develop support industries as well as the strict control over the import of products.

The import structure continued changing to cater for the country’s industrialisation and modernisation. The products the import of which is necessary accounted for 81.2 percent, 87.7 percent and 87.9 percent respectively in 2011, 2012 and the first nine months of 2013. The import value of these products has increased since the beginning of this year - this reflected the recovery of important sectors making products for both domestic sale and export. The products the import of which must be tightly controlled and those which are restricted accounted for 4-5 percent.

The Philippines and Indonesia are large trading partners of Vietnam, buying Vietnamese rice. Thanks to effective trade promotion activities, the presence of high-quality Vietnamese products in the Cambodian market has increased. Although it is a small market in terms of capacity, Cambodia is an Asian market with which Vietnam has a high trade surplus.

Trade deficit is inevitable for a developing economy, but thanks to efforts to maintain a high export growth rate and seek new export markets as well as effective import management, Vietnam has had a surplus in trade with some other countries.

Vietnam’s trade deficit considerably decreased in recent years. In 2011, it was 9.8 billion USD, accounting for 10 percent of the export value. In 2012, Vietnam had a trade surplus of 284 million USD. This year, it is predicted to be 500 million USD.

The US takes the lead among markets with which Vietnam has a trade surplus. Vietnam’s surplus in trade with the US was 12.4 billion USD, 14.8 billion USD and 12.2 billion USD in 2011, 2012 and the first nine months of 2013 respectively. The EU ranks second behind the US in this regard.

Japan has actively helped Vietnam develop support industries and provided assistance for Vietnamese businesses, craft villages and interior decoration item producers to access the Japanese market. In 2010, Vietnam still had a deficit in trade with Japan, but since 2011 it has seen a continuous surplus in trade with the country.-

Vietnam opts for solid, feasible economic growth

The Government's estimate for a GDP growth rate of 5.5-5.8 percent for 2014 that was submitted to the National Assembly's ongoing year-end session reflects a change in thinking in economics - a more solid and feasible growth is chosen. Insights from the Vietnam Government Portal.

On behalf of the Vietnamese Government, Prime Minister Nguyen Tan Dung on October 21 presented a report on the socio-economic situation in 2013, the results of the first three-year implementation of the 2011-2015 five-year plan and the tasks for 2014-2015 at the 6th session of the 13th National Assembly.

The Government has no longer preferred a “hot” gross domestic product (GDP) growth rate that heavily relied on investment capital and credit growth. It chooses a sustainable growth which depends on economic restructuring and three strategic breakthroughs.

GDP increased from 4.76 percent in Q1, 5 percent in Q2 and 5.54 percent in Q3 to an expected 6 percent in Q4 this year, showing a rising trend. In the first nine months, the number of newly-established enterprises picked up 10.8 percent and over 11,200 ones resumed operation.

GDP estimate for 2013 is higher than real GDP growth rate for 2012 (5.4 percent in comparison with 5.25 percent ). However, the estimate for 2013 (5.4 percent) is lower than the National Assembly's preset index (5.5 percent).

Structure of economic sectors moved positively, in which the proportion of agro-forestry and fishery decreased and industry-construction and service increased.

The proportions of investment and GDP plummeted rapidly from 39.2 percent in 2006-2010 to only 30.9 percent in 2011-2013, and around 29.1 percent in 2013.

However, there are shortcomings in the domestic economy, especially the low GDP growth rate of 5.63 percent on average over the last three years.

The agro-forestry-fishery sector expanded at a low pace in two consecutive years at 4.02 percent in 2011 and 2.68 percent in 2012 and 2.52 percent in 2013 (estimated), respectively.

The industry-construction sector, the driving force for national economic growth, slowed down to only 5.75 percent in 2012 and 5.43 percent in 2013.

The total demand remains weak and the proportion of investment and GDP decline unexpectedly - that force customers to tighten their belts.

In the report at the National Assembly's 6th session, Prime Minister Dung also highlighted the Government’s major solutions to address current difficulties and realise future plans for national socio-economic development. He laid a stress on enhancing the macro-economy stability and inflation control.

