Shares continue downward slide

Shares continued to slide on both stock exchanges yesterday with the VN-Index closing off 0.95 per cent to 371.75 points while the HNX-Index lost 1.21 per cent to 60.62 points.

Following the six-day losing streak on the HCM Stock Exchange, trading volume decreased 8 per cent to only 34.6 million shares, worth VND534.78 billion (US$25.5 million).

Property developer Vincom (VIC) yesterday hit the daily limit of 5 per cent but still failed to rescue the Index as six of the 10 leading shares by capitalisation slumped. Vietinbank (CTG), and Phu My Fertiliser (DPM) led the slide with losses of 4.4 per cent and 4 per cent, respectively.

Decliners overwhelmed advancers by 145-85 overall. The country’s fourth largest listed bank Sacombank (STB) was again the most active code on the HCM City market with 1.52 million shares changing hands while closing unchanged at VND14,800 ($0.70).

On the Ha Noi Stock Exchange, losers were almost four times higher than gainers, with the volume of the day’s trades declining 5 per cent over Monday, totalling just 24.8 million shares, worth VND204.7 billion ($9.7 million).

Orient Securities Co (ORS) became the most heavily traded share on the northern bourse yesterday with a volume of 1.82 million while closing at a floor price of only VND2,000 a share for eight sessions in a row.

This week, the central bank will take its first steps in restructuring the banking system and introducing solutions for rescuing the real estate and securities market. However, Pham Van Khoa, of Bao Viet Securities Co, said it would take time to consider whether this information would make a positive impact on financial market.

“Although the market doesn’t give much cause for short-term optimism, long-term investors may consider the possibility to jump in the market if the downturn will continue,” analysts with BIDV Securities Co wrote in a report.

They reasoned that even though interest rates had yet to decrease, the downtrend was clear for the time being and there were no reasons to fear higher inflation next year.

“The problem is only the time. Banks have yet to cut interest rates, primarily due to the concerns that this could diminish policy efficiency and reduce people’s confidence in the oversight authority,” they wrote, adding that as prices were too low now, expected profits relative to risks were quite balanced.

Foreign investors continued to unload shares yesterday, responsible for a net sell worth VND11.65 billion ($554,800) in HCM City, but they concluded as net buyers in Ha Noi, picking up over VND2 billion ($99,500) worth of shares.

Gold prices fall sharply

Domestic gold prices have dropped remarkably in three successive days, hovering around VND43.5 million at 8.30 am on December 14.  

SJC gold was traded at VND43.55 million-VND43.8 million in Ho Chi Minh City but VND20,00 per tael higher in Hanoi.

Meanwhile, the State Bank of Vietnam (SBV) has increased the interbank exchange rate to VND20.831 per US dollar, a record high since it remained unchanged for 41 days.

As of October 4, the exchange rate had risen by 0.9 percent, meaning that the next adjustment must not exceed 0.1 percent, following the SBV Governor’s commitment.

Some commercial banks like ACB, Eximbank and Vietinbank, have also raised their exchange rates following the SBV’s decision. While Vietcombank has maintained its rate at VND21.005-VND-21.011 per US Dollar.

PM: Restructuring improves State businesses efficiency

Restructuring will help State-owned businesses better perform their role in the socialist-oriented market economy and operate effectively with assigned financial resources, said Prime Minister Nguyen Tan Dung.

PM Dung made the statement at a conference to review the arrangement and renovation of State-owned enterprises (SOEs)during the 2001-2010 period, in Hanoi on Dec. 8.

He said relevant agencies have, over the decade, built an institutional system, including the State management of SOEs, owners’ management institution and the institution to ensure for SOEs’ operations.

Through rearrangement, businesses have been expanded in scale and the efficiency of their operation and their workers’ income have also been raised, said the PM.

The equitization has created a multi-ownership mechanism and a new dynamic and management mechanism for businesses, which, he said, have helped businesses operate more effectively and be managed in a transparent and public manner.

According to the PM, SOEs in general have met requirements assigned by the State, including ensuring energy security, stabilizing the nation’s financial markets and promoting socio-economic development in the fields where the private sector has not yet operated, such as aviation, telecommunications, construction of major projects, security and defense.

