BUSINESS IN BRIEF 17/4
Vietnam in global top 10 for foreign remittances
The World Bank (WB) has announced Vietnam is among the top ten overseas remittance recipients in the world, receiving US$11 billion last year alone.
WB reported that overseas remittances hit US$542 billion globally last year and are expected to rise to US$581 billion in 2014 and US$681 billion in 2016.
India topped the list with US$70 billion, followed by China (US$60 billion), the Philippines (US$25 billion), and Mexico (US$22 billion).
Vietnam ranked ninth with US$11 billion.
Top nine countries remained the same compared to the previous year. In 2012, Vietnam came ninth with US$10 billion remitted.
In terms of remittances as a share of GDP, the top recipients were Tajikistan (52%), Kyrgyz Republic (31%), and Nepal and Moldova (both 25%).
Remittances in Eastern Asian and Asia-Pacific regions were estimated to grow by 4.8% in 2013 to US$112 billion. Thailand, Vietnam and the Philippines saw the highest growth thanks to a large number of their guest workers.
By 2015, workers can travel freely among ASEAN countries, driving regional remittances to a projected US$148 billion in 2016.
The WB forecast that global remittances will surge strongly in the short-term.
Vietnam wins rice export contract to Philippines
Vietnam has won a contract to supply 800,000 tonnes of rice to the Philippines, the Vietnam Food Association said on April 15.
Under the contract, rice will be delivered to the Philippines from May till August.
The signing of the contract is expected to fuel rice prices in the Mekong Delta, Vietnam’s largest granary.
The association reported as of April 13 Vietnamese businesses had exported 1.4 million tonnes out of a total of 2.7 million tonnes signed with partners.
High Quality Products Expo opens in HCM City
As many as 230 enterprises are showcasing their products on 700 stands at the 2014 High Quality Products Expo which opened in HCM City on April 15.
On display are consumer goods, food and foodstuffs, cookies, household utensils, cosmetics, clothing and fashions.
The 6-day event, the 18th of its kind, is expected to attract crowds of visitors and consumers as businesses offer discounts of up to 50% and other preferences.
The organisation board, the High Quality Vietnamese Product Business Association (HQVPBA), will honour 30 businesses that have won consumer trust for 18 consecutive years.
Consumers have the chance to receive 18 gifts each day or enjoy a 18% discount on all items. 18 consumers will also have the chance to win valuable gifts through lucky draws on the closing ceremony on April 20.
Exchanges will be held between businesses, consultants and consumers, giving advice on food hygiene and safety, and how to use household utensils effectively.
The City of London offers support to Vietnam
With a wealth of experience in trade and services, the City of London is willing to support Vietnam in attracting investment and boosting exports, Lord Mayor Fiona Woolf has said.
Receiving Vietnamese Deputy Prime Minister Vu Van Ninh in London on April 15, Woolf noted British businesses are keen to explore and expand operations in the Vietnamese market.
She said she is following Vietnam’s banking reform and hopes to cooperate and share experience in the field with Vietnam.
Deputy PM Ninh said Vietnam is accelerating its economic restructuring programme, with a focus on renovating its growth model, aiming to achieve sustainable development.
He proposed the City of London share experience in developing financial services and mobilising capital sources, especially through the public-private partnership (PPP) model.
Ninh is in London for an official visit to the United Kingdom of Great Britain and Northern Ireland.
On April 15 he visited and worked with managers of Standard Chartered (SCB) bank who thanked the Vietnamese government for facilitating the bank’s operations and proposed additional support for its expansion in the country.
SCB managers expressed hope that Ninh will help the British business community get a better understanding of Vietnam’s deep international integration and its economic restructuring efforts, primarily in the banking system.
They hailed Vietnam’s effort in containing inflation, stabilising the macroeconomy, and maintaining south growth in the context of the global economic slowdown.
They were optimistic about Vietnam’s economic development prospects, initial encouraging results in banking restructuring, and its improved credit rating index.
The British executives held that an early conclusion and signing of free trade agreement (FTA) negotiations between Vietnam and the European Union will create plenty of opportunity for investment and trade cooperation between both sides, as well as between Vietnam and the UK.
