Many power projects cut to help control inflation

The Electricity of Viet Nam (EVN) and its subsidiaries have decided to cancel construction of 300 projects with total investment of VND12.5 trillion (US$609 million) in response to Government Resolution 11.
The resolution was passed to control inflation, stabilise the macroeconomy and ensure social security.

EVN reviewed its investment plans and was able to identify projects which could be cancelled without affecting the nation's power supply or other key projects of constructions.

Its subsidiaries have been actively co-operating with localities to develop land for the construction of power supply facilities as well as developing awareness raising programmes to inform the public about the need to save power.

EVN statistics reveal that the country saved 530 million KWh of electricity in the first half of the year.

The group also reports several successes so far this year. It has developed power supply systems for the Khmer ethnic minority in southern Bac Lieu, Tra Vinh and Soc Trang provinces, and poor households in northern Son La, Lai Chau and Dien Bien provinces.

EVN said that 1,700MW was added to the country's power system in the first six months of the year as a result of five new power projects with total capacity of 1,085MW. At the same time, power demand in the period was 18.3 per cent less than predicted.

It also completed 56 power grids ranging from 110KV to 500KV.

The group said that electricity regulations and controls had been effective due to a higher water level in reservoirs and power savings in production and consumption.

The group said the power system was expected to reach 314.5 million kWh per day this month.

EVN plans to maximise output by hydropower plants and mobilise other resources such as coal and turbines in addition to importing electricity to meet the country's socio-economic development needs.

The group has asked units to ensure adequate power for the upcoming university entrance exam and help localities prepare for flood prevention.

Hai Phong attracts investment from Hong Kong

A delegation from the northern port city of Hai Phong led by Chairman of the municipal People’s Committee Duong Anh Dien had a working session with the Hong Kong-Vietnam Chamber of Commerce (HVCC) in Hong Kong on July 8.

The meeting was arranged by the Vietnamese General Consulate in Hong Kong and Macau (China) to bridge information exchange and strengthen cooperation between Hai Phong city and the HVCC, a Hong Kong-based organisation specialising in promoting trade and investment activities between Hong Kong businesses and Vietnamese partners.

At the working session, the Hai Phong leader said the city gave an overview of the city’s development, domestic and international investment flows into the city in recent time thanks to its open and transparent policies and favourable location in international trade.

According to the Vietnamese Consul General in Hong Kong and Macau, Nguyen Thi Nha, activities such as the visit and working session between the Hai Phong People’s Committee and the HVCC will help Hong Kong businesses and organisations better understanding about Vietnam’s economic, trade and investment environment.

Vietnam attracts over 400 FDI projects on real estate

Over 400 FDI projects worth more than US$42.8 billion were registered in the field of real estate in the first half of this year, according to the Ministry of Planning and Investment.

This slowdown was attributable to the government’s monetary tightening policy to reduce inflation as foreign property developers weighed up pouring their capital into the Vietnamese market more carefully, especially medium-sized businesses.

However, experts said that businesses with strong economic potential and clear business strategies are likely to invest in the market.

There remain a number of merger and acquisition deals as a result of fast real estate growth over the years.

These deals are forecast to continue growing in both quantity and value in the future.

Vietnam’s footwear production on the rise

In the first half of 2011, Vietnamese footwear production witnessed an increase of more than 30 percent over the same period last year.

Footwear remains one of Vietnam’s key exports, ranking third after textiles and crude oil, with its revenue reached nearly US$3 billion.

Domestic consumers have changed their tastes from buying cheaper rubber sandals and shoes to costly leather, leatherette sport and canvas shoes.

The implementation of the Government’s resolution No.11 on monetary and credit control has shown positive impact on the industry. However, labour shortages, high inflation and the rises in price of electricity, transportation and labour have negatively affected its performance.

Switzerland finances public service project

The Swiss Government will sponsor US$11.231 million to the second phase of the Program on Public Services Provision Improvement in Agriculture and Rural Development (PS-ARD) in northern Hoa Binh and Cao Bang provinces.

An agreement to the effect was signed in Hanoi on July 5 by representatives of the two provinces and the Swiss Government.

The second phase of the programme has been deployed in 2010 and will last through 2015 at an investment capital of US$14.169 million.

The programme is intended to enhance communal level capacity building in making socio-economic development plans and better efficient and effective decentralized public service delivery systems and processes in agriculture and rural development.

