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BUSINESS IN BRIEF 11/11

 Firms with bad debt can still seek new loans; Smartphone market share expands; Assoc. says cashew business needs not be conditional now; HCM City to host International Cycle Show 2013; Tra fish industry caught in a trap
Beverage cans plant opens in Danang

Crown Danang Beverage Packaging Co., a member of the U.S.-based Crown Holding Inc., on Wednesday opened a beverage can plant worth over US$40 million in Danang City.

Constructed on an area of 3.6 hectares in Lien Chieu Industrial Park, the plant can produce over 700 million cans annually.

Crown Danang Beverage Packaging Co. is supplier of aluminum cans for VBL Danang Co., Saigon Beer-Alcohol-Beverage Corp., the plant of Suntory Pepsico in Quang Nam Province, the plant of Coca-Cola in Danang, the Dung Quat beer plant in Quang Ngai Province and other beer and beverage companies in the central region.

According to Lien Chieu Industrial Park’s investor, the Crown beverage can plant is the biggest foreign direct investment (FDI) project at the industrial park. After this huge project, more potential FDI projects are expected to come to the industrial park in the coming time.

Firms with bad debt can still seek new loans

Those businesses in HCMC struggling with bad debt can still apply for new bank loans if their production and business plans are convincing enough, said Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch.

Commercial banks have got a directive to this effect from the central bank and the city has been translating this into reality since October 14. Despite bad debt, banks will consider the feasibility of an applicant’s project and lend to it if proven workable.

The goal is to help enterprises ride out the difficulties they are facing and pay old loans while banks can achieve credit growth targets in the final months of the year. The plan will run from now to the end of this year, Minh said.

However, banks would be exposed to more risks if their clients failed to pay both old and new loans. However, this is an option needed for enterprises to survive the current tough market conditions.

Many enterprises in the city have demands for loans but have found it tough to gain access to credits at banks due to their overdue debts. As a result, banks in the city are projected to achieve credit growth of as low as 5.5% in the Jan-Oct period compared to late 2012, lower than the nation’s figure.

Local government also has plans to take other solutions such as cutting the interest on the loans that are falling due to support enterprises and allowing debtors to pay the principle first and the interest later.

Pham Linh, deputy general director of Orient Commercial Bank (OCB), said the bank has steadily disbursed loans to enterprises since early this year. As of the end of October, credit growth in the corporate customers segment had reached 23% over late last year. The figure is expected at 30% late this year.

Many enterprises have asked for loans to finance their imports in the lead up to the upcoming Lunar New Year buying spree. However, they have not placed huge orders due to financial woes, so financing demand would not rise suddenly from now to the end of this year.

OCB is now offering enterprises short-term lending rates in dong from 9.5-10% per annum and 12-12.5% per annum for long-term loans. For dollar credits, the bank charges 3.8% a year and 6-6.5% on long-term loans.

Most enterprises now prefer short-term loans. Linh said few enterprises want long-term credits to make investments or expand business operations.

Le Thanh Trung, deputy general director of HDBank, said his bank had reported credit growth of 10% this year. However, capital demand from enterprises will increase strongly from now to the end of this year.

Smartphone market share expands

Figures from mobile-phone producers and market research companies show that smartphones are selling well in Vietnam with the market share expanding strongly.

According to GfK, smart-phones accounted for 40% of volume and 80% of revenue of the mobile phone market last year. This year, local consumers are expected to buy as many as 17 million mobile phones, including seven million smartphones.

Notably, the sale volume of smartphones in Vietnam this June reached 484,000 units, more than doubling the year-ago volume of nearly 193,000 units.

Pham Tien Thinh, general director of New Horizon Internet Joint Stock Company, developer of the search engine Wada, told the Daily that technology transition is taking place quickly from desktops to laptops and now smartphones.

When a person wants to search for information on the Internet, he thinks about a smart-phone immediately due to flexible use in any circumstance and at any time. Therefore, the smartphone segment will see strongest growth in the future, Thinh said.

Ngo Nguyen Kha, managing director of Vietnamese smartphone brand Mobiistar, said that the smartphone segment has taken the lead for sale volume and seen tough competition among producers.

“The strong growth of the smartphone segment will bring about business opportunities to distributors and retailers. Therefore, the market has seen fierce competition among many producers, including Vietnamese enterprises,” Kha said.

To produce a highly-competitive smartphone, the key factors are outstanding design, better quality and cheaper prices. In addition, content services must be diversified and meet localized demands, Kha added.

According retailers, smartphones priced from VND1.5-5 million each have drawn stronger attention from consumers. These products have middle configuration and basic functions such as web browser, social network, camera and video recording.

In the coming time, smartphone prices are expected to drop further as producers will launch new products and promotion programs at the end of the year.

This month, many enterprises have introduced new products such as LG with LG G2, Sony with XperiaC and Nokia with Lumia 1020. MobiiStar also cooperated with Taiwan’s chip producer MediaTek to launch Touch Lai 512 smartphone onto the market late last week.

