Official calls for critical amendment to business law

If the Law on Enterprises is not properly amended, it would put nearly 3,000 enterprises on the brink of filing for bankruptcy, according to an official.

Minister of Planning and Investment Bui Quang Vinh said at a recent National Assembly’s session that Article 170 in the law desperately needs amending in order to save thousands of enterprises, ensure foreign direct investment (FDI) and employment for hundreds of thousands of workers.

Article 170 under the current Law on Enterprises stipulates that FDI firms that were licensed before July 1, 2006 must re-register and operate under the 2005 Law on Enterprises. The re-registration term is five years since the law took effect.

This means that as of July 1, 2011, FDI firms that have yet to re-register are not allowed to supplement their business spheres nor extend their projects. They are just allowed to operate under the original fields mentioned in their business license.

The ministry’s statistics showed that as of May 31, 2013, as much as 2,916 out of total 6,000 FDI enterprises have yet to re-register.

The proposed amendment to the article would remove the five-year deadline for the re-registration.

The draft regulation would allow FDI enterprises to decide if they need to register but continue to operate in accordance with their business licenses.

FDI enterprises that were set up before July 1, 2006 with expired business licenses could file for bankruptcy to be allowed to re-register to continue their operations, the draft regulation said.

Bui Quang Vinh admitted the ministry’s fault in delaying the amendment of the article and promised that they would amend the regulation as soon as possible.

Vinh said that the number of FDI firms with expired business licenses has reached 41. The figure would climb to 142 in 2014 and 269 through 2015.

He added that they would issue regulations that stipulate the new deadline for such enterprises to re-register and policies for enterprises that don’t register. Any that fails to comply with the regulations would have to file for bankruptcy.

Nguyen Thi Kim Nga, NA Vice Chairwoman said many NA deputies have proposed that the government clarify the reasons why those enterprises have yet to re-register, assess the socioeconomic impact of the situation as well as investment environment for FDI firms in the country over the past time.

Meanwhile, some others proposed that relevant agencies leave expired enterprises to file for bankruptcy and then they would set up new enterprises. However, the government said such procedures would be more difficult than amending one article in the law as it would result in considerable losses, Nga noted.

“We’ll direct the Ministry of Planning and Investment and the NA’s Economics Committee to collect opinions on the issues so as to accomplish the draft amended law and submit it to the NA for approval during this term,” she added.

Banks reluctant over bad-debt settlement plan

Although the newly-established Vietnam Asset Management Company is hoped to resolve the problem of rising bad debts, banks have shown little interest in the company.

VAMC would buy bad debts from banks via self-issued bonds. The bonds would have no interest rate and credit institutions could use them to apply for refinance loans.

Banks, on the other hand, are not enthusiastic that the bonds are set with only a five-year time limit to resolve bad debts. In addition, banks would be required to contribute 20% of the funds from VAMC bonds towards risk prevention each year. If, after the five-year limit, bad debts have not been successfully resolved, banks would be required to use the bonds to retake the debts.

Many banks commented that the spending on risk prevention fund was the main issue that made them reluctant about the VAMC project.

Tay Han Chong, CEO of MeKongBank, said that the measures being taken by VAMC only helps to delay dealing with the bad debt issue.

Another bank leader in HCM City said VAMC will be a powerful tool for institutions who are in need of a last resort, but that the mandatory spending on risk prevention makes banks wary of accepting. "Banks will have to spend their profits on contributions to the fund, so there will not be many perks for those institutions who accept the programme," he said.

Nguyen Gia Dinh, Vice Chairman of Sacombank, added, "During times when so many businesses are experiencing financial trouble banks must be somewhat patient and keep rates low. Our only option is to nurse these bad debts for a while and extend payment deadlines if necessary. Once the business environment recovers we will be able to recoup the capital."

Cao Sy Kiem, member of the Monetary Policy Consultant Committee, said, "Of course, spending on the risk prevention fund will affect the banks' profits, however, banks banks are not earning much profit in the current situation anyway. Banks and enterprises will have to work together in order to forge a final solution to the bad debt problem."

Hoa Binh province works to lure Indian businesses

Currently hosting two India-invested projects capitalising at 20 million USD, northern Hoa Binh province is working to lure more investors from the South Asian country to a wide range of its industries, in particular the processing, the field that has so far drawn much interest from Indian businesses.

The province has recently coordinated with the Indian Embassy in Vietnam and the Vietnam Chamber of Commerce and Industry to organise a seminar to introduce its potentials to representatives of the Indian Businesspeople Association in Vietnam.