The PM also pointed out their shortcomings and weaknesses that need to be solved in future, due to untimely and unsuitable management mechanisms, slow equitization, low business efficiency in many SOEs, along with prolonged financial losses.

PM Dung laid stress on the consistent targets of continuing to restructure SOEs for more effective operation and ensuring competent performance of the role and tasks assigned by the Party and State, including ensuring macro-economic stability.

Ministries and branches should focus on finalizing the institutions for management, and ownership and managements of SOEs, as well as Party work in these businesses, he said.

The PM also asked ministries, branches and localities to approve their SOEs’ restructuring schemes in 2011.

Over the past 10 years, the country has rearranged more than 4,750 SOEs, including equitizing almost 3,390 businesses.

As of October, 2011, the country had 1,309 SOEs, including 452 involved in security and defense and the remaining in business activities.

Meanwhile, State-owned corporations and groups with multi-ownership structure operate mainly in key sectors of the economy.

Interbank exchange rate suddenly increased

The State Bank of Vietnam today set a sudden VND-10 increase on the interbank dollar exchange rate after keeping it unchanged for the last 40 days.

The new rate stood at VND20,813 a dollar, the highest since February 11, when the central bank devalued the dong by 9.3 percent.

Earlier this year, on September 7, central bank Governor Nguyen Van Binh promised that the exchange rate would not increase by more than 1 percent by the end of the year.

The rate has risen by VND185, or 0.9 percent, as of today.

This means that the central bank can only increase the rate a maximum oft 0.1 percent, or VND21, in the last 17 days of the year in order to keep its commitment.

Most banks now trade the greenback at the new ceiling of VND21,021.

On the Hanoi black market yesterday, the dollar selling price was quoted at VND21,160 a dollar, while the buying price was VND21,130 a dollar.

Also yesterday, gold prices in Vietnam at times retreated to as low as VND43.98 million a tael, but consumption was still quiet.

The precious metal closed yesterday at VND44.15 million per tael.

The gap between domestic and the global price is now some VND1.6 million a tael.

VN pledges improved conditions for US business

The Vietnamese Government will improve investment environment and create favourable conditions for foreign businesses, including those from the US, to operate in the country while strictly implementing commitments reached by the two sides.

The pledge was made by Prime Minister Nguyen Tan Dung at a reception in Hanoi on Thursday for a delegation of US businesses in Vietnam and guests who had engaged in the negotiations of the Vietnam-US Bilateral Trade Agreement (BTA), on the occasion of the 10 th anniversary of the signing.

The PM welcomed the delegation’s members to Hanoi to attend the workshop on Vietnam-US trade relations post-BTA, themed “Looking back to the past – Looking towards the future” jointly held in Hanoi by the Diplomatic Academy of Vietnam, the Vietnam-US Trade Council, the Vietnam Chamber of Commerce and Industry and the US Chamber of Commerce in Vietnam.

He affirmed Vietnam ’s willingness to partner with the US to continue effectively upholding outcomes of the BTA and negotiations of the Trans-Pacific Partnership (TPP) Agreement, in an effort to elevate the two countries’ relations to a new height, for peace, cooperation, prosperous development and mutual benefits.

PM Dung said the signing of the BTA was made possible with goodwill from both sides.

During the past decade, the BTA has brought significant results for trade and investment of the two countries, while improving mutual understanding and trust, PM Dung said. He described the outcomes as practical lessons and a momentum for the negotiation process to help Vietnam join the TPP.

On the occasion, US Ambassador to Vietnam David Shear expressed his delight at achievements Vietnam and the US have gained over the past decade, saying the signing has helped raise two-way trade and create a foundation for the development of bilateral relations.

Two-way trade between Vietnam and the US in 2011 recorded an estimated 20 billion USD, representing a ten-fold increase compared with 2001.

The Ambassador expressed his wish that the Vietnamese Government will continue supporting US businesses in the country and increasing two-way trade for the interest of both countries.