China’s Haier Company has also joined the local market, cooperating with Saigon Postel to launch low-priced smartphones in the country since Monday. Oppo Company also introduced new products to consumers last night.

Bulgarian trade, economic office opens in city

Bulgarian President Rosen Plevneliev on Thursday attended the opening ceremony of the Bulgarian Office of Trade and Economy Service in HCMC before wrapping up his visit to Vietnam.

Based on level 14 of Vincom Center B (55A Le Thanh Ton Street, District 1), the office is expected to boost trade and investment between the countries.

According to President Plevneliev, Bulgarian enterprises want to enhance cooperation with Vietnamese partners, especially in the sectors where Bulgaria is strong such as energy, mining, water treatment, farm produce and poultry processing, pharmaceutical, tobacco and telecom.

“The opening of the Bulgarian Office of Trade and Economy Service in HCMC expresses Bulgaria’s effort to promote trade and investment in Vietnam,” he said at the opening ceremony.

Two-way trade between the nations was recorded at only US$43 million in July. Vietnam mainly exports coal, coffee, seafood, handicraft products, rubber, black pepper, apparels and footwear while its main importing products are machines, equipment, chemicals, pharmaceuticals, wine and shipbuilding equipment.

With total registered capital of less than US$50 million, Bulgaria ranks 54th among 91 nations investing in Vietnam.

Assoc. says cashew business needs not be conditional now

The Vietnam Cashew Association (Vinacas) has changed its stance, saying the cashew industry should not be made a conditional business now though it is the association that made the proposal to restrict participation last year.

Dang Hoang Giang, general secretary of Vinacas, said his association had wanted to treat the cashew industry as a conditional sector given matters relating to food safety and hygiene. However, he said, the Ministry of Agriculture and Rural Development over the past time has issued several circulars on food safety as well as technical processes for cashew processors and exporters.

Besides, as several countries have imposed stricter criteria on cashew nut imports from Vietnam, Vinacas deems it unnecessary to turn the industry into a conditional business now to reduce the number of substandard companies like before.

There are around 330 companies directly exporting cashew nuts at home, rising nearly 40 firms compared to the end of 2011, Vinacas reports.

Increasing or reducing the number of cashew exporters is subject to the market demand, meaning those enterprises wanting to continue cashew exports need to meet food safety and hygiene requirements set by foreign importers, Giang stated.

Vinacas had proposed the agriculture ministry turn the cashew industry into a conditional sector as soon as possible on the ground that many processors and exporters had failed to comply with technical criteria dragging down quality. These enterprises undercut other industry peers by selling substandard products at lower prices.

Following such a proposal, Vinacas has been criticized for trying to eliminate small enterprises with the condition that only entities having large production and processing scale are given licenses for exports. The policy if endorsed would only benefit big businesses, failing to ensure fairness for all industry players, local companies complained.

Cashew exports reached 212,000 tons in January-October with a total value of US$1.34 billion, up 15.5% in volume and 8.5% in value year-on-year, the agriculture ministry reports. The nine-month export price of the farm produce averaged out at nearly US$6,347 a ton, dipping roughly US$423 a ton or 6.24% over the same period in 2012, according to the ministry.

Nuclear power projects being propped up, says ministry

Two nuclear power projects and some other large-scale hydropower ones are being propped up to ensure sufficient power supply for the country in the years to come, said the Ministry of Industry and Trade.

The ministry, on behalf of the Government, delivered a report at the ongoing National Assembly sitting on capital arrangements for the projects, and stressed that measures are being taken to accelerate preparations and progress of the projects.

The Ninh Thuan 1 Nuclear Power project in the south-central province of the same name has been financially secured with the trade finance tool from Russia in line with an inter-governmental agreement signed in November 2011.

The project, with total investment of VND200 trillion, or nearly US$10 billion, is now being fleshed out with a primary survey having been finished to choose a site for the plant. The second survey is about to be conducted soon.

As per the plan, dossiers on the plant site as well as the project’s feasibility study will be finished this December, so that the Russian side can start construction.

The Ninh Thuan 2 Nuclear Power project, meanwhile, also has had its dossiers on the project’s location completed. Japan Atomic Power Company as the consultant charged with choosing the project site will submit the dossiers in the fourth quarter, according to the ministry.

However, financial sources for the projects have not been secured, as the Ministry of Finance is still working with Japan on credits for the mammoth project.

Regarding large-scale hydropower projects, the construction progress is being pushed up.

Lai Chau Hydropower Project endorsed by the National Assembly in late 2009 has finished the foundation and construction is being done to ensure the first turbine will be commissioned in 2016.

Financial arrangements for the project have also been ready, as the project owner Electricity of Vietnam Group (EVN) has signed contracts with local banks for credits totaling VND14.5 trillion for the project. EVN is also in talks with foreign lenders now to borrow more funds for this project.

