Shares mixed on sombre trading

Shares continued to go up on the HCM City Stock Exchange but started to decline yesterday on the Ha Noi bourse.

The benchmark VN-Index in HCM City rose another 0.3 per cent to close at 430.77 points, but trading decreased slightly from the previous day with over 39.6 million shares, worth VND968.6 billion (US$46.1 million), changing hands.

Gains in large-cap shares again lifted the Index with the VN30 Index tracking the top 30 shares on the southern bourse rising 0.52 per cent to 516.05 points.

PVF and real estate Kinh Bac City Development (KBC) were the two most active stocks on HCM City's bourse yesterday with over 2.4 million shares traded on each code. But while PVF rose 3.3 per cent to VND12,500 ($0.60) a share, KBC fell 4.9 per cent to end at VND9,800 ($0.47) each.

On the Ha Noi Stock Exchange, the HNX-Index declined 0.24 per cent to 70.15 points by the end of this morning, with declines once again outnumbering gains by 120-78.

Blue chips also slumped when the top 30 shares by market capitalisation and liquidity also sank 0.17 per cent to an average of 133.93 points.

Over 33 million shares, worth VND295 billion ($14 million), were exchanged yesterday.

The second-quarter business results of over 400 listed companies had improved over the previous quarter, while it was expected that additional monetary policies to support growth would soon be issued by the Government, said Pham Tien Dung, an analyst at Bao Viet Securities Co.

"Based on this, we can expect more positive moves in the medium- and long-term. However, in the short term, the sideways phase may continue, though a sell-off scenario will be unlikely to happen," Dung wrote in a report.

Vietnamese bank among five biggest in Cambodia

The Bank for Investment and Development of Cambodia (BIDC), a susidiary of the Bank for Investment and Development of Vietnam (BIDV), has been named as one of the five biggest banks in Cambodia, after three years of operation.    

Addressing the opening of a new branch in Phnom Penh on August 13, BIDC General Director Nguyen Van Hien said that the bank’s total assets have reached US$480 million, while its outstanding debts amount to US$320 million.

The bank also provides comprehensive financial services for Vietnamese enterprises investing in Cambodia.

With the establishment of the Phnom Penh branch, BIDC once again confirms its qualifications for operating and developing sustainably in the Cambodian economy, he said.

With its professionalism and skill, BIDC will continue to develop and contribute to promoting bilateral trade between the two countries, he added.

The BIDC branch is located at Monivong Avenue in the commercial and financial centre of Phnom Penh.

VASEP proposes conditions for shrimp export businesses

Shrimp export businesses must meet necessary conditions in terms of capital, human resources and environmental protection methods.  

The Vietnam Association of Seafood Exporters and Producers (VASEP) has made the proposal to the Ministry of Industry and Trade.

VASEP said some small-and medium-sized shrimp producers have to halt their production due to unhealthy competition as they still place immediate benefit above quality. It warned them of losing customers or making compensation if they continue buying shrimp with impurities and make trade frauds.

Even worse they will run into serious financial troubles as banks refuse providing more loans for them.

VASEP urged the Government to direct the provincial people’s committees to support the shrimp sector in both planning and developing a sustainable manner.

Earlier, VASEP had proposed listing tra fish into the production chain with essential conditions attached.

‘Target Ukraine' exporters told
 
Enterprises should pay more attention to Ukraine to increase trade and investment between the two countries, according to Viet Nam's Ministry of Industry and Trade.

The ministry said the Ukraine was an emerging market with a high consumption and diversification of demand, but Vietnamese enterprises had not paid attention to trade promotion activities and failed to capitalise on the Ukrainian market's potential.

Enterprises should actively promote trade activities between Viet Nam and Ukraine to gain further access to the market in the future, the ministry said.

Export value between the two countries increased year-on-year by 68.1 per cent to US$194.5 million in 2011, and in the first half of this year, it gained 47.05 per cent to $96.62 million.

According to many local enterprises, Viet Nam exported mainly farming products, footwear, and textiles and garments to the Ukraine, the ministry said.

Another advantage is that about 10,000 overseas Vietnamese live and work in the Ukraine, providing a bridge between the two countries and contributing to wealth generation on both sides.

Additionally, Viet Nam and the Ukraine have signed 20 economic and trade co-operation agreements which were a great foundation for the development of trade and investment between the two countries in the future, the ministry said.

However, many enterprises from Viet Nam and the Ukraine were struggling to gain a foothold in their respective markets, the ministry said. Language barriers, cultural awareness, legal information, consumption demand and the physical distance between the two countries had forced costs up and turnover down.