The Government aims to implement flexible monetary and tight budget policies, adjust the interest rates in accordance with the inflation control target, boost export and control import while increasing foreign currency reserves and stimulating the capital and stock markets.

A market mechanism will be continuously applied to essential public services and products in a suitable roadmap to ensure the inflation control requirement, transparency and policies supporting contributors and the poor.

The Prime Minister underlined a focus on removing difficulties in production and trade and ensuring an appropriate growth rate. Targets have been set for increasing the supply, supporting domestic market development, implementing synchronised solutions and taking advantage of opportunities and favourable conditions in international agreements to expand export market.

It is also aimed to address bad debts, prioritise capital for agriculture, rural development, production for export, small- and medium-sized enterprises, support and hi-tech industry.

Administrative procedures will be continuously simplified and further support granted to the consumption of major goods and natural disaster and epidemic recovery programmes. Tourism and services development will also be facilitated.

The acceleration of the economy restructure is preferred. The general scheme on restructuring the economy and other projects on restructuring sectors will be implemented synchronously, focusing on boosting public investment, restructuring the banking system, financial market, State-owned businesses, agriculture, industry and services.

He also pointed to the effective implementation of institutional reforms and the development of human resources and infrastructural system.

Farmers informed of crop protection usage

CropLife Viet Nam, a coterie of giant agricultural corporations, is holding what it calls its 2nd Stewardship Day in six Cuu Long (Mekong) Delta provinces today.

Held in collaboration with the Ministry of Agriculture and Rural Development's Plant Protection Department and relevant local sub-departments, the event hopes to attract more than 2,500 farmers who will be informed of and encouraged to adopt effective and responsible use of crop protection products.

The first Stewardship Day held last year captured significant interest from both local authorities and farmers for a one-day seminar and training workshop.

Remittances reach $3b in HCM City

The State Bank of Viet Nam in HCM City had received US$3 billion from remittances as of the end of September this year, putting Viet Nam in the top ten countries in the world for remittances.

In 2013, HCM City's remittances could reach $4.8 billion, an increase of $700 million from last year. The majority of remittances came mainly from the US and Europe, but this year has seen an increase from China and South Korea.

The World Bank said Viet Nam would receive around $11 billion in remittances this year to stand ninth in the world.

REE looks at $1.9m thermoelectric deal

R.E.E Mechanical&Electrical Engineering Joint Stock Company (REE) planned to buy an additional 2 million shares in Pha Lai Thermoelectric Plant (PPC), creating a deal worth around VND40 billion (US$1.9 million).

If the deal passes through, REE will hold 22.88 per cent shares of Pha Lai Thermoelectric Plant, a slight increase on its current 22.26 per cent stake.

Foreign investor buy shares in PNJ

Venner Group Limited has recently bought an additional 355,068 shares in Phu Nhuan Jewellery Company (PNJ), increasing their stake from 1.61 per cent to 2.11 per cent.

Foreign investors now hold a total of 7.21 per cent of shares in the HCM City-listed company, with Venner Group Limited, Warehame Group Limited and Viet Nam Enterprise Investments Limited the major players.

PNJ's revenue and after-tax profits were reported as VND5.74 trillion (US$273.33 million) and VND116.22 billion ($5.53 million), respectively.

PNJ closed down 0.1 point at VND27,200 ($1.3) per share on Thursday.

Hoa Phat reports profit for first nine months

Steel maker Hoa Phat Group (HPG), reported earning post-tax profits of VND1.52 trillion (US$72.38 million) in the first nine months of this year, nearly a two fold increase on the same period last year.

Total revenue in the third quarter alone reached VND4.25 trillion ($202.47 million) and for the nine-month period, revenues amounted to VND12.66 trillion ($603 million).

Hoa Phat expected to pay healthy dividends of 20 per cent this year to shareholders.

Underperfoming stocks removed from HNX30-Index

Five shares will be removed from the HNX30-Index from the beginning of November due to prolonged under-performance.