Vietnam joins Creative Product Week in Indonesia

Vietnamese goods are being showcased at the 5th Creative Product Week (CPW), which is launched in Jakarta, Indonesia from July 6-10.

Vietnam’s pavilion attracts many visitors to a wide range of handicraft products and cultural and art works.

Also on display are creative products of about 800 businesses from the Association of Southeast Asian Nations (ASEAN).

The 5th CPW is focused on information technology such as animation, software, publishing, printing, packaging and advertising, music and film, and fashion products.

This year’s event is expected to earn US$6 million in revenue from trade transactions (up about nearly US$1 million compared to last year).

Indonesia’s exports of creative goods reached Rp 104.71 trillion, or 7.5 percent of the country’s total exports in 2009, representing an average increase of 2.9 percent during the 2006-2009 period.

Banks still perplexed by demands

Bringing down lending rates to non-productive sectors is challenging banks.  

Many bank executives said pulling down lending rates to non-productive sector to no more than 22 per cent as of June 30 and 16 per cent as of December 31, 2011 was not a simple task.

Kien Long Bank’s general director Truong Hoang Luong said the bank had made a great stride to drive non-productive sector lending rates down to 22 per cent as of June 30.

The rate is around 20.3 per cent at the Ho Chi Minh City Housing Development Bank (HDBank). The bank’s deputy general director Dam The Thai said HDBank would continue taking back loans from non-productive sector and focus on supporting production, manufacturing, agriculture and rural areas.

The door to personal loans is also ring-fenced as smaller joint stock banks wanted to be certain they would pull down the lending rate to non-productive sector to 16 per cent by the year’s end, Thai said.

OCB general director Trinh Van Tuan said though the bank succeeded in bringing down the rate to 21 per cent by late June 2011 it had stopped lending to securities and property areas and restricted personal loans.

Tuan said as the consumer price index (CPI) was eased in June and was forecast to further go down in the upcoming months, the State Bank should consider relaxing current lending requirements towards banks.

“The State Bank may consider whether allowing banks to keep the lending rate to non-productive sector at 22 per cent as presently instead of 16 per cent as required,” Tuan said.

OCB’s lending growth was more than 7 per cent currently against late 2010.

Western Bank general director Dang Duc Toan said the bank’s lending rate to non-productive sector was kept below the permissible level prior to June 30 deadline and it now stayed at around 20-21 per cent. To bring it down to 16 per cent by the year’s end, the bank would gradually take back loans from securities, property and even personal loans, Toan said.

State Bank Ho Chi Minh City branch office director Ho Huu Hanh said six joint stock banks in the city still failed to meet central bank requirement as of July 1, 2011. Hanh, however, refused to declare those bank names and said his branch forwarded a report about it to central bank and wait for State Bank’s guidance.

According to State Bank reports, the banking sector’s outstanding loan growth was 7.05 per cent as of June 10, 2011 against late 2010, of which dong lending rose 2.72 per cent in amount and dollar lending rose 22.21 per cent.

The production sector’s outstanding loans hiked around 11 per cent and made up 83 per cent of total loan structure.

Lending to agriculture and rural areas surged 25 per cent and to export sector up 25.8 per cent. Non-productive sector outstanding loans slide 9.46 per cent in amount and made up 16.9 per cent of total against 18.8 per cent in late 2010.

The property sector’s outstanding loans were around VND222 trillion ($10.7 billion) as of June 10, 2011 against VND235 trillion ($11.35 billion) in late 2010.

City eyes closer ties with provinces to enrich tourism

HCMC as the country’s tourism hub has plans to strengthen relationship with provinces to enrich tourism products to woo more visitors, especially international guests, said a leader of the municipal government.

Vice Chairwoman Nguyen Thi Hong said here on Wednesday that the city attached importance to diversifying and enriching tourism products for the development of the local hospitality industry. Therefore, the city is working on cooperation plans with other localities to develop inter-provincial tourism routes.

“The city’s tourism has enjoyed strong growth in the past five years with average revenue up 26% per year and international visitors up 15% per year. Diversifying tourism products is considered as one of the keys in maintaining tourism growth,” Hong, head of the steering committee for tourism development of HCMC, said in a ground-breaking ceremony for a hotel on Wednesday.