Song Bung 4 Hydropower Project, whose construction commenced in mid-2010, has seen some components unfinished as scheduled despite a financing agreement had been clinched with the Asian Development Bank since 2008.  As of July this year, the disbursement for the project had reached 63% of the total cost of nearly VND5 trillion, with half supplied by ADB.

Another major project is the Thuong Kon Tum Hydropower should be commissioned in 2015, but financial sources for the project have not been ready. Apart from the project owner’s equities of VND1.7 trillion, a credit contract is being negotiated with an Austrian bank. The project owner will borrow some VND2.9 trillion from banks and issue bonds worth VND500 billion.

Co.opMart opens new store in Kien Giang Province

Saigon Co.op put into operation a new supermarket in the Mekong Delta province of Kien Giang this week.

Saigon Co.op’s new supermarket is located in a commercial center in Vinh Thanh Van Ward in Rach Gia Town in Kien Giang Province. This is the second Co.opMart store to open in Kien Giang Province, bringing the total number of Co.opMart outlets to 64 in the country.

Built at a cost of around VND90 billion (US$4,2 million) and covering nearly 5,500 square meters, Co.opMart Kien Giang 2 features more than 30,000 essential products including foodstuffs, cosmetics, fashion items, toys, households utensils, household electrical appliances and souvenirs.

Along with other Co.opMart chains, the new supermarket will sell subsidized commodities as per requirement of local people and nearby districts.

In addition, it will also offer convenient services including free gift-wrapping services, telephone orders, and free home delivery for areas within 5km radius to customers who buy more than VND200,000 ($9.48) worth of goods.

On this occasion, the supermarket is offering many promotional programs to customers.

HCM City to host International Cycle Show 2013

The International Cycle Show 2013 will take place in the Vietnam Expo to be held at the Saigon Exhibition and Convention Center in District 7 in Ho Chi Minh City from December 4-7, aimed to introduce new two-wheel vehicle models to consumers made by well-known global brands.

Organized by Vinexad Company, this year the exhibition has attracted more than 300 enterprises from 15 countries and territories with their best selling global products.

The International Cycle Show will display bicycles, electric bicycles, bike accessories and kids riding toys.

In recent years, although Vietnam has been affected by the economic crisis that has also had global consequences--the country has been very successful in attracting Foreign Direct Investments. From 2008 until now, Vietnam has attracted FDI of upto US$10-11 billion.

According to the Singapore Business Federation and AmCham, foreign investors have always appreciated Vietnam as an attractive market for investments in Asia.

Ministry, Big C Supermarket to join hands for internship program

The Ministry of Education and Training and Big C Supermarket Chain have signed a Memorandum of Understanding to conduct a pilot internship program for students.

As per the MOU, vocational students from the ministry’s pilot schools will be offered internships at Big C outlets nationwide. The ministry’s pilot vocational program includes training programs in the warehouse and management of the supermarket.

Big C will receive students from the pilot schools to work in training programs in accordance with the supermarket’s demand and requirements and create favorable conditions in which vocational school teachers and managers of Big C can exchange training expertise and receive hands-on practice of managing a warehouse and the supermarket chain.

EU, US increase orders of handicrafts

Domestic handicraft exporters are benefiting from a new trend in which customers from the EU and the US are moving to Viet Nam, according to the Handicraft and Wood Industry Association of HCM City (HAWA).

Hawa said that the price of Vietnamese handicraft products was much cheaper compared with other countries, including China.

This has encouraged customers from the EU and the US to order products from Viet Nam.

Nguyen Ba Linh, director of the Tu Bon Handicraft Company in the southern province of Binh Duong, said many export orders had been received since August.

Each month, his company made 1,000 products to meet demand.

Luong Thi Thuy, director of the Hiep Luc Co-operative in southern Dong Nai Province, said they had received orders up to May of next year. Most of the customers were from the EU and the US.

Thuy said thanks to the increasing orders, her co-operative's revenue increased by 25 per cent year-on-year.

The Phuoc Du Long Company in Binh Duong Province had a fruitful year as their exports accounted for 90 per cent of its total yield.

Experts warned that problems existed in the domestic handicraft industry.

Dang Quoc Hung, deputy chairman of Hawa, said the production ability of Vietnamese handicraft producers was not stable.

Due to small-scale production, many companies could not meet demand and failed to hand over products in time, he explained.

Ton Gia Hoa, deputy chairman of the Viet Nam Handicraft Association, said Vietnamese handicraft producers had not invested much in technology, production and design.

Many companies had faced losses or had to reduce their production activities.

The increasing cost of raw materials was also cited as another difficulty.

In the first nine months of this year, the handicraft industry earned an export revenue of US$1.1 billion, rising by 15 per cent year-on-year.

To reach the goal of $1.5 billion in export value this year, companies must invest more in technology, expert said.

Viet Nam's imports from its northern neighbour of China would surpass US$30 billion by the year-end with a turnover of US$3 billion each month, according to the Ministry of Industry and Trade.