The codes in question are PetroVietnam Construction Corporation (PVX), Ocean Hospitality and Service (OCH), Generalexim (TH1), PV2 Investment Company (PV2), and Vinaconex (PVV).

The HNX30-Index is composed of the northern bourse's top shares by capitalisation and liquidity.

PVX was under surveillance due to two consecutive years of losses, while the four others suffered low liquidity, with average trading volume reaching only 7,000 to 190,000 shares.

Those shares will be replaced by members of Song Da Group including Song Da 10 (SDT), Song Da 9 (SD9), Song Da 6 (SD6), and Nha Be Garment and Textile (NBC) and Ha Noi Education Development And Investment (EID).

Cashew exports to top US$1.8 billion

With an increasing demand for cashews in the global market, Viet Nam expects a higher export volume this year, reaching US$1.8 billion.

According to the Viet Nam Cashew Association (Vinacas), the country exported 212,000 tonnes of cashew worth $1.3 billion in the first nine months of the year.

The average FOB export price in the period was $6,200 a tonne. The price was rather low in the first two quarters of the year, but since August it has gone up to $7,600 a tonne.

The US, China and the Netherlands were the three largest markets during the period, the association said.

Nguyen Duc Thanh, Vinacas chairman, said that export prices might rise by year-end.

Last year, export volumes were 220,000 tonnes. This year, they are expected to be 200,000-250,000 tonnes.

Total export revenue of more than $4 billion is predicted for the 2013-15 period. The export ratio of processed cashews is expected to rise in the coming years.

To fulfill the target, the industry must import an average of 300,000-400,000 tonnes of raw cashews a year, according to the association.

The challenge for the industry is the shortage of raw materials as domestic production meets only 50 per cent of processing capacity, it said.

In addition, Viet Nam's cashew productivity is about 0.7-0.8 tonne per hectare, rather low compared to other countries.

High-quality cashew seedlings that would raise yields should be created.

The association has urged its members to invest more in technology to address the labour shortage, increase productivity and safety of cashew products, and reduce production costs.

UK-Viet Nam trade jumps

Bilateral trade turnover between Viet Nam and the UK rose 25 per cent for the first eight months of the year to US$3.4 billion, according to the Vietnamese Embassy in the UK.

Of the total, the embassy said that Vietnamese export value to the UK stood at $3.12 billion, increasing by 28 per cent over the same period last year.

The main exports during this time were audio equipment, coffee, footwear, timber furniture and plastics.

Meanwhile, Viet Nam spent $296 million to import wheat, steel, salmon, pharmaceuticals and vehicles from the UK. This value declined by 2 per cent year-on-year.

The embassy predicted that trade value between the two countries would jump to $5.12 billion in 2013, 17 per cent higher than that of last year.

Nguyen Thi Hong Thuy, Vietnamese Commercial Counsellor in UK, said that despite many difficulties caused by the global recession, trade between the two countries had grown at an average of more than 30 per cent per year.

However, she said, the result was modest compared with the total trade turnover of each country.

This shows that Vietnamese products in UK were less competitive than those from China, Thailand and India, she said, explaining that distance and different business methods had complicated trade activities.

Local trade deficit hits $187 million

Viet Nam's trade deficit in the first 10 months of this year hit US$187 million, according to the General Statistics Office (GSO).

Export revenue reached $107.97 billion and import value hit $108.16 billion, both increasing 15.2 per cent over the same period last year.

Director of the GSO Trade Department Pham Quynh Loi said the growth rate had remained stable since the beginning of the year.

The foreign direct investment sector saw high growth with export turnover of $72.8 billion, a year-on-year increase of 22.3 per cent. Domestic businesses posted turnover of $35.9 billion, a surge of 3 per cent.

Most export revenue came from the FDI sector. The export value of fixed telephones, mobile phones and accessories was $17.72 billion (up 76.1 per cent).

Meanwhile electronics, computers and accessories fetched $8.65 billion (up 41.5 per cent) and garments and textiles posted $14.8 billion (up 18.7 per cent).

