MOL to turn heads

Vietnam’s online payment market is proving appealing to foreign players.

Last month MOL Access Portal Sdn. Bhd. (MOL), Asia’s leading e-payment service provider, entered into a joint venture agreement with pioneering Vietnamese e-commerce group PeaceSoft Solutions Corporation (PeaceSoft) to acquire a 50 per cent stake in NganLuong, PeaceSoft’s online payments unit.

Under the joint venture agreement, MOL and PeaceSoft will jointly operate one of the country's first online payments and escrow platforms together with other related e-payments services in Vietnam.

“This is an excellent combination as MOL can bring its global network of merchants into Vietnam, while giving the opportunity for Vietnamese merchants and publishers to sell their products and content directly to 12 markets through MOL’s growing payment network,” said PeaceSoft president Nguyen Hoa Binh.

“We have strong trust and belief that we will be able to bring NganLuong to the next growth level with our global experience and expertise in building, investing and operating leading localised payment services worldwide. We are extremely delighted to partner with PeaceSoft in this strong growth opportunity,” said MOL Global’s Group chief executive officer Ganesh Kumar Bangah.

“NganLuong is one of the market leaders in the field of e-payments in Vietnam and this investment strengthens MOL’s regional leadership position with a strong presence in every major Internet market in South East Asia,” Ganesh said, adding that with more than 31 million Internet users, Vietnam was an important and potential market to MOL.

From 2013 onwards, NganLuong’s development will pursue three-pillar strategy, focusing on tapping three major online market segments, including online payment for e-commerce, payment for digital content services- the segment which is forecast to reach $1 billion revenue by 2015 by the Vietnam Software Association and payment via mobiles- the segment catching 300 per cent growth each year globally, but not yet available in Vietnam.

In fact, many foreign players have stepped into Vietnam’s online payment market in the past years.

For instance, in October, 2011 Japan’s NTT Data Corporation acquired a 40 stake in VietUnion Online Services Corporation, a subsidiary of the Saigon Investment Group, in a capital tie-up venture. VietUnion owns Payoo e-wallet, a payment services company.

Before entering into a joint venture with MOL, NganLuong had a cooperative deal with global online payment gateway Paypal.

Besides, IDG Ventures bought a stake in Vietnam’s mobile payment serviceVinaPay and Ukraine-based Kosto Group put claws into PayLink.

Southern ports struggle in internecine battle

Terminal operators in the Cai Mep -Thi Vai port complex in southern Ba Ria -Vung Tau province continue struggling to survive in the face of the declining demand and growing competition from neighbouring Ho Chi Minh City based terminals.

According to the latest report of Ba Ria-Vung Tau Provincial People’s Committee, six container terminals in the Cai Mep – Thi Vai area are operating at a meagre 15 per cent of their designed capacity, mirroring the dire situation of terminal operators’ up and down in the country. The volume of cargo moving through the terminals last year declined 6.5 per cent from 2011, forcing most of the terminals to reluctantly accept bulk cargo in an attempt to reduce losses.

Nguyen Xuan Ky, deputy director of Cai Mep International Port, said he saw no signs that cargo volumes would increase this year.

Tran Khanh Sinh, director of Tan Cang-Cai Mep, also had a gloomy outlook. He blamed the economic slowdown, the slow pace of relocating terminals from Ho Chi Minh City and incentive grants to encourage shipping lines to dock at the Cai Mep–-Thi Vai area.

“We now have to share the pie with terminals in Ho Chi Minh City, which should be closed and relocated to Ba Ria-Vung Tau in accordance with the government plan,” Sinh said.

The Cai Mep-Thi Vai port complex was touted to become an international transshipment port in the southern region to replace the Saigon Port complex.

From 2009 to 2012, five terminals were put into operation in the complex, including Cai Mep International Terminal, SP-PSA International Port and SP-SSA International Container Terminal, which were jointly developed by state-run Vinalines and Denmark’s APM Terminals BV, Singapore’s PSA International and the US’ SSA Marines, respectively. The other terminals are Saigon New Port’s Tan Cang-Cai Mep Container Terminal and Hutchison Port Holdings’ Saigon International Terminals.

In January this year, the Ministry of Transport inaugurated another container terminal, Cai Mep-Thi Vai International Container Terminal. The new terminal will be under the management of Japanese operator Nippon Yusen Kaisha. The opening of new terminals in the port complex added a further burden on existing operators, already reeling from last year’s losses.

Presently, shippers continue running cargo through Ho Chi Minh City’s ports due to the sluggish realisation of the relocation of the city-based ports to the Cai Mep-Thi Vai area.

