Settling VND40-70 trillion in bad debts to be difficult for VAMC: Economist

Governor of the State Bank of Vietnam Nguyen Van Binh expected that Vietnam Assets Management Company (VAMC) would settle between VND40 trillion (USD142.8 million) and VND70 trillion (USD333.3 million) bad debt this year, but this may be a difficult task.

This comment was made by senior Economist Le Xuan Nghia, Head of Business Development Institute.

The company started operations on July 9, however, its two most important regulations, Internal Operation Regulation and Special Bond Issue Regulation, have not yet been signed, he explained

According to Mr. Nghia, VAMC only deals with one third of bad debts; meanwhile, private banks will have to be responsible another third and the Ministry of Finance will restructure the rest.

The firm only buys bad debts valued at more than VND1 billion for individual customers and VND3 billion for corporate customers.

After selling bad debts to VAMC, banks will receive special bonds from the company which can be used as collateral to get loans from the SBV through the OMO mechanism. Accordingly, banks will be provided with loans of a maximum of 30% of the bonds value.

Capital source is the most decisive factor for bad debt settlement, making settlement quicker using the state budget rather than capital from the SBV, the economist said because the bank has to settle bad debts while also enforcing inflation policies. He added that, during the process of bad debt settlement, growth will be around 5.5-6% per year.

“We hope that the bad debt problem can be dealt with in the next four to five years. During this time economic growth will be slowed down and the property market will gradually recover. These are things we have to accept,” Nghia emphasised.

Diseases ravage shrimp farms in several provinces

The Department of Animal Health under the Ministry of Agriculture and Rural Development on July 7 said that outbreak of diseases in six provinces and cities across the country have been mainly in shrimp farms with brackish water.

The affected areas are the central provinces of Nghe An, Ha Tinh and Ninh Thuan; the Mekong Delta provinces of Tien Giang and Ca Mau; and Ho Chi Minh City. Of these, Ca Mau suffers the worst.

About 1,843 hectares have been damaged due to white spot disease and 2,797 hectares have been damaged due to Acute Hepatopancreatic Necrosis Syndrome.

The Animal Health Department has proposed to localities to speed up measures to cope with diseases and their spreading. Prime Minister Nguyen Tan Dung has instructed the Ministry of Agriculture and Rural Development to provide farmers with 95 tons of chlorine to disinfect shrimp farms.

According to departments of agriculture and rural development in Bac Lieu, Soc Trang and Tra Vinh Provinces in the Mekong Delta, Acute Hepatopancreatic Necrosis Syndrome and white spot disease have ravaged more than 22,000 hectares of shrimp farms in the first six months of the year. Long-lasting hot weather and unseasonal rain have also proved conducive to spread of disease.

US grants FDA certificate to Vinamilk

Vietnam Dairy Products Joint Stock Company or Vinamilk has just been granted a certificate by the United States Food and Drug Administration (FDA) to export their products to the United States.

According to food safety regulations in the US, all consumer goods must be registered with FDA. Vinamilk can now export dairy products to the American market.

In 2012, export turnover of Vinamilk was nearly US$180 million, and by end of 2013, the Vinamilk Company hopes to reach a turnover of US$230 million.

Currently, Vinamilk products exported to the US include dried milk, baby foods, condensed milk and fresh milk.

Sugar inventory running high as export deadline over

Local sugar inventory is running high though a four-month sugar export plan allowed by the Ministry of Industry and Trade ended last month, with sugar shipments reaching some 40% of the permitted volume.

According to a recent report of the Vietnam Sugarcane and Sugar Association (VSSA), sugar exports via minor border gates and border trade channels were still small in June and will be difficult as the Chinese side tends to push down prices and sometimes suspends border trade without prior notice.

Therefore, only about 81,600 tons of sugar had been exported in the year to June 12 among 200,000 tons licensed for export, or roughly 40%.

Meanwhile, the volume of unsold sugar at local plants had totaled about 490,000 tons as of June 14, lower than the peak level of around 579,800 tons in May but still high compared to the same period in 2012.

Ha Huu Phai, chief representative of VSSA in Hanoi, ascribed the situation to higher global sugar prices in recent times, which have been hovering around only some US$500 a ton. Besides, he added, seeing the current huge inventory in the local industry, Chinese buyers have constantly forced Vietnamese exporters to slash prices.

 “Prices of sugar exports to China only stand at around VND15,000 per kilo. With such a  low price, only companies with efficient production can earn profit while smaller ones without proper investment in productivity improvement will certainly suffer losses,” he told the Daily.

