Vietnam looks to sustain sea industry

A seminar on sustainable sea economic development took place in Nha Trang city in central Khanh Hoa province, gathering 100 experts and managers in Vietnam and abroad.

As heard during the seminar, the total value of the maritime sector – generated primarily through oil and gas, tourism, shipping and aquaculture – accounted for up to 22% of the national GDP in Vietnam. The potential of other industries, such as ship building and oil processing, has yet to be fully tapped.

Vietnam’s sea exploitation has faced several limitations with its capacity equal to only one seventh of the Republic of Korea and one ninety-fourth of Japan.

Nguyen Chu Hoi, former General Director of the Vietnam Administration of Seas and Islands , said advanced science and technology is the driving force behind developing the sea economy.

The government ought to encourage international cooperation in the field, especially in green technology transfer, Hoi clarified.

According to Dr Tran Anh Tuan from the Ministry of Planning and Investment, marine potential analysis and management reforms are necessary for the sector’s long-term growth.

Participating experts highlighted sustainable development and aquatic reproduction.

The Khanh Hoa People’s Committee and the US Boston international forum co-organised the seminar.

Vingroup breaks ground on eco-park

Vingroup officially kicked off phase one of construction of an entertainment, housing and eco-park on Vu Yen island in the northern province of Hai Phong on July 12.

Construction plans cover the entire Vu Yen island, which is spread over 872 hectares in the districts of Thuy Nguyen and Hai An and crisscrossed by the Ruot Lon, Bach Dang and Cam rivers.

Of note, a 36-hole international golf course has been designed in the heart of the island as the highlight of the complex, while the entertainment area will include shopping malls, dining areas, an aquarium, and a water park. At the same time, ecological villas will be built by the river in the north of the island.

The group has worked to preserve the island's natural beauty and biodiversity, and an ecological park is also planned in a large area adjacent to the Bach Dang river, where tourists can enjoy outdoor activities that allow them to remain close to nature and green spaces. Further, a conservation area will be built to improve the quality of the landscape and act to protect the environment.

Additionally, a 1.5 km cable car system has been built to connect the mainland and the island.

Group Vice President Nguyen Viet Quang said that Hai Phong had become one of the key areas of the group's investment.

He added that once it has been completed in 2020, the complex would become an important economic centre, creating jobs and contributing to the socio-economic development of not only Hai Phong city, but also the surrounding areas.

Central Highlands to replace 19,200 ha of coffee trees

The Central Highlands provinces of Dak Lak, Lam Dong, Dak Nong and Gia Lai have planned to replant additional 19,224 hectares of coffee trees to enhance the quality and productivity of the sector during this year’s rainy season.

Since 2010, the region has replanted and transplanted coffee trees on over 61,000 hectares.

Apart from applying farming techniques guided by the Ministry of Agriculture and Rural Development, local farmers and businesses have been using high-yield seedlings on a larger scale.

The region is also calling for incentives for coffee tree replacement in terms of financial and technical assistance and infrastructure facility improvement to contribute to the sustainable development of the sector.

According to the Central Highlands Steering Committee, about 140,000 - 160,000 hectares of old coffee trees in the region need to be replaced with new seedlings in the next five years.

The Central Highlands is now home to more than 90 percent of Vietnam’s 635,000 hectares of coffee trees. The region generates 2.3-2.5 tonnes of beans every hectare and more than 1.5 million tonnes of beans every crop; productivity that is currently 2.5-3 times higher than the global average.

In 2014, Vietnam exported more than 1.7 million tonnes of coffee beans worth over 3.4 billion USD, ranking second in terms of national export values after rice.

Farm banks bridge food gaps between crops

The Dak Ha district of the Central Highlands province of Kon Tum has to date established 61 “community banks” in 50 villages to help local ethnic minority groups overcome food shortages between harvests.

The “community bank” is similar a type of stockpile, where grains and other farm produces are stored at the end of the harvest and lent out to needy people at low interest rates. The bank collects interest “payments” every six months.

The model was launched in 2011 to mitigate food shortages during the inter-harvesting period where ethnic minority locals had previously been forced to harvest premature crops or borrow money from loan sharks.

Since then, the bank has lent out nearly 115 tonnes of paddy rice and over 67 tonnes of rice while some 900 million VND (41,275 USD) sourced from the Vietnam Bank for Social Policies and 300 tonnes of fertilizers have also been allocated in loans.

Dak La commune in Dak Ha district alone has set up six community banks thus far while hundreds of impoverished families in Ngok Reo commune have benefited from eight of the banks.

The “community bank” model has greatly contributed to local socio-economic development and ensuring social security among ethnic minority communities, said Party Committee Secretary of Ngok Reo commune Dinh Van Phat.

He added that the programme has helped many impoverished households improve their incomes and lifted themselves out of poverty.

