Credit quality of Vietnam banks has improved: Moody's

The credit quality of Vietnamese banks has improved, thanks to the combination of macroeconomic stability and improved governance, Moody's said on Thursday.

In a report entitled "Stabilising trend for the macro environment will help Vietnamese banks address problems in asset quality," the rating agency said that the key drivers have prompted some credit differentiation among Vietnamese banks, albeit at modest levels, as reflected by Moody's positive rating actions on six banks recently.

On September 22, Moody's upgraded the ratings of Viet Nam International Bank (VIB)'s B2 deposits and E+/b3 BFSR/BCA by one notch, while affirming the ratings of five banks and changing their outlooks to positive at the same time. The five banks are Military Commercial Joint Stock Bank (Military Bank), Sai Gon Thuong Tin Commercial Joint-Stock Bank (Sacombank), Viet Nam Technological and Commercial Joint Stock Bank (Techcombank), Asia Commercial Bank (ACB) and Viet Nam Prosperity Bank (VP Bank)

"The recent positive rating actions on Vietnamese banks were primarily driven by the stabilisation in the operating environment in the country, which is positive for banks because it supports the recovery of their poor asset quality, provides stability to their deposit bases, and improves their business prospects," says Eugene Tarzimanov, Moody's Vice President and Senior Credit Officer.

"Additionally, some Vietnamese banks have also improved their governance standards and lowered their risk appetites, thereby improving their credit underwriting standards," adds Tarzimanov.

Moody's report provides insight into the Vietnamese banks' individual strategies and on the steps taken to improve governance, highlighting that some of them have made more adjustments than others in response to the adverse market conditions since 2011. These developments, when taken together with macroeconomic stabilisation, have reduced the incidence of new problem assets on their balance sheets, and have also improved the recovery prospects for problematic legacy assets.

However, Moody's report also says that the banks' credit profiles and ratings will improve only if the underwriting standards and capital-generation capacities also improve significantly, and if the banks allocate more profits to provisioning and writing-off of problem assets.

Moody's report notes that Viet Nam's economic growth has recovered somewhat from the trough reached in 2012, and the country has managed to stabilise inflation at historically low levels. This achievement has allowed the State Bank of Viet Nam to decrease its policy rates to promote economic growth. For example, the refinancing rate fell to 6.5 per cent earlier this year from 15 per cent in early 2012.

Moody's says that lower interest rates are positive developments for Vietnamese banks because they decrease the debt burden of their borrowers and lead to some improvements in the real estate market.

Supportive macroeconomic conditions, including stable inflation and exchange rates, and weak loan demand have improved the liquidity of the entire banking system. As deposit growth outpaced loan growth, the system's loan-to-deposit ratio improved to 82 per cent in June 2014, from 87 per cent in June 2013.

Integration demands big changes: official

Major economic changes have to be initiated if Viet Nam is to take due advantage of opportunities generated as the country expands and deepens its international integration process, Deputy Minister of Planning and Investment Nguyen Chi Dung said yesterday.

Addressing at a Ha Noi workshop on economic opportunities and challenges facing the country, Dung said maintaining macroeconomic stability and speeding up economic growth will continue to be top priority over the next five years as the nation strives for sustainable development.

Economists at the workshop predicted that the world economy is likely to face numerous difficulties and challenges in the coming years. Therefore, they said, the Vietnamese should focus on containing inflation and keeping growth at a reasonable rate in line with both domestic and international developments.

Associate Professor Nguyen Van Thanh of the National Centre for Socio-economic Information and Forecasting sketched out two likely scenarios for the Vietnamese economy over the next five years.

In the first one, with the growth model changing slowly and State management not improving significantly, Viet Nam would maintain its growth rate at 6.5 percent and inflation at 6.7 percent, with investment/GDP ratio reaching 13 to 14 percent.

In case the country shifts faster to a new growth model and takes full advantage of bilateral and multilateral free trade agreements and State management improves considerably, the growth rate can reach 7.1 per cent, inflation kept at 7.21 per cent and investment/GDP ratio can improve to 15.3 per cent.

Dung concurred, highlighting the importance of speeding up economic restructuring as well as adopting a new growth model while making the economy more competitive.

Other workshop participants called for increasing the application of scientific and technological advancements to production and stressed the need for training to ensure that the nation has a highly skilled workforce to meet developmental challenges.

Steel firms need tax cut roadmap

As Viet Nam and the Custom Union of Russia, Belarus and Kazakhstan (VCUFTA) anticipate signing a free trade agreement in 2015, the Viet Nam Steel Association (VSA) advocated gradually reducing the steel import tariff over ten years rather than eliminating it immediately so that domestic steel producers could retain their competitiveness.

The steel sector already faced difficulties from low consumption, coupled with competition from low-priced Chinese steel, VSA chairman Ho Nghia Dung said. Meanwhile, Russia was the world's fifth-largest steel exporter in terms of production volume, churning out 70 million tonnes per year.

