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Nestle invests an additional US$37 mil in Vietnam
Familiar food and drink maker Nestle just announced it is pumping more than US$37 million into expanding its MILO factory at the AMATA Industrial Park in Binh An, Vietnam.
Nestle Vietnam Co. Ltd on October 9 said the planned expansion in Bien Hoa City, Dong Nai province should create more than 50 jobs bringing the total number of employees at the location to 304.
The company currently has invested over US$450 million in three processing plants in Vietnam, a company representative announced, adding it also operates three plants in Bien Hoa, Long Binh and AMATA industrial parks.
Tuna fish hopes to secure firm foothold in Japan
Japan’s Kato Hitoshi General Office and Japanese seafood experts have pledged their continuous assistance to help fishermen in Binh Dinh province export tuna fish to Japan.
Chairman of the Binh Dinh provincial People’s Committee Le Huu Loc said the Japan-Vietnam Friendship Association and other relevant agencies are seeking every measure in support of local fishermen. To secure a firm foothold on the Japanese market, it is essential to promote the use of advanced technology and improve the efficiency of tuna fishing, he suggested.
According to Cao Thi Kim Lan, Director of Bidifisco, which purchases tuna fish to ship to Japan, the price of Vietnamese tuna is traded at around VND240.000/kg (around US$12/kg) on the Japanese market.
With the current export price, Bidifisco can earn a little amount of profit, she said, but still hopeful for bright prospects for tuna export to Japan, which she described as a promising market.
“We are focusing on educating local fishermen on standard fishing procedures and tuna identification techniques and providing them with more assistance and equipment for higher efficiency”, Lan added.
During a recent working session with the Binh Dinh provincial People’s Committee, representatives of the Japan-Vietnam Friendship Association in Osaka, Kato Hitoshi General Office and Japanese seafood experts said they are willing to help local tuna exporters to access the Japanese market and develop Vietnamese tuna trademark in Japan.
Japanese group seeks investment opportunity in Vietnam
Japanese investors consider Vietnam as their prioritised investment destination which has favourable conditions and prominent attraction at present and in the future.
They have so far invested in 2,410 projects in Vietnam with a combined capitalisation of US$36.3 billion.
The information was revealed at a seminar in Hanoi on October 8 by the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI) and the Japanese IHI Corporation with the aim of promoting images and enhancing cooperation between IHI and Vietnamese partners.
FIA Director Do Nhat Hoang said Japan is a leading economic partner and foreign investor in Vietnam. Japanese businesses’ contributions through direct investment projects and official development assistance (ODA) provided by the Japanese Government and international cooperation agency (JICA) have been paid off. These important supplement sources will help accelerate the completion of Vietnam’s infrastructure system and make its economy more competitive.
IHI CEO Tamotsu Saito affirmed that the group is willing to support Vietnam’s development goals and will actively cooperate with Vietnamese partners in training and technology transfer.
Businesses to the seminar shared experience in investment cooperation and agreed that Vietnam is completing its legal system to further improve the investment and business environment .
Hoang stated that Vietnam has made great efforts to improving the investment environment and the efforts have been acknowledged by foreign investors through the increasing number of FDI projects in the country.
IHI group has taken part in some important projects in Vietnam including Nhat Tan Bridge in Hanoi, Binh Bridge in Haiphong, and the improvement of Hanoi-HCM City railway system.
On the occasion, IHI group presented scholarships to 10 outstanding students of the Hanoi University of Science and Technology.
India tops list of Vietnam’s pepper importers in South Asia
India is the largest market for Vietnam’s pepper in South Asia, accounting for about 59 percent of the total value of Vietnam’s pepper exports to the region, according to the Vietnam Pepper Association (VPA).
Other major customers in South Asia are Pakistan and Bangladesh which together with India generate 97.4 percent of Vietnam’s earnings from pepper export to the region.
Currently, Vietnam’s pepper has been sold to most of South Asian countries except for Afghanistan, Bhutan and the Maldives. In the first seven months of this year, pepper exports to the region increased sharply in terms of value compared to the same period last year, with a 109 percent rise posted in India, 211 percent in Pakistan, 410 percent in Bangladesh and 748 percent in Nepal.
In 2014, Vietnam expects to earn more than US$160 million from pepper export to the South Asian markets.
As the world’s largest pepper producer, Vietnam ships the spice to more than 90 countries and territories.
HCMC asks for loan agreement extension
The HCMC government has proposed the State Bank of Vietnam extend the validity of the Loan Agreement No.2731-VIE signed with the Asian Development Bank to December 31, 2018 for the Metro Line No.2 project.