VN, US mark trade agreement’s 10th anniversary

Vietnam and US have celebrated the 10th anniversary of their bilateral trade agreement (BTA) which has brought two-way trade value to over $20 billion, a 1,200 percent rise, since the BTA entered into force on December 10, 2001.

On July 13, 2000, just five years after President Clinton announced the normalization of diplomatic relations with Vietnam, U.S. and Vietnamese negotiators signed a bilateral trade agreement (BTA) that now defines the strong economic ties between our two countries.

In addition to the trade and investment benefits, the BTA served as a “stepping stone” for Vietnam’s accession to the World Trade Organization in 2007.

Progress in the bilateral trade and investment relationship has coincided with a tremendous economic transformation in Vietnam that has helped to improve the lives of ordinary Vietnamese citizens.

Real income in Vietnam has grown an average of 7.2 percent per year, and GDP per capita has risen from $413 in 2001 to $1,300 in 2011. Meanwhile, Vietnam’s poverty rate has fallen from 58 percent in 1993 to 10.6 percent in 2010.

“This is a good time for the United States and Vietnam. Over the last 10 years we have made impressive advances in our bilateral relationship, particularly on the economic front,” said US Ambassador to Vietnam David B. Shear.

“Promoting even stronger economic ties between our two countries is among my top priorities as Ambassador,” he added.

"Building on this accomplishment, the United States and Vietnam continue to work together to define rules for trade and investment that promote economic growth and opportunity in our economies."

Currently, the US and Vietnam, together with seven other partners, are negotiating a Trans-Pacific Partnership (TPP) regional free trade agreement, which serves as a potential platform for economic integration across the Asia-Pacific region.

"This integration will advance the economic interests for both the United States and Vietnam for many years to come, creating jobs and further strengthening our relationship," he said.

KPC, Petrolimex renew gasoil term deal for 2012

Kuwait Petroleum Corp (KPC) and Vietnam's Petroleum Import-Export Corp, or Petrolimex, have renewed their gasoil term agreement for 2012 at slightly lower volumes, industry sources said on Thursday.

Under the renewed term contract which was done through private negotiations, KPC will supply about 700,000 tonnes of gasoil to Petrolimex at a premium of above US$1 a barrel to benchmark Middle East quotes, one of the sources said.

The premium was on a free-on-board (FOB) basis, the source added.

Of the total volumes, about 70 percent will be for 0.2 percent sulphur gasoil and the rest will be the 500 ppm sulphur gasoil.

The volumes were slightly lower than KPC's current contract to supply about 800,000 tonnes of gasoil to Petrolimex, likely due to a reduction in the Middle East refiner's production of higher sulphur gasoil, industry sources said.

For 2011, Petrolimex paid a premium of between 50 and 80 cents a barrel over Middle East quotes to KPC.

KPC and Petrolimex have a trading relationship since 1994.

Petrolimex has also finalised term contracts with at least six other suppliers to buy about 1 million cubic metres or about 6.29 million barrels of gasoil for delivery over January to December next year, at least two sources with knowledge of the matter said earlier this week.

It paid levels ranging from a discount of 30 cents a barrel to parity to Singapore quotes for the 0.25 percent sulphur gasoil on an FOB basis from South Korea and Singapore.

For the 500 ppm sulphur gasoil, it paid differentials of parity to Singapore quotes, a premium of 20 cents a barrel and a premium of 30 cents a barrel on an FOB basis for cargoes loading from South Korea, Taiwan and Singapore respectively.

Suppliers include South Korea's SK Energy and Hyundai Oilbank, Elico Oil, Unipec, PetroChina and Winson Oil, the sources said.

Distributor claims Meiji products in VN are safe

Meiji baby powder milk products currently available on Vietnamese market are radiation-free, and are thus safe for consumption, Meiji’s official distributor in Vietnam confirmed yesterday.

Meiji’s distributor Huong Thuy Co Ltd made the confirmation just one day after Meiji Holdings, a Japanese major dairy firm, said it was recalling some 400,000 cans of Meiji Step formula that contained radioactive cesium-134 and cesium-137, according to English language Japan Today Newspaper.