Russia also spent far less than other nations to produce steel, Dung said. In the 1980-90 period, Russia started producing steel using high-tech methods that saved fuel and time. To produce a tonne of steel embryo, Russian steel producers needed only 50 kWh, while Vietnamese producers needed 500-600 kWh.

Pham Chi Cuong, former chairman of VSA, warned that eliminating the steel import tariff in the beginning of 2015 would force many domestic small-and-medium sized steel firms out of the game. The country had only a few large enterprises producing more than one million tonnes per year.

Real estate tax arrears reach $190m in Ha Noi

Tax debts in the property sector here in the first nine months of 2014 reached VND4 trillion (US$190.4 million), figures from the city taxation department show.

The figures also revealed that land use rights tax collections met only 45 per cent of target, with 62 real estate projects in the city failing to pay for the taxes.

Le Thi Kim Giao, deputy head of Hoang Mai District's taxation department told online newspaper infonnet that property enterprises have blamed the downturn in the real estate market on financial difficulties caused by a lack of access to loans.

Hoang Mai is one of the city's inner districts with a large number of property projects. However, up to 10 projects in the district have not paid for land use rights taxes estimated to be worth VND881 billion ($41.9 million).

In the context of the difficult economic situation in and outside the country, the Government has issued several timely policies to support real estate companies.

Some companies in the sector were allowed to extend the deadline for payment of land use rights taxes, but some completed projects have yet to fulfill their financial duty to the State. These include Palm Garden Viet Hung, Berriver 390 Nguyen Van Cu and the HH5 Viet Hung Urban Area. Each enterprise has its own reason for delayed tax payment.

The online newspaper quoted Nguyen Tuan Anh, deputy general director of the Housing and Urban Development Corporation (HUD), as saying his company paid VND400 billion ($19 million) to the State budget.

However, the company had to complete some unfinished projects which required a deadline extension for tax payments.

Rise in M&A deals stir up nation's property market

Mergers and acquisitions (M&A) in the domestic real estate sector have always depended strongly on the property market in the capital city, experts said.

According to the Thoi bao Ngan hang newspaper, the experts cited the large business transactions that have taken place in the capital city, including Daibiru Group of Japan's purchase of office area at the corner of VIBank worth US$60.1 million, Licogi 16 Company's purchase of the VND143-billion ($6.7-million) Sky Park Residence project from Thanh Hoa Construction Corporation, and FLC Group's purchase of land worth VND198 billion ($9.34 million) at 36 Pham Hung St from Hai Phat Company.

Also, numerous companies have purchased shares to gain management rights in other companies. For instance, Vingroup, via Sai Dong Urban Investment and Development Joint Stock Company, bought 128.6 million shares of the Hong Ngan Real Estate Company to own the Green City project, with a total area of 17.6 ha and a total investment capital of VND7.9 trillion ($372.6 million).

Vingroup also bought 70 per cent of Ocean Retail from the Ocean Group to change the name of Ocean Mart to VinMart.

Richard Leech, CBRE Viet Nam's executive director, said that since 2011, an average of 15 M&A transactions, mainly by domestic companies, have been taking place in the real estate sector every year. Domestic companies have accounted for 63 per cent of the total number of sellers and 54 per cent of the total number of buyers of property projects.

However, foreign direct investment (FDI) in the real estate sector in the first three quarters of this year reached $1.2 billion, all in M&A, he added.

M&A in the real estate sector developed strongly, with an increase in the number of business transactions and requests for assessments and market studies, Leech revealed.

Now, foreign investors are entering the domestic real estate market to conduct market studies, including those from South Korea, Japan and Singapore, he noted.

A good number of foreign investors are planning to buy office buildings in Ha Noi and HCM City, including projects that are completed, undergoing completion or scheduled for construction in the future.

"Every year, business transactions in the M&A market of the domestic real estate sector are increasing because the sector is an attractive market, but companies just announce the business transactions under their strategy of marketing their trademarks," Ngo Thi Huong Giang, Savills Viet Nam's senior manager of research and consultancy, told Viet Nam News.

Phan Xuan Can, chairman of the Soho Viet Nam Real Estate Consulting Company, said there were M&A activities in the domestic property market than previously because of the increase of equity in the market, low interest rate of loans and low supply of property products.

Vu Minh Giang, chairman of the Thai Minh Quang Joint Stock Company, said the M&A activities have increased and often developed in the inner city districts, especially for investors with good financial ability.

Investors were attracted to the inner districts of Cau Giay, Tu Liem, Thanh Xuan and Hoang Mai, where most enterprises have had many projects and have sold some of them to restructure their investment in their companies, Giang added.

Singapore a lucrative market for agriculture

Vietnamese enterprises are enjoying a great opportunity to accelerate their agro-fisheries exports to Singapore, which has a large demand for these products.

