Revitalising the property market

Local and foreign experts discussed prospects for revitalizing the suffering property market at a seminar in HCM City on June 13.

Deputy Minister of Planning and Investment Dang Huy Dong reiterated the government’s policy of developing the real estate market as part and parcel of the country’s market economy and an important investment channel.

To meet its socio-economic development goals for 2013, the government has introduced a number of solutions to stabilise the real estate market and secure its future.

Despite the efforts, the property market remains in a tight spot, Dong admitted.

Dau Tu (Vietnam Investment Review) Editor-in-Chief Dr Nguyen Anh Tuan highlighted a range of recent introduced policies designed to alleviate some of the difficulties besetting the VND135,000 billion market.

Professor Nguyen Mai, former deputy chairman of the State Committee for Cooperation and Investment (SCCI), analysed the real estate market’s prospects in a report from a macro-economic standpoint.

Cushman & Wakefield General Manager Chris Brown also presented an overview of the potential for market revival while Nguyen Viet Manh, head of the State Bank of Vietnam’s Credit Department, discussed how he and his colleagues plan to help the market’s recovery.

Former Deputy Minister of Natural Resources and Environment Dr Dang Hung Vo pointed out some of the real estate market’s most troubling issues, including surprisingly large inventories combined with bad commercial bank debts. He said the demand for housing from low-income earners remains high but availability is limited.  

He also highlighted the government’s recent VND30 trillion bailout package targeting real estate businesses’ financial problems and helping low-income earners become house owners while simultaneously relieving some of the market’s oversupply.

Construction exhibition promotes brands

Vietbuild 2013, an international exhibition on construction, building materials, real estate, and interior and exterior design, officially opened at HCM City’s Sai Gon Exhibition and Convention Centre on June 13.

The five-day event was co-organised by the Ministry of Construction and the Vietbuild Construction International Exhibition Organisation Corporation.

As many as 800 domestic and international enterprises from the Republic of Korea, Japan, the US, Italy, and Vietnam are showcasing their technologies and building materials at more than 2,200 booths.

On display are a wide range of construction materials, interior design models, smart home systems, electronic equipment, sanitation solutions, and glass products.

The Viglacera Corporation, Lotus Group, Hung Phu Thanh Aluminum Technology Co. Ltd, Phuc Khang Construction and Investment Corporation, and Eurowindow Joint Stock Company all number among the exhibition’s participants.

A series of seminars relating to the building sector will also be held within the framework of the exhibition.

Auto sales up 42% in May

The Vietnam Automobile Manufacturers’ Association (VAMA) has reported the domestic auto industry sold nearly 9,731 units in May, up 11% on April and 42 percent more than the same month in 2012.

The VAMA said the registration fee reduction that entered into effect on April 1—cutting prices from 15–20% of value to 10–15%—has stimulated sales.

The association predicts that if authorities routinely apply the minimal 10% registration fee, car sales this year could total 108,000, or 8,000 more than its previous estimates.

More than 40,145 units were sold over the entire four-month period, a 10% increase on the same period last year.

May’s auto sales revealed a significant difference between Completely Knocked Down (CKD) units and Completely Built Up (CBU) units.

CBU vehicle sales saw a sharp 61% increase in May amounting to 2,253 units, while CKD vehicles edged up only 1% to 7,478 units.

Some manufactures are preparing to release their newest models at Ho Chi Minh City’s upcoming Vietnam Motor Show 2013. These include the Mercedes GLK220 CDI, Mercedes A-class, BMV 3 GT, Honda City, Honda CR-V, Hyundai Elantra, and Nissan Sunny.

Forum boosts Vietnam-Indonesia trade links

Vietnam and Indonesia have plenty of opportunity to strengthen bilateral cooperation in trade, tourism, and investment in a sustainable manner.

Vietnam Chamber of Commerce and Industry (VCCI) President Vu Tien Loc was speaking at a joint business forum in HCM City on June 13.

He said both business communities need to diversify trade and investment promotions and expand cooperation in other areas out of their traditional ones, such as oil and gas, mining, food processing and agriculture.

Indonesian Ambassador to Vietnam Mayerfas noted this year’s forum, the second of its kind, demonstrates both nations’ commitment to bolstering their ever developing ties.

Vietnam enjoys comprehensive cooperation with Indonesia and is intent on establishing an official strategic partnership during the 2012–2015 period.

The two-day forum attracted large numbers of businesses from both countries operating in cement, pharmaceuticals, food, electronics, consumer products, agricultural machinery, garments, tourism, and oil and gas.

It is a valuable opportunity for participants to ensure they possess the most up-to-date and accurate information on the business and investment environment in Vietnam and Indonesia, meet potential partners, and expand their markets.

As of May 2013, Indonesia poured US$285.2 million into 35 valid projects in Vietnam, ranking it 27th among foreign investors in the country.

Indonesian investment focuses on the processing and manufacturing industries, hotel and accommodation, health care, and social support services.

Vietnam is implementing seven Indonesia-based projects spanning mineral exploration, oil and gas, and communications projects, with registered capital totalling US$106.7 million.

Indonesia is Vietnam’s fourth largest Southeast Asian trade partner, with two-way trade surging from US$2.5 billion in 2008 to US$4.6 billion last year.

Foreign investors keen on Vietnamese market

Many foreign investors regard Vietnam as an ideal market thanks to the country’s incentive policies and transparency in investment attraction.

Businesses from the Republic of Korea (RoK) are busy preparing to pour billions of US dollars into Vietnam in the hope of becoming one of its leading direct foreign investors.

Prime Minister Nguyen Tan Dung has encouraged foreign investment in long-term domestic projects. His recent speech at the 2013 Shangri-La Dialogue in Singapore has helped galvanise foreign businesses’ confidence in the Vietnamese market.

PM Nguyen Tan Dung addresses at Shangri-La Dialogue in Singapore

In an article on June 7, the Korea Herald praised PM Dung as one of Asia’s outstanding politicians, who has helped to bring the emerging economy out of the global economic crisis.

A number of international scholars also appreciated his efforts to build strategic trust as a key to maintaining peace and promoting development in the region.

Dung took office in the midst of the global economic crisis but managed well to maintain Vietnam’s economic growth rate at 8.23% in 2007, with export earnings rising 24% from two year earlier.

Vietnam then became the 150th member of the World Trade Organisation (WTO), and has established its Permanent Normal Trade Relations with the United States. More importantly, the country has enjoyed political stability and social security during Prime Minister Dung’s two terms in office.

The International Monetary Fund’s (IMF) latest report on macroeconomic performance and policy governance shows Vietnam’s financial sector has improved thanks to the State Bank’s liquidity provision and the merger of some small banks. The current account surplus has increased by over US$9 billion, partly due to a decline in imports that helps to maintain the hard currency reserves at a level almost three months worth of import value.

According to the IMF, Vietnam’s economic policy has proved successful to a certain extent as seen in ensuring macroeconomic stability, controlling inflation and increasing the value of the domestic currency.

With the steady flow of FDI capital into Vietnam, more than 1,500 Korean businesses continue operating efficiently with billions set aside for long-term investment in the country.

After its recent successful operation of a US$1.5 billion smartphone project in Bac Ninh province, Samsung is investing an  additional US$2 billion in a smartphone and high-tech manufacturing complex in Thai Nguyen province.

LG Electronics is also going ahead with a US$300 million electrical appliance and electronics project in Haiphong city.

Heasung Vina, a camera producer for Samsung smartphones, is committed to spending US$36 billion on raising its annual capacity to 25 million units.

Doosun Industries is expected to take part in Samsung’s support industry project soon after receiving an investment license for a US$14 million high-tech printing plant in Vietnam on May 14.

 The Korean Chamber of Commerce (Korcham) Chairman is confident more companies are eyeing future Vietnam-based investment as Samsung’s and LG’s support industries continue to develop.

Australia to appoint agricultural advisor to Vietnam

Australia’s Minister for Agriculture, Fisheries and Forestry, Joe Ludwig announced on June 12 that an agricultural advisor will soon be appointed to work in Vietnam next year.

Ludwig expressed hope that Australian food producers and exporters will benefit from the presence of agricultural experts in Vietnam and other Asian markets as they can help strengthen bilateral agricultural cooperation, particularly between Australia and newly-emerging nations.

He affirmed the Australian government’s commitment to creating new opportunities for local food producers and exporters to bring agricultural products to new market.

According to Australia’s National Food Plan, about 5.6 million AUD (roughly US$6 million) has been allocated for Australian agricultural experts in 15 countries, including the US, Japan, Thailand, India and Indonesia.

Citing delays, Kumho seeks tax refund

Kumho Asian Plaza Saigon is demanding a refund of import tax paid for equipment imported to serve its projects.

Kumho Asiana Plaza Saigon, which is the owner of a high-end complex in Ho Chi Minh City, with an InterContinental Hotel, an office building and a serviced apartment building, has just sent document to the Ho Chi Minh City Department of Customs proposing a refund of VND14.3 billion ($687,500) it paid for the goods.

“We see that imported goods to serve our project qualify with import tax refund under regulation of Article 113, Circular 194/2010/TT-BTC,” said the report. Accordingly, pursuant to Clause 12, Article 113 under the circular, cases eligible for tax refund consideration includes exports and imports for which duty has been paid but are later eligible for tax exemption or refund under decisions of competent state agencies may enjoy tax refund.

The proposal came after the local department of customs’ conclusion that the company would no longer enjoy investment incentives in line with its initial investment certificate due to its changes in process of implementing the investment project. According to the first investment certificate No.1601/GP issued in 1996, the company was exempted import tax for machines, equipments and materials imported to serve its projects.

However, due to negative impacts of the Asian economic crisis in 1998, the project had been delayed, which was also reported to competent agencies.

In late 2006, the investor continued carrying out the project. The Ho Chi Minh City People’s Committee granted the investment certificate No.41104300338 to the company which replaced its previous investment licences. The investor also increased the investment capital up to $255 million in October 2007.

With a series of changes in the process of implementing work, the project was extended. But, customs agencies decided the firm would no longer benefit from incentives. According to the local department of customs, when the investment certificate was changed in 2006, the company did not carry out the project in accordance with its investment licence’s process and also did not ask for an extension of the free list and no longer merited the tax exemption.

After the customs agency’s conclusion, the company frequently disputed the claim to the relevant authority. But, while waiting for the Vietnamese authority to reconsider, the company had to import goods to serve projects without import tax exemption with worth of VND14.3 billion ($687,500).

However, the company said according to the Ministry of Finance’s Document 10755/BTC-CST dated July 28, 2009 and the State Audit’s Document 1041/KTNN-TH dated July 19, 2012, if the tax incentives under the investment certificate No.1601 was higher than the level in the Ho Chi Minh City People’s Committee investment certificate No.41104300338, the company would be allowed to continue enjoying incentives in the first one.

China border ties enhanced

Party General Secretary Nguyen Phu Trong yesterday said that provinces along the Chinese-Vietnamese border could be used to great economic advantage.

Trong said he hoped the two sides would improve co-operation in all fields and build up a border line of peace, friendship and development.

The Party leader said this while receiving Peng Qinghua, a member of Central Committee of the Communist Party of China (CPC), who is on an official visit to Viet Nam.

Peng, who is also secretary of the Guangxi Zhuang Autonomous Region's CPC Committee, said Guangxi attached importance to developing the traditional and friendly relations with Viet Nam, especially in traffic works and trading.

On the same day, Prime Minister Nguyen Tan Dung met Peng. Dung said China was one of the top investors in Viet Nam. However, there was still plenty of room for development.

He also suggested that China in general and Guangxi in particular would raise the number of scholarships for Vietnamese students to study in China.

He hoped Guangxi would tightly co-ordinate with Viet Nam's border provinces, suggesting that the two sides pay more attention to boosting investment in traffic works connecting the two countries and border economic zones.

Dung also said he hoped Viet Nam's ministries, sectors and localities made it easy for Guangxi enterprises to make long-term investments in Viet Nam.

He said his trip aimed at enhancing co-operative relations between Guangxi and Viet Nam's localities, especially in the fields of economy, trade, investment, culture, education and training and tourism.

Dung highly appreciated the working results between Peng and leaders of northern border provinces of Lang Son and Quang Ninh.

About 300 business people yesterday attended the Viet Nam-Guangxi Economic and Trade Cooperation Conference in the capital.

Peng Qinghua, Party Secretary of the Guangxi Zhuang Autonomous Region, spoke highly on the bilateral economic relationship between Viet Nam and Guangxi Province in past years.

He emphasised the importance of creating projects in the framework of "two corridors, one economic belt" , especially infrastructure connectivity and co-operation in industry, trade, finance and logistics.

(The two corridors refer to the two strips of land on either side of the border and the one belt of economic ties between peoples living there.)

Guangxi Province was an effective gate for comprehensive co-operation between Viet Nam and China, said Deputy Minister of Industry and Trade Ho Thi Kim Thoa.

Viet Nam's trade with Guangxi reached US$9.73 billion in 2012, up 28.4 percent year-on-year or accounting for 24 per cent of the total trade turnover between the two countries, Thoa said, adding that Viet Nam had also been the second largest trade partner of Guangxi for the past 12 years.

She described yesterday's event as a good chance for businesses to seek out new opportunities for the further development of the co-operation between Guangxi and Viet Nam's provinces.

During the forum, enterprises from Guangxi Province expressed their hopes of further coordinating with Vietnamese partners in wide range of sectors.

The eighth Guangxi trade fair in Viet Nam is being held in Ha Noi's Giang Vo International Exhibition Centre.

The four-day expo showcases the socio-economic achievements and special products of Guangxi Province, such as automobiles, machinery, electronic products, household appliances, garment and textile products, pottery and porcelain, chemical products and agricultural products.

Almost 110 well-known Guangxi and Vietnamese businesses have joined the event.

Lower steel prices cut into earnings

Domestic steel producers are rushing to slash prices, even cutting them lower than production costs in a desperate bid to stimulate consumption. However, the unhealthy competition has made them suffer losses.

Steel inventories have been piling up, forcing steel makers to scale down production. Last month, inventory grew from 320,000 tonnes to 350,000 tonnes, according to the Viet Nam Steel Association (VSA).

Nguyen Tien Nghi, VSA vice chairman, said the inventory growth was due to the frozen real estate market. The lack of sales forced steel companies to reduce selling prices to retain their market share, he said, but demand was nevertheless continuing to shrink as people waited for a deeper price decrease.

Last year, businesses reduced steel pipe prices by VND300,000-500,000 (US$14.30-23.80) per tonne.

According to the General Department of Customs, steel selling prices saw the highest decrease in March.

The association said input costs for steel production had not decreased while prices of other goods were on the rise, pushing up production costs.

Therefore, steel makers should not continue to lower their prices, it advised. Rather, they should reduce costs as much as they could and bring down inventories to ensure sustainable production and employment for workers.

Ishisaki Yoshitomo, founder of Takako Japan and chair of Takako Viet Nam, said that Japanese corporations wanted to develop a specialised industrial zone (IZ) for the steel supporting industry in Viet Nam.

If the stamping and casting industry was developed successfully, Viet Nam would benefit from the high demand for these products throughout Southeast Asia, he said.

Yoshitomo added that Japan had significant experience in developing supporting industries, especially the stamping and casting industry, which it was eager to share in Viet Nam. Minister of Planning and Investment Bui Quang Vinh said the MPI was ready to help develop the industry in Viet Nam.

Vinh said building IZs would be simple, but attracting investment and maintaining operations would be difficult.

The Vietnamese Government always supported investors with infrastructure and legal frameworks. Building supporting industrial zones, particularly stamping and casting zones, had received special attention, he said.

For locations, he suggested Thai Nguyen, Quang Nam, Quang Ngai, Da Nang and Binh Duong provinces and HCM City due to their favourable positions, good infrastructure, deep seaports and suitable geological environment.

Ministry proposes loans for coffee producers

The Ministry of Agriculture and Rural Development (MARD) is considering extending loans to coffee exporters as the businesses battle losses brought about by a slump in export prices.

The ministry said both domestic and export coffee selling prices had fallen sharply in the last three months, causing headaches for coffee firms which bought their coffee at the previously higher prices.

Statistics from the ministry showed the coffee price had fallen from VND46 million (US$2,190) to around VND40 million ($1,905) per tonne in Tay Nguyen (Central Highlands) provinces.

MARD said the country exported only 109,000 tonnes last month, earning $226 million.

Total coffee exports in the first five months of the year stood at 697,000 tonnes with a turnover of $1.49 billion. This represented a 23.2 per cent decrease in quantity and 21.7 per cent fall in value over the same period last year.

Germany and the US continued to be Viet Nam's leading coffee importers, accounting for 13.5 per cent and 11.8 per cent of total exports, respectively.

The ministry added that farmers and coffee agencies in the country had temporarily limited exports because of the low prices.

The Government issued Resolution 02/2013/NQ-CP to provide solutions that would untie businesses' difficulties in production, market and bad debts.

The resolution extends terms from 12 to 36 months for export loans, however it only applies to vegetable and seafood products, not coffee.

Nguyen Nam Hai, general secretary of the Viet Nam Coffee Exporters Club said rumours had circulated that financial investors had withdrawn from the world's three biggest floors including Arabica Ice New York, robusta Liffe London and BM&F Brazil.

Hai said this was the reason coffee prices had continued to fall in recent months.

He added that several companies which bought coffee at high prices had suffered losses because of the current low export prices.

Truong Ngan Company in southern Binh Duong Province's Di An Town was yet to repay debts totalling roughly VND600 billion ($28.85 million) to banks, including Military Bank, VIB, Oricombank, Agribank, Maritime Bank, Vietinbank and Techcombank.

Nguyen Xuan Binh, the company's director said his company had operated as a coffee exporter since 2005, exporting between 30,000 and 70,000 tonnes of coffee per year.

The company was once prosperous and enjoyed good credit relations with the aforementioned banks. However, in recent years, lagging coffee prices and high interest lending rates had seriously affected the company's operating results and driven it into insolvency, he added.

Central Highland Dak Lak Province's Department of Industry and Trade said the locality had seen 43 coffee businesses and agencies fall into bankruptcy with debts totalling VND300 billion.

Dong Nai favours high-tech FDI projects

Southern Dong Nai Province is prioritising FDI projects involving high-tech companies and support industries, particularly those that are environmentally friendly and offer high yields.

The province has also stopped granting licences to projects suspected of causing water pollution.

The revised strategy comes after the provincial Department of Planning and Investment released figures showing Dong Nai Province has attracted US$567 million in foreign direct investment (FDI) over the past five months, meeting 61 per cent of its 2013 plan.

According to the department, 15 of the 34 new projects in the province are backed by Japanese investment, with combined registered capital of $162 million, accounting for 60 per cent of the total registered capital.

In light of the tough economic climate, the province is paying special attention to administrative reforms and training to improve the quality of its labour force. In addition, it is investing in infrastructure and services to serve both workers and investors.

The province also organises regular meetings between businesses and managing agencies to tackle difficulties as quickly as possible.

The leading foreign investors in the province include the Republic of Korea, Japan, and Taiwan, as well as ASEAN, European and American countries.

Local seafood exporters see brighter signs in Q2

Domestic seafood exporters expected to achieve good business results in the second quarter of this year, according to experts.

Seafood exports in the second quarter have seen signs of a recovery thanks to high demand for shrimp and tra fish.

Duong Ngoc Minh, chairman of Hung Vuong Joint Stock Company, said demand for seafood products would increase in the second quarter and export prices were expected to increase from the first quarter.

Agifish, a subsidiary of Hung Vuong Co, was scheduled to ship 10,000 tonnes of tra fillets worth US$36 million to the US in the second quarter, he said.

Tran Van Hung, chairman and general director of Hung Ca Limited Company, said export prices of tra fillet had increased by 3-5 US cent per kilo. The company had signed contracts to export tra fillets at $2.5-3.6 over the next three years.

Tran Van Pham, general director of Soc Trang Seafood Joint Stock Company, said production and exports had increased since mid-April against the same period last year, and his company had signed new contracts with $1-1.5 per kilo of shrimp.

The Viet Nam Association of Seafood Exporters and Producers (VASEP) said the recovery of seafood exports was due to high appreciation for the quality of Vietnamese seafood exports from major markets, including the EU, the US, Japan, South Korea and Russia.

However, many local experts said the domestic market continued to experience difficulties from a lack of supply as well as technical barriers and export tariffs.

Seafood exports were expected to reach $6.5 billion this year, 5 per cent higher than 2012, said VASEP.

Shrimp exports were likely to reach $2.2 billion, equal to that of last year, while tra fish exports were predicted to bring in $1.9 billion, up 5.5 per cent.

Exports of other seafood products were expected to rise by 10 per cent to $2.4 billion.

The association said that exports of seafood to major markets were expected to recover in the second quarter of this year after a drop of 8 per cent in turnover in the first three months.

Ratio of VietGap vegetables increase in Co.opMart

The Department of Industry and Trade in Ho Chi Minh City recently held a ceremony to introduce vegetable producers applying VietGAP standards to Saigon Co.opMart, in order to boost their market demand.

Initially, Saigon Co.opMart has signed contracts with 16 companies, of which nine are in Ho Chi Minh City, and the rest are in Lam Dong and Ninh Thuan Provinces. The contracts will benefit three parties, namely, producers, traders, and consumers.

Nguyen Thi Hanh, CEO of Saigon Co.opMart, shared that currently Co.opMart supermarkets consumed 120 tons of vegetables a day. In the near future, vegetables under VietGap standards will account for 60 percent of the total amount of vegetables sold via the network. Meanwhile, at Co.opMart supermarkets in the City, VietGap vegetables now account for more than 90 percent.

VietGap vegetables sold by Saigon Co.opMart will be priced 10-15 percent lower than in markets as the company buys vegetables sans middle men and is part of the price subsidized program.

The Department of Industry and Trade said that it will continue to view other supermarket networks to carry out their commitment to support and encourage firms to concentrate on producing safe vegetables for consumer demand in the City. In addition, the City will also introduce via pilot schemes a food-safety market model at Ben Thanh and Hoc Mon wholesale markets.

Prices fall in peak fruit season in Mekong Delta

Local farmers in the Mekong Delta are in despair as price of fruits is falling drastically even as they are entering peak harvest season.

Fruit prices have tumbled during peak harvest season in the Mekong Delta (Photo: SGGP)

Doan Ngo Festival, on the fifth day of the fifth lunar month, is also peak fruit harvest time in the Mekong Delta. However, fruit prices have tumbled in several provinces like Ben Tre, Vinh Long, Tien Giang, Hau Giang, Can Tho, Soc Trang.

Cat Chu mango, a specialty of Cao Lanh District of Dong Thap Province, is fetching only VND2,000-4,000 a kilogram.

According to Tran Van Nam, a trader in South Can Tho Market, the price was VND23,000-30,000 a kilogram in early March.

Huynh Van Tan, a farmer from Tinh Thoi Commune in Cao Lanh City of Dong Thap Province, said that several farmers have lost interest in harvesting their fully ripe mangoes from the trees, choosing to let the fruit rot in the orchard.

Nam Roi grapefruits are also getting similar treatment in Vinh Long and Hau Giang Provinces. In early May, grapefruit price was VND25,000-30,000 a kilogram. The rate has plunged to only VND5,000-7,000 a kilogram now.

Nguyen Van Khanh, a farmer in Phu Huu Commune of Chau Thanh District in Hau Giang Province, said that a kilogram of grapefruit brought him VND10,000-12,000 a kilogram in the same period last year. This year, prices have fallen sharply but still traders have not shown interest.

Mangosteen price has reduced by VND8,000-10,000 to fetch only VND20,000-25,000 a kilogram in Chau Thanh District in Hau Giang Province and Ke Sach District in Soc Trang Province.

Durian price has fallen by an average of VND3,000-5,000 a kilogram compared to the beginning of June.

Retail price of rambutan is only VND5,000-7,000 a kilogram now, VND10,000-13,000 lower than in the beginning of May in Vinh Long Province and Can Tho City.

Blue dragon fruits lie in huge piles and priced at VND3,000-4,000 a kilogram alongside roads leading to Can Tho City.

Low prices and unstable demand has also put orchards under the Global Good Agricultural Practice (Global Gap) Standards at risk of bankruptcy.

Careful deliberation of hydropower projects in Dong Nai province

The Department of Industry and Trade in Ho Chi Minh City has proposed to the City People’s Committee to organize an international seminar to deliberate on the environment impact of Dong Nai 6 and 6A Hydropower Projects, inviting both national and foreign scientists.

In a report sent to the Chairman of the City People’s Committee, the Department also suggested that the HCMC Union of Science and Technology Association work with scientists to survey, collect data, and give expert and objective opinion on the two projects.

The report also summed up opinions of various departments, organizations and scientists about Dong Nai 6 and 6A Hydropower Projects on Dong Nai River.

The two plants will supply annually about 929 million kWh of electricity, however the outcome of this benefit may turn out to have other negative impacts.

The reservoir capacity of the two plants is more than 200 million cubic meters, which will not help much in coping with drought and prevention of flooding in the lower reaches of the Dong Nai River.

Construction of these two plants might affect the ecosystem of the Dong Nai River. Water release and accumulation might cause flooding during the rainy season and drought during the dry season in the lowlands including HCMC and Dong Nai and Binh Duong Provinces.

Scientists are of the view that the two plants will also greatly affect the ecosystem of Cat Tien National Park.

Because of all such contradictory and controversial opinions on the two projects, the impact of the plants should be seen and assessed more accurately, objectively and based on scientific evidence.

Bank staff turn to lecturing

More banking staff are turning to work as lecturers at colleges and universities.

A staff member from a HCM City-based university said, “The number of applicants for lecturing has considerably increased over the past two years. Last year, a candidate had to compete with up to 10 people, compared to just 2-3 people previously. The number has doubled this year, particularly in banking and finance.”

The number of candidates who has applied for other universities has also on the rise. The Administration Faculty of the Hanoi Law University recently advertised for lecturers and received 50 applications, with 14 selected.

Minh Hong, a finance master degree holder said as banks were facing difficulties she had turned to academia. “I followed some of my friends to apply as a teacher. But, it is quite difficult to be chosen because of the high competition. I have applied to several colleges and universities, but have not yet been selected.”

Thanh Lam, a probationary lecturer at a university said, “After completing a masters in finance, I worked at a bank for 4-5 years, but now, due to the economic difficulties, we have been assigned to fulfil revenue targets, while our incomes decreased. Therefore, as soon as I finished the masters, I decided to turn to work as a teacher.”

Thuy, an accountant at a telecommunications firm turned to lecturing at a college in HCM City. She said, “It’s true that working at a company could mean you earn five to seven times more than as a teacher, but you have to work very hard from early morning to late afternoon. There’s more competition nowadays.”

Local seafood exporters see brighter signs in Q2

Domestic seafood exporters expected to achieve good business results in the second quarter of this year, according to experts.

Workers process tra fish for export at Go Dang Seafood JSC in southern Tien Giang Province. Seafood exports in the second quarter have seen signs of a recovery thanks to high demand for shrimp and tra fish.

Seafood exports in the second quarter have seen signs of a recovery thanks to high demand for shrimp and tra fish.

Duong Ngoc Minh, chairman of Hung Vuong Joint Stock Company, said demand for seafood products would increase in the second quarter and export prices were expected to increase from the first quarter.

Agifish, a subsidiary of Hung Vuong Co, was scheduled to ship 10,000 tonnes of tra fillets worth US$36 million to the US in the second quarter, he said.

Tran Van Hung, chairman and general director of Hung Ca Limited Company, said export prices of tra fillet had increased by 3-5 US cent per kilo. The company had signed contracts to export tra fillets at $2.5-3.6 over the next three years.

Tran Van Pham, general director of Soc Trang Seafood Joint Stock Company, said production and exports had increased since mid-April against the same period last year, and his company had signed new contracts with $1-1.5 per kilo of shrimp.

The Vietnam Association of Seafood Exporters and Producers (VASEP) said the recovery of seafood exports was due to high appreciation for the quality of Vietnamese seafood exports from major markets, including the EU, the US, Japan, South Korea and Russia.

However, many local experts said the domestic market continued to experience difficulties from a lack of supply as well as technical barriers and export tariffs.

Seafood exports were expected to reach $6.5 billion this year, 5 per cent higher than 2012, said VASEP.