Kien Giang grants 30 new investment licences in H1

The Mekong Delta province of Kien Giang granted 30 new investment licences in the first six months of this year to projects in agriculture, industry, tourism and trade, according to the provincial People’s Committee.

The projects have a combined capital of 11.98 trillion VND (550 million USD) and cover an area of 611 hectares.

The committee said that the province has been working with relevant agencies to implement major projects such as the Kien Giang Thermal Power Plant in the Xeo Ro industrial zone or Petrovietnam projects to build a synthetic oil service port system and a bonded fuel warehouse on Phu Quoc Island.

The province also assisted with accelerating the implementation of projects in the Thanh Loc industrial zone in Chau Thanh district.

The Thanh Loc industrial zone has currently eight projects under construction and another nine registered.

Other industrial zones and the Ha Tien border gate economic zone have attracted 20 projects with a total investment capital of 4.17 trillion VND (191 million USD).

Kien Giang also revoked the licences of two projects due to their failure to implement on schedule.

Local firm among shortlisted honourees of Jewellery News Asia Awards

Jewellery News Asia (JNA) Awards recently selected Phu Nhuan Jewellery JSC (PNJ) among their finalists for three major categories honouring excellent businesses, according to the Sai Gon Giai phong newspaper.

The Vietnamese firm has high hopes of winning Employer of the Year, Outstanding Enterprise of the Year – ASEAN Countries, and Retailer of the Year, the newspaper said, quoting sources from the company.

Within the first half of 2015, PNJ posted more than VND3.85 trillion (US$177.4 million) in revenue, a 6 percent annual climb, with pre-tax profits estimated at VND228 billion (US$10.5 million). Gold jewellery retail made up 75% of the total value earned.  

The company has opened 17 gold stores nationwide so far this year and plans to establish another four in July.

Singapore leads ASEAN in investment in Vietnam in Jan-Jun

Singaporean investors topped those from other Southeast Asian countries in investing in Vietnam with 1,428 projects worth US$32.2 billion in the first half of this year, according to figures released by the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.

Singaporean-owned projects accounted for 54.25% of the total number and 60.8% of the registered capital when it comes to projects run by investors from Southeast Asia by the end of June, the FIA said in a recent report.

Malaysia came second with 499 projects with a total investment of US$12.06 billion, making up 19% of the count and 22.1% of the capital.

It was followed by Thailand with 392 projects worth totally US$6.8 billion, accounting for 15% of the number and 12.5% of the registered capital.

Thailand was tailed by Brunei, Indonesia, the Philippines, Laos, and Cambodia.

As of June, investors from the Association of Southeast Asian Nations (ASEAN) had 2,632 operational projects totaling US$54.6 billion in Vietnam.

A project financed by an investor from ASEAN countries was worth US$20.7 million, 48.9%, or around US$6.8 million, higher than the average of a foreign-invested project.

The ASEAN investment in Vietnam was mostly put in manufacturing and processing industries, with 1,009 projects worth US$22.2 billion, accounting for 40.8% of the total investment.

ASEAN investors have invested in 55 out of 63 provinces and cities in Vietnam, with their funds mostly channeled into large cities that have better infrastructure.

Ho Chi Minh City was the top destination in the first six months, with 1,144 projects worth US$15.07 billion, representing 27.6% of the total investment.

The southern economic hub was followed by Hanoi (417 projects, US$8.58 billion, and 15.7% of the total investment) and the southern province of Ba Ria - Vung Tau (67 projects, US$6.19 billion, and 11.3% of the total investment).

The regional group is currently transforming itself into a new stage of development, aiming to form an EU-style ASEAN Economic Community by the end of this year.

Vinamilk holds investment meeting

Items on the agenda included the possible divestment to be undertaken by the SCIC.

Vinamilk held an investors meeting on the afternoon of July 7 to discuss how the company is being divested and its business plans and merger and acquisition (M&A) plan.

Chairman Mai Kieu Lien said it’s not known whether the Government will allow the State Capital Investment Corporation (SCIC) to divest from Vinamilk. The Government encourages enterprises to equitize and the divestment will be decided by the SCIC.

Regarding investment of VND4 trillion ($183.40 million), Ms. Lien said it will go to two main purposes: finding cheaper sources of raw materials and investing in a milk company to produce finished goods that already have market share and brand reputation.

She said as the end of April 2014 the price of raw materials began to fall and is expected to continue to fall until the end of third quarter. Vinamilk has prepared its material supplies for 2015 so any change to the price will not affect its business plan.

As for foreign markets, Vinamilk has been exporting to Cambodia for about ten years. This month it will introduce a new brand, Angkor Milk, and in October will introduce condensed milk to the country.

Ms. Le Quang Thanh Truc, Investment Director at Vinamilk, said that in the first half of the year it reached 50 per cent of its annual plan, with revenue of VND19.21 trillion ($88.07 million), and profit after tax of VND3.75 trillion ($17.19 million), accounting for 55 per cent of the plan.