To support local enterprises' trade activities in the Ukraine, the ministry plans to implement trade promotion programmes and market research, as well as organise exhibitions and trade fairs in the Ukraine and open branches and representative offices in the country.

The ministry also said an international trade exhibition to be held in Kiev from September 16-22 would be a good chance for Vietnamese enterprises to find trade opportunities.

Businesses from several countries in Asia and Eastern Europe, including Viet Nam and the Ukraine, are expected to participate in the exhibition at the Rainbow Trade Centre.

The fair will showcase a wide range of goods including agricultural products like tea, coffee, seafood and processed foods, consumer goods, textiles and garments, furniture, cosmetics, medicine, electrical goods, household appliances, and construction materials.

VN Airlines plans to change target
 
National air carrier Vietnam Airlines said it would miss its business targets for this year due to increased competition from other carriers in the domestic market.

The airline has asked the Ministry of Transport to adjust the company's business targets due to business difficulties during the first seven months of the year.

Vietnam Airlines forecasts profits of nearly VND69 billion (US$3.3 million) after tax for the year, more than VND300 billion ($14 million) less than expected, or about 20 per cent of their 2012 target.

Its total revenue is estimated to be about VND52 trillion ($2.4 trillion), down by about VND2.4 trillion ($114 million), or 4.6 per cent of their target.

Vietnam Airlines chairman Pham Viet Thanh said the carrier only earned the profit of about VND13 billion ($0.6 million) during the first five months. The first five-month revenue was only VND21 trillion ($1trillion), or about 39 per cent of the year target.

He said the airline had to reduce air fares and flights during the period due to the less than expected demand.

About 78 per cent of tickets had been sold during the first five months, which was nearly 3 per cent lower than targeted and also lower than the same period last year.

Even in July, the peak tourism month of the year, the revenue earned from the domestic market either decreased by 2.5 per cent compared to the same period last year or fell far short of the target.

The airline blames fierce competition from new air carrier Vietjet Air as one of the reasons for the missed targets due to a loss of market share, especially for the two major routes from Ha Noi to HCM City and from HCM City to Da Nang.

Another factor was that VNA will have to spend up to $6 million to establish a reserve fund after its merger with Jetstar Pacific in February, he said.

The missed targets may make it difficult for Vietnam Airlines to reach its target of earning at least $200 million after launching its initial public offering (IPO) slated for no later than the end of 2013.

Pepper exports likely to hit high $780m
 
Viet Nam this year can earn up to US$780 million from its pepper exports if the price of pepper remains at a high of more than US$7,000 per tonne, said the Viet Nam Pepper Association (VPA).

The total pepper export volume would reach between 110,000 and 115,000 tonnes, according to the VPA.

In case world pepper prices fall from July's high, pepper farmers have the choice of keeping their harvested pepper in stock to wait for prices to rise again.

As a result of this, the VPA has warned pepper enterprises that they need to act with caution when deciding on purchase prices or the signing any import and export contracts to avoid risks.

The wholesale price of pepper at key pepper growing areas in the Central Highlands and southeast region is currently between VND123,000 and VND125,000 per kilo, an increase of VND18,000-20,000 per kilo (about US80 cents - 90 cents) against the same period last year.

Pepper buying and selling activities in the domestic market were recently sluggish due to price fluctuations that saw some Vietnamese businesses buying Indonesian pepper for re-export.

During the past six and a half months, Viet Nam shipped more than 72,000 tonnes of pepper abroad, earning about $495 million.

Viet Nam continues to be one of the world's leading pepper exporters, accounting for 40 – 50 per cent of the global volume.

Market to offer exchange-traded funds

Exchange-traded funds are urgently needed and are expected to become operational on the Vietnamese stock market next year, the State Securities Commission has announced.

Developing exchange-traded funds (ETFs) was a must, said Ha Noi Stock Exchange deputy director Nguyen Anh Phong. Only stocks, bonds and closed-end fund certificates were currently being traded on the market, Phong said, and the current model of closed-end funds made it difficult for fund management companies to create new products.

"These companies need a more flexible and effective tool," Phong said at the seminar last Friday. "Fund management companies, brokerages and investors are all eager for ETFs."

ETFs offered advantages of diversification, low costs and transparency, but investors would need thorough training to full appreciate the benefits, he added.

The greatest strength was transparency, since the investment portfolios of ETFs would be updated daily, said the head of the commission's fund management department, Nguyen Thanh Long, noting that net asset values could be updated as frequently as every 15 seconds.