Huong Thuy Co said among the Meiji products being sold in Vietnam, only Meiji Gold 1 and Gold 2 are directly imported from Japan, while other products are from Australia.

“Those imported from Japan have undergone comprehensive radiation checks by the Ho Chi Minh City Nuclear Center to ensure that they are safe to be circulated in the market,” the distributing company assured.

Many worried consumers have begun to return Meiji milk cans to the stores where they bought the products upon learning of the radioactive contamination.

“A few customers returned the products to us this morning,” the owner of a milk shop in District 3 told Tuoi Tre on Wednesday.

Meanwhile, Nguyen Thi Huynh Mai, deputy head of the Food Safety and Hygiene Agency under the municipal Department of Health, said her agency will conduct tests to determine whether Meiji products on sale in stores and supermarkets citywide are contaminated with cesium radiation.

Earlier on December 6, Japan's Meiji Holdings announced that radioactive cesium fallout from the country’s crippled Fukushima nuclear plant was found in its powder milk.

The level of contamination ranged from 22 to 31 Becquerel a kilogram, far below the allowable 200-becquerel limit, Japan’s Kyodo News quoted Meiji as saying.

The contaminated milk cans were produced between March and April at a factory in Saitama Prefecture, some 200 kilometers from the Fukushima Daiichi nuclear plant, where reactors were sent into meltdown in the aftermath of the March 11 quake and tsunami, AFP reported.

Meiji said it suspected that cesium might have got into the powdered milk during the drying process, rather than from the raw materials.

The dairy company said it will exchange around 400,000 Meiji cans exclusively on sale in Japan for free.

Meiji spokesperson told AP that all of its products exported to Vietnam are radiation-free.

Intergration boosts domestic firms  
 
The country’s integration into the World Trade Organisation has positively influenced a majority of domestic enterprises, according to a Vieät Nam Chamber of Commerce and Industry survey.

Implemented between July and November this year, over 3,300 enterprises were interviewed nation-wide. These firms were involved in areas such as construction, textiles and garments, agriculture, seafood processing, electronics, pharmaceuticals, engineering, banking and real estate.

Four years after the country joined the WTO, up to 80 per cent of surveyed businesses said that their revenues had risen during 2007-10 while 9 per cent confirmed unchanged figures, 8 per cent experiencing unstable revenue changes and 3 per cent witnessing declines.

Results showed that international economic integration was also a process of selection, said the Institute of Information Technology for Business Director Leâ Vaên Lôïi.

Those who failed to take advantage of new business opportunities would struggle in the long-run, he added.

Meanwhile, nearly half of interviewed firms considered product prices as their competitive factor, 40 per cent said that they had advantages over other firms in seeking potential export markets and 30 per cent explaining that unique products helped them enhance their competitive edge.

Product prices as competitive factor was by no means a positive indicator, Lôïi said.

A price reduction race could result in poor-quality raw materials, the use of labour exceeding the provision of law or failure to recruit high quality personnel.

Moreover, in the long-term, this competitive factor could inhibit businesses from accessing important market segments in which customers were willing to use expensive products or services, but required consistent quality, Lôïi noted.

The survey found that insufficient market information was the largest obstacle firms faced during the global integration process.

Cumbersome administrative procedures which would need to be addressed include difficulties in accessing credit resources and advanced technologies, poor appliance of e-commerce and other IT services. Inadequate assistance from the State and associations as well as harsher competition from foreign rivals and trade barriers at overseas markets were also problematic, the survey revealed.

Shared value benefits businesses
 
“Creating Shared Value” should be made part of the business strategies of local enterprises to ensure sustainable development, experts said at a symposium of the same name in the capital yesterday.

Shared value policies and practices could enhance competitiveness while simultaneously advancing economic and social conditions, Mark Kramer, a leading Harvard University professor and co-author of “Creating Shared Value”, told attendees at the event, organised by the Vietnam Chamber of Commerce and Industry (VCCI) and FrieslandCampina Vietnam.

Corporate Social Responsibility (CSR) practices such as ethical behaviour, transparency, sustainable use of natural resources and fair labour conditions were essential requirements for any successful business, he noted.

