Domestic powdered milk firms buoyant

Domestic milk companies have increased powdered milk production to meet a higher demand on the local market.

Le Nguyen Hoa, deputy chairman of Dong Tam Nutrition Food Company (Nutifood), said the powdered milk market generated 2.36 trillion VND (111.3 million USD) in revenue in 2012, which included 300 trademarks, mostly foreign.

However, Hoa said, imported powdered milk is costly and domestic products are up to 60 percent cheaper and producers have better distribution systems.

That is why Nutrifood is building a powdered milk factory in the southern province of Binh Duong with an annual capacity of 50,000 tonnes, he said.

Another domestic firm, Vietnam Dairy Company (Vinamilk) also seems to be reaping boom benefits. Vinamilk chairwoman Mai Kieu Lien said the company’s powdered milk in Binh Duong province has a capacity of 54,000 tonnes a year, which include products for children and the elderly and hospital patients. It has won 25.8 percent of the market for children, she said.

Vietnam Customer Protection Association (Vinastas) deputy general director Vuong Ngoc Tuan said local powdered milk products meet hygiene and quality standards and are much cheaper.

Banks yet to give gold custody services

Half of the 12 banks eligible for gold custody service have yet to provide this service to their individual clients while other banks with strong gold mobilization activities before are still not allowed to run this operation.

A leader of Vietcombank said that the bank has yet to launch gold custody service as it has to re-consider warehouse design. In the short term, Vietcombank cannot decide an exact time for launching this service.

A branch director of Bank for Investment and Development of Vietnam (BIDV) said that his branch is unable to provide gold custody service due to substandard facilities. The service is only available at some branches of BIDV.

VietinBank has launched the service at head offices of its branches, meaning that customers cannot deposit gold at other transaction points of the lender. VietinBank charges VND20,000 per tael of gold a month and the minimum monthly fee is VND30,000.

Among seven joint stock commercial banks eligible for the gold custody service, only TienPhong Bank, LienVietPostBank and ACB have offered this service to customers while ABBank, Viet Capital Bank, Bao Viet and Military Bank have not.

Other banks that had mobilized large gold volumes before such as DongA Bank, Eximbank, Sacombank and VietABank have yet to obtain approval for this service.

Phan Huy Khang, general director of Sacombank, said that the lender has sought approval from the central bank’s HCMC branch to provide this service and is awaiting feedback.

At present, banks continue to give custody service for gold deposited before but do not welcome new gold depositors.

Do Minh Toan, general director of ACB, said that many customers before gained profits from gold depositing. Now, they do not want to withdraw gold out of banks to keep it at home.

A leader of the central bank’s HCMC branch said that the volume of gold under bank custody is large, suggesting that people have demand for this service.

City’s banks report slight rise in home loans

The number of customers asking for home loans in HCMC is still small while the disbursed volume is inconsiderable in spite of numerous preferential loans offered by the city’s banks recently.

A credit executive of a lender specializing in individual loans in HCMC informed the number of home loan applications at his bank had not risen in the last six months and that many branches even received only one or two applications per month in the period. He noticed the number of borrowers applying for home loans has barely posted growth since the start of July.

Sharing the same view, Pham Huy Thong, deputy general director of VietinBank, said home loan applications at his bank have increased, albeit at a slow pace, although it has introduced multiple preferential credit packages so far.

The pervasive effect of the VND30 trillion housing package targeting low-income earners in the market remains modest since few target borrowers are able to gain access to the low-interest loans. Similarly, not many corporate borrowers are given the low-cost loans, prompting Thong to believe more time is needed until the local real estate market is warmed up with information relating to the hefty loan package.

According to Tran Tan Loc, deputy general director of Eximbank, his bank disbursed hundreds of billions of dong early last year but the amount disbursed has been bigger this year. Many have asked for home loans from Eximbank given lower housing prices compared to last year plus current lending rate reductions. However, he noted, the trend has just started and might increase considerably in the next few months.

Loc informed his bank would offer one more housing loan package in which homebuyers can access low-interest loans. Total volume to be disbursed by the package would be huge, Loc said, adding the program’s lending rates would be low as credit growth at Eximbank has kept pretty low recently. The lender now has provided loans to low-income people with housing demand in Binh Tan District at an annual rate of 6.5%.

Despite the difference of the target borrowers between the VND30 trillion housing program and other credit packages by local banks to come soon, Loc noted that the lenders would still be under pressure of slashing lending rates to lure customers. As this is the common trend among most members in the banking industry, homebuyers will see more advantages to own a home at a more affordable price than before in the context that lending rates are on the wane.