Meanwhile, the costs of managing traditional funds could amount to 2-3 per cent of net asset value, but the costs for ETFs were much lower. "In European countries, it's around 0.55-0.99 per cent," Long said.

ETF certificates would be traded on the Ha Noi Stock Exchange, with the first fund certificate to list likely to be based on the HNX30 Index, he added.

"Picking the HNX30 as the basis for the initial fund is aimed at establishing a legal framework," said the exchange's general director, Tran Van Dung. "After this framework is complete, other qualified indices can be considered as a basis for an ETF."

The State Securities Commission has drafted a circular on the establishment and management of securities investment funds, with a chapter dedicated to ETF transactions.

Information technology park built in Ha Noi

The Ha Noi People's Committee has approved a plan for an information technology park in Long Bien District.

The 360,674 sq.m park has total investment capital of VND9.5 trillion (US$452 million) from Him Lam JSC. It includes high-rise buildings, luxury hotels, a trading centre and housing areas for experts and technicians. It is expected to be completed by the end of 2013.

MoF reviews supporting activities

The Ministry of Finance has been working with other ministries to implement tax incentives to support enterprises and individuals in this difficult time.

Among these, the General Department of Taxation extended corporate income tax payments for 8,260 enterprises in Viet Nam, worth VND347.5 billion (US$16.5 million), in accordance with Resolution No13/NQ-CP. A total of 3,153 commercial and service enterprises were also offered a 50 per cent discount on land lease fees up to VND339 billion ($16.14 million).

Awards honour trademarks that are sustainable

One hundred businesses were honoured for their great efforts in building sustainable trademarks during an awards ceremony in Ha Noi on Sunday.

The top 10 awards went to well-known trademarks including Tien Phong Plastic JSC, Cai Lan Oils and Fats Industries Company, Civil Engineering Construction Corp No 1, Pyme Pharco JSC, Lavie Company, Power Engineering JSC and Petroleum Technical Service Corporation.

The awards are presented every three years with the aim of encouraging enterprises to foster technical application to improve the quality of their products while ensuring sustainable production.

Southern province attracts $19m in FDI

The southern province of Tay Ninh has attracted US$19 million in foreign direct investment (FDI) since the beginning of this year, according to the provincial Trade, Investment and Tourism Promotion Centre.

The latest addition has brought the total FDI registered in the province to $1.4 billion to date, a figure that has seen Tay Ninh ranked 9th among 63 provinces and territories nation-wide in terms of FDI attraction.

"We are attempting to speed up administrative reforms that can help foreign investors reduce the time and costs needed to implement their projects," said the centre's director Tran Huu Hau.

Trade with Chile up 38% in first half

Bilateral trade with Chile increased 38 per cent in the first six months of the year to a value of over US$321 million, according to the Chilean Trade Promotion Agency.

During the period, the agency said, imports from Chile climbed 41 per cent year-on-year to $238.8 million, while export value stood at $82.6 million, an increase of 29 per cent. Major exports to Chile include footwear, cement, coffee, garments and tra fish.

Bilateral trade is expected to reach $1 billion in the next three years as the Viet Nam-Chile Free Trade Agreement takes effect, said agency director Felix de Vincente.

Bilateral trade also jumped by over 50 per cent in 2011 to nearly $487 million.

Vietnam’s apparel industry has high hopes from Korean market

According to the Vietnam Textile and Apparel Association, orders from major markets such as the US, EU and Japan have experienced a slump which has made the country’s textile and garment industry turn with high expectations to the Korean market.

Export figures show that garment and textile turnover to Korea reached US$904 million in 2011, the highest compared to previous years.

The association said that Vietnamese firms should focus on high-grade market segmentation to develop the diversity of consumer demand of Korean teenagers.

Currently, there are 450 Korean firms investing in Vietnam’s textile and garment industry with total investment of $1.8 billion, making Korea one of the biggest investors in Vietnam.

With these advantages, Vietnam’s textile and garment export turnover to Korea could top $1 billion this year.

Trade ministry allows import of eggs despite excess supply

Price of poultry egg has fallen drastically over the last few months due to excess supply, but despite this the Ministry of Industry and Trade has gone ahead with granting a quota to import 40,000 dozen eggs.

According to Nguyen Thanh Son, deputy head of the Department of Livestock under the Ministry of Agriculture and Rural Development, the price of poultry egg and meat, like pork and chicken, has dropped drastically since the beginning of the year, with egg prices plunging almost 47 percent.

About 4.1 billion eggs were produced in the first six months of the year, an increase of 4.7 percent over the same period last year.