Ninh is scheduled to hold talks with Foreign Secretary William Hague, and meet with major British investors on April 16.
Switzerland backs Vietnam business reforms
Switzerland on April 15 announced to provide US$4.75 million for reforming Vietnam’s business environment.
The four-year (2014-18) project for "Expansion of National Business Registration System (NBRS)" between the Ministry of Planning and Investment and the United Nations Industrial Development Organisation (UNIDO to new commercial entities is expected to cost US$5.45 million.
In 2008-13 the project was funded by the MPI, Switzerland, Norway's Agency for Development Cooperation, and UNIDO.
NBRS is being used for single-point, fully-computerised services for business, tax, customs, statistics, and public-security registration of firms in 63 provinces.
As a result, online enterprise registration and enterprise information services, covering the records of over 864,596 enterprises and subordinate units registered under the Enterprise Law and 164,000 annual financial statements of shareholding companies, are available through the National Business Registration Portal at www.businessregistration.gov.vn.
The average registration time has decreased from 15 days in 2008 to only 3.5 days as of last year.
Deputy Minister of Planning and Investment Dang Huy Dong said business registration reform to date has not only reduced the cost and time for registration nation-wide, but also demonstrated that client-friendly and efficient public sector services benefit the development of the private sector.
Miroslav Delaporte, country representative of Switzerland's State Secretariat for Economic Affairs (SECO), said improvements in the business environment, including business registration reforms have helped mobilise capital and unleashed the entrepreneurial spirit of the Vietnamese people."
Nilgun Tas, chief of the Competitiveness, Business Environment and Upgrading Unit and deputy to the director of the Business, Investment and Technology Services Branch at UNIDO, said the private sector will not only gain access to efficient services of NBRS, but also benefit from more appropriate enterprise supporting policies, designed and implemented based on the full picture of all commercial entities operating in Vietnam.
"There is also great potential to link the NBRS with additional public services, for example, with social insurance, secured transactions, trademark, and patenting services, among many others and as such to expand this e-Government initiative wider."
PM vows best support for fisheries sector
The Government will issue a decree offering more support to the country’s fisheries sector, putting it on a fast and sustainable road to growth, Prime Minister Nguyen Tan Dung has promised.
At a conference on the development of the seafood industry in the central city of Danang on April 15, Dung called for closer State management and better policies, particularly in credit, insurance, export and infrastructure, for fishermen.
He said new partnerships should come up, such as cooperatives and trade unions, in order to create a value chain.
The Government will do its best to facilitate trade and expand the seafood market, he confirmed.
Dung asked ministries, agencies and localities to pay attention to key maritime forces, including the navy, the coastguards and fishery surveillance officials who will assist fishermen in catching and coping with natural disasters, thus helping safeguard the national independence and sovereignty.
Some delegates suggested catching more fish offshore and building about 3,000 steel vessels. In aquaculture, more focus should be given on highly-competitive products like prawns, tra fish and molluscs, making it easier to export a wide array of products.
They added that it is advisable to rearrange the value chain covering fishing farms, grounds and markets in which processing firms play a core role.
The industry, with over 4.5 million workers, yielded an output of nearly 6 million tonnes. However, its infrastructure remains poor with 99% of fishing vessels being made of wood. Some 1 million workers have yet to undergo training.
Asian Productivity Organisation meets in Hanoi
The executive committee of the Asian Productivity Organisation (APO) convened its 56th meeting in Hanoi on April 15, focusing on the policies of member countries and proposing multilateral and bilateral cooperation programmes.
The event drew the participation of about 70 high-ranking representatives from member economies and observers from the International Labour Organisation (ILO) and the UN Food and Agriculture Organisation (FAO).
During three days of sitting, participants will elect a president and vice president for the 2014-15 term, unveil the 2013 financial report, appoint auditors for 2014, and approve a budget and strategy for 2015 and 2016.
Deputy Minister of Science and Technology Tran Viet Thanh said that Vietnam is conducting management reforms. The renovation of the growth model, along with an increase of productivity, quality, effectiveness and competitiveness, is among orientations and solutions in the country’s socio-economic development strategy in the coming time.