Shippers are also put off by the inefficient inland infrastructure linking terminals. Roads such as National Road 51 connecting the Cai Mep-Thi Vai area with other provinces like Dong Nai and Binh Duong, home to thousands of foreign-invested companies, are not yet up to the task of rapid transport.

Gas-fired power plants to run on oil

Several gas-fired power plants like Phu My, Ba Ria, Nhon Trach 1, Nhon Trach 2, Phu My 2-2 and Phu My 3 will run on oil due to gas supply interruptions over the next few months.

From January to June this year, the southern electricity system has had no backup source left since coal and gas-fired power plants are operating at full capacity. Therefore, the risk of power shortfall would be great if coal-fired plants don’t operate stably or there is an unforeseen incident at a large thermal power generator, said HCMC Power Corporation (EVN HCMC) at its customer conference last Friday.

In July, Ca Mau Gas Complex will disrupt supply for 14 days for repair and maintenance. During these days, the national electricity system will lack capacity and transmission lines in the south will be overloaded.

So, Ca Mau Power Plant will switch to operating on diesel oil and seeking assistance from the generator of O Mon Power Plant.

In September, the gas block 06.1 (consisting of two natural gas fields Lan Tay and Lan Do located 370 kilometers offshore Ba Ria-Vung Tau) will disconnect supply for seven days to expand the wastewater treatment system. In addition, Nam Con Son Gas Plant will stop supply for one day for maintenance.

So during this time, several generators of Phu My, Ba Ria, Nhon Trach 1, Nhon Trach 2, Phu My 2-2 and Phu My 3 will run on oil to prevent overload on the southern grid.

Speaking to the Daily on the sidelines of the conference, Nguyen Tan Loc, deputy general director of Vietnam Electricity Group (EVN), said the cost of generating power from diesel oil would be high. It will cost about VND5 trillion to produce one billion kWh of electricity from oil, he estimated.

During the dry season this year, EVN will generate more than two billion kWh of electricity from diesel oil for the southern region.

In the first four months of 2013, power consumption rose 11.5% year-on-year. However, so far, no coal or gas-fired power plant has switched to running on diesel oil.

Regarding power price, Loc said the price of coal sold to power plants had been adjusted according to the market. Power price will also be adjusted this way, meaning output prices will increase in accordance with input price hikes, he said.

At present, the national power capacity is nearly 25,500 MW. This year, the capacity will be raised by some 2,600 MW, bringing the total capacity to over 28,100 MW.

Hydropower contributes 44% to the national power supply, while coal and gas-fired thermal power makes up 44.4%, oil-fired thermal power 4.6%, imported power 3.8% and other sources 2.9%.

Petrol prices expected to fall for fourth straight time

There is a high possibility that local retail petrol prices will fall for the fourth straight time as global prices have tumbled these days.

Speaking with the Daily, several fuel wholesale companies said since April 26 when the local retail price was slashed by VND310 for a liter of gasoline, the prices of finished petrol products in Singapore have constantly declined and stayed at low levels.

For instance, in the trading session last Friday, the price of RON 92 petrol closed at US$107.24 a barrel and that of diesel oil 0.5 US$113.69 a barrel.

According to local fuel wholesalers, at present they have only reached break-even point after offsetting the high price of old shipments in line with the 30-day average price frame from April 3 though global prices have slumped continuously over the past days.

The wholesalers ascribed the problem to fuel import tax that have been adjusted up twice by local relevant authorities, from 12% to 14% and then to 16% for gasoline and from 8% to 12% for diesel oil. Therefore, if the prices of finished products continue to decline, the local retail price will have a chance to go down.

However, an executive of a wholesale enterprise forecasts local retail price reductions will be minimal as State management agencies will likely raise import tax.

“The Ministry of Finance is looking to raise petrol import tariff to 20%,” the sales director of a southern fuel wholesale company remarked.

Mobile phone exports bring in largest turnover

Mobile phones and components have surpassed textile-garment to top the list of export items generating the largest turnovers.

In the first four months of the year, mobile phones and components recorded an export turnover of US$5.8 billion, an impressive growth of 92.3% year-on-year. Textile-garment exports maintained a stable growth of some 20%, but they just brought in US$5.1 billion and thus ended up in the second place.

Meanwhile, electronic products, computers and components achieved a relatively high growth, 46.1% over the same period last year, but they only generated US$3.2 billion. Crude oil exports fetched US$2.5 billion, up 6.5%, and footwear US$2.3 billion, up 9%, says a report by the General Statistics Office.

It is very rare for an item that has just been exported for three years yet to make it to the top of Vietnam’s major export items, said experts.