The city’s Department of Culture, Sports and Tourism reports that tourism revenue in HCMC in the first half of this year is estimated at VND23 trillion, up 24% year-on-year. International arrivals in HCMC totaled around 1.65 million, up 10% year-on-year.  

As a big business hub and an international gateway for foreign visitors, HCMC has a strong advantage to receive international guests but it still lacks natural sites and beautiful beaches for the visitors.

So far, the tourism sector has joined forces with several localities. For instance, HCMC, Lam Dong and Binh Thuan have inked an agreement to link their key tourist destinations.

HCMC has also cut similar deals with partners in the Mekong Delta region.

According to the tourism department, in the second half of this year, the city’s tourism will review the five-year cooperation plan with the Mekong Delta region, as well as the development of the tourism triangle among HCMC, Binh Thuan and Lam Dong to make better activities for cooperation.
 
Three Mekong infrastructure contracts signed

Project Management Unit of Southern Inland Waterways (PMU S.I. Waterways) on Wednesday signed three contracts with successful bidders for the World Bank-backed Mekong Delta Transport Infrastructure Development Project, shortly called WB5.

The WB5 project is worth US$312 million from the WB’s loan and a grant from the Australian government through the AusAID organization with an aim to improve traffic systems in the Mekong Delta region, minimize traffic jams on main roads and waterways, reduce costs for transportation from production areas to consumer markets, and support the hunger eradication and poverty reduction project in the region.

The three contractors, Uniconsult Consulting (Germany), Halla Engineering & Construction Corporation (Korea) and Joint Venture of Khanh Giang (Vietnam) & Dredging International Asia Pacific (Singapore), won the three contracts of the project.

They include contract CS-D2: Institutional Support to Vietnam Inland Waterway Administration and contracts NW1-2: Dredging and Improvement to Class 3 on Corridor 2.

These are 3 among nearly 30 important contracts that the project owner has delivered to the Project Management Unit of Southern Inland Waterways, said Nguyen Ngoc Thach, general director of PMU S.I. Waterways.

The package CS-D2 is to strengthen the strategic management power for the Vietnam Inland Waterway Administration, and structure-oriented multi-modal transports of the transport sector. Uniconsult Consulting will implement this package.

Meanwhile, the contracts NW1-2 will carry out dredging, improvement of canals, construction of My An and Phong My bank and frontage roads. The contractors will dredge 3.6 million cubic meters, build 1.9 km of bank protection road, 19 km of frontage road and 6 bridges on frontage road with a total value of about VND374 billion, equivalent US$18.2 million.

“The potential of the waterways transportation in the Mekong Delta is very large, while our investment is in shortage. The waterways are often congested,” Thach said. Higher transportation costs in Vietnam than in other countries hurt the competitiveness of local goods, he said.

Smartlink to join Asian network soon

A total 31 member banks of Smartlink Card Services Joint Stock Co. have agreed on joining Asia-Payment Network (APN) in 2011, becoming the second card alliance in Vietnam to join the Asian network behind BanknetVN.

With APN membership, in future, Smartlink member banks in Vietnam can expand their card payment networks to those in the Asian region, according to the card alliance in its recent annual meeting. Through this system, cardholders in Vietnam can enjoy more utilities at attractive fees.

APN currently clubs together players from many Asian countries including Malaysia, Indonesia, Thailand, Singapore, the Philippines, South Korea and Vietnam.

Besides, Smartlink also has plans to connect to China Union Pay via Vietnam’s Vietcombank and become a provider of ATM services for different cards such as Visa Card, Mastercard, American Express, and JCB.

Smartlink in this year’s first half recorded nearly 22 million transactions with the total value of VND19 trillion. Its member banks are now operating 6,000 ATMs and 29,500 points of sales, accounting for market shares of 50% and 55% respectively.
 
Vinapco says Jetstar Pacific pays some of fuel debt

The Vietnam Air Petrol Company (Vinapco) has accepted Jetstar Pacific’s gradual payments for overdue fuel bills as the low-cost carrier has tried to pay some of the VND173 billion (around US$8.4 million) it owed the locally-dominant jet fuel supplier.

Vinapco general director Tran Huu Phuc told the Daily on the phone on Thursday the country’s second largest airline had transferred more than VND40 billion (some US$1.94 million) to the company and promised to clear the arrears this month.