According to the city government, the second metro line will be funded more than VND26 trillion (some US$1.23 billion). Of this figure, US$540 million will come from the regional lender, US$313 million from the German Reconstruction Bank (KFW), US$195 million from the European Investment Bank (EIB) and US$326.5 million from the State budget.
In its proposal, the city government also asked the central bank for permission to reallocate funds for different components of the Metro Line No.2 project.
Up to date, the Vietnamese Government and creditors have signed all the loan agreements.
The Loan Agreement No.2731-VIE for the first stage worth US$40 million set the project’s completion date at December 31, 2016 and the loan deadline is June 30, 2017.
However, the basic design and selection of contractors for the project have been reconsidered, causing delays in conducting site clearance and relocating infrastructure facilities. Therefore, the project’s progress will be behind schedule.
Mobile marketing forum to open at month-end
An in-depth overview on advertising on mobile devices with updated statistics and consumer behaviors as well as new trends will be provided at the Mobile Marketing Association Forum Vietnam 2014 slated for October 30 in HCMC.
The forum is expected to gather leading brands, mobile networks, marketing agencies and technology companies. Besides, it is where participants can learn from experience of leading brands in Vietnam and have an overview of the mobile marketing market in preparation for their new marketing strategies and plans.
Talking about mobile marketing, Roopa Dhawan, managing partner at Mindshare Vietnam, said the mobile marketing market is witnessing considerable growth. The click-through rate (CTR) in Vietnam is some 2% on average, 1-1.5% higher than in regional markets like Indonesia, Singapore and Myanmar, she added.
The increasing number of smartphone users opens up more chances for creative products to approach right people and targeted customers. The number of phone users has exceeded the number of TV viewers and the trend should not be ignored, according to Dhawan.
A survey conducted in quarters one and two by TNS and Google pointed out that Vietnam sees a strong increase in the number of smartphone users, from 20% last year to 36% this year. The group of people aged 16-24 accounts for the highest smartphone use rate with 58% while the rate in the age group of 25-34 was 45%.
The survey also revealed that 85% users watch videos online via their smartphones. This rate is quite high compared to the world’s average of 46%.
Although the screen of smartphones is small compared to traditional marketing channels, users still spend three to four hours using their phones and enterprises should take advantage of this.
HCM City rejects airport expansion
HCM City has rejected plans to expand its airport on practicality grounds and instead wants work on a new airport in neighbouring Dong Nai Province speeded up.
The 1,500-hectare Tan Son Nhat International Airport currently has nearly 590.5 hectares under civilian use and the rest for military activities, but is located in a very densely populated area, which raises questions about the wisdom of expanding it.
Its current capacity is around 20 million passengers per year, meaning the transportation system connecting the airport with the city is frequently overloaded, according to the city people's committee.
If the airport's annual capacity is to be raised to 50 million passengers, it will have to expand to the north, where around 640 hectares need to be cleared and 140,000 households moved.
Expansion will cost an estimated US$9.15 billion if the land is acquired at official prices, and much higher if based on market rates, according to the city administration.
An expanded airport will surely worsen the noise and air pollution in one of the country's most densely populated cities.
Urban development and airspace management by the Ministry of Defence will also be impacted, the people's committee fears.
The city has urged the Ministry of Transport to soon begin work on Long Thanh Airport in Dong Nai instead.
With a maximum capacity of 25 million passengers a year, Tan Son Nhat is expected to be overloaded by 2017 when the demand will rise to around 29 million, while the first phase of Long Thanh — with an annual capacity of 17 million — will not be ready until 2023, according to the Airports Corporation of Viet Nam (ACV).
The ACV had drawn up plans to expand Tan Son Nhat's capacity to 26 million passengers pending opening of Long Thanh.
SBV seeks to deter virtual gold traders
A representative of the State Bank of Viet Nam (SBV) affirmed that virtual gold trading was illegal and warned them of the extremely high risks involved.
Vietnamnet online quoted Nguyen Ngoc Canh, director of the SBV Foreign Exchange Management Department as saying organisations or individuals who establish a trading floor for gold and buy or sell the precious metal using overseas accounts without permission from Vietnamese authorities were violating Viet Nam Law.
According to Decree No 24/2012 /ND-CP on gold business activities, the Prime Minister and the SBV have yet to grant a licence to any organisation or individual for gold business activities, including gold exchange and gold trading using overseas gold accounts.
The SBV has warned people to refrain from joining in gold trading through gold trading floors using overseas gold accounts.Violators will be administratively charged and fined from VND50 to VND100 million (US$2,350 to $4,690), and their gold and other paraphernalia will be confiscated.
Canh said that in the near future, the SBV would strengthen inspection procedures and work with concerned agencies for the timely detection and handling of cases of virtual gold trading.
The SBV also warned that organisations or individuals found guilty of virtual gold trading would be required to report regularly to the hi-tech crime police, SBV and concerned agencies.