Hoa Binh now boasts eight industrial zones with a total land area of about 1,620 hectares where infrastructural facilities are available for plants’ operation.

Apart from the processing industry, the locality has strongly encouraged investments in support industry and tourism.

It has offered a corporate tax rate of 10-20 percent for investors during the time their projects are underway together with other land use and tax incentives.

At the event, the Indian representatives briefed Hoa Binh authorities and businesspeople on their country’s customs formalities and import-export policies.

India is one of the markets holding great potential to Vietnam.

Vietnam mainly exports cell phones, electronic components, coal, chemicals and peppers to India , while importing cattle feed, pharmaceutical products and machinery from the country.

India now has 69 investment projects in Vietnam with a registered capital of 252 million USD, focusing on the processing industry.

Mekong Delta targets GDP growth of 12 percent

The Mekong Delta will try to increase its economic growth by 11-12 percent per annum from now until 2020 in order to enhance living standards for people in the region.

The Steering Committee for the Southwestern region announced that the agricultural sector will make up to 40 percent, industry - nearly 30 percent, and services - over 30 percent of the region’s economy.

In the field of agriculture, the region will diversify products, strengthen intensive farming, establish areas specialising in particular plant varieties like rice, fruit and short-time industrial trees. Natural materials for industries and animal feed will also be heavily developed.

Aquaculture, a strength of the region, will have due attention paid to its expansion. The region will invest in developing the irrigation system and protecting ecosystems, especially the coastal salt-marshes in Dong Thap Muoi area, Long Xuyen Quadrangle, west of Hau River and Ca Mau peninsula.

Small and medium-sized industries will be efficiently developed. The industrial sector will soon exploit the gas potential of the Southwest sea area, aimed at developing gas-electricity- nitrogen fertiliser industry. Additionally, industrial clusters, sea transport, agriculture and aquaculture processing, engineering industry and construction material production will also be developed. Can Tho city is considered the centre for these efforts.

In the services sector, Mekong Delta provinces will pour appropriate investment into developing trade and tourism, especially eco-tourism. Among others, Phu Quoc island in Kien Giang province will be transformed into a tourist hub.

From now to 2015, the region will invest in training, upgrading machinery and equipment, and applying scientific and technological processes to production.

Infrastructure will be further improved with the focus on rural road networks, highways connecting the region with Ho Chi Minh City, sea and river ports, and Tra Noc airport in Can Tho City.

A number of universities will be upgraded while some new colleges are to be established. The region will also modernise its provincial and district hospitals and hasten the construction of medical facilities specialising in treating cancer, gynecology-obstetrics, and heart and lung diseases.

The “Baby-Benz” makes its debut in Vietnam

The manufacturer of luxury cars Mercedes-Benz Vietnam on Thursday launched the compact car A-Class, imported from the Germany, which is the first luxury compact introduced by Mercedes-Benz to tap the potential segment in the country.

The launch of the new car line is aimed at attracting a wider range of customers in the country, targeting successful young people, given the rising trend in compact vehicle consumption in big cities.

A-Class is not simply a car, but a companion, a statement of style and a milestone of success, according to the company.

A-Class is a milestone in design development of Mercedes-Benz. Coefficient drag (Cd) on the new A-Class decreases from 0.31 to 0.27, the lowest one in the segment. A lower coefficient drag helps the car save energy during operation, especially when accelerating and running at high speed. With its size, A-Class is listed as a compact. However, the driver can actually experience comforts in the small car. The high bonnet helps the A-pillar curve the door with a longer perimeter, thereby increasing the volume of interior space without affecting the exterior design.

In addition, both the A200 and A250 Sport AMG are using turbocharged 4-cylinder engine named M270 with direct fuel injection, which brings a power of 156 HP and 211 HP respectively – so impressive with the displacement of only 1.6L and 2.0L. The new A-Class is the most economical car in the segment: the A200 consumes just 5.4 liters for 100 kilometers, an extremely low cost of VND130,000. With a full 56-liter fuel tank, the driving range of A200 is over 1,000 km.  Even the powerful version A250 Sport AMG, which can accelerate from 0-100km/h in just 6.6 seconds, has the consumption of 6.4 liters for 100km.

In the family of Mercedes-Benz, the young A-Class has inherited numerous smart features and safety technologies from its brothers such as C-Class or E-Class.

Active Parking Assist helps the driver find suitable parking space, as it automatically performs steering, while the driver simply adjusts the acceleration and brake pedal as directed.