As Jetstar Pacific has not paid off the debt, Vinapco forces the airline to prepay more than VND3 billion (over US$145,000) for the jet fuel it needs every day for its aircraft to perform around 40 daily flights on domestic routes.

Phuc said Jetstar Pacific had also written to Vinapco agreeing to be responsible for bank interest rate of the unpaid debt and the company regarded this as a positive sign. He clarified Vinapco had to pay interest for the loans it took out for jet fuel imports to feed airplanes of Jetstar Pacific, Vietnam Airlines, Vietnam Air Service Co (Vasco) and Air Mekong as well as foreign carriers.

Previously, Vinapco told Jetstar Pacific to show an underwriting document by either the airline’s major shareholder State Capital Investment Corporation (SCIC) or a credit institution before June 4 as a condition for the company to continue fuel supply for the carrier’s aircraft.

Phuc said Jetstar Pacific had not had any such underwriting documents more than a month after the deadline, but Vinapco saw the airline was doing its utmost to pay off the debt. This is one of the reasons why the company has agreed on the airline’s deferred payments for the debt.

Another private airline, Indochina Airlines, still owes over VND25 billion to Vinapco, and Phuc acknowledged that the company did not really know how to collect this debt, as the country’s first private operational carrier was grounded just one year after it launched domestic services in November 2008.

Vinapco now has to wait and see because its legal actions have not taken effect. Phuc said the Hanoi court said it had forwarded Vinapco’s file against the airline to its counterpart in HCMC where it was headquartered after having failed to summon the carrier’s management for several times.

Phuc said the HCMC court had not informed Vinapco of the case against Indochina Airlines, which defaulted on accumulated debts said to exceed over VND70 billion (US$3.4 million).
 
Path to Indian market bumpy

Vietnamese authorities are making efforts to help Vietnamese exporters step up sales to India but it seems hard to expand exports there since many key export items of the two countries are quite similar.

Local businesses are eager to learn about the potentials offered by the emerging Indian market, but many of them might be disappointed since India has many export items similar to Vietnam’s.

Some Indian products are even more competitive than Vietnamese goods, heard an online conference on the Indian market organized by the Ministry of Industry and Trade on Thursday.

Tran Quang Huy, deputy director general of the ministry’s South West Asia and Africa Market Department, said Vietnam and India had a range of similar goods but some Indian goods are better in price and quality, such as textiles, garments, footwear and farm produce.

Vietnam now has a trade deficit with India. In the first five months of this year, Vietnam exported US$483 million worth of goods to India and imported more than US$1 billion worth from India, according to Vietnam’s Customs.

Vietnam is heavily dependent on imported materials which are major export items of India, such as materials for production of feed, textiles and garments, footwear, and electronic products.

Nguyen Son Ha, commercial counselor of Vietnam in India, acknowledged an uptrend of Vietnam’s textile and clothing material imports from India. At the moment, India is one of the main material providers for Vietnam’s textile and garment industry.

Vietnam last year imported nearly 66,000 tons of cotton from India, up from the 30,000 tons plus in 2009.

India has a huge supply of leather and skilled labor in the industry, enabling it to become a global center of leather.

India has a big demand for importing fuels, raw materials, unprocessed farm products and consumer goods. However, it is imposing high tariffs, creating challenges for Vietnamese goods to make it to the Indian market.

“It’s not easy for Vietnamese goods to enter India’s market, such as coffee, rubber, pepper, footwear and garments,” said Huy of the South West Asia and Africa Market Department.

Moreover, India is a major producer of chemicals, packaging, and fruit.

Vietnamese businesses in some sectors still have opportunities to export to India, though. Take furniture, computers and construction materials for example, according to the conference. India is in the process of building infrastructure and high-rise apartments.  

A number of Vietnamese goods now enjoy tariff preferences as part of the free trade agreement between India and ASEAN, such as garment, footwear, furniture, coffee, tea, rubber, plastics, chemicals, machinery and equipment, ores and minerals. This FTA took effect in January 1 last year.
 
Investors eye infrastructure sector

Many businesses and investment funds are eyeing infrastructure projects around the country, and agree that the country offer attractive opportunities for long-term investors.

Speaking at a meeting on Thursday with VinaCapital and Macquarie Capital and International Finance Corp. (IFC), Le Song Lai, general director of State Capital Investment Corporation (SCIC), said SCIC is expanding new projects, especially infrastructure projects in the fields of energy, urban areas, hospitals and schools. SCIC has earlier only focused on selling State-owned capital and restructuring enterprises.