Vietnam wishes to receive assistance from the APO and its member agencies in training experts and sharing experience in applying solutions to raise output and quality, he emphasised.
Since joining the APO in 1996, thousands of Vietnamese organisations and businesses have had the chance to access advanced management technology and gain experience in raising productivity and quality from regional and global countries. Numerous systems relating to quality environment and energy management have been applied widely in Vietnam.
As part of the meeting, delegates will undertake a fact-finding tour of the Traphaco pharmaceutical joint stock company, where solutions have been applied successfully to raise output and quality. The company won the Asia-Pacific quality award for 2013.
Effectively implementing FTAs
A Vietnam-US seminar in Hanoi on April 15 examined the role of the National Assembly in overseeing and improving the efficiency of implementation of free trade agreements.
In his speech, Tran Van Hang, Chairman of the National Assembly’s Committee for External Affairs (CEA) noted Vietnam has integrated deeper into regional and global economic institutions, supporting national economic development.
Vietnam has already negotiated and signed many bilateral and multilateral trade agreements, he said, adding it has joined the World Trade Organisation (WTO) and signed 8 bilateral FTAs to date.
Most FTAs that Vietnam are involved in are in Asia, with regional and neighbouring economies like ASEAN and China, as well as with global powers such as the US and EU.
In addition, the country has constantly revised its legal systems and institutions on intellectual property rights, labour, and the environment, making it easier for negotiating, signing and implementing FTAs.
At the seminar, Vietnamese lawmakers and experts from the US Agency for International Development (USAID) agreed that the NA and its agencies play a crucial role in the process of negotiating, signing and implementing international trade pacts to ensure their legality.
The NA has ratified international treaties and agreements and issued legal documents to fulfil international commitments.
Participants emphasised that the NA must promote its representative role and timely reflect the opinions and desires of relevant agencies throughout the FTA process.
They also discussed FTA signing trends around the world, the impact of the agreements on Vietnam’s economy, and difficulties in negotiation, signing and implementation process.
Vietnam-Russia trade ties spotlighted
Two-way trade turnover between Russia and Vietnam is growing dramatically, three times higher the world’s average figure, said Russian Deputy Minister of Economic Development Alexei Likhachev.
The Russian news agency Itar-Tass quoted Likhachev as saying on April 14 that bilateral trade was valued at US$4 billion last year, and is expected to hit US$5 in the near future.
He greatly valued effective cooperation between Moscow and Hanoi in prioritized projects which were adopted at an inter-government meeting in 2013. Accordingly, a special working group of senior experts was established to accelerate the implementation of key projects within a year.
So far, the two sides have carried out 12 projects, and are working on adjustments of six others. As much as US$20 billion has been disbursed, four or five times higher than the set target, said Likhachev.
The Russian DM emphasized that these projects have helped remarkably increase Russian investment in Vietnam.
Last year, Vietnamese investment in Russia was estimated at US$2 billion, mostly focusing on oil and gas industry. Russia’s investment in Vietnam was at US$3.3 billion, up 35% year from 2012.
He predicted that Vietnam and Russia will see a strong investment inflow in the coming years, much higher than the present figures.
Japanese businesses eye the Mekong Delta region
The Steering Committee for South-western region chaired a meeting with local leaders of the Mekong River Delta region in Can Tho city on April 15, discussing the agenda for a meeting with Japanese businessmen early next week.
Addressing the event, standing Steering Committee Deputy Head Nguyen Phong Quang said that from April 21-23, representatives from 40 leading Japanese businesses will tour the Mekong River Delta region, seeking investment opportunities in the field of agro-forestry and fisheries.
Quang suggested each locality in the region should select one or two typical projects to introduce to Japanese businesses.
According to the Ministry of Foreign Affairs and the Steering Committee, Vietnam-Japan relations have been elevated to a strategic partnership which offered more good conditions for Japanese businesses to seek more investment opportunities in Vietnam, including the Mekong River Delta.
As scheduled, Japanese businesses will participate in a seminar in Can Tho city which will introduce the potential for agricultural investment between Japan and Mekong Delta localities and conduct a survey at some businesses in the provinces of Hau Giang, Dong Thap and Vinh Long.