Meanwhile, the traditional parking brake will be replaced by an Electric Parking Brake, eliminating the tedious task by a button. A-Class also inherits the Cruise Control system, which allows the driver to adjust the maximum speed desired in the speed limit areas. In emergency situations, STEER CONTROL will help the driver steer accurately by highly controlling steering power. Particularly, the A250 Sport AMG version will be equipped with smart reversing camera, showing the reversing line to help drivers handle easily in narrow space.

When inside, users can also admire other top-class amenities, such as the sporty seats covered with ARTICO leather. The seats will help driver and passengers be stable in cornering at high speed, thus bringing the excitement on each journey with the new A-Class.

The new car comes with two versions, A200 and A250 Sport AMG, which are priced at VND1,264 billion and VND1,623 billion (VAT included) respectively.

Vingroup gains big from Vincom Center A sale

Vingroup Joint Stock Company has completed the sale of Vincom Center A in HCMC for US$470 million, or over VND9.8 trillion, said a senior executive of the company.

Under a deal with Vietnam Infrastructure and Property Development Group Corporation (VIPD), Vingroup has sold to VIPD its entire stake in the subsidiary Future Investment and Trading Services One Member LLC, which owns the land use right and all the property at Vincom Center A.

The pre-tax profit from this deal is VND575.4 billion, said Le Khac Hiep, vice chairman of Vingroup.

Vincom Center A is a luxurious property located in a prime site in HCMC’s District 1, surrounded by Le Thanh Ton, Dong Khoi, Le Loi and Nguyen Hue streets. It comprises nine floors and six basements, with four floors for a high-end retail mall and a five-star hotel from the fifth floor upwards.

VIPD is an investment holding company involved in a diversified range of businesses including real estate development and investment. It currently owns 1.1 million square meters of land in prime locations across Vietnam and is developing these sites into commercial, residential and tourism properties, says a statement published on Vingroup’s website.

Hiep said his firm expected to earn around VND3.66 trillion in pre-tax profit from apartment and infrastructure transfers this year. The profit is forecast to be higher next year thanks to the progress in apartment handover, he told the Daily.

Royal City, a project developed by Vingroup, started handing over unfurnished apartments in December 2012 and fully-furnished ones in April 2013. Meanwhile, Times City began to hand over apartments to homebuyers last month, he said.

Vingroup recently announced it had sold its 20% stake in Vincom Retail to Warburg Pincus for US$200 million.

Talking about this deal, Hiep said: “We, as a real estate company, want to combine our capabilities with experience of foreign partners in investment, promoting global retail sale and supporting corporate consumers. Of course, we also want the strong financial capability of Warburg Pincus to create growth momentum for Vingroup in the future.

“The partner will help us keep our revenue stable and develop the portfolio of properties for rent. This deal is a step forward in business internationalization and foreign investment attraction.”

JBA’s eased monetary concern

Japanese companies in Vietnam have warned the government’s loosened monetary policy could result in the return of high inflation and exchange rate tension.

The Japan Business Association in Vietnam (JBAV) chairman Motonobu Sato said at the Vietnam Business Forum last week that the government recently adopted a loosening monetary policy to control the economic situation.

“We understand that with the loosened monetary policy, the government wants to support Vietnamese companies in seeking loans from banks,” Sato said.

“But, our biggest concerns are that high inflation and shortage of dollars may come back again,” he said.

The State Bank in March lowered the deposit interest rate from 9 to 8 per cent and in May it continued to cut the rate to 7 per cent.

As a result, many banks like Techcombank, Southern Asia Bank, PG Bank, Dai A Bank, Tienphong Bank and Eximbank have reduced annual lending rates to 8.25, 9.43, 10, 10, 9.7 and 9.2 per cent, respectively. Vietcombank’s deposit interest rate also dropped to 6 per cent last month.

The Ministry of Planning and Investment (MPI) said in a bid to revitalise local production, the government would find ways to boost credit growth to a targeted 12 per cent rate for 2013.

During this year’s first five months, credit expansion rate touched 2.29 per cent only.

Sato said Vietnam’s economy up to 2011 witnessed a local currency depreciation against the dollar due to the trade deficit. This trend saw a depreciation of the dong and high inflation, while local companies struggled to buy dollars, because they had to purchase materials in dollars and sell to domestic companies in dong.

In February 2011, the government issued Resolution 11 to tighten the monetary policy and strangle the black market to stabilise the macroeconomy.

According to the JBAV, despite decreases in lending rates now, local enterprises were unable to absorb new capital.

Meanwhile, it said the major reason for Vietnam’s high inflation was state-owned enterprises’ ineffective use of capital and these enterprises’ monopoly over petrol and electricity, as well as ineffective public investment.