In the meantime, at HSBC Vietnam, the disbursed volume for home loans by the bank is rising but no sharp growth is seen, only year-on-year steady growth. The bank ascribed the steady growth in home loan disbursement to suitable credit policies designed for the target customers in line with its strategy.

The six-month home loan disbursement growth at HSBC exceeded 23% against the same period in 2012, with the lowest lending rate for its home loans fixed at 9.5% per annum.

Nevertheless, Huynh Kim Sang of HSBC forecast that those in dire need of housing would be given more opportunities as a host of realty developers have sought to convert their apartment projects into low-cost homes that are more affordable to low-income people than before.

Mobivi to place more payment machines in District 7

Viet Phu Payment Services Support Joint Stock Company (Mobivi) and Phu My Hung Development Corporation signed a cooperation agreement on Thursday to place more PayLink payment machines at Phu My Hung area and Crescent Mall in District 7.

The two sides agreed to place an additional 80 machines within next month, taking to 120 the total number of PayLink machines at the area.

The machines enable users to top-up mobile phone accounts, buy phone cards and pay electricity, water and pay television bills.

The machines will process each transaction in 30 seconds before giving a bill to customers. All transactions are saved in the system to help customers check information and deal with complaints.

Ryan Walter Galloway, strategy director of Mobivi, said that the enterprise will invest from US$1-2 million to develop specific products for the PayLink machine system in the area.

City builds special zone for Japan engineering SMEs

HCMC will have a manufacturing zone designed for Japan’s small and medium mechanical engineering enterprises in the coming time.

Under the plan, Japan’s Unika Holdings Company will cooperate with Hiep Phuoc Industrial Park Company to develop infrastructure for small and medium Japanese enterprises, the Japanese company’s CEO told HCMC Chairman Le Hoang Quan on Thursday.

Yasumi Yoshinori, CEO of Unika Holdings Company and advisor of the Japanese small and medium mechanical business association, said that with assistance from the city government, the two partners had agreed to conduct necessary procedures to establish the joint venture to build the zone and make its debut next month.

The joint venture will develop the zone on 100 hectares, but in the beginning it will prepare a standard workshop site on 13 hectares in Hiep Phuoc Industrial Park for Japan’s hi-tech businesses.

According to Yoshinori, small and medium enterprises from Japan tend to make overseas investments with Vietnam as a favorite destination. It is now a good time to set up the joint venture to prepare infrastructure and attract Japanese producers.

He also noted that small and medium enterprises of Japan had little experience in investing overseas and thus expected assistance from the city government.

HCMC Chairman Quan said that the investment efficiency of Japanese enterprises in HCMC was always high and Japanese manufacturing enterprises had high technologies which the city needed. Therefore, the city would facilitate their investments and operations, he added.

Besides, Quan suggested that the zone should be twice as large compared to the planned area of only 100 hectares.

According to Hepza, Unika Holdings Company has invested in Tan Thuan Export Processing Zone for around 18 years and specializes in producing and outsourcing precision engineering products. This October the company will hold a seminar in Japan to call for investments from the country into HCMC.

Toll collection right transfer proposed for expressway

Toll collection on the HCMC-Trung Luong expressway will likely be assumed by another enterprise from October 1, according to a proposal by the current operator Cuu Long Corporation for Investment, Development and Project Management of Infrastructure (CIPM).

Le Duc Tuan, office manager of Cuu Long CIPM, told the Daily that his firm proposes the toll collection right transfer because it has only been doing the job on behalf of the Government. The proposal has been forwarded to the Ministry of Transport.

Since February 25, 2012 when CIPM officially collected toll fees on HCMC-Trung Luong expressway, the transport ministry has still been unable to find out any investor intending to purchase the toll collection right.

Under the transfer plan submitted to the transport ministry by CIPM, the transfer of the toll collection right of the 40-kilometer expressway will be carried out via a bidding round. The toll collection will last five years, while the transfer value is estimated at some VND1.6 trillion which will be paid in three installments within ten months.

Still, it is still unknown whether the ministry will seek ways to transfer the toll collection right again after five years or will stop the fee collection.

BIDV Expressway Development Company (BEDC) earlier had purchased the toll collection right of HCMC-Trung Luong Expressway for 25 years at more than VND9.1 trillion. However, due to financial constraints, this company returned the project and the ministry has assigned CIPM to collect the toll ever since.