Nguyen Viet Chi, Vietnamese commercial counsellor to Singapore, made this remark during a trade exchange in the island nation last Thursday, and revealed that nearly all seafood and agricultural products in Singapore were imported. These goods are Viet Nam's strongest exports, Chi noted.

Vietnamese frozen fish is popular in Singapore because of its affordable price and good flavour, said Lee Boon Cheow, chairman of the Singapore Fish Merchants' General Association.

Low transport costs due to geographical proximity also facilitated the export of a large volume of Vietnamese frozen fish to the market, Cheow added. He also revealed that his association would try to increase the importation of dried fish from Viet Nam.

Chi said Viet Nam's seafood and agricultural exports to Singapore have experienced an average annual growth of nearly 20 per cent, from S$279 million (US$220 million) in 2011 to approximately S$400 million ($315 million) in 2013.

Viet Nam was current the third largest rice exporter to Singapore after India and Thailand, with a turnover hitting nearly S$79 million ($62 million) in 2013 or nearly 30 per cent of the country's total rice imports.

The country was also the third largest supplier of seafood exports and the eighth largest supplier of fruit and vegetable exports to Singapore.

In spite of these encouraging results, bilateral trade between the two countries accounted for less than four per cent of Singapore's total imports, said Le An Hai, deputy head of the Ministry of Industry and Trade's Asian-Pacific Market Department, on the sidelines of the event.

The ministry expected to double or even triple the trade turnover in the years to come, Hai added.

Vinacomin expects 10% rise in profits to $57.1 million

The profits of the Viet Nam National Coal and Mineral Industries Group (Vinacomin) in the first nine months of the year is expected to reach VND1.2 trillion (US$57.1 million).

This is a 10 per cent year-on-year increase.

Nguyen Van Bien, Vinacomin's deputy general director, told a press meeting held in Ha Noi this week that in the January-September period, the group earned VND78.3 trillion ($3.7 billion) in revenue, which is a 12 per cent increase year-on-year, meeting 74 per cent of the year's target.

While the company contributed VND8.6 trillion ($409.5 million) to the State coffer in the period, the revenue from coal was VND39.1 trillion ($1.86 billion), representing a 12 per cent year-on-year increase. The revenue from minerals amounted to VND4.4 trillion ($209 million), a 21 per cent year-on-year increase.

Vinacomin produced 25.6 million tonnes of coal in the period, which is a 2 per cent year- on- year increase, meeting 75 per cent of the year's target.

Coal consumption also rose by 2 per cent to touch 26.2 million tonnes, including 4.84 million tonnes for exports and 21.38 million tonnes for domestic consumption.

The revenue from electricity production and consumption rose 21 per cent to touch VND8.3 trillion ($395 million).

The firm's electricity output in the first nine months of this year was 6.37 billion kWh, meeting 75 per cent of the year's target.

Vinacomin has implemented several electricity projects such as the Dong Nai 5 Hydropower Plant, the Nong Son Thermopower Plant and the Na Duong 2 Thermopower Plant. The projects also include the Cam Pha 3 Thermopower Plant, the Quynh Lap 1 Thermopower Plant and the Hai Phong 3 Thermopower Plant.

Viunacomin also announced that the Tan Rai Alumin Plant has been operating in a stable manner, producing 90 per cent of its designed capacity in the past two months.

Vinacomin's total investment in capital construction was estimated at VND14.3 trillion ($680.9 million), posting a 29 per cent year-on-year rise.

Bien said the average salary of the company's labourers rose by 5 per cent to reach VND7.75 million ($370) each per month in the first three quarters of the year due to increasing turnover.

Big C signs deals with Bac Giang suppliers

French supermarket Big C yesterday signed agreements worth VND2 billion (US$95,238) with 35 suppliers for poultry, vegetables, confectionery, textile and garment, and handicraft items.

Products meeting the supermarket's criteria will be put on the shelves of Big C Bac Giang with the best among them also finding their way into the nation-wide Big C system, representatives said at a seminar.

Big C has now inked deals with 145 small- and medium-sized producers worth a total of VND108 billion ($5.14 million).

PVN plans to equitise three subsidiaries this year

Viet Nam National Oil and Gas Group (PetroVietnam) said that by the end of the year it would equitise three companies in its group, Ca Mau Fertiliser Co Ltd, Binh Son Refining and Petrochemical Co Ltd, and Dung Quat Shipbuilding Industry Co Ltd.

PetroVietnam still needs to equitise another two of its companies. Stakes in these two, PetroVietnam Power Corporation and PetroVietnam Oil Corporation, will be sold in following years.

PetroVietnam only retained 100 per cent of state capital in the parent company and PetroVietnam Exploration Production Corporation (PVEP), and would sell stakes in other units, according to Le Minh Hong, PetroVietnam's deputy general director.