Shrimp exports were likely to reach $2.2 billion, equal to that of last year, while tra fish exports were predicted to bring in $1.9 billion, up 5.5 per cent.

Exports of other seafood products were expected to rise by 10 per cent to $2.4 billion.

The association said that exports of seafood to major markets were expected to recover in the second quarter of this year after a drop of 8 per cent in turnover in the first three months.

Ho Tram Strip to open in July

Ho Tram Project Company (HTP), an affiliate of Asian Coast Development (Canada) Ltd. (ACDL), on Monday announced that its first resort in Ho Tram Strip in Ba Ria-Vung Tau Province will open to the public on July 26 and operate under the name The Grand-Ho Tram Strip.

The first part of the first phase of The Grand-Ho Tram Strip includes 541 five-star rooms, gaming facilities, meeting and convention space, ten bars and restaurants, a spa, children’s areas, three swimming pools and luxury retail shops.

The property, which also includes extensive entertainment space and one of the largest function centers in Vietnam, was to have operated under another international brand and operator. However, with the dissolution of that management contract, the owners will instead manage the property with 2,000 staff recruited and trained under the direction of MGM Resorts International, according to a statement of HTP.

In October, 2012, HTP broke ground on the second part of the first phase of The Grand-Ho Tram Strip, which will include a second tower of 559 rooms and additional leisure facilities. The Bluffs, a golf course designed by Greg Norman, is also under construction as part of the Ho Tram Strip.

The project earlier was only allowed to run a casino with 90 gambling tables and 1,000 slot machines when the entire section A is completed. The remaining 90 gambling tables and 1,000 slot machines will be placed at its section B.

However, ACDL in April obtained the amended investment certificate to operate casinos, even when only a half of works of the section A had been completed.

Speaking to the Daily via e-mails at that time, an ACDL leader said that the amended certificate includes a gaming entitlement of 180 live tables and 2,000 electronic gaming machines split equally between the two first integrated resorts.

ACDL is an international development company specializing in integrated resort destinations. Through its wholly-owned subsidiary HTP, ACDL is the developer of the Ho Tram Strip, a group of integrated resorts to be located on more than 164 hectares of land and two kilometers of pristine beach in Ho Tram. The project has a registered capital of US$4.2 billion.

The first phase will include a 1,100-room five-star hotel, a world-class entertainment facility, restaurants, high-tech meeting space, an exclusive VIP area, a championship golf course, as well as a variety of beach-front recreation activities. The phase scheduled to open in 2013 will be the initial component of the largest integrated resort complex in Vietnam.

TPP to expose nation to new challenges

The Trans-Pacific Strategic Economic Partnership Agreement  (TPP) will bring about opportunities for Vietnam to improve exports but also expose the nation to many new challenges, said experts at a seminar.

Speaking at the TPP seminar organized by the Can Tho branch of the Vietnam Chamber of Commerce and Industry (VCCI) last Friday, Thoi Ngoc Doan Thuy from Ba Ria-Vung Tau Province’s Department of Industry and Trade said TPP rules prohibit export subsidy and re-subsidy under any form.

Therefore, compared to regulations of the World Trade Organization (WTO), TPP rules will put trade ties between Vietnam and other member countries to disadvantages. Firstly, technical barriers of export markets will be stricter while Vietnam’s competitiveness is still low, causing obstacles to making use of tariff reductions.

Secondly, Vietnam will have to open the domestic market to other nations, removing 100% of tariffs. Local enterprises will face greater competition from international rivals, Thuy said.

Vietnam will also face problems such as intellectual property rights and investor-state dispute settlement (ISDS).

Concerning ISDS, Pham Duy Nghia, head of the faculty of law of the HCMC University of Economics, took an example of an enterprise from a TPP member country in the Mekong Delta city of Can Tho. If dispute occurred between this investor and local authorities, this investor would bring the case to an international court or arbitrary council, not a local court, a diplomatic or investment promotion agency.

Nghia told the Daily on the sidelines of the seminar that TPP would bring about lower tariffs and more goods export opportunities, create jobs and raise employees’ incomes. However, export markets will also set up strict requirements while Vietnam has to open its door for other TPP member countries. Local enterprises with low competitiveness may lose on the home market.

To help local firms cope with TPP challenges, Nghia said enterprises should monitor TPP negotiations and be aware of their future impacts on the local market.

Enterprises must identify export markets, standards they have to meet and consider using product components imported from TPP countries to enjoy the 0% tax rate, Nghia said.

Other experts at the seminar also said that local enterprises may find it hard to benefit from this 0% tariff as they have to meet high requirements for origins of goods, meaning materials must be imported from TPP member countries only.

However, the nation now relies heavily on materials imported from non-TPP countries. For example, garment and textile firms primarily import materials from China and South Korea.

There have been 17 rounds of TPP negotiations with the participation of 11 nations: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam. Japan is expected to join TPP negotiations at the end of this year.

Flashes of action in a slow market

Local investors are venturing  into real estate project acquisition despite a moribund economy.