Toll amounts totaled around VND380 billion in the first year, with VND65 billion spent on power consumption and maintenance services for the expressway annually, according to CIPM.

The HCMC-Trung Luong expressway has a total length of 62 kilometers developed at a cost of VND9.88 trillion, with the expressway section stretching 40 kilometers.

Bank restructuring takes center stage at M&A forum

The restructuring of credit institutions and the search for strategic partners of local lenders are expected to generate a big wave of mergers and acquisitions (M&A) in the coming time.

This topic was lively discussed at Vietnam M&A Forum 2013 held by Dau tu newspaper and AVM Vietnam Joint Stock Company in HCMC on Thursday.

Dao Minh Tu, deputy governor of the State Bank of Vietnam (SBV), informed there were currently 13 banks with foreign strategic partners.

A number of banks, both State-owned and private ones, are looking for strategic partners, said Sanjay Kalra, resident representative of the International Monetary Fund (IMF) in Vietnam and Laos.

Investors show a considerable interest in the restructuring of credit institutions, especially nine banks classified as weak.

Eight of these banks have made schemes for restructuring and the job is progressing well, said Tu.

Investors and experts expressed a concern that bank restructuring was moving too slowly. In response, Tu said: “Banks are moving on the right path and at a fast pace, not as slow as people think.”

What matters is not the time, but the efficiency of the restructuring process, he stated.

SBV will let banks make self-adjustment plans first through mergers and search for potential partners. Only in case of necessity will the central bank intervene to prevent property loss and guarantee the efficiency of the restructuring process, he said.

The amended version of Decree 69 stipulates that in some special cases, foreign investors can hold a combined stake of over 30% in a Vietnamese bank. This amendment has caught the attention of many foreign investors.

With the presence of foreign strategic partners, banks are changing in a good way, from governance, business, training to brand building.

Kalra stressed bank merger was not simply a process of combining two banks together, which just resulted in a bigger bank, not a stronger one. The most important part of this process is to change the way of doing business and governance and to create momentum for better operations.

M&A deals in Vietnam totaled some US$1.53 billion in the first half of 2013, a relatively low value compared to the same period last year.

Still, John Ditty, CEO of KPMG Vietnam and Cambodia, forecast M&A deals this year would have a value approximate to the figure last year. The total value of M&A deals in 2012 was US$4.9 billion, versus US$6.3 billion in the preceding year.

Large M&A deals used to be those worth tens of millions of U.S. dollars, but now there are transactions worth hundreds of millions or even billions of U.S. dollars.

Masataka “Sam” Yoshida, senior managing director of RECOF Corporation, remarked Vietnamese companies often quoted high prices, making it hard for Japanese partners eyeing M&A deals.

Even so, he believed the M&A market still had much room to grow.

The Vietnam M&A market is attractive because investors can not only do business in the local market but also penetrate a wide market opened up by the free trade agreements (FTA) that Vietnam is involved in.

Vo Tri Thanh, vice president of the Central Institute for Economic Management, said many investors had told him that the more challenges there were in the market, the more chances there would be for M&A.

The outlook of foreign capital inflows via M&A remain positive as negotiations over the Trans-Pacific Partnership (PPP), the FTA with the European Union and ASEAN+6 are nearing completion, with a huge market ahead.

BASF relaunches Vietnam business

Germany’s leading chemical company BASF has started its own plant protection business in Vietnam in a farmer-oriented bid to improve yield and quality.

Starting on August 7, the global firm sold its crop protection products directly in Vietnam instead of via intermediaries as previously.

The new business also aimed to help crops tolerate drought and control weeds, said BASF Vietnam’s managing director Petrus Ng. He added agricultural solutions were one of BASF’s five business segments and received the highest research and development investment.

Raman Ramachandran, BASF senior vice president, crop protection in Asia-Pacific, echoed the comments saying, “We aim to bring to Vietnamese farmers the full benefits of our innovative crop protection products. As we want to focus even more strongly on Vietnam, we have taken the strategic decision to re-enter the market in our own right.”

BASF has ended its agreement with its Vietnam distributor, and from now on will market its crop protection products directly in the country. These include the company’s AgCelence products, for example the fungicide Headline, which offers disease control, as well as improved yield, stress tolerance and quality of crops.

As part of the new move, BASF will establish an expert field team to provide training and development for Vietnamese farmers. The field team members will visit farmers and provide expertise on crop development, facilitating experience and information exchanges between farmers and industry experts.

BASF Vietnam has some 30 staff members for the team and Leon Van Mullekom, BASF business director for crop protection in Southeast Asia, told VIR that the company expects to double that in two years. “The problem here is how to find the right people,” he said.