VinaCapital, one of the leading investment firms in Vietnam, has ploughed money into four such projects with a success rate of 50%. However, the enterprise still sees a lot of potential in the sector.

Kenny Low, deputy managing director at VinaCapital, said that infrastructure investment in Vietnam remains a good opportunity. The Government has called for investment in the sector and invested capital in State-owned enterprises, giving more chances for private firms to join infrastructure projects.

Legal framework of PPP (public private partnership) is one of the Government’s incentives for investors.

However, VinaCapital said the sector would be more attractive if Vietnam offers more incentives in the PPP program because profits from infrastructure projects are lower than that of other industries.

Investors still face challenges as the projects consume a lot of capital and require different kinds of currency, while the Vietnam dong keeps depreciating. Meanwhile, shareholders must be knowledgeable as infrastructure projects are more complicated than others.

The investors at the meeting told SCIC the main factors for successful infrastructure projects were suitable legal framework and policies, good partners, attentive shareholders and careful appraisal.

Nguyen Noi, deputy head of Foreign Investment Agency under the Ministry of Planning and Investment, said the Government’s PPP pilot program is a strong boon for investors. Unlike BOT (build, operate, transfer) form, the Government contributes 30% to a PPP project and does not collect any profits.

“Vietnam, however, has shortcomings in supervising profits of investors. Some enterprises earn bigger profits than the levels assigned for capital recovery but do not give the project back to the Government,” Noi said.

Vietnam is expected to need US$150-160 billion for infrastructure projects from now to 2020, including US$40 billion for electricity, US$53 billion for roads, US$3 billion for railroads and US$25 billion for seaports. As the State budget only meets 50% of the demand, the nation has to mobilize the rest of the capital from other economic sectors.

* The Mekong Delta will need around VND100 trillion for its traffic infrastructure development plan from now to 2020, while the sector finds it hard to lure investment due to poor profitability.

Almost all traffic projects in the region have fallen behind schedule. To solve the problem, the Delta has mobilized many sources like government bonds, application of many investment forms like BOT, BT and PPP or selling toll collection rights.
 
IFC and Sumitomo co-invest in particleboard plant

International Finance Corporation (IFC) and Japan’s Sumitomo Forestry Co. Ltd. are co-investing in a particleboard-processing plant in Vietnam, IFC said.

The plant, owned and operated by Vina Eco Board Co. Ltd., a joint venture between Sumitomo Forestry Company and Sumitomo Forestry (Singapore) Limited, is located in the Mekong Delta province of Long An.

IFC contributed US$9 million in equity investment in the plant, which is expected to benefit about 700 farmers along the wood supply chain. With an annual design capacity of 250,000 cubic meters, the plant will be able to produce high-quality particleboard that meets the specifications of furniture processors.

The project also includes the construction of an 11-megawatt biomass-based power plant to supply its energy needs, thus reducing greenhouse-gas emissions.

Simon Andrews, IFC’s Regional Manager for Vietnam, Lao PDR, Cambodia, and Thailand, said he hoped the plant would help creating jobs in the country’s forestry sector and cutting greenhouse-gas emissions.
 
Danang targets four million visitors in 2015

Danang City’s government has approved a tourism development program for the next five years with an aim to receive four million holidaymakers in 2015.

To meet the target, the central city will develop three main categories of tourism, namely sea, resort and ecological tourism; culture, history, landscape, countryside and trade village holidays; and business, seminar and shopping tours.

The number of visitors is projected to grow by 18% annually while tourism revenue is expected at over VND3.4 trillion in 2015. The tourism sector is expected to make up 7% of the city’s gross domestic product (GDP) instead of 5.12% currently.

Local government plans to set aside nearly VND3.2 trillion for the program with VND167 billion coming from the State budget.

The city’s government has asked related agencies to carry out tourism projects in Son Tra Peninsula, Ngu Hanh Son cultural park, Lang Van, Hai Van Pass and Bach Dang tourist street.

It will focus on high-class sea tourism services and waterway, shopping, leisure and business projects, speed up promotion programs and human resources training.

Danang aims to receive three million domestic and one million international visitors in 2015.
 
City approves pedestrian bridge project

The HCMC government has approved construction of a pedestrian bridge linking District 1 and Thu Thiem new urban area in District 2 as suggested by the Department of Transport last September.