MPI deputy minister Dao Quang Thu however said in response to foreign investors’ concern at the VBF that with Vietnam’s foreign currency reserve equivalent to more than 12 weeks of import, there should be no fear of dollar shortage to satisfy businesses’ demand.

“The Vietnamese government commits to create all best conditions for investors to change the dong into foreign currencies,” he said.

More clean water for city’s residents VND1.2 tril. for Tan Hiep 2 water plant

Saigon Water Supply Corporation (Sawaco) on Thursday started a trial operation of Kenh Dong water plant it purchased with a designed daily capacity of 150,000 cubic meters of water to provide clean water for six western districts, said Bach Vu Hai, deputy general director of Sawaco.

Sawaco commissioned Kenh Dong water plant during a 72-hour visit to check the stability of equipment and the quality of water before connecting to the water supply system in districts 12, Tan Binh, Tan Phu, Hoc Mon, Binh Chanh and Binh Tan.

With a designed daily capacity of 200,000 cubic meters of water, the plant is developed by Kenh Dong Water Supply Joint Stock Company at a cost of VND1.25 trillion. The remaining capacity of 50,000 cubic meters of water will be for Cu Chi District and industrial parks in Duc Hoa and Duc Hue provinces in Long An Province, Hai told the Daily.

Under the city’s water supply zoning plan, Kenh Dong plant will have its capacity raised by an additional 150,000 cubic meters of water a day in the second phase in 2015 to replenish clean water for Cu Chi.

Total clean water supply of Sawaco is around 1.5 million cubic meters a day. The firm is looking to increase its capacity to 2.4 million cubic meters a day by 2015 and 3.4 million cubic meters by 2025 in line with planning.

*HCMC’s leaders on Thursday morning also had a meeting with Sawaco, the HCMC Infrastructure Investment Joint Stock Company (CII) and Refrigeration Electrical Engineering Corp. (REE) on the deployment of Tan Hiep 2 water plant designed with a daily capacity of 300,000 cubic meters of water at a cost of VND1.2 trillion.

At the meeting, Hai of Sawaco said Tan Hiep 2 plant will be constructed by a joint venture of Sawaco, CII and REE with a capital contribution ratio of 36%, 32% and 32% respectively. An REE representative told the meeting that his firm wants to raise its capital contribution to 51% and that it will be responsible for the construction progress of the scheme in front of the municipal leaders.

Banks lend VND121 billion to enterprises in Nha Be

Five commercial banks including Sacombank, VietinBank, OCB, DongABank and Agribank on Thursday made VND121 billion loans available for 20 enterprises in HCMC’s Nha Be District to help them maintain and develop their business operations.

This is part of the bank-business connectivity program organized by the central bank’s HCMC branch over the past year.

Speaking at the credit contract signing ceremony, Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said interest rates have declined sharply and rapidly. Therefore, interest rates and capital costs are no longer a big problem for enterprises.

Lending rates applied for five prioritized sectors have slid to below 10% per annum. Some home and consumer loan programs even have interest rates as affordable as in the pre-crisis period.

The program has been organized in many districts in HCMC such as Can Gio, Tan Binh, Tan Phu and Go Vap.

Egame seeks funding for online game upgrade

Online Education Game Joint Stock Company (Egame) is looking for funds to upgrade its online education game Chinh phuc Vu mon (Conquer the Dragon Gate), which was launched more than a year ago.

Nguyen Hong Thuy, general director of Egame, said the company started developing the game in 2008. In April 2012, Chinh phuc Vu mon was launched into the market and so far, Egame has spent US$2 million on the game.

“From now to 2014, Egame will further invest in this game. The investment costs around US$10 million and the company is seeking finances,” said Thuy.

Chinh phuc Vu mon targets students as there are currently 20 million college students and 17 million primary and high school students in Vietnam.

“This market is full of potentials, but it requires long-term strategies because it takes 5-7 years for an online game to start generating revenue,” said Thuy.

He said Egame had surveyed 5,000 parents nationwide before making the game. The respondents said they want games that are both educational and attractive.

Chinh phuc Vu mon is based on the tale of a carp transforming into a dragon after successfully climbing a cataract called the Dragon Gate. Players join the search for talent to deal with the major concerns of the community.

To win the game, players need not only skills and tactics, but also extensive knowledge of natural and social sciences.

The game also features a 3D classroom with hundreds of lessons for junior and senior high school students.

If achieving big success with Chinh phuc Vu mon, Egame will develop more online games for foreign markets.

Social Insurance Vietnam, VNPost cut deal for payment

The Vietnam Social Insurance and the Vietnam Post Corporation (VNPost) on Thursday signed an agreement to manage beneficiaries and pay social insurance monthly via the national post system.