The multinational company is also considering the establishment of what it calls an AgSolution Farm, which would showcase its agricultural innovations for farmers, partners and employees. BASF operates AgSolution farms around the world, including regional countries like Thailand, the Philippines, and Indonesia. “Such a farm would be set up in Vietnam in 2014 or 2015,” said Mullekom.

He added BASF would regularly launch new crop protection products in Vietnam every year.

First seven month exports worrisome

According to data by the Ministry of Industry and Trade, although export turnover in the first seven months of this year was estimated at above US$72 billion, up 14 percent year-on-year, exports showed a worrisome picture in each sector.

Compared to the same period last year, farm produce and seafood--the country’s main export commodities, fell 7.2 percent in July, and 8.6 percent in the first seven months of this year. In the first seven months, export items which saw an increase compared to the same period last year, included vegetables and fruits with 28 percent, pepper with 17 percent, and cashew nut with 5 percent. An increase in export volume covered a slump caused by price reduction.

Except seafood exports of $3.38 billion, down 0.2 percent, key export items all drastically fell over the same period last year, such as coffee at $1.9 billion, down 23 percent; rice at $1.87 billion, down 13 percent; and rubber at $1.22 billion, down 17.6 percent.

Seven-month-accumulated slump in exports was estimated at $814 million year-on-year, of which, coffee accounted for $589 million, and rice $213 million, as commodity prices in global market declined by $359 million.

Fuel and minerals also posted decrease in volume and value. Export turnover of fuel and minerals was estimated at $755 million in July, down by nearly 14 percent over June, and 30 percent year-on-year. In the first seven months, exports of this group touched $5.76 billion, down 15 percent year-on-year. Export price of all items in this commodity group fell with ore and other minerals plummeting 49.9 percent, and coal sinking 20.4 percent. Thus, export turnover of this commodity group dropped $562 million in value, and $456 million in volume.

Noticeably, an increase of 14 percent in seven-month export turnover was contributed by industrial processing products with exports surging by nearly 26 percent year-on-year, accounting for 69.5 percent of total export turnover. Of which, cellphones continued to have highest export turnover with $11.63 billion, up 87 percent year-on-year.

Another highlight in last seven-month exports was that Foreign Direct Investment companies still played an important role. While total imports of the domestic sector reached US$24.5 billion, up 1.6 percent year-on-year, the FDI sector export totaled US$48.28 billion, including crude oil, up 22 percent year-on-year.

The role of FDI sector became more important in the balance of trade as FDI sector saw trade surplus of $6.91 billion, whereas domestic sector posted trade gap of $7.65 billion.

The appearance of foreign investors has helped Thai Nguyen Province become the province which has highest newly-licensed FDI projects in the first seven months of this year with registered investment capital of $2.1 billion, accounting for 44.8 percent of total newly-registered investment capital.

However, these results still reflect that Vietnam remains a processer. For instance, cellphones have the highest exports and strongest growth, but foreign companies mainly import components and accessories into the country to reassemble for export. Hence, despite large export turnover, profits remain low.

Tea exports earn US$120 million in 7 months

The Ministry of Agriculture and Rural Development (MARD) reports Vietnam exported 77,000 tonnes of tea in the past seven months, earning US$120 million up 4.1% in value.

MARD attributed the rise to the surging price of tea on global markets. The US$1,526 per tonne benchmark was 4.4% higher than last year’s figure.

More than 16,000 tonnes of tea were shipped abroad in July alone, reaping nearly US$27 million.

Taiwan consumed US$14.3 million worth of tea imports, making it Vietnam’s largest customer, increasing 11.9% year-on-year.

Pakistan’s more than US$17.5 million in import value placed it second.

The US, the United Arab Emirates, Germany, and Poland all demonstrated their promise for Vietnamese tea exporters, their individual turnovers each improving 1.2–1.4 times last year’s levels.

Vietnam Tower among 25 great skyscrapers

Bitexco Financial Tower in Ho Chi Minh City has been chosen by CNN as one of the world’s 25 great skyscrapers: icons of construction.

The 68-floor lotus tower invested by the Bitexco Group is the only Vietnamese construction work entering the list.

As a Grade A+ commercial construction in HCM City, Bitexco Financial Tower has set new standards for Vietnam’s construction industry.

Meeting world-class standards, the 262-meter skyscraper provides the city with more than 37,000 square metres of prime office space and 8,000 square meters of prime retail space.

