HCM City asks CII to stop tolling cars passing Road 25B

HCMC vice chairman Nguyen Thanh Tai has ordered HCMC Infrastructure Investment Joint Stock Company (CII) to immediately stop collecting toll at Hanoi Highway toll station from cars passing Interprovincial Road 25B.

According to the HCMC People’s Committee late last week, CII was asked to recognize the direction of vehicles passing the toll station, then the company would return the collected tolls for vehicles that do not use Dien Bien Phu Street for which the toll station is meant.

CII had paid some VND1 trillion for the right to collect toll fees from vehicles using Dien Bien Phu Street in the city’s east and Kinh Duong Vuong Street in the west. The company built the Hanoi Highway toll station in 2001 to recover its investment.

However, many transport companies of the HCMC Association of Goods Transport have been complaining that they pay the road fees while they mostly do not use Dien Bien Phu Street. They were discontented that many of their container trucks only traveled between Cat Lai Port in District 2 of HCMC and Binh Duong or Dong Nai Province through the station.

In the middle of September, the transport association sent a complaint to the HCMC Inspectorate and the Vietnam Standards and Consumers Association, alleging that CII had been charging tolls incorrectly even before the moving of its toll station from District 2 to District 9, causing great losses to the transport companies.

According to a statement, Tai asked the director of the HCMC Transport Department to make a clear and explicit explanation to local media and the transport association to confirm the legal basis on allowing CII to relocate the toll station from a location near the Saigon Bridge to a new site near the Rach Chiec Bridge in August.

Tai also asked the HCMC Department of Public Security to collect evidence to handle several truck drivers causing serious traffic jams at the toll station on September 30 and November 2.

Thai Van Chung, general secretary of the HCMC Transport Association, told the Daily that the association would send a proposal tomorrow to the city government asking for measures to return collected fees to not only container trucks using Road 25B to Cat Lai Port, but also to trucks passing the station from other streets in District 2 including Tran Nao and Le Van Luong streets.

According to a source of the Daily, under the latest order from vice chairman Tai, CII late this week will install a small station on Road 25B to Cat Lai Port to recognize vehicles that need to be refunded toll fees.

Delays in hi-tech healthcare park project denied

Hoa Lam-Shangri-La Healthcare Limited Liability Company has rejected news reports that its US$400 million hi-tech healthcare park project in HCMC was lagging behind schedule.

The company received an investment certificate from the city government in July last year and broke ground for the project in Binh Tan District in October that year. The project has since then been staying on track, the company told reporters at its newly built office in the park’s premises on Thursday.

Lai Voon Hon, general director of the company, and other company executives called the press conference, which was also attended by city department chiefs and other officials, after local news reports said the project had faced delays.

After news broke late last month, the city government ordered the relevant agencies to look into the project for which, the Department of Investment and Planning said, the company has paid all land rent and received a land use rights certificate. The development of the huge project is expected to last 10 years.

“We have to carry out the project step by step due to many works. There are a lot of administrative formalities which our company must do,” he said. “For foreign investors like us, we must receive all the land use rights before pouring money into the project. “We’ve kept up with our development plan.”

The company has built the project office, called The Hub, and completed a survey of land and infrastructure, a master plan for land allotment, a soil investigation, a boundary survey and an environment impact assessment, he said. The company, he noted, has poured VND250 billion into the project to date.

Nguyen Thi Huu Hoa, deputy director of the Department of Planning and Investment, also said in a report on the progress of the project sent to the city authorities on Wednesday that the company had completed The Hub within the project site, which is now used as an operation office for the project.

The hi-tech healthcare park project involves investors from Vietnam, Malaysia, Singapore and the UK. Lai Voon Hon said it could attract investments from other countries.

“Our shareholders are committed to pouring money into the project,” he said

Speaking at the press conference, representatives of the city’s relevant departments affirmed that the company was carrying out the project on schedule.

Nguyen Van Hiep, deputy director of the Department of Construction, said the company had been working on the project as scheduled despite the grip of the global economic downturn.

Hoa’s report says that unfavorable global economic conditions had not kept the company from delaying the project and that with assistance from a working group of the city, the company will be able to commence construction on the hi-tech healthcare park this December.

The company is now awaiting a construction permit from the Ministry of Construction to start work on phase one of the project at 532A Kinh Duong Vuong Street in Binh Tri Dong Ward, about 20 minutes’ drive from the city’s central business district via the newly-completed East-West Highway.

The first phase of the park will consist of general hospital, medical training centre, kindergarten and international school, and housing for staff.

“Pending the (construction) permit, we are in the process of inviting tenders for a piling test. Construction work wil begin three months after obtaining the permit,” said Tran Thi Lam, chairwoman of the Hoa Lam-Shangri-La Healthcare Limited Liability Company.

Lam, shedding tears, said, “We have been trying our best to get the project moving. If the foreign investors abandon the project, the local partner will have no choice but to walk away as well due to the complex nature of this healthcare project.