VSSA forecast the total yield of the sugar crop 2012-2013 at a record high of more than 1.5 million tons while local demand is put at 1.3-1.4 million tons in 2013. Along with ample domestic supply, sugar imports in line with Vietnam’s commitments to the World Trade Organization and huge amounts of smuggled sugar at home would also bring down local sugar prices.

New water plant in city operational

A new water treatment plant in HCMC’s outlying district of Cu Chi on Monday started supplying water for city residents with a daily first-phase capacity of 200,000 cubic meters.

Work on the VND1.3 trillion Kenh Dong plant began in 2006. Its treated water will run through a 12km pipeline with a diameter of 1.2m to the reservoir of Tan Hiep water plant in Hoc Mon District through before it is supplied for users in districts Hoc Mon, Binh Chanh, Tan Binh, Tan Phu, Binh Tan and 12.

Ha Van Sang, general director of Kenh Dong Water Supply Joint Stock Company, said the remaining capacity of the plant, at about 50,000 cubic meters a day, will go to Tay Bac urban area and four industrial parks in neighboring Long An Province’s Duc Hoa District.

Crude water for the Kenh Dong facility is sourced from Dau Tieng reservoir.

The city’s other operational water plants are Tan Hiep, Thu Duc, Hoc Mon and Binh An. There are also Binh Tri Dong and Go Vap underground water well compounds and smaller wells with a total capacity of around 1.7 million cubic meters a day.

Kenh Dong Water Supply Joint Stock Company was established in 2007 and currently has chartered capital of VND400 billion. Its shareholders are the State-owned HCMC Finance and Investment Company, Saigon Water Corporation (Sawaco), HCMC Irrigation Management Exploitation and Service Company and Manila Water Company.

HCMC’s water demand is forecast to reach nearly 2.8 million cubic meters a day in 2015 and rise to nearly 3.8 million in 2025. Crude water for the city comes from the Saigon River, Dau Tieng reservoir (0.95 million cubic meters a day), the Dong Nai River and Tri An reservoir (nearly 1.5 million cubic meters) and underground water (nearly 0.5 million cubic meters).

Sawaco, HCMC Infrastructure Investment Joint Stock Company (CII) and REE Corporation are under preparation to carry out the Tan Hiep 2 water plant project having a capacity of 300,000 cubic meters per day and an investment of VND1.2 trillion.

Tan Hiep 2 has three shareholders – Sawaco with a 36% stake, CII with 32% and REE with 32%. The facility is scheduled to get off the ground early next year and be put into operation in 2015.

RoK firm builds textile factory in Ben Tre

A company from the Republic of Korea has been licensed to build a garment and textiles factory in Giao Long industrial park, located in the southern province of Ben Tre.

The 50 million USD project, the largest of its kind in Ben Tre, is invested by Unisoll Vina Ltd., Co. under Hansoll Textile Ltd.

Covering an area of 25 hectares, the factory is expected to produce 90 million items per year, all of them for export.

The factory is scheduled to be completed in September 2014, generating over 11,000 jobs.

Since 2001, Hansoll Textile Ltd has also invested in the southern provinces of Binh Duong and Dong Nai under its policy of expanding investment in Mekong Delta provinces.-

Hanoi invests in agricultural technology

Hanoi plans to spend more than one trillion VND to implement an agricultural mechanisation project until 2016, with a vision to 2020.

The project will be enforced in 21 selected districts and towns which desperately need their agricultural methods to be revamped.

Under the project, the level of mechanisation in tillage will increase from 69.2 percent to 90 percent by 2016 (and 95 percent by 2020); in seeding and planting the level will rise from 7.1 percent to 20 percent (and 40 percent by 2020); and in preventing insects from damaging crops it will grow from 10.2 percent to 40 percent (80 percent by 2020).

Mechanisation in the harvesting process will rise from the current 7.8 percent to 30 percent by 2016 before reaching 60 percent by 2020.-

Lax requirements on customs preferential treatment

Enterprises gaining US$200 million or above in trade revenue are qualified to enjoy customs preferential treatment, according to the Circular 86/2013/TT-BTC of the Ministry of Finance.

The Circular replaces the business preference policy since 2011 in which enterprises were required to have a minimum of US$350 million per year to receive preferential treatment.

The requirement is also relaxed for those exporting agro-aqua products, textile-garment, and leather-footwear and importing raw materials for production. To get priority, they must have at least US$50 million in turnover, instead of US$70 million as stipulated by the old rules.