Toyota releases sales results

Toyota Motor Vietnam (TMV) has announced is sales results for the first half and for June.

By the end of the first half sales had totaled 23,031 units, an increase of 38 per cent (excluding Lexus) compared with the same period last year, in which the passenger car segment reached 12,414 units (an increase of 59 per cent) and the commercial vehicle segment 10,617 units (an increase of 20 per cent).

Its best seller was the all-new Vios, launched in March 2014, with 6,233 units sold, double the number sold in the same period last year. Following was the new generation Corolla, launched in September 2014, with 3,280 sold units.

Sales of Innova and Fortuner reached 4,406 and 4,629 units, respectively, increasing 22 per cent and 21 per cent compared with the same period last year.

Regarding completely-built-units (CBU) distributed by TMV, in the first six month total sales increased 72 per cent compared with the same period of 2014, to 2,782 units.

In June 2015 Toyota’s sales stood at 4,289 units, an increase of 25 per cent compared with June 2014 and its highest sales volume this year.

Sales of passenger cars reached 2,265 units, an increase of 26 per cent against June last year. Commercial vehicles, meanwhile, recorded sales of 2,024 units, 25 per cent higher than in June 2014. The Innova and Fortuner maintained their high sales rates, with 842 units, an increase 26 per cent against June 2014, and 780 units, an increase of 20 per cent, respectively.

Among CBU vehicles, the all-new Yaris 2014 held its leading position with sales in June of 237 units, followed by the Hilux with 173, Prado 65, Land Cruiser 46, and Hiace 40.

Vehicle sales still on the rise

Sales in June rise 4 per cent compared to May but 57 per cent compared June last year.

Motor vehicle sales reached 18,686 units in June, an increase of 4 per cent compared to May and 57 per cent compared to June last year, according to a recent report from the Vietnam Automobile Manufacturers’ Association (VAMA).

Passenger cars saw 9,769 units sold, for an increase of 9.2 per cent against May and 45 per cent against June 2014, while the number of commercial vehicles sold reached 7,834, up 0.5 per cent and 75 per cent. Only special-purpose vehicles saw a decline, of 8.1 per cent compared May, with 1,083 units sold, which was still a significant increase of 136 per cent compared to June last year.

The volume of completely-knocked-down (CKD) motor vehicles stood at 14,448, a slight increase of 3 per cent compared to May and up 56 per cent against June last year. The number of completely-built-up (CBU) units was 4,238 units, for increases of 9 per cent and 64 per cent.

SBIC & Vinalines moving ahead with restructuring

The restructuring process of the Shipbuilding Industry Corporation (SBIC) and Vinalines was announced in a report on the first half of the year released recently by the Ministry of Transport (MoT).

SBIC, formally known as Vinashin, has basically completed the financial restructuring of its international bonds and debts. The report said it had finished restructuring debts to international credit organizations in the first stage and was waiting for approval from government to continue.

The report also showed that the restructuring plans of 40 subsidiaries of Vinashin had been approved, while the plans of 104 other companies were waiting for approval.

Regarding Vinalines, five subsidiaries were disbanded, two were declared bankrupt, eleven were equitized, and one is to be merged.

MoT said that the restructuring process would be accelerated for nine others corporations under the approved plan. The five corporations receiving the most focus were SBIC, Vinalines, Vietnam Railways, Vietnam Expressway Corporation and Corporation for Investment, and Cuu Long Development and Project Management of Transportation Infrastructure.

In the first half of the year seven enterprises completed initial public offerings (IPOs) and had organized the first general meeting as joint stock companies, including Vietnam Airlines.

Deutsches Haus takes possession of new BMW

Euro Auto, the authorized BMW importer in Vietnam, handed over a premium Series 5 model to its partner, Deutsches Haus, in Ho Chi Minh City in early July.

“Deutsches Haus Ho Chi Minh Stadt trusts and relies on premium German automobiles as they reflect the same high quality aspects as the development of our project,” said Mr. Elmar Dutt, Senior Director of Marketing & Communications at Deutsches Haus. “Our partnership and cooperation with Euro Auto creates perfect synergy for the future.”

Deutsches Haus Ho Chi Minh Stadt is a pioneering premium grade office tower strategically located on the corner of Le Duan Street and Le Van Huu Street in the heart of Ho Chi Minh City. The 25-storey building, consisting of approximately 30,000 sq m of prime office space, is expected to be completed in the third quarter of 2017.

In the first half of 2015 the 5 Series accounted for 30 per cent of BMW’s sales volume nationwide. The luxurious Alpine white edition of the BMW Series 5 handed over to Deutsches Haus Ho Chi Minh Stadt is equipped with the latest BMW navigation system and wireless internet connection. Passengers in the back seat can now easily enjoy working with the convenient assistance of two folding tables.

Online FMCG sales heading upwards

The latest report from Kantar Worldpanel released on July 8 shows that online sales of fast-moving consumer goods (FMCG) increased in Vietnam.

