French seminar draws investors to Vietnam

A seminar entitled “ Vietnam , trade and industrial partner in Southeast Asia” took place in the French city of Lyon on November 13.

The event was jointly organised by the Vietnamese Embassy in France ’s Trade Office, the Rhon – Alpes Chamber of Commerce and Industry and the Lyon Chamber of Commerce and Industry.

Addressing the event, Deputy Minister of Industry and Trade Ho Thi Kim Thoa described France as a potential market for Vietnam’s export staples such as garment, leather, footwear, wooden furniture, aquatic and processing farm products.

Thoa suggested enhancing of French language training for the Vietnamese business community and Vietnamese youth in particular to boost Vietnam’s export to the European country.

She also asked the two countries’ businesses to make the most of trade agreements signed between the two countries and the upcoming Free Trade Agreement with the European Union.

French participants expressed their interest in the market, industrial development, and Vietnam ’s policies to attract investment. They said Vietnam needs to tackle some obstacles, especially in infrastructure to meet the demand for socio-economic development.

A number of French businesses registered to visit Vietnam to seek trade cooperation next year.-

WB funds $70 mln for urban upgrading in Can Tho

The World Bank (WB) has agreed to provide $69.9 million to upgrade the urban area in the southern city of Can Tho, according to local authorities.

The money, which is in the form of Official Development Assistance (ODA) with a grace period of five years and a yearly interest rate of 2.5 per cent, will be injected into the Can Tho Urban Upgrading Project.

The Vietnamese Government will earmark $20.4 million to the project.

The project covers the upgrading of local infrastructure including roads, water supply and drainage systems, lighting systems, environment and hygiene equipment and other facilities.

It will be implemented in two phases, the first is from 2012 to 2014 with the disbursement of 30 per cent of the loan and the second from 2015 to 2017.

There will be more than 524,000 direct and indirect beneficiaries upon the completion of the project.

The Can Tho project is part of a larger one on upgrading six urban areas in the country’s Mekong Delta with an aim of reducing poverty by improving living conditions of the local communities.

Cash-starved PVX divests from affiliate

PetroVietnam Construction Co (PVX) has sold its entire 34-per-cent stake in PetroVietnam Premier Recreation Co (PVR) to the financial conglomerate Ocean Group (OGC) and VNT Co Ltd, an Ocean Group affiliate.

The move was part of PVX's strategy to divest from non-core lines of business while improving its financial picture, PVX said in announcing the share sale. PVR predominately operates in petroleum distribution, tourism and real estate development.

Under the terms of the deal, OGC bought 10 million PVR shares and VNT bought 8.15 million. The shares were sold at their par value of VND10,000 per share. On the day of the transaction, however, PVR shares were trading at just VND3,300 per share.

The deal therefore adds more than VND180 billion ($8.5 million) to the available capital of PetroVietnam's construction affiliate, helping ease PVX's heavy debt burden, which topped VND6.5 trillion ($309.5 million) by September 30. PVX's accrued losses by that date represented another VND546 billion ($26 million).

While VNT would not comment on the deal, an OGC official, on condition of anonymity, told the website vnexpress.net that OGC would soon join in the efforts to restructure PVR, noting its own strengths in the financial and real estate sectors. For its part, VNT is closely involved with OGC, co-operating with the group in a $365 billion housing project and holding 6.27 million OGC shares.

OGC posted a profit of VND121.25 billion ($5.7 million) in the first nine months of this year. VNT has yet to release current-year financials but published a net profit last year of over VND10.2 billion ($485,700).

Bank finances Peru oil project

Vietinbank will extend a seven-year loan to finance a PetroVietnam Exploration and Production Co (PVEP) oil field development project in Peru.

PVEP is one of the main contractors for the project, which was expected to begin commercial production by 2013 at an initial output of 6,000 barrels of crude oil per day. Production would rise to 15,000 barrels by 2015 and 61,000 by 2019.

Previously, Vietinbank lent PVEP US$200 million for the second phase of the Dai Hung oil field development project in the Nam Con Son basin off Viet Nam's southern coast.

Agreement on husbandry signed

Agriculture and Forestry University and the Viet Nam Veterinary Association, the organisers of the 6th Asian Pig Veterinary Society Congress (APVS 2013), signed a co-operation agreement on Tuesday to organise a series of professional events designed for the husbandry industry.

The two organisers also host ILDEX Ha Noi 2013, an international livestock, diary, meat processing, aquaculture exhibition and forum, which is scheduled to take place in September next year. The Asian Pig Veterinary Society Congress 2013 will be open in HCM City next September.

Firms lauded for contributions

One hundred outstanding businesses will be honoured in HCM City today for their contribution to socio-economic development in Viet Nam.

The annual event called Mark of Respect is in its fourth year. It will also highlight unique businesses that have made a positive impact on the business community, organisers said.