Accordingly, eligible businesses are granted certificates that entitle them to priority customs clearance, such as a reduced customs clearance time and the right to go through the green gate.

In addition to the condition on import-export turnover, businesses must also satisfy the conditions on legal compliance, financial accounting and payment. However, all of them have been eased.

The time for evaluating legal compliance of a business is now 24 months from the date of the General Department of Customs receiving its application for the preferential treatment, versus 36 months previously.

Under Circular 86, the process for verifying preferred business applications is simpler.

Enterprises only need to be approved by the General Department of Customs and local tax authorities, and no longer have to seek the nod from local departments of investment and planning, the authorities of industrial parks and economic zones, and local market monitoring agencies.

The Circular will take effect from August 11.

EZs, IPs database to be finalized

Deputy PM Hoang Trung Hai has urged the Ministry of Planning and Investment to work with related ministries and localities to early finalize the database on economic zones (EZs) and industrial parks (IPs).

The move aims to improve the domestic investment environment and sharpen the competitiveness of Vietnamese localities in the regional arena.

Deputy PM Hai, who heads the Steering Committee on EZs and IPs Development, asked the Ministry of Industry and Trade (MoIT) to review and accelerate the development of industrial complexes and report obstacles in formulation, environment, land clearance, and investment preference for prompt remedies.

Especially, the MoIT is in charge of rashly finalizing the database on the operation of EZs and IPs including land usage, sewage treatment and labor structure.

The MoIT is also responsible for assessing the establishment and operation of industrial complexes especially those that have yet complied with the regulations or are running inefficiently.

So far, Viet Nam is home to 289 IPs covering a total land area of over 81,000 hectares; 15 coastal EZs with 698,000 hectares; 28 border EZs in 21 provinces.

In the first half, IPs and EZs attracted over US$7.9 billion registered capital, occupying over 80% of the total newly-registered capital and supplemented capital.

As of June, 2013, IPs lured 4,665 FDI projects worth around US$70 billion; coastal EZs US$40 billion; border EZs US$700 million.

In addition, IPs and EZs attracted over US$14 billion from domestic investors.

IPs and EZs in some localities, however, are coping with weak management, slow infrastructure construction, complicated site clearance, prolonged complaints on land, and low FDI attraction.

Fuel price stabilisation fund statistics released

The Finance Ministry published its first edition of quarterly statistics related to the management and use of the fuel price stabilisation fund on its website on July 9.

This disclosure was made pursuant to a request made by Deputy Prime Minister Vu Van Ninh on May 3, when he asked the Finance Ministry to publicise the data on the fund every quarter on its website to provide transparency.

According to the Finance Ministry, the fund balance at the end of June was over VND55 billion (US$2.6 million), a decrease of roughly VND700 billion (US$33 million) when compared to last year's figures.

Since 2009, the fund balance has never been in the red and has always been in the black and had reached as high VND1,800 billion (US$84.6 million) in 2010.

It was reduced to roughly VND1,500 billion (US$70.5 million) in 2011, VND740 (US$34.8 million) in 2012 and down to VND55 billion at the end of June 2013.

Seven out of 12 companies using the stabilisation funds now have positive fund balances such as Vietnam National Petroleum Group and Military Petroleum Corporation.

Currently, fuel companies must extract VND300 per kg or litre of oil and petrol to add to the price stabilisation fund to be used for the purpose of price stabilisation.

Garment exports target comes near

Vietnam's total export turnover for textiles and garments in the first half of this year surpassed 8.9 billion USD, a 14.5 percent increase year-on-year, the Vietnam Textile and Apparel Association (VITAS) reported.

The textiles and garments industry is approaching its 19.5 billion USD export target for this year after receiving sufficient orders to meet the goal, according to Le Tien Truong, vice chairman of the Vietnam National Textile and Garment Group (Vinatex).

The Republic of Korea market saw the highest growth of 32 percent, with export turnover topping 660 million USD and accounting for 7.5 percent of the sector's total shipments, Vinatex said.

The US and the EU are currently Vietnam's largest markets for textiles and garments, with revenue of 3.94 billion USD and 1.29 billion USD respectively, followed by Japan at 1.1 billion USD.

Exports to the EU currently account for nearly 15 percent of the total volume, and the industry aims to boost exports to Japan to a similar level.

The Korean market was expected to become the fourth largest for the country's textiles and garments, with a total export turnover of more than 1 billion USD by 2014, VITAS added.

The industry's profits in H1 accounted for 53 percent of the annual plan.