The bridge is projected to connect the end of Dong Khoi Street in District 1 to the central square of Thu Thiem New Urban Area across the Saigon River. This is one of the most important projects in a list for urgent investment by the local government.

According to the Transport Department, a joint venture between Dang Co Investment Service Joint Stock Co., Bac Viet Development Co. Ltd. and Indochina Capital has suggested to build the bridge under BT (build, transfer) form. The joint venture will cover the feasibility study cost for the project.

The city has asked Thu Thiem New Urban Area management unit and the investors to give various designs and field suggestions from the public.

Defrain Souquet Deso Associes Co., or Deso, in February submitted a zoning plan of the 1/500 scale for the central square and a lakeside park in Thu Thiem to build a typical public space of HCMC.

Vietnam Star builds new Mercedes-Benz Autohaus

Vietnam Star Automobile, the authorized dealer of Mercedes-Benz, is investing an extra US$5 million in its new flagship Autohaus 600 in HCMC according to Daimler’s global standards.

The Mercedes-Benz Autohaus 600 project is located next to the Customer Service Center on Nguyen Van Linh Parkway in the Saigon South new urban in District 7.

This is a high-class complex comprising a deluxe showroom with fine architectural design, multi-functional workshops and genuine parts store, the company said in a statement. It is the first Autohaus that follows the right structure of Daimler Mercedes-Benz in Germany.

The showroom is also expected to display a variety of super imported models including sporty AMG sub-brands.

In 2005, Vietnam Star Automobile had its first Autohaus 600 established in HCMC at 2 Truong Chinh Street, Tan Phu District. In 2007 the dealer opened a city showroom at the PetroVietnam Tower, 5 Le Duan Boulevard.

Vietnam Star Automobile is the only Mercedes-Benz dealer who has a widespread distribution system in both Hanoi and HCMC, including two city showrooms and two Autohaus with workshop centers.

Vietnam Star Automobile is a subsidiary of Hap Seng Star Auto Sdn Bhd – a Mercedes-Benz retail partner in Malaysia.

Mercedes-Benz Vietnam closed its first six months of the year with 1,253 cars sold. The passenger car segment grew 21% from the same period last year, at more than 900 units.
 
Vietnam’s TV channel FBNC cooperates with CNBC

FBNC, a Vietnamese television channel that specializes in finance and business news, has has cooperated with the American satellite and cable television channel CNBC (Consumer News and Business Channel) to produce the program “Vietnam in Focus”.

This 30-minute newsreel that specializes in Vietnam’s economy will be aired on the channel CNBC Asia – Pacific – Australia twice per month.

“CNBC airs this English program on Sunday morning from 8 a.m, then it will be re-broadcasted by Vietnamese Television’s Channel 4 (VTV4) and FBNC,” explained Tran Ngoc Chau, FBNC director.

Maritime Bank, Vinacomin cut deal

Maritime Commercial Bank and Vietnam National Coal and Minerals Group (Vinacomin) signed an agreement in Hanoi on Wednesday to cooperate in many fields.

Under the agreement, Maritime Bank will provide the State-owned group such services as local and international payment, credits, risk management, and foreign exchange. In addition, the bank will provide consulting and financial services to raise long-term capital for Vinacomin in local and international financial markets.

Moreover, the two sides also agreed to consider opportunities to jointly invest in projects.

Le Minh Chuan, CEO of Vinacomin, said in a statement that Vinacomin’s capital demand was around US$1.6 billion annually to fund its projects. Therefore, the support from credit institutions like Maritime Bank is very important for the group, he said.
 
Singapore expert urges better risk management

In an economic slowdown, enterprises should improve their fundamentals like IT system design, internal audit and risk management, said Uantchern Loh, a risk management expert from Singapore.

With 25 years’ experience in risk management consulting, Loh said in a talk in HCMC on Thursday that in high growth markets like Vietnam, companies are usually busy with day-to-day trading operations, so there is no time left for them to train and look at their fundamentals.

“They think they can fly high and fast, but they even don’t know how to swim,” said Loh, who was invited by audit and consulting firm Deloitte to talk about risk management at the Hochiminh Stock Exchange.

If the economy went down, they would not know how to ride out tough times, he noted. “This is the time for enterprises to learn swimming. And (it’s) never too late to learn how to swim.”