The FDI sector also saw high import value, which jumped 25.7 per cent in the first 10 months to $61.9 billion over the same period last year.

The domestic economic sector posted import value of $46 billion, an increase of 3.5 per cent over last year.

The trade deficit data shows that the domestic economic sector has maintained its maximum production capacity, according to GSO economists, who noted that imports of many items used for domestic production declined.

Imports of steel stood at $5.5 billion, up 10.7 per cent, but petrol imports sank 22.9 per cent in volume and 22.5 per cent in value.

Local firms also take blame for officials’ corruption

Local enterprises have become more actively involved in bribe taking and giving in a vicious cycle that they should somehow be able to escape, said an expert from the World Bank in a seminar in HCMC on Thursday.

Soren Davidsen from the World Bank (WB) told a seminar in HCMC on Thursday that Vietnamese enterprises were believed to have played an active role in giving bribes to corrupt officials.

The seminar, one of activities held before the anti-corruption dialogue between the Government and international donors in Hanoi next month, was organized by the Government Inspectorate, the Vietnam Chamber of Commerce and Industry (VCCI) and the British Embassy in Vietnam.

More than 75% of the enterprises when asked said they had given bribes despite not being suggested to do so while 59% of the surveyed companies informed they had handed gifts or money to State officials, Davidsen quoted the figures from a recent survey conducted by the WB and the Inspectorate.

Meanwhile, 63% of the corporate respondents replied that they gave unofficial monies to create an implicit mechanism so that their business troubles would be solved quickly.

“This means that local companies have played a role in creating the vicious circle of corruption,” he stressed.

The process began with a civil servant intentionally causing troubles in procedures, prompting companies to offer bribes to get the troubles removed, he explained. The official has then repeated the deplorable action since then for illegal gains.

Business in HCMC said that corruption was one of the three most headache-causing problems they were facing after price hikes and falling revenue, Davidsen said.

Quoting the surveys on corruption faced by local enterprises conducted by the WB and the Inspectorate between 2007 and 2012, Davidsen said that as local firms have seen no signs of corruption abating, they think the practices have become more widespread now.

According to Nguyen Quang Vinh of the Business Office for Sustainable Development under VCCI, around 50-60% of the respondents in the provincial competitiveness index survey conducted by VCCI annually reported their problems had been handled upon the unofficial expense payment.

“This means that the number of enterprises failing to have their problems solved after giving unofficial expenses is very high,” Vinh said.

According to Davidsen, up to 88% of those polled attributed State officials’ corruption to their worsening ethical merits while up to 79% of State officials blamed their bad deeds on low wages.

Lawyer Tran Trong Tien from the Phap Tien Law Office warned local enterprises of continuing to suffer from corruption if they did not manage to improve legal knowledge themselves.

However, the fact shows that local authorities and entities now are seeking ways to wipe out corruption.

In particular, Le Thanh Nguyen, director of the hi-tech business incubator at the Saigon Hi-tech Park, said his park had signed covenants on anti-corruption with 13 firms operational there like Intel, FPT Software Company and DGS Electronic Company. The covenants include supporting business morality and business operation subject to legal compliance and fighting corruption and power abuse.

HCM City desperate to accelerate housing credit deployment

The central bank’s HCMC branch has proposed the city’s government and the State Bank of Vietnam seek ways to prop up the foot-dragging home loan program as few needy people have been able to access the preferential lending package.

The biggest bottlenecks are the reluctance on the part of grassroots administration units to certify housing conditions of homebuyers who want to take out soft loans from the VND30 trillion housing credit package while notary offices refuse to certify papers regarding the assets which will only be formed in the future.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, told the Daily that after many months, commercial banks involved in this special credit program have signed credit contracts with 137 homebuyers with loans totaling VND78 billion, but only VND22 billion has been disbursed.

Minh petitioned the municipal authority and the central bank to remove the difficulties by giving specific instructions to remove the bottlenecks.

As per the prevailing laws, notary offices will only certify assets with ownership right already established, meaning assets to be formed in the future are not subject to the regulations. Meanwhile, low-cost housing projects under construction have yet to be issued with ownership right certificates.