The General Department of Customs revealed that imports from the market had increased significantly in recent years, from $16.44 billion in 2009 to $24.9 billion in 2011 and $28.8 billion in 2012.

They topped $26.74 billion in the first nine months of this year, with five groups of items reaching an import value of over $1 billion.

They included machinery and equipment, mobile phones and components, computers, electronics, clothing, steel and iron.

Increased imports have led to a rising trade deficit, from $11.54 billion in 2009 to $13.46 billion in 2011, $16.39 billion in 2012 and $17.24 billion in the first nine months of this year, despite modest export growth of 3 per cent.

Economists blamed the country's huge trade deficit with China mainly on poor domestic support industries that had forced many companies to import goods. Among the key imports were machinery and equipment, fertiliser, animal feed, chemicals and plastic.

To deal with the deficit, experts suggested that measures be taken to boost exports with a focus on hi-value goods such as software, electronics and components, while facilitating the development of domestic support industries.

Diversifying markets, particularly those with potential such as Africa and the Middle East, would also reduce the country's dependence on China, they said.

Tra fish industry caught in a trap

The Viet Nam Association of Seafood Exporters and Producers (VASEP) proposed that the state establish a production quota for tra fish in order to avoid an oversupply.

The country's seafood exports reached $1.8 billion by the end of the third quarter, an increase of 12.5 per cent over the same period last year, according to VASEP. However, tra fish output in the first nine months of this year declined 11 per cent to 723,000 tonnes, according to the Ministry of Agriculture and Rural Development (MARD). The shortage is expected to last beyond the end of this year, forcing almost all tra fish export processing factories to temporarily halt production, said Duong Ngoc Minh, VASEP deputy chairman.

The proposal was one of several plans that the association submitted to the Prime Minister for restructuring production and consumption of tra fish to boost sustainable development.

VASEP suggested that the MARD establish an annual quota for each province producing tra fish and ensure that it was maintained.

The specific quantity would be determined by the MARD, the VASEP and the Viet Nam Tra Fish Association as well as provincial people's committees and provincial seafood associations based on forecasts about exports and domestic consumption from the VASEP and the Ministry of Industry and Trade.

Then provincial people's committees and seafood associations would establish quotas for individual farms. They would also control the production process and quality of raw materials.

The VASEP also proposed a pilot mechanism for exporting Vietnamese tra fish products to the EU. To limit unfair competitiveness, the Zeebrgge Port in Belgium would distribute them to 28 EU markets. The VASEP would take care of transport, logistics, auctions on electronic trading floor, distribution and payment.

Development policies help to boost Ha Noi real estate sector

The real estate market in the capital city is showing a positive change, especially in the high-end apartment segment, said Tran Quoc Khanh, a property expert of G5 property trading floor which includes the Viet Nam Real Estate Association and four real estate trading floors in Ha Noi.

Khanh said in the last few months, the high-end apartment segment has seen a positive bounce back. For instance, the Discovery Complex project seeing 42 contracts traded successfully in just over three weeks.

A representative of Tan Hoang Minh Real Estate Trading Floor said only two weeks after its D'Le Pont D'or housing project officially started, at least 60 customers registered to buy apartments.

Dang Xuan Duong, who has just purchased a high-class apartment at Hyundai Hillstate in Ha Dong District for VND 25 million per sq.m, said the project investor has offered a flexible policy for buyers. Specifically, buyers can pay in advance 30 per cent of the total price and receive an apartment. The remaining finance would be paid in the following one year with no interest rate.

Apart from flexible policies offered by investors, design, construction quality and reasonable prices were important factors for buyers in making their final decision.

Nguyen Thu Huong a customer of Watermark project in Tay Ho District, Ha Noi, said the West Lake area is receiving many leases from foreigners who live and work in Viet Nam. So, She wants to use her idle money to buy a high-end apartment to lease.

Currently, the price of apartments fell more in comparison with a few years ago. According to Huong, the Watermark project is well situated next to the West Lake area, and apartments there have fetched VND 46 million per sq.m; and apartments at the D'Le Pont D'or project in Hoang Cau Street in Dong Da District, Hanoi, have sold at prices between VND30 million and 35 million per sq.m; and the Discovery Project Complex in Cau Giay District, sales fully furnished apartments for VND 27 million per sq.m.

According to Le Kim Khanh, a broker from Infoland real estate trading floor, the property market will see positive development as the year ends. Therefore, many property developers have started offering their promotion programmes to attract buyers.

For many projects such as Royal City, Times City, Mandarin Garden, Star City in Ha Noi ,investors are accelerating the construction process to handover apartments to customers on time.

Test drive delivers customer satisfaction

Offering a test drive to people visiting a dealership to buy a new vehicle significantly increases customer satisfaction with the sales process, according to results of a Viet Nam Sales Satisfaction Index (SSI) study released last week.