As many as 100 domestic and foreign businesses out of thousands of businesses in Viet Nam will be selected.

Organised by the Viet Nam Chamber of Commerce and Industry and Bstyle.vn, the event also promises to present business opportunities to attendees.

Nghe An targets slow projects

The central province of Nghe An has withdrawn licences from 16 projects that were being sluggishly implemented or breached investment regulations this year.

This is part of efforts by local authorities to create a better investment environment. The province is now guiding relevant departments and sectors to speed up land clearance to ensure sufficient land for investors while attempting to call for more investment in industrial zones and key sectors such as agriculture, forestry and seafood.-

HCM City seals deal on Korean services

The central city's Information and Communications Department signed a Memorandum of Understanding (MoU) with the National Information Agency of South Korea (NIA) to develop e-Government services.

Following the MoU signed on Tuesday, NIA will transfer e-Government frame technology and help deploy e-Government applications as well as training courses.

The agreement is part of the US$4.3 million project, which is funded by the World Bank, on setting up an e-administration in the city. In August, the Digital Terrestrial Television (DTT) and Hyundai Information Technology joint-venture won a bid to develop the information technology project.

Samsung to build phone factory

Samsung Electronics Viet Nam will receive an investment licence today to develop a second mobile-phone factory in the northern province of Bac Ninh.

When licensed, the US$830 million plant will merge with Sumsung's current plant in the province to become a technology complex, estimated to cost $1.5 billion, according to Dau Tu (Investment) newspaper.

Earlier, the Government approved a proposal for additional tax breaks and incentives for Sumsung in August.

Poor planning leaves power capacity unused

A number of power transformer stations in the central province of Quang Ngai are reported not to be producing to capacity, prompting local authorities to review the efficiency of the planning and investment stages of their construction.

In Binh Son District, a VND700 billion (US$33.3 million) 500KV transformer station has been operational for three years, helping provide power for factories in the Dung Quat Economic Zone, but only one-third of its capacity has been put to use.

The manager of the station, Nguyen Huu Nhat, said that while they have a capacity of 450MW, the current demand is much lower, at around 100-150MW.

He added that this is due to many planned factory developments falling through due to a lack of investment following the economic slowdown.

The station is one of many built in the province in the last few years under the provincial socio-economical development master plan that ran until 2010. Other projects built during that time include two 220KV stations in the in districts of Mo Duc and Dung Quat, and a 110KV station in Dung Quat. Hundreds of billion of Vietnamese dong were reportedly spent on such projects.

Truong Quang Dung, deputy director of the provincial Department of Industry and Trade, said that the investment put into these electricity transmission projects were based on a vision of high power demand, with the authorities wanting to ensure that there would be enough power for local residents' daily life and production.

However, he admitted that currently electricity transmission stations in the province are working up to just 30 per cent of their design capacity.

He said that local authorities had failed to assess the real need, and so unintentionally caused a waste for investors and the State budget.

Vinacomin gets $300 million loan for building Tan Rai project

Vietnam National Coal and Mineral Industries Holding Corporation Limited, better known as Vinacomin, last week received $300 million loan from a group of foreign banks for constructing the country’s first bauxite and alumina project.

The 13-year loan is guaranteed by the Ministry of Finance of Vietnam and insured by the Japanese Export Credit Agency Nippon Export and Investment Insurance (NEXI).

Under this facility, Citi is the sole NEXI coordinator as well as the joint lead arranger together with Mizuho Corporate Bank, Ltd., Sumitomo Mitsui Trust Bank, Limited and The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Le Minh Chuan, president and chief executive officer of state-owned Vinacomin said the $300 million loan agreement was the largest agreement ever for Vinacomin and this would finance Vinacomin’s Lam Dong Bauxite – Alumina Complex Project, an important national project with the direction and support from the Vietnamese government.

“The term loan with tenor of 13 years will also have significant impact on the success and effectiveness of the project, contributing to promoting one of the main industry segments of the Group in particular as well as the socio-economic development of Central Highland region in general,” said Chuan.

Lam Dong Bauxite-alumina complex project, or Tan Rai project, is the first bauxite-alumina project ever constructed in Vietnam and it is critical to the development of bauxite-alumina resources in the country for sales in domestic and export markets, as well as to the socio-economic development of central highland region.

This project has been constructed since 2008 with total investment capital of around $700 million. The Ministry of Industry and Trade in a press conference held in Hanoi late last month announced the project would start commercial operational in the first quarter next year, after failing to meet the construction deadline two times in 2011 and 2012.

Brett Krause, managing director and Citi country officer for Vietnam said this term-loan facility would surely enable Vinacomin to meet its capital structure target for the project while at the same time help the group to diversify its funding sources.