PetroVietnam has completed valuation of Ca Mau Fertiliser and submitted the necessary information to the Government. The group is awaiting the Government's approval of the company's gas price plan for 2015 and the following years before making the initial public offering (IPO).

With regard to Binh Son Refining and Petrochemical, PetroVietnam is negotiating the sale of 49 per cent of its stakes to Russia's Gazprom Neft. This would make it a liability company with two members.

Hong said the most difficult case was the Dung Quat Shipbuilding Industry Co, as this company had accumulated huge losses and debts. If it fails to sell stakes to the public, PetroVietnam plans to make it a joint stock company with capital contribution from State Capital Investment Corp and the company's employees.

Hong said PetroVietnam has invested in 11 businesses, but most of them are in the oil and gas sectors, with the exception of two banks: Ocean Bank and Viet Nam Public Bank (PVComBank).

The group currently holds 52 per cent of PVComBank's capital and 20 per cent of Ocean Bank's stakes with a total capital investment of over VND5 trillion (US$237 million).

Hong said that PetroVietnam has already prepared road maps for its divestment from these two banks. But the firm hasn't implemented them because the Government asked it to continue investing in PVCombank until 2016.

Meanwhile, the group has to wait for instructions from the State Bank of Viet Nam for its withdrawal from the Ocean Bank.

"Following the Prime Minister's direction, capital divestment from banks and financial companies must follow the instruction of the State Bank of Viet Nam to ensure the safety of the banking system during the restructuring process," Hong said.

Last March, PetroVietnam withdrew VND600 billion ($28 million) from the Lai Vu Industrial Zone by transferring management to the Hai Duong Province's People Committee.

Vietnam Airlines upgrades fleet with Airbus A350

The national-flagship airline, Vietnam Airlines, has ordered 10 modern Airbus A350 aircraft equipped with sleeping chairs and Wifi.

The first Airbus A350, a long-range, twin-engine wide-body plane, is in the final stage of production in France. Vietnam Airlines is expected to receive the first one in mid-2015 and it will become the first airline firm in Asia and the second in the world to employ the Airbus A350 XWB.

Although the aircraft is able to connect to the internet in flight via satellite, Vietnam Airlines has yet to decide whether they will activate function.

The A350 is made mostly of composite in order to save energy and protect the environment.

Vietnam Airlines will receive 33 wide-body airliners over the next three years, including 19 Being B787 and 14 Airbus A350. Next year it will receive nine such planes.

Substandard cốm producer affects industry

Many cốm, or green rice flake, makers in Hanoi’s Me Tri Commune have suffered from slow sales as consumers turn their backs on the product after a recent scandal over use of an additive.

Me Tri Commune in Nam Tu Liem District is home to 64 cốm producers and traders. Their businesses have been negatively impacted after cốm producer Do Duc Tang was found to be using a controversial additive in the production process.

After conducting a surprise inspection at Tang’s production facilities on September 23, authorities found that he used substances that are banned from food production in order to colour the cốm upon the demands of some wholesalers. The authorities took some samples for testing and suspended the Tang's operations pending a final decision.

Now, the entire village is struggling to protect the prestige of their traditional craft.

Tran Van Thanh, a cốm producer in the commune, said, “We’ve seen a sharp fall in sales after the addictive incident. They are down from between 10 and 20 kilos per day to nearly zero recently.”

According to Thanh, before the incident his business was good, especially after the launch of the website cometri.com.vn. Since the beginning of this season, his family has sold hundreds of kilos.

“We were shocked. It’s like the fly in the ointment. Now we find it hard to sell our product,” Thanh said.

Do Huy Hung worked in the trade for 30 years. His entire family lives on this income. He was the man who revived the craft after the same scandal in 2011.

“My 70-year-old mother sells cốm at Buoi market. Recently she has only been able to sell a few kilos a day instead of dozens. After the incident, local people surrounded the violator’s house in protest,” Hung said.

The craft creates jobs for around 1,500 people in the commune.

Nguyen Dinh Cuong, head of the market watchdog group in Hanoi, said, “Since the incident, we have conducted an inspection of all cốm producers in Me Tri Commune, which showed that they all strictly comply with the food safety and hygiene standards.”

The violating producer was closed and may be fined if test results show the health code was broken.

Local medical authorities also asked 64 cốm producers to meet for an educational seminar on the food safety regulations.

NA Economic Committee skeptical about growth

The National Assembly (NA) Economic Committee on October 9 cast doubt on economic growth figures reported by the Government, saying that the data is not convincing.

Speaking at a meeting in Hanoi City on October 9, Nguyen Van Giau, chairman of the committee, said it is illogical for the nation to obtain higher growth than previous years while total social investment has declined and many enterprises have shut down.

Giau noted that the target of creating around 1.6 million jobs each year is not reliable.