Shared value added additional opportunities to improve social and environmental conditions beyond the company’s own footprint - helping solve problems to which the company did not contribute, he explained.

“The long-term competitiveness of companies depends on social conditions, including improving education and skills, safe working conditions and sustainable use of natural resources,” Kramer said.

“Incorporating societal issues into strategy and operations is the next major transformation in management thinking.”

Local firms can participate in the process of creating shared value at different levels: from supplying society with better products at more reasonable prices; or engaging in managing natural resources effectively; and boosting economic and social advancement while fostering the development of local economic sectors.

“CSV theory is a new concept in the world as well as in Vietnam. It serves to create an opportunity for businesses to increase competitiveness and promote sustainable development,” said Nguyeãn Quang Vinh, general secretary of the Vieät Nam Business Council for Sustainable Development.

FrieslandCampina Vieät Nam has applied the theory to an array of community-based activities, encouraging local economic development centred on social needs and business strengths in producing and processing milk according to dairy development and nutrition programmes for sustainable development, said FrieslandCampina Vietnam CEO Mark Boot.

The Dairy Development Programme (DDP) has successfully documented a sustainable dairy production system that could serve as a model of shared value creation for Vieät Nam, helping develop new institutional capacities, policies and practices around development that benefit both small-hold farmers and the nation, Kramer pointed out.

“The shared value theory has been applied in the Saigon Union of Trading Co-operatives’ (Saigon Co-op) business development strategy over several years to benefit the company, farmers and customers,” said Nguyen Thi Hanh, Saigon Co-op CEO.

“The theory aims at benefiting both business and society, the Saigon Co-op having shared its profits to invest in production projects. As a result, it has had a stable supply of vegetables and food for its supermarkets,” Hanh said.

In the long-term, Saigon Co-op had increased its reputation and profits while creating more jobs for local people while farmers had gained stable incomes, she added.

The Co-op has also promoted Vietnamese goods to create opportunities for local enterprises to improve product quality and output, she noted.

Kramer said that Vietnam had many small- and medium-sized enterprises (SMEs) who could easily apply the CSV theory.

“SMEs have an advantage in being closer to local customers which enables them to keep a finger on the demand and social pulse,” Kramer said.

Meanwhile, the Government could promote a shared value programme via a stable legal system and awards or tax, Vinh suggested.

The symposium attracted around 200 representatives from ministries, sectors and enterprises in discussing the efficient implementation of the CSV theory.

Khanh Hoa to spend $25m in mountains

The coastal province of Khanh Hoa will spend more than VND540 billion (US$25.7 million) developing its mountainous areas during the next four years.

The plan, passed by the provincial People’s Council yesterday, aims to reduce the number of poor households by 6-7 per cent annually and bring electricity to 98 per cent of its population by 2015.

Khanh Hoa has 49 mountainous communes, inhabited by 33 ethnic groups with a total population of 61,500. Almost 13 per cent of them are living under the national poverty benchmark of VND400,000 ($19) per head per month in income.

Coffee sector bids to boost quality

Vietnam will focus on improving the quality of its coffee, developing high quality seedlings to support replanting of old coffee plants and increasing the proportion of quality certified coffee, a senior official said yesterday.

This would help the industry develop in a sustainable manner, said Nguyen Xuan Hoa, deputy general director of the Department of Processing and Trade for Agro-Forestry Fisheries Products and Salt Production, as the 17th Asia International Coffee Conference got underway in HCM City.

He said Vietnam planned to have its entire coffee production area eligible for sustainable production certification by 2020.

Vietnam had done very well in coffee exports over the past 10 years, but its development has not matched potential.

Despite being the world’s second largest coffee exporter, the Vietnamese coffee industry faced many challenges, including slow pace of diversification (of coffee varieties), lax quality management of green coffee beans during purchasing process, unhealthy competition among buyers, high production costs and low domestic consumption, Hoa said.

In addition, coffee area with certification remained modest, he added.

“The country currently exports coffee in the form of green beans with preliminary processing, which keeps its value low. There is very little branding and proper packaging,” Hoøa said.