The J.D. Power Asia Pacific 2013 Study identifies and examines seven factors that contribute to overall satisfaction with the purchase experience.

In order of importance, they are: delivery process, delivery timing, sales initiation (including test driving), paperwork, salesperson, dealer facility, and the deal itself (price discounts, warranty etc.).

The study reports SSI performance as an index score based on a 1,000-point scale, with a higher overall score indicating higher satisfaction with the new-vehicle sales and delivery process. Overall sales satisfaction averages 850 this year, a four-point increase from last year, the study found.

Among the six brands covered by the study, Hyundai ranked highest in overall sales satisfaction with a score of 856, up eight points from last year. Hyundai performed particularly well in the sales initiation, deal, salesperson and delivery timing factors.

Honda came in second (853), followed by Toyota (852).

The survey found that only 73 per cent of new-vehicle buyers are offered a test drive by the dealer, and among them, just 36 per cent actually take up the offer.

"It is important that dealers encourage customers to test drive their new-vehicles in order to familiarise themselves with the various features and benefits of the car," said Rajeev Nair, director at J.D. Power Asia Pacific, Singapore.

"A test drive is a great opportunity for the salesperson to demonstrate and highlight vehicle's features to customers, answer any queries that customers may have and help to differentiate their brand from those of competitors."

With 84 per cent of new-vehicle buyers in Viet Nam purchasing a new vehicle for the first time, the study finds that satisfaction is higher among new-vehicle buyers when their salesperson spends more than 30 minutes to conduct a thorough handover of the new vehicle to the customer, 15 points higher than among buyers whose salesperson spends 15 minutes or less with them at the time of delivery.

According to the study, friends and family are the most popular sources of information for new-vehicle shoppers. However, it also found that 78 per cent of new-vehicle shoppers in Viet Nam were using the Internet to research vehicle makes and models, up from 61 per cent last year.

"The importance of the Internet in Viet Nam underscores the need for brands and dealerships to provide a strong Web presence that both informs and attracts customers," said Nair.

"Brands that can leverage the Internet to extend and complement their physical dealerships stand to benefit from engaging customers across multiple contact channels."

The 2013 Viet Nam Sales Satisfaction Index (SSI) Study was based on responses from 922 new-vehicle owners who purchased their vehicle between October 2012 and July 2013. The study was fielded between May and August 2013 and measures new-vehicle owner satisfaction with the sales and delivery experience from authorized dealers in Viet Nam.

J.D. Power is a global marketing information services company whose Asia Pacific offices are located in Tokyo, Singapore, Beijing, Shanghai and Bangkok.

Domestic economy forecast to improve

Viet Nam's macroeconomy has a positive trend, according to HSBC Viet Nam's CEO, Sumit Dutta, but he warns that people should not expect miracles in 2014.

His bank forecasts that the country's 2014 GDP growth will be 5.4 per cent, up from what it projects for 2013 at 5.2 per cent. GDP per capita will be US$1,971, from this year's $1,750.

International FX reserves will be $35 billion compared to $30 billion expected for 2013.But the CPI is anticipated to rise to 8.3 per cent from the expected 6.7 per cent for this year. The dong vs the US dollar value will remain stable.

Viet Nam's currency ranks as the third-best performing currency in Asia (year to August), devaluating by 1.5 per cent, while Australia lost 14.5 per cent and India, 15.47 per cent. China gained 1.79 per cent and Hong Kong ranked second, losing 0.07 per cent.

Others positive trends include inflation, which is expected to be contained and strong and sustainable flows of FDI, predicted to continue. Exports will flourish and grow as well.

On the other hand, State-owned enterprises will continue to be a drag on growth, according to the bank's CEO, and the banking system's non-performing loans will take time to resolve. The real estate market will improve slowly next year.

For surviving and thriving, Sumit said liquidity was the key and there could be opportunities for cash-rich companies.

He advised businesses attending this week event on Viet Nam's macroeconomic outlook for 2014 — Will the Tiger Roar Again?, held in HCM City by the bank and the Eurocham, Cancham and several others — to keep on growing market share.

"When the tiger wakes up, you need to be ready".

"Reviewing your business model and being flexible to cope with changing trends" is also important," he added.

Commercial housing receives VAT break

The Ministry of Finance has promulgated circular 141 stipulating the reduction of the current 10 per cent value-added tax (VAT) to 5 per cent for selling and leasing commercial housing projects with an aim to promote purchasing power.

Under the new decree, commercial housing projects which meet conditions, including apartments with selling prices of less than VND15 million per square metre and areas of less than 70sq.m each, would be able to enjoy a tax reduction. These selling or leasing prices must include a 10 per cent VAT and a 2 per cent maintenance cost before the project's eligibility for the tax reduction is determined.

The decree is expected to take effect by the end of this month.

Dang Hung Vo, former deputy minister of Natural Resources and Environment said by nature VAT is imposed on consumers.

It is the reason why the tax reduction for commercial housing projects would be a support for home buyers, Vo said.

He added that the 50 per cent tax decrease was at a relatively high level. For example, the price of a VND1 billion apartment could be reduced by VND50 million because of the tax reduction.

However, he said the importance was that real estate investors were required to strictly implement the decree to facilitate selling apartments to buyers. If they take advantage by pushing the price of their apartments higher and then applying the new tax, then home buyers would not benefit from the policy.

He added that many consumers had been waiting for the new tax reduction first before buying their apartments.

Vu Cuong Quyet, general director of Green Land Company's branch in the North, said the tax reduction would be an opportunity for low-income earners, as property projects which have selling price of less than VND15 million per sq.m would be eligible for the new tax.

The policy would help people with low-and-middle income purchase houses at preferential prices.

However, Quyet was also concerned about the lack of affordable apartments on the market and was not certain whether the market would become hot or not, but said liquidity would improve.

He added investors would not offer such apartments immediately because the supply was limited.

Also, some property investors have been worried about VAT deduction.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company said property companies are not certain how the VAT tax reduction for the selling or leasing prices will be determined once the 10 per cent VAT for buying materials is taken into consideration.

Duc said they have been waiting for guidance from the ministry on the issue.

The decree also stipulates that social housing projects would enjoy 5 per cent VAT and 10 per cent corporate income tax.

Vingroup issues bonds worth $200 million

Vingroup Joint Stock Company debuted on the international debt capital market issuing US$200m worth of 4.5 year bond notes.

Supply outstripped demand for the bonds with more than 100 investors snapping up the coupons, which offered an 11.625 per cent return.

The net proceeds of the bond issue will be transferred to Vincom Retail, a retail subsidiary of Vingroup, and private equity investor Warburg Pincus.

Vincom Retail owns and operates a portfolio of high-end shopping malls in prime locations and key cities in Viet Nam. It will use the net proceeds to fund development projects and for working capital and general corporate purposes.

Fund managers absorbed the lion's share of the notes, 66 per cent, while 25 per cent went to private banks and 9 per cent to other banks and investors.

Many of the buyers were new to the Vietnamese corporate credit market, with 25 per cent hailing from the United States, 15 per cent from Europe and the remaining 60 per from Asia.

The notes, which mature in 2018, received a B+ ranking from Fitch rating agency while S&P issued the new venture a B rating.

NFSC sees sunnier future for local stocks

A newly-released report by the National Financial Supervision Commission of Viet Nam (NFSC) on the local economy offered reasons to be cheerful for the Vietnamese stock market.

The report said, excepting June and August when the world economic situation was not so good due to the feared cancellation of the US support package and the uncertainty around an invasion of Syria, the VN – Index tended to rally month after month.

Up to October 23, the VN-Index rose 1.79 per cent from September and 21.1 per cent from earlier this year.

The report also said liquidity was not so high but was steady through each session and gradually increased each month.

The average transaction volume in October was VND1.094 trillion (US$52.09 million) per day, while it was VND744 billion ($36.8 million) in September. The report also found that in the three months since June, foreign investors returned to the market with the net buying of VND590 billion ($28.09 million) in September and VND896.2 billion ($42.6 million) from October 1 to 24.

According to technical analysis, the market has passed its bottom level. The VN-Index stood over the 470 points while the HNX – Index also stood higher than 57 points.

The report concluded that the recovery of the domestic economy and the possibility that the US would extend its QE3 package until the end of 2013 could boost stock market expectations by the year's end.

Verification stamps to stop counterfeit goods

The Ministry of Industry and Trade's Trade Promotion Department on Thursday signed a co-operation agreement with Viet Nam Products Verifying Corporation (VNPV) to apply SMS product verifying stamps to eliminate counterfeit goods.

The stamp is expected to help enterprises manage its agent network, protect their brand names and copyrights.

It also assures buyers that they are purchasing genuine brand name products. Each verifying stamp has a secret code printed by advanced technology – which can not be forged.

The buyers can make sure they are buying the real thing by sending the code numbers on the stamp to switchboard number 1127.

The stamps are a solution researched and developed by VNPV, based on Government guidelines to support work on preventing counterfeit goods and commercial fraud.

Global increases force Viet Nam gas prices up

Gas prices rose on the local market yesterday, demanding a further VND18,000 (US$0.9) per canister (12 kg).

Deputy Director of Saigon Petro Gas, Do Trung Thanh, announced the day before in HCM City that the company would be selling gas at a new price of VND408,000 ($19.4) per canister, citing earlier increases in the world gas price of $60 per tonne in November.

Meanwhile one major gas distributor in Ha Noi said the current price of VND370,000 ($17.6) per canister would increase to VND400,000 ($19.04).

Prices have increased by VND34,000 ($1.6) in the four months since June.

More than 2,600 building and property trading companies stopped their operations or dissolved in the first 10 months of the year, according to the Ministry of Construction. The total included over 2,100 building enterprises and 527 real estate firms.