The parties involved in the project are Hoa Lam Services Co. Ltd. of Vietnam, Malaysia’s Ireka Development Management Sdn Bhd as the development manager, Singapore’s Shangri-La Healthcare Investment Pte Ltd. and the UK’s Aseana Properties Ltd as the investor.

“We have engaged local and foreign consultants and the design concept was completed for the general hospital,” Lam said.

The international hi-tech healthcare park covers 37.6 hectares and needs 10 years to develop. It will feature a world-class healthcare environment for medical professionals and patients, which includes private tertiary care and teaching hospitals, research centers, medical institutes, commercial and retail components as well as supporting service residences and other community facilities.

Vietnam’s first rice trading center to open

The country’s first rice trading center will be inaugurated in Hau Giang Province on November 26 on the occasion of the first rice festival in the Mekong Delta.

The center will help local farmers in properly pricing their products and preventing losses due to price fluctuations on the market, said Nguyen Van Dong, director of the provincial Department of Agriculture and Rural Development. Farmers will also learn to raise rice quality and competitiveness on the global market.

The center initially will support contracts for delivery at-sight, and will support futures transactions in the long term.

Over 30 traders have registered to trade at the center so far, Dong said. Farmers and enterprises can place selling or buying orders online.

The trading center will support enterprises in purchasing rice from farmers, said Ta Thi Thu Thuy, director of Dong Thap Province-based Phuong Thanh Private Rice Firm. The enterprise is facing difficulties in buying rice for its two husking factories with annual capacity of 40,000 tons.

This is the second farm produce trading center in Vietnam after the Buon Ma Thuot coffee transaction center launched by Daklak Province’s Industry and Trade Department.

Working hours, payrolls for workers still under dispute

Businesses and officials were in opposing voices about working hours and payrolls for laborers at a conference gathering ideas for the amendment of Labor Law in HCMC on Thursday.

Several asked to increase the number of extra hours beyond the regulated 200-300 hours per year so that enterprises can tackle arising problems like when they have to finish quick contracts or face a temporary shortage of manpower, as long as they pay workers properly.

A business executive said many of his workers even wished to work extra shifts to earn more, as the compensation for extra hours were 50% higher than the normal rate.

However, others called for detailed regulations on the number of permitted extra hours for weekly and monthly schedules. The length of extra time must be regulated so as to help workers recover their health and energy, and will also help inspectors to check out whether employers abide by the rule when asking laborers to work long hours during certain periods.

In addressing this concern, Dang Duc San, head of the Legal Department under the labor ministry, said that “it is not necessarily to provide such sight schedules.” The new draft provides for 300 extra work hours a year, but enterprises should be given more flexibility in asking employees to work over time during certain periods if they can prove the suitability in doing so.

The concern over unrealistic regulated payroll for laborers was also raised at the conference.

Many suggested that they be permitted to set up their own payroll on condition that the real payments are higher than the regulated floor rate.

The newly-announced minimum wages were also under fire, as they did not give further benefit to workers, some said at the conference. Higher regulatory wages only mean higher social insurance fees to be paid by workers, as the real payments for workers remain intact, they said.

The ideas at this conference would be gathered by the ministry and undergo careful consideration under the assistance from International Labor Organization, said San of the ministry.

The amended Labor Law, to be submitted to the Ministry of Justice for assessment in December, will keep up with international standards, he added.

It will be presented to the Government next year and to the National Assembly for a vote in October next year.

ACE Life posts high growth in premiums

ACE Life Insurance Co. Ltd. has announced its premiums in the third quarter this year increased by 64% from the same period last year.

This growth has pushed ACE Life’s premiums in the first nine months to VND319 billion, or US$ 18 million, increasing 54% against the same period last year, the company said in a statement. Apart from high growth in premiums, ACE Life said it recognized a high policy persistence rate with the termination rate kept at roughly 3%.

ACE Life was the first insurer introducing the Universal Life product to Vietnam in March 2006. It now offers a full range of Universal Life products that allows individuals and groups between the ages of zero and 80 who have different financial capabilities and social economic status to apply.

The insurer has implemented several initiatives to improve the quality of customer care service, including the launch of an online policy information service, the Quality Control Center, and an SMS service to policyholders.

ACE Life Vietnam is wholly-owned by ACE INA International Holding Limited, a member of the ACE Group of Companies, one of global leaders in insurance and reinsurance. The group now operates in more than 50 countries.

Sacombank introduces steel exchange

Sacombank Group announced on Thursday to open Sai Gon Thuong Tin Commodity Exchange (Sacom-STE) next month with the key commodities for transaction being construction and industrial steel products.

According to Sacom-STE, the exchange will provide package services for sellers and buyers of steel products. The exchange will also support capital, update information about steel prices both globally and domestically and provide a transport system and a storage system for its clients.