Dung Quat Oil Refinery sets new safety record
The Dung Quat Oil Refinery and affiliates on April 15 welcomed an important milestone, working for 600 consecutive days and nights in a safe, stable and effective manner.
Since it began operations, the Dung Quat Oil Refinery Plant has produced and sold 26.7 million tonnes of products, earning VND543,000 billion and contributing over VND86,000 billion to the State budget.
In the first quarter alone, the plant produced and sold 1.7 million tonnes of products, fetching over VND37,000 billion and contributing over VND7,000 billion to the State budget.
Especially, the factory has launched over 11 million tonnes of products in various types to the market during 600 consecutive days and nights.
To mark the event, the international insurance market and technological copywriters have granted a certificate to Dung Quat Oil Refinery for effective, stable and safe operations.
At the same time, four copywriters namely UOP from the US, Axens from France, Merichem from the US and Sini from Italy also granted certificates to Binh Son Oil Refinery and Chemistry Company for safe and stable operations.
In May and June, theBinh Son Oil Refinery and Chemistry Company will provide a periodical maintenance for Dung Quat Oil Refinery for 45 days.
This year, the Company is striving to produce 5.18 million tonnes in various types and gross VND113,600 billion in revenue and contribute over VND13,700 billion to State budget.
Banks and corporate clients ink 28 price stabilization deals
Eight banks and 28 corporate customers have signed 28 deals to carry out the city’s program aimed at stabilizing prices of dairy products, food and school stationery.
Leaders of the HCMC government, the Ministry of Industry and Trade, the central bank, southern provinces and cities witnessed the signing of the contracts during a review meeting last Friday between HCMC and other provinces.
There are eight banks involved in this year’s price stabilization program – Sacombank, VietinBank’s branch No. 7, Eximbank, BIDV’s Ben Thanh branch, Agribank’s Ly Thuong Kiet branch, Military Bank, DongA Bank and HDBank. Last year’s program had only five banks taking part.
Meanwhile, the 28 corporate borrowers are producers of essential products, milk and school stationery, such as Saigon Co.op, Saigon Trading Group (Satra), Pham Ton Co., Ltd, Ba Huan Co., Ltd, Dong Tam Nutrition Food Joint Stock Company (Nutifood), Dong Hung Co., Ltd (Citimart) and Saigon Food Joint Stock Company.
The participating banks and enterprises will be hammering out specific loans. However, the total amount the banks have pledged for the program is VND8.3 trillion, four times higher than last year.
HCMC Department of Industry and Trade deputy director Le Ngoc Dao said VND2.8 trillion of the VND8.3 trillion would come in short-term loans with interest rates ranging from 5.5% to 6% per year, up nearly VND1.94 trillion versus last year.
VND2.15 trillion medium- and long-term loans will be lent to farm development and material cultivation projects, VND1.05 trillion higher than last year. They will carry an interest rate of 7% to 10% per year.
The remaining VND3.35 trillion will be provided for manufacturing enterprises, cooperatives and distributors joining the price stabilization chain at interest rates of 7-8%.
Nguyen Phuoc Thanh, deputy governor of the central bank, said the loans pledged for the program this year were higher but the interest rates lower than last year.
At the meeting, Sacombank struck deals with Can Tho, An Giang, Dong Nai, Ben Tre, Long An, Dong Thap and Tien Giang to sponsor training courses for authorities and traders at traditional wet markets.
According to Dao, the price stabilization program for this year and the Lunar New Year holiday early next year involves 76 enterprises, including goods producers, suppliers and banks, up by nine firms.
In addition to HCMC, An Giang, Dong Thap, Dong Nai, Binh Thuan, Khanh Hoa and Lam Dong provinces also have enterprises participating in the program.
Prices of products chosen for the program are 5-10% lower than normal market prices.
Starting from this year’s program, the chosen products will be labeled with the program’s logo, which depicts a conical hat, lotus and Ben Thanh market.
Coffee projected at over US$2,000 per ton
The Vietnam Coffee and Cocoa Association (Vicofa) has forecast export prices of Robusta coffee will increase to more than US$2,000 per ton in the next few months.