Le Van Toi, chairman of the Vietnam Coffee and Cocoa Association, said old coffee plants covered over 130,000ha of the total of 510,000ha under cultivation. “This will increase to 50 per cent in the next 10 years,” he said.

“The decline in coffee production is very clear,” he said, adding “it will be difficult for Vieät Nam to keep the position of second largest coffee producer and exporter if the Government does not take prompt action to finance the tree renovation programme”.

To help the sector develop in a sustainable manner, Hoøa said the Vietnamese government has mapped out a policy to promote higher value-added coffee production and processing, with a focus on quality management combined with trade promotion activities. The aim was to impact all the steps in the value chain from farm to market, he said.

The plan was also to create more competitive and higher value-added products, and to boost domestic consumption.

Vietnam will offer incentives for businesses to invest in technology and modern equipment and increasing its instant coffee production capacity from the current 10,000 tonnes per year to 20,000 tonnes and 30,000 tonnes per year by 2015 and 2020, respectively.

Toi said the Government should encourage local and foreign companies to invest more in roasted and instant coffee to add value to the coffee production.

World coffee production for 2011-12 is forecast at 127.4 million bags (a bag is equal to 60 kilos), down 5.7 million bags compared to the last crop because of adverse weather conditions that could have a negative impact on production and post harvest activities in a number of exporting countries, particularly in Central America and Indonesia, according to Toi.

Roberio Oliveira Silva, executive director of the International Coffee Organisation, said coffee production in Brazil, Vietnam and Indonesia - three leading coffee producers - were expected to fall during the 2011-12 crop. Inventories were also forecast to remain at diminished levels.

“World coffee consumption, meanwhile, has a very stable increase over the past 10 years in both producing countries and emerging markets,” he said.

Vietnam produced about 1.2 million tonnes of coffee beans in the 2010-11 crop and exported 1.1 million tonnes worth US$2.6 billion, an increase of 6.56 per cent in volume and 56 per cent in value, Töï said.

The country’s coffee export for the 2011-12 crop was forecast to be lower than the last crop since production had not risen and inventory has reduced.

However, local consumption was increasing and would account for about 100,000 tonnes in the next crop, he said.

The capacity of processing facilities for green coffee beans have reached to more than 1 million tonnes per year, contributing to improved quality.

Some companies, including Vinacafe, Nestle and Olam, have invested in facilities to make more instant coffee for domestic consumption and export.

Next crop, the association would buy between 200,000 and 300,000 tonnes of coffee for temporary storage to support farmers, the conference heard.

Vietnam has around 510,000ha under coffee cultivation, mostly of the robusta variety.

The higher value arabica variety is grown in some other provinces in the north, central and Central Highland regions.

Remittances set to reach $9b in 2011

Remittances from overseas Vietnamese to Vieät Nam are expected to reach nearly US$9 billion this year, a record high and $1 billion more than last year, according to the State Bank of Vieät Nam (SBV).

The SBV said that overseas remittances reached $2.5 billion in the first and third quarters of this year and $2 billion in the second quarter.

About 4 million Vietnamese are living in nearly 100 countries and territories around the world. There are also about 400,000 Vietnamese guest workers abroad.

These overseas Vietnamese and guest workers send huge sums of money back home, according to the Vieät Nam Academy of Social Sciences. The volume of overseas remittances to Vieät Nam made up just 4.2 per cent of the total gross domestic product (GDP) in 1999, but reached 7.8 per cent in 2002 and 7.7 per cent in 2010.

Despite limited Official Development Assistance (ODA), Foreign Direct Investment (FDI) and Foreign Indirect Investment (FII), overseas remittances to Vieät Nam continue to increase. The SBV said these foreign currency remittances offset nearly 50 per cent of the trade deficit in 2010.

Traàn Vaên Trung, director of Ñoâng AÙ Remittances Company, told Thanh Nieân newspaperÙ that despite the global economic crisis, overseas remittances sent through his company in the first 10 months of this year reached $1.3 billion, higher than its yearly plan.