Sacom-STE, located at 25 Ly Thuong Kiet Street in HCMC’s Tan Binh District, will receive exchanges of industrial and construction steel products with each unit a minimum of five tons. It will start operation in the middle of December.

Nguyen The Vinh, chairman of Sacom-STE, told local reporters at an introduction ceremony on Thursday that the commodity exchange was in the process of test runs while Sacom-STE was waiting for an appraisal and operation certificate from the Ministry of Industry and Trade.

“Sacom-STE expects to be granted an operation certificate by year-end from the industry and trade ministry so it can start receiving official exchanges on December 15,” said Vinh.

Vinh also said Sacom-STE planned to expand the exchange to include sugar by the third quarter of next year, and rubber and plastic products in early 2011.

On the occasion, Sacom-STE revealed some of its strategic partners including SGS Vietnam Company, FPT Software Solutions Company, IBM Company, HPT Company and L-H Transport Company. These partners will provide technical support and goods transport services.

Pham Chi Cuong, chairman of the Vietnam Steel Association (VSA), said while the distribution system of domestic steel producers remained undeveloped, leading to an imbalance in supply and demand and unstable steel prices for years, the operation of Sacom-STE’s steel exchange would enhance the trading of steel products and help stabilize prices.

According to VSA, the country has some 2,000 distributing agents for both imported and domestic steel products.

Herbalife enters Vietnam market

Herbalife International of America Inc. marked its official debut of business in Vietnam on Thursday when the nutrition, weight-management and personal care products company opened its distribution center in HCMC’s District 3.

Nguyen Thang, country manager of Herbalife Vietnam, said at the opening ceremony that the new facility would distribute health improvement products to Vietnamese consumers.

William M. Rahn, managing director of Herbalife for Asia Pacific, told the Daily after the ceremony that the products already on sale in Vietnam were good for health and those providing consumers with the more nutrition and protein they needed.

But, Rahn did not mention the prices of such products, which include performance protein powder as well as multivitamin and nutritional shake products available in different colors.

Rahn said he believed in strong growth of Herbalife in Vietnam as many of the more than 86 million people in this country needed better nutrition products when they worked industriously and their standards of living had been improved.

Vietnam is the 71st market of Herbalife worldwide and the 13th market in Asia Pacific. Rahn said five of the company’s top ten markets were in Asia and pinned high hopes that Vietnam would be the sixth after Taiwan, Korea, Malaysia, India and China.

Berjaya in deal with U.S. hotel manager

Berjaya - D2D Co. Ltd., a unit of Berjaya Land Berhad, on Wednesday signed a memorandum of understanding with the U.S. hotel management company Marriott Inc. to manage a five-star hotel in the country’s south.

The 22-story hotel with 263 rooms is part of the broader Bien Hoa City Square project worth US$150 million which Berjaya - D2D is developing in Dong Nai Province.

This hotel will be the first international lodging brand name in Dong Nai, providing quality hospitality and convention space for the province, when it is operational in 2012.

Work on the Bien Hoa City Square covering nearly 2.6 hectares on Vo Thi Sau Street in the province’s Bien Hoa City started in September last year.

This project also comprises a 20-floor office building, a 20-floor high-end apartment building with 448 units and a three-story shopping center.

Berjaya - D2D is a venture between of Malaysia’s Berjaya Land Berhad through its subsidiary Berjaya Leisure Cayman, and Vietnam’s Industrial Urban Development Company 2 (D2D).

Marriott International Inc., one of the leading international hotel management firms, has more than 3,200 lodging properties in the United States and 66 other countries and territories.

In a related development, Berjaya Land Bhd, a subsidiary of Berjaya Corporation Berhad, has said it will begin construction on the US$2-billion Nhon Trach New City project next year.

The project will undergo phased development, Tan Sri Vincent Tan, chairman of Berjaya Corporation Berhad, said at an investment certificate award ceremony in Dong Nai Province on Wednesday.

Around 600 hectares of land in Dong Nai Province, about 25 kilometers from downtown HCMC, will be reserved for this property development project which Tan said was designed to create an integrated first-grade city with an environmentally friendly theme.

It will house a theater, cultural house, square, exhibition centre, museum, administrative quarter, and commercial and social facilities such as offices, hotels, serviced apartments, food and beverage outlets, and entertainment spaces, sports centre, hospital, open green spaces and infrastructure, he said.

One unique feature of the project, he said, will be an exciting central garden space leading to the City Hall which will be the landmark of Nhon Trach New City.

In mid-October this year, Berjaya - D2D launched the sale of its first apartment project called Amber Court in Bien Hoa.

“I’m pleased to announce that we have successfully sold off 100% of the units. This is a good indication and has reinforced our confidence in Dong Nai Province and in Vietnam as a whole,” he said.

He said that with this success, the joint venture had been motivated to move on so as to launch the second phase of the project comprising 448 units of apartment before the year ends.