The tower has a helipad on the 52nd floor that juts out 22 meters. The project has total investment capital of US$270 million and was completed in October 2010.

At the time of inauguration, Bitexco Financial Tower was the tallest building in Vietnam, but the record was broken in 2011 when Hanoi’s Keangnam Landmark Tower was put into operation.

Long-term strategy needed to boost rice export

This year, one million tonnes of rice from the summer-autumn crop was scheduled to be stockpiled by July 31, but only 80-85 percent of the target was fulfilled.

As proposed by the Ministry of Agriculture and Rural Development (MARD), the Prime Minister agreed to extend rice procurement to August 15 in a bid to stabilise rice prices during the main harvest period in the Mekong Delta.

According to MARD’s Plant Cultivation Department, the region’s summer-autumn crop covers 1.68 million hectares, expecting to result in more than 9 million tonnes of unprocessed rice, or 4.6 million tonnes of husked rice. About 680,000 hectares will be harvested each month during the main season, which falls in July and August.

The latest statistics show that as of the end of July, about 800,000 hectares of rice have not been harvested, so ending the rice procurement programme at this time would not benefit farmers in some Mekong Delta provinces like Long An, Kien Giang, Tra Vinh and Soc Trang.

At present, rice prices in these localities have gone up by VND500-700/kg from the level at the beginning of the harvest, since businesses are accelerating their procurement for stockpile and commercial purposes.

The Vietnam Food Association reports that aromatic rice is being sold at healthy prices. This kind of rice accounted for 12.6% of Vietnam’s total rice exports in the first half of 2013, up 77.8% from a year earlier.

Nonetheless, many businesses complained that the quality of aromatic rice is not high, due to the cultivation of a wide range of aromatic long grain varieties.

At a meeting on rice procurement and export in July, Director of the An Giang Import-Export Company Nguyen Van Tien said that instead of cultivating lots of varieties, localities should focus on several key ones for export.

He proposed that the agricultural sector work with research institutes to produce certain varieties that can be grown on a large scale for the long term, so that rice is produced in large amounts with the same quality, helping create Vietnam’s own rice trademark.

Le Thanh Tung, an official from the Plant Cultivation Department, said farmers will be willing to supply rice in line with exporters’ demands if the businesses are committed to buying all the products.

However, he said not many rice exporting companies have done this until now. Their procurement is made mainly through trade mediators. The linkage between farmers, rice processors and exporters is still weak.

In addition, many participants said that as selling prices are decided by the global market, farmers should try to reduce production costs in order to ensure profits.

To address the problem, they said, guidance should be provided to farmers in how to apply new cultivation techniques and make good use of agricultural materials, while the prices of fertiliser and pesticide prices should be stabilised.

IMF praises Vietnam’s macroeconomic stability

Vietnam regained macroeconomic stability over the past year, but the economy is progressing at two speeds, says the International Monetary Fund (IMF).

The IMF Executive Board released its Article IV consultation with Vietnam on August 9, saying that the export sector is performing well—especially foreign-invested enterprises—but the domestic sector, though improving, has yet to find a solid footing because of several factors, including low productivity, structure of resource allocation, impaired bank balance sheets, and inefficiency in several state-owned enterprises (SOEs).

Credit growth has picked up modestly in real terms, mostly concentrated in the export-oriented and agricultural sectors. Headline inflation has declined significantly, but underlying pressures persist, said the IMF.

The current account surplus surged to US$9.1 billion in 2012 from US$0.2 billion in 2011 given a slowdown in imports and the strong export performance.

The exchange rate has been stable, and gross international reserves more than doubled in February 2013 from end-2011, although they are still inadequate at about 2½ months of prospective imports.

According to the IMF, during the next two years, the current account surplus is expected to remain sizable, and foreign direct investment (FDI) inflows would remain strong, supporting international reserves. This outlook depends on an improvement in the global economy, broadly unchanged monetary and exchange rate policies, and a measured withdrawal of fiscal stimulus.

The authorities have made significant progress in macroeconomic stabilization and containing vulnerabilities in the banking sector and advancing reforms in the SOE sector. Calm has returned to financial markets after the State Bank of Vietnam (SBV) provided liquidity and facilitated the merger of several small, weak banks over the past two years.

Moreover, the IMF said, to reduce bank balance sheet risks from gold speculation, the SBV has also implemented a measure to stop gold deposit taking and lending activities. While some weak banks cannot meet the required conditions to access the interbank market and must rely on the SBV’s refinancing facility and open market operations for liquidity support when needed, the interbank market’s function has largely been restored. Banking system liquidity has eased, as evidenced by higher deposit growth and significantly lower funding costs.