At a recent meeting of the organization in HCMC, Vicofa ascribed its projection to a variety of factors including stronger demand, bad climate conditions and lower supplies by major coffee growers such as Brazil, Vietnam, Indonesia and Venezuela.
According to Vicofa’s vice chairman Do Ha Nam, global coffee demand remains huge and has risen steadily in recent years while most coffee growing countries have been grappling with droughts this year, which will certainly affect yields.
In the 2013-2014 crop, according to Vicofa statistics, local farmers have harvested nothing from 5,000 hectares under coffee cultivation while another 40,000 hectares has been badly affected by diseases.
Meanwhile, the current dry season has also hit the Central Highlands region hard. This largest coffee growing area of the nation will be crippled by a water undersupply in the second half of this month, with both yield and quality in the crop 2014-2015 to be partially affected.
“If global coffee demand edges up while coffee growing nations face lower yields due to little rain, coffee prices will inevitably nudge up,” Nam explained.
Vicofa has also attributed the possible Robusta price spike to the current considerable gap between the price of Robusta beans (over US$2,000 a ton) and that of Arabica beans (US$4,300 a ton), which has led coffee processors to switch to using Robusta beans in droves.
Brazil is now the top Arabica coffee exporter while Vietnam takes the lead in global Robusta supply.
Last Friday, coffee sold for VND41,000-41,800 per kilo in the Central Highlands, up VND300-400 per kilo against the previous day.
Leading European retailer likely to open store at I-Home building
C.T Group has said it has worked with a major European retail firm over a plan to open a commercial center on the ground floor of I-Home apartment project under construction in HCMC’s Go Vap District.
The foreign retailer has come to the site of the apartment project for inspection and the forthcoming opening of the store would add value to the apartments, according to C.T Group.
I-Home is located on Pham Van Chieu Street and consists of three blocks with around 500 units of 47-76 square meters whose prices range from VND630 million to VND1.1 billion.
The first block has the first 11 floors complete at the moment while the third floors of the other two blocks have just been finished. Apartment buyers can take delivery by the end of this year.
Most LEDs on local market have substandard quality
Around 90% of the LEDs available on Vietnam’s market are of poor quality, with large volumes of them assembled by small establishments and having a very short life and low efficiency, according to the HCMC Energy Conservation Center (ECC).
Director of ECC Huynh Kim Tuoc said at a meeting on energy efficiency last week that HCMC currently had around 100
LED producers and suppliers. However, around 60 of them buy components to assemble LEDs at home and their quality is poor, he noted.
Tuoc said high-quality LEDs can consume 50% less electricity than normal lights like incandescent bulbs. Buyers of LEDs should query about the origins of LED chips, reflector and other parts. If the origins are unclear, their quality cannot be ensured.
Tien Giang Energy Conservation Center has recently installed LEDs for some road and bridge projects. Though the supplier guarantees the life of these LEDs is five years, many of the LEDs have got dim or broken after only two years in use, according to the center’s deputy director Phan Thanh Tien.
Tien Giang Province plans to use LEDs for public lighting along some main roads but the low quality of LEDs on the market is cause for concern, Tien said.
Saving energy by using LEDs has become popular at some public works in HCMC such as the lighting systems along Thanh Thai Street, Thu Thiem Bridge and steel overpasses and at office buildings of many State agencies.
According to ECC, high-quality LEDs has high luminescence efficiency and their life can reach 100,000 hours, 8-10 times higher than good fluorescent lights. Besides, LEDs are friendly to the environment.
Tran Van Mung at HCMC Power Corporation said the firm would stop financial support for households to install solar water heaters to channel funding to those using LEDs.
VAMA proposes using int’l fuel consumption results
The Vietnam Auto Manufacturers Association (VAMA) has proposed Vietnamese authorities accept the fuel consumption test results that are internationally recognized when vehicles are required to display a fuel consumption label next year.
Metelo Jesus Arias, general director of Ford Vietnam and chairman of VAMA, told the Daily that he was behind the Ministry of Transport plan that compels vehicles to display a fuel consumption label.
He, however, said there should be a workable road map and guidelines from authorities on how to implement the new requirement, test standards, label templates and a label display location. Besides, procedures for certifying a car’s fuel consumption should be kept simple.
According to VAMA, the authorities should recognize internationally approved test results of fuel consumption conducted by automakers and importers.
Some countries have fuel consumption labeling rules in place, which are designed to classify vehicles and display information about fuel consumption, emissions, or amounts of money saved in five years.
Under the Ministry of Transport’s new circular, with effect from next year, passenger vehicles of less than seven seats, which are domestically manufactured/assembled and imported, will have to display fuel consumption labels.
As planned by Vietnam Register, the fuel consumption label would be put on the front windscreen, containing information about automaker, assembler, importer, and fuel consumption.
Domestically manufactured/assembled cars certified to meet technical safety and environment requirements by next year will have to display the label as from 2016.
Real estate brokerages rushing to recruit new staff
A slew of real estate brokerages in HCMC have since early this year been racing to recruit more staff as business in the sector has grown more active than in previous years.
The realty trading centers that are getting directly or indirectly involved in property development projects have reported stronger demand for sales employees.
Kim Oanh Real Estate Joint Stock Company is recruiting 200 staff, Phuc Khang 200 and Tac Dat Tac Vang 50. These firms specialize in investing and distributing low-cost land lots in Long An, Binh Duong and Dong Nai provinces, which border HCMC.
Dang Thi Kim Oanh, general director of Kim Oanh Real Estate Joint Stock Company, said her firm was looking to distribute around 3,000 land lots this year. Therefore, it is employing more people in charge of sales.
“Customer demand for land has been growing since early this year. Therefore, we need to develop a professional team to meet customer needs,” Oanh said. The firm now has five branches in HCMC, Binh Duong and Dong Nai.
Phuc Khang Real Estate Investment and Trading Joint Stock Company has launched EcoSun project covering 150 hectares in Dong Nai Province following the success of Eco Village, Eco Town and Sunflower City projects. The company is preparing more staff to speed up sales.
Meanwhile, real estate distributors like Danh Khoi A Chau, Thien Tin and Hoa Binh House are also displaying their recruitment notices with each needing no less than 50 people.
According to realty trading centers, the market has shown clearer signs of recovery this year with the number of successful monthly transactions surging three to four times versus last year.
Nguyen Van Tu, general director of Minh Khang Gia Real Estate Company, said the number of successful transactions conducted through the firm in the first quarter was equivalent to that in the final half of last year.
In recent times, investors have launched new projects onto the market with higher commissions for brokerages. This is why many brokering centers are taking on more staff to take advantage of emerging business opportunities, he said.
Another Vinalines unit goes bust
After Vinashinlines filed for bankruptcy last month, Vietnam Oil and Gas Transportation Joint Stock Company (Falcon), another loss-making unit of State-run Vietnam National Shipping Lines (Vinalines), is preparing to go out of business.
Vinalines has asked the holder of State capital at Falcon, in which Vinalines holds a 51% stake, to coordinate with the board of directors to organize an annual general meeting and urgently start bankruptcy procedures.
Falcon earlier failed to hold an extraordinary general meeting on March 18 to discuss a bankruptcy plan as less than 65% of shareholders showed up. It organized another meeting on April 8 as requested by the Government and the Ministry of Transport.
Falcon is a middle-scale enterprise but it has a fleet with the second highest load capacity among Vinalines' subsidiaries, with 390,000 DWT.
In its latest financial report, Falcon incurred total losses of over VND2.8 trillion as of the end of 2011, higher than its equity by VND385 billion and its chartered capital by four times. Given Vinalines' restructuring project in May 2013, Falcon would still owe VND65 billion to banks after selling out all its assets.
The biggest concern in Falcon's bankruptcy scheme is that most of its properties have been mortgaged at banks for loans.
Many creditors have liquidated Falcon's vessels at prices much lower than investment value and levels determined by banks.
M&A deals seen more active in banking sector
The banking sector looks set to have more mergers & acquisitions (M&A) deals struck this year as numerous banks are putting forth their merger schemes in the ongoing annual general meeting (AGM) season.
Vietcombank will seek approval to carry out an M&A agreement with other banks at its AGM slated for April 23. However, the bank has not disclosed the names of any candidates, Viet Capital Securities Company (VCSC) said in a report released last Friday.
PGBank has also released documents for its AGM scheduled for April 18, which include a proposal to merge into VietinBank. This M&A will take place through a share swap at the ratio of at least one PGBank share for 0.82 VietinBank share, which translates to a maximum price for PGBank at VND13,612 per share.
PGBank is an unlisted private bank with assets totaling VND19.2 trillion while VietinBank is the second largest State-owned commercial bank with total assets amounting to VND576 trillion.
Last year PGBank reported net profit of VND38 billion, a net interest margin (NIM) of 2.6%, a non-performing loan ratio of 2.9%, a return on equity of 1.2% and a return on asset of 0.2%.
With PGbank’s lower profitability and smaller market share than VietinBank’s, VietinBank will certainly act as a guardian of PGBank in this M&A deal rather than an investor merely seeking profit and market share. As planned for the merger, PGBank will keep its existing structure and brand name, VCSC said.
Sacombank has plans to acquire Southern Bank and Vietnam Maritime Bank is working on a merger with Mekong Development Bank. A source told the Daily that the central bank has given approval in principle to these merger schemes.
The central bank encourages larger banks to take part in the restructuring of smaller institutions; otherwise, it will have to acquire shares of those ailing banks to revive them.
The former solution helps save cost and time and it has won the nod from major banks. The central bank is assisting lenders to complete procedures after the merger schemes have been approved by shareholders, the source said.
The central bank’s governor, Nguyen Van Binh, at a regular Government meeting in March said the bank restructuring project is moving ahead after nine banks were earlier restructured.
Capital raised on HOSE surges
Corporations on the Hochiminh Stock Exchange (HOSE) reported a double year-on-year increase in capital raised through this bourse in the first quarter of the year.
HOSE data showed that listed firms raised over VND4.3 trillion, up from the VND2.3 trillion in the first quarter last year. This indicated an improvement in investor sentiment, allaying last year’s fears that the stock market was not serving as a channel for companies to raise money.
In the first quarter, over 2.8 trillion shares were transacted on the market, a staggering rise from the 35 million shares traded in the same period last year. Notably, the volume of newly issued stocks surged 86.8% year-on-year.
There was no delisting case reported in the first quarter this year while six firms left the stock market in the same period last year.
In the coming time, HOSE will deploy first exchange traded funds (ETFs) and field suggestions from market members to draft listing, information disclosure and transaction regulations for ETFs, said HOSE chairman Tran Dac Sinh.
HOSE will continue supporting banks and public companies to list on the market, and launch a single index for both HCMC and Hanoi exchanges. HOSE will also study the iVN30 and new products such as covered warrant and non-voting depository receipt (NVDR).
HOSE and State Capital Investment Corporation (SCIC) have signed a memorandum of understanding on cooperation in share auctions. Both sides will join hands to help public firms where SCIC owns shares list on the stock market.
Last year over 300 enterprises on HOSE saw revenue improving 10.7% and after-tax profit growing 19.2% against 2012.
Teka triumphs in customs duty case
Teka Vietnam has triumphed in a tax dispute with Vietnamese customs authorities on a taxable price assessment of its eleven imported products.
The Ho Chi Minh City Department of Customs has just released a decision to cancel its original decision on the taxable price of eleven Teka Vietnam imported products.
Teka is a multinational firm of German origin, engaged in manufacturing and marketing kitchen and bathroom appliances, porcelain products and industrial containers.
Following the case, the customs authority will keep the price declared by Teka Vietnam as the taxable price for eleven items, instead of the much higher price recalculated by the custom authority.
These products include sinks, induction cookers, electric roasters, dishwashers and fridges. The taxable price determined by the Vietnamese custom authority for them was from 30 to 100 per cent higher than Teka’s declared valuations.
In late December 2013, the Ho Chi Minh City Department of Customs decided to apply a taxable price for a cargo of kitchen and bathroom appliances imported from Spain by Teka Vietnam on November 15, 2013, making its assessment by comparing the same model in the customs authority’s data system.