Berjaya is the largest single Malaysian company which has invested in Vietnam in a big way. Elsewhere in the country, Berjaya has received investment certificates for some real estate projects, including a US$3.5-billion international university township and the US$930 million Vietnam Financial Center covering 6.8 hectares, both in HCMC.

In Hanoi, Berjaya Land is developing a residential and commercial project called Thach Ban New City on 31.3 hectares in Long Bien District at an estimated cost of US$500 million. It is also developing Long Beach resort on Phu Quoc Island.

Jetstar Airways seeks clarification for brand issue in Vietnam

Jetstar Airways has said it needs a clarification for the statements made in relation to the Ministry of Transport’s conclusion that Jetstar Pacific must use its own logo different from that of the Australian airline for its commercial activities in Vietnam.

Simon Westaway, head of corporate relations at Jetstar Airways, made the point when reached by the Daily via email following the ministry’s decision to force Jetstar Pacific to replace the Jetstar logo, or the Jet and orange star.

The order came after the ministry’s meeting with representatives of the State Capital Investment Corporation (SCIC) and Jetstar Pacific in Hanoi on Monday, more than a week after the Civil Aviation Administration of Vietnam resubmitted to the ministry a complaint that Jetstar Pacific’s use of the Jetstar logo for its commercial services is making people mistake Jetstar Pacific for Jetstar Airways, a foreign airline that does not have the traffic rights for domestic services.

Jetstar had been made aware of media reports on a decision by the ministry regarding the Jetstar brand in the Vietnamese market, Westaway said in an email reply to the questions which Daily had sent to Jetstar Airways chief executive officer Bruce Buchanan.

Buchanan and Qantas have not answered any of the questions, which mainly cover the impact of such a decision on the brand and franchise agreements between Jetstar Pacific and Jetstar Airways that they still confirm approval from Vietnam’s relevant authorities, the possibility of Qantas’s withdrawal of its capital from this Vietnamese airline, the growth of Jetstar Pacific and the cost of building a new logo.

“We are seeking further information and clarification as to the statements made,” Westaway explained. “We will be in a position to provide further comment upon further clarification of this matter.”

Westaway said Jetstar still stood by the sentiments it expressed in a media statement delivered to local reporters at a meeting with Buchanan during his trip to Vietnam last week to oversee the latest growth and performance of Vietnam’s second largest airline.

“We again note that the Jetstar Pacific business, which has and remains over 70% owned and controlled by Vietnamese interests, has been well supported and is growing under the influence and direction of the Jetstar organization, one of the two largest value-based airlines in the Asia and Asia Pacific region,” Westaway said.

In the media statement, Jetstar Airways said Jetstar Pacific was looking to the 2.5 millionth passenger in the coming days and this reflected the growing business, since it was re-branded to turn the then Pacific Airlines into Jetstar Pacific in May 2008. 

Jetstar Pacific posted growth of a whopping 43% in passenger volumes in the third quarter of 2009, and its market share increased from 14% to 23% though it currently flies on only seven of the some 30 domestic routes.

“Jetstar Pacific carried over 510,000 for the quarter continuing a record period of growth for the airline having commenced its major strategic and commercial partnership in May 2008 with the Qantas Group and supported by the Jetstar brand,” the statement said.

Qantas became a strategic investor of Pacific Airlines after SCIC agreed to sell a 30% stake worth US$50 million in the airline to the Australian group in April 2007. SCIC now holds a controlling stake of 69.93% in Jetstar Pacific and other local shareholders include Saigontourist Holding Co.

Jetstar Airways said in the media statement which was attached to the email reply that the Qantas Group investment stayed at 27% of Jetstar Pacific and retained its option to increase the percentage to 30%.

VN access to TPP markets to affect China exports

The World Bank in Vietnam has projected that Vietnamese exports would replace an increasing share of Chinese exports to Trans-Pacific Partnership (TPP) markets when the comprehensive trade agreement comes into force.

The TPP is expected to create opportunities for Vietnam to diversify trade and enhance market access to key export markets, especially the United States and Japan. This trend has already been ongoing even before the conclusion of TPP talks, the WB said in a report on the impact of the trade pact on Vietnam.

The TPP will generate considerable benefits for Vietnam. Among the TPP member states, Vietnam, which has the lowest per-capita gross domestic product (GDP), has comparative advantages, in particular in labor-intensive manufacturing.

The TPP is also expected to lead to further increases in FDI inflows to build up export capacity, including in upstream suppliers to sectors that are subject to strict rules of origin like textiles and garments.

As for economic impacts, the bank said simulations suggest that the TPP could add as much as 8% to Vietnam’s GDP, 17% to its real exports, and 12% to its capital stock over the next 20 years. About half of the benefits are generated by tariff reductions and half by non-tariff measures (NTM), including liberalization of key service sectors.