This financing also marks the first time for NEXI to provide untied loan insurance for a bauxite and alumina project. Previously, Vinacomin announced Aluminum Corporation of China Limited and Japan’s Marubeni Corporation had expressed in interest in importing alumina from this project. With the finance support of NEXI, it means that Vinacomin will select Marubeni as its export partner.

“The transaction enables the stable supply of alumina to Japan for Marubeni, a Japanese trading firm whose overseas smelters would now secure long-term feedstock supply from the Lam Dong Project. This strong Japan interest enabled NEXI to extend its comprehensive insurance coverage for the financing,” Yumoto Yohei, Director, head of Export and Agency Finance, Citibank Japan Ltd., said.

Cashew export looks to set new record

As by the first half of September, 2012, cashew export value surpassed the amount made in 2010, signaling a prospect for the country to set a new record this year.

Cashew export increased over 8.8 times in the 2000-2011, averaging almost 21.9% a year.  

The country is expected to gain around US$1.5 billion in export turnover in 2012, outstripping the record made last year of US$1.473 billion. The turnover is forecast to surge 4.2% from last year.

Even when cashew export is facing with price difficulties, high export volume growth rate at 27.4% helped drive export turnover up.

The cashew cultivation area in the country has been expanded to cover 360,300 hectares in 2011, up 84.2% against 2010. Cashew output jumped from 67,600 tons in 2000 to around 318,000 tons in 2011. Meanwhile, cashew exports increased to 178,500 tons in 2011, 5.2-fold against 2000.

In 2012, the biggest importers of Vietnamese cashews included the US with US$307.3 million; China US$191.6 million; the Netherlands US$131.7 million.

However, the country is still heavily relying on imported raw cashews, with a volume amounting to 277,800 tons worth US$278.9 million as by the first half of September, 2012./.

Regulations on foreign trade representative offices

Fee for a license on the establishment of a representative office of a foreign trade promotion organization will be VND 3 million (US$150), according to a new regulation of the Ministry of Finance (MoF).

This is part of Circular 187/2012/TT-BCT recently issued by the MoF.

Fees on re-granting, amending and extending the existing licenses are VND 1.5 million (US$75) per license.

The new regulations are also subject to foreign trade promotion organizations and other foreign organizations which operate in trade promotion in Viet Nam as stipulated in Article 2 of Decree 100/2011/NĐ-CP on the establishment and operation of representative offices in Viet Nam.

The Circular, however, is invalid to representative offices of foreign merchants, non-governmental organizations, cooperative organizations on research, culture as well as education.

The Trade Promotion Department under the Ministry of Industry and Trade is in charge of granting establishment licenses for representative offices of foreign trade promotion organizations.

Nearly 1,000 businesses use digital signatures

Some 980 enterprises have used digital signatures in customs clearance, according to the Viet Nam Customs.

The pilot digital signature program was first introduced in the Northern city of Hai Phong since the end of September last year and the program has been expanded to other localities across Viet Nam.

Application of digital signatures has brought back practical benefits to the customs sector and businesses as well as and it shortens time for customs clearance, said the Viet Nam Customs.

Using digital signatures is an important goal set by the Ministry of Finance to improve and standardize transactions and customs clearance./.

Opportunity to bring Vietnamese goods to the world through Overseas Vietnamese

Vietnam has a large number of Overseas Vietnamese living across the world and they play an important role in helping domestic businesses to penetrate foreign markets. This is a great potential to boost export.

According to the State Committee for Overseas Vietnamese under the Ministry of Foreign Affairs, there are some 4.5 million Vietnamese living, working and studying in 103 countries and territories all over the world.

About 500,000 overseas Vietnamese return to the homeland every year and many of them come to seek business opportunities. They, especially entrepreneurs, play a bridge connecting Vietnam and host countries to boost the volume of Vietnamese goods to serve overseas Vietnamese as well as help made-in-Vietnam merchandise deeply penetrate the international market because they thoroughly know both Vietnam and the host countries where they are living.

However, domestic businesses have not taken all the advantages of this great potential to boost export through overseas Vietnamese.

According to Mr. Luong Van Vinh, General Director of My Hao Cosmetics Company, when traveling abroad, he always tries to find out what consumer goods overseas compatriots usually use. He has realized that while overseas compatriots from other countries always use the products made by their homelands, overseas Vietnamese rarely use Vietnamese products. It is simply because they do not have many opportunities to access and learn more about Vietnamese products.

Tran Dang Lam, a student in London, England, said that the Vietnamese products sold there were mainly food, and the consumers were mainly Asians. He added that information about Vietnamese products was hard to find.

In the Federation of Russia, large numbers of overseas Vietnamese are living and working, but Vietnamese goods are mainly food products.

In fact, many Vietnamese compatriots like to use and introduce specific products of the homeland but information about Vietnamese products, particularly in markets, supermarkets and stores abroad are very scarce.