“Remittances are expected to reach $1.6 billion by the end of 2012, a year-on-year increase of 20 per cent,” he added.

According to the World Bank, Vieät Nam ranked 16th among countries in terms of remittances received from abroad, and second in Southeast Asia after the Philippines (which received remittances worth $21.3 billion in 2010).

Remittances could help address the trade deficit and improve the balance of payments if the receiving countries adopted proper policies to mobilise this source for socio-economic development, the World Bank said.

Brokerages grasp onto dwindling client base

As increasing numbers of investors flee the stock market, stock brokerages are trying to hold onto their remaining client base by improving services and strengthening their customer dialogue.

Merely discounting transaction fees was no longer very effective in retaining investors, An Phat Securities Co general director Tran Thien Ha told the Securities Investment newspaper.

Leaders of securities companies needed to foster direct dialogue with investors to give them a greater understanding about the financial situations of companies which were holding their money, Haø said

Investors have been expressing rising concerns over the possible insolvency of small securities companies, particulary after SME Securities Co and Traøng An Securities Co received warnings from the authorities for their inability to make settlement payments for stock transactions.

Therefore, other securities firms are stepping up their regular communications with clients, including Thaêng Long Securities, Baûo Vieät Securities, FPT Securities and SHS Securities. These companies frequently send market analyses and reports to clients or host seminars to help investors gain a greater insight into market information and trends.

Vietinbank Securities Co (CTS) deputy director Nguyen The Phuong also said his company was no longer focusing on launching new products and services attractive to speculative investors, such as margin trading, but giving priority to developing the company’s core business clientele. CTS was offering new value-added services via the internet, including online money transfers, online cash advances and other online transactions.

“One of our big advantages is that CTS has Vietinbank’s support, so, in terms of financial capacity, our investors feel more confident in our company,” Phuong said.

More office building projects changing hands

The office-for-rent market in HCMC in the past few years has witnessed several project transfer transactions, and this trend will likely rise under the current tough market conditions, with a number of projects reportedly under negotiation to change hands.

Many investors have been running into financial problems due to the troubled economy, and thus seeking partners to sell their property projects. This has resulted in a more bustling market of project transferring.

The most notable transaction is the transfer of Centre Point office building project on Nguyen Van Troi Street, Phu Nhuan District. It took over a year for Jones Lang LaSalle Vietnam to settle down a stake transfer from project owner Refico to a Japanese investment fund.

However, seven months after its acquisition of the entire office building, the foreign fund decided to ask Jones Lang LaSalle Vietnam as a broker to look for another partner to transfer the project.

David Lyons, the country head of Jones Lang LaSalle Vietnam, said the investment fund planned to close in the first quarter of 2013, thus divesting capital in all invested projects.

It will be difficult, though, for the Japanese fund to find a potential investor to change hands, especially when the office-for-lease market is under pressure to offer discounts and struggling to find tenants.

In another transaction, the owner of the building office and commercial center project Royal Tower on Nguyen Luong Bang Street in Phu My Hung was seeking another investor to join hands to finalize the project via the brokerage of Jones Lang LaSalle Vietnam.

At present, the 21-storey office building, covering 41,000 square meters with 17 stories for lease and four for retail, is 80% complete and may be fully ready within the next six months.

According to Jones Lang LaSalle Vietnam, the project owner being a local firm hopes to cooperate with an investor with financial potentiality and experience in office building management depending on the equity percentages.

The investment director of Jones Lang LaSalle Vietnam said that three foreign investors have shown interest in the project.

Investment in existing projects is an option for foreign investors who have yet to have Vietnam offices and experience in monitoring of construction contractors here. Market observers ascribed the lack of experience in project development and the pressure from bank credits to the trend of project transfers.

The commercial center and retail project Lam Son Square in Vung Tau has recently hired Jones Lang LaSalle Vietnam to seek a partner to sell the half-done project in Bai Truoc area of Vung Tau for US$10 million.

The project with eight floors developed by a local and overseas Vietnamese investor has two floors completed.