Loh described what Vietnam’s economy was facing like high inflation now was normal since many other countries were on the same boat, but the important thing is how businesses prepare to react.

“Risk management must be a part of management in the company and everybody has to be involved in it,” said the expert with experiences in helping stock exchanges in Singapore and Malaysia to build risk management systems.
 
Poverty rate down but still high

The percentage of poverty-stricken households in 12 rural provinces has fallen strongly, but the proportion remains higher than the national average, a sociological survey showed on Thursday.

In the report “Characteristics of the Vietnamese Rural Economy: Results from Surveying Rural Households 2010 in 12 provinces across the country,” the organizer said the proportion of poor households has fallen to 16% in 2010 compared to 20% in 2008 and 23% in 2006.

The survey was launched by the Central Institute for Economic Management (CIEM) and the Embassy of Denmark, polling 2,200 households in 12 provinces from 2006 to 2010.

Vu Xuan Nguyet Hong, vice president of the CIEM, said the poverty downtrend was seen in most of the researched provinces, excluding Dien Bien, Khanh Hoa and Long An where the poverty rate in 2010 was higher than that in 2006.

In 2010, the poverty rate in Phu Tho Province was the lowest at 9% while that in Dien Bien Province was the highest at 32%. The proportions in other provinces such as Lai Chau (29%), Lao Cai (24%) and Khanh Hoa (24%) remained high .

However, it is noteworthy that CIEM applied the old poverty criteria approved by the Ministry of Labor, Invalids and Social Affairs rather than the new ones, which set higher standards.

Of the old creiteria, households with per capita income per month in rural areas at less than VND200,000 are considered poor people. Under these criteria, the poverty rate in Vietnam fell to below 10% in 2010, meaning that the rate in the above provinces was higher than the country’s average rate.

In another related survey on a larger scale, with the participation of 69,360 households, the General Statistics Office reported that the poverty rate in the country in 2010 was 14.2%, with the rate in urban areas at 6.9% and that in rural areas at 17.4% under the new standard issued by the Government in the 2011 – 2015 period.

Direct flights to UK make Vietnam's market larger

A direct air route between Vietnam and the UK will help turn Vietnam into a larger market, providing a gateway for visitors from the UK to Indochina, said a UK airlines executive.

At a seminar in London on July 7 to introduce Vietnam Airlines direct air route to the UK, which will officially launch on December 8, managing director of UK Alternative Airlines John Pope said direct flights will help travelers to save much time for transit, predicting a surge in the number of visitors from the UK to Vietnam.

Vietnam Airlines planned to use Boeing B777-200ER to transport passengers and cargo between Vietnam and the UK, with two flights from Hanoi and two others from Ho Chi Minh City a week to Gatwick airport, 48km from London .

At the seminar, which was attended by representatives from travel agencies from both countries, Vietnam Airlines representative Nguyen Sy Thanh introduced the airlines’ current services to the world market and future ones to the UK, as well as Vietnam’s tourism potential.

The new route is expected to actively promote tourism and business travel between Vietnam and the UK .

In 2010, about 100,000 visitors from the UK came to Vietnam and the number is expected to increase in the coming time.

Vietnam and the UK established their strategic partnership in last September and their two-way trade value reached over $2 billion.

The UK was the third largest European Union investor in Vietnam, with total investment of $3 billion.

Some investors make hay while sun hides

Few foreign investors are buying stakes in Vietnamese enterprises’ at high prices amid the local stock market falls.

At the end of May, the local market was surprised by the deal Streetcar Investment Holding purchasing five million Halico shares at VND213,600 per share, more than double the market price of some VND100,000 and more than 20 times higher the shares’ par value of VND10,000.

The England-backed firm continued offering to buy additional one million shares of the local company at the same price.

Some contributed the deal’s high price to Halico’s good profitability. The drink-maker’s after-tax profit reached VND162.4 billion ($7.8 million), 2.3 times higher than its chartered capital of VND70.6 billion ($3.4 million) in 2008. Those figures were of VND220 billion ($10.6 million) and VND108.5 billion ($5.2 million) respectively in 2009.

At the end of 2010, although Halico’s profitability reduced with after-tax profit hit VND129.2 billion ($6.2 million) and while chartered capital of VND200 billion ($9.6 million), its equity had risen to VND603.7 billion ($29.1 million).