Surplus supply has plunged the price of egg. In the northern region, the price of an industrial chicken egg has fallen from VND1,700-1,800 in January to VND900.

Duck egg price has dropped from VND2,400 to VND1,500 an egg and prices are even cheaper in the southern region.

During the last one month, egg price has increased slightly. Breeders and businesses are not yet happy and are anxious as the Ministry of Industry and Trade has granted quota to import 40,000 dozen eggs, from August until the end of 2012.
 
Phan Thi Dieu Ha, deputy head of the Export Import Department under the Department of Industry and Trade, said that Vietnam has pledged with the World Trade Organization to apply quota on four different commodities including poultry egg.

In 2007, Vietnam granted quota to import 30,000 dozen poultry eggs. This number will increase by five percent each consecutive year. However, no private business has registered to import poultry eggs so far.

Nguyen Thanh Bien, deputy Minister of Industry and Trade, said that in the process to placate WTO, Vietnam negotiated protecting of four agricultural commodities, and the tariff rate imposed on these commodities is very high.

To apply the high tariff rate, Vietnam must accept granting an import quota with low tariff rate on the above products every year.

Mr. Bien said that import of eggs is not timely because the domestic supply is abundant and farmers cannot sell their products. However, the ministry’s quota allocation will not affect domestic production and breeders.

TienPhong Bank offers support to farmers in Mekong Delta

TienPhong Bank is offering a special loan scheme to support farmers in the Mekong Delta from August 15, under which the bank will provide capital to farmers for purchase of fertilizer, pesticide, machinery, labor and daily costs.

In addition, the bank is also implementing credit packages worth VND3 trillion ($144 million) for enterprises, in which they will enjoy interest rate from 12.5 to 14 per cent.

The State Bank of Vietnam has just allowed TienPhong Bank to increase its credit debit balance including securities issued by enterprises, till the end of the year.

The bank promised to facilitate loan borrowing procedures to help people and enterprises access capital easily.

 Singapore companies increase investments in Ho Chi Minh City

According to the Department of Planning and Investment in Ho Chi Minh City, 39 new investment projects by Singapore companies have been added by July 30, worth more than US$120 million.

Currently, Singapore companies have invested in more than 550 projects in Ho Chi Minh City worth $6.8 billion. Of these, twelve projects increased their size by an additional capital of about $47 million. Singapore companies have mainly invested in real estate, healthcare, education and trade.

Keppel Land and CapitaLand, the two leading Singapore real estate companies, have signed contracts with Vietnamese companies to develop several real estate projects. Keppel Land, in particular, has 18 projects, of which seven have been completed.

Lending rate cuts not enough to warm up realty market

Lending rate downtrend offers homebuyers more chances to access financial assistance from banks, but experts deem it not enough to prop up the property market and lure buyers for investment purposes.

Unlike the first two quarters, the third quarter so far has seen many apartment projects, mostly the mid-end ones, launched into the market.

Apart from flexible payment methods, project owners also join hands with banks to provide homebuyers with preferential lending rates of around 12% per year.

For example, Nam Long Investment Corp. last week put up for sale 2,000 Ehome 3 Saigon West condos in HCMC’s Binh Tan District at VND615 million each. Among the banks that give out loans to customers of this project, Vietcombank offers an annual lending rate of 12%.

In another example, the HCMC-based Construction and Investment 8 Joint Stock Co. has recently opened the Green Building project in District 9 for final sale at prices of around VND1 billion per unit. The project owner said BIDV would grant buyers loans worth as much as 85% of the condo values with an interest rate of 12% for the first six months.

Realty firms hoped lending rate reductions would give a positive sign to the currently slowing down apartment market.

To attract attention of homebuyers, many banks have carried out soft loan programs. However, preferential lending rates are only available within the first 12 months at most, and then will be negotiated in accordance with the market interest rates.

For instance, Vietinbank has launched a VND5-trillion credit package with a lending rate of 12%. This rate, however, is only applied in the first three months for short-term loans and two months each year for long-term loans.

Similarly, VPBank provides credits with an interest rate of 12% for the first three months. Thereafter, lending rates will be adjusted in accordance with VPBank’s regulations.

Therefore, a banking expert advised homebuyers to take a close look at their loan contracts, especially the lending rates after preferential terms are over.

The central bank’s governor signaled the ceiling deposit rate would be slashed by another percentage point within this year. Therefore, lending rates will be cut further in line with deposit rates, offering more chances to homebuyers.