The ministry said the stagnant property market had resulted in low liquidity at banks, which in turn affected building material producers, assembly and interior companies.

Total building material inventory last year was VND3.8 trillion ($180 million), including 415,000 tonnes of cement, 4.1 million bricks, 14.3 million tones of building glass and 20,000 tonnes of steel.

Construction firms struggle for survival

More than 2,600 building and property trading companies stopped their operations or dissolved in the first 10 months of the year, according to the Ministry of Construction. The total included over 2,100 building enterprises and 527 real estate firms.

The ministry said the stagnant property market had resulted in low liquidity at banks, which in turn affected building material producers, assembly and interior companies.

Total building material inventory last year was VND3.8 trillion ($180 million), including 415,000 tonnes of cement, 4.1 million bricks, 14.3 million tones of building glass and 20,000 tonnes of steel.

HCM City apartments shift to social housing

The municipal People's Committee approved proposals to change three property projects from commercial housing to social housing.

More than 6,000 apartments will be affected by the change.

Tran Trong Tuan, director of the city's Construction Department said the change from commercial housing to social housing projects was slow as most projects divided big apartments into smaller ones without ensuring technical safety and social infrastructure, so the city had to take time to review all proposals thoroughly.

The city proposed the Government provide loans from its VND30 trillion (US$1.4 billion) package for apartments with areas of more than 70sq.m and prices of less than VND15 million per sq.m. It also asked for value-added (VAT) and corporate income tax exemptions for social housing investors and VAT reductions for first-time homebuyers.

Commercial centres banned in Old Quarter

A new regulation introduced by the capital People's Committee stipulates that no new constructions or big commercial centres will be allowed in the Old Quarter.

The city also plans to continue moving polluting workshops out of the area. Multi-function buildings, hotels, restaurants, commercial centres and basements that do not affect historic buildings in the Old Quarter can be built on Tran Quang Khai and Tran Nhat Duat streets.

Coffee output to fall due to climate factors

Coffee output from the 2013-14 crop will fall by 15 per cent over the previous one due to unfavourable weather conditions and a high proportion of old trees with low yields, according to the Viet Nam Coffee and Cocoa Association.

In the last crop, drought and diseases had seriously affected productivity and quality of coffee in plantation areas. The situation would continue with this crop, said Nguyen Nam Hai, the association's deputy chairman, at a conference in HCM City yesterday.

Currently, about 25 per cent of coffee cultivation area has old trees that have low yield and unstable quality, according to Hai.

The sector has responded to this situation with a plan to replant old coffee trees, but it has not been very successful because of a lack of capital and seedlings.

Delegates at the conference said that since replanting takes up a lot of time and capital, the Government should provide more incentives for farmers, including preferential loans.

Le Quoc Doanh, deputy Minister of Agriculture and Rural Development, said the ministry would work to develop more high quality coffee seedlings that the farmers could use.

Viet Nam's coffee exports from the 2012-13 crop - from October last year to September this year – have fallen in terms of both volume and value, with 1.4 million tonnes being exported for US$3.03 billion, Hai said.

This represented a reduction of 11.2 per cent in volume and 10.3 per cent in value over the previous crop, he added.

For the last crop, Germany was the biggest buyer of Vietnamese coffee, followed by the US, Spain, Italy and Japan.

Hai said coffee firms were in trouble because of calling prices.

Luong Van Tu, the association's chairman, said "coffee prices have reached a four-year low in the world market."

In the domestic market, the price has dropped to more than VND30,000 a kg, the lowest in the last three years, he said.

He attributed the fall to supply being higher than demand and many coffee speculators shifting their investment to other sector.

The coffee industry is going through a very difficult stage, with many firms incurring losses and suspending operations, Tu said.

He said the situation requires relevant government ministries, agencies and enterprises to work together and address problems, failing which exports will continue its downward trend.

The association suggested that the Government consider allowing the sector to stockpile 200,000-300,000 tonnes of coffee from the 2013-14 crop to prevent prices from falling further in the domestic market, negatively affecting coffee growers.

Coffee firms also called on the Ministry of Agriculture and Rural Development and the association to establish close ties with their counterparts in other major coffee producing countries to share information.

They wanted the Government to intervene and resolve problems related to the value-added tax.

For his part, Doanh urged coffee firms to focus more on improving processing technology to add value to their products.

FDI businesses take over

Domestic coffee producers are facing domination from foreign direct invested (FDI) enterprises in the local market.

Nguyen Viet Vinh, general secretary of the Viet Nam Coffee Cocoa Association (VICOFA), said 13 FDI businesses accounted for a half the country's total export coffee volume, creating difficulties for Vietnamese enterprises.

Vinh said FDI firms enjoyed preferential taxes and low interest rates on loans from foreign parent companies. This enabled them to be very active in buying coffee while Vietnamese businesses had to battle slow value-added tax refunds and were forced to accept loans at high interest.