The contract clarifies how VNPost will provide services to the social insurance entity via the country’s post network including paying monthly pensions and social insurance allowances by cash, managing beneficiaries in line with the list provided by social insurance entities and those receiving money via individual bank accounts. Besides, VNPost helps the partner master the changes of the number of pension and social allowance beneficiaries for certain cases as stipulated by the contract.

The service earlier had been piloted in four provinces from August 18, 2011 as the first phase and it then was launched on a trial basis in eight more provinces and cities in April, 2012, with the total volume amounting to nearly VND600 billion for about 220,000 people via monthly payments.

*In a related development, the post savings system mobilizes an average of more than VND13 billion a day, says a source from the system.

Speaking at a meeting held by the Ministry of Information and Communications on Thursday, Do Ngoc Binh, chairman of VNPost, said despite the interest rates’ volatility in the market last month, his firm had still done good business with the post savings segment.

Deposits of the post system reached about VND400 billion in May, with over VND13 billion mobilized a day on average, while the current deposit value of the whole system totals VND12 trillion now, Binh said.

Total revenue of VNPost was around VND1.49 trillion from January to April, with the express delivery segment growing 20% year-on-year, while the post savings segment saw a surge of up to 32% over the same period in 2012, Binh reported. In the meantime, the information technology and telecom service segment only recorded a rise of 40% year-on-year in the same period.

VNPost was formerly under the Vietnam Post and Telecommunications Group (VNPT) but it has been transferred to the information ministry this year.

The firm achieved total revenue of VND2.3 trillion in 2008, VND2.89 trillion in 2009 and VND3.34 trillion in 2012. It provides services from mail, newspaper distribution, money transfer and express delivery to financial post, express post and IT and telecom.

Vietnam, Spain boost trade ties

Two-way trade turnover between Vietnam and Spain in the first quarter of 2013 hit more than 533 million euro, up 9.23 percent against the same period last year.

According to preliminary statistics from the Spanish Customs, Vietnam’s exports to the country reached over 477 million (up 9.46%) and imports were worth more than 55.9 million euro (up 7.31%).

Vietnam mainly exported machinery, electrical, electronic and engineering equipment, footwear and components, coffee, garments, and seafood, and imported airplanes, spare parts, seafood, machinery, electrical and electronic equipment, chemicals, dye, pharmaceuticals, animal food and leather.

Bilateral trade value has grown considerably from 1 billion euro in 2008 to 2 billion euro last year, except for the year of 2009 due to the impact of the global economic downturn.

Rice exports hit US$1.302 billion in five months

Vietnam exported 2.858 million tonnes of rice from January 1 to June 6, earning US$1.302 billion.

According to the Vietnam Food Association (VFA), the 70,516-tonne shipment in the first week of June was estimated at US$33.387 million.

Rice prices in the Mekong Delta region currently hover around VND4,850-5,200/kg.

On the domestic market, the average price of 5% broken rice is VND6,500-6,600/kg, and that of 25% broken rice VND6,100-6,200/kg.

Nokia Vietnam markets first products overseas

The Nokia mobile phone manufacturing plant in Vietnam has shipped its first batch of goods abroad, announced the plant’s Director General Ivan Herd.

Herd said his plant, which is located in the Vietnam-Singapore Industrial Park (VSIP) in northern Bac Ninh province, will be officially inaugurated in September this year.

The factory of the mobile phone giant is designed for an annual output of 180,000 units, and most of its products will be exported, he said.

“We plan to develop Nokia Vietnam into one of the biggest and most modern plants in the world,” Ivan said.

He also said that the Vietnam-based plant is currently employing 300 workers and expects to recruit thousands more in the future.

Thai group invests in $2bln Quang Ninh hi-tech complex

Thailand’s Amata Group and Vietnam’s Tuan Chau Group will team up to build a high-tech urban complex in Ha Long city.

The complex, to sit on 16,00ha in Quang Yen village, Uong Bi district, will include a high-tech park, a free trade area, and research units to develop high added value products, as well as educational facilities and urban areas.

The first phase of the project will be built on 500ha at a cost of US$1.5-2 billion. Construction work will begin in December 2013, with the first factory scheduled to be put into operation in late 2014.

The Amata Group has been investing in Vietnam since 1994 and is considered one of the six strategic investors in Quang Ninh, along with Vingroup (Vietnam), Texhong (China), and SE and the Yazaki Company from Japan.

Vingroup previously proposed building hotels and entertainment areas worth nearly US$45 million on Reu Island in Bai Chay ward, Ha Long city, and the Vietnamese Charmvit Group also plans to build a golf course on Hung Thang Hill in Ha Long.

