GPBank shareholders’ meeting fails again

Global Petroleum Bank (GPBank) last Saturday failed to organize an extraordinary general meeting for the second time as only 31% of its shareholders showed up, far lower than the required minimum ratio of 51%.

Earlier, GPBank scraped its plan for a shareholders’ meeting on June 20 since only 36% of shareholders were present while the required ratio was 65%. Its extraordinary general meeting will happen on July 2 no matter how many shareholders show up.

GPBank has been urging shareholders to raise its chartered capital to VND3 trillion as regulated by the central bank. The lender’s chartered capital is now negative due to losses.

It is unlikely that shareholders would contribute more money to raise GPBank’s chartered capital to VND3 trillion.

Many investors, including a 100% foreign-owned lender, have offered to take over the struggling bank. However, the central bank has not approved the deal, citing their excessive demands. Investors are no longer interested in GPBank now and the central bank might buy the bank at VND0 as it has done to two other institutions.

Therefore, there is a high possibility that the central bank could announce to take over GPBank at the upcoming general meeting to turn it into a State-owned bank just like Ocean Bank and Vietnam Construction Bank (VNCB).

The central bank has suspended Ta Ba Long from the posts of chairman and board member of GPBank, Doan Van An from the posts of deputy chairman and board member, and Ta Thu Thuy from the post of board member.

To ensure normal operations of GPBank, the central bank has appointed Tran Thi Le Nga as the legal representative of the commercial bank from April 8. Nga was formerly chief of VietinBank’s board of controllers.

GPBank is among nine weak banks that must be restructured as ordered by the central bank.

HCM City talks VN-Korea FTA

The Viet Nam-Korea Free Trade Agreement, which was signed earlier this month, is expected to more than double bilateral trade by 2020, officials said at a seminar held in HCM City yesterday.

Park Sang Hyup, head of the Korea Trade-Investment Promotion Agency (KOTRA) in HCM City, said bilateral trade last year rose to more than $30 billion from nearly $500 million in 1992.

Phan Thi Thanh Minh, head of the Ministry of Industry and Trade's southern operations department, said under the FTA, Viet Nam would remove import tariffs on more than 90 per cent of Korean products, including garment and textile raw materials, unprocessed plastic, electronic parts, automotive components, household electricity, iron and steel, electric cables and others.

South Korea, meanwhile, will reduce import duties on more than 95 per cent of Vietnamese goods, including key export items like shrimp, fish, crab, tropical fruits, garment and textiles, and wooden products.

South Korea will also open its doors to Vietnamese garlic, ginger, honey and sweet potato.

Law adds teeth to homeowner rights

Homebuyers will soon get protection for their money and rights as a regulation making bank guarantees mandatory for future property purchases will come into effect next week.

Following Article 56 of the Law on Real Estate Business, property developers, before selling or leasing unfinished properties, must obtain guarantees from eligible commercial banks as assurances of their financial obligations to buyers.

Speaking at an online discussion on "Property guarantees – will there be risks," held in Ha Noi on Wednesday, Vu Van Phan, deputy director of the Construction Ministry's Housing and Real Estate Market Management Department, said several countries have implemented property guarantees. For example, South Korea has been applying this guarantee norm for years at 0.5-1 per cent fee.

"The purpose of the article is to protect homebuyers' money. If property developers fail to hand over apartments to buyers despite commitments, banks will be responsible for returning buyers' money, in line with signed contracts. In addition, this will help improve the sense of responsibility of investors," Phan observed.

Customers have lost their trust after several real estate projects collapsed in the past few years, affecting the realty market," he added.

Vu Quoc Hiep, chairman of the GP Invest Company's Management Board, agreed, saying that this can be considered as the second shield, together with the purchase of contracts between investors and homebuyers. Customers can ask real estate developers to provide images or videos of their projects' progress regularly.

Hiep noted that the ministry will promulgate a decree or circular outlining the implementation of the regulation.

He also asked about the fee for a guarantee and proposed the ministry to specify the rules for the collection of fees.

Meanwhile, some said that a property guarantee will present more risks for banks than other normal guarantees.

Doan Thai Son, director of the State Bank of Viet Nam's Legal Department, pointed out that commercial banks already have this guarantee under Circular 28 issued by the central bank in 2012. In reality, several banks have implemented guarantees for property projects.

The central bank has prepared a list of commercial banks eligible to offer guarantees for real estate projects.