Le Tham Duong, dean of the Business Administration Faculty at the HCMC Banking University, remarked now is the good time for those with urgent demand for houses to realize their dream. However, he stressed the current lending rates are still beyond reach of many middle-income earners.

He stated interest rate is only a factor contributing to the prosperity of the market. Lending rate cuts as recently announced are still not enough to lure investors back into the property market.

Economic expert Dinh The Hien said the current market trend allows homebuyers to select houses at prime locations with reasonable prices.

As for short-term investors, they should consider more carefully as the economic woes might continue into next year. It is unlikely that property prices would pick up from now to 2013, so now is not the right time for surfing investors.

Meanwhile, there are still opportunities for long-term investors, who are actually financially capable and do not expect profits in a short time, said Hien.

The economic expert said investors should not pour money into the apartment projects that have just completed footing construction. Instead, they should invest in the finished and near-completion projects.

With completed apartments, investors can lease them out in case they cannot be sold yet, Hien said.

According to a market research of Jones Lang LaSalle, there are some 85,000 apartments on offer in HCMC, including around 39,000 incomplete ones.

The apartment market will welcome an additional 16,300 units in late this year.

Duyen Hai seaport project to get started late this year

Vietnam Electricity Group (EVN) is under preparation to start work on a seaport for Duyen Hai Thermo-power Center in Tra Vinh Province late this year

EVN leaders told Deputy Prime Minister Hoang Trung Hai, who paid a working trip to Duyen Hai Thermo-power Center over the weekend, that the seaport can handle 30,000-DWT ships and will receive 12 million tons of coal and oil serving the operation of power plants in the center.

EVN in June this year signed an engineering, procurement and construction (EPC) contract worth some US$180 million for developing this seaport.

The project is scheduled for completion and operation in the third quarter of 2014. Besides, the first power plant of the thermo-power center will start to supply power for the national grid in late 2015.

Duyen Hai Thermo-power Center invested by EVN and Malaysia-based Janakuasa Sdn Bhd consists of four coal-fired thermal power plants having a total designed capacity of 4,200 MW. The center has a total investment cost of around US$8 billion.

VND1.2 trillion advanced for road projects

Total advanced investment funds for developing road projects set for completion between now and June next year is VND1.21 trillion, according to the Directorate for Roads of Vietnam.

Trinh Dinh Nghi, director of the office of the directorate, told the Daily his agency has been entrusted as owner of 101 projects with total capital of VND2.83 trillion planned for this year’s capital construction.

As of the end of June, the agency had carried out projects worth an estimated VND2.46 trillion and had more than VND1.31 trillion disbursed, Nghi said. This means there will be a severe shortfall of capital to continue deploying the projects in the rest of the year, he noted.

Of the VND1.21 trillion requested as advance, VND881 billion is to be sourced from the Government bond sales and the remainder is funded by the State Budget, Nghi stated.

In 2011, the Ministry of Transport demanded to halt the construction of 75 ongoing projects totaling VND1.42 trillion in line with the policy to cut the public investment at that time.

With the advanced fund allocation, the first project of the transport industry to be re-started is the one to upgrade the road section from Ninh Thuan to Lam Dong provinces as part of the National Highway 27.

* The HCMC Department of Transport finds it difficult to secure capital for developing elevated roads and monorail systems to reduce traffic congestion in the locality from now to 2015 as planned.

The list of the key projects in the 2011-2015 period includes the tramway No.1 Saigon – Cho Lon - Mien Tay Coach, the monorail No.2 linking Nguyen Van Linh Street in District 7 to Thu Thiem, the tramway No.3 from Go Vap Intersection to Quang Trung Software and Tan Thoi Hiep, and the urban railway route No.6 from Ba Queo to Phu Lam Intersection.

According to Bui Xuan Cuong, deputy director of the department, the elevated roads No.1 and 3 have been re-started but there are still no investors for the projects’ deployment.

The biggest problem faced by relevant authorities in executing the projects is capital mobilization as the four elevated road projects alone require a combined cost of up to over VND50 trillion, or some US$2.4 billion. Therefore, the authorities are trying to call for investment into the projects via the formats of build-operate-transfer (BOT) build-transfer (BT) or public-private partnerships (PPP).

In fact, the construction of a number of schemes like the tramway No.1 and the elevated road No.1 have been suspended due to the withdrawal of the investors for some reasons. Meanwhile, the consortium of Thanh Danh Construction and Trading Company and Malaysia’s Titanium Management Company in charge of the tramway No.1 project has withdrawn from the project because of failing to reach a same voice in the project deployment.