A lot of overseas Vietnamese businessmen are now the suppliers to supermarkets and retail chains in foreign countries. Therefore, they could be a good channel through which Vietnamese manufacturers can bring their goods to supermarket chains.

Even many overseas Vietnamese have suggested launching a campaign to “Buy Vietnamese goods” overseas, the same as the campaign launched in Vietnam. Once the program is operational, they would join forces to popularize Vietnamese products.

Mr. Pham Quoc Toan, Head of the Marketing Department of the Incentra Investment Company Ltd in Moscow, Federation of Russia, said that Vietnamese food was introduced to the Russian market mainly through international trade events, such as the annual world food fair and international tea and coffee trade fairs.

Vu The Hoang, deputy director and head of the Representative Office of the N-M company in the Ukraine, said there were over 10,000 overseas Vietnamese in the Ukraine so their demand for Vietnamese products is great such as clothes, leather shoes, artwork, food, agricultural and sea products. However, information and samples of Vietnamese goods is limited. Therefore, export of Vietnamese goods to the Ukraine is modest in comparison with the potentials of the market.

According to Mr. Do Thang Hai, Head of the Ministry of Industry and Trade's (MOIT) Trade Promotion Agency, competitiveness of Vietnamese goods in the overseas market is not high enough. In addition, Vietnam has not paid due attention to trade promotion.

Furthermore, building and protecting trademarks has not been paid due attention. Some Vietnamese products have been widely approved by consumers but fake versions have later appeared in the market. As a result, consumers boycott the original products.

According to Mr. Do Thang Hai, to overcome these issues, the Trade Promotion Agency would focus on promoting trade, advertising the merits of Vietnamese products and strengthening production capacity of domestic enterprises.

MOIT will organise more trade fairs and exhibitions overseas while sending delegations to investigate opportunities in the hope of expanding the foreign markets where many Vietnamese people are living and working, including the US, European Union, Eastern Europe and other regions.

Besides, domestic businesses should pay more attention to build and protect their trademarks, renovate designs, ensure quality standards, food hygiene and make customers trust their products. Apart from introducing the goods in Vietnamese language, domestic producers could use English, German, French, or other languages for those who don’t know the Vietnamese language whereas they can know made-in-Vietnam products.

MOIT has planned to invite overseas Vietnamese entrepreneurs to visit their homeland to seek opportunities for cooperation with domestic trade partners and manufacturers to bring Vietnamese products to the world as well as encourage them to cooperate with the businesses in the host country to produce, process Vietnamese goods there.

To do so, Vietnam Trade Offices and Trade Promotion Offices abroad must bring into play their role in connecting overseas Vietnamese entrepreneurs with domestic businesses as well as making efforts to help domestic businesses to deeply penetrate into overseas markets./.

Carlsberg gets a boost from Habeco

Denmark-based brewery Carlsberg has received support to expand its ownership in Habeco to one-third of total shares.

The Ministry of Industry and Trade last week sent a document to Habeco ordering Habeco to sell an additional 13 per cent stake to its foreign strategic shareholder Carlsberg.

Habeco will sell shares to Carlsberg at the price of VND50,015 ($2.4) per share, according to the document. The price is equal to Habeco’s initial public offering (IPO) price. Habeco conducted an IPO in 2008.

Carlsberg became Habeco’s strategic shareholder in 2008, holding a 16.07 per cent stake. One year later, Carlsberg signed a memorandum of understanding with Habeco at Carlsberg’s headquarters in Copenhagen on acquiring an additional more than 13 per cent at the Hanoi-based brewery.

“Holding 30 per cent of Habeco has been our strategic plan for long time. However, this process has taken time to fulfill legal procedures,” said Hoang Dao Hiep, regional marketing director of Carlsberg Indochina. Hoang declined to give further details.

However, Habeco deputy general director Vuong Toan in an interview with VIR late last year said the reason for Habeco to delay selling the additional over 13 per cent stake was that Habeco and Carlsberg failed to reach an agreement on price.

Efforts by VIR to contact a spokesman of Habeco last week for comment were unsuccessful.

Habeco is now one of the three biggest beer companies in Vietnam with a 13 per cent market share, following Sabeco with 51.4 per cent and Singaporean Asia Pacific Brewery’s Vietnam Brewery Limited with 30 per cent. In Hanoi, Habeco accounts for 85 per cent of market share.

In the first six months of 2012, Habeco reported revenues of $132 million, up 27.1 per cent year-on-year. The after-tax profit reached $11.4 million, down 5.41 per cent compared with the same period of last year.

“We have seen big potential in Habeco as the biggest brand name in the north. To cooperate with Habeco as a strategic shareholder, there will be more business opportunities for both Carlsberg and Habeco,” said Hiep.

He added that Vietnam was always one of the most important and potential markets for Carlsberg in Asia, following Japan and South Korea in term of output and revenue of beer.