Quang Ninh provincial leaders say that choosing strategic investors is an important step towards restructuring the province’s economy with a focus on developing industry, services and tourism.

FDI projects cancelled due to infeasibility

A number of FDI projects worth billions of USD across Vietnam have been cancelled due to infeasibility or because investors failed to complete required procedures.

The Kien Giang provincial government has just decided to cancel a luxury resort project worth EUR2 billion (USD2.63 billion) on Phu Quoc Island.

The project was proposed by Swiss Trustee Group in late 2007 with their Vietnamese partner Vinaconex R&D JSC.

The project received approval in principle by the provincial government but the investor has yet to complete required procedures.

After several warnings by local authorities for the investor to complete compensation and resettlement plans by last February, along with detailed plans for the project itself by last August, these deadlines were not met.

Eventually the project was cancelled, stirring up public concern over other similar luxury FDI projects.

Statistics by the Ministry of Planning and Investment's Foreign Investment Agency showed that numerous FDI projects, worth billions of USD, have been cancelled since 2007.

The most prominent of these include the USD9.8-billion Ca Na steel complex in Ninh Thuan Province, the USD4-billion Rong beach in Quang Nam Province, the USD1.68-billion creative city in Phu Yen Province, and the USD1.3-billion magic world park in Ba Ria-Vung Tau Province.

A number of others have been progressing at a very slow pace.

Several economists have expressed worry over the general feasibility of the plans for many of these luxury FDI projects, which they say exhibit significant disparities between registered capital and actual fund disbursement. Numerous projects that are already underway, such as New City and Nam Hoi An reported low rates of disbursement.

"Many investors have failed to realise their pledges," said Dr. Nguyen Mai, Chairman of the Vietnam Association of Foreign Invested Enterprises.

He added that any projects that show themselves to be stagnant or infeasible should be discontinued as soon as possible in order to make way for better ones.

The Ministry of Planning and Investment has reported ODA disbursement reached US$1.5 billion by the end of May, accounting for 31.3 percent of amount planned for this year.

Earlier, ODA disbursement was estimated at $450 million in the first four months of the year and in May alone it exceeded $1 billion, more than two times higher compared to that of four months earlier.

Last year, ODA disbursement was estimated at more than $3.6 billion, the highest so far. Meanwhile, ODA committed capital reached $7.3 billion in 2012, and nearly $6.5 billion in 2013.

Data from the Ministry showed that implemented FDI capital in the first five months of the year was estimated at $4.58 billion, up 1.6 percent, while registered capital was at $8.52 billion, up 8.9 percent year-on-year.

South Korea invests US$14 million in Ha Nam Province

Ha Nam Province has recently granted investment certificates to two South Korean companies in Hoa Mac Industrial Park for total investment capital of US$14 million.

Of which, Finetek Vietnam Company will invest $9 million to produce electronic components and Keyrin Telecom Vietnam Company will invest $5 million to produce micro speakers.

Since the beginning of this year, there have been five South Korean companies that have received investment certificates to invest in industrial parks and complexes in Ha Nam Province with a total investment capital of $47.5 million.

Long Thanh Int’l Airport site clearance to cost VND15 trillion

The People’s Committee of Dong Nai Province, the Japan International Cooperation Agency, and Airports Corporation of Vietnam, recently held a meeting to discuss compensation package for site clearance, resettlement, and infrastructure development for the upcoming Long Thanh International Airport.

For this purpose, nearly 5,400 households with more than 17,000 people will have to be resettled and 3,000 of the existing houses will be completely destroyed. Total compensation for resettlement is expected to reach VND15 trillion before the project can even take off.

The project will cover an area of 5,000 hectares that will including runways, air terminals, and related infrastructure for airport services.

Before the project kicks off, site clearance will be necessary in Long Phuoc, Bau Can, Long An, Binh Son, Suoi Trau, and Cam Duong Communes.

Ministry resolves freeze in property market

According to a report prepared by the Ministry of Construction, many measures have been now put in place to resolve the present freeze in the property market.

Minister Trinh Dinh Dung said the ministry has implemented several measures to balance supply with demand and combat growing bad debts as well as create social housing for students and low income groups.

Since 2012, the Ministry has been studying the various causes that led to freeze in the property market.

Municipal and provincial authorities have been asked to reassess and convert condominium projects to suit market demand. Thus the Ministry has stopped 138 projects covering an area of 4,361 hectares, including 37 projects in Ho Chi Minh City.