Statistics from the association showed that the FDI sector's coffee exports in the 2011-12 crop made up a half of the country's export compared to only 20 per cent in 2008-9. In 2009-10, the rate was 31 per cent and in 2010-11, 38 per cent.

Vinh said the percentage would be higher for the 2013-14 crop as Viet Nam's big coffee exporters had had problems receiving the VAT refund, resulting in a lack of capital.

Last week, coffee price in Central Highlands provinces fell sharply from VND39,000 to VND32,000 per kilo. However, domestic coffee producers were not able to buy it for stock because of the slow VAT refund.

Some experts said FDI enterprises would rush to buy the coffee. Domestic companies would be forced to buy coffee from FDI firms at the higher prices to meet their export contracts.

Figures from the Ministry of Industry and Trade also revealed that the FDI sector has dominated the export turnover of some key export products.

They made high export turnover in agricultural and aquatic products, which were once the strength of domestic firms. In the first 10 months of the year, export turnover of FDI enterprises in the coffee industry was US$0.67 billion out of the total of $2.2 billion.

Economist Bui Kien Thanh said FDI firms had waiting export markets while Vietnamese companies lagged behind.

Thanh said the Government should review all policies ranging from monetary, taxes and fees to make sure they did not deprive domestic businesses.

Entrepreneur forum helps lift VN-Canada trade

Around 200 representatives from the Canada-Viet Nam Friendship Association, the Canada-Viet Nam Trade Council and overseas Vietnamese businesses attended a forum held in Toronto early this week.

Addressing the event, held by the Vietnamese Ministry of Industry and Trade (MoIT) and the Vietnamese Embassy in Canada, Vietnamese Ambassador To Anh Dung praised the efforts made by entrepreneurs to boost trade and investment ties between the two countries.

He affirmed that despite their geographic distance, the two business communities were finding numerous opportunities to increase their cooperation.

HCM City licenses 363 foreign-invested projects

HCM City licensed 363 foreign-invested projects totally worth US$ 847.4 million in the first 10 months of this year, marking year-on-year increases of 70 per cent in term of capital and 12 per cent in the number of projects.

According the municipal People's Committee, 108 existing projects were also allowed to increase capital by $639.3 million during the period.

Dong Nai ranks fourth in FDI attraction

The southern province of Dong Nai climbed to the fourth position nationwide in foreign direct investment (FDI) attraction with 1,056 valid projects worth 19.64 billion USD by October 20, according to the Foreign Investment Agency.

The province exceeded its yearly FDI attraction target in the first ten months of 2013 with a total investment capital of over 1 billion USD, the agency added.

As many as 36 countries and territories have so far invested in Dong Nai, mainly from Taiwan , the Republic of Korea , Japan , ASEAN countries, Europe and America.

Of those, Japan ranks third with 3 billion USD and its projects focus on hi-tech and support industry.

To achieve these outcomes, Dong Nai has intensified investment promotion activities to introduce its potential and preferential policies to foreign investors, said Director of the provincial Planning and Investment Department Bo Ngoc Thu.

In FDI attraction, the province has given priorities to hi-tech and support industry projects as well as high added value, environmentally-friendly and energy-saving ones, she added.

The director further said that Dong Nai has also created a healthy and transparent business environment, conducted administrative reforms and offered supporting activities to facilitate foreign investors.

The province has paid attention to protecting the environment of Dong Nai River by minimising projects that pose pollution risks.

Dong Nai has to date withdrawn the investment licences of 354 FDI projects worth nearly 4.4 billion USD due to their inadequate waste water treatment facilities or low progress.

Vietnam raked in 19.2 billion USD in FDI in the first 10 months of this year, a whopping 65.5 percent more than last year's figure, according to the General Statistics Office.

As many as 52 countries and territories had new investment projects in Vietnam during the period.-

52 countries, territories invest in Vietnam

As many as 52 countries and territories had new investment projects in Vietnam in the first ten months of this year.

Japan ranked first among foreign investors in Vietnam during the period with a total newly registered and additional capital of over 4.8 billion USD, accounting for 25.2 percent of the country’s total registered foreign investment.

The Republic of Korea and Singapore were Vietnam’s second and third largest investors, with 4.019 billion USD and 3.985 billion USD, respectively.

In general, Vietnam saw strong increases in both number and scale of foreign investment projects, making foreign investment attraction a silver lining in the country’s economic panorama.

Vietnam has brought in 19.2 billion USD in foreign direct investment (FDI) in the first 10 months of this year, a whopping 65.5 percent more than last year's figure, according to the General Statistics Office (GSO).

The GSO said around 1,050 new projects had been licensed this year with a registered capital of 13.1 billion USD, up 79 percent from the previous figure, with the remaining 6.1 billion USD in capital coming from existing projects.

Meanwhile, FDI disbursement in the January-October period only rose by 6.4 percent from last year to 9.6 billion USD.-

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

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