In June 2009, Habeco and Carlsberg started construction on the Hanoi-Vung Tau Brewery, which will produce 50 million litres a year, in the southern province of Ba Ria-Vung Tau. The new brewery is an initiative in both sides’ plans to expand into the southern part of the country.

Carlsberg first entered Vietnam in 1993 through the formation of the Southeast Asia Brewery, a joint venture with Viet Ha Brewery. It owns 60 per cent equity of the joint venture. The brewer also acquired a 30 per cent stake of the Ha Long Brewery as well. It is now the market leader in central Vietnam holding a 100 per cent stake of Hue Brewery.

Cat Tien hydropower project stirs debate

The backer of a controversial plan to build two hydropower projects in pristine Cat Tien National Park has jumped to the defence of the project.

Ho Chi Minh City Stock Exchange-listed Duc Long Gia Lai Group director Nguyen Dinh Trac said the Dong Nai 6 and 6A plants would not be “harmful to Cat Tien National Park as the public and mass media would think.”

The 135 megawatt, VND4.41 trillion ($212 million) Dong Nai 6 and the 106MW, VND3.44 trillion ($165.6 million) Dong Nai 6A, covering Lam Dong, Dak Nong and Binh Phuoc provinces, would use 372ha including 137ha of Cat Loc area and 235ha of protection forests.

Since early last year, the projects have made big media headlines with fears for the 137 hectares of Cat Tien National Park granted world’s Biosphere Reserve status in 2001 and 144ha of Southern Cat Tien protection forest. To make matters worse, these projects are reported to be illegal because they have not been ratified by the National Assembly. Under Clause 3 of the National Assembly’s Resolution 49/2010/QH12 dated June 19, 2010, the transformation of any 50ha of national or special forests into other non-forest purposes must be considered and approved by the National Assembly.

Moreover, the projects are also found to violate the Law on Biological Diversity issued in 2008.

However, “whether these projects will be approved by the National Assembly or not depends on the government and the prime minister,” said the company’s chairman Bui Phap.

Phap said these projects were located in the northern edge of the park’s Cat Loc area, 30 kilometres from the park’s Bau Sau area and Southern Cat Tien area which are the restricted forests.

“Thus construction of the projects will not hurt the park’s biological values and the environment,” he said.

Trac said the projects had been valued, appraised and approved by many ministries including Planning and Investment, Finance, Construction, Agriculture and Rural Development, Natural Resources and Environment (MoNRE), National Defense, and Industry and Trade.

On July 21, 2011, Prime Minister Nguyen Tan Dung issued Decision 1208/QD-TTg approving Power Master Planning VII between 2011-2020, with a vision to 2030, in which the Dong Nai 6 and Dong Nai 6A would become operational by 2015 and 2016, respectively.

Business registration to be streamlined

Business registration red tape is to be a thing of the past.

Service should be improved and fees will increase under a new system for handling business registrations

The process of business registration, previously regarded as simply a state management function, will be regarded as a service starting from December 10, 2012, under the Ministry of Finance (MoF) newly enacted Circular 176/2012/TT-BTC.

Organisations and individuals register businesses shall have to pay increased charges set at a level sufficient to cover expenses instead of the current nominal fee level. Under current regulations at Circular 197/2006/TT-BTC, organisations and individuals in need of getting business registration information only have to pay state management agencies maximally VND10,000 per time in service fee.

However, from December 10, 2012 when Circular 197 came into force the service fee will be doubled to VND20,000 per time when organizations and individuals turn to Ministry of Planning and Investment’s Business Registration Support Centre and provincial-level business registration offices to procure information relevant to business registration certificates, including those of representative offices and branch offices.

For information relevant to company regulations or joint stock companies’ financial statements the fee will be VND50,000 ($2.4)/copy and for other materials in business registration records payment will be VND25,000 per material. From December 10, 2012, organisations and individuals procuring summary reports about firm leaders and corporate management activities in three year time need to pay VND100,000 ($4.80) per report whereas the fee will be doubled to VND200,000 ($9.60) per report for getting reports on firm development history in three year time.

Besides, the MoF also hiked fee levels levied on enterprise and household business registration. Accordingly, from December 10, 2012 new registration and changing content in business registration certificates will charge firms VND200,000 ($9.6) per time.

The VND100,000 per time fee will be equally applied to granting new business registration certificates in case former ones are lost, burnt, dragged or abolished; granting new and changing the content of certificates involving business registration of representative offices and branch offices and changing business locations; and household business registration. Thus, compared to current regulations the new fees only hike by three to five times, but payers of these fees are also being classified.

Under current regulations the fee imposed on household business registration is at most VND30,000 ($1.4) per time whereas cooperatives, private and semi-public education and training facilities, private healthcare centres and culture-information units whose business registration certificates are granted by district-level People’s committees have to pay at most VND100,000 ($4.8) per time for getting the certificate.