The domestic market posted modest growth of only 9.5 percent, the lowest in the last three years.

Vinatex itself enjoyed slightly better growth of 11 percent, according to Truong.

The unsold inventory stock dropped slightly by 2 percent compared to the same period last year, with products remaining in the store for less than one year accounting for 82 percent of the total.

Truong said the industry was actively expanding in new markets such as Turkey, Africa and the Middle East, while maintaining growth in traditional markets like Russia, the EU, and Japan.

Local textile and garment companies are anticipating the success of the Trans-Pacific Partnership negotiations, which should boost export turnover to several markets, especially the US, thanks to zero export duties.

SOEs seek to streamline business structure

Seven State-owned enterprises (SOEs) out of the 44 that had their restructuring plans approved have re-organised their management structure to boost efficiency, according to the Ministry of Finance's statistics.

The SOEs include such major firms as PetroVietnam, Electricity of Vietnam (EVN), Vietnam National Textile and Garment Group (Vinatex), National Tobacco Corporation, Machines and Industrial Equipment Corporation, Vietnam Paper Corporation (Vinapaco) and Vietnam National Chemical Group.

In addition, four had withdrawn from non-core businesses, including EVN, Vinatex, Vinapaco and the Vietnam National Coal – Mineral Industries Group.

The restructuring was in line with the plan on reforming SOEs during the 2011-15 period approved in the Prime Minister's Decision 929/QD-TTg in July last year.

As of June, 66 SOEs had drafted their restructuring plans, 44 of which were approved.

Statistics showed that 42 out of 92 SOEs had investments in non-core businesses, such as securities, insurance, real estate, investment funds and banks, estimated to total 22.405 trillion VND (1.06 billion USD) in investments.

Previously, Deputy Prime Minister Vu Van Ninh asked relevant State organisations to speed up the restructuring of SOEs, with the withdrawal of investment from non-core businesses while ensuring transparency and efficiency.

The restructuring of SOEs aims to improve the performance of the sector, which had been inefficient for many years.

Vietnam sees bright prospects for handbag exports

Handbag exports have grown impressively with many companies investing in outsourced work for famous products bearing international brand names.

According to statistics from Vietnam Customs, the export revenues of suitcases, handbags and umbrellas in the first five months of the year reached US$744.58 million, up 22.22 percent against the same period last year. The total turnover of these products was only US$1.518 billion in 2012 and US$1.33 billion in 2011.  

Vietnam’s leading handbag importer was the US (US$317.63 million), followed by Japan (US$93.28 million), Germany (US$54.53 million), Belgium (US$40.93 million), the Republic of Korea (US$28.01 million), France (US$23.32 million), Holland (US$22.11 million), China (US$18.7 million), the UK (US$17.1 3million), Canada (US$13.8 million), Spain (US$12.02 million) and Italy (US$11.04 million).

Besides these major markets, the handbag sector saw a sharp increase of export turnover in Hong Kong (up 56.76 percent), Sweden (up 56.14 percent), Malaysia (55.27 percent), and Thailand (54.66 percent).

The Vietnam Leather and Footwear Association (Lefaso) has set a target of US$1.7 billion in briefcase and handbag revenue this year and expects an export growth rate of 30 percent in the coming years.

The demand for made-in Vietnam handbag is growing, even for those bearing popular brand names such as Mitti, Hams, and Mr Vui.

For example, Thai Binh Shoes is one of the leather and footwear companies which have quickly seized export opportunities. With a total investment capital of US$10 million, the company has invested in building garment workshops and a factory to produce handbags for Coach Company to export to the US.

Nguyen Duc Thuan, President of Lefaso, said that eight out of ten global handbag brand names have transferred their orders to Vietnam. This is a good opportunity for Vietnamese enterprises to enhance their international prestige.

In the past, FDI enterprises produced the bulk of handbag exports. Two years ago, domestic businesses began to get involved in the sector. Since 2011, which saw the highest export turnover of US$1.33 billion, the handbag, suitcase, umbrella and wallet producers have succeeded in earning more than US$1 billion in revenue a year.

According to Lefaso, the domestic demand for handbags and knapsacks rose 25 million units last year. But only 15 million products were made of local materials. For luxury handbags, Vietnam still depends on imported materials. And, for this reason, many domestic businesses are now focused on producing backpacks and shoes for pupils at a reasonable price.

Foreign investors continue to eye Viet Nam market

Viet Nam remains an attractive destination for foreign investors despite challenges, according to EY, one of the world's leading accounting companies.