Online’s share of the grocery market in modern trade rose from 0.4 per cent in 2013 to 1.5 per cent in 2014, with such growth looking set to continue well into the years to come.

“The development of online sales in Vietnam will happen at a different pace by sector, starting with more individual / premium markets, which is witnessed by the dominance of personal care (which accounts for nearly 50 per cent online), followed by milk powder, and after that we may see progression to the other sectors,” said Mr. Davil Anjoubault, General Manager of Kantar Worldpanel Vietnam. “Thanks to the prevalent speed and convenience trends among Vietnamese consumers and high internet penetration, Vietnam is a promised land yet to be discovered to the fullest, where retailers and brands need to focus to develop the online market.”

Kantar Worldpanel has noted the online practices of both local and international players, including Unilever, P&G, Masan, among others, in recent years, which reinforce the message of e-commerce helping their brands approach shoppers from another direction.

Kantar Worldpanel also forecasts global FMCG online sales to reach $130 billion by 2015.

Top 10 enterprises for positive media coverage

Based on an analysis of media reports, the Top 10 enterprises that received the most positive media exposure from July 2014 to June 2015 were announced on July 7 by Vietnam Report, an independent company ranking the services and quality of companies in Vietnam.

The Top 10 includes Vinamilk (VNM), the Vietnam Insurance Company (BVH), the Bank for Foreign Trade of Vietnam (VCB), the Hoa Sen Group (HSG), the Hoang Anh Gia Lai JSC (HAG), the PetroVietnam Fertilizer and Chemicals Corporation (DPM), the Hoa Phat Group (HPG), the Vingroup JSC (VIC), the Military Commercial Joint Stock Bank (MBB), and FPT Telecom (FPT).

Vinamilk has been the standout in the milk industry for years, Vietnam Report said, with Ms. Mai Kieu Lien, its CEO, attracting much attention in both domestic and overseas media. BVH ranked second, for its major contributions to the community and in winning both domestic and foreign awards. VCB was third, receiving much more positive media exposure than negative exposure.

Vietnam Report also named enterprises with the most varied information appearing in the media. VNM led the way, followed by VIC, HAG, DPM, VCB, BVH, HSG, HPG, FPT and MBB.

There was more positive media exposure for the Top 10 enterprises than negative exposure. Vietnam Report explained that because they had high capitalization ratios and liquidity in the stock market they had a great deal of positive exposure. Secondly, with the stock market performing well, Vietnamese are in a better to build a positive image.

The most discussed topics in the media regarding enterprises were their stock price, business performance, business strategies, products, and human resources. Vietnam Report said that the positive exposure for enterprises was mainly regarding their stock price, which attracts a lot of people’s attention. Meanwhile, business performance influenced the ability of enterprises to make a profit, which also attracts positive media exposure.

Leather and footwear conference upcoming

The Leather and Footwear Export Promotion Conference will be held in Ho Chi Minh City on July 15 by the Vietnam Trade Promotion Agency and the Vietnam Leather, Footwear and Handbag Association (Lefaso).

The conference’s theme is “Business and Export Capacity Building for Leather and Footwear Businesses”, centering on problems facing Vietnam’s footwear industry, solutions to resolve internal difficulties, and how best to export Vietnamese leather and footwear products.

More than 200 enterprises from Vietnam, Italy, the US, Thailand, Taiwan, and Hong Kong will attend the conference, discussing such matters as the export potential of the leather, footwear and handbag industry, market demand, advantages, difficulties and challenges in exports, barriers to international trade, and improving competitiveness in the 2016-2020 period.

In recent years the export potential of Vietnamese footwear has increased rapidly due to rising foreign direct investment (FDI) in the industry. Total export value reached $10.22 billion in 2014. Footwear enterprises with FDI and joint ventures exported goods to many major markets around the world, valued at $7.93 billion.

US firms at the right time

More investment opportunities will be available for American investors as Vietnam has been working hard to improve the country’s business environment.

Minister of Finance Dinh Tien Dung recently presided over a conference in New York to demonstrate the wealth of investment opportunities in Vietnam. Nearly 170 US investors, including large-scale organisations like JP Morgan Asset Management, Goldman Sachs, and Morgan Stanley Investment Management, as well as three US billionaires, were impressed by Vietnam’s rapid growth and abundance of prospects in the local financial market.

The raft of the US investors who attended the conference, according to AIA Vietnam general director Wayne Besant, illustrated the great interest of US investors in Vietnam.

In the last decade, Vietnam’s economy has reached an average growth rate of 6.4 per cent a year, putting it in the top three Asian countries in terms of growth. Inflation has been kept under control, and Vietnam is expected to accomplish a seven per cent growth rate once again.

What has impressed the US investors and other foreign investors even more is a new regulation that removes the cap on foreign ownership, allowing foreign investors to liberally buy stakes at all listed companies in Vietnam, with exceptions in some sectors restricting foreign investment.