Software firm eyes “new city”

Quang Trung Software City Development Company  has been instructed by the Ho Chi Minh City People’s Committee to work with the planned Thu Thiem new urban area management board to study possible locations for developing a second site.

According to Chu Tien Dung, chairman of Quang Trung Software City Development Company (QTSC), Thu Thiem Software Park is a prime candidate for QTSC2.

“We are researching some places for QTSC2 and will report to the Ho Chi Minh City People’s Committee the best one,” Dung said. “As we have seen, Thu Thiem Software Park is an important candidate for QTSC2 with a high possibility of attracting investments because it has a good infrastructure network and it is less than 20 kilometers from the city center.”

Thu Thiem new urban city is envisioned as a dynamic, diverse urban center of Ho Chi Minh City, comprising facilities for trade, housing, public services, culture and education as well as open space that is suitable for a population of 130,000 people and a labour force of 350,000 people.

Thu Thiem New Urban Area Construction Authority deputy head Trang Bao Son told VIR that the authority had received inquiries from one foreign and two local investors including QTSC for developing the project.

According to Son, four roads are expected to be completed in 2015, giving the start for the formation of the Thu Thiem new urban area.

But Dung told VIR that the foreign investment attraction in software in particular, and in IT industry in general, had slowed remarkably during the economic downturn.

“The investment attraction progress is slower than before,” said Dung. Building a software park, he said, should have the strong support from the government.

QTSC was itself transferred from a company under the direct management of the city’s Department of Science and Technology to a member limited liability company in 2011, and could now could take advantage of the Thu Thiem new urban city.

Ho Chi Minh City authorities issued a decision to end the life of $1.2 billion project due to late progress of implementing Thu Thiem Software Park whose previous developers were Vietnam’s SaigonTel Joint Stock Company, a subsidiary of Saigon Invest Group and TA Associates International, a member of Taiwan-based Teco Group.

According to the previous developers’ plan, the park will be built on 15.9 hectares in the centre of the Thu Thiem new urban city, and would become the biggest software park in Southeast Asia.

Ho Chi Minh City loses out to neighbouring provinces

Ho Chi Minh City is facing greater difficulties in luring foreign direct investment  for high technology and high value-added sectors.

According to the Ministry of Planning and Industry (MPI), foreign direct investment (FDI) into Vietnam now focuses primarily on the manufacturing sector, attracting $6.9 billion of the total FDI of $10.48 billion in the first 10 months. The property sector follows at $1.84 billion.

Investors into manufacturing sector will pay attention to land rentals and tax incentives at the investment location. Ho Chi Minh City is different from other provinces due to high cost of site clearance, and having tax incentives that only apply to the high-tech sector.

Ho Chi Minh City had lost its attractiveness in luring FDI, especially manufacturing sector, due to cutting off investment incentives for investors into industrial parks, said Kunimitsu Yoshikawa, managing director of Japan-based Yoshikawa Financial Consultant Co., Ltd.

Ho Chi Minh City’s high labour and land rental costs have made it less attractive than other provinces, added Yoshikawa.

Nguyen Tan Phuoc, vice director of Ho Chi Minh City Export Processing and Industrial Zones Authority (Hepza) admits that all industrial parks in Ho Chi Minh City established by infrastructure developers instead of government’s bodies and the high prices of site clearance as well as infrastructure construction lead to high rentals.

Calpis, a beverage producer from Japan, has researched southern provinces for the plant’s location but it will not be in Ho Chi Minh City due to the land leasing price in Ho Chi Minh City was higher than other provinces such as Tay Ninh, said Takashi Igari, Calpis’s market development manager.

In fact there have been several investors who choose the investment location for their manufacturing plants in other provinces instead of Ho Chi Minh City.

Nidec Tosok Corporation under Japan’s Nidec Corporation commenced its $39.6 plant manufacturing automobile parts in Ben Tre province last month. The first three plants of Nidec Tosok have located in Ho Chi Minh City. Another Japanese corporation Tamron also decided to locate its $13 million optical production plant in Hanoi instead of Ho Chi Minh City as first research.

According to Huynh Van Nuoi, director of Ben Tre Industrial Zone Authority, some Japan-based manufacturers in Ho Chi Minh City have come to Ben Tre for expansion research. Among them, Furukawa and Nidec Tosok have located their plants manufacturing automobile parts in the province.

“Land leasing prices in Ben Tre are quite lower than Ho Chi Minh City and its neighbouring provinces. As a result, existing companies in Ho Chi Minh City, Dong Nai or Binh Duong can come to Ben Tre for their investment expansion,” said Nuoi.

Moreover, Ho Chi Minh City doesn’t have advantage of labour in site because the most labour force, especially common workers in Ho Chi Minh City came from other provinces. This is a burden for employers due to higher salary and accommodation costs, according to Phuoc from Hepza.