The Ministry is concentrating more on building or converting existing buildings into social housing. As per a survey, by 2015 around 1.74 million people will face housing difficulties and 1.715 million workers from other parts of the country working in industrial parks will wish to settle down in the City. Low income groups too will need housing.

Hanoi and Ho Chi Minh City will need 111,200 and 134,000 houses, respectively.

The Ministry thus wants localities to build more social houses to meet the increasing demand. Realty developers have been required to restructure their property development plans to build more social housing projects for low-income groups and those entitled to social housing policies.

Investors have been ordered to convert commercial houses into social houses or converted large apartments into smaller ones. So far 56 investors of 23 condominium projects in Ho Chi Minh City have asked to convert their buildings into social housing or restructure size of apartments.

The Ministry said it has reaped some initial positive results in resolving obstacles in the property market and house prices have lowered, said Construction Minister Trinh Dinh Dung.

Dung also added that in future, the National Assembly will re-adjust business income tax and value added tax with preferential treatment along with credit packages that will allow members of the public to take out loans at only 6 percent a year to purchase apartments under social housing projects and small commercial projects. These measures will further help the frozen property market.

VSA objects to power price discrimination against steel industry

The Vietnam Steel Association (VSA) has strongly objected to a Ministry of Industry and Trade plan to apply separate higher electricity tariffs for major power consumers like steel and cement plants, saying this is an act of price discrimination.

The status quo should be maintained as the steel industry is currently in trouble over poor demand, Pham Chi Cuong, chairman of VSA, said, adding any power price hikes this time around would sink the industry and other electricity-guzzling sectors like cement into further difficulty.

“Personally I think there shouldn’t be any adjustment of power prices for the steel and cement industries. A price change, if any, should ensure fair treatment for all manufacturing industries, meaning power prices shouldn’t be increased for the steel and cement sectors only,” Cuong said.

In the steel industry, only steel billet production consumes much power, with the power price for the activity representing some 6% in the billet cost, while power prices of other products only make up 2%, Cuong clarified.

Prices of power sold to steel and cement production and other manufacturing industries would surge as a result of a new power retail pricing scheme drafted by the Ministry of Industry and Trade. As planned, power price hikes for manufacturing sectors, including iron, steel and cement production, would be different depending on voltage and production hours.

However, the draft provides a new power pricing method for steel and cement production, instead of applyimg the same level for all manufacturing industries as at present. Under the draft, iron, steel and cement producers using power voltages of 110kV or higher during peak hour would pay 10% more for power compared to the prevailing price. The highest price hike for voltages of less than 6kV during peak hour would be 20% as per the draft.

The new rule on retail power prices would take effect from July 1 in line with a number of amended regulations of the revised Power Law which will also come into force on the same day, a source from the Electricity Regulatory Authority of Vietnam (ERAV) under the industry ministry said.

Turkey among Vietnam’s major cell phone markets

Mobile phones and phone components now rank second among Vietnam’s major export items to Turkey, according to a Turkish business delegation that is in Vietnam to seek investment opportunities in HCMC.

Fatih Kemal Ebiclioglu, chairman of the Istanbul Electrical-Electronics, Machinery & ICT Exporters’ Association, said last Friday that Turkey was importing a variety of items from Vietnam, including information and communication technology (ICT) devices, mobile phones and components.

Last year, Vietnamese exports to Turkey totaled more than US$863 million, up 11.75% over 2011. In the year to end-March, Vietnam had exported US$220 million worth of products to this market, a rise of 18.73% year-on-year, says a report by the Vietnam Chamber of Commerce and Industry (VCCI).

Fiber tops the list of items fetching the highest revenue from export to Turkey, followed by mobile phones and components. Last year, the latter group generated US$200 million from export to Turkey, up 65% from 2011.

In the first quarter of 2013, cell phones and component exports to this market reached US$70 million, most of it coming from the factory of Samsung in Vietnam.

There are still great chance for cooperation between Turkey and Vietnam, Ebiclioglu stated, explaining that Turkey has strengths in electronics, ICT and energy. As for ICT, Turkish firms are seeking to join hands with Vietnamese partners to distribute hardware and software.

He said Vietnamese exports to Turkey were expected to increase further in the near future when the two countries reached an agreement on investment protection and another on avoidance of double taxation. These agreements will help boost two-way trade in the future.

Bond-funded projects increasing in scope

Many projects funded by government bonds have raised their investment costs to increase scope, although the National Assembly (NA) Standing Committee allows such undertakings to adjust investment costs when there are changes in prices and technologies.

At the NA session in Hanoi last week the committee delivered a report on inspections into their compliance with the Law on Practicing Thrift and Fighting Wastefulness in using government bonds for investment in 2006-2010.