Harbinger Group founder Philip Falcone, who has been investing in the $4 million Ho Tram project in Vung Tau province since 2007, said that despite his investment facing many ups and downs in the last eight years, he still had hope in the Vietnamese government’s efforts and believed that he chose the right opportunity, in the right place, at the right time for his investment here in Vietnam.

Marc Mealy, vice president for policy at the US-ASEAN Business Council, cited the Intel Corporation, which had invested in Vietnam and would invest more in the coming time, as the group expected to become a crucial partner for Vietnam through its global value-chain. Mealy said Intel proved that the country’s business environment was safe, convenient, and prospective.

According to Mealy, as a developing economy, Vietnam has opened up many opportunities for major investors in energy, infrastructure, and manufacturing as well as education and healthcare. Once the Tran-Pacific Partnership agreement is concluded, the country will not only benefit through VN-US trade relations, it will also become an important gateway for US investors to tap into the ASEAN market.

Billionaire Wilbur Ross, the 200th richest person in the US, stated his reasons why companies and investors should consider investing in Vietnam by lauding the country, in particular its stock market, as an attractive destination, thanks to the government’s determination to speed up the process of state-owned enterprise equitisation, the expansion in foreign ownership limit, and the efforts made to reduce the administration procedures. Ross said that Vietnam is at a turning point that has gradually improved the relationship between the government and the private sector with regard to the ownership issue.

Agri sector primed for investment

A wave of local private investments worth billions of dollars is expected to help change Vietnam’s poorly funded agricultural sector.

Senior agricultural expert Pham Hoang Ngan told VIR that at least 30 large domestic enterprises were planning to implement major agricultural projects in Vietnam in the near future.

“They are working with authorised agencies for support. A billion dollar wave of private agricultural investments will hit Vietnam soon,” she said.

These 30 enterprises include big brand names like Vinaseed, TH Group, Trung Nguyen, Vingroup, Viettel, and Minh Phu. For example, a TH Group source told VIR that in addition to its $1.2 billion concentrated dairy cow and fresh milk production project in the central province of Nghe An, the group planned to invest over VND4 trillion ($187.8 million) into a 3,000 hectares project to raise 20,000 dairy cows in the central province of Thanh Hoa. The group is also planning to invest VND7.348 trillion ($345 million) into building a 3,171ha project to raise 20,000 dairy cows to produce fresh milk in the Central Highlands’ province of Lam Dong. In addition, it would invest VND13 trillion ($610.32 million) into building a 12,000ha project to produce fresh milk from 72,000 dairy cows in the Central Highlands’ province of Dak Lak.

The group is also focusing on forestry projects. It is investing $500 million into its May Forestry Joint Stock Company, with two projects in Nghe An, including a $150 million wood bar plant, with the annual capacity of 8,800 cubic metres, and a $350 million MDF wood plank plant, with the annual capacity of 400,000 cubic metres. TH has also invested $32 million in the production of organic vegetables.

In addition to TH, Minh Phu Seafood, which is Vietnam’s largest shrimp exporter, has reported its plan to the Ministry of Agriculture and Rural Development (MARD) for a VND10 trillion ($467.3 million) project to raise shrimp and African carp nationwide. This project will be deployed in an integrated production chain, which involves the participation of millions of farmers. The project plans to produce 140,000 tonnes of shrimp and 50,000 tonnes of African carp by 2020, when the total revenue is projected to hit $2.5 billion, and 200,000 tonnes of shrimp and 100,000 tonnes of African carp by 2025, when the total revenue is expected to reach $3.5 billion. The project will include the construction of sub-projects, including a research institute, a shrimp breeding centre, animal feed and medicine factories, aquatic product processing factories, a logistics and distribution company, and the expansion of more export markets.

Nafoods Group, which is the world’s biggest exporter of baby jackfruit and passion fruit products, has also asked the MARD to support its VND2.05 trillion ($96.24 million) project to build more factories and rent more land. The group currently has a 5ha factory on 900ha of land in Nghe An.

“We want to expand the area to 5,000ha in Vietnam’s northern region,” said the group’s chairman and general director Nguyen Manh Hung. “Some VND1.35 trillion ($63.38 million) will be for constructing infrastructure and the remaining VND700 billion ($32.86 million) will be for cultivation.”

Nguyen The Ha, investment consultant from Bui Van Ngo Co. Ltd, said his company would invest VND1 trillion ($46.72 million) in expanding its existing VND1 trillion ($46.72 million) factory to make agricultural machines, starting in 2015. The company would also need more land.

Additionally, this company would implement a $1 billion project to process high-quality rice in the southern province of Long An. The project would include four clusters of factories able to dry 4,000 tonnes of rice per day and husk 800,000 tonnes of rice per year.

Secondary bond market sees second quarter trade flurry

In the second quarter, the secondary market attracted investors and recorded a high trading amount because of the inactivity of the primary bond market.