As notary offices do not agree to certify the assets, local banks also refuse to lend them to avoid risks.

Besides, as most grassroots governments do not certify housing conditions for residents in need of home loans as low-income earners and those owning no homes, the branch urged the central bank and related authorities to seek solutions accordingly.

Not only homebuyers find the access to soft loans choked off, but also realty developers consider the obstacles too high to surmount.

During a meeting in HCMC on Tuesday, many local property developers said they found it extremely difficult to access the credit package program.

The meeting was attended by the city’s construction department and Real Estate Association (HoREA) and Pham Van Dong, head of the economic and budget committee of the city’s People’s Council.

At the meeting, Le Hoang Chau, chairman of HoREA, informed that Resolution 02 on tackling bad debts and inventories had been issued late last year but the central bank and the construction ministry had not released instructions on the credit package’s implementation until the middle of 2013.

Owners of many commercial housing projects have been seeking permission for converting their projects into low-cost homes and division of condos into smaller units over the past months but have yet to receive any response from State management authorities, Chau noted.

In particular, he said, Sai Gon-Gia Dinh Real Estate Company has won approval in principle from the construction ministry to convert the Thoi An housing project with 360 units in District 12 into budget homes but it has yet to get permission from the city’s leaders to do so.

Similarly, Nguyen Thi Nhu Loan, chairwoman of Quoc Cuong Gia Lai Joint Stock Company, said her company over the last three months had applied to change a housing project in the outlying district of Nha Be into low-cost homes to be sold at VND12 million a square meter but it had not received any feedback from relevant authorities on this issue. Loan complained that her enterprise had no other choice but to accept losses to sell the condos at lower-than-expected prices to avoid paying a daily interest sum of up to VND200 million to banks.

Meanwhile, Hoang Quan Real Estate Company has yet to receive more than VND500 billion from the VND30 trillion housing credit package for its project’s construction and another VND1 trillion from a lender to support homebuyers as committed due to failing to win approval from the local government for disbursement.

Given such deplorable reasons, Chau urged the city’s government to step up the process of considering the projects in need of adjustments.

Vietman’s largest textile firm says IPO price remains a mystery

Vinatex, the country’s largest textile company, is due to IPO (initial public offering) during the last quarter of this year at a price its CEO says remains a mystery.

The state-run company, fully known as Vietnam National Textile and Garment Group, has finished several important steps ahead of the IPO, CEO Tran Quang Nghi told Tuoi Tre.

These include assessing the company’s value and determining the number of interested investors and strategic shareholders over the privatization, Nghi said.

The CEO said the IPO will open new chances for Vinatex as well as the Vietnamese textile industry, especially after the Trans-Pacific Partnership is signed in the near future.

But Nghi refused to say how his company will be priced at the IPO.

“I think it is an unknown number,” he said.

Nghi acknowledged that this is “not the prime time for the stock market as well as for investors,” and thus he “could not say anything in advance regarding the IPO price.”

As a state-run company, Vinatex has 51 percent of its stake held by the government, and Nghi hoped investors will buy up to 40 percent of the stake at the IPO.

As of the end of last month, Vinatex posted earnings worth VND33 trillion, with export turnovers rising 12 percent year-on-year to $3.2 billion.

Transport inspectors discover highway project irregularities

Tranport inspectors are criticising the execution of a build-operate-transfer (BOT) model highway upgrade in northern Thai Binh.

The first of their critiques is the project’s slow progress.

According to the Ministry of Transport (Mot) inspectors’ final report, by September this year the upgrade of 5.5km of road between the La Uyen and Tan De bridges on National Highway 10 had yet to be completed after nearly three years construction.

As of that time the developer, Tasco, could only put 4.1km of the road into use after already spending $10.6 million, not including land acquisition costs.

In the original contract the deadline was two years from construction start and it was extended to the end of 2013 due to problems with site clearance.

At the same time, the project’s investment cost more than doubled from $14.8 million to $34 million, of which added construction costs came to $10.4 million.