Mobile phones were first exported in 2010 and brought in nearly US$2.4 billion, securing a spot in the list of export items with a turnover of US$2 billion or above. In the following year, mobile phone exports rapidly grew to over US$6.88 billion, a three-fold increase from 2010.

Last year, mobile phone surpassed crude oil to become the second leading export item with a turnover of more than US$12.7 billion, or two times higher than the figure in 2011. Eventually, the item rose to the top spot in the first four months of 2013.

With such a spectacular result and if the global mobile phone market maintained its current growth rate, mobile phone would likely be the first export item of Vietnam to ever hit the record high of US$20 billion.

Up to 98.2% of the exported cell phones and components are products of foreign-invested enterprises.

The production complex of Samsung in Bac Ninh greatly contributes to such a volume. Taiwan’s Foxconn and some other manufacturers also make considerable contributions.

Buyers of the mobile phones assembled in Vietnam are not only regional nations, but also demanding markets such as Europe, the United Arab Emirates (UAE) and Russia.

However, the problem is Vietnam is still a place for assembly of components produced elsewhere, and there is not so many products made in Vietnam.

As a result, the country recorded a significant increase in imports of mobile phone components. Vietnam imported nearly US$1.5 billion worth of such products in 2010, over US$2.5 billion in 2011 and more than US$5 billion in 2012.

In the first four months of 2013, the country imported over US$2.27 billion worth of mobile phones and components, up 89.2% year-on-year, mainly from China (67.3%) and South Korea (30.8%). Foreign-invested enterprises imported 86.3% of this volume.

Four-month credit growth at 1.4%

The credit growth of the banking system started to show improvement in January-April, at 1.4%, though it was only 0.03% in the first quarter, the State Bank of Vietnam (SBV) reports.

The above credit growth is quite positive compared to a reduction of 0.2% in the same period in 2012. However, according to SBV, the credit improvement is still lower than the target.

The low credit growth is often seen in the first few months of the year due to seasonal reasons, the central bank said.

Besides, the economy has still faced many difficulties, leading to limited credit demand and thus low credit growth. The major factors causing slowing credit growth are high inventories at companies, slackened demand and troubles in collaterals settlement.

While this credit growth is pretty low compared to the whole year’s target of 12%, capital mobilization sharply surged from the end of January and recorded a high rise against the same period in 2011 and 2012. As of April 23, deposits marked up 5.34% versus the end of last year, 1.5 times higher than the year-ago period’s rate and six-fold higher than the figure in the same period in 2011.

According to SBV, the deposit growth of Vietnam dong is much higher than that of foreign currency, in line with the central bank policy of restricting foreign currency deposit and lending while promoting direct forex trading.

As such, the amount of current capital in Vietnam dong at credit institutions was quite stable and ample in the first four months of the year, resulting in low borrowing demand of commercial banks via open market operations.

Interest rates on the inter-bank market stayed at low levels and barely declined from early this year, at 2-3% per annum for overnight, 2.6-3.2% for one week and 4.3-5% for one month on April 23.

The central bank in the report also mentioned the fluctuation of foreign exchange rate after the Lunar New Year and in the middle of April, saying this is only a sentimental factor and that the rate was stabilized after the central bank applied intervention measures. As of April 25, the inter-bank exchange rate between Vietnam dong and U.S. dollars stayed stable at VND20,828 to the dollar, with the average buying rate of commercial banks picking up some 0.4% against early this year.

Realty investors riding out tough times

While other property firms are waiting for a bailout, a number of investors are seeking ways to save themselves, considering the current hard times as an opportunity to prove their capability and prestige.

Nam Long Investment Corp. last week held a topping-out ceremony for the first phase of its Ehome 3 Saigon West project in HCMC’s Binh Tan District one month ahead of schedule. Around 80% of the 331 apartments built in the first phase have found their owners and are set for handover this September.

Nam Long is developing the second phase with 161 flats. In addition, the firm is carrying out Ehome 4 Saigon North in Binh Duong and An Thanh Residential Area in Long An.

Similarly, Saigon Thuong Tin Real Estate JSC (Sacomreal) is running several projects.

Ngo Vi Hung, general director of Sacomreal, said his company was determined to finish the Belleza project in District 7 on schedule despite the stagnant market in 2012. The project was completed in September 2012 and 50% of the homes have been handed over.

Sacomreal has also finalized the shell-building phase of the Carillon project in Tan Binh District, with over 95% of the apartments sold.

The company is accelerating the progress of two villa projects, namely Arista Villas in Thu Duc District and Jamona City in District 7, covering nine and ten hectares respectively, said Hung.