Investors were attracted by a significant rise in bond yields and the huge gap between yields in the primary and secondary markets. Bond yields in the secondary market by the end of the second quarter had bounced back strongly from a decline in the first quarter, as a result of strong credit growth, rising inflation, and a depreciation of VND against USD. In the second half of this year, it is expected that credit growth and inflation will increase further, which will likely cause bond yields to continue their upward trend.

During the first six months of 2015, total traded value of bonds and bills in the secondary market via outright and repo transactions reached VND497.179 trillion ($21.9 billion), up 53 per cent compared to the same period last year. As a result, the average value per month was recorded at VND82.863 trillion ($3.79 billion). This was due to an increase in trading value in the second quarter, which reached VND260.552 trillion ($11.9 billion), up 10.1 per cent compared to the previous quarter and 45 per cent on-year.

Outright transactions dominated the secondary market in most of the reviewed weeks. For the first six months of 2015, total value of outright transactions was twice that of repo transactions. There were VND340.089 trillion ($15.5 billion) of outright transactions, contributing 68.4 per cent of the total. Repo transactions accounted for only 31.6 per cent, worth VND157.090 trillion ($7.19 billion).

By tenor, the breakdown of outright transactions shows short-term bonds overwhelmed the market. Bonds with short-term maturities usually have higher liquidity and much less risk than long-term bonds, which attracts greater investor attention. In addition, the supply of short-term bonds in the primary market has been reduced by Decision No78/2014/QH3 allowing the issuance of over-five-year bonds only. Investors therefore had to move to the secondary market to purchase short-term bonds. One-to-three-year tenors contributed 33.5 per cent of total outright transactions, while three-to-five-year made up 22.4 per cent. Less-than-one-year tenors also accounted for 17.9 per cent of the total. For long-term maturities, five-to-seven-year and over-seven-year tenors contributed 17.2 per cent and 9.0 per cent of the total, respectively.

As of June 2015, foreign investors net bought VND606 billion ($27.7 million) in the secondary market through outright and repo transactions. However, in the second quarter foreign buyers accounted for only 9 per cent of total trading value, much lower than the contribution of 17 per cent in the first quarter.

According to Bloomberg, bond yields over the second quarter of 2015 increased dramatically at all tenors after a decline in the first quarter. One of the main reasons was a rise in the CPI in the second quarter due to an increase in oil and electric prices, which caused investors to demand higher bond yields and lowered demand for bonds. The demand for bonds was reduced further as banks tried to enhance their credit activities, which was reflected in substantial credit growth in the second quarter.

Tenor structure in the primary market also prevented banks from buying bonds, as most of their need was for short-term bonds in line with the maturities of their funds. In addition, fluctuations in the VND/USD exchange rate in April–May motivated investors to move funds from the bond market to the exchange market to speculate on the dollar. Low demand for bonds led to a surge in bond yields.

Mid-term (three to five year tenor) bond yields increased at a higher pace than short- and long-term tenors. Compared to March 31, bond yields by the end of June were listed as: one-year (5.10 per cent, +34bps), two-year (5.53 per cent, +56bps), three-year (5.90 per cent, +79bps), five-year (6.41 per cent, +95 bps), seven-year (6.73 per cent, +58bps), ten-year (6.90 per cent, +39bps), and fifteen-year (7.70 per cent, +42bps).

Developer spat resolved

Malaysia’s Gamuda Land has taken over a 40 per cent stake in the joint-venture development of Celadon City, due to major differences among investors regarding the project’s concept and direction.

The negotiation to transfer the stake of the $1.1 billion Celadon City lasted for three years and Gamuda Land took over the 40 per cent stake from three Vietnamese partners - Saigon Thuong Tin Real Estate, Thanh Thanh Cong, and An Phu Gia Joint Stock Company. Located on an area of 82 hectares, Celadon City is in Son Ky ward, in Ho Chi Minh City’s Tan Phu district. The transfer value was VND1.014 trillion ($48.2 million) by share and another VND386 billion ($18.3 million) by cash.

According to Chow Chee Fan, general director of Celadon City, the reason for this acquisition was differences in concept for developing the project.

“The differences caused both sides to come to the conclusion that Gamuda should take full control of this project,” Chow told VIR.

“With our strong financial capacity and a wealth of experience in mix-used urban development projects in Malaysia, we are able to sustain and financially develop this project,” Chow confirmed.

Gamuda Land wants to proceed with the project under an international concept, with a large garden and high quality apartments, similar to its work in Malaysia. The domestic partners, meanwhile, wanted to build and sell the apartments as soon as possible in order to recover their capital investment.

All payment, Chow said, was finished by the end of June.

With the estimated original investment capital of VND24.8 trillion ($1.1 billion), the project, which kicked off in 2010, includes a cultural and entertainment centre, education, commercial and sports facilities. Currently, around 500 apartments in blocks A and B have been sold, and the foundation of blocks C, D and E of Ruby precinct have been completed. Celadon City will provide more than 7,300 apartments in total.