The committee also said the gross domestic product (GDP) growth rate of 6.19% in the third quarter was not convincing. The Government has yet to make clear the driving force for breakthroughs in the third quarter that fueled a growth rate of 5.62% in the January-September period.

There were more than 51,200 businesses being dissolved or going bust in the first nine months of this year compared to 18,800 newly-established firms.

Notably, some medium and large-scaled enterprises have stopped operations after struggling to survive in the previous years. This has caused adverse impacts on employment, State budget collections, GDP growth and economic activity, Giau said.

In the first three quarters of this year, up to 213,000 enterprises incurred losses, accounting for 68.6% of the total number of tax files. Tax debts also increased 7.3% against late 2013.

Some sectors with great contribution to the State budget such as natural gas, beer and cement reported low production outputs while coal, liquefied gas, tobacco and motorbike even encountered output declines. The nation’s stockpile index rose 13.4%, higher than in 2013.

Bad debt in the banking sector has not been settled as efficiently as expected. Between July 2013 and August 2014, Vietnam Asset Management Company (VAMC) purchased nearly 3,300 debts for over VND46 trillion compared to the original value of over VND56 trillion, lower than the target of VND70-100 trillion in the entire 2014.

VAMC is still facing difficulties in selling debts to foreign investors, especially loans having properties as mortgaged assets.

Banks have also seen bad debt rising again from 3.61% last year to 4.07% in late May and 4.11% in late July.

A report of the Ministry of Finance showed State budget revenue increased by 10.3% and spending by 12.8%. Budget deficit has been adjusted up to around 5% of GDP for 2011-2014, which is higher than the target of 4.5% for the 2011-2015 period.

Budget deficit was 4.9% of GDP in 2011, 4.8% in 2012 and 5.3% last year.  

Despite the issues, Minister of Planning and Investment Bui Quang Vinh said the socio-economic situation continued positive improvements in most sectors in the first nine months of the year. The services sector fared well, exports rose by 14% year-on-year and inflation was put under control.

FDI inflow predicted to be lower than last year

The fact that Vietnam only attracted US$11.18 billion in foreign direct investment (FDI) in the January-September period, a year-on-year fall of 25.5%, has prompted predictions about a lower FDI inflow than last year.

As of now, Samsung CE Complex (SECC) in HCMC’s Saigon Hi-Tech Park (SHTP) has become the most capital-intensive project approved in the country. The US$1.4-billion project is hoped to boost the FDI flow.

Samsung’s project is expected to fuel the city’s economic development as it is the second billion-dollar project at SHTP after a US$1-billion project of Intel licensed in 2006.

However, both SECC and a US$140-million integrated business park Onehub Saigon of Ascendas Saigon Bund Co. Ltd. in SHTP have yet to push up the FDI flow in the country against those of last year.

Meanwhile, a report of the Foreign Investment Agency under the Ministry of Planning and Investment showed that last year’s January-October saw registered FDI surge to US$19 billion, much higher than the amount of FDI pledged so far this year.

Earlier, Minister of Planning and Investment Bui Quang Vinh said the expected FDI capital this year will not be lower than the total US$22.35-billion of last year thanks to some large projects expected to be granted investment certificates in the rest of the year.

Some experts thought that only projects with very large capital like the US$22-billion Nhon Hoi oil refinery plant can help the registered FDI of this year catch up with that of last year. Nonetheless, this project owned by a joint venture of Thai firm PTT and Saudi Arabia’s Saudi Aramco Company has yet to be approved by the Prime Minister.

SCIC says will buy State stakes at banks

State Capital Investment Corporation (SCIC) will buy stakes divested from banks by other Stated-owned enterprises, but will limit its purchases to 5% or below of banks’ chartered capital.

The point was raised at a seminar which was held in Hanoi on October 9 on the implementation of Decision 51/2014/QD-TTg on capital transfer, divestment and listing on the stock market of SOEs.

SCIC is mandated to buy stakes divested by SOEs from non-core investments in banking and insurance sectors and acquire SOEs’ shares in initial public offerings (IPOs). SCIC is now building its own regulations on such matters.

“SCIC will make a purchase when SOEs fail to sell their stakes below par value or book value, or fail to sell shares to banks designated by the central bank,” SCIC said.

In case of disagreement with SCIC, State-run groups and corporations can report to the Government and the Ministry of Finance to find out a solution.

VNPrintPack 2014 to attract over 230 firms

VNPrintPack, an international printing and packaging industry exhibition scheduled to open on October 22, is expected to attract more than 230 domestic and foreign enterprises to showcase their latest products and technologies.

The four-day event at the Saigon Exhibition and Convention Center (SECC) in HCMC’s District 7 will feature various products in the industry, such as strapping machines, industrial cutters, printing products and technologies, and paper drilling machines.

Exhibitors are from around 10 countries and territories, including Germany, Singapore, South Korea, India, Italy, Japan, Malaysia and Taiwan, the organizers said.