To Singaporean investors, Viet Nam is considered the second-best destination, after Myanmar, according to EY (formerly Ernst&Young).

Max Loh, the EY's regional managing partner for ASEAN, said that, with total investment capital of more than US$23 billion, Singapore was the fourth biggest investor in Viet Nam, followed by Japan, South Korea and Taiwan.

New Singaporean investors continue to be interested in Viet Nam, while those who have already invested want to maintain or expand their business, according to Loh.

EY, however, said Viet Nam faced several challenges, including bad debt, a lower-than-expected Gross Domestic Product (GDP) last year, and the record number of bankruptcy.

Nevertheless, EY praised the Government for addressing these problems.

As for regional competition, Loh said that Viet Nam should not "have its focus on Myanmar alone."

"In a globalised world, every country competes for investment dollars. Every country wants to upgrade itself and be value-added," he said.

"Myanmar has many attractive opportunities as Asia's last significant frontier economy, but at the same time, it has its weaknesses such as infrastructure and an undeveloped financial system," he added.

To become more attractive, EY experts said that Vietnamese companies should increase productivity, restructure their business and develop innovative practices.

Having low costs and cheap labour is not an advantage anymore, as these competitive advantages do not last forever, according to the experts.

Companies need to move up in the value chain and adapt to rapidly changing conditions, both locally and internationally.

Tran Dinh Cuong, managing partner of EY in Viet Nam, told Viet Nam News that EY was in the process of changing its business strategies worldwide, and this would be reflected in its Viet Nam operations as well.

"Emerging markets, including Viet Nam, will play an important role for us to reach our general purpose," he said.

Credit access easier for many Mekong Delta firms

Up to 94.7% of enterprises in the Mekong Delta took out bank loans in the first six months of the year while the figure was only 81.8% in 2012, according to a survey of the Can Tho branch of the Vietnam Chamber of Commerce and Industry (VCCI).

It is apparent that the number of enterprises borrowing money from banks in the first six months picked up against 2012, says the survey’s report presented at “Capital solutions for delta firms, removal of bottleneck between banks and enterprises” seminar in Can Tho City on Wednesday.

However, Nguyen Phuong Linh, director of the Member and Training Department of VCCI Can Tho, told the seminar that most banks only disburse short-term loans while minimizing long-term amounts. Furthermore, the lending requirement remains stringent.

“As per the survey, most borrowers are big companies while small- and medium-sized enterprises (SMEs) complain they couldn’t access bank loans due to stringent lending procedures,” Linh said.

Similarly, speakers at the seminar said it is still difficult for SMEs to gain access to bank loans and that lending rates remain high.

Enterprises in An Giang Province still have difficulties borrowing money from banks despite lots of supporting policies issued by the Government including loan payment extension or lending rate reductions, said Tran Thi Dep, chairwoman of the An Giang Business Association.

Several entities want to get long-term loans for investment in production but owing to strict screening procedures at lenders, they have no other choice but to use short-term loans for long-term investment, making them unable to repay the banks on schedule, she stressed.

Explaining why lenders are inclined to tighten long-term loans, Nguyen Hoang Minh, director of Orient Commercial Bank (OCB) for southwestern region, said due to low capital absorption, locals tend to place short-term deposits at his bank, only from three to six months, making it hard to meet demand for long-term loans.

Although lenders have slashed lending rates, credit growth is still very low, at a mere 3.31%, compared to the 12% as earlier projected for 2013.

Gold volume for auctions down

The central bank will continue to supply gold for the market through auctions but the volume put up for sale will drop back given the falling demand, said Le Minh Hung, deputy governor of the State Bank of Vietnam.

Hung said banks have settled all gold deposit accounts and will continue to deal with gold loans in the coming time estimated at around nine tons.

However, banks have no need to buy gold to settle gold arrears. Therefore, the demand for gold of banks will decline sharply.

So, the central bank will offer around 26,000 gold taels for each auction, not 40,000 taels like before.

Nguyen Ngoc Trong, sales director of Phu Nhuan Jewelry Company (PNJ), said that banks bought smaller gold volume in the bidding on Tuesday. Enterprises bought up around 10,000 taels out of 40,000 gold taels put up for sale while earlier, enterprises found it hard to compete with banks at previous sessions.

Gold supply to the market will increase if the central bank continues to organize auctions, which may help narrow the gap between local and international gold prices, Trong said. Gold demand is low now, with PNJ selling just around 400 taels of gold each day this week.

Since March 28, the central bank has auctioned off over one million taels, equivalent to around 42 tons of gold.