In another recent announcement, Vingroup said it would transfer the entire Tower B office section of Vincom Center Hanoi on Ba Trieu Street, Hai Ba Trung District to Techcombank. Previously Tower A had been sold to Bank for Investment and Development of Vietnam (BIDV).

Along with the transfer of entire projects, the market has also witnessed the wholesale of office floors, or strata sales, instead of monthly leasing.

For example, the Petroland Tower project in Phu My Hung new urban area starting operation last Saturday has around 80% of the 30,500-square-meter office space sold to financially-capable companies.

Petrocapital and Infrastructure Investment JSC (Petroland) said 17 of the 21 office stories had been sold at VND37 million per square meter. This method had been applied since the project’s commencement.

Also, Petroland said it would sell the 10-storey office building on Truong Dinh Street, District 3 but did not inform the specific offering price for the 2,800-square-meter premises.

In addition, Jones Lang LaSalle Vietnam has revealed two other projects in Danang and HCMC are approaching buyers.

The property service company said project owners used to focus on leasing their office space rather than transferring their projects, whereas in other countries, office building investors often sell their products to recover capital for other investments. However, this seldom happens in Vietnam.
 
VietABank lends VND60 billion to property firm

Vietnam Asia Commercial Bank, or VietABank, on Tuesday signed an agreement to provide a credit of VND60 billion for Vietnam Urban Construction and Investment Joint Stock Co., a subsidiary of Vietnam Housing and Urban Development Group (HUD), to help the latter continue its construction projects.

This was part of strategic cooperation agreement signed by the two sides in Hanoi on the same day in a bid to help secure HUD’s financial capability for property projects and other operations in the coming time.

Under the agreement, the lender pledged to provide HUD with all types of loans to facilitate feasible real estate projects. The two sides will also join hands to give installment payment programs for condo buyers.

On the other hand, HUD will open accounts at VietABank and use other banking products offered by the lender. The deal also enables the two sides to cooperation in developing market, distribution channels, customers and advertising.

Phuong Huu Viet, chairman of VietABank, said the agreement will open long-term cooperation, helping the two sides exploit advantages and sustain their growth on the market.

Textiles and garments enjoy $6.5 billion surplus

With export turnover expected to top US$13.8 billion this year, the textile and garment sector remains the country’s top earner, Le Tien Truong, deputy chairman of the Vietnam Textile and Apparel Association, told Tuoi Tre.

Truong said that, even though the country’s trade gap has widened and raw material prices have fluctuated wildly, the sector managed to reap a trade surplus of $6.5 billion this year, $1.5 billion more than last year.

“The localization ratio of the textile and garment sector has also risen by 2 percentage points year-on-year, to 48 percent,” he said. This ratio indicates the percentage of materials used by textile and garment companies that are produced locally.

He said the lucrative operation of the sector is the result of well-conducted market forecasts and efficient investment and production, adding that local exporters have also managed to win the trust of international partners and customers.

However, Truong added that the sector is concerned that it may not be able to maintain such high growth next year, since its main export markets -- the US, the EU, and Japan, which account for nearly 80 percent of total export volume – all face serious economic problems.

“Textile and garment exports will face many challenges next year thanks to the global economic slowdown, especially the ongoing European debt crisis,” he said.

As for the domestic market, he said high inflation remains the main obstacle for the textile and garment businesses.

Though the government is aiming to keep inflation below 10 percent next year, the rate is still high enough to threaten businesses operations, he said.

“Certain costs such as power, water, fuel, and labor wages will continue to rise, negatively affecting the sector’s operation and growth,” he said, adding that capital will be the next challenge.

“Most businesses have endured capital shortages in order to maintain production.

“Moreover, although lending interest rates have dropped to around 16-19 percent a year, not many businesses will be able to access these sources of capital.”

Truong said the sector has targeted a $15 billion export turnover in 2012, which would be a 12-percent rise year on year.

“To achieve this goal, the sector has to increase its localization ratio.”

Specifically, the sector has to increase the use of polyethylene (PE) fibers provided by Vietnamese businesses, rather than using imported fibers, which would help save $300 million a year, he said.

“Local businesses are also encouraged to use domestically-sourced raw material, equipment, and machinery to save costs.”