According to the foreign exchange management department, virtual gold is viewed as speculation and price manipulation that destabilises the country's economy.
Between 2008 and 2009, the operation of gold trading floors in the country created great risks for investors and great losses to society.
As a result, in December 2009, the Government asked the SBV to implement drastic measures to stop all activities related to gold trading floors or gold trading accounts.
Earlier, the police arrested six top officials of the Ha Noi–based Khai Thai Consultant Limited Company (KTIC) for "illegal business practices" on October 2.
The arrested officials include KTIC General Director Hsu Ming Jung (also called Saga) from Taiwan, KTIC Director Nguyen Manh Linh and three branch directors, as well as a chief accountant.
The Police Department for Investigation of Social Order Crimes (C45), under the Ministry of Public Security (MPS), has confiscated about VND70 billion (US$3.3 million) after examining KTIC's branches and Jung's residence in Ha Noi.
Investigators from the MPS Hi-tech Criminal Prevention Department (C50) had initially found that KTIC was operating an illegal online gold and foreign exchange (forex) trading floor.
On September 26, C50 arrested the director and chief accountant of VGX Investment Joint Stock Company (VGX) for operating an illegal gold trading floor.
Business rules must make sense
Ministries that want to continue issuing business licences to the community may soon have to demonstrate that the requirements they demand make sense.
And the many other Government departments and bodies that issue certificates for a multitude of reasons may also be forced to do the same thing.
Vice Minister of the Ministry of Planning and Investment, Dang Huy Dong, explained the likely developments at a Government task-force meeting on Monday.
The task force, which included officials and experts from ministries, was charged with evaluating current regulatory requirements for businesses.
Complaints have been made that there are too many rules – and that most of them are too complicated.
The total variety of business licences issued by Vietnamese ministries is 398. There are also rules for hundreds of certificates required from Government departments and other official bodies.
Under the new proposals, ministries will have to explain the reasoning behind all regulations for business licences.
Dong said the task force's mission was not to get rid of as many regulations as possible, but to remove those that were unnecessary in administrative procedures. He said this should produce a convenient and transparent business environment.
Le Duy Binh, an independent consultant with the task force, said business regulations today were too complicated and sometimes illogical. This was not serving the nation's objective of boosting economic development, he said.
"One poorly-thought out regulation may stop thousands of entrepreneurs from entering the market," said Binh.
He referred to a regulation that forced businesses to acquire fixed assets worth of US$50,000 to be eligible to declare value-added tax using the credit method. The requirement was later dropped.
He suggested ministries shift their focus from pre-control to post-control, saying that pre-control often burdened start-ups with complex requirements.
Independent consulting companies, such as Economica Viet Nam and MCG Management Consulting, also recommended that in many cases it was best to leave it to natural selection in the marketplace to eliminate businesses.
Phan Duc Hieu, from the Central Institute for Economic Management, said there was a need to build standards on categorising types of businesses before regulations could be set.
Members of the task force agreed that businesses and requirements deemed illegal, unnecessary and inappropriate must be terminated while current regulatory requirements must be revised and simplified.
Hieu cited a regulation that dictated labour-hire agencies must have their head offices at a permanent address for more than three years, noting that this was highly restrictive and unnecessary.
Another example was a requirement to have a certain number of vehicles to start a transport company. The requirement effectively forced individual entrepreneurs, who are often short of capital or simply want to remain cautious, to spend a large amount of money unnecessarily.
Last month, Prime Minister Nguyen Tan Dung called for the reform of administrative procedures for individuals and businesses saying improvements to the business environment contributed substantially to Viet Nam's rapid and sustainable development.
Phu Quoc port to be built under P3 model
The southern coastal province of Kien Giang plans to build a tourist port to accommodate vessels of up to 6,000 passengers in its Phu Quoc Island District under the Public – Private Partnership (PPP) model.
The province's leaders and representatives from Ministry of Transport decided in a recent meeting that the VND1.2 trillion (US$56.4 million))port would be built in Duong Dong town on the island, according to the Viet Nam Economic Times.
The province has asked Vingroup to invest in the project. No State funds will be used.
Nguyen Thanh Son, secretary of Kien Giang Province's Party Committee, said the province could not rely on annual budget allocations from the Government and the investment in the Build-Operate-Transfer (BOT) method would not be effective because of the small amount of revenue collected from passenger boats.
Son said the province had worked with the corporation, and had suggested a consulting company to conduct research on how much the company and the local government should spend.
It is expected that the port would be able to accommodate the largest cruisers in the world.
The port would help develop the tourism industry on the island.