In related news, Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said that HCMC authorities have detected three gold smuggling cases over the past six months. Gold trafficking is more active in border provinces rather than in HCMC.

Saigon Jewelry Company (SJC) closing the day posted up gold prices at VND37.3 million and VND37.6 million per tael for buying and selling respectively, down a slight VND100,000 against the previous day.

The Greenback price also declined on the unofficial market. On Wednesday afternoon, currency exchange points at Ben Thanh Market in HCMC bought a U.S. dollar at VND21,600 and sold it at VND21,650, down around VND250 against early this week.

Meanwhile, banks bought the greenback at VND21,240 and sold it at the ceiling price of VND21,246.

Overseas remittance to HCMC hits US$1.9 billion

Overseas remittance via HCMC-based banks in the first six months of this year reached US$1.9 billion, up 3% against the same period of 2012.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said that this is a positive sign as remittance inflow usually moves up in the fourth quarter before the Lunar New Year holiday. Therefore, this year’s total remittance to the city is expected at US$4.5-4.8 billion, higher than last year’s figure of US$4.1 billion.

Notably, remittance flowing to the real estate market dropped to around 7% compared to around 23% last year. Most remittance was put into operation of family-run businesses.

The remittance volume exchanged into Vietnam dong accounted for 30% of the total, up from levels in previous years at 15-17%. Low deposit rates have prompted people to sell their foreign currencies to get dong.

Most remittance was sent from overseas Vietnamese for their families while that from laborers accounted for around 22%.

Real estate M&A bustling

The real estate market has seen merger and acquisition (M&A) activity active over the past six months with some large projects changing hands while the market has turned more transparent.

One of most notable transactions is the transfer of Vincom Center A in downtown HCMC. Vingroup Company, owner of the commercial center-hotel complex, has sold the project to Vietnam Infrastructure and Property Development Group Corporation (VIPD) at nearly VND10 trillion.

In May, the U.S.-based investment fund Warburg Pincus negotiated with Vingroup to acquire a 20% stake of Vincom Retail, a member of Vingroup, at around US$200 million.

Meanwhile, Japan Asia Land has transferred Center Point high-rise office building in Phu Nhuan District to Singapore-based Mapletree Vietnam Company but details of the deal have yet to be revealed. Two years ago, the Japanese investment fund spent around US$58 million on acquiring this building.

Marc Townsend, managing director of CBRE Vietnam, said that project investment tendency has been changing.

Five years ago, foreign capital ran into the local real estate market via investment funds. They were seeking to tap the potential Vietnam market and stealthily decided to make investments through these funds.

However, foreign investors now have had tendency to make direct investments in projects, focusing on high-rise office buildings.

Unlike previous years, real estate companies are offering project sales and seeking partners publicly, Townsend said.

For example, owner of the Saigon Link project is calling for investors to invest in the 2,500-square-meter land lot in Phu Nhuan District. Pacific Property and Infrastructure Development and Investment Company is also seeking partners for the Saigon Water Garden complex and PPI Tower in Binh Chanh and Thu Duc districts.

Chris Brown, managing director of Cushman &Wakefield Vietnam Company, said that investors from Asia, the Middle East and Russia are still interested in the realty market in Vietnam.

However, these investors focus on main markets such as Hanoi, HCMC, active projects and land lots at prime sties.

According to a market survey of StoxPlus, 2012 saw 35 real estate M&A deals involving projects with legal procedures completed or under construction, of which, only six projects were transferred to foreign investors and 29 others changed hands among local investors with the total value of around US$400 million.

Statistics of the Ministry of Planning and Investment shows that real estate sector ranked second among areas most lucrative to foreign investors in the first half of this year with total capital of nearly US$420 million, or 4% of the total capital of US$9.3 billion.

Local suppliers advised to partner with U.S. buyers

As U.S. customers now are shifting to purchasing Southeast Asian commodities instead of from Chinese vendors, Vietnamese companies need to make the most of the great chance, the American Chamber of Commerce in Vietnam (AmCham Vietnam) said.

At a seminar on the Trans-Pacific Strategic Economic Partnership Agreement (TPP) organized by AmCham Vietnam and the Leading Business Club in HCMC on Wednesday, Mark Gillin, chairman of AmCham, said TPP is triggering order and investment transfers to TPP members from other countries. In fact, many U.S. investors have recently switched from China to Vietnam.

However, despite the advantages of TPP as well as other free trade agreements, Vietnamese businesses need to woo U.S. customers by setting up one-on-one relationships with them, he said.