In terms of sectors, labor-intensive manufacturing and especially sectors which currently face high import tariffs in the TPP markets will benefit most. These include textile, apparel, and footwear and to a lesser extent food processing and electronics.

On the contrary, primary export sectors, including agriculture and services, are expected to decline mainly as a result of accelerated structural transformation, with production factors reallocating to manufacturing.

However, the WB warned some challenges arising from the TPP for Vietnam, including the implementation of TPP commitments and the impact of rules of origin.

The WB said the TPP would not only remove trade barriers and enhance access to key export markets, but will also have tangible impacts on regulatory quality, intellectual property rights, investor protection, competition, state-owned enterprises (SOE) management, labor and environmental standards, food safety, public procurement and liberalization of services, including financial services and telecommunications.

While implementation of these commitments will be particularly challenging for Vietnam - given its gradual reform path and institutional legacies, Vietnam has shown in the context of its accession to the WTO that it is able to leverage external commitments to advance domestic reforms, especially in challenging reform areas.

“The TPP is expected to serve as an external anchor for structural reforms,” the WB said.

The TTP’s strict rules of origin also pose a challenge for Vietnam, as its exports are highly dependent on material imports and intermediate goods, particularly in the textile sector.

Currently, Vietnam imports 60-90% of textiles from other countries, mostly from China and Taiwan, neither one a TPP member. A large part of Vietnam’s current exports in the sector could not comply with TPP rule of origin requirements, according to the WB. 

The textile sector would have to restructure to maximize TPP benefits. While this poses a challenge in the short term, FDI in upstream businesses is expected to build up needed production capacity and a number of Japanese, Chinese and South Korean firms are investing heavily in fiber production in Vietnam.

The WB said it stands ready to support Vietnam in the implementation of TPP commitments and advancing accompanying measures to further enhance Vietnam’s competitiveness. 

The bank is also providing both lending and non-lending support to enhance competiveness and to strengthen linkages between FDI and domestic enterprises - both key for Vietnam to maximize the benefits of the TPP and other free trade agreements (FTAs).

The WB said it is already discussing with more developed TPP member states the creation of a multi-donor trust fund to help Vietnam prepare for successful implementation.

Japan firms look for domestic partners

Eleven Japanese industrial enterprises are taking part in a four-in-one exhibition on metalworking solutions at the Saigon Exhibition and Convention Center in HCMC in order to look for local suppliers.

These firms are active in various sectors like mechanical engineering, electronics and waste recycling from Japan’s Osaka. They want to find buyers and partners that can supply products for the Japanese market.

According to Hideo Toyoshima, head of the Osaka Foundation for Trade and Industry, Osaka is strong in supporting industries and enterprises from this Japanese city have come to Vietnam to seek partners as part of their strategies to expand their operations outside Japan and meet rising development demand.

Vietnamese businesses can expand their markets and have access to advanced technologies when partnering with Japanese firms, Toyoshima said.

Small and medium enterprises from other parts of Japan like Tokyo and Hiroshima are joining the three-day expo to seek Vietnamese suppliers of components.

Hirotaka Yasuzumi, managing director of the HCMC office of the Japan External Trade Organization (JETRO), cited JETRO’s annual survey as saying that 78% of Japanese enterprises active in Vietnam want to increase local content in their products.

According to the survey, of total production costs of Japanese enterprises in Vietnam, labor makes up 17.4% while material accounts for 58%. Therefore, enterprises find it important to cut material cost to enhance the competitiveness of their products.

Yasuzumi said the localization ratio of products made locally by Japanese companies rose to 33% last year compared to 22% four years ago.

However, Vietnam’s supporting industries are lagging far behind those in Thailand and China where respective local content represents 55% and 66% of the value of products made by Japanese firms.

According to the expo’s organizer, Reed Tradex Co. Ltd, the event attracts more than 500 brands from 25 countries and territories.

The expo, consisting of Metalex Vietnam 2015, Business Alliance 2015 for Supporting Industry, Electronics Assembly 2015 and Industrial Components and Subcontracting Vietnam 2015, lasts until this Saturday.

Thaco posts record car sales in September

Truong Hai Auto Corporation (Thaco) sold 4,035 passenger cars in September, the highest monthly sales volume since the company joined the local auto market in 2007.

The company ascribed the higher-than-expected sales to the record sales of Kia, Mazda and Peugeot brands distributed by Thaco last month, with respective figures of over 2,000, more than 1,900 and nearly 60 cars.

Thaco delivered more than 27,500 passenger cars of all makes to customers last month, soaring over 60% year-on-year and higher than the company’s total sales last year. The figure included 14,000 Kia vehicles and more than 13,000 Mazda cars.

With good business results in the first nine months, Thaco is looking to sell more than 40,000 passenger cars in all of this year, said Bui Kim Kha, deputy general director of Thaco.