The tourist and container port would have an 800-metre L-shaped breakwater to make sure the port can receive cruisers year-round and a 400-metre pier and 1,200-metre approach bridge to the pier.
The project details will be submitted to the Ministry of Transport on October 20 and later to the Government for approval.
Phu Quoc Island is located near the Singapore – Thailand – Viet Nam – Northeast Asia tourism route, used by 19 marine transport companies.
It is expected that the number of tourists to Phu Quoc by sea will increase annually from 105,000 to 190,000 until 2020, and to 550,000 visitors by 2030.
VN rice exports to rise by 6%: FAO
The United Nations Food and Agriculture Organisation (FAO) has predicted that Viet Nam's rice exports would increase by six per cent year-on-year to 6.9 million tonnes in 2014.
The organisation attributed the increase to the country's rising paddy yield and the rising demand of Asian markets, including Indonesia, Malaysia, China and the Philippines.
FAO estimated Viet Nam's paddy yield this year to hit a record high of 44.5 million tonnes, equivalent to 27.8 million tonnes of rice that represent a year-on-year increase of 740,000 tonnes.
The country is in the summer-spring and autumn-winter harvest seasons, and FAO estimated paddy yields during these seasons would inch down against that of the same period last year, following the Government decision to use some rice-producing areas for the cultivation of other crops.
The Ministry of Agriculture and Rural Development (MARD) reported that Vietnamese rice exports in the past nine months reached 5.02 million tonnes worth US$2.3 billion.
In September alone, the nation exported 524,000 tonnes of rice worth $249 million.
Wholesale rice prices in the domestic market continuously increased for three consecutive months, including last month because of rising import demand, especially from China.
A tonne of rice with 25-per cent broken rice grain content was priced at $400, a 21-per cent increase against that of September last year.
China remained the largest market for Vietnamese rice, making up 33.24 per cent of market share, followed by the Philippines at 22.71 per cent, Malaysia at 6.1 per cent, Ghana at 5.37 per cent and Singapore at 3.26 per cent.
The United States Department of Agriculture predicted that Viet Nam's rice yield this year would reach 28 million tonnes, equivalent to 45 million tonnes of paddy, and that its exports would reach 6.7 million tonnes.
Feed producers exempted from registration tax
Prime Minister Nguyen Tan Dung has approved the Finance Ministry's proposal to remove the business registration tax to reduce difficulties of companies engaged in livestock feed and aquatic food production.
The ministry's proposal forms part of its draft of a revised Tax Law. Under the revised law, enterprises in livestock feed and aquatic food production will be exempted from the current 5 per cent tax rate.
Also, under the revised law, citizens may choose payment methods for personal income tax on stock transfers and real estate.
The Prime Minister ordered concerned ministries and agencies to co-operate in completing the revised law and submitting the draft to the National Assembly Standing Committee for review and approval by the end of this month.
The ministry also proposed increasing the special consumption tax for casinos from the current 30 per cent to 35 per cent.
The ministry said current personal income tax laws stipulated that a 10 per cent tax be imposed on winners of more than VND10 million in casinos and lotteries.
But it is difficult to tax such earnings, ministry officials admitted. They pointed out that some countries and territories such as the Philippines, Singapore and Malaysia, as well as Laos and Macau, refrained from collecting personal income tax from casino and lottery winners, with tax agencies directly supervising casino and lottery operations and imposing corporate income tax instead.
The ministry therefore proposed the removal of personal income tax on casino winners and the increase of the special consumption tax on casinos, in line with international norms.
Vietnam to welcome wave of investment from Japan
Ho Chi Minh City’s Development Joint Stock Bank (HDBank) and Japan’s Hyakugo Bank have launched the Japan Desk service targeting Japanese firms operating in Vietnam as an effort to welcome the wave of investment from the Northeast Asian nation.
At the advisory “Japan Desk”, in the HDBank Trading Centre in HCM City’s District 1, Japanese investors will be given necessary banking service priorities, such as account services, liquidity management, loan arrangement, project investment, import-export funding, e-banking, and financial and investment advice.
The launch of the “Japan Desk” at HDBank will help intensify support for Japanese firms investing and operating in Vietnam, and improve Vietnam’s investment climate, making it a more secure environment for Japanese enterprises, President of Hyakugo Bank Ltd Ueda Tsuyoshi said.
He said he believed that the newly introduced service would help Japanese businesses access the best financial and banking services from a reputable bank like HDBank, adding more and more Japanese investors would come to Vietnam in the near future.
Hyakugo Bank is specialised in providing financial services and has extensive experience in and understanding of Japanese enterprises’ culture, while HDBank is a strong and reputable bank with a national network. The cooperation between the two banks is therefore ideally suited to meet the demand of Japanese clients, he affirmed.