Although investing in the high-end segment with the most problems at present, Nova Real Estate Investment Corp. (Novaland) is still carrying out various projects. For example, the first phase of Sunrise City in District 7 was completed and handed over on schedule in late 2012, and the second and third phases are moving at a fast pace.

Besides, Novaland is investing in two other projects, Tropic Garden in District 2 and The Prince Residences in Phu Nhuan District.

Last weekend, Saigon Thuong Tin Tan Thang Co., a joint venture between Sacomreal and Gamuda Land of Malaysia, handed over 110 apartments of the A block of the Celadon City project five months ahead of schedule.

In the high-end segment, perhaps Phu My Hung Corp. is deploying the most projects at the same time, including the villa projects Chateau and Phu My 3 and the apartment projects Star Hill and Happy Valley. All of them are being implemented on schedule.

The aforesaid investors are all competent and experienced in real estate. However, given the persistent woes, they are adjusting their strategies for adaptation.

Ngo Vi Hung said the projects being developed by Sacomreal had been carefully planned about three years ago and must go on despite the market problems.

“No one anticipated such a prolonged difficult situation. But we believe the market will rebound any time, so it is necessary to make investments as planned, or else opportunities would slip away,” he said.

To adapt to the market situation, Novaland has reduced the apartment size in the second and third phases of the Sunrise City project to 56 square meters per unit. In addition, the investor allows buyers to choose whether to receive fully-furnished or bare homes.

Moreover, Novaland designs special sales programs, in which customers can defer payments by five years with no interests charged or sublease the apartments.

Phu My Hung Corp. has attracted the market attention when offering the longest payment period ever for customers of the Happy Valley project.

Banks will give loans at an interest rate 10-12% per annum for the first six or twelve months from the date of disbursement, and then the rate will be adjusted in accordance with the deposit rate for 12-month term plus 3-5% a year, depending on each bank.

Homebuyers need to make a 25% down payment and settle the rest by 15 installments within 30 months.

The director of a brokerage firm remarked that in the current context, only professional investors could implement multiple projects simultaneously and keep to the schedule. Most property investors in Vietnam can cover only 25-30% of the total investment cost of a project with their own funds, and the rest must be borrowed from banks and mobilized from buyers.

“It is also the case with other sectors than real estate; the more difficult it is, the harder investors must try to preserve the market confidence. Investors like Nam Long, Novaland and Sacomreal are the bright spots in the context that the confidence of multiple customers has been undermined since a number of investors have fled away,” he said.

Property prices go down further in Hanoi

Property prices in Hanoi had fallen 20-40% by the end of the first quarter, yet the market remains sluggish with few transactions.

The market has recorded discounts in almost all segments, including apartments, villas, semi-detached houses and land plots. In Cau Giay District, apartment prices have been slashed 10-20%, but sale remains poor.

According to property trading floors in the western part of Hanoi, apartment prices in this area have gone down. Madarin Garden, for an example, has seen its offer price cut to VND25-35 million from the previous VND45 million per square meter.

Similarly, apartments of the Van Phu Victoria project in Ha Dong District are now on sale at VND14-15 million per square meter, versus VND21-22 million previously. Owner of the Westa project in Mo Lao Urban Area has lowered the offer prices from VND26-28 million to VND17.9-21 million a square meter.

The majority of customers now have demand for low-cost mid-size condos Therefore, it is said that apartment prices in Hanoi are still high and must be reduced further to attract buyers.

A research by CBRE shows that prices of villas and semi-detached houses in Hanoi declined 15-20% year-on-year in the first quarter. Because supply of villas and semi-detached houses is abundant, their prices are forecast to drop further in the coming time. VNREDSat-1 set for launch today

HCMC – Vietnam’s first remote sensing satellite VNREDSat-1 is expected to be put into orbit at 9:06 a.m. local time today after its launch was postponed last Saturday, said the Vietnam Academy of Science and Technology.

VNREDSat-1 was originally scheduled for launch last Saturday from Kourou Space Center in French Guyana, but the launch was postponed in the last minute because of unfavorable weather.

Brigitte Serreaul, representative of EADS Astrium and director of the project currently present at Kourou, said weather conditions at Kourou in the next two days would remain unpredictable, but Arianespace intended to send the satellite into space at 9:06 a.m. today.

The final decision about the launch will be given at 7:30 a.m. today, says a report on Thanh Nien newspaper.

Arianespace, the company in charge of launching VNREDSat-1, has successfully put two telecom satellites of Vietnam, Vinasat-1 and Vinasat-2, into orbit. Meanwhile, EADS Astrium is the designer and manufacturer of VNREDSat-1.