The organizers said local and foreign enterprises will have the opportunity to expand their market, establish business relationships, and exchange and approach advanced science and technology in the printing and packaging industries.

220 firms to join VietnamPlas 2014

* More than 220 firms from 10 countries and territories will be participating in the Vietnam International Plastic & Rubber Industry Exhibition (VietnamPlas) 2014, which is slated for November 5 to 11 at SECC.

Enterprises from Australia, South Korea, Malaysia, Hong Kong, India, Saudi Arabia, Taiwan, China and Thailand will occupy 350 booths at the 14th such exhibition.

Products on display include machines for plastic injection molding and granulating, hydraulic and pneumatic machines, conveyor system and tire making machines.

The event will be organized by the Vietnam National Trade Fair and Advertising Company (Vinexad), Hong Kong-based Yorkers Trade & Marketing Service Co. Ltd. and Paper Communication Exhibition Services, the Vietnam Plastics Association (VPA), and the Vietnam Rubber Association (VRA).

Rice prices fall in Mekong Delta

The rice price in the Mekong Delta has abruptly fallen after a week-long spike triggered by Vietnam’s winning government-to-government contracts to supply 400,000 tons of rice to Indonesia and the Philippines.

Rice traders in the delta said the price of unprocessed rice IR50404 is VND7,200-7,300 a kilo, down VND100-150 compared to last week, while unmilled grains IR 50404 have also slid to VND4,600-4,700 a kilo.

Ngo Ngoc Yen, director of HCMC-based rice trading firm Yen Ngoc, have attributed the shrinking domestic rice prices over the past few days to the slow pace of purchases by local exporters.

Nguyen Dinh Bich, an expert in Vietnam’s rice industry, told the Daily the local rice price depended heavily on local enterprises’ inventory. Falling prices of rice and paddy show that local exporters may have sufficient stocks to fulfill the two contracts.

Global rice prices have also decreased since the beginning of this month.

According to www.oryza.com, a website on international rice markets, Thai 100% B rice is offered at US$430-440 a ton, down US$15 against October 1, while India’s 5% broken rice is US$415-425 a ton, down US$5.

Meanwhile, offered rice prices of Vietnam and Pakistan have remained stable since earlier this month, at US$440-450 and US$405-415 a ton respectively.

Statistics of the Vietnam Food Association (VFA) indicated the association’s members had shipped abroad nearly 4.8 million tons of rice worth over US$2 billion in the year to end-September.

Ocean Hospitality starts work on airport hotel project

Ocean Hospitality and Services Joint Stock Co. has started construction of its StarCity Airport Hotel project, a four-star hotel near Tan Son Nhat Airport in HCMC.

StarCity Airport Hotel covers more than 3,115 square meters and has 14 floors, two basements and 215 rooms. The VND1 trillion hotel is expected to be up and running in March, 2016.

Ocean Hospitality general director Albert Saebel said the hotel is a step of the group to expand and develop its four-star StarCity Hotel chain around the country.

The group expects to open its StarCity Nha Trang Hotel & Spa, the first of the StarCity Hotel chain, in the central coastal city of Nha Trang late this year.

It is also operating several other hotels like Sunrise Hoi An Beach Resort, Sunrise Nha Trang Beach Hotel & Spa, StarCity Ha Long Bay Hotel.

Last year, Ocean Hospitality doubled its chartered capital to VND2 trillion.

It obtained over VND1 trillion in revenue, up 25% versus a year ago, of which 46% came from hotel business, and pre-tax profit of VND193 billion, up 46.7% year-on-year.

Female students win Luong Van Can Talent Awards 2014

More retail giants make inroads into Vietnam

Modern retailing represented by foreign and domestic powerhouses is catching on in Vietnam, taking the place of brick-and-mortar businesses, according to experts.

The home retail market is now full of convenience stores, supermarkets and shopping malls. Foreign giants Walmart, Auchan and Robinson are eyeing or even starting their operations here, said Deputy Director of the Ministry of Industry and Trade’s Domestic Market Department Tran Nguyen Nam at a forum in Hanoi on October 13.

In her view, Chairwoman of the Vietnam Retailers’ Association Dinh Thi My Loan warned that more and more foreign retailers will vie for the lion’s share in Vietnam. The trend will bring along both opportunities and challenges, forcing domestic rivals to strengthen their edges.

The association’s position is that authorities must carefully consider granting license to retailers. In the meantime, it is unnecessary to protect domestic distributors, but there should be transparency when it comes to draw foreign investment, Loan said.

According to the ministry, Vietnam recorded 724 supermarkets, 132 trade centres of various kinds, around 9,000 markets and 1 million family-run outlets by the end of 2013.

By 2020, as many as 1,200-1,300 supermarkets, 180 trade centres and 157 shopping malls are predicted to operate in the country.-

Plastics export earnings rise 18 percent

The domestic plastic industry has achieved a high growth in exports but continues to face difficulties arising from a lack of input materials, said the Vietnam Plastic Association (VPA).