To sell over 12,000 cars in the three remaining months of 2015, Thaco will continue promoting hi-tech car models with reasonable prices including the above three auto brands at Vietnam Auto Expo 2015 set for the end of October in HCMC.

In addition to passenger cars, Thaco assembles commercial vehicles including trucks and buses. The company has set an ambitious sales target of 70,000 passenger and commercial vehicles and revenue of VND44.3 trillion (about US$2 billion) this year.

The sales target is much higher than the 46,000 units Toyota Vietnam aims for this year, increasing 13% compared to 2014.

Last year, Thaco led the domestic auto market by sales with 42,000 units finding buyers, surging

49% versus 2013 and dominating 32% of the market share held by members of the Vietnam Automobile Manufacturers Association.

Thaco forecast domestic auto sales would grow 10-15% a year. The company looks to sell 100,000 cars in 2018 when the tariff for completely built-up autos imported from other ASEAN markets falls to 0% in line with Vietnam’s commitments to the ASEAN Trade in Goods Agreement (ATIGA).

The company expects to obtain after-tax profit of over VND5.83 trillion this year, up a staggering 78% year-on-year and pay taxes of nearly VND11.3 trillion, soaring 69%.

In the first half of this year, Thaco posted revenue of VND18.8 trillion, up 88% over the same period last year, and after-tax profit of over VND3.2 trillion, equivalent to 86% of the profit the company attained in all of 2014.

HCM City to issue VND1 trillion bonds this week

The HCMC government plans to issue VND1 trillion (US$44.4 million) worth of municipal bonds with tenors of five, 10 and 15 years on October 12.

This will be the city’s second bond sale this year, according to a report of the city government.

The city raised VND2 trillion from the first bond issue in the middle of last month. Of which, five-year bonds valued at VND1.49 trillion carry a coupon of 7.25% per annum while the bond yield of 8.05% per year is for 15-year bonds worth VND510 billion.

The city government will use VND3 trillion to finance 64 key projects in the city.

The HCMC government mobilized VND3 trillion from municipal bonds in 2014. According to the HCMC Department of Finance, the city has so far issued over VND10 trillion worth of bonds to raise funds for public investment projects.

FDI firms to join major job bazaar this week

Around 35 foreign-invested enterprises (FIEs) have put their names down to participate in a major job bazaar to be organized by the HCMC Center for Employment Service (CES) in collaboration with the HCMC Export Processing and Industrial Zone Authority (Hepza) on October 13.

The FIEs plan to recruit some 950 employees including salespeople, technicians, mechanics and interpreters at the event at 106/14D Dien Bien Phu Street, Binh Thanh District, CES director Tran Xuan Hai said at a meeting in HCMC on Wednesday.

Hai said the job bazaar will be the second of its kind for FIEs in HCMC. The city arranged a job bazaar for Japanese employers last year but more FIEs from other countries and territories will be attending the event this year.

Dang Yen Loan from Nuskin Vietnam asked the organizers to cooperate with providers of skilled laborers to help employers meet more qualified candidates at the job bazaar as she found that not many skilled laborers knew about the event.

Meanwhile, Nguyen Minh Tung of Nidec Seimitsu Vietnam said he felt that the event would not attract many candidates fluent in Japanese. He added that Japanese firms still have to count on job service providers to recruit suitable employees.

CES deputy director Nguyen Cao Thang said nearly 1,000 candidates would join the job bazaar, including university graduates and trainees from Japan and other countries and students of foreign language schools in the city.

Bitexco assigned to design new bridges in city

The government of HCMC has given the go-ahead to Bitexco Group to draw up two new bridge projects spanning the Saigon River to connect Binh Quoi-Thanh Da urban area with districts Thu Duc and 2.

Vu Quang Bao, general director of Bitexco, told the Daily that it takes about six months to complete the designs of the bridges. He estimated the combined investment cost of Binh Quoi-Thu Duc and Binh Quoi-Rach Chiec bridges at VND4 trillion (around US$178 million).

The city government has approved building the two bridges in the build-transfer  (BT) format in line with a master zoning plan for road development in the city.

The 426-hectare Binh Quoi-Thanh Da urban area will be developed for a population of 41,000-50,000 and have bridges spanning the Saigon River to connect to neighboring areas.

Binh Quoi-Thanh Da urban area was zoned by Saigon Construction Corp. in 2007 to accommodate 30,000 citizens as well as 500,000 visitors and workers a day. However, due to rapid urbanization, the zoning plan has become obsolete and Bitexco is using it as a reference to map out a new development plan.

Bao said Bitexco has completed a zoning plan, scale 1/2000, for Binh Quoi-Thanh Da urban area and submit it to the city government for approval this month.

Bitexco is the owner of the 68-storey Bitexco Financial Tower in District 1. The group is working on The One, an office-retail-hotel project, which comprises 55-storey and 48-storey towers at a total cost of US$500 million. The project covers a total area of 8,600 square meters surrounded by Le Thi Hong Gam, Calmette, Pham Ngu Lao and Pho Duc Chinh roads in District 1.