IMF Executive Directors commended the authorities for significant progress in stabilizing the economy over the past two years, but cautioned that Vietnam faces important internal and external risks in the period ahead.

They underscored the importance of reforming SOEs to enhance Vietnam’s growth potential and reduce fiscal risks. The establishment of a high-level steering committee would be critical to foster SOE restructuring. Equitization of SOEs could be accelerated, and accountability and financial discipline strengthened. Directors encouraged the creation of a level playing field for private and state firms, ensuring equal access to capital, and introducing greater competition into state-dominated sectors, including infrastructure, they added.

Steel exports face anti-dumping lawsuit in US

The US Department of Commerce (DOC) has officially begun antidumping duty investigations into oil country tubular goods (OCTG) imported from Vietnam, according to the Vietnam Competition Authority (VCA).

On July 22, the DOC asked Vietnamese steel producers answer its inquiries into the price and value of made-in-Vietnam OCTG by August 12, 2013.

The Department on July 30 launched all anti-dumping investigations based on individual tax rate registration documents.

It said that the inquiries into the price and value will be used as criteria to define compulsory defendants sued by US plaintiffs. Those businesses getting involved in the anti-dumping lawsuit will enjoy tax rates lower than the national levels.

In addition, businesses operating in non-market economies can register for individual tax rates to avoid being subjected to the national rate, which is much higher. They have 60 days to complete the registration since the DOC initiated the dumping inquiries on July 23, 2013.

Real estate value drops off in Q2

The value of the country's real estate currently on sale on the market at the end of June was roughly VND108.77 trillion (US$5.06 billion), down 15.4 per cent against the first quarter, said Deputy Minister for Construction Nguyen Tran Nam.

Nam said that 27,805 high rise apartments worth VND41.54 trillion ($1.93 billion) are currently available, accounting for 38.19 per cent of the country's total housing stock.

There are also more than 2 million square metres of land plots on the market, Nam disclosed at a meeting in the capital yesterday of the Central Steering Committee on Housing Policy and Real Estate Market.

Nam said that these figures were inadequate as several cities and provinces have not yet provided accurate figures but the data provided from 56 out of 63 cities and provinces nationwide.

HCM City and central Khanh Hoa Province were the areas to record the biggest drop in available real estate.

The value of unsold real estate in HCM City at the end of June had fallen to roughly VND26.69 trillion as city-based property developers sold an additional 1,877 apartments in the first half of the year.

In Ha Noi, there were 9,651 apartments and houses available, up 3,862 units against December last year. The total value came to more than VND17 trillion.

During yesterday's meeting, the State Bank of Viet Nam also reported that total outstanding loans to the real estate industry in the first half of this year rose by 4 per cent against December last year to reach VND237.5 trillion ($11.04 billion).

Of the total, lending to industrial and processing zones came to VND14.96 trillion, up 0.1 per cent. Loans to residential urban developers were VND46.68 trillion while VND55.84 trillion was allocated for purchasing houses and repairs.

However, the central bank noted that non-performing loans in the real estate sector stood at 6.53 per cent at the end of June, against 5.39 per cent in December last year.

As for the VND30 trillion housing stimulus package, the central bank said that it would pay more attention when carrying the programme, out as currently it is difficult for individual borrowers to access the package that offers the preferential interest rate of 6 per cent per year.

Viet Nam-Japan Economic Summit set for September start

The Viet Nam – Japan Economic Summit (VJES), co-organised by the Viet Nam Chamber of Commerce and Industry (VCCI), the Japan External Trade Organisation and Nikkei Business Publication, will take place from September 4 in Ha Noi.

The three-day event aims to build closer economic and business ties, exchange business updates and review economic relations between the two countries.

VJES 2013 is expected to draw the participation of 400 delegates to provide professional insights and updates on business opportunities in the two markets.-

Petrol imports fall across the board during first seven months

Petrol imports have declined in both volume and value, according to the Ministry of Industry and Trade.

Statistics from the ministry showed that during the first seven months of this year, Viet Nam imported about 4.25 million tonnes of petrol valued at nearly $4 billion, decreasing 26 per cent and 28 per cent, respectively, over the same period last year.

The ministry forecast the volume of petrol imports into the country for the full year would not be as high as that of last year.

Viet Nam also needed to speed up work on oil refinery projects, especially at the Nghi Son oil refinery, in an effort to further reduce petrol imports.