In fact, foreign-invested firms in Vietnam contribute up to two-thirds of the country’s total exports, showing that not many local companies can build up the direct tie with U.S. partners who already have supply chain with stringent processes, Gillin remarked.

According to Herb Cochran, executive director of AmCham in HCMC, big U.S. enterprises like Walmart all have a detailed process to manage relationships with suppliers, so Vietnamese entities need to study supply requirements to become their direct suppliers.

For instance, Walmart requires its suppliers to carry out transactions with electronic bills and have their factories audited before delivering goods to the U.S. retailer. In addition, multiple U.S. clients even request Vietnamese companies to acquire a number of certificates such as Data Universal Numbering System (DUNS) to help them identify the legal entity and financial capability of the suppliers.

The 18th TPP round of negotiations will take place in Kota Kinabalu in Malaysia from July 15-24, with Japan becoming the 12th member joining this round of talks, seeing the 12 TPP members holding a combined 40% of total gross domestic product globally.

Maguchi eyes investment opportunities in Binh Dinh

Japan-based company Maguchi is considering cooperating and investing in the seaport business in Binh Dinh Province, according to Nguyen Bay, director of the provincial Investment Promotion Center.

A delegation led by Hiroyuki Kawata from the company’s board of directors visited and worked with provincial officials and leaders of Quy Nhon Port earlier this week to seek investment opportunities.

According to Kawata, potential and advantages of Quy Nhon Port are reasons that Maguchi will consider investing in the region, especially as seaport operations in Japan are in fierce competition with regional rivals.

The visit of Maguchi to Binh Dinh Province follows the province’s investment promotion trip to Japan last month and aims to prepare for a visit of Maguchi president in the near future.

According to Bay, in addition to seaport business cooperation, seafood and ceramics production are the sectors Maguchi is also interested in.

The delegation of Maguchi visited seafood firms, plants and frozen facilities in the province to study the chance of cooperation in processing seafood and exporting frozen seafood to Japan as well as sending local laborers to Japan to work at facilities of Maguchi.

At the reception held for the delegation, provincial chairman Le Huu Loc pledged to facilitate Japanese investments. He expected the firm to consider investing in the seafood sector, helping the province improve ocean tuna processing and preservation.

According to Kawata, Japanese investors are shifting investment focus to Vietnam, including Binh Dinh Province. Maguchi will study and register some projects of the aforementioned sectors in the earliest time.

Quy Nhon Port, a grade-one port of the south-central port group, is in Quy Nhon Bay and shielded by Phuong Mai Peninsula, which is suitable for ship docking and goods loading and unloading. The port can handle ships of up to 30,000 DWT.

Textile-garment shipments to major markets surge

Vietnam’s textile-garment export increased by 14.5% year-on-year in the year’s first half, with strong rises seen in shipments to major markets like the U.S., EU, Japan and South Korea, the Vietnam National Textile and Garment Group (Vinatex) reported.

Le Tien Truong, deputy general director of Vinatex cum vice chairman of the Vietnam Textile and Apparel Association (Vitas), said at a meeting on Tuesday that textile-garment exports in January-June generated some US$8.9 billion.

The U.S. market contributed the highest amount with US$3.94 billion, equivalent to 44.8% and up 12% from the same period last year.

Meanwhile, exports to EU, Japan and South Korea reached US$1.29 billion, US$1.1 billion and US$660 million respectively.

According to Truong, such results are quite high compared to the growth rates in importing markets as well as the global textile-garment market as a whole.

The total volume of imported textile and garment stateside in the six-month period reached US$52 billion with a year-on-year of only 3% while the respective figures of EU, Japan and South Korea were US$124 billion and 8.5%, US$20.8 billion and 9.8%, and US$5.78 billion and 4.5%.

Truong said that the above growth of Vietnam’s textile and garment exports indicated the competitiveness of Vietnamese products on the global market, especially in the U.S., EU, Japan and South Korea.

Regarding the U.S. market, Vietnam’s exports of artificial fiber rose by 14.5% from the same period last year. Besides, textile-garment exports to the EU also increased owing to economic recovery there and Vietnamese enterprises’ efforts in further penetrating the market.

Vinatex forecasts that Vietnam’s apparel export to Japan will be equal to that to EU. Meanwhile, South Korea will remain Vietnam’s fourth biggest textile-garment market and Vietnam targets to obtain an export turnover of over US$1 billion from this market.

With results obtained in the year’s first half and current good conditions, it is likely that Vietnam can hit the export target of US$19.5 billion this year, according to Truong.