In the opening ceremony of the “Japan Desk”, Deputy Consulate General of Japan in Ho Chi Minh City Yakabe Yoshinori said in the Japanese government’s new growth strategy, the country will continue policies to boost overseas Japanese investment, affirming the cooperation between Hyakugo and HDBank is part of the growth strategy.
With efforts to improve the investment climate in recent years, Vietnam has become an attractive destination for foreign investors, especially from Japan.
At present, Japan is one of the biggest foreign investors in Vietnam. Over 2,200 Japanese enterprises have invested 35 billion USD in numerous projects. The amount of investments has been growing, with Japan companies’ investment moving from China and Thailand to the ASEAN region, including Vietnam.
HDBank Chairwoman Le Thi Bang Tam stated that the wave of Japanese investments in Vietnam provides domestic organisations the opportunity to improve the quality of goods and services in an effort to meet the demands of Japanese partners.
In early 2014, HDBank signed a bilateral cooperation agreement with Hyakugo to catch the chance.
HDBank holds assets of close to 90 trillion VND (4.3 billion USD) and a chartered capital of 8.1 trillion VND (380 million USD). It is amongst the top ten banks in Vietnam, with an expansive network, high rates of annual growth, an organisational structure in line with international standards and a carefully established presence in the global financial market.
HDBank set up ties with over 300 banks in more than 150 countries and territories, and is preparing to open it first branch in Myanmar.
In recent years, HDBank restructured its operations by merging with DaiABank, acquiring the Societe General Viet France (SGVF), and rebranding the corporation as HDFinance.
Hyakugo Bank enjoys a sound reputation and long-standing tradition in Japan, with total assets of approximately 47 billion USD, and is expanding into the global market.
Binh Duong’s electronic export tops 1.7 bln USD
The southern province of Binh Duong earned more than 1.7 billion USD from exporting electronic products in the first nine months of this year, representing an average increase of 20 percent compared to the previous years.
According to Director of the provincial Department of Industry and Trade Vo Van Cu, local businesses produced 1.2 million electronic units during the period. Many of the products posted high export growths such as phones and spare parts (41 percent), and computers and others (ranging from 4 to 10 percent).
Electronic products have surpassed garments and woodwork to lead Binh Duong’s key export items, he said, adding that the province has also encouraged investment in technology projects, especially those producing computers, phones and spare parts.
Binh Duong’s three-quarter export turnover surpassed 11 billion USD, up 14.5 percent year-on-year. The province also enjoyed a trade surplus of over 2 billion USD, with 1.8 billion USD from foreign direct investment (FDI) enterprises.
The province targets 17 billion USD from exports this year, up 16.5 percent against last year. Its export turnover now accounts for 12 percent of the country’s total figure.-
Domestic coal demand to rise in 4th quarter
Domestic demand for coal is expected to grow rapidly during the last quarter of 2014, the Vietnam National Coal and Mineral Industries Group (Vinacomin) forecast during a conference on October 7 in the northern province of Quang Ninh.
The conference heard that in the first three quarters, Vinacomin’s members maintained produced 25.6 million tonnes of coal end products, fulfilling 75 percent of the yearly target.
During the same period, the group sold a total of 26.2 million tonnes of coal, of which 4.8 million tonnes were exported.
Since the domestic market is seeing signs of recovery, especially during the dry season when there will be a higher demand for coal to power thermoelectricity plants, new cement projects and other coal consuming facilities.
This year, Vinacomin plans to sell 35.5 million tonnes of coal, including 6.5 million tonnes for exports.
To achieve its goal, the group has implemented numerous policies and addressed all arising challenges promptly, while accelerating production to meet the market demand during the dry season.-
National grid helps boost development in Phu Quoc
The 110kV Ha Tien – Phu Quoc submarine power cable system has been in operation for more than half a year now, marking the strong development and change in the socio-economic outlook of the island district, the Vietnam Economic News reported.
Thanks to the national grid, instead of buying power from diesel generators at high prices, now daily activities of Phu Quoc islanders have been easier and investment projects in the island have also progressed more quickly.
The owner of Khai Hoan fish-sauce making facility Ho Kim Lien, who has lived on the island for a long time, said although power prices only account seven percent of her production structure, the trading activities have become more active since the island was connected to the national grid and she is considering to invest in hotel business there.
Power prices of Kim Vang Hotel (30/4 Road, Duong Dong Town) have also reduced from 13 to 7 million VND a month. The manager of the hotel said she feels relieved now thanks to the connection to the national grid.
The demand for power in other places like the Phu Quoc General Hospital – the only hospital on the island that is in charge of examining and treating both local people and tourists is very high. Director of the Phu Quoc General Hospital said “Previously, we could not even run diesel-fueled power generators as the power consumption was too high and it cost 200 million VND for power prices every month. Now the prices have dropped more than 50 percent.”