This comes to $7 million for each kilometre of road built, considerably more costly than other projects, even those with higher quality standards.

Moreover, the investor has already started collecting road tolls on the incomplete stretch of highway to recoup its investment capital.

Another problem was the asphalt used in constructing the road. It was not approved by the consultant supervisory unit and failed to produce the minutes on checking bitumen content.

“This is a major fault, and it may very badly affect the quality of the road,” said one transport expert.

Another shortcoming was when MoT inspectors required the executor of the land acquisition sub-project, Vu Thu district People’s Committee, to return $352,000 to the state coffers.

These monies, added to the provincial budget, was land ret collected from local residents.

Transport inspectors said the executor had no rights to this sum as they had already been provided state budget capital for land acquisition and to build resettlement areas for affected citizens.

Relevant authorities are required to send their responses to the inspectors’ report before the end of this year.

“Although the shortcomings of this project are not so great, they reflect the fading role of relevant state management agency and highlight procedural loopholes that need to be closed to ensure successful BOT transport project execution,” said a senior transport expert.

Experts forecast credit growth below target

It is unlikely that the banking sector will reach its 12 per cent credit growth target for this year, but experts are hopeful that next year will be better.

Addressing National Assembly (NA) deputies at the ongoing sixth session, Prime Minister Nguyen Tan Dung reported that credit growth hit 6.64 per cent in the first nine months, well exceeding the 2.5 per cent seen in 2012.

The government is hoping credit will soar in the last quarter after wide-ranging measures to spur demand and streamline lending procedures were aimed at meeting full-year 12 per cent target.

Economic experts and bank executives are not so sure.

Senior economist Le Xuan Nghia said credit growth may reach only 11 per cent this year as banks have abundant capital sources but the economy has poor liquidity, thereby hindering capital circulation.

Deputy general director of DongA Bank Nguyen Thi Ngoc Van said that businesses are finding it difficult to boost consumption and banks are limiting their lending.

Deputy general director at VIB Bank Le Quang Trung said he expects credit to grow by 9 per cent this year.

While many banks have reported sharp credit growth in recent months, this is in terms of volume and most were personal loans, while business lending, particularly to small and medium-sized enterprises (SME), saw little improvement.

Ho Chi Minh City-based Sacombank reported 13.4 per cent credit growth by the end of September, but 70 per cent of outstanding loans were held by individual customers.

State giant Vietcombank, as of September, expanded its credit by 5.1 per cent, skyrocketing against 1.47 per cent negative growth in the first six months of the year.

“Lending to SMEs, however, only represented around 12 per cent of the bank’s total outstanding loans,” said Vietcombank deputy general director Truong Thuy Nga.

Despite modest forecasts for 2013, experts anticipate much greater credit growth in 2014.

Nghia highlighted a number of factors behind his 2014 projection of 14-15 per cent.

First is that exports are expected to rise by 10 per cent next year.

Secondly was that the government has set a 2014 GDP growth target of 5.8 per cent, and the budget deficit will be 5.3 per cent along with a planned 30 per cent increase of the budgets social investment. More public investment would propel growth in other sectors, and thus fuel credit growth.

Thirdly, Vietnam has begun tackling bad debts and drastic measures are planned for next year to further open capital flows.

Experts have warned that the economy will only rebound after Vietnam has successfully sold off its bad debts.

World experiences show that quite frequently foreign players jump into countries with credit problems to buy up bad debts.

In the case of Korea, US groups were active buyers of the country’s debt. After successful restructuring of these businesses three years later, they sold them off to other Korean firms and exited. This helped Korea get rid of bad debt crisis quickly and ailing banks had grown healthy.

Gov’t should reduce micro management: experts

Many experts during a meeting on Thursday suggested that the Government should spend more time setting up long-term national strategies in future years instead of focusing too much on daily micro management tasks.

Speaking at a seminar announcing results of the project supporting the Government in building a vision, Grayson Clarke from SKL International/PAI said that there have been shortcomings in operations of the Government. The Government is still trying to do many things while there is no cohesion among departments. Besides, the Government focuses too much on micro management and heavily depends on administrative orders.