The VNREDSat-1 project costs a total of 55.8 million euros, or some US$72.6 million, funded by official development assistance (ODA) from France and Vietnam’s reciprocal capital.

After going into space, VNREDSat-1 will provide ministries and localities with high-resolution images for socioeconomic development. In particular, the satellite will help Vietnam timely respond to forest fires, floods, oil spills and many other natural disasters.

Work to start on new coach station next quarter

New Mien Dong coach station will be constructed in the third quarter with an investment of VND960 billion, according to Le Van Pha, deputy general director of the project owner Saigon Transportation Mechanical Corp. (Samco).

The HCMC government has approved the detailed 1/500 planning of new Mien Dong coach station which will be located between HCMC’s District 9 and Binh Duong Province’s Di An Town in an area of over 16 hectares.

The project will be a complex of multiple functions serving demands of passengers and operations of a coach station.

Under the planning, the new coach station consists of square, central terminal, supporting services, office space, shopping space, restaurant, hotel and entertainment facilities.

The six-floor main terminal will be the place for vehicle parking, operation management, vehicle repair and maintenance, vehicle register and fuel trading.

According to Samco, 31 households and five State enterprises will be relocated with a total compensation of around VND890 billion. Binh Duong Province will complete the site clearance and compensation within this month and HCMC will finish it late this year.

The construction of new Mien Dong coach station aims to meet the demand of transporting to northern and central provinces and reduce overload at existing Mien Dong coach station in HCMC’s Binh Thanh District.

The new coach station will be connected with bus routes, especially the metro line No. 1 from Ben Thanh to Suoi Tien. Thanks to this, passengers traveling to HCMC can either take a bus or a metro to enter the city’s center.

Besides, Binh Duong Province is considering developing a metro line connecting Binh Duong New City with the metro line No. 1.

The new coach station is set for completion in 2016 while the metro line No. 1 will be put into operation in 2017.

For the existing Mien Dong coach station covering 60,200 square meters, the HCMC government plans to auction 50% of the land area to get money which will be advanced for Samco to pay the compensations. Meanwhile, the rest area of the station will be maintained to serve as a station for bus routes and vehicles running to Central Highlands provinces.

The land site auctioned will not be allowed to develop a residential area but a commercial center.

Saigontourist targets more four-star hotels

Saigontourist Holding Company will concentrate on development of four-star hotels in the future, said the State giant’s chief executive officer.

Saigontourist general director Tran Hung Viet said that the enterprise has a strong presence in the three to four-star hotel market but it will now focus on four-star facilities. HCMC and some localities such as Phu Quoc and Con Dao will remain its key investment destinations.

Besides, Saigontourist has plans to build more five-star hotels under self investment or joint venture formats, Viet said.

The enterprise has 50 hotels and many travel, transport firms nationwide. Last year, Saigontourist obtained VND13 trillion in revenue. Its revenue and gross profit grew around 18% and 24% each year respectively.

The enterprise has set up relationships with around 200 foreign travel companies to send local travelers there. It is also studying new markets such as UAE and India.

Saigontourist is considering its overseas investment plan but it will be conducted step by step. The enterprise is still carrying out its hotel purchase project in the U.S. but technical issues and building quality evaluation have yet to be solved, Viet said.

Saigontourist is also interested in investment in Myanmar. The enterprise will cooperate with some units to seek locations for restaurant and hotel projects in the ASEAN nation.

Rice exporters worried over deep price drop

Vietnamese cash-strapped rice exporters are selling rice at low prices to keep inventories from surging at a time global demand is weak, heard a review meeting on rice export activity held last week.

Speaking at the meeting on rice export in the year’s first four months, Pham Van Bay, vice chairman of the Vietnam Food Association (VFA), said that although the price of Vietnamese rice was much lower than the global one, customers do not want to buy Vietnamese rice in anticipation of further price decline.

The export price of last month’s transactions dropped by US$10-15 per ton from that of March due to the low demand and local enterprises’ capital shortage. The average export price in the four-month period also fell sharply by over US$28 compared to the same period last year.

Enterprises last month shipped abroad over 700,000 tons of rice worth US$301 million, up 4.81% and 3.89% year-on-year, respectively. However, the average price was only US$429.66 per ton, falling by US$3.82.

From the year’s beginning until April 30, Vietnam’s total rice export volume amounted to 2.15 million tons, up 23.49% from the same period last year, while the export turnover reached US$942.4 million, up only 16.03%.

Local exporters are contracted to deliver 2.08 million tons of rice this month.

According to Bay, rice exporting activity in the four-month period failed to meet the target due to long holidays during the time.

Vietnam’s main markets are China, Africa, the Philippines and Hong Kong this year to date.