Sugar sales tumble ahead of new crop

Domestic sugar producers have reported a sharp decline in sales ahead of the start of the 2015-2016 sugarcane crop in October.

Nguyen Hai, general secretary of the Vietnam Sugar and Sugarcane Association (VSSA), said July-September sugar sales were much lower than the same period last year though confectionery producers needed more sugar to make mooncakes for the Full-Moon Festival in Vietnam.

Hai estimated that 67,000 tons of sugar was sold in July, 89,000 tons in August and 82,500 tons in September, well below the monthly average of 115,000-120,000 tons in the same months of previous years.

The fall in sales volume meant a large amount of sugar consumed in the period did not come from sugar refineries in Vietnam, Hai said.

Domestic sugar sales were affected by Vietnam’s commitments to the World Trade Organization (WTO) and the import of sugar from Laos by Hoang Anh Gia Lai Group (HAGL).

Under Circular 08/TT-BCT issued on May 27, 2015 by the Ministry of Industry and Trade, HAGL must pay an import tariff of 2.5% for the sugar it refined in Laos. As of September 5, the local company had brought in 15,323 tons out of a 50,000-ton import quota.

HAGL is expected to take the remaining 30,000 tons of sugar to Vietnam in the coming time, thus making life tougher for local sugar mills. 

From the end of August to mid-September, local sugar producers were unable to sell the commodity to China, a major importer of Vietnamese sugar. Data of VSSA showed that just nearly 86,000 tons of sugar had been sold to the northern neighbor as of September 18 though competent authorities allowed sugar exports of 246,400 tons.

Though exports turned sour, a number of local mills have refined more sugar this year. For example, Nuoc Trong Sugar JSC, a major sugar refinery in the southern province of Tay Ninh, had turned out 7,500 tons of sugar as of September 15 for the new crop, 360 tons higher than the same period last year. 

All sugar plants in the Mekong Delta region will start processing sugarcane in the new crop this month with sugar output expected at more than 40,000 tons. Their inventories had amounted to 160,000 tons as of September 15.

Last month saw sugar prices hovering in the range of VND13,300 and VND14,300 per kilo while sugar plants’ offered prices were VND400-500 per kilo lower than wholesale prices.

HOSE: FOL increase impact unclear

Decree 60 that allows for a foreign ownership limit (FOL) increase at almost all listed enterprises encourages foreigners to buy shares on Vietnam’s stock markets but the impact of this foreign room expansion has remained unclear due to China’s devaluation of the yuan and the State Bank of Vietnam’s exchange rate adjustments. 

Tran Anh Dao, deputy general director of the Hochiminh Stock Exchange (HOSE), told a media briefing in HCMC on Wednesday that with the decree issued in early July by the Government, foreign transactions rose sharply but plunged in August and September. 

She said China’s devaluation of the yuan in August hit Vietnam’s stock market while the depreciation of the Vietnam dong currency against the greenback also left certain impact on the market.  

The decree, with effect from September 1, allows foreign room to rise at most listed companies. However, due to a lack of the Ministry of Planning and Investment’s guidance on conditional business sectors, only securities firms can increase the FOL at present.   

Saigon Securities Inc. (SSI) on September 1 announced to raise its foreign room to 100% but foreign investors now own a combined 48.8% of the brokerage.

Dao said no data showed the impact of the FOL increase on the local stock markets.

Decree 60 took effect when the central bank devalued the local dong, negatively affecting foreign trading. Therefore, it is hard to assess the effect of the decree on the stock markets.    

She said Decree 60 in general would create favorable conditions for foreign stock traders to invest in Vietnam. Nonetheless, many companies are afraid they could be acquired by foreign investors.

According to HOSE, there has been a balance between foreign buying and selling over the past year though selling was slightly stronger, especially in the third quarter of this year.   

Foreigners were net sellers in the third quarter as foreign buying amounted to some VND17.9 trillion (US$795.2 million) while foreign selling reached over VND18.5 trillion. Foreign trading volume and value declined in the period.       

Dao hoped foreign trading on the local stock markets would remain stable following the conclusion of Trans-Pacific Partnership talks early this week.

The third quarter saw 10 enterprises make debut on HOSE and the number has been 17 in the year to date. Nafood Group JSC and Binh Dien Fertilizer JSC on September 7 listed on the HCMC exchange.

Budget housing projects unattractive to realty firms

HCMC’s budget housing development program has not been as attractive to property enterprises as expected due to low profitability and complicated procedures, according to the HCMC Real Estate Association (HoREA).

In a report recently sent to the city government, HoREA said such problems have kept property developers away from the budget housing development program.

HoREA said investors involved in budget housing projects are required to have their financial statements for these projects audited and that some of their costs have not been accepted. This is why housing developers have earned little or no profit from housing projects for low-income buyers.