The traffic infrastructure on Phu Quoc has received comprehensive investment, including the North-South axis, bypasses, an international airport and a passenger port. Therefore, connection to the national grid is expected to make a push to turn the island into a special economic and administrative zone and a centre for trade exchanges of the country, the region and the world.
Statistics of the Phu Quoc district People's Committee showed that, in 2013 it welcomed more than 500,000 tourists, of those 35 percent were foreigners and the number this year is expected at 600,000 as a direct airline route from Russia to Phu Quoc was opened and another route from Incheon (the Republic of Korea) to Phu Quoc is about to be launched.
Many other projects are under prompt implementation on the island such as the Vingroup’s hotel complex project in Bai Dai; the 120 room Sailing project in Cua Lap while some local hotels will expand and diversify their services. So far, nearly 200 projects have been invested in Phu Quoc and mainly in tourism sector.
Deputy Chairman of Phu Quoc district People's Committee Huynh Quang Hung said connection to the national grid helped reduce 50-70 percent of electricity costs than previous time, hotel charges and other services also decreased from 5-20 percent.
In the past eight years, Phu Quoc’s economy has seen a strong development towards tourism and services, with average growth of 26 percent a year and per capita income of 82 million VND a year.
Residential sales increase in HCM City
Ho Chi Minh City has seen an uptrend in residential sales in the first nine months of this year, the Vietnam Investment Review (VIR) reported.
As sales improve and buyers’ confidence increases, developers have become more and more confident launching their products, the newspaper cited CBRE’s latest report as saying.
Launches continued to enjoy high sales results in the third quarter.
CBRE noted that with 3,104 units launched, supply in the third quarter went up 95.8 percent compared to the same period last year.
Thanks to improving market conditions, prices on both the primary and secondary markets in the third quarter started to show tentative improvement against the second.
Primary prices increased from 1 to 4 percent compared to the last quarter and 1.2 to 5.4 percent compared to the same period last year across all segments.
The most noticeable improvement was in District 2, thanks to infrastructure improvements such as Metroline No.1.
On another note, the increase in tenants looking for buy-to-let options bolstered high-end apartment prices.
However, in general the high-end segment showed a more positive picture than the other segments as resellers easily found tenants confident in capital gains.
According to Duong Thuy Dung, head of CBRE’s Research and Consulting Department, sales volumes continued to rise with deposits put down on 50-70 percent of units. Preliminary figures showed that sales volume increased by 8.6 percent on-quarter and 94.8 percent on-year to approximately 3,300 units sold.
While the affordable segment continued to rise, the number of units sold in the high-end segment as a whole was relatively modest.
Buyers at high-end developments comprised a high proportion of either buy-to-let or capital gain investors that are often superstitious about selling or buying houses during “Ghost Month”. In contrast, end-users, and especially those on a limited budget, buy a house at whatever point they are able to access financing.
“It has been a long seven year slog with disappointments and broken promises on house delivery. However, recent positive sales results and busy launch events suggest that we have may arrived at a point where the worst of the market is behind us,” Dung was quoted as saying.-
Vietnam needs 8 bln USD for PPP infrastructure projects
Vietnam needs approximately 17 billion USD for infrastructure development by 2020, with half coming from the private sector.
Stanley Boots, an international lawyer specialised in infrastructure at the Ministry of Planning and Investment (MPI), presented these figures in a dialogue on public-private partnership (PPP) between MPI Minister Bui Quang Vinh and the Lord Mayor of the City of London, Alderman Fiona Woolf, in Hanoi on October 7.
Woolf assured Vinh that the City of London would help countries throughout the world, including Vietnam, meet infrastructure challenges. Woolf added that the city was currently working on a more sustainable model of financing with its global partners.
Since 2008, the ministry has sought ways to address the growing financial needs of infrastructure projects in Vietnam. In 2009, several public private partnership projects were launched.
Last year, the ministry updated Decision 71 to include the PPP programme, and developed PPP provisions in a draft decree recently submitted to the Prime Minister, Vinh told the Lord Mayor.
The document introduces a more comprehensive legal framework to facilitate the joint investment model, including a set of regulations to ensure international standards are met.
In the near future, up to 298 projects worth more than 982 trillion VND (46.7 billion USD) will require support from the non-State sector, both domestic and foreign, Director of the Bidding Management Department Le Van Tang said, adding that 55 projects were initiated by ministries and the rest by localities.
In the past, Vietnam has implemented infrastructure projects using the build-operate-transfer (BOT), build-transfer-operate (BTO) and build-transfer (BT) models. However, these models have their weaknesses, especially concerning the allocation of State resources.-
Tax law amendments to assist businesses approved
Prime Minister Nguyen Tan Dung has approved the draft tax law amendments proposed by the Ministry of Finance as part of the government’s efforts to help local businesses overcome the current economic difficulties.