Similarly, the projects to build elevated roads No.1 and 2 under the investors from South Korea and Malaysia have come to a dead halt due to financial constraints.

VND327 billion for Rex Hotel upgrade

The Rex Hotel now is upgrading a section of its premises on Pasteur Street in downtown HCMC with total investment funds of up to VND327 billion and plans to put the area into operation in October this year.

Tao Van Nghe, general manager of the hotel, said when in place, the newly-upgraded premises will provide 125 high-class rooms on high floors. The ground floor will be home to restaurants and this is the difference compared to the similar spaces of the hotel along Le Loi, Nguyen Hue and Le Thanh Ton streets which are being leased out to high-end fashion brands, Nghe noted.

“We will use one part of the space to do our restaurant business and lease out the remainder to others, with all tenants required to meet the criteria of the luxury hotel,” Nghe stated.

When complete, the five-star hotel will have 284 rooms along with a series of shops and restaurants targeting high-class customers at the grounds floors. In the future, the hotel will be expanded into a bigger hotel bordered by the four streets.

Despite the operational suspension of 125 rooms in the year’s first half for upgrade, the hotel still obtained over VND194 billion in sales, almost equivalent to last year’s figure.

Residents hold back Marriott

US-based ITC Spectrum LLC continues facing residents’ ire against its site clearance for a $250 million Marriott International resort project in central Binh Dinh province.

Man Ngoc Ly, director at Binh Dinh Economic Zone Management Authority, said the provincial authority and the developer had not reached a compensation agreement with many households living in the Vinh Hoi tourism project site.

“At the end last year, local residents agreed to take compensation cash and leave their home for resettlement areas. But they have changed their mind and asked for higher compensation,” said Ly.
In the past two weeks Binh Dinh Provincial People’s Committee, Binh Dinh Economic Zone Management Authority and the developer had meetings with residents to negotiate compensation costs. However, Ly said the negotiations were not finished.

“We have not reached a final agreement with local residents,” said Ly. Vinh Hoi tourism complex is among the first projects registered in Nhon Hoi Economic Zone in 2007, now known as Binh Dinh Economic Zone. ITC Spectrum LLC develops this project through a wholly-owned subsidiary Vietnamese-American Hotel and Resort Limited Company.

In 2010, Marriott International signed a management agreement with the US developer to manage the project under two luxury hotel brands including Ritz-Carlton and JW Marriott. According to Marriott International, the 325 hectare project will be an oceanfront, fully-integrated, mixed-use development including three resorts, a championship 18-hole golf course designed by Robert Trent Jones II, residential villas, a retail village, an arboretum and other recreational amenities.

However, until now, the developer and local authority have cleared only 135 out of 325ha. Total site clearance cost is about VND200 billion ($10 million). This cost will be covered by the developer and then it will get refunds through land rental exemption when the project is operational.

Actually, the developer started building infrastructure system in the cleared site such as internal roads several months ago. But, Ly said this work was stalled because of the protest from local residents.

Cracks in investment promise

Surveys showing international organisations see Vietnam as a great place for investment are in stark contrast to foreign direct investment commitments dropping.

The current downturn of the economy, which accelerated only 4.38 per cent in the first half of this year, is often blamed for the continuous decline in foreign direct investment (FDI) commitment in Vietnam. However, many foreign investors operating in Vietnam said the biggest challenge barring FDI inflows in Vietnam is the inconsistency of business-related legislation.

The new FDI commitment in the first seven months of this year hit $8.03 billion, dropping 33.1 per cent from a year earlier. There were 698 new projects registered in the country at the same time, down 16.3 per cent year-on-year.

“A long-standing difficulty is in the lack of clarity in business and business-related legislations, compounded by the economic downturn, the current investment climate is not too rosy, despite the vast opportunities still available in Vietnam,” said Bobby Liu, president of the Singapore Business Association of Vietnam, addng some legislation passed this year had made it even tougher for businesses.

The Labour Code, which was passed by the National Assembly in June, is an example. Under this Labour Code, worker overtime remains generally limited to 200 hours per-year. Investors claim that provision will restrict flexibility and reduce productivity of factories and of Vietnam.

A EuroCham survey released two weeks ago found out that new Labour Code coming into effect on the May 1, 2013 is causing uncertainty and concern among European businesses in Vietnam. The vast majority of 42 per cent of respondents expected the new Labour Code to have a negative effect on their business. Meanwhile, 28 per cent stated they were unsure what the new legislation would entail, hinting at a lack of information available about the new legislation and what exactly it will mean for day-to-day business.