Take as an example a budget housing project developed by Thu Thiem Co. in Thao Dien Ward, District 2. The company reportedly bought the land use right to around 1,900 square meters from local residents in 2004 at around VND2.5 million per square meter. The current land price approved by the city government for the area is some VND12 million per square meter while the market price is over VND20 million, so if the 2004 price of VND2.5 million is used to calculate the project’s input cost, the investor would incur heavy losses.

Many other enterprises are facing the same problem. 

Le Ngoc Tu, director of Binh Dan Housing Development and Trading Co., said his company has a project covering more than 14,000 square meters in Binh Chieu Ward, Thu Duc District. Over 9,200 square meters of the project was approved for conversion into residential land and the remaining area for public works.

In late 2009, the authority of Thu Duc District approved the project’s zoning plan, scale 1/500, with 76 land lots of 64 square meters each. Binh Dan was told to pay the land use fee for the 9,200-square-meter site to get the license for the project. However, as the company did not have enough money to pay the fee amount, it sought permission to convert the commercial housing project into a budget one.

Tu told the Daily that though the authority of Thu Duc supported the plan, Binh Dan has yet to get approval from the city government for the conversion plan due to complicated procedures and regulations.

Under Government Decree 188 of 2013 on management and development of budget housing projects, the selling price of budget apartments is based on all costs calculated by the investor to recover investment capital, including loan interest, but the profit of a project is capped at 10%.

Binh Dan bought the land lot for VND3 million per square meter but is now allowed to apply the price of the current land lot at only VND400,000 per square meter as the city government approved it as agricultural land.

Due to the wide price differential, Tu said, the company cannot use the low land price regulated by the city government as an input cost for the housing project. Therefore, the company has sought approval to determine a reasonable price for customers and the company.

The highest profit for developers of budget housing projects is capped at 10% but the report of HoREA showed that the actual profit they can earn is lower. Even some investors have racked up losses.

To convert commercial housing projects into low-cost ones, investors must go through a labyrinth of procedures at multiple agencies, from local government to the Ministry of Construction, the central bank and lender banks. 

In previous years, a lot of real estate enterprises sought approval to change their housing projects into budget ones to reduce inventories, bad debts and losses. Nevertheless, as the property market has shown signs of recovery, fewer enterprises are interested into budget apartment projects, said HoREA chairman Le Hoang Chau.

Vietnam to diversify textile material suppliers

Vietnam will expand the range of its textile and garment material suppliers to stimulate the development of the sector, a senior official of the Ministry of Industry and Trade (MoIT) said. 

At a conference on the Vietnam-India garment and textile co-operation on October 12 in Hanoi, Deputy Minister of Industry and Trade Do Thang Hai said Vietnam is seeking textile material suppliers outside the Association of Southeast Asian Nations (ASEAN) and China.

He noted that India’s fabric, natural fibre, cotton and garment accessories are of good quality and diversity.

In addition, the ASEAN-India free trade agreement has made Indian materials more competitive in term of prices.

This makes India a potential destination for the Vietnamese garment and textile industry to seek suppliers of materials and accessories, the Deputy Minister said.

Vishvajit Sahay from the Department of Heavy Industry under India’s Ministry of Heavy Industries and Public Enterprises, said India’s yearly export of garments and textiles to Vietnam already reached US$400 million.

He said however, Vietnam’s imports of materials from India are still modest due to difficulties in payment and transport.

The official noted that last year the Indian government passed a US$300-million credit programme in order to help Indian companies to enter the Vietnamese market.

He affirmed that both Indian enterprises exporting to or investing in Vietnam, and Vietnamese enterprises which want to import garment and textile materials from India can seek preferential loans from the programme. 

According to figures from the MoIT, Vietnam-India trade has strongly grown in recent years, reaching US$5.59 billion in 2014, up 9.84% in comparison with 2013.

Work underway at Sheraton Ha Long Bay

Construction of Sheraton Ha Long Bay, a five-star international hotel in Ha Long city, Quang Ninh province, kicked off on October 10, just nine days after the investor and local authorities signed a cooperation contract. Total investment in the project is almost $40 million.

The hotel is to be opened by 2017 under the contract, which was signed by Quang Ninh province, Starwood, and the C.L.U.B.M Ha Long JSC on October 1.

Sheraton Ha Long Bay will have 265 rooms, with one Presidential Suite on an area of 180 sq m, 68 houses for rent, and a shopping center.

Starwood is currently managing four hotels in Vietnam: Sheraton Hanoi Hotel, Le Meridien Saigon, Sheraton Saigon Hotel, and Sheraton Nha Trang Hotel & Spa. It will open two resorts in the future: Sheraton Danang Resort, on January 1, 2018, and Sheraton Phu Quoc Resort, on January 7, 2017.

Starwood has over 1,200 projects in 100 countries around the world. The group announced a profit of $235 million for the first half of this year.

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