Accordingly, the list of goods and services exempt from VAT is to be expanded to include feed for animals, which is currently subject to the 5-percent tax rate, in order to support local breeding and aquaculture businesses.
Business license taxes are to be revoked. And, people’s right to choose between two tax payment methods for personal income from stock trading and real estate deals is to become part of the law.
The ministry was requested to urgently submit a proposal for the building of the tax law amendment bill to the Standing Committee of the National Assembly and present it at the 8 th National Assembly Meeting in October 2014.
Capital injection needed to cut loan interest rates
The State Bank of Vietnam needs to inject capital into the banking system to help credit institutions cut lending costs without causing a systematic imbalance in interest rates.
The National Financial Supervisory Commission (NFSC) made this proposal in its September economic report, which infonet.vn cited.
SBV figures in September showed that lending interest rates for general production and business remained stable at nine to 10 percent for short-term loans and 10.5 to 12 percent for medium- to long-term loans. Meanwhile, deposit interest rates fell by 0.1 to 0.3 percentage points to five to six percent for short-term loans, six to 7.2 percent for loans of less than 12 months and 7.3 to 7.8 percent for longer-term loans.
The NFSC backed up its comments with reports from 15 credit institutions and said the average profit margin between deposit and lending interest rates in the first half of this year decreased by 50 percent year-on-year.
"The growing imbalance of interest erodes the financial capacity of credit institutions and the risk provisioning toward bad debts as well," the report said.
The commission also suggested the volume of low-interest capital that the central bank should inject.
To date, the banking system handled more than 249 trillion VND (11.6 billion USD) in non-performing loans (NPLs), compared with 464 trillion VND (21.7 billion USD) in bad debt in September 2011. After three years, an estimated 53.6 percent of NPLs were resolved.
The Vietnam Asset Management Company (VAMC) is expected to purchase 70 trillion VND (3.2 billion USD) of NPLs by the end of this year, plus 78 trillion VND (3.7 billion USD) in provisional funds from commercial banks and credit institutions.
SBV Governor Nguyen Van Binh told the National Assembly Standing Committee meeting last week that the central bank would take drastic measures to handle bad debts.
However, in its latest report, the NFSC said the VMAC was in need of a State-sourced financial stream to become more competent in purchasing bad debts. Otherwise, the VMAC will need more time to lengthen tenures of special notes to help credit institutions accumulate long-term capital sources.
Vietnam to host APK in November
As one of the most important business partners of Germany in the region, Vietnam will host the 14th Asia-Pacific Conference of German Business (APK) in November 20 to 22, 2014 for the very first time.
In recent years, Vietnam has attracted an increasing number of German investors. This event has been organized biannually in Asia since 1986 and has evolved into one of the largest networking events in the region attracting both political and business leaders. Previous APK’s were hosted in India, Singapore, Korea, Thailand, Japan, Malaysia, China, Australia and Indonesia.
The conference is aimed to link Vietnamese enterprises with German business representatives, exchange information and experience on the opportunities of the Asia-Pacific region and create partnerships for the future.
The economic relationship between Germany and Vietnam experienced rapid growth shown by the total bilateral trade value of EUR 7.42 billion in 2013. German exports to Vietnam increased in the first half of 2014 by 4.3 per cent to reach EUR 935,000. But German imports from Vietnam fell during that period year over year by 7.1 per cent to EUR 2.77 billion.
With more than 700 estimated participants, the Asia-Pacific Conference of German Business is a platform for the exchange of ideas among companies and decision makers in Asia and a great opportunity to strengthen the business relationship between Germany and Vietnam. It is a chance for both Vietnamese and German companies to explore investment opportunities, discuss cooperation potentials and exchange business experience among each others.
Co-organiser and local host of the APK are the Delegation of German Industry and Commerce in Vietnam (AHK).
Production recovers, exports show good results
Industrial production increased 6.7 percent in the first nine months this year, up from 4.8 percent and 5.3 percent in the same period in the last two years, reported the Ministry of Industry and Trade.
In the nine months, exports reached US$109.6 billion accounting for 75.4 percent of the year’s plan. This year, it is expected to increase 12 percent against last year to hit US$148 billion.
Imports are forecast to hit US$146.5 billion, up 11 percent over last year, creating a trade surplus of US$1.5 billion.
WB forecasts VN’s growth of 5.4 percent in 2014
Vietnam’s gross domestic product (GDP) has picked up 5.4 percent in 2014, said World Bank (WB) in its East Asia Economic Update launched on October 6
The country’s economy expands at a much lower than the target of 5.8 percent set by the Government. According to Sandeep Mahajan, WB lead economist for Vietnam, the number will be raised if the Southeast Asian country’s economy can be improved in last three months of the year.