Streetcar’s deal is similar to Lotte Confectionery Co. Ltd’s purchasing nearly 40 per cent stake of Bien Hoa Confectionery Joint Stock Corp in 2008, and Oman Investment Fund (OIF) buying 12.6 per cent PetroVietnam Insurance (PVI) stake last year, which also priced those company’s shares at nearly twice the market prices.

Nguyen Anh Tuan, PVI chairman said: “Purchasing PVI shares is just the foreigner’s first step to set their foothold in Vietnamese market. They had to own a sufficient shares amount which is not easy to be collected via exchange, thus they accepted such price.”

After the deal with PVI, OIF boosted its investments in the local petroleum sector, such as frequently pumping money as well as providing services to national oil and gas giant PetroVietnam.

Hanshin Engineering & Construction Co. in late June also bought 25 million PetroVietnam Construction shares at VND25,000 per share, doubling the market price at that time.

Nghe An plays hard ball

Central Nghe An province is cracking down on delayed projects.

Dong Nam Nghe An Economic Zone (EZ) and Industrial Zone (IZ) Authority is drawing a list of delayed projects and plans to take back land to give it to new investors.

According to the authority’s deputy head Phan Xuan Hoa, creating ‘clear’ space for investors was the way the authority supported investors in the face of the province’s tight budget.

“We are calling for support from infrastructure developers to be able to give investors clear land,” Hoa said.

Vast land was unused due to project delays, according to Hoa. Accordingly, from 2007 until present, the authority took back investment licences of 23 projects, including six projects in 2010 alone.

Nam Cam IZ alone had 16 projects having licences taken back. The IZ area would have been leased out to licenced projects. However, the number of projects actually off the ground was just a handful, therefore a huge land area remains unused.

“We face difficulties in taking back land since some delayed project developers opposed to our decision,” Hoa said.

Nghe An is currently home to eight industrial zones and economic zones embedded in the list of priority industrial zones for development until 2015 with a vision towards 2020 covering a total area of 2,860ha.

The prime minister green-lighted the planning of Dong Nam Nghe An EZ, consisting of Nam Cam IZ and Thanh Thuy border-gate economic zone.

The province’s EZs and IZs lured in 87 projects, including 10 on-going foreign direct investment projects.

Most prominent projects are Japan-backed Kobelco’s $1 billion iron-nugget manufacturing complex with an annual capacity of two million tonnes, an India-backed $25 million mineral processing and fertiliser production project and a Vietnam Cement Corporation’s $33.8 million non-baked building material production plant.

Metro still on a roll

Metro Cash & Carry has further expanded its  B2B cash & carry wholesale model into the central south coastal region of Vietnam.

The German wholesaler broke ground for its new centre in Khanh Hoa province’s Nha Trang city on July 8, looking to raise its total number of B2B wholesale centres in Vietnam to 15 when finished late this year.

With a total sales area of over 5,600 square metres and a product range of over 25,000 food and non-food items, Metro Nha Trang will serve the businesses in the central south coastal regions and in the Central Highlands.

The new centre, located on an area of over two hectares in the Vo Canh commune of Vinh Trung sub-district, will target business customers such as hotels, restaurants, caterers, traders, offices, and service companies besides creating new jobs and increasing tax revenue for the locality.

Metro Cash & Carry Vietnam managing director Randy Guttery, said: “We have increased our investment over the country to get closer to our business customers as well as benefiting and assisting local businesses to grow.”

He added that “Nha Trang city and Khanh Hoa province in general are among our focal markets in the central south coastal region. The continuously growing tourism and marine economy of these regions bring us great opportunity.”

As one of the tourism hubs of Vietnam, Khanh Hoa has also seen a large number of investment projects in marine industry such as Van Phong International container-transit port, the Van Phong petro-service industrial zone, the Van Phong petrochemical complex and the Van Phong thermo-electricity centre.

Metro Cash & Carry opened its first cash and carry wholesale centre in Vietnam in 2002. Today the company is operating thirteen wholesale centres in Ho Chi Minh City, Hanoi, Haiphong, Danang, Can Tho, Bien Hoa-Dong Nai, Long Xuyen-An Giang, Quy Nhon-Binh Dinh, Binh Duong, and Vung Tau and two distribution platforms in Binh Duong and Lam Dong. The Metro centre in Quang Ninh province is under construction and will go online within this year.