The first thing Gamuda Land did after taking control of the project was the launch of more than 370 apartments in Block C, with prices from $1,200 per square metre.

In order to keep its commitment to providing the local community with the best facilities, the company will start the construction of a sport and recreation club within the next three years, with the investment capital of $15 million. Primary and secondary schools are slated to follow.

Gamuda Land, a division of Malaysian property developer Gamuda Berhad, has other large-scale projects in Hanoi, including the 500ha Gamuda City and the 323ha Yen So project, with the total investment capital up to $5 billion.

Medical equipment imports to be licensed online

On July 2 the Department of Equipment and Medical Facilities under the Ministry of Health announced the introduction of online services for importing medical equipment. Implementation will last from July 1 to September 30, then on October 1 a National Customs Portal for online services in importing medical equipment will be officially launched.

Enterprises will only have to complete forms and send their dossier for an import license over the internet rather it being done in person, as previously, saving time and money.

Licensing authorities, meanwhile, will have an easier time evaluating dossiers received online. All will be managed together, making it accurate, secure and easy to check. It is expected that licensing will only take one-third of the time needed previously.

Medical equipment is following in the footsteps of functional foods, pharmaceuticals, and cosmetics in being able to access online services, according to Minister of Health Nguyen Thi Kim Tien.

The Department generally receives dossiers from over 700 enterprises a month. The huge number along with complex criteria makes evaluation difficult. Completing the process will take a big step forward with these new measures.

M&A to rocket in Vietnam

In their latest report Baker & McKenzie includes Vietnam within emerging markets with highest transactional growth in merger and acquisition (M&A) activities.

Stand-out markets for predicted high transactional growth over next five years include developed economies such as the Netherlands, the UK, Sweden, China, Hong Kong (China) and India, and the emerging markets of Mexico, Egypt, and Vietnam.

Globally, Baker McKenzie analysts predict M&A deals will rise to $2.7 trillion worth this year before accelerating to $3 trillion in 2016 and $3.4 trillion in 2017.

M&A activity relating to emerging markets will grow dramatically, rising by 56 per cent to $678 billion by 2018, up from $435 billion in 2014.

The most active sectors over the next five years are forecast to be healthcare, telecommunications, and structural financials.

Consumer goods and services, technology, and pharmaceuticals are also expected to expand due primarily to cyclical trends.

FIE financial statements to be reviewed

Deputy Minister of Finance Tran Van Hieu has signed an official letter to city and provincial people’s committees around the country on reviewing the financial statements of foreign-invested enterprises (FIEs).

The task will be performed in cooperation with local tax departments and aims at implementing management, supervision and efficiency improvements in foreign direct investment (FDI).

Departments of Finance are responsible for completing an overall local report for submission to the Ministry of Finance (MoF) before August 30.

MoF has asked that information be provided on total exports and imports in 2014 (excluding crude oil) and the total number of employees working at FIEs in each city or province as at December 31, 2014.

To complete a comprehensive review of information on the operational situation and contributions of FIEs to cities and province, MoF also asked local Departments of Finance to cooperate with relevant agencies on supplemental information in each report before submission to the MoF.

Two foreign banks to increase capital

The State Bank of Vietnam (SBV) has approved the Ho Chi Minh City branch of the Far East National Bank (FEB) increasing its charter capital from $15 million to $25.95 million and the city’s branch of the China Construction Bank Corporation (CSBC) increasing its charter capital from $30 million to $60 million.

FEB has been in Vietnam since 2004 and this is the first time it has sought to raise its charter capital from the minimum requirement of $15 million.

CSBC, meanwhile, has been in Vietnam since 2009. It reported first quarter pre-tax profits of $173,748; significantly lower than the $1.42 million recorded in the first quarter of 2014.

Both banks must increase their charter capital with 12 months from July 6, when the SBV gave its approval.

Vietcombank Chairman warns of possible risks

At a preliminary meeting to summarize its operations during the first half of the year and to implement plans for the second half, Vietcombank Chairman Nghiem Xuan Thanh warned the bank may face operational risks in the future, primarily from credit growth and non-performing loans.

As at June 30, Vietcombank’s credit growth was higher than the sector average, after increasing 6.52 per cent since the end of 2014. The growth, however, was mainly based on increases in foreign exchange activities and long-term lending, which led to inefficient use of short-term capital, limiting banking services and putting pressure on liquidity.

In particular, medium to long-term credit growth rose from 36 per cent to over 40 per cent compared to the first half of 2014. Vietcombank also had the largest amount of mobilized foreign exchange capital within the banking system, as in the second quarter it completed $1 billion worth of transactions to invest in government bonds.

Regarding liquidity risk, the bank must continue maintaining a loan-to-deposit ratio (LDR) of around 75 per cent, as its interest rates remain low compared with other banks.