The regular change of automotive industry-related policies is another evidence of inconsistencies in Vietnam’s legal framework. Over the past years, the Vietnamese government and provincial authorities have many times changed tax and fees relating to automotive industry. The latest movement is the increase of registration fees for cars in Ho Chi Minh City and Hanoi up 15 or 20 per cent, respectively.

Laurent Charpentier, chairman of the Vietnam Automobile Manufacturers’ Association and Ford Vietnam’s general director, said the demand in this market was growing rapidly, but the regular changes of government policy was worrying automaker in Vietnam and deterring spare part suppliers from investing in the country.

In fact, the government is trying to reduce administrative obstacles and policy risks for foreign investors, aiming to attract more FDI into the country. The specific actions are the implementation of the Project 30 to simply administrative procedures and the current implementation of prime minister’s instruction for enhancing investment climate.

Still, foreign investors complain of sluggish improvements. Japan’s Itochu Corporation is a victim of the sluggish step. The firm recently complained that the delay in promulgating a legal system to introduce fuel ethanol to Vietnam was a barrier for Itochu and its Vietnamese partner, PetroVietnam Oil, to sell bio-fuel in this market, causing losses.

Hari Achuthan, managing director of New York-based ACO Investment Group, said Vietnam had huge potential for investment. But if Vietnam failed to keep its policies consistent, investors would eye other markets.

According to the “World Investment Report 2012” released by the United Nations Conference on Trade and Development last month, Vietnam remains keeping its position at 11th most prospective economy for investments in the period 2012-2014. The ranking is based on the respondents of 174 validated transnational companies.

Vietnam was also ranked in the most attractive 20 emerging market for investments by US-based consulting firm A.T. Kearney.

Local tourism fails to boost vacationers’ spending

While many international holidaymakers earmark several hundred US dollars to buy gifts during their Vietnam trips, the local tourism industry fails to showcase souvenirs attractive enough to make the vacationers open their wallets.

Tourists staying in five-star hotels can spend up to $400 a day on shopping, but there are not many choices for them to spend this money on during their stay in Ho Chi Minh City, according to some tour guides.

Even on Dong Khoi Street, which is considered the “shopping heaven” for international tourists, it is difficult to find a gift with a completely Vietnamese identity.

Souvenirs, most commonly in the forms of lacquers and handicrafts, are available in almost every tourism spot across the country, and a gift thought to be unique in the north can easily be found on a shelf in the south.

“I used to think I could find many unique gifts in HCMC, but after having been to the northern provinces and the Ancient Town of Hoi An, I noticed that all of the products in HCMC can be found in those other areas as well,” said Lynn, an Australian tourist, as she was browsing at a pottery booth in Ben Thanh Market on August 10.

She eventually chose three pottery statues in Vietnamese ethic costumes, and lamented, “Though the gifts are the same, their prices are much higher than in other places.”

Lynn said she had set aside several hundred US dollars prior to her Vietnam trip to buy souvenirs, but could bring home only a few bags of coffee and several key chains.

“I used to buy T-shirts with the national symbol whenever I visit a new country, but those in Vietnam are of poor quality,” she shared.

She also had to abandon the idea of buying some local aromatic spices, as “they are not properly preserved and wrapped.”

Foreign tourists are usually taken for a shopping-excursion around Binh Tay market during their tour of the city’s Chinatown, but few holidaymakers end up opening their wallets to buy gifts.

The problem, according to Vuong, a freelance tour guide, is that the market’s aisles are too narrow, and there is a severe shortage of directional and instruction banners for the tourists.

“I feel unsecure and uncomfortable in Binh Tay market,” said Tim, an American vacationer.

“It is too stuffy, hot, and dirty, and I didn’t dare to step into the rest room,” he added.

There are a wide range of souvenirs on shelves in the market at reasonable prices, but few transactions are made as the traders feel confused whenever they see a foreign potential buyer.

Here, the language barrier is an issue.

“Many western tourists asked me about the fabric prices but all I could do was smile,” admitted Huong, a trader.

“Just seeing them makes me nervous, let alone inviting them to buy my goods.”

Taking advantage of WTO membership for development

After five years of implementation, Resolution 08-NQ/TW has brought about great and practical results, significantly contributing to the country’s common achievements.

The statement was made by Prime Minister Nguyen Tan Dung while presiding over a national conference in Hanoi on August 14. He reviewed the implementation of the resolution on a number of major policies and guidelines aimed to develop the economy in a rapid and sustainable manner, now that Vietnam has become a member of the World Trade Organisation (WTO).