Initially, the total cost of the projects to be financed by government bonds in the period 2013-2010 was some VND150.6 trillion, of which VND110 trillion would be covered by government bonds. However, by 2010, the total cost of these projects had been raised to more than VND570.9 trillion, with VND530 trillion to be funded by government bonds.

The capital demand for the period after 2010 is VND315 trillion.

The latest report published by the Government on May 17 revealed the total cost of bond-funded projects had been increased to approximately VND685 trillion.

Most of these projects have revised their investment costs. Some have boosted their total investment costs by many times, while some others have not only adjusted the costs of labor, site clearance, materials and equipment, but also increased their size.

As a result, the total investment cost of government bond-funded projects has snowballed.

The projects planned for development in more than two years can factor possible rising costs in their total cost estimates. Still, cost adjustments in the three years from 2010 to 2012 far exceeded inflation in this period, suggesting the projects that spurred their costs indeed wanted to expand their scale.

“This leads to an imbalance in funding,” says the report by the NA Standing Committee, adding that it even goes against the law.

In 2006-2010, government bond funds were allocated dispersedly. Meanwhile, the number of projects and their total costs grew rapidly, causing financial shortages for many ongoing projects, forcing them to be rescheduled or adopt another investment format, causing a waste of resources.

The mechanism for capital allocation is unreasonable with no specific criteria, leading to inequality among regions and localities, paving the way for the ask-give mechanism to stay. Many projects seem to be not as urgent as they claimed when seeking government bond funding.

The NA Standing Committee told the Government to request ministries and localities to review the total investment cost of all projects and classify them. Those making cost revisions inappropriate with the NA resolutions and Directive 1792 of the Government should not get additional funding.

The committee also asked the Government to reprimand the ministries and localities in charge of the government bond-funded projects with several wrongdoings and make a report to the NA at the next sitting.

Work starts on Japanese biotech plant

Japan’s Nippon Zoki Pharmaceutical Co. Ltd. last Friday started construction of its first biotechnological plant in Vietnam.

The plant at Que Vo Industrial Park (IP) in the northern province of Bac Ninh is being developed by Konishi Vietnam Biotechnological Co. Ltd, a subsidiary of Nippon Zoki, with total registered capital of US$90 million on 10.6 hectares.

The first phase of the project, which costs an estimated US$62 million and covers three hectares, will be put into operation in April next year.

Nippon Zoki specializes in making pain relief and human immune system improvement products.

According to the investor, the plant will make pharmaceutical products extracted from the skin of white rabbits in New Zealand with a designed consumption capacity of 3,700 head a day. In the first phase, the investor will import raised rabbits from New Zealand for production and develop on-site input material regions in the long run.

Bac Ninh vice chairman Nguyen Tien Nhuong expects the project of Nippon Zoki to open up opportunities for the development of the province’s husbandry industry.

The factory in Que Vo IP, when in place, will be a great opportunity for the rabbit farming sector in Bac Ninh and the nation’s north as a whole.

It is easy to raise rabbits with low investment capital in the north while local farmers can make high profit. The project will also contribute to increasing export value of Bac Ninh, satisfying local demand and improving incomes of locals in its material farming regions.

In addition to the plant under construction in Que Vo, Nippon Zoki has two other plants abroad, with one in China and the other in Japan, which are running at full capacity but are still unable to meet rising demand, the investor said.

Australia’s Woolmark backs garment industry

Australian firm Woolmark and Vietnamese textile-garment manufacturers are jointly implementing a project intended to help Vietnam become one of the top five textile-garment manufacturing countries by 2020.

As the exclusive agent of Merino wool worldwide, Woolmark has been working with some 50 Vietnamese partners to develop a sustainable supply chain in Vietnam and expand its market by introducing Merino wool to the local market.

The project is aimed at promoting the trademark Woolmark owned by Australian Wool Innovation Limited (AWI) and introducing Vietnamese wool brands of high quality and added value to global markets, said Jimmy Jackson, general manager for product development and commercialization at the Woolmark Company.

He said 70% of AWI wool was exported to China. However, the attractiveness of China is on the fall, so AWI is seeking other markets for Australian wool.

Asked why AWI was eyeing Vietnam, he said Vietnam had a developed textile-garment industry and a lot of skilled labor.

Especially, wool processing needs a lot of water while Vietnam has a high annual rainfall plus nearly 400 rivers across the country. Therefore, AWI is pursing this project in Vietnam.

“Reducing exports to China and increasing exports to Vietnam is a strategy of the company,” said Jackson.

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