IBM advises OCB on security, provides hi-tech software

IBM Viet Nam said on Thursday that the Orient Commercial Joint Stock Bank (OCB) was the first Vietnamese bank to use its Qradar security system.

The system has been protecting OCB from security risks, including on-line threats and fraud operations for the past five months.

Nguyen Ba Quynh, general manager the software department at IBM Viet Nam, said that the security environment had become more complicated with the rapid development of sophisticated attacks.

Using modern technology in gathering, evaluating and analysing documents from different sources can help organisations protect their information, he added.

Founder sells entire stake in AAA to Insurance Australia Group

Do Thi Kim Lien, founder of the AAA Assurance Corporation (AAA) has sold her entire stake to Insurance Australia Group Ltd (IAG).

Lien said the move is part of her new financial investment strategy this year, giving her more time for other activities.

As the Honorary Consul of South Africa in HCM City, Lien said she would focus more on developing activities to promote political and trade ties between Viet Nam and South Africa.

She would also engage in more charity work, including giving scholarships to poor students, and building bridges and schools, she said.

City distributes social housing

The HCM City People's Committee and Real Estate Sai Gon Co Ltd recently handed over 114 social housing homes - out of the 233 units at To Hien Thanh apartment building in District 10 - to 100 State officials and members of the armed forces.

The To Hien Thanh apartment building is part of the city's plan to build 3,000 social housing units this year.

Real Estate Sai Gon Co also plans to build 540 social housing apartments in District 12's Tan Thoi Nhat Ward in the fourth quarter this year, plus 1,750 low-income houses in Binh Chanh District at the beginning of 2014.

FLC buys Alaska Garden City stake

Alaska Land, investors of urban area project Alaska Garden City, sold 99 per cent of its stake to FLC Group for VND300 billion (US$14.285 million) on Thursday.

The urban area - with a total investment of VND3.5 trillion ($166.7 million) - covers 7,895ha in Dai Mo Commune, Tu Liem District.

The project is scheduled to begin construction at the end of this year and be completed in 2017.

HCM City auctions land plots

The HCM City People's Committee recently approved the auction of more than 1,000 land plots in District 2.

The money collected from auctions would be spent on developing infrastructure for relocation areas in the district.

Of them, 853 plots in Nam Rach Chiec relocation area totalled 30ha in area and the remaining 202 covered 50ha in Cat Lai Ward.

Times City gets insurance service

BIDV Insurance Corporation officially became insurer of Vingroup's complex Times City project after compensation reaching up to VND7 trillion ($333.34 million) was agreed.

Petrolimex Joint Stock Insurance Company was the co-insurer.

The insurance service covered asset risks, fires, business interruptions, public liabilities and machinery breakdowns.

The 37-ha project on Minh Khai Street began construction in 2011 and was expected to be completed after two years of construction.

PVI Tower leases office space

PVI Tower has already leased more than a half of its office areas although it is not officially open for renting, according to PVI Holding, the project's owner.

The corporation said it has attracted several big companies to move their offices into the tower, such as Japanese Obayashi Corporation, South Korean Samsung Electrics Viet Nam and Canadian Sunlife Insurance Company.

PVI Tower is a Grade A office building comprised of 25 stories and two basements. The building is the headquarters of PVI Holdings and member companies, which includes offices, multi-function meeting rooms, an international standard conference hall with a capacity of 700 people, a gym, spa, restaurant and other services.

Statistics show that Ha Noi has 146 office buildings with a total area of more than 2 million sq.m for rent, twice that available over the past 10 years.

Non-voting depository receipts expected to lure foreign capital

The HCM City Stock Exchange has proposed to the State Securities Commission to allow issuance of non-voting depository receipts (NVDRs). This is a new trading instrument which aims to stimulate foreign trading activities in the local stock market.

The proposal would counter the fact that foreign investors who want to invest in some listed companies may be prevented from doing so by foreign ownership restrictions.

Nguyen Thi Viet Ha, head of Research and Development at the HCM City Stock Exchange, said lifting foreign ownership ratios in listed companies was not the only way to attract foreign capital.

"Raising foreign ownership needs careful consideration to manage the investment structure between domestic and foreign investors. More developed markets, such as Thailand, also still restrict foreign ownership," Ha told the Dau tu chung khoan (Securities Investment) newspaper.

The HCM City exchange was seeking solutions to facilitate foreign investment and trading and NVDR could be an option, Ha said.

Issuing shares without voting rights also had its own problems. Issuers may be not be qualified to issue shares or they may not want to raise capital through issuing shares, Ha said.

Investing in NVDRs, investors would receive the same financial benefits, including dividends, right issues or warrants, as ordinary shareholders. The only difference between ordinary shareholders and NVDR holders was the latter could not be involved in company decision-making.

Ha said the HCM City exchange would establish a wholly owned company which would be responsible for issuing and selling NVDRs to investors.

With regard to the concerns that NVDR holders not attending a company's shareholder meeting could lead to the meeting being a failure, Ha said the regulator could limit the percentage of NVDRs in the first stage of deployment to ensure the holdings of the shareholders' meeting.

"Investors who own 5 per cent of capital of a company, including NVDRs and common stocks, will be obliged to disclose information as a large shareholder. When reaching 25 per cent of ownership, they also have to make public offer of sale," Ha said.

However, under the current regulation, exchanges are not allowed to establish a subsidiary company or issue and receive depository certificates. Thus, in order to implement such incentives, other relevant laws should be amended.

In addition, trading regulations should also be more defined in law.

The State Securities Commission has approved the exchange's proposal and submitted it to the Ministry of Finance for consideration.

Falling home prices create buyer's market

Home prices have continued to decline in Ha Noi and HCM City, leading to an improvement in property sales, according to a report released by Savills Viet Nam early this week.

In the second quarter, the Savills Property Price Index (SPPI) for Ha Noi residential area was 104.7, dropping 3.6 points quarter-on-quarter and down 17.7 points year-on-year.

The index has decreased for eight consecutive quarters by roughly 25 per cent since its peak at 138.7 in the second quarter of 2011.

The inventory ratio decreased two percentage points, reaching 93 per cent. "It is a good sign for the overall improvement of the market's performance," the company said.

The average apartment price has decreased 30 per cent in the last two years due to the entrance of new projects and price reductions.

In HCM City, the residential price index stood at 89.4 in the second quarter, with a slight increase of 0.2 points quarter-on-quarter, but decreased by 3 points year-on-year.

The absorption rate increased one percentage point quarter-on-quarter and two percentage points year-on-year to 8 per cent.

The number of transacted units surged 59 per cent year-on-year, and the volume has been trending upwards for four consecutive quarters.

The increase of newly launched apartments with lower selling prices led to the decrease in the average market price by 21 per cent in four years since 2009.

Savills noted that the residential price index had gradually climbed up since the bottom of the second quarter last year.

"Thanks to flexible prices, better product mix and Government policies such as lowered interest rates, the confidence of home buyers rose indirectly. The substantial year-on-year increase in transaction volume is a sign that the market is recovering," the company said.

Meanwhile, in the office sector, the SPPI for Ha Noi dropped 12 points year-on-year to reach 56 in the second quarter. The office index stood at 71, down 4.2 points over the same period last year.

Imports put pressure on local paint firms

Foreign-invested paint companies in Viet Nam are putting pressure on local manufacturers.

The Viet Nam Paint and Ink Association said Viet Nam says the country has an annual total output of 250 million litres of paint, including 180 million litres of decorative paint.

Chalermsak Pimolsri, marketing director of the foreign-invested Four Oranges Paint Company, said the average consumption was 1.5 litres of paint per head per year in Viet Nam, much lower than the four litres a year in Thailand and seven litres in developed countries.

Foreign-invested paint makers already hold 65 per cent of the local market and have advantages with trade marks, finance and diversification of products, he said.

Another foreign-invested paint firm, Jotun Viet Nam Co Ltd, has expanded its factory and increase capacity to 25 million litres of paint per year.

Director of AkzoNobel Paints Vietnam, David Teng, said the company had invested 13 million euro (US$17.3 million) to develop a factory in southern Binh Duong Province.

The association said Viet Nam has about 600 paint companies, including 30 foreign-invested firms holding the lion's share of the market. Local paint companies produce lower quality paint.

However, some domestic paint is becoming competitive, including Kova, Dong Tam, Tison, Alphanam and Hoa Binh.

The local firms mainly sell their products in provinces while the foreign firms dominate the large cities.

Hoang Van Hung, director of Nero Paint Co Ltd, said domestic companies must diversify their products to increase market share.

Local companies also seem to have an edge in non-decorative paints, including the Hoa Binh Paint Company's paints for coastal environments - and waterproofing, heat and nano paints [produced by the Kova Company].

Nguyen Thi Hoe, chairwoman of Kova Group, said her firm had sustainable development on the local market but aimed to develop exports. It already sells to Singapore and Indonesia.

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