The Thoi bao Kinh te Viet Nam (Vietnam Economic Times) newspaper quoted the association as saying that in the third quarter of 2014, the industry achieved a 17.9-percent year-on-year increase in the total export value of plastic products to 2 billion USD.

During the period, export value showed strong growth, posting year-on-year increases of 78.28 percent for the Myanmar market, 69.19 percent for the Belgian market and 67.73 percent for the Swedish market.

VPA Chairman Ho Duc Lam said that in the third quarter, Japan was the largest export market for Vietnamese plastic products, accounting for 24.79 percent of total export value. Export value to Japan had a year-on-year surge of 25.2 percent, with 20 kinds of plastics products, mainly for transport, packaging and office stationery. The association expected the export value to Japan to grow by 13 percent for this year.

The US was the second largest export market, accounting for 12.65 percent of total export value. The export value to the US had a year-on-year surge of 38.69 percent and the figure is expected to increase by 11 to 13 percent, though Vietnamese exporters faced anti-dumping duties for their export of plastic and spongy air bubble bags to the country.

The association and domestic plastic exporters have prepared documents and data for US offices on the sunset review of anti-dumping duties in the last quarter of this year, Lam said.

Meanwhile, the domestic plastic industry also had opportunities to promote products to the European Economic Zone because anti-dumping duties of between eight to 30 percent were imposed on some Asian countries but not on Vietnam .

The VPA expected the country to achieve a year-on-year surge of 16.5 percent in plastic export value to 2.6 billion USD for 2014, Lam added.

However, domestic plastic producers must import 80 percent of their input materials, and these accounted for 70 to 80 percent of production costs, thereby reducing the added value and competitiveness of these products.

To achieve sustainable development in the future, Lam suggested that domestic plastic producers produce plastic material, export environment-friendly products with high added value that meet international health and safety standards and update their production technology.

Forbes Vietnam to honour top 50 best listed companies

The top 50 best listed companies on the Vietnamese stock market will be honored for their excellent business and financial performances at a ceremony to be held on October 17, Forbes Vietnam announced at a press conference on October 13 in Ho Chi Minh City.

The list includes companies reaping good business results in 12 key sectors, whose revenue growth rate in 2013 averaged 7 percent (the market’s rate was 2 percent).

Notably, their average pre-tax-profit growth rate hit 23 percent while the market’s figure stood at 15 percent, according to the statistics of the Ho Chi Minh Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX).

Forbes Vietnam Editor-in-chief Tran Dang Khoa said the rankings, which were released for the first time by the magazine on September 3, 2013, aims to make those outstanding enterprises more well-known to investors while encouraging others.

A round-table talk will also be held on challenges in business management for company executives as part of the ceremony’s activities.

Forbes Vietnam is a monthly magazine published in Vietnamese for the country’s leading CEOs and entrepreneurs.

The magazine plans to announce other lists of outstanding companies and individuals in the Vietnamese market, including the list of top 30 most successful individuals aged under 30.

Ca Mau to expand large-scale rice fields to 15,000ha by 2015

The Mekong Delta province of Ca Mau has planned to expand its large-scale rice fields to cover 15,000 hectares by 2015 and 20,00 hectares by 2020, said a provincial official.

According to Director of the Ca Mau Department of Agriculture and Rural Development Le Van Su, the average rice output of the province is expected to reach 6.2 tonnes per hectare by 2020 instead of 5.7 tonnes currently.

A massive freshened area covering U Minh, Tran Van Thoi and Thoi Binh districts in U Minh Ha region will be developed to large-scale areas, he said.

After three years of implementation, the model has proved efficiently, helping mechanise production, promoting connections between farmers and businesses, contributing to sustainable development and creating stable incomes for rural labourers, according to Su.

The large-scale rice field area in Ca Mau currently totals 9,000 hectares and will be added by 1,000 hectares by the end of this year.

Meanwhile, Le Dung, Chairman of the provincial People’s Committee, said with the application of the model, the southernmost province targets two-fold rise in income for local farmers by 2020.

The Mekong Delta, one of the key regions applying the model and the country’s largest rice granary, comprises of 12 provinces and one centrally-run city with a total area of 40,000 square kilometres and a combined population of 18 million. It has been tasked with ensuring the country’s food security.

From now to 2030, the region is growing rice across an area of 1.8 million ha, more than half of which is for export. It is also striving to maintain an annual output of 24-25 million tonnes of rice.-

Vietnam aims to increase litchi exports

Vietnam ’s litchi has been accepted to enter Japan , US and Australia , bringing a great news for both farmers and exporters.

The country successfully exported the first consignment of nearly 20 tonnes of litchi to Japan this year, opening up a new hope to increase its litchi exports in 2015, said the Vietnam Economic News reported.