In the bilateral field, commitments to the WTO have been nearly fulfilled, Dung said, adding that impact of the commitments can now be assessed effectively.

Regionally, Vietnam has integrated more intensively into ASEAN, heading towards the building of the ASEAN Community by 2015.

The country is actively negotiating or preparing negotiations on several important free trade agreements such as the Trans-Pacific Partnership (TPP) agreement and a bilateral free trade agreement with the EU, the Prime Minister said.

The present context requires Vietnam to look back and comprehensively evaluate the implementation of the resolution, as well as targets and tasks laid out in the Government’s Programme of Actions, in order to seek solutions to continue improving the efficiency of international integration in general and international economic integration in particular, he noted.

Dung stressed the need to assess the achievements in a right way while looking honestly at shortcomings, weaknesses and reasons to draw lessons during the implementation of the resolution.

It is also necessary to clarify the context and new development requirements to set targets, tasks and solutions to boost and improve the efficiency of international integration while building strategies for international integration in the coming time, the PM said.

The conference will hear a report from the Ministry of Industry and Trade that focuses on the implementation of the Resolution No. 08 and the Government’s Resolution 16/2007/NQ-CP on the implementation of Resolution No. 08.

The Ministry of Planning and Investment will present a draft report on Vietnam’s socio-economic situation five years after joining WTO.

The Government’s draft resolution on economic integration during the 2012-2015 period with a vision to 2020 and a number speeches of representatives of central agencies, ministries, localities, research institutes, associations and economic groups will also be delivered at the conference.

VN smartphone users to reach 21 pct by year-end

The number of smart phone users in Vietnam is expected to rise to 21 percent from the current 16 percent of mobilephone users by this year’s end, according to a recent research by Ericsson Consumer Lab (ECL).

Tablet will also see the number of its users increase from 2 percent to 5 percent in the last six months of the year.

Along with the rising number of smartphone and tablet users, the research also said local smartphone users will use more mobile apps in the second half of this year, with the number predicted to go from 35 percent to 40 percent.

Entertaining, television, video and game services are the current most downloaded apps, according to ECL, one of the world’s leading telecom market researchers.

It is also expected that apps related to banking, shopping and tourism will attract more users in the future.

Continuous upgrades of network infrastructure and more appropriate pricing policies will maintain the high smartphone growth rate in the country, ECL stated.

“Mobile operators in Vietnam should keep pace with the technology developments of smartphones in terms of coverage, transmission speed and stability,” said Jan Wassenius, director of Ericsson Vietnam, Laos and Cambodia.

SJC stops buying deformed gold bars as price rises

Saigon Jewelry Co (SJC) Monday stopped buying back deformed gold bullion from local people who want to resell them.

Nguyen Cong Tuong, deputy head of SJC sales department, told Tuoi Tre that the firm had to do so because it was running out of money.

“We have bought back a lot of deformed SJC gold bullion over the past two months without being allowed to reprocess them into normal gold bars,” said Tuong.

“This has caused a real stagnancy in the flow of our working capital, so we have had to offset it with bank loans, and paid the interest rates.”

“We have sought for State of Vietnam permits to reprocess the gold bullion, but they have not yet been licensed,” Tuong added.

The gold price on Monday surged to a two-month high at VND42.51 million a tael, but slipped to VND42.46 at the opening of Tuesday’s trading session. Spot gold on the world market was at $1,612.8 an ounce, some VND1.91 million cheaper than the local gold price.

SJC moves have immediately been reapplied by other gold shops as SJC dominates the local gold market with about 95 percent market share.

The company in late May also refused to buy back deformed SJC gold bullion, and then resumed the program on June 6.

Tuong told Tuoi Tre the company stopped exchanging deformed SJC gold bullion as of May 25 because the central bank restricted its gold bullion processing following a new management regulation.

“SJC has submitted documents to the central bank to ask for permission to reshape the deformed bars, but has yet to receive any response,” said Tuong.

SJC late last year was empowered by the SBV as the sole gold bullion manufacturer of Vietnam.

This was reaffirmed by SBV deputy governor Le Minh Hung at a media conference on July 4, 2012.

Under decree no. 24, which took effect on May 25, 2012, the government is the monopoly in processing gold bullion, and it has assigned the central bank to manage the gold trading market, he said.

Consequently, all of the licenses granted for gold manufacturers, including SJC, have expired since the issuance of the decree.

With SJC holding 95 percent of the gold bar market, and enjoying a good reputation for its quality and prestige, the central bank has decided to choose SJC as the state brand of gold bullion, said Hung.