As the export price stays low, paddy price in the Mekong Delta continues the downtrend now. Prices of paddy and material rice have now tumbled by some VND50,000-VND100,000 a ton.

In Dong Thap Province, fresh paddy now sells for VND4,059-VND4,150 a kilo, while that of dried paddy goes for some VND5,000-VND5,100 a kilo.

Thu Thiem drums up investors’ interest

Over 150 investors have put their names down for the conference on investment promotion for Thu Thiem New Urban Area, said Mai Van An, chief officer of Thu Thiem Investment & Construction Authority (Thu Thiem ICA).

The conference on investment promotion for Thu Thiem New Urban Area will take place in HCMC tomorrow. At the event, 13 large-scale projects will be brought forward to call for investment with open-door policies and simplified administrative procedures.

Six of these projects will be introduced to investors for the first time, including an international trade-finance-banking center located in the heart of Thu Thiem. The 93-hectare center will gather international financial institutes and experienced financial experts.

An international finance academy will be built on 1.2 hectares to supply human resources to the international trade-finance-banking center.

A multi-purpose sports and recreation complex covering 39 hectares will be developed for major sports events. It will consist of a stadium, a sports hall and a sports park.

A hotel-resort project will be carried out in the southern delta. Covering 7.3 hectares, it will be a place to relax and get close to the nature, the flooded forest conservation area.

Near the southern delta, an 8.2-hectare water park will go up, which will be a destination for families and young people. The park will be located near the north-south backbone road.

The central square and riverside park project covering nearly 30 hectares is the last of the six projects to be introduced for the first time. This area will serve as an attractive public space and a place to organize cultural and political events.

In addition, seven projects that have not found investors will be brought forward at the conference tomorrow. They include a component project of the northern residential area, a convention center and hotel complex, a cruise ship port, Thu Thiem Software Park, an international school, a pedestrian bridge and the infrastructure for the international trade-finance-banking center.

To lure investment into Thu Thiem New Urban Area, the HCMC government has asked relevant agencies to offer investors incentives and sought the Government’s permission to select investors independently.

According to Thu Thiem ICA, work has begun on the main roads in the new urban area. However, to eliminate incompetent investors, Thu Thiem ICA requires investors to prove their financial capacity (able to cover 20% of the cost of a project) and professional capacity.

Site clearance in Thu Thiem is almost finished and the plan on the 1:2000 scale has been approved.

In addition to the aforesaid projects, 17 other projects are under construction in Thu Thiem, including a low-rise apartment building developed by Dai Quang Minh Co., a resettlement project with 6,200 condos, a multi-purpose tower with an 86-story observatory tower, an international hospital, an opera theater and a children’s palace.

Economic recovery hampered by exhausted firms

The rising number of exhausted businesses will hinder the economy from recovering its growth next year, said the National Financial Supervisory Committee.

In the first four months of 2013, about 16,600 firms were disbanded or became inactive, up 16.9% year-on-year, the committee said in a report.

Restrictions on credit access and unpleasant production and business situation made a lot of enterprises run out of resources, resulting in shutdowns or bankruptcies, the committee explained.

The report by the committee says the production situation remains difficult due to high input costs and poor consumption, leading to a considerable inventory level. As of April 1, the inventory index of the processing industry had grown 13.1% over the same period last year.

Production slowdown is reflected quite clearly in modest growth in the Jan-Apr index of industrial production (IIP), only 5%, versus 5.9% in the year-ago period. Such a situation is ascribed to the sluggish aggregate demand of the economy.

Consumption demand is very low, with total retail sales of goods and services in the first four months excluding the price hike factor picking up a mere 4.6%, compared to 5.9% in the first quarter of 2012.

Similarly, investment demand is limited, resulting in a shortage of investment capital for economic growth in the early months. Total investment in the first quarter stood at 29.6% of GDP, lower than the year-ago figure (36.2%).

Talking to the media, Vu Viet Ngoan, chairman of the National Financial Supervisory Committee, said the State should have boosted public spending to stimulate the economy in the current tough times. “However, the Government has little chance left to stimulate demand since public spending is limited,” he said.

The committee cited two main reasons behind the lack of investment capital, with the first being slow disbursement of the State budget funds for investment.

Investment from the State budget by the end of the first quarter had amounted to VND35.2 trillion, or 18% of the year’s target, down 4.9% over the same period in 2012, when the disbursement rate was already very slow. As of April 15, investment from the State budget had met 27.2% of the year’s target.

The second reason is modest credit growth. For total investment to reach the target, credit growth in the first three months must have been at least 1.5% (or an increase of around VND50 trillion). However, as of mid-April, credit growth had only been 1.44%.

The committee set out several reasons for such a low credit growth, including exorbitant lending rates beyond reach of enterprises and high bad debt ratio hindering credit growth, despite a strong increase in deposits.

The pace of recovery in the near future will greatly depend on economic restructuring in line with bad debt settlement, said the committee.

Thus, the economy is hardly growing due to weak aggregate demand. While the inflation target of 6-6.5% for 2013 is likely attainable, more drastic measures need to be taken to achieve the 5.5% GDP growth.

Siam Cement Group’s first quarter profit climbs

Thailand’s Siam Cement Group, which just bought a 85 per cent stake in Prime Group in Vietnam, has reported higher profit and sales.

The firm (SCG) announced its operating performance for the first quarter of 2013, showing growth in all businesses.

The company recently undertook a strategic business restructuring whereby the cement, building materials and distribution were consolidated into one business unit and is referred to as “SCG Cement-Building Materials.” This business restructuring and SCG’s latest investment in Prime Group, showed its regional business expansion.

SCG’s unreviewed consolidated financial statements and its subsidiaries for the first quarter showed a profit of 8,796 million baht, an increase of 47 per cent year on-year. Revenue from sales increased 6 per cent to 109,439 million baht on higher sales volume in the paper and cement-building materials businesses.

On a quarter-on-quarter basis, the profit increased 27 per cent, benefitting from the seasonal volume growths in the cement-building materials business, and the recovery of chemicals margins. Revenue from sales increased 10 per cent.

As for SCG business in ASEAN markets outside Thailand, first quarter sales revenue amounted to 8,280 million baht an increase of 36 per cent from the same period of last year.

Total assets of SCG in ASEAN as of March 31 amounted to 53,634 million baht which is 13 per cent of total assets of SCG.

The total assets of SCG as of March 31, 2013 amounted to 407,940 million baht.

“SCG continues to enhance its capabilities and offerings within ASEAN, towards the leader of construction materials market in the region, and follow the vision of becoming an ASEAN sustainable business leader by owning 85 per cent stake in Prime Group, Vietnam’s leading building materials manufacturer that is valued at 7,200 million baht,” SCG chairman Kan Trakulhoon said. “This latest investment has propelled SCG to become the world’s largest ceramic tiles producer with highest production capacity of 225 million square metres, combined with productions in ASEAN countries including 48 per cent in Thailand, 33 per cent in Vietnam, 14 per cent in Indonesia, and 5 per cent in the Philippines.”

CFOs set record straight

Late last month, more than 180 top CFOs and financial executives from across all major industry sectors converged in Ho Chi Minh City to exchange views, discuss key industry concerns and share best practices at Vietnam CFO Summit 2013.

The event was themed "The Future CFO – The complete finance professional" and organised by ACCA. The conference featured a line-up of senior industry experts such as Le Dang Doanh, once of the Central Institute for Economic Management, Hugh James McIntosh, TNK Vietnam country president and Pepsi Vietnam CFO Rizwan Qamar.

The summit was organised in the context that CFOs abandoned their comfort zones and deal with complex challenges. The finance function used to be charged only with accounting, measuring the company's performance and delivering reports to senior management and shareholders. But, today CFOs are now leading businesses from the front.

In this summit, ACCA presents a survey of more than 500 chief financial officers for ACCA’s report "The complete finance professional 2013: Why breadth and depth of finance matter in today’s finance function" identified the key financial areas that CFOs said they need in the finance function.

Apart from the need for accounting professionals to behave and act ethically and professionally, financial management and financial analysis were seen as particularly high-impact areas, followed closely by governance risk and control, strategic management accounting and corporate reporting. Internal audit, tax advice and planning were also widely considered to have considerable impacts.

Stephen Heathcote, executive director of markets for ACCA, said: “The event was a great opportunity for ACCA’s guests to understand the challenges and opportunities the accountancy profession faces now and in the future. Our Complete Finance Professional campaign shows that CFOs want their finance staff to have a broad range of skills and expertise throughout the finance value chain.

“This need is supported by ACCA’s annual survey of employers we conducted last year, which showed that nearly 90 per cent of employers said the ACCA Qualification was relevant to all employment sectors, this confirms our belief that ACCA offers a relevant qualification that meets the needs of business, individuals and employers to ensure that we develop the complete finance professional capable of achieving strategic roles in business.”

In tune with this zeitgeist, the high-level and highly informative summit featured expert insights and compelling case studies on various current issues affecting CFOs as they go through this transformational age.

Nissan opens ninth 3S dealer in Vietnam

This week Nissan Vietnam announced a new dealership in Ho Chi Minh City, Nissan Mien Tay, the ninth authorised 3S Nissan dealer in Vietnam.

Nissan Mien Tay is a Nissan’s global-standard 3S dealer located at 54 Kinh Duong Vuong, District 6, Ho Chi Minh City.

Nissan Mien Tay is fully owned by Western Passenger Transport and Service, a member of Saigon Transportation Mechanical Corporation and covers 3,970 square metres, total construction area is 3,800sqm with total investment capital is $2 million.

This dealership is equipped with 18 service working-bays, two state of the art paint shops, and several advanced diagnostics equipment imported from Nissan Motor.

“Ho Chi Minh City is the economic centre of Vietnam, contributing 20 per cent to the nation’s gross domestic product (GDP) and 28 per cent of its industrial output. I understand that Ho Chi Minh City aims to record 9.5 per cent GDP growth and raise its GDP per capita to $4,000 this year. With various socio-economic development initiatives underway to achieve these targets, I am confident that Nissan Mien Tay will certainly make significant contribution to enhance Nissan’s presence in southern Vietnam,” said Ang Bon Beng, senior regional director of Edaran Tanchong Motor Sdn Bhd.

Based in Hanoi, Nissan Vietnam is a joint venture between Nissan Motor Japan and Tan Chong Motor Holdings Berhad (TCMH). TCMH is an established investment holding company, of which the current principal activities include assembly and distribution of Nissan motor vehicles in Malaysia, Cambodia and Laos.

Lung Lo Group receives new IHC Beaver dredger

The Lung Lo Construction Corporation, under the Defence Ministry, has received a modern dredger, IHC Beaver 5014C, manufactured by the Dutch IHC Beaver Dredgers B.V. Company.

The ship, 35.1m in length, 9.5m in width and 174 tons in weight, is able to operate at a maximum dredging depth of 14m basing on the assessment of the Navy’s Technique Department.

Once operational, the dredger will contribute to promoting productivity and quality of the group’s port constructions offshore.

PwC recognised for building tax service market

PricewaterhouseCoopers (Vietnam) Ltd. (PwC) has received the prime minister’s Certificate of Merit for the firm’s achievements in building and developing the tax consulting service market in Vietnam from  2008 to 2012.

According to the Vietnam Association of Certified Public Accountants, PwC was amongst the Top 3 companies having the highest revenues from tax consulting services in Vietnam. PwC was one of the first tax consulting firms to be established in the country, and has made significant contributions to the development of the tax service and tax agent industry.

“We are delighted to receive such a valuable award which demonstrates the government’s interest in and recognition of our contributions to the tax consulting industry and, importantly, to the growth of foreign investment and development of the Vietnamese economy,” said Dinh Thi Quynh Van, PwC general director, who also received the prime minister’s Certificate of Merit for her achievements as an individual tax consultant.

“As an active member of the Vietnam Tax Consultants’ Association, PwC has joined hands with the association and the tax consulting business community to contribute to developing the tax policy system of Vietnam, to improve efficiency and boost the development of the tax consulting industry,” she added.

PwC was one of the first foreign-owned consultancy firms to be established in Vietnam in 1994. During nearly 20 years of growth and development, PwC has continuously remained among the leading firms in audit, tax, legal and advisory services, playing an active role in the development of the professional consulting service industry in Vietnam, as well as in the success of the PwC global network.

In 2011, PwC also received the prime minister’s certificates of merit for the firm and its individual members - Ian Lydall, chairman, and Nguyen Phi Lan - deputy general director of PwC Vietnam - for their contributions to the development of the independent audit service industry in Vietnam. Ian Lydall is the first foreign auditor to receive this certificate of merit.

Fuel price stabilisation data to be published

Deputy Prime Minister Vu Van Ninh has asked the Ministry of Finance to publicise the management and use of the fuel price stabilisation fund every quarter on the ministry's website.

This was to enhance the transparency of the fund as well as providing official information to relevant organisations and residents.

Deputy Director of the Price Management Department Nguyen Anh Tuan said that the fund was under the management of the Ministry of Finance and the Ministry of Industry and Trade, not the petrol enterprises.

The Ministry of Industry and Trade said that Circular 84/2009/ND-CP regarding petrol businesses would be amended and submitted to the Government before the end of June.

The fuel price stabilisation fund was founded based on Circular 84, under which wholesale petrol enterprises must set aside funds to stabilise prices.

Petrol prices were cut three times last month by a total of VND1,200 (US$0.057) per litre after an increase of VND1,400 ($0.067) to a record high of VND24,550 ($1.17) per litre at the end of March.

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