However, Teka Vietnam disagreed with the valuation and petitioned to Ho Chi Minh City Department of Customs in mid-January 2014.
In a dialogue with Teka in early February, the customs authority agreed to cancel its determination of the taxable price for the eleven items.
In Decision 39/QD-GQKN dated March 7, 2014 sent to Teka Vietnam, Le Dinh Loi, deputy head of Ho Chi Minh Department of Customs said that Teka Vietnam was the distributor of Teka Group and was not allowed to directly sell products to consumers; therefore, wholesale prices were 30-35 per cent of the retail price published on its website or retailer listed prices.
Due to the specific quality of these products, the company had to bear many other costs such as warehousing, display, maintenance, engineering and after-sales service, said Loi.
Meanwhile, under Decision 39, many other products in its cargo imported in November 2013 would still receive a higher taxable price but information has yet to be released.
VIR’s attempts to contact Teka Vietnam have been fruitless.
Other foreign invested companies like Electrolux, Toyota, and Diageo are petitioning to Vietnamese customs authorities based on what they regard as inaccurate taxable prices on their imported products.
However, while Teka Vietnam was successful in maintaining its declared prices for eleven items, the other enterprises are still waiting for a final decision from the General Department of Customs for their issue.
Sing Viet in bribery case
The Ho Chi Minh City Police Department last week started investigating an alleged graft case in which the Sing-Viet township investor claimed it had given state officials in Hanoi $2.8 million in bribes.
The foreign investor had alleged the bribes had been used to facilitate procedures for the long-delayed project, which aims to build the township on more than 330 hectares in Le Minh Xuan commune of Binh Chanh district.
The Ho Chi Minh City People’s Committee spokesman Vo Van Luan told the press late this March that the bribery claims required thorough investigations to show that the city’s investment certificate issuing process was above-board, thus protecting its investment environment against corruption allegations.
The project received the city’s approval in 1997, with the investor being a joint venture between Singaporean companies St. Martin’s Properties, Science & Engineering Investment, Techno Fibre and Integrated Engineering Services Pte Ltd and the city’s Binh Chanh Investment and Construction Company. The total investment capital was estimated to exceed $300 million.
However, the project had still failed to break ground 10 years later because the joint venture could not afford all the money for site clearance. Then the local company withdrew from the project.
The Ho Chi Minh City People’s Committee adjusted the investment certificate for the project following the involvement of the wholly foreign-invested firm Sing-Viet City Limited Company as a new investor.
In November 2011, the administration issued another investment certificate for the project as St. Martin’s Properties, Science & Engineering Investment, and Techno Fibre withdrew to be replaced by Regional Connexion Limited.
In early December that year, the administration announced the second adjustment as the investor’s legal representative was changed from Singapore’s Chua Chye Leong Alan to Malaysian Chan Kong Tick. St. Martin’s Properties then lodged a lawsuit against the people’s committee and the Ho Chi Minh City Department of Planning and Investment for making the adjustment, saying the decision had not been accepted by all member companies. St. Martin’s Properties demanded a cancellation of the adjustment, and compensation to it and the two other companies.
At a trial in July 2013, the city court rejected the request. In an appeal court in October 2013, the plaintiff provided the court with new documents, including papers that alleged the project developer paid $2.8 million in bribes to state officials in Hanoi to “lubricate” procedures for the project. The appeal court then overturned the first trial’s verdict, and set the date for another trial.
Now, the project site remains a forlorn location, located some distance from the National Highway 1 and the Road 10 in Le Minh Xuan commune. The only evidence of the project are some Sing-Viet City billboards.
Nguyen Duy Hanh, a vendor at the corner of Tran Dai Nghia and Mai Ba Huong roads, told VIR if the site had not been reserved for the project, it would have long-ago been used for housing and businesses. She added a majority of affected people there had received compensation for site clearance, but they had no idea when work would recommence. According to the local authorities, the construction of resettlement homes for the affected residents has been delayed for many years.
Processing and manufacturing industry sees positive signs
By the end of the first quarter of 2014, the processing and manufacturing