There are two forms of guarantees, trust loans and mortgages. It is easy to implement mortgages for both property developers and banks.

Son suggested that banks should carefully review developers' ability while offering guarantees under trust loans.

He proposed a guarantee fee of 0.1 per cent, 1 per cent, and 2 per cent or higher, depending on a bank's assessment.

He calculated that with an average housing price of VND25 million per square metre, 100sq.m. can have a total value of VND2.5 billion. The guarantee fee will be calculated on 70 per cent of the total value, or VND1.7 billion. If the fee is 0.5 per cent of the total value, investors will have to pay VND8 million or VND32 million for a fee of 2 per cent.

However, several people worry that developers will add the additional fee to housing prices.

He suggested that a guarantee fee should be negotiated between banks and investors depending on each project and its risks.

Businesses move into farms slowly

Private enterprises have succeeded with their agricultural investments, but their progress still lags behind their true potential and the demand for development in the sector, a conference was told in Ha Noi yesterday.

Minister of Agriculture and Rural Development Cao Duc Phat said that investments by private businesses in the area had increased by 1.9 times from 2009-13.

The number of companies investing in agriculture rose from around 2,400 in 2007 to 3,635 in 2013, an average growth rate of 13.8 per cent per year. Private firms accounted for nearly 90 per cent of the figure, creating jobs for some 265,000 workers.

Companies such as Vinamilk, TH Truemilk, Minh Phu Seafood and property developer Hoang Anh Gia Lai have become locomotives driving high-tech application and market expansion in the agricultural sector in many localities.

Real estate giant Vingroup, major telecommunications service provider Viettel and multi-sector business group FLC have also expressed intentions to invest in the field.

The Government has issued specific resolutions last year and this year to speed up the improvement of the agricultural business environment.

The Ministry of Agriculture and Rural Development (MARD) has also established a working group with the participation of its management agencies and 30 key enterprises to attract agricultural investments.

Phat said investments in agriculture remained limited and unstable. In 2014, only about 1 per cent of nationwide businesses dealt in the sector, and more than half of this minority had equity of less than VND5 billion (US$238,100).

At yesterday's meeting, representatives of the World Bank and many companies said that better conditions related to land, infrastructure, taxes and fees, as well as investment promotions and technological development should be in place in order to attract more interest in agriculture.

Deputy Prime Minister Hoang Trung Hai said that the country will enter a variety of free trade agreements, so challenges had become greater for agricultural development.

He said land issues, especially site clearance, was the biggest obstacle facing companies, and ministries and sectors would have to scrutinise them for appropriate settlements in the coming months.

He suggested enterprises should prioritise forming links with farmers instead of asking for land grants, since the growing Vietnamese population had left the per-capita area of land for production small.

Hai said the Government would focus its investments on agricultural infrastructure, including irrigational works and rural traffic, urging the MARD-led working group to concentrate on developing advantageous lines of products.

He added that enterprises were also being encouraged to either team up or foster public-private partnerships.

The Deputy PM also urged agro-businesses to produce more quality products and pay more attention to the interests of the community in order to gain consumer confidence.

"The Government will continue to trim administrative procedures and show enterprises that we are serious about helping them to industrialise and mordernise agriculture and rural areas," he noted.

Last Thursday, an inter-ministerial meeting heard that relevant ministries would have to work closely to boost exports, especially for agricultural produce, as an agricultural growth slump would pose the greatest challenge to the country's economic growth.

Minister of Planning and Investment Bui Quang Vinh reported that the agricultural industry grew by only 2.17 per cent during the first half of this year, while the sector last year accounted for 3.44 per cent of the country's gross domestic product growth.

He attributed the slump to droughts in the central region and struggling seafood exports, which had significant impacts on agricultural production and exports.

HCM City on path to hit growth target

HCM City has managed to remain on the growth path this year, city authorities noted at a meeting to review socio-economic performance in the first half of the year.

According to a report tabled by the city People's Committee at the meeting last week, the city's gross domestic product was worth over VND417 trillion (US$21.5 billion) in the period, representing 8.55 per cent growth year-on-year.

This is the highest rate attained in the last three years, the Department of Planning and Investment said.

Thai Van Re, the department's director, said the growth rates of 6-9.8 per cent achieved by industry and construction, agriculture, and services indicates that economic development is on the right track.

Other areas like trade and credit and banking have also achieved high growth rates, he said.

The wholesale and services turnover was VND323.2 trillion ($14.8 billion), a year-on-year increase of 10.9 per cent.