He also spoke about credit quality and the process of collecting bad debts in accordance with plans. “Credit quality is really at a level of concern and the amount of bad debt provision is at its highest ever,” he told the meeting.

A report tabled at the meeting showed that bad debts fell in the second quarter against the first (from 2.97 per cent to 2.43 per cent), but compared to 2014 some VND1 trillion ($45.85 million) had been incurred. In the first half Vietcombank collected VND1.01 trillion ($46.30 million) in bad debts but bank leaders consider this to be a modest result given it represented just 34 per cent of the annual plan.

Vietcombank is one of only a few banks to have set a high rate of provision by the end of second quarter, so it has the capacity to actively deal with its bad debts. However, the high level of provision affects its profit, with Vietcombank recording lower profits than other banks with State ownership.

Specifically, in the first six months the pre-provision profit of Vietcombank stood at VND6.03 trillion ($276.47 million), an increase of 16.6 per cent over the same period last year, but provisions of VND2.99 trillion ($137.09 million) saw its profit come in at VND3.04 trillion ($139.38 million), an increase of only 9.45 per cent against the same period of last year. The result was, however, 50.7 per cent of the annual plan set at its annual general meeting.

HD SAISON Finance offically introduced

HDBank and Credit Saison (Japan) officially introduced HD SAISON Finance on July 4, the new brand identity of HDFinance.

The brand was initially Société Générale Vietnam Finance, before being acquired in 2013 by HDBank and becoming HDFinance. In April this year the Credit Saison became a strategic shareholder, with 49 per cent of capital, and renamed the entity HD SAISON Finance.

HD SAISON Finance has over 3,000 representative points throughout the country and relations with over 2,000 partners to serve around 1 million customers with loans for motorbikes, motor cars, mobile phones, and so on.

“There have been more Japanese enterprises investing in Vietnam and more Japanese tourist coming here as well, which indicate the extent of the links between the two countries,” Mr. Takahashi Naoki, Chairman of HD SAISON Finance, told the introduction ceremony. “In this context, in 2012 Credit Saison opened a representative office in Hanoi, which was our first base in Southeast Asia, to expand the consumer finance market. After the long process of analysis, we are proud to have the opportunity to come together with HD Bank and HDFinance.”

HoSE announces Top 10 brokers for Q2

The Ho Chi Minh City Stock Exchange (HoSE) has announced the leading stockbrokers in terms of market share for the second quarter of 2015. Unlike the first quarter, when the top four remained the same, the second quarter saw the Saigon-Hanoi Securities Joint Stock Company (SHS) take over fourth place from VNDirect Securities (VNDS).

SHS’s market share reached 5.5 per cent, an increase of 0.06 per cent compared with the first quarter, while VNDS’s was 5.57 per cent, a decline of 0.1 per cent.

Except for the change in ranking between SHS and VNDS the other positions were the same as in first quarter, with Saigon Securities Inc. (SSI) leading the market again with a market share of 13.52 per cent, followed by the Ho Chi Minh City Securities Corporation (HSC) with 11.24 per cent and Viet Capital Securities (VCSC) with 7.99 per cent, for increases of 1.28 per cent, 0.2 per cent, and 0.21 per cent, respectively.

In terms of bonds in the second quarter, only five companies participated in the market. SSI led with a market share of 85.01 per cent, followed by Bao Viet Securities (BVSC) with 6.94 per cent and VNDS with 4.02 per cent. BVSC lost first place in the quarter with a significant decline in market share, from 42.26 per cent in the first quarter to 6.94 per cent in the second.  

Five Star Garden to get underway

Five Star Kim Giang Co., an affiliate of the GFS Group, and the Uy Nam Investment Construction JSC (Unicons), under the Cotecons Group, have recently signed a contract to develop the Five Star Garden housing project in Hanoi’s Thanh Xuan district.

“Construction of the Five Star Garden project is our top priority,” Mr. Nguyen Sy Cong, CEO of Unicons, said at the signing ceremony. “We will ensure work progress and quality.”

It is a favorable time to begin construction as Unicons can mobilize full resources in machinery, modern technology, high quality raw materials with competitive prices, and skilled construction workers. “This will also help the project’s owner ensure housing is handed over to customers on schedule, in early 2017.”

A representative of Five Star Kim Giang, meanwhile, said the company has been careful in the selection of the leading professional partners, including Unicons, to develop the project. “We believe Five Star Garden will bring absolute satisfaction to our customers when completed,” he said.

With total investment of VND1.8 trillion ($82.5 million), the project covers an area of 12,530 sq m in Kim Giang Ward in Thanh Xuan district. Sixty per cent of the project’s area is for green space, with trees, playgrounds, footpaths and ponds.

Five Star Garden comprises two 33-storey buildings, including 1,200 apartments for sale, office space for lease, shopping malls, and other facilities for residents such as supermarkets, kindergartens, gyms, and spas.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR