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 SBV releases more gold into market;  Experts discuss re-structuring rice production, exports; Eight-month auto imports rise sharply; Ho Chi Minh City takes lead in FDI attraction

SBV releases more gold into market

The State Bank of Vietnam (SBV) resumed auction of gold after a pause of two weeks, selling 19,900 taels out of 20,000 taels of gold at the 58th gold auction on September 12 with highest bid at VND38 million per tael, and lowest bid at VND37.94 million per tael.

Since March 28, the State Bank has held 58 gold auctions and sold 1,537,100 taels of gold, more than 59.1 metric tons of gold out of 1,642,000 taels that were put up for auction.

After the 58th gold auction, the price of SJC-brand gold dropped to VND37.4 million per tael for buying, and VND37.65 million per tael for selling as of 8.30am on September 13.

 Experts discuss re-structuring rice production, exports

At a meeting organized by VnEconomy Newspaper and Vietnam Food Association on September 12, experts discussed production and business re-arrangement to raise value of rice exports and thereby enhance farmers’ living standards.

In 2012, the country exported more than 7.5 million tons of rice, ranking second in the world, after India, in rice exports.

In the first eight months of the year, the country exported nearly 4.7 million tons with revenue of US$2,005 billion.

However, the quantity has slumped by 7.86 percent and revenue is down by 11 percent against the same period last year, with average price going down by $15 per ton. Experts believe Vietnam will face harsher conditions by year end.

Pham Van Bay, Deputy Head of Vietnam Food Association, said the country is totally reliant on the world market. This year, Thailand lowered rice price due to huge inventory and India decided to lower on account of a bumper crop.

On the other hand, with no facility to stockpile rice for a long time and bank interest pressure, Vietnamese enterprises are compelled to sell rice as quickly as possible, which brings down prices.

Disheartened, farmers in North Vietnam have begun to leave their paddy fields uncultivated. However, the Ministry of Industry and Trade said that these are but some scattered cases in provinces.

There is now need to restructure the agriculture sector based on market demand, mark areas for planting rice, and build Vietnamese rice brand names in the world market to strengthen trade.

Vietnam-Japan industrial cooperation strategy

Deputy Prime Minister Hoang Trung Hai has urged relevant agencies to complete an action plan in line with Vietnam’s industrial strategy within the framework of Vietnam-Japan cooperation.

At a meeting on September 12, he expressed his hope that the draft plan will be submitted the Prime Minister for approval late this year. This will create a firm foundation for relevant agencies, businesses and investors from the two countries to cooperate in six major areas - electronics, agricultural machinery, agro-forestry and seafood processing, environmental industry and energy saving, automobile and spare part manufacturing, and shipbuilding.

A representative from the Ministry of Planning and Investment said Vietnamese and Japanese working groups have gathered opinions from both countries’ businesses in every sector to outline a vision to 2020 with measures to achieve strategic targets relating to tax, credit, procedures, investment management mechanism, development of support industry, and human resource training.

The draft plan for Vietnam-Japan industrial cooperation is focused on renovating technologies, improving productivity and international competitiveness and developing products of high added value for export and domestic use, he said.

Participants in the meeting discussed issues related to specific criteria and targets for high-tech application in line with Vietnam’s economic conditions as well as measures to increase the annual production value of prioritized sectors by a minimum of 20 percent and contribute at least 35% to total industrial production value.

UK businesses seek opportunities in Vietnam

Eight NOF Energy businesses from the UK will make a fact-finding tour of Vietnam from September 16-18.

Their visit aims to introduce UK oil and gas exploitation skills, products and services and to seek trade cooperation in Vietnam.

During their stay, they are scheduled to work with Vietnam National Oil and Gas Group, State-owned oil and gas enterprises, and private and foreign invested companies in Hanoi, Ho Chi Minh City and Vung Tau.

Caroline Lofthouse, business development director of NOF Energy, said companies are willing to share experience and professional skills with Vietnamese partners.

NOF Energy is a highly proactive business development organization operating in oil and gas, nuclear power, and renewable energy. It represents more than 420 companies in providing technologies and solutions for the global supply chain.

Eight-month auto imports rise sharply

Vietnam has imported 22,000 automobiles worth more than US$408 million in the first 8 months of 2013, up 21.9% in volume and 5.7% in value on the comparable period last year.

According to the General Statistics Office, 9,900 imported completely built unit (CBU) automobiles defied the local auto market’s general gloomy outlook.

The Vietnam Automobile Manufacturers’ Association reported domestic auto sales fell 3% to 9,360 in July.

But local auto retailers are offering discounts and increasing the number of domestically-assembled cars ahead of an expected surge in business later this year.

Recent Ministry of Industry and Trade statistics reveal car import volatility, with volume up in May and June but down in July and August.

The Republic of Korea remains Vietnam’s major car supplier, exporting 9,258 CBU models in the 8-month period. It represents a 39.09% rise on the same period in 2012 and accounts for 37% of Vietnam’s total automobile imports.

Korean investment encouraged in Vietnam

The Republic of Korea (RoK) is willing to share its development experience and encourage its businesses to invest in Vietnam.

RoK Ambassador to Vietnam Jun Dae Joo made the statement at an international workshop jointly held in Hanoi on September 12 by the Vietnamese Ministry of Planning and Investment (MPI) and the Korea International Cooperation Agency (KOICA).  

He hailed Vietnam’s administrative reform result in recent times, and said the RoK will work with other donors to reexamine development aid for Vietnam.

Participants discussed and compared the development experiences of the RoK and Vietnam and proposed measures to step up their bilateral cooperation.

MPI Deputy Minister Nguyen The Phuong noted the RoK–one of Vietnam’s largest international donors—has also been a source of technological assistance and incentive loans.

He said its increased development aid has made a significant contribution to Vietnam’s socio-economic development.

Hoang Viet Khang, Head of the MPI’s External Economics Department, said the RoK has extended Vietnam US$71 billion in preferential loans over the past two decades. The 2013 financial aid total is expected to reach US$5–6 billion.

He reported Vietnam received US$58 billion or about 72% of committed figure so far, and disbursed around US$37 billion.

KOICA Chief Representative Kim In praised the effectiveness of the RoK-Vietnam cooperative model. He said he believes Vietnam could still fine-tune its business environment and increase the efficiency of its aid spending.

The RoK is one of Vietnam’s four largest foreign investors, with total registered capital totalling nearly US$26 billion.

Two-way trade turnover hit US$21 billion last year, mostly in the processing and manufacturing industries.

Exporting fish breeding stocks to South America

The Research Institute for Aquaculture No. 1 (RIA) has exported more than 26,000 mother tilapia fish to South America since 2006.

Mexico and Colombia have purchased the largest proportion, at a cost between US$7–12 per each.

The RIA Tiapia Fish Centre Director Nguyen Cong Duong said it supplies around 35–50 million tilapia breeding fish to northern Vietnamese provinces each year.

The centre has recently expanded the scale of its production in Tam Ky City’s Tam Ngoc Village in the central province of Quang Nam. It spent VND64 billion building two breeding stock cultivation foundations over 2011–2014.

Upon completion, around 25,000 mother tilapia fish will be supplied to interested localities.

Ambassador explores Vietnam-Australia cooperation opportunities

Vietnamese Ambassador to Australia Hoang Vinh Thanh has visited the North Australian city of Darwin at the invitation of the Northern Territory Government.

At a working session with Attorney-General John Elferink and other high-ranking Northern Territory Government officials, Thanh discussed expanding economic, trade, and education cooperation between the Northern Territory and Vietnamese localities.

He thanked his hosts for creating the best possible conditions for expatriate Vietnamese people living and working in the territory.

Thanh said he believes Darwin’s and its surrounds’ cattle husbandry, oil and gas, and resource—particularly uranium—exploitation industries present a wealth of opportunities for cooperation with Vietnamese cities and provinces.

Elferink revealed Northern Territory Chief Minister Adam Graham Giles will visit Vietnam in the near future.

Thanh also witnessed the signing of a beef export shipping contract between a Northern Territory company and the Haiphong Investment and Animal Poultry Products Export-Import Joint Stock Company (ANIMEX).

Vietnam is currently the second largest importer of Australian live cattle after Indonesia.

Belarus PM hails cooperation potential with Vietnam

Belarus and Vietnam have great potential for expanding economic, trade and investment cooperation, says Prime Minister Mikhail V. Myasnikovich.

Receiving Vietnamese Minister of Industry and Trade Vu Huy Hoang in Minsk on September 11, Myasnikovich assured his guest that Belarus will help Vietnam increase relations with other Customs Union members (Russia and Kazakhstan).  

He also expressed his hope that Vietnam will be a gateway for Belarus to penetrate the large, lucrative Southeast Asian market.

Hoang briefed Myasnikovich on the results of the 10th meeting of the Vietnam-Belarus Inter-government Committee for Economic, Trade and Scientific and Technological Cooperation, the Vietnam-Belarus business forum, and the current third round of free trade agreement (FTA) negotiations between Vietnam and the Customs Union of Russia, Kazakhstan and Belarus.

All these activities will support the business communities of the two countries in fostering economic and trade ties, Hoang said.

He recalled a Belarus visit in May 2013 by PM Nguyen Tan Dung during which both PMs agreed to raise two-way trade to US$500 million ahead of the 2015 schedule.   

At the meeting, PM Myasnikovich and Minister Hoang discussed the prospect for stronger bilateral cooperation in farm produce and food processing, light industry, construction, electronics engineering, automobile assembling, and truck and agricultural machine manufacturing.

Vietnam - an attractive market in Asia

Vietnam, with a population of around 90 million, strong economic growth and its proximity to China, is one of the more appealing markets in Asia, according to The Australian Financial Review, a leading daily newspaper.

The newspaper ran an article on September 11, saying that good name helps small-and-medium-sized enterprises (SMEs) gain a foothold in Vietnam.

Australia’s assistance in the construction of My Thuan Bridge in southern Vietnam still resonates in commercial dealings in the rapidly developing country, the paper reported.

The article noted that the bridge over the Mekong River linking Tien Giang and Vinh Long provinces, which was completed more than a decade ago and was a joint venture between the Australian and Vietnamese governments, has helped gain Australia’s commercial reputation.

According to the head of global trade at HSBC, Andrew Skinner, Vietnam will eclipse the growth in China’s trade with Australia next decade, growing at around 8% by 2030.

Vietnam attends CAMBUILD 2013 Expo in Cambodia

Nearly 20 businesses from 20 countries in the world including Vietnam have participated in the Cambodia International Building & Construction Industry Expo (CAMBUILD 2013) in Phnom Penh from September 10-12.

Among Vietnamese products on show are construction ceramics, electrical equipment and fire extinguishers.

The construction sector in Cambodia has developed stably in recent times. In the first half of the year, its total investment capital reached US$1.94 billion, up 123 % against same period last year.

Vietnamese businesses and producers consider the country as a potential market for their construction materials such as steel, iron, and cement as well as household goods.

VSIP model to boost industrial development in Quang Ngai

The Vietnam-Singapore Industrial Park (VSIP) Joint Venture will break ground on an urban-industrial-service complex project in central Quang Ngai province on September 13.

The ceremony will be attended by Prime Minister Nguyen Tan Dung and his Singaporean counterpart Lee Hsien Loong.

The urban-industrial-service complex is the VSIP Joint Venture’s fifth project in Vietnam and the first investment model in the central region. It will be built on an area of 1.226 hectares in Tinh Tho and Thinh Phong communes of Son Tinh district.

It consists of 600 hectares of industrial land in Dung Quat Economic Zone and 520 hectares of urban-service land near the centre of Quang Ngai city. In the initial stage, the joint venture will focus on developing 260 hectares of industrial-urban-service land with total funding of nearly US$340 million.

VSIP’s four projects in the provinces of Binh Duong, Bac Ninh and Hai Phong have attracted nearly 490 local and foreign investors from 23 nations and territories in the world with total capitalization of over US$6.2 billion, and have created more than 140,000 jobs for local people.

At the groundbreaking ceremony, the management board of Dung Quat Economic Zone will grant investment licenses to the first four projects.

Quang Ngai province is strongly committed to providing support for the implementation of VSIP-Quang Ngai projects and building an open mechanism for attracting foreign investors, especially from Singapore.

PM requests salary inspections on leaders of state-owned companies

Prime Minister Nguyen Tan Dung has urged a comprehensive check on the implementation of labour and salary policies of state-owned enterprises (SOEs), including the salaries of leaders, between 2010 and 2012.

According to the document, signed by the PM on September 10, the government has issued many labour and salary policy regulations in line with the SOEs restructure. However, a number of SOEs still do not obey the regulations, for instance, the recent cases in HCM City in which the leaders of four public interest companies were accused of embezzlement from employees' salaries. They received an annual salary of VND 2.6 billion (USD123,809). They are now suspended and awaiting punishment for their actions.

The PM has ordered ministries, agencies and localities to check the regulation implementation at SOEs nationwide, to detect violations promptly. He also asked them to examine wholly state-owned companies which perform public services.

The inspection results must be reported to the Ministry of Labour, Invalids and Social Affairs, along with agencies’ proposals on labour, salary and public service policies, before November 30. The ministry will collect the reports for submission to the government leader before December 31 this year.

The Ministry of Labour, Invalids and Social Affairs is also required to remind SOEs to conform to labour, salary and bonus regulations, particularly payments for leader positions, such as: chairman, general director, deputy general director and some others.

Ho Chi Minh City takes lead in FDI attraction

Ho Chi Minh City leads the country in attraction of foreign direct investment (FDI) with nearly US$32.78 billion registered for 4,575 project so far this year.

As reported by the HCMC People’s Committee, in 2011, 2012 and the first eight months of 2013 the city licensed 1,135 new FDI projects with a total registered capital reaching US$4 billion and 339 projects increased their investment capital with a total of US$1.83 billion added.

Overall, the city has absorbed a total of US$5.83 billion in FDI during the period, accounting for 15.73% of the nation. It is estimated FDI attraction in the city for the year 2013 is likely to reach US$1.29 billion.

Changes in investment promotion policy, administrative procedures reform, and creation of favourable investment environment have helped increase FDI in the city. The city’s dynamic FDI capital, along with modern technologies being applied, plays an important role in speeding up domestic production and increasing export revenue and competitiveness for HCMC economy, thus contributing to the overall growth of the nation.

On September 10, the city granted business licenses to three Japan FDI projects worth US$170 million. The move aims to encourage investment from Japan to HCMC, especially in the field of high-tech and support industries.

Currently, there are 105 Japanese companies operating in export-processing zones and industrial parks in HCMC with total investment of US$1.27 billion, mainly in the mechanical, electrical, and electronic sectors.

Bad debt stops bank expansion

Commercial banks are banned from opening new branches if they have a bad debt ratio of more than 3 per cent of their total outstanding loans, announced the State Bank of Viet Nam (SBV).

The regulation is part of the new policies set by Circular No 21/2013/TT-NHNN, governing the opening of branch and transaction offices by commercial banks, which takes effect from October 23.

Independent experts estimated that the bad debt ratio requirement to open branches was rather challenging for banks, as the bad debt ratio in Viet Nam's banking system was at a standstill of 4.46 per cent for the total loans in June. Probably only very good-performing commercial banks are able to meet the new standard. This makes the trip to a new branch of a commercial bank harder but safer.

The State Bank also tripled the minimum capital requirement for a new branch to VND300 billion (US$14.16 million). Commercial banks under one year old are allowed to open up to three branches in different cities or provinces within a financial year. The cap for banks over one year old is five branches.

A commercial bank is allowed to open no more than 10 branches in the inner area of Ha Noi or HCM City.

In fact, too many banks are concentrating only in key areas like Ha Noi and HCM City, creating a lot of redundancy in banking services while the rest of the country is neglected.

The latest SBV move dates back to a similar story in 2007 when a strong flux of banks applied to establish new commercial banks and the central bank had to raise standard requirements in order to filter out the ones with the most potential.

Binh Duong aims to boost production

The southern province of Binh Duong has set ambitious goals for accelerating local production and exports, as well as handling bad debts, in order to generate stable development for the province next year, said the province's chairman Le Thanh Cung.

Cung said Binh Duong was helping local businesses to overcome their financial difficulties and was working to promote trade and supply enough electricity for local production, particularly in key industries.

According to the State bank branch in Binh Duong Province, the province's bad debt currently totalled VND1.28 trillion (US$62 million), an increase of 16.5 per cent since early this year.

Mobilised capital continued to outweigh loans due to slow production. The figure was now at VND76 trillion, a savings of VND47 trillion ($2.2 billion).

The province's total outstanding debt reached nearly VND61 trillion ($2.9 billion) by the end of August, a year-on-year rise of 11 per cent that indicates that the gap had grown between mobilised capital and disbursed capital.

This large gap was attributed to local businesses' difficulties in maintaining and expanding their production, which in turn led to low disbursement.

The branch warned that many local businesses had halted their production or completely dissolved, which could burden the province's banking system with more bad debt.

Since the beginning of this year, about 244 businesses stopped production, a 34 per cent year-on-year decrease.

By August, local businesses owed VND170 billion ($8.1 million) in unpaid taxes, according to the Binh Duong Customs Department, meaning that the province's budget revenue fell short of the yearly target. Department representatives said that VND86 billion ($4.1 million) of the sum was unrecoverable.

Local tax authorities attributed the rising tax debt to the fact that 42 businesses were missing.

Despite the bad debt, industrial production in August showed signs of recovery, authorities said.

The Industry and Trade department said that the province's industrial production value had reached more than VND90 trillion ($4.29 billion), an increase of 12.3 per cent. FDI businesses took the lead, contributing more than VND60 trillion to the provincial budget.

The province's investment climate also improved, with investment capital of more than $1 billion over the eight months, fulfilling the set target.

Government moves to collect owed petrol tax

The State Auditor of Viet Nam proposed that the Ministry of Finance collect VND470 billion (US$22.38 million) from petrol and oil dealers to account for taxes they owed from last year.

These products were temporarily imported. But rather than re-exporting them, the dealers sold them domestically, so they did not pay sufficient import taxes, the auditor explained.

Recently, the Ministry of Finance forced seven petrol dealers to pay VND345 billion ($16.43 million) in taxes for petrol and oil products that were temporarily imported and sold on the local market rather than re-exported.

Those dealers paid the tax arrears even though they believed they should not have to because last year, all petrol and oil traders suffered huge losses and did not have capital for production or business, said Trinh Quang Khanh, deputy chairman of the Viet Nam Petrol and Oil Association. They petitioned the Ministry of Finance for refunds.

Pakistani pharma firms seek opportunities in VN

Leaders from 12 Pakistani pharmaceutical companies yesterday met with their Vietnamese counterparts to discuss opportunities to boost bilateral trade.

The meeting was hosted by the Viet Nam Chamber of Commerce and Industry (VCCI) and the Trade Development Authority of Pakistan (TDAP); and attracted representatives from leading pharmaceutical firms in Pakistan and Viet Nam.

According to the deputy head of VCCI's Department of International Relations, Pham Quang Thinh, despite increases in bilateral trade during the last several years, cooperation between the two countries' pharmaceutical sectors was limited.

"We hope the meeting will help further trade relations between the two countries in the pharmaceutical domain and in general," Thinh said.

Statistics show Viet Nam spent US$3.5 billion importing pharmaceutical products and materials in 2012. At present, the country's major pharmaceutical partners include France, India, the Republic of Korea (RoK) and Thailand; sourcing pharmaceutical materials from China, Spain, Austria, the RoK, and France.

The Vietnamese pharmaceutical industry grew by an annual average of 13.5 per cent between 2008 and 2011, and expanded 25 per cent in 2012. According to analysts, the sector's rapid growth is providing lucrative opportunities for cooperation with foreign suppliers, including Pakistan.

During the exchange, a representative from the Pharmacy Council of Pakistan briefed participants on the development of the country's pharmaceutical sector and incentives for foreign investors.

The representative from Pakistan's Embassy in Viet Nam, Aizaz Khan, also emphasised the recent successes in developing trade between the two countries.

Viet Nam and Pakistan operate direct flight routes and play host to financial representative offices in an effort to reduce transport costs and increase bilateral trade.

Trade between the two countries has increased considerably, reaching $96.2 million in the first four months of 2013 alone.

Vietnamese commodities such as tea, cashew nuts, pepper, steel, and rubber are favourites with Pakistani consumers; while emerging products like automobiles and spare parts, handicrafts and seafood are also becoming popular in the South Asian country.

Reports also indicate that enterprises in both countries have taken significant steps to diversify exports and cooperate in lifting investment and enhance agricultural processing.

Banks offer preferential credit to HCM City borrowers

Ten banks took part in a ceremony in HCM City to lend to 44 businesses and two households in two districts at preferential interest rates.

Sacombank, Vietinbank, Vietcombank, BIDV, Agribank, DongA Bank, ACB, HDBank, MHB, and ABBank signed credit contracts worth nearly VND1.5 trillion (US$71.4 million) with targeted borrowers. Of which, Sacombank joined to support VND60 billion ($2.86 million) for 5 businesses and 2 households with interest rate of from 8 per cent per year.

Since the beginning of this year, Sacombank implemented 25 preferential packages worth VND28.9 trillion ($1.37 billion) and $105 million to support businesses and individuals following the policy of the Government and the State Bank of Viet Nam.

Besides, to support businesses who join market stabilisation programmes in 2013 and Lunar New Year 2014, Sacombank will set aside VND200 billion ($9.5 million) to businesses with preferential interest rate of minimum 6 per cent per year.

The ceremony was attended by officials from the State Bank's city branch, the Department of Industry and Trade, and the People's Committee of Binh Tan and Binh Chanh districts.

The programme has been implemented in other districts earlier.

Singapore's Orchid offloads FPT shares

Orchid Capital Investment Pte Ltd announced a sale of nearly 29.17 million FPT Corporation shares, or 10.66 per cent of the company's holdings, last week.

Orchid Capital is the largest shareholder of FPT, one of the country's leading IT and telecommunications companies.

In a report sent to the State Security Commission of Viet Nam on Tuesday, the Singaporean shareholder said that it had sold nearly 18 million FPT shares at VND45,000 (US$2,14) each on September 4 and the last 11 million shares in the two following days. The total value of those transactions was over VND1,300 billion ($61.9 million). No information about the buyers has been revealed.

Orchid Capital belongs to the Singaporean investment group Richard Chandler Corporation and became FPT's largest shareholder in 2012. At that time, the Singaporean company bought each share for VND34,000-38,000 ($1.6-1.8).

Currently, Orchid Capital holds more than 11 per cent of shares in Masan Group, which specialises in making food and beverage products in Viet Nam.

Meanwhile, FPT's former CEO Truong Dinh Anh announced yesterday that he had registered to sell 1.16 million of the 1.18 million shares he holds in FPT.

A group of six foreign investors acquired over 3.5 million shares in FPT between July and September, increasing their ownership from 5.01 to 6.3 per cent. —

Ha Noi makes progress despite setbacks

Deputy Prime Minister Vu Van Ninh asked Ha Noi authorities to implement stronger solutions to solve difficulties with production and business, restructure the economy and pay more attention to equitisation of State-owned enterprises.

Speaking at a Tuesday meeting with representatives from the city, ministries and sectors, Ninh said Ha Noi has overcome difficulties and challenges to gain a comprehensive progress in the recent time.

He agreed with the city's economic growth target of 8.5 per cent set for this year, but reminded local authorities to make breakthroughs in economic development in the years to come.

It's reported that the city collected nearly VND80 trillion (US$3.82 billion) for the budget in the first eight months of this year, making it equal to nearly 50 per cent of the expectation.

Ha Noi estimated to collect more than VND120 trillion ($5.7 billion) this year, or 75 per cent of the target assigned by the municipal People's Council.

Chairman of the municipal People's Committee Nguyen The Thao emphasised the city's impressive progresses as its economy has been continuously growing, inflation has been controlled and social welfare has been stable.

Thao said 2013 is the most difficult year in the recent three years for the city, especially production, fund support and market expansion.

In the first months of the year, domestic purchases decreased, export fiercely competed and the real-estate market has been frozen. Meanwhile, businesses faced high production costs and high bank interest rates, leading to the increasing volume of bad debts and inventory.

Thao said the city has given many solutions but not strong enough to achieve stable development as expected.

In the coming time, Thao said the city will focus on production development, including market, loan and sales of products. It will issue policies to solve inventory products and real estate problems.

Thao proposed the Government and ministries further help the city solve difficulties in mechanism, policies and crossing documents.

A representative from the Ministry of Planning and Investment said in the field of investment, there still exists a number of unsuitable and crossing documents related to various ministries and sectors, causing less attraction for investors and making if difficult for the city.

He said the Prime Minister had assigned his ministry to draft a joint circular on investment among various ministries, which is expected to boost investment in the city in the future.

As for the city's proposals on solving difficulties in the equitisation endeavour of State-owned enterprises, Deputy PM Ninh said the Government has been adjusting some related decrees and documents to make them suitable with the real situation.

Saigon Paper buys back Japanese partner’s stake

Saigon Paper Corporation (SGP) has bought back a 33.81% stake held by Daio Paper Corporation, one of the two Japanese shareholders in the local paper firm.

The Bridgehead Investment Fund under Development Bank of Japan is now the only Japanese shareholder in Saigon Paper with a 14.49% stake.

Speaking to the Daily last week, SGP general director Cao Tien Vi said Daio had withdrawn from SGP because of its ownership change. Therefore, Daio also changed its investment strategy and shifted its resources from the Vietnamese market back to Japan for consolidation, he added.

Cooperation between SGP and Daio had been good since the latter bought SGP shares in April 2011. Daio was a big, professional and responsible partner, and the pullout was unexpected, according to Vi.

SGP is currently conducting procedures to increase equity to around VND1 trillion.

After the firm’s charter capital is increased, the chairman of SGP, Mai Huu Tin, will hold a stake of 42.3%, equivalent to VND416 billion. Meanwhile, Vi as general director of SGP, investment funds Bridgehead and BVIM and other shareholders own 57.7%, or nearly VND570 billion.

Vi said SGP’s pre-tax profit in January-July rose by nearly VND60 billion year-on-year despite inventory-triggered difficulties faced by the paper industry. SGP will mobilize more capital to invest in a paper line which will have a capacity of 28,000 tons per year to make better use of its existing facilities and increase paper capacity to 74,440 tons a year.

The firm’s revenue is expected to reach VND4.5 trillion in 2015 and double to VND10 trillion in 2020 when its two plants run at full capacity.

Statistics of the Vietnam Pulp and Paper Association show local paper consumption in the year’s first half dropped sharply, with coated paper declining 34.5%, newsprint 29% and tissue 18%.

The first six months saw many paper mills suspending or ceasing operation and even a paper craft village almost grinding to a halt. Such entities were mainly small with annual capacity of less than 10,000 tons and were using outdated and energy-consuming machinery.

Vietcombank to open priority desk for Japan clients

Bank for Foreign Trade of Vietnam (Vietcombank) is planning to establish a priority desk exclusively serving Japanese corporate clients in Vietnam.

When the Japan Desk is in place, Vietcombank will become the first bank in the country to have such a division. The establishment of the Japan Desk is part of a deal Vietcombank has signed recently with the Japan Bank for International Cooperation (JBIC).

In the agreement Vietcombank will assist Japanese small and medium enterprises that are already and will be present here in the nation for investment via JBIC and its own network in Japan.

According to Vietcombank deputy general director Pham Quang Dung, the Japan Desk will be responsible for providing non-financial advice on the business and investment environment in Vietnam, potential partners and experts in specific fields, and financial consulting on banking products, services and special financing packages for Japanese customers.

Central bank to reduce gold auctions

The central bank will now organize gold bar biddings following market demands, not the regular two or three auctions per week like before.

According to a leader of the central bank, there were no auctions last week after the central bank had organized gold bar biddings regularly since March 28. Market demands have declined while the gap between local and international gold prices has narrowed down.

In the future, the agency will only intervene in the market given supply-demand tension. Therefore, there is no schedule for gold auctions but gold bar sales remain.

If enterprises and banks want to sell gold, the central bank will buy in as an end-trader on the market, the leader said.

During the period of more than five months of gold auctions, the central bank has launched over 1.5 million gold taels onto the market, or nearly 57 tons of gold.

Saigon Jewelry Company (SJC) last Friday quoted gold selling price at VND38.33 million per tael, or VND3 million higher than the world price for a tael. The disparity was VND3.3 million per tael at the opening bell on Friday.

During last week, local gold prices fluctuated independently from the world prices. According to local gold trading firms, buying power remained weak.

SJC sold around 1,000 gold taels daily last week, rather low compared to August. Nguyen Cong Tuong, deputy sales manager of SJC, said that investors were hesitant at buying gold as they were concerned about America’s possible military strike against Syria.

Steelmakers want higher prices though demand stays low

Local makers have said they are considering hiking prices of construction steel this month to explore market reactions and cover rising input costs, with each price spike equivalent to at least some VND150,000 a ton.

The price rise of VND150,000 at a time is just a slight adjustment, Nguyen Tien Nghi, vice chairman of the Vietnam Steel Association, said. This indicates steelmakers are hesitant to pull up the prices at a time of slackened demand.

Industry players will be raising prices gradually within this month to offset surging input costs in spite of low demand, Nghi told the Daily.

Do Duy Thai, general director of Thep Viet Corporation, said his firm would increase prices two times, by VND150,000 a ton each time, instead of VND300,000 at once this month. Prices of many construction steel products offered by Thep Viet in the country’s south now stay at around VND13.3 million a ton, exclusive of VAT, Thai said.

The price hike now is a tough decision for companies in the steel industry as demand has yet to recover while cheap Chinese steel is still flooding the local market. But local firms have no other choice but to revise up prices since import prices of input materials have soared from US$390 to more than US$400 a ton in the last three months, not to mention a 5% power price rise early last month.

Nguyen Thi Xuan, chairwoman of Pacific Steel Joint Stock Co. in the central coast city of Danang that supplies the central region, said her firm was facing tough business conditions. Although the designed capacity of Pacific Steel is 300,000 tons of building steel a year, the factory is running at only 10% capacity, equivalent to an annual output of 30,000 tons, she said.

Steel prices of Pacific Steel are only around VND12.5 million a ton, exclusive of VAT, and with such low prices, Xuan’s enterprise is making losses; otherwise, it has no money to service bank loans and pay wages to employees. But she declined to elaborate on the loss for each ton sold.

Thai from Thep Viet said local firms were facing more pressure from the increasing presence of imported steel. Local sales totaled only 2.5 million tons in this year’s first half while low-priced steel imported from China in the same period amounted to 600,000 tons, throwing domestic producers into difficulties, Thai complained. He said stricter controls over steel products mixed with boron imported from China would help protect the local industry.

The Ministry of Industry and Trade recently said it and the Ministry of Science and Technology planned to issue a joint circular on management of steel imports this month.

According to the industry ministry, despite power and material price hikes, local steel enterprises couldn’t raise selling prices due to weak construction demand in the seventh lunar month and in the rainy season.

Many Chinese firms invest in Vietnam

Vietnamese and Chinese enterprises signed many cooperation deals concerning development of industrial park infrastructure, construction of power plants and farm produce export with total pledged capital of US$110 million at a workshop held on Monday in HCMC.

Speaking at the workshop, vice governor of Shandong Province Xie Geng proposed some solutions and sectors which need more bilateral cooperation in the future such as construction, agriculture, trading and services.

According to Xie Geng, Shandong has a wide range of industries like steel, auto manufacturing, light industries, textile-garment, non-ferrous metal, equipment manufacturing, electronics and telecommunications, which are the province’s strengths. Meanwhile, Vietnam has rich resources of coal, oil steel and rubber while are suitable for manufacturing industries, and thus both sides should boost cooperation on manufacturing industries.

“We will continue encouraging and supporting capable enterprises to make investments, build facilities in Vietnam and create more jobs for locals,” said Xie Geng.

He also proposed both sides to enhance agricultural cooperation. Shandong is a big agricultural province of China with huge production volumes of cotton, fruits, vegetables and meat.

Therefore, Vietnamese and Chinese enterprises should not only cooperate on outsourcing farm produce but also on farming techniques and researching.

In addition, infrastructure construction is a potential cooperation field of both sides as Shandong enterprises’ strength is to contract big projects overseas, he said.

Deputy Minister of Industry and Trade Nguyen Cam Tu said at the workshop that the ministry was willing to cooperate with Shandong Province to further boost bilateral relations.

Tu proposed the provincial government to encourage big enterprises to make investments in Vietnam, import Vietnamese products and facilitate Vietnamese enterprises when conducting trading promotion activities in Shandong.

On the same day, leaders of HCMC and Shandong Province signed a memorandum of understanding to establish cooperation relations, making Shandong become the fifth Chinese locality HCMC cooperated with after Shanghai, Guangzhou, Zhejiang and Guangxi Zhuang Autonomous Region.

Xie Geng suggested that HCMC and Shandong should first cooperate on economy and trade and then on the sectors of culture, education, tourism and science.

Vietnam-Shandong trade reached US$2.42 billion last year, with Vietnam’s export reaching US$1.14 billion and import at US$1.28 billion. Meanwhile, trade between Vietnam and Shandong in the year’s first half increased by 4.6% to US$1.25 billion, according to the Ministry of Industry and Trade.

Regarding investment, enterprises in Shandong have invested in 44 projects in Vietnam as of July with total capital of US$240 million. Meanwhile, Vietnam had two investment projects in Shandong having registered capital of US$430,000.

Market stages mild rally above 470 points

The southern bourse made a turnaround on Tuesday, with the VN-Index gaining a mild 4.37 points, or 0.93%, to 474.53, after losing big ground on the previous day.

There were only three out of the 30 biggest stocks falling, namely Becamex Infrastructure Development (IJC), Masan (MSN), and PetroVietnam Finance Corp. (PVF), and one stock, Kinh Do Corp. (KDC), standing still.

The 26 remaining stocks made gains but their trade volumes were largely scant, without any stock seeing more than one million shares changing hands. The VN30-Index rose over six points to hit 530.19.

Although stock prices increased, investors remained hesitant in trading, as seen in the low liquidity of the bourse. Investors changed hands only 28 million shares worth VND427 billion, including VND37 billion worth of 1.23 million shares traded in the put-through session.

More active trading was seen in PetroVietnam Gas Co. (Gas) with a transaction value of VND28 billion, Hoa Phat Group (HPG) with VND16.32 billion, and Bao Viet Holding (BVH) with VND16.3 billion. Foreign investors were net buyers on the HCMC market again but at very small margin, at about VND7.3 billion only, VND1.5 billion lower than in the previous session.

The HNX-Index on the northern bourse had a rising session also when inching up 0.38 point to hit 60.04. Investors on this bourse traded 18.6 million shares worth VND120.4 billion.

Vietcombank Securities Co. (VCBS) in its report said that foreign investors had been waiting for clearer information about Syria so the downside risk had lingered. At this time, there has yet had any bad news locally but there hasn’t had any good supporting news while the stock market still suffers from global uncertainties, the broker said.

“We think given the current situation, investors should maintain caution and calmness. The safest way is to stand aside and waiting until there has been a clear trend on the market. Then investors can choose the best investment way,” said VCBS.

Meanwhile, Viet Capital Securities Co. said that the VN-Index would continue testing the strong supporting area of 466-470 while the supporting level for the HNX-Index was 59.5 point. In case those levels are breached, the next supporting level is 440 points for the VN-Index and 57.5 points for the HNX-Index.

“We keep a cautious attitude at this time, and investors shouldn’t buy to fish the bottom as the possibility of big losses is still high,” it added.

Nam Long to build more low-cost condos

Nam Long Investment Joint Stock Company will build an additional 750 condos as the second stage of EHome 3 Saigon West project after all apartments of the first phase have been sold out.

Around 390 of the 750 units will be launched onto the market at the end of the year at around VND700 million each.

Nam Long has sold all the 330 condos of the first phase within one year. This is one of the projects that have sold well despite the current gloom of the real estate market.

The investor has handed over homes to customers one month earlier than scheduled.

Located on Ho Hoc Lam Street in HCMC’s Binh Tan District, the project includes 14 blocks of nine stories each, supplying the market with around 2,200  units of 49 to 63 square meters each. Other facilities such as schools and supermarkets are also available.

Nguyen Vinh Tran, deputy general director of Nam Long Company, said the investor has tried to maintain prestige as many homebuyers have lost confidence in the local property market.

The low-cost condo project and flexible payment policy has helped the project reach out to customers, Tran said.



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