The biggest-ever deal in the real estate market was announced last week, with the transfer of Ho Chi Minh City’s Vincom A Centre from Vingroup to Vietnam Infrastructure and Property Development Group (VIPD) for VND9,823 billion ($470 million).

Vingroup claimed it reaped an estimated profit of VND4,300 billion ($205 million) from the transfer.

The deal was carried out in the form that Vingroup transferred its entire stake in Future Investment and Trading Company, a Vingroup member.

Vincom Centre A Ho Chi Minh City represents the most luxurious, high-end class of properties in a prime location in District 1, featuring a 16,000 square metres of shopping centre and a 300-room hotel.

Another concluded deal is the local firm Hanel taking over a 70 per cent stake in the five-star hotel, office and serviced apartment complex in Hanoi - the Daeha Business Centre from the Korea chaebol Daewoo E&C.

Hanel had beaten another Korean cheabol, Lotte, to win this deal.

Many other deals have been transacted in recent years that show the strength of domestic investors in real estate industry.

Outstanding transactions include the domestic BRG acquiring the Hilton Hanoi Opera - one of the most famous five-star hotels in Hanoi, Sovico Holding buying Furama Resort Danang from a Hong Kong group Lai Sun and Thien Minh Tourism Company buying the Victoria chain of resorts and hotels.

The mergers and acquisitions (M&A) in the real estate market have been increasing, especially with many companies narrowing their portfolios by selling non-core projects, to concentrate on core and important projects.

According to investment consulting company Stoxplus, real estate was among the hottest fields in M&A last year, with 29 deals in total of $400 million.

Aside from the Vingroup case, Dat Xanh Group had six M&A cases in which it took over other projects at total value of $65 million.

Meanwhile, VinaCapital is offering the sale of its 50 per cent stake in the 365-room Sofitel Legend Metropole Hanoi and Vinaconex is finding partners to sell its 50 per cent stake in the An Khanh joint venture which is developing Splendora urban project in Hanoi.

Neil MacGregor, managing director of Savills Vietnam, said while in the past many developers were reluctant to seek finance from the banks, projects were now leveraged at unprecedented levels.

“There are a number of options open to developers requiring capital to move their projects forward, none of which necessarily require financing from banks, if the right partner can be found,” MacGregor said.

Although facing a number of challenges such as an immature legal framework, low market transparency, complicated licencing procedures and differences in price expectations, MacGregor believed that the next few years would see the conclusion of a rising number of M&A deals.

“Whilst the lack of bank finance is troublesome for many in the real estate industry, it also creates an unprecedented period of opportunity for others, particularly those with cash,” he added.

Tools to recalibrate economy

Work is underway to lift the bad debt cloud from the economy.

The Vietnam Asset Management Company (VAMC), the main weapon to attack debts, is in place with VND500 billion ($23.8 million) in chartered capital at its disposal, the VAMC envisages tackling nearly VND100 trillion ($4.7 billion) in bad debts. Through issuing bonds for debt purchases, the VAMC seeks to address bad debt dilemma without using the state budget.

Senior financial expert Dr. Nguyen Tri Hieu, however, warned that to tackle such a huge bad debt amount, the VAMC would need to use big financial leveraging which was risky.

“Assuming that the VAMC bought VND50 trillion ($2.38 billion) worth of bad debts, it would need to pay commercial banks special bonds of the same value. Banks then take these bonds to the State Bank asking for refinancing with 50 per cent discount of the bond value to get back VND25 trillion ($1.2 billion). This means the VAMC could have around $1.2 billion in total asset value versus $23.8 million in chartered capital. VAMC’s financial leverage rate by that time will be 50/1, too perilous for a financial institution,” Hieu said.

In this case, VAMC’s chartered capital would even be contracted if one commercial bank dropped in its debt payment obligation.

In this respect, a commercial bank executive assumed VAMC going bankrupt was unlikely, but this would make banks think twice before ‘selling’ their bad debts for bonds.

At the Vietnam Business Forum in early June 2013, VBF co-chair Alain Cany said VAMC’s setup was a positive signal, but settling banks’ bad debts could not only resort to a single solution.

Economic experts claimed the VAMC could only tackle one-third of the total bad debts, while the government was set to fully deal with current bad debts by 2015.

Under the premier-approved project on tackling bad debts, not only banks, all ministries and government agencies must get involved in the push. The premier also required credit entities to collaborate with VAMC in addressing bad debts.

In addition, credit organisations and borrowers should incur major responsibilities for the arising bad debts and sharing losses in dealing with bad debts.

Meanwhile, state budget shall be on the hook for bad debts stemming from lending to priority subjects or to those under government assignments.

The government reportedly would resort to using debt instruments in dealing with bad debts. The prime minister has assigned the Ministry of Finance to map out plans on debt instrument issuances to help the government effectively tackle various debt issues.

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