According to Ho Chi Minh City People’s Committee, the city has 10 industrial parks and three processing zones but only six among them have built accommodation for workers.

The movement of assembly line and labour – intensive to other provinces would help investors reduce cost of land leasing and salary compared to Ho Chi Minh City, said Phuoc from Hepza.

Vietnam’s coffee exports jump to a new record

Vietnam’s booming coffee exports have hit a new record value of $3.3 billion for the 2011/2012 crop, confirming the country’s standing as the world’s second biggest coffee exporter after Brazil.

But the country’s coffee exporters are now worried that a looming deadline to prohibit foreign-currency financing could impose a competitive handicap in the global market. A petition is being circulated seeking to scrap the new rule.

Vietnam’s exports of coffee beans from the 2011/2012 crop was estimated to hit a record volume of 1.5 million tonnes or over $3.3 billion. That is an increase of 23 per cent and 24 per cent in quantity and value compared to crop year 2010/2011 respectively, stated the Vietnam Coffee Cocoa Association (Vicofa). For the first 10 months of 2012, the figures are 1.4 million tonnes and over $3.1 billion, respectively.

According to coffee industry insiders, in addition to bumper crops, local exporters have benefited from the relatively low-interest loans in foreign currencies from local banks. Previously, the high interest on VND loans put Vietnam’s exporters at a disadvantage on the global market.

According to Intimex Nha Trang Company, a member of Vicofa, the company has achieved export turnover of $700 million in crop year of 2011/2012 benefiting from loans in foreign currency.

Le Duc Thong, director of Daklak Import-Export 2/9 Company, said loans in foreign currency from banks were very useful for local coffee exporters to compete with foreign players. “In the last two years, local exporters have suffered loans in VND with interest rate 5 times higher than foreign companies’ rate of loans in foreign currency, which led to many difficulties in competing with foreign companies.”

However, according to Decision No. 857.NHNN of the State Bank, the deadline for loans in foreign currency is the end of 2012. Many coffee exporters worry that the situation of a “loss at home” will return. An urgent petition has been sent by most of members of Vicofa to the State Bank seeking a continuation of the policy allowing loans in foreign currency.

According to Vicofa, Vietnam’s average coffee export price is $2,000 per tonne, which is only $30-40 cheaper than international prices in London and New York compared to the previous difference of $100 per tonne.

Vietnamese consumers more cautious in Q3 2012

Vietnam’s consumer confidence index dipped 8 points to 87 in this year’s third quarter with nine out of ten (91%) Vietnamese changing their spending habits to save more, shows a survey from Nielsen.

Consumers’ cautious sentiment increases as 73% of Vietnamese stated this is not a good time to buy things they want and need, according to the survey conducted between August 10 and September 7, 2012. This is the lowest confidence since the first quarter of 2009.

The global survey points out that Vietnam, Hong Kong, Taiwan, Korea and Japan are the bottom five economies where consumers were the least optimistic about local job prospects in quarter 3. Meanwhile, the global consumer confidence index still increased one point to 92 in the quarter, and is up four index points from the same period of the previous year.

The cautious sentiment among Vietnamese consumers was also manifested with 91% of respondents reporting change in their spending to save on household expenses, increasing from 86% in Q2 and 84% in Q1 2012. Gas and electricity remain the most ‘cutback-expenses’ among 68% of respondents, followed by new clothes (67%), out of home entertainment (66%) and telephone expenses (55%).

Only 40% of Vietnamese online respondents believe their local job prospect will be good to excellent over the next 12 months, decreasing 6 percentage points from the previous quarter and 18 points since beginning of the year. Similarly, 42% of Vietnamese respondents believe their personal finance in the coming year will be good to excellent, down from 51% in Quarter 2.

“The subdued third quarter results reflect an overall trend that is neither positive nor negative as consumers are treading water very carefully,” said Venkatesh Bala, chief economist at The Cambridge Group, a part of Nielsen.

With fuel prices rising five times within the third quarter; 24% of Vietnamese respondents raised utility bills (electricity, gas, heating, etc.) as their biggest concern. This was followed by the economy and job security at 20% and 16% respectively.

The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns and spending intentions among some 29,000 Internet consumers in 58 countries and territories. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

Nielsen’s survey shows that North America and Europe reported the only quarterly consumer confidence increases, rising three index points to 91 and one point to 74, respectively. Asia-Pacific (100) and Middle East/Africa (98) regions remained flat in Q3 and Latin America decreased two index points to 94.

India (119) and Indonesia (119) reported the highest index scores in Q3 while China’s index score increased 0.6 to 106 and the U.S. increased three points to 90.

The biggest quarterly consumer confidence gains in Q3 were reported in Switzerland (+10), Belgium (+9), Australia (+8), Thailand (+8), Hungary (+7), Norway (+7), United Arab Emirates (+6), Italy (+5) and Canada (+5).