According to WB’s report, Vietnam’s economy posted a relatively macro-economic stability and maintained export and balance of payment.
WB experts also pointed out a paradox in the country’s economy that while foreign direct investment (FDI) sector is stable and a factor to push up the nation’s economy growth, a slowdown in domestic demand restrains the development.
Retail markets showed that purchasing power decreased by 5.7 percent in six months due to a decline in consumers’ confidence.
The ratio of private investments were only 10.7 percent of GDP in the first quarter of the year, lower than 13.9 percent in the same period in 2010. In addition, more and more local privately-invested enterprises shut down or stopped operations.
In first seven months of the year, around 37,600 local enterprises have gone out of businesses, an increase of 10 percent compared to same period last year.
Accordingly, FDI sector continues pushing up the country’s economy. In fact, FDI sector contributed 20 percent of the nation’s GDP, 25 percent of investment and offered millions of jobs for local laborers.
WB experts advised that Vietnam’s government should focus more on re-structuring state-owned enterprises and banks.
Metrople to spend VND 1billion for special ceremonies
Metropole Wedding & Convention Center has just organized the 1st ceremony of thanks on 600 clients, who had ever held the wedding in Metropole from February to August, 2014.
The conference was attended from representatives of Trade & Promotion Department under Ministry of Industry & Trade and journalists in HCMC.
Three couples won lucky awards. Of these, the 1st prize worth VND 200million went to couple Nguyen Dong Nhat & Hoang Huynh Nhu Ngoc (District 3); the 2nd prize, VND 100million, belonged Pham Lam Phuc (District 10) and Vo Cong Thanh and Hoang Thi Song Hieu are bagged the third one worth VND 50million each.
Mr. Huynh Van Van, director of Metrople said the 2nd & 3rd ceremonies will continue taking place from now to the year-end. Metrople will spend around VND 1billion for the event.
Vung Ang thermal plant BOT deal talks heat up
The Vung Ang 2 thermal power project is in the final stage of build-operate-transfer negotiations with the intention of starting construction early next year.
Vung Ang 2 Thermal Power Joint Stock Company (VAPCO), the investor in the 1,200 megawatt Vung Ang 2 project recently reported to the Ha Tinh provincial authorities that the investor had submitted build-operate-transfer (BOT) contracts to the Ministry of Industry and Trade. It is expected to start construction in March 2015.
It will become the sixth foreign-invested BOT power project in Vietnam over the past decade, following Phu My 2, Phu My 3, Mong Duong 2 plant, Hai Duong power plant and Vinh Tan 3 plant.
The 1,200 megawatt Vung Ang 2 project is a part of the Vung Ang thermal power centre in the central province of Ha Tinh, where the state-run PetroVietnam is building the Vung Ang 11,200 megawatt power plant.
The project is being built by VAPCO, a joint venture between the locally-owned Refrigeration Electrical Engineering Corporation (REE) and OneEnergy Asia Limited, which is a 50/50 partnership between Hong Kong’s CLP Holdings and Japan’s Mitsubishi Group. VAPCO was established in 2007, with BOT contract negotiations starting in 2009. Conversion of foreign currency has proven to be a tricky obstacle in BOT contract negotiations.
Under the prime ministerial Document 1604/TTg-KTN, the Vietnamese government guarantees conversion into US dollar for 30 per cent of the project revenue in VND. However, investors in BOT power projects with ongoing negotiations such as Vung Ang 2 and Van Phong requested up to 100 per cent foreign currency exchange guarantee.
Since Vietnam opened its doors to foreign investors, the Vietnamese government has licensed only five BOT power projects. However, increasing domestic electricity demand has attracted foreign investors to the country’s power sector.
Although Vietnam’s economy is still in a downturn, the electricity demand in the first half of this year rose 11 per cent year on year. The MoIT estimated that the demand would continue to increase from 11 to 13 per cent next year.
The Grand Ho Tram Strip has new president
The Grand Ho Tram Strip has announced the appointment of Shaun McCamley as its new president.
McCamley, an Australian national, has extensive Asia gaming experience in both marketing and operations. A gaming industry veteran, McCamley started his casino career as a croupier in London’s Curzon House Club Mayfair, and worked his way into positions of increasing responsibility throughout his 35-year career in the gaming industry, establishing himself as one of most senior industry executives in Asia Pacific along the way.
Before moving to Vietnam earlier this month, he had served as managing partner of Euro Pacific Asia Consulting, one of the most established and respected specialist gaming consulting firms in Macau.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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