As of June end deposits at banks and financial organisations topped VND1.384 trillion ($63.7 million), up 14.8 per cent.

The increases in both deposits and loans indicate that capital has been channelled well into the economy, he said.

The city's industry grew at 6.5 per cent.

Industrial parks and export processing zones and the Sai Gon Hi-tech Park have attracted investments of over $623 million this year, up 87 per cent.

The city's exports were worth $2.53 billion.

Tran Anh Tuan, acting head of HCM City Institute for Research and Development, said manufacturing has done well in the last three years together with consumption and exports.

In the second half of the year, the city authorities plan to take many measures to help businesses.

The People's Committee will enhance relations with the corporate sector through contacts and meetings to know about the difficulties and hindrances companies face.

Measures will be taken to help businesses improve their competitiveness by renewing technologies and promoting their products.

The city will continue to help supporting industries with a focus on exhibitions and mapping out a project to develop them.

Le Hoang Quan, chairman of the People's Committee, said the city is setting up a board to steer the city's economic integration with the global community.

Relevant agencies have stepped up inspection and oversight of market to find those flouting the laws with a focus on efforts to combat smuggling and production of fake goods and violation of intellectual property rights and food hygiene and safety norms.

The city will also promote business and investment by stabilising and developing the local market while maintaining and strengthening traditional foreign markets and establishing new markets for Vietnamese goods.

It will continue to monitor and guide the restructuring of credit organisations and ensure they operate safely and efficiently and to implement the banking restructure project mapped out by the Government and the State Bank of Viet Nam.

World Bank funds food safety

The World Bank's Board of Governors approved an additional fund of US$45 million for a project ‘Improving the competitive capability and food safety' in Vietnam on June 27.

Vo Thanh Son, senior expert on rural development at the WB and a team leader of the project, said the additional funding is aimed at consolidating the project's initial achievements and expanding good agricultural practices to other localities.

The project was first approved in September 2009, with the International Development Association providing $65.26 million and the Government of Viet Nam contributing $13.77 million.

Vietnamese tea needs to have world certification

Viet Nam's tea producers should meet Fairtrade International's certification standards to increase the competitive quality of tea products and improve their export value, said experts.

According to the Ministry of Agriculture and Rural Development, the national tea export value in the first half of this year saw a reduction of 6.7 per cent in volume to 54,000 tonnes and 4.1 per cent in value to US$90 million against the same period last year.

Viet Nam is one of the top five tea producers in the world and exports tea to 120 countries and territories, including Taiwan, Pakistan, mainland China, the United States, and Russia, as well as Malaysia and Singapore.

Vietnamese tea products have covered 60 per cent of the black tea market and 40 per cent of the green tea market in the world.

However, Hoang Vinh Long, head of the Viet Nam Tea Association's administration office, said Vietnamese tea export is mostly pre-processing products packaged in large bags without any brand name, so their export value has been low because Vietnamese tea exporters have not built a brand or produced finished tea products for exporting to direct customers.

Meanwhile, most Vietnamese tea producers and traders have small production and business units, low capital, and limited skills for marketing and negotiating export contracts, he noted.

The other reasons for the low export value of tea products include the poor skill of tea growers, small investments in the tea industry, low supply, undeveloped tea processing industry, and unstable quality.

Now, customers at home and abroad pay more attention to the origin of products and production conditions at enterprises, according to the association. Therefore, Viet Nam's tea producers should get the international fairtrade certification to improve the quality and competitiveness of Vietnamese tea products on the world market.

The fairtrade certification is one of the current trends in international trade, Nguyen Thi Hong Minh from the Viet Nam Research Institute of Rural Industry was quoted as saying by the Thoi bao Kinh doanh (The Business Times) newspaper.

Many customers value the certification that supports fair production and business practices and respects sustainable living environments, she said. These issues are new for Vietnamese tea producers, and hence, they have not paid much attention to them.

Long pointed out that Viet Nam has only two tea producers who have the international fairtrade certification: Bac Ha Investment and Development Company Limited and Shan Tea Cooperative in Yen Bai Province.

Interests of the certification are to have more export market and a higher export price, as well as establish long-term and sustainable business relations, he added.

However, local tea producers' knowledge of the certification is low, he observed. Most of them have small capital, while large investments are needed to improve production and product quality, two requirements for attaining the certification.