Contrary to export, the local textile-garment market has not improved much since the year’s beginning with a rise of only 9.5%, which is the lowest rise in the past three years.

Vietnamese textile-garment enterprises are expecting the Trans-Pacific Partnership (TPP), if ratified, will boost their exports, especially to the U.S. as the import textile-garment tax will be reduced to 0% from the current rates of 16-32%.

Vinatex’s revenues earned in the six-month period rose 11% year-on-year to VND20.227 trillion, with domestic revenues rising by 11% and accounting for nearly a half.

Some units under Vinatex posting good sale growth rates in the period are Viet Tien Garment with 35%, Binh Minh Garment 18%, Vinatex Danang 59%, Chien Thang Garment 25%, Tan Chau Garment 49%, Hoa Tho Textile-Garment 40%, Hanoi Textile-Garment 39% and Dong Phuong Knitting 76%.

Petrol stabilization fund almost depleted

The petrol price stabilization fund is running out, with only VND55.5 billion left as of June 30 compared to VND756.4 billion on December 21, 2012, said the Ministry of Finance.

The ministry, citing reports from 12 wholesale companies paying to and using the fund, said that negative changes of global oil prices have made inroads into the fund.

Under the current practice, wholesale oil traders extract part of the selling prices of oil products for the fund, and can use a certain amount from the fund to compensate their selling prices when the global price surges. The fund is managed by wholesalers themselves at the supervision of central authorities.

During this year’s first half, oil wholesalers contributed roughly VND2.2 trillion to the fund, according to the finance ministry. However, during the period, these wholesalers have tapped a combined VND2.9 trillion from the fund, resulting in the balance dropping to only about VND55.5 billion as of June 30.

The ministry said the fund at certain oil traders was even deficit at end-June.

Some wholesalers still enjoyed a surplus fund as of June 30, such as Petrolimex posting VND201.7 billion, Military Petroleum Co. VND179.2 billion, Saigon Petro Co. Ltd VND51 billion and Thanh Le Import-Export Co. roughly VND56 billion.

Meanwhile, PetroVietnam Oil Corp. saw the highest deficit of nearly VND218.7 billion, followed by Petec Trading and Investment Corp. with a shortfall of VND146.2 billion.

Wholesale enterprises have made extractions from selling prices for the petrol price stabilization fund since the end of 2009 in accordance with Decree 84/2009/ND-CP, with a fixed value of VND300 for a liter/kilo of petrol or oil to be sold.

In the meanwhile, they have tapped the fund many times from April, 2010.

The highest tapping volume was from February 12 to February 24, 2011, with wholesalers allowed to use up to VND1,650 for a liter of petrol, VND2,300 for a liter of diesel oil, VND2,150 for a liter of kerosene and VND1,400 for a kilo of fuel oil.

At present, the tap rate is fixed at VND300 a liter of gasoline, VND200 a liter of diesel oil or kerosene and VND100 a kilo of fuel oil.

Without the price stabilization fund, local fuel price hikes must have been higher and more regular since 2010, the ministry said.

This is the first time the ministry has announced the fund balances at all involved entities. It plans to publicize the figures in the first month of every quarter so that companies and locals can supervise the management and usage of the fund as well as petrol price administration.

The announcement is what newly-appointed Minister of Finance Dinh Tien Dung promised when he assumed the position over a month ago. There are 15 fuel wholesalers in operation now, Dung’s ministry reports.

Water department proposed for city

The HCMC Department of Natural Resources and Environment proposed to establish a Water Department that will focus on managing and exploiting water resources in the city effectively at a meeting on Tuesday.

According to the plan presented at the meeting, the Water Department will be under the management of the HCMC government and in charge of allocating, using and protecting water resources and preventing and fighting against damage caused by water.

Regarding management of water resources, agencies specializing in managing and protecting water resources in HCMC are the Water and Minerals Management Division, the Environmental Protection Division under the Department of Natural Resources and Environment and the Irrigation Division under the Department of Agriculture and Rural Development.

However, according to the proposal, the city’s current water resources management model is inadequate as there are many agencies in charge, which causes overlapping management, low management efficiency and declining water quality and volume.

Besides, one of the existing problems concerning water resources in HCMC is groundwater depletion resulting from inappropriate exploitation and lack of planning.

Moreover, the quality of surface water is getting worse due to untreated domestic and industrial waste discharged into rivers as well as low efficiency of controlling damages caused by water leading to flooding when there is heavy rain and high tides.

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