Nguyen Dinh Cung, acting director of Central Institute for Economic Management (CIEM), said that the Government should not spend too much time on daily tasks. Meanwhile, the Government should set up long-term development strategies like the board of directors of an enterprise.

In addition, the Government has to be more effective with budgets. Few ministers say that they would try to use their budget wisely. They usually try to mobilize more capital to carry out projects. That is why Vietnam is always facing overspending, Cung said.

Le Xuan Ba, former director of CIEM, said that daily tasks have consumed all the time of the Government. Therefore, the Government’s cabinet members have no time for strategy planning and selecting priority targets for each period.

Another shortcoming is that both the Government and the National Assembly in Vietnam release too many legal documents such as laws, decrees and circulars. Meanwhile, no one has assessed or studied effectiveness of these documents or their impacts on society.

“The Vietnamese government has many strategic initiatives but has no vision or general roadmap to realize them,” Clarke said.

According to a report on the project, Vietnam gained huge success during the renovation period with income per capita surging from US$90 in 1990 to US$1,300 in 2010. However, to obtain these results, the nation strongly exploited economic potential, natural-resources-based industries and creativity of people by facilitating individuals in establishing private businesses and calling for local and international investment, especially for labor-intensive sectors.

But now, the population advantage has declined while the ratio of people aged 60 or above is rising fast. As the global economic turmoil has hit hard the U.S and Europe, the two biggest markets of Vietnam, local enterprises have been pushed into distress.

Experts at the seminar said that the Government should diversify the market, export goods and stimulate domestic consumption. Besides, people across the nation should be supported to access public services.

The project assisting the Government in building a vision and a roadmap for realizing that vision has been implemented since late 2011 and may be complete this month. It was conducted by CIEM, the Swedish International Development Cooperation Agency, SKL International/PAI and other Vietnamese agencies.

Vietnam depends heavily on China textile, footwear material

The nation’s total textile and footwear material imports from China hit nearly US$888 million in January-September, up around 30.5% compared to the same period of last year.

According to data of the Ministry of Industry and Trade, total apparel and footwear material imports amounted to over US$2.7 billion in the first nine months, of which China accounted for 32.5%. Many enterprises in the industry have expressed concerns about the country’s heavy dependence on China as a major supplier of material.

In the coming time, Chinese companies are feared to take bigger profit and share in the value chain of the Vietnamese garment and textile industry. Many Chinese enterprises have expanded their business operations in the local market to take advantage of the Trans-Pacific Partnership (TPP) agreement over which Vietnam is in talks.

Texhong Textile, Pacific Textiles and Crystal Group from Hong Kong have plans to expand investment in Vietnam. Meanwhile, Hong Kong’s Texhong Ngan Long Science and Technique Company is also seeking partners in the country.

The TPP is expected to be signed in 2014, forcing enterprises to follow fiber origin rules if they want to benefit from tax incentives. This means that Vietnamese firms have to produce materials, except for products made at orders of foreign partners.

Le Quang Hung, chairman of Saigon Garment Manufacturing Trade Company (Garmex Saigon), said it is hard for local enterprises to invest in material production given the lack of capital and experience. Therefore, local firms would continue depending on foreign material suppliers in the coming time.

According to the Vietnam National Textile and Garment Group, the garment sector now can meet only 2% of cotton demand and one-eighth of cloth demand while turning out just 140,000 tons of low and medium-quality fiber a year. Despite much effort, the textile sector meets only 48% of domestic material demand this year.

Long Thanh-Dau Giay expressway toll collection begins soon

Around 23 kilometers of the HCMC-Long Thanh-Dau Giay expressway will be opened to traffic later this year, with the section’s toll collection starting at the same time, the Government Office said.

According to the Government Office, Deputy Prime Minister Hoang Trung Hai on Monday approved the temporary use and toll collection of the 23-kilometer section stretching from the eastern belt road in HCMC’s District 9 to National Highway 51 in the southern province of Dong Nai.