Land rents continue to soar

Land rents are rising too quickly, according to members of the business community who met in Ha Noi at a conference entitled "Property Rights and Enterprise Development".

The meeting last week was co-organised by the Viet Nam Chamber of Commerce and Industry (VCCI) and World Bank Group.

Some business rents have remained stable, being set by five year leases signed before 2011, said Le Thanh Hai from the VCCI's Enterprise Development Foundation.

Land rental fees throughout Viet Nam, however, have continuously increased, now being about twice as costly as last year, despite exemption policies in place from 2011 to 2014, she added.

Howerver, representatives of businesses from the northern province of Hai Phong complained that land rentals in 2015 increased from two to 4.5 times, compared to last year - and by 10 times compared to 2010.

And businesses in Ha Noi reported that rents increased from five times to as much as 25 times.

In the hospitality industry, construction has been scheduled in large leased areas with high proportions set aside for park areas with trees and a lower proportion for construction.

Therefore, high land rental costs reduce their competitiveness in the hospitality industry, compared to other countries in the region, according to the Tourism Advisory Board (TAB).

The business community proposed that specific plans were needed due to increasing costs of leasing land, and ceiling prices should not be allowed to reach two times higher than the 2010 price, following Resolution No 02/2013/NQ-CP dated January 7, 2013 of the Government.

Yet, the demand to build on land is increasing, as the economy continues to show signs of recovery.

Of note, there were 401,000 operating companies at the end of 2014. Of those, 74,842 were newly registered enterprises in Viet Nam.

Property firms lure Japanese expats

The Japanese population offers a reliable source of current and future demand for short- and long-term accommodations, with growing interest among Japanese companies to open units in Viet Nam.

This was noted by Mauro Gasparotti, Executive Director at Alternaty Viet Nam, a boutique real estate consulting firm.

Alternaty recently carried out a research on Japanese companies in Greater HCM City and Ha Noi, as well as Japanese nationals living in Viet Nam. The aim of the study was to identify some of the key demand factors for accommodations, specifically in properties offering serviced apartments.

Japanese nationals' contribution to infrastructure development and investment in industrial parks will continue fuelling the requests for serviced apartments, both in central business district locations and areas closer to main industrial hubs or office complexes.

"Contrary to popular belief, that Japanese guests require specific designs and facilities, our market survey shows that international standard designs are now widely accepted and only limited, custom-made adjustments need to be made, mainly in services and specific F&B (food and beverage) facilities," Gasparotti said.

According to Alternaty, a total of 133 companies and individuals were surveyed and a series of questions relating to preferences for accommodation were asked.

Approximately 95 per cent of respondents indicated safety/security as a critical factor while choosing an apartment, while 80 per cent of respondents who are here for long-term stay identified offered rates as an important factor in decision-making.

Only 25 per cent of respondents required Japanese-oriented designs for their accommodation.

For the majority of long-term respondents, their monthly budget ranges between US$1,000 and $2,000.

Real estate market faces many challenges

Real estate related laws such as revised Housing, Real Estate Trading, Investment and Enterprise Laws will take effect from July 1, creating a larger transparent and convenient legal framework for businesses. However experts have pointed out many things that should be done to practice the new policies effectively.

Hung Thinh Construction Company chairman Nguyen Dinh Trung said that new regulations would well assist the real estate market from July. For instance, foreigners can buy houses in Vietnam and investors must be guaranteed by banks to ensure future house buyers’ rights.                       

However, the Government and ministries should simplify procedures and clearly determine responsibilities of relevant organizations and individuals when issuing decrees and circulars on the implementation of these regulations and handling documents for investors, experts said. This aims to get results as expectations.

Mr. Trung proposed the Government to exempt investors of done site clearance projects from making deposits for bank guarantee. The deposit rate should be 1-3 percent not total investment capital of a project.

Some polices had been issued and considered as a lever to the real estate market. However, they have been implemented sluggishly without effectiveness as expectations such as the VND30 trillion (US$1.37 billion) housing credit package. It has been disbursed too slowly to help low income people have houses due to asynchronous documents on the policy implementation.

Director of Le Thanh Real Estate Company Le Huu Nghia said that the property market has recovered but showed new worries. The number of customers has increased 50 percent over a year a go but the supply has also hiked 500 percent.

Clear policies and financial assistances to businesses and house buyers were needed to prevent the market from falling into frozen condition in the next couple of years, he said.

The HCMC Department of Construction’s housing development division reported businesses have marketed 75,000 future apartments since early 2015.

Deputy Director of the State Bank of Vietnam in HCMC Nguyen Hoang Minh said that HCMC bad debt has reached VND53 trillion (US$2.43 billion), accounting for 5 percent of total liability. Of these, real estate accounts for 25 percent.

The city has set a target to reduce bad debt ratio to 3 percent, meaning many half-done real estate projects, which businesses have invested hundreds to thousands of billions of dong in, must be handled.

The HCMC Real Estate Association has proposed the city People’s Committee to support businesses to deal with 689 half-done and 85 revoked projects to prevent wastes to the society.

It also suggested the committee to consider permitting investors to divide large and unsalable apartments into smaller ones and transfer commercial into social housing or service projects.

US$1 billion tourism complex in Phu Yen started construction

The one-billion-USD tourism complex in Phu Yen province was kicked off on June 27.

The high-class tourism complex covers a total area of nearly 360 hectares in the coastal communes of An Chan and An My in Tuy An district, and An Phu in Tuy Hoa city, including a 5- and 6-star hotel complex, a 36-hole golf course, international yacht harbor and many leisure facilities.

A subproject named Sunrise Phu Yen will be built on Hon Chua Island, about 1km from the coast of An Chan commune. This tourist site is designed with dive hunting, fishing and sea entertainment services in addition to a heliport and luxury villas

The project’s investor, New City Vietnam and T-Way Air,  a budget airline based in Seoul, South Korea  also signed an agreement on launching direct route from Seoul to Tuy Hoa in the coming time.

Government again urges state firms to speed up privatization

The managements of state-owned enterprises that fail to privatize and divest from non-core businesses as ordered this year face "strict" action,  a government committee on the restructuring of SOEs said at a recent meeting in Hanoi.

Only 61 SOEs have finished selling stakes to private investors in the first six months, accounting for a mere 21.1% of the number of businesses  slated for privatization this year, the committee said.

But state-owned conglomerates pulled out of five "sensitive" sectors -- real estate, stocks, banking, insurance, and venture funding – selling their  stakes for US$176.87 million, or 15% of the target.

While policy problems have been the main cause of the tardiness, the economic situation have also made it difficult for SOEs to sell their shares,  according to the committee.

While SOEs have sold more than VND11.16 trillion (US$511 million) worth of stakes in non-core businesses, it is "nothing" compared to the  amount of funding the government needs to provide some others, Deputy Minister of Planning and Investment Dang Huy Dong told the meeting.

For instance, Vietnam National Chemical Group, Vietnam Posts and Telecommunications Group, and Vietnam National Coal and Mining  Industries Group alone are now in need of over VND40.45 trillion (US$1.85 billion), he said.

Under a decree the government issued in July last year, a “state conglomerate” must have chartered capital of at least VND10 trillion (US$457.87  million).

Since it is impossible for many to achieve that, Dong said his ministry has been working with other agencies to either change the definition of  state conglomerate or amend the regulation.

A report by the Central Institute for Economic Management (CIEM) earlier this year showed that state conglomerates have been expanding quite  quickly and make up an overwhelming majority - 15 out of 20 percent of Vietnam's largest businesses.

Vietnam rubber exports rise marginally

The nation’s natural rubber industry rebounded modestly in May as exports recorded higher prices and volume than April, according to the  Ministry of Agriculture and Rural Development (MARD).

During May, the country shipped 78,000 tonnes of rubber to foreign markets generating US$114 million of revenue, up from 58,000 tonnes  exported at US$84 million for April.

During the five month period January-May, exports of natural rubber saw an on-year increase of 30.1% in volume to 330,000 tonnes with an  on-year reduction in value of 2.9% to US$475 million.

Meanwhile, the ministry said in early May, the export price of Vietnam’s key rubber product (SVR 3L) reached US$1,655 per tonne, US$73 per  tonne higher than the previous month’s sales price.

The export price of SVR 3L rose to US$1,700 per tonne at the end of May and US$1,790 per tonne on June 12, the ministry said.

On the world market, the June 1-12 average price of ribbed smoked sheets (RSS 3) rubber on the Tokyo Commodity Exchange was US$1,919  per tonne for futures contracts, up US$67 per tonne or 3.6% compared to the average prices in May.

Notably, the price of natural rubber decreased US$75 per tonne from the average price for June last year.

Due to an extended global production surplus the market is experiencing a glut with the price of rubber expected to remain stagnant at US$1,500  and US$2,500 per tonne through 2020.

In addition, Dr Tran Thi Thuy Hoa, head of the Vietnam Rubber Association said demand is slowing in China, the world’s top buyer and tire  exporter, and natural rubber is increasingly facing stiffer competition.

The price of an alternative to natural rubber made synthetically from crude oil continues to decrease and is now half what it cost a year ago.  

However, Hoa speculated the price could possibly increase after 2020.

She suggested the rubber industry reduce its output, production costs, and investment for production in line with the reduction in global demand  and reallocate the nation’s resources to expand other non-rubber industry exports.

It should also strive to develop the Made-in-Vietnam brand name, increase trade promotional activities, and offer incentives for the development  of rubber and all of the nation’s industries, Hoa underscored.

Echoing Hoa’s sentiments, the National Agro-Forestry-Fisheries Quality Assurance Department in turn pointed out that in light of reduced  demand producers should remain vigilant in monitoring rubber production to insure quality.

They should also, within the constraints of reduced investment, upgrade production lines with modern technologies, and continue to beef up  quality standards for processing of natural rubber and related products.

Coffee growers receive support for effective water resource management

Coffee farming households in five Vietnamese Central Highland provinces have recently benefitted from the project ‘More coffee with less water-  towards a reduction of the blue water footprint in coffee production’.

The project is funded by Nestlé Corporation and the Swiss Agency for Cooperation and Development (SDC), with support from German EDE  Consulting and many other local partners, including the Western Highlands Agriculture and Forestry Sciences Institute (WASI).

After a period of survey and test implementation, the project was officially kicked off in April this year and will run through to 2019.

The overall goal of the project-valued two million euros in the total funding- is to ensure equitable and sufficient water availability for all water users  in Vietnam’s Central Highlands and to obtain pivotal water savings through improved irrigation management in the coffee sector.

Also, the project aims to reach out to a critical mass of farmers, and hence to improve people's livelihoods in socio-economic terms and to  protect the environment.

Valuable lessons learned of the project will feed into a global dialogue on influencing and implementing water policies for agriculture.

Under the project, 50,000 of the poorer and marginalized coffee farming households with limited access to know-how in the stakeholder  provinces will receive training on Good Agricultural Practices including water management.

As planned, 30 trainers and 2,000 coffee farmers will receive training and six demonstration models established right this year gearing towards  coffee sustainable production through the application of effective water resource management models in each locality in the project site.

Do Thanh Chung, country director (Vietnam) of EDE Consulting said, “Through Nestlé funding and the experiences from our ongoing NESCAFE  Plan on coffee sustainable development, we expect to lend a helping hand to raise the general awareness about how to reach optimal water  

resource usage in coffee production in Vietnam as well as the possible impacts on water sources quality improvement.”

The project success is expected to contribute to boosting the coffee yields and minimising the environmental impact and the quantity of water  needed for production. Notably, the project could help coffee farmers reduce the water they use from 700 litres to 400 litres per tree.

Vietnam, the second largest coffee producer in the world behind Brazil, has created jobs for 2.6 million local workers in the sector. Meanwhile,  the Central Highlands accounts for more than 95% of the coffee growing area in the country.

TH Group hit ASEAN Best Food Award

TH Group has won the prestigious ASEAN Best Food Award for its line of micronutrient fortified milk products.

The award was given to the group at an award ceremony at the evening of June 25, 2015 within the ASEAN Food Conference organised in the Philippines’s Manila city during June 24-26, 2015.

The award is the conference’s platform for each of the participating countries to showcase native product innovation. Established in 2000, the conference convenes annually and unites the ASEAN countries with the same purpose: guide consumers to the best food and beverage products in their market and reward manufacturers for quality and innovation. It also aims to increase product trial, awareness, distribution and sales.

The group “line of micronutrient fortified milk products” includes three sterilised milk products including TH true MILK-branded School Milk, TH true MILK-branded Top Kid and TH true MILK-branded Calcium Supplement.

School Milk is supplemented with micronutrients including calcium, iron, zinc, iodine, folic acid and mixture of vitamin A, C and D. This product receives advice from Swiss-backed globally-recognised DSM and Vietnam Nutrition Institute.

Top Kid is also supplemented with various micronutrients such as DHA (helping improve brainpower, eyesight and health conditions for kids), calcium, and vitamin D and C which help improve immunity and prevent aging.

Meanwhile, Calcium Supplement milk is extractd from Chicory bulb originating from Belgium. Chibory is proved by scientists to be able to help human body increase the absorption of calcium by 20 per cent.

These products have excellently met all strict requirements from the award’s organisers, including 1) manufactured in the member country and of export quality, 2) contain 50 per cent of any raw material indigenous to the member country, and 3) have not been featured previously in the conference.

The line of micronutrient fortified milk products is directly produced at TH Group’s milk processing plant in the central province of Nghe An’s Nghia Dan district. All materials are also produced by the group in the district.

This plant’s first phase came into operation in 2013, with annual capacity of 200,000 tonnes of fresh milk, which will be raised to 500,000 tonnes in 2017.

The milk is made via the production chains produced by Sweden’s Tetrapak, Germany’s GEA and Italia’s SACMI (Italia), without using preservatives and genetically modified materials.

At the group’s dairy cow farm, biological technologies are used, with cows raised with high-quality feeds mixed by automatic chains.

Saigon Port’s upcoming IPO in the spotlight

Saigon Port Company Limited (Saigon Port) is offering 36 million shares or 16.51 per cent of the company to the public via auction at an initial price of VND11,500 (54 UScent) per share on June 30, 2015.

The company is one of the oldest and largest port operators in Vietnam. But its market share has been declining and a substantial portion of its operations are being shut down.  The real value of the company is in its property holdings, which include prime locations in the centre of Ho Chi Minh City that are being converted to residential and commercial development projects.

Established in 1863, Saigon Port is a subsidiary of Vietnam National Shipping Lines (Vinalines). Saigon Port is located in the Ho Chi Minh City area, one of the most active port areas of Vietnam. According to the Vietnam Port Association (VPA), the company has the second highest throughput in the south of Vietnam, after Saigon New Port which owns the Cat Lai port area. But, Saigon New Port’s throughput in 2014 was four fold of that of Saigon Port thanks to its strategic location in the Cat Lai area and its connectivity to completed infrastructure. From 2008, in order to reduce transportation pressure in urban areas, Ho Chi Minh City relocated its port system towards the Cat Lai area and outlying areas of the city. This created a substantial loss in market share for Saigon Port. From 2010 to 2014, the throughput of the company decreased from 11.6 million tonnes to 10.9 million tonnes and its market share decreased from 4.5 per cent to 2.9 per cent while the throughput of Vietnam’s port system increased gradually from 260 million tonnes to 370 million tonnes.

According to the socio-economic development master plan of Ho Chi Minh City, starting from July 2016, Nha Rong Khanh Hoi Port, which accounts for 50 per cent of the company’s facilities and equipment and contributed about 50 per cent to the parent company’s revenues will be shut down. At that time, its replacement, Saigon Hiep Phuoc will not have completed construction. The company’s revenues are therefore expected to decline 17 to 18 per cent year-on-year in 2017 and 2018. The company’s other main ports of Tan Thuan and Tan Thuan 2 operate at nearly full capacity and cannot be expanded, limiting its growth potential.

Additionally, the company has to make provisions from VND89 billion ($4 million) to VND193 billion ($9 million) each year from 2015 to 2020 for its investments based on their performance capability. These amounts will reduce the profitability of Saigon Port and damage its financial position.

The good news is that the Nha Rong Khanh Hoi property will be transformed into a 32.1 hectare complex residential area with commercial centers, condominiums and villas. The invested capital for this project is estimated to be VND11 trillion ($512 million). Saigon Port will own 26 per cent of this project. This is not Saigon Port’s only property. In total, the company owns 1.3 million square metres of rental lands. These include large areas located in central business district of Ho Chi Minh City. This land bank has a very low land rental fee and is carried on the company’s balance sheet at a very low price. The total value of land after reassessment value is only VND246 billion ($11 million). We believe that with these strategic locations, the company’s land value should be much higher than its book value.

At the initial auction price of VND11,500 per share, the 2014 price/earnings ratio of Saigon Port is 40.8x, which is much higher than the port industry average of 8.3x.Thiswould make the company substantially less attractive than its peers. However, the 2014 price/book ratio is only 1.1x, much lower than the port operator industry average of 1.7x and very cheap for a property company, especially considering the low book value of the land bank relative to its market value.

Housing project units' sale opens in central city

The Central Green Land joint stock company has launched the sale of units in Nam Tran Central Park, a terraced home and township project.

A 91.5sq.m land plot in Nam Tran Central Park is priced at VND768 million (US$36,000). The 53ha project in Lien Chieu district in the central city offers more than 320 houses in the busy living quarter located near Thanh Khe beach.

The houses and township, surrounded by the Dien Bien Phu and Ton Duc Thang main roads, are part of the city's northwest expansion and development, with key roads and urban areas connecting Thua Thien-Hue and Quang Nam provinces and industrial parks.

It's the second township project that the company has constructed in Da Nang, after the Ngo Quyen Trade Centre in Son Tra peninsula opened last year.

Central Green Land and the Dat Quang Group jointly developed the 15.5ha Green City project, worth US$8.6 million, last year.

According to a report from Savills Viet Nam, a property consultancy firm, Da Nang's property market grew 12 per cent last month.

Savills Viet Nam said Da Nang property developers plan to focus on coastal resort projects in the future. It said the central city has seen rapid urbanisation, attracting a large labour force from neighbouring provinces as well as overseas.

In the future, resort projects in the coastal Ngu Hanh Son and Son Tra districts will be given priority.

Binh Dinh approves hi-tech shrimp farming project

The government of Binh Dinh Province has allowed Vietnam-Australia Seafood Company to develop a major shrimp farming and processing project using greenhouse technology on 300 hectares in Phu My District.

According to the provincial investment promotion center, the VND800 billion (US$36.7 million) project in My Thanh Commune will produce quality shrimp for export to Europe, the United States, Japan and other markets.

In addition, the company will sell shrimp to seafood processing enterprises in the province and other localities in Vietnam.

The investor is allowed to set up a shrimp farming area of 100 hectares in phase one of the project. Later, the province will allocate the remaining 200 hectares to the firm to expand production and construct a processing factory.

Vietnam-Australia Seafood Company plans to use technologies including Israeli greenhouse, water filtration and treatment of the U.S. and the Netherlands, and bio-substances for its shrimp farm in the central province.  

The enterprise said these technologies are suitable to weather conditions in Vietnam and can help reduce costs and risks and increase yields. The water filtration and treatment technologies will ensure a stable water environment for shrimp and do not cause pollution.

Phu My District has favorable conditions for shrimp farms. However, many shrimp farms consume too much freshwater and discharge untreated wastewater directly to the environment. Therefore, the company’s shrimp farming model is encouraged to back sustainable shrimp farming and improvement of economic efficiency.  

The Binh Dinh Investment Promotion Center said the project is listed in the sectors the Government encourages as stated in Decree 210 and the province’s Decision 3480/QD-UBND to call for investments in agriculture in 2014-2020. It is also in line with the province’s zoning plan for hi-tech shrimp farming until 2020 with a vision towards 2030.

Apart from Binh Dinh Province, Vietnam-Australia Seafood Company has applied greenhouse technology to over 50 hectares under shrimp cultivation in the Mekong Delta province of Bac Lieu.

Dairy zone opened in Ha Nam

FrieslandCampina Vietnam has inaugurated a 66-hectare sustainable dairy zone in the northern province of Ha Nam after one year of development.

The zone is part of a sustainable dairy industry development project for Vietnam, which is being implemented by the northern province and the Dutch government.

FrieslandCampina Vietnam has invested much in two dairy farms and essential infrastructure such as roads, wastewater treatment systems, and facilities for forage production, milk buying and quality testing in the zone.

Local households in need of farms to raise dairy cows can register with the authorities of Ha Nam Province to lease areas in the zone managed by FrieslandCampina Vietnam.

The company will assist farmers in cow farming skills and techniques, veterinary services, business plans, and access to preferential loans and animal feed providers.

The company will purchase all fresh milk from cow farmers in the zone for processing at its factory in Phu Ly Town in the same province.

The company will invest in eight more farms with a herd of 50-80 cows in each farm by the end of 2017. By 2018, the zone will be completed and have 50 dairy farms able to produce at least seven million kilos of fresh milk per year and create some 345 jobs.

The sustainable dairy industry development project is being implemented in line with the Facility for Sustainable Entrepreneurship and Food Security for the 2014-2018 period with funding of the Dutch government.

The project aims to establish and develop specialized dairy zones for households, contribute to food security, create jobs and reduce milk imports.

The project is being carried out under a public-private partnership between FrieslandCampina, the Ministry of Agriculture and Rural Development, Ha Nam Province and Dutch partners such as De Heus, Wageningen UR, and Friesian Agro Consultancy B.V.

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