The US Department of Agriculture recently granted a licence for Vietnam to export longan and litchi to the US from October 6, 2014. Vietnam expects it can export to the US about 600 tonnes of litchi and 1,200 tonnes of longan each year.

At a regional export promotion conference recently held by the Ministry of Industry and Trade in Hanoi , Nguyen Khanh, Director of the Bac Giang Trade Promotion Centre, said that the province recently received a letter from the Australian Embassy in Vietnam informing that Vietnam had been allowed to export litchi to Australia from 2015.

These facts show that there are opportunities for Vietnam to diversify the export markets for litchi to prevent its dependence on one traditional market. However, it will not be easy for Vietnamese litchi to enter these markets as they have very strict requirements in terms of quality.

Nguyen Khanh said that to prepare for exporting litchi to these markets, Bac Giang province was making a shift from growing litchi according to VietGap standards to applying GlobalGap standards on 100ha of litchi plantations. The province expects that about 500-800 tonnes of litchi will be produced according to GlobalGap standards next year.

“In recent times, Bac Giang province coordinated with Hai Duong province to provide farmers with training on litchi growing techniques to ensure their quality and hygiene. Thanks to these efforts and the post-harvest technology, Vietnamese litchi is expected to meet the strict requirements set by importing countries,” Nguyen Khanh was quoted as saying.

Along with ensuring hygiene and safety, choosing a suitable post-processing preservation technology is also an important factor directly affecting litchi exports, because countries which recently opened their markets to Vietnamese litchi are located rather far from Vietnam , requiring greater time for transportation.

In 2014, the Institute for Regional Research and Development under the Ministry of Science and Technology has applied the CAS technology to preserve litchi harvested from plantations in Bac Giang province for pilot export to Japan . The ABI Group ( Japan ) is the sole inventor of this technology. CAS is an advanced technology helping optimize the preservation of seafood, agricultural products and food. This technology allows maintaining the freshness, tissue/cell structure and original colour of products even many years after being defrosted, depending on each kind of product.

Thanks to the CAS technology, nearly 20 tonnes of Vietnamese litchi have been successfully exported to Japan at prices ranging from JPY300-650 (60,000-130,000 VND) per 10 litchis. Examination results announced by the ABI Group showed that Vietnamese litchi preserved with the CAS technology basically met Japan ’s quality requirements for this kind of fruit. Japanese experts recognised the higher quality of Vietnamese litchi compared with Chinese and Malaysian alternatives. This technology allows litchi to be well preserved for 11 months, promising Vietnam opportunities to export litchi to difficult-to-please markets such as West European countries.

The CAS technology has big advantages but requires costly investment. Nguyen Khanh said that Bac Giang province was considering the application of a preservation technology from Israel . Not as costly as CAS, this technology requires investment of about 10 billion VND to preserve 1-10 tonnes of litchis for about two months.

Litchi has been selected to be one of the seven products of the northern region, together with tea, textiles and garments, footwear, bamboo and rattan products, logistics and tourism products, to receive support from the Decentralized Trade Support Services for Strengthening the International Competitiveness of Vietnamese Small and Medium-sized Enterprises programme.

This programme will be implemented from now until 2017. Under the programme, litchi businesses will be assisted to promote sustainable production in accordance with international standards; the management over processing facilities will be tightened to ensure the quality of export products; trade promotion activities will be organized; and the links between businesses and farmers will be promoted.

Hopefully, Vietnamese litchi businesses will make the most of these opportunities to promote exports to many countries.

Vietnamese businesses need to be well prepared for the global economic integration and actively cope with challenges to make inroads into choosy markets, Minister of Industry and Trade Vu Huy Hoang has said.

From now to mid-2015, Vietnam is scheduled to strike the Trans-Pacific Partnership Agreement (TPP) and Free Trade Agreements (FTAs) with the EU, the Customs Union of Russia, Belarus and Kazakhstan , and the Republic of Korea .

The signing aims to expand new markets and draw investment in the fields that Vietnam has yet developed, Hoang said.

Therefore, enterprises should regard this as a golden opportunity to increase their competitiveness in the global playground, he advised.

The Vietnamese Government is working with foreign partners to help businesses develop hi-tech support industry in the run up to the ASEAN Economic Community (AEC) scheduled to be formed in December 2015.

For example, the Japanese Government has recently built two industrial zones reserved for support industries in the southern province of Ba Ria-Vung Tau and the northern port city of Hai Phong .

Vietnam has partnered with the Republic of Korea in building a technology incubator in the Mekong Delta city of Can Tho. They are also looking towards the second one in the north.

The Ministry of Industry and Trade is promptly drafting a resolution on the development of support industries, which will be submitted to the Government by early November and come into force by 2015. It aims to simplify administrative formalities for the benefits of involved parties.

Vietnam currently has 1,400 enterprises operating in support industries such as electric, electronic, metal and rubber components and accessories.

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