The transport ministry is requested to complete all related procedures to ensure the expressway use and toll collection meet requirements based on written approval by the State Council for Acceptance of Construction Works.

At the ceremony for joining the main span of Long Thanh Bridge last Tuesday, Vietnam Expressway Investment and Development Corporation as the expressway’s project owner said that around 23 kilometers of the project would be completed later this year, connecting HCMC’s District 9 and Dong Nai. The remaining part will be accomplished at the end of next year.

The 55-kilometer HCMC-Long Thanh-Dau Giay expressway will cost an estimated VND18.9 trillion, with some VND9.9 trillion used for the first phase and funded from ODA loans.

As an important component of the north-south expressway, HCMC-Long Thanh-Dau Giay expressway plays a vital role in linking the southern key economic area, helping shorten the distance between HCMC, Dong Nai and Ba Ria-Vung Tau, and quicken cargo transport to and from Cai Mep-Thi Vai port complex.

HCM City desperate to accelerate housing credit deployment

The central bank’s HCMC branch has proposed the city’s government and the State Bank of Vietnam seek ways to prop up the foot-dragging home loan program as few needy people have been able to access the preferential lending package.

The biggest bottlenecks are the reluctance on the part of grassroots administration units to certify housing conditions of homebuyers who want to take out soft loans from the VND30 trillion housing credit package while notary offices refuse to certify papers regarding the assets which will only be formed in the future.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, told the Daily that after many months, commercial banks involved in this special credit program have signed credit contracts with 137 homebuyers with loans totaling VND78 billion, but only VND22 billion has been disbursed.

Minh petitioned the municipal authority and the central bank to remove the difficulties by giving specific instructions to remove the bottlenecks.

As per the prevailing laws, notary offices will only certify assets with ownership right already established, meaning assets to be formed in the future are not subject to the regulations. Meanwhile, low-cost housing projects under construction have yet to be issued with ownership right certificates.

As notary offices do not agree to certify the assets, local banks also refuse to lend them to avoid risks.

Besides, as most grassroots governments do not certify housing conditions for residents in need of home loans as low-income earners and those owning no homes, the branch urged the central bank and related authorities to seek solutions accordingly.

Not only homebuyers find the access to soft loans choked off, but also realty developers consider the obstacles too high to surmount.

During a meeting in HCMC on Tuesday, many local property developers said they found it extremely difficult to access the credit package program.

The meeting was attended by the city’s construction department and Real Estate Association (HoREA) and Pham Van Dong, head of the economic and budget committee of the city’s People’s Council.

At the meeting, Le Hoang Chau, chairman of HoREA, informed that Resolution 02 on tackling bad debts and inventories had been issued late last year but the central bank and the construction ministry had not released instructions on the credit package’s implementation until the middle of 2013.

Owners of many commercial housing projects have been seeking permission for converting their projects into low-cost homes and division of condos into smaller units over the past months but have yet to receive any response from State management authorities, Chau noted.

In particular, he said, Sai Gon-Gia Dinh Real Estate Company has won approval in principle from the construction ministry to convert the Thoi An housing project with 360 units in District 12 into budget homes but it has yet to get permission from the city’s leaders to do so.

Similarly, Nguyen Thi Nhu Loan, chairwoman of Quoc Cuong Gia Lai Joint Stock Company, said her company over the last three months had applied to change a housing project in the outlying district of Nha Be into low-cost homes to be sold at VND12 million a square meter but it had not received any feedback from relevant authorities on this issue. Loan complained that her enterprise had no other choice but to accept losses to sell the condos at lower-than-expected prices to avoid paying a daily interest sum of up to VND200 million to banks.

Meanwhile, Hoang Quan Real Estate Company has yet to receive more than VND500 billion from the VND30 trillion housing credit package for its project’s construction and another VND1 trillion from a lender to support homebuyers as committed due to failing to win approval from the local government for disbursement.

Given such deplorable reasons, Chau urged the city’s government to step up the process of considering the projects in need of adjustments.

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

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