The biggest quarterly consumer confidence declines in Q3 were reported in Hong Kong (-15), Argentina (-11), South Korea (-10), Vietnam (-8), Colombia (-8), Israel (-7), Venezuela, (-7), Malaysia (-6) and Finland (-5).

Furniture exporters look back to local market

A slew of wooden furniture exporters who have found life harder in foreign markets due to weakening demand are looking back to the local market with annual sales estimated at US$3 billion.

This is evident in the way companies treated local customers at the Vietnam Furniture & Home Furnishing Fair, or VIFA Home, 2012. They brought to the trade fair a range of discount goods or those with “local” prices that are lower than export ones.

Those woodwork exporters who have long been reliant on big outsourcing orders by foreign customers showed the determination at the fair to tap the domestic market this time around though domestic customers can afford to pay less.

Take Scansia Pacific for instance. The company has a range of outdoor wooden tables and chairs that have been its key export items but at the fair, which ended on Sunday, it was selling them at prices that many customers can afford.

A Scansia Pacific outdoor table for four persons was offered at around VND2 million and if four chairs are added, the combined price will be a little bit more than VND4 million. This price is neither too high nor too low but wooden material that is of high quality and can stand harsh weather is really a competitive edge.

Nguyen Chien Thang, managing director of Scansia Pacific and chairman of the Handicraft and Wood Industry Association of HCMC (Hawa), said the quality of its export woodwork had won customers’ confidence over the years.

A couple of wood processors have said they find it hard to meet the tastes of local clients, Thang said, but once they survive tough design requirements by their foreign customers, they will be certainly able to meet local customers’ demand.

In addition to individual customers, exhibitors could look for distributors and retailers like Boutique Art and 3B Furniture to build business links and bring their goods to local users, he said.

Dien Quang Hiep, director of Mifaco, a leading wooden furniture exporter, had the same view as Thang’s. Hiep said he could not ignore the domestic market with a total sale value amounting to US$3 billion.

Viet Excursions buys new passenger vehicles

Local travel firm Viet Excursions has spent VND66 billion buying 20 Hyundai Noble 2012 automobiles to transport tourists, especially those from international cruise ships touring HCMC and neighboring southern provinces.

Phan Xuan Anh, chairman of Viet Excursions, said those coaches had been imported from South Korea at a price of VND3.3 billion each. Fourteen coaches have been put into service while the rest will arrive in Vietnam soon.

Around 60% of the fleet’s capacity will be used to serve tourists on board cruise ships. “There is a shortage of high-quality coaches for serving international tourists. We mobilized two coaches from Cambodia in the last Tet holiday given high demand. Due to our financial constraints, our cruise line partners have advanced money for us to buy the new coaches,” he said.

In addition to the 20 coaches, Viet Excursions will invest in a similar fleet to serve central Vietnam and may buy more coaches for HCMC.

According to Anh, there will be many cruise ships taking international tourists to Vietnam from now until next April. Viet Excursions will welcome ships at ports in Halong, Thua Thien-Hue, HCMC and Ba Ria-Vung Tau almost every week during the period.

Among these ships, huge ships transporting thousands of tourists will mostly make calls in Ba Ria-Vung Tau and Thua Thien-Hue provinces while smaller ships such as Silver Shadow, Seabourn Pride, Nautica, SS Voyager and Crystal Symphony will visit Halong and HCMC.

The cruise ship Silver Shadow with 450 passengers on board came to Saigon Port last week.

HCM City to extend dykes to belt road No. 3

Given the rapid urbanization, the center of HCMC may have developed further to Belt Road No. 3 by 2015, requiring dykes and tidal drainage facilities to be extended to protect the center from high tides and climate change.

To accomplish the above objective, the Government has approved an irrigation and anti-flooding project for HCMC. The project worth over VND11.5 trillion is aimed to control tides, lower water levels in the canals surrounding the right bank of the Saigon-Nha Be rivers and improve drainage capacity of the sewer system in the city.

Deputy Minister of Agriculture and Rural Development Hoang Van Thang told the Daily that his ministry would work with related agencies on reviewing the anti-flooding system of HCMC in order to prioritize implementation in the flood-prone sections.

Thang, who serves as the head of the steering committee for the anti-flooding project for HCMC, deemed it necessary to consider and propose an appropriate schedule for the project in the context of budget constraint.

According to the construction planning for HCMC up to 2025, the downtown area will expand toward to Belt Road No. 3. This is a priority area so investment capital will be focused on construction of anti-flooding works here.

Currently, the areas along the Saigon River are often flooded when the tide rises. When the tide reached its peak in October, many low-lying areas were submerged as levees were breached.

Belt Road No. 3 is built into a closed route, going through four localities, encompassing HCMC and parts of Dong Nai, Binh Duong and Long An provinces. It is expected that the road will be completed in stages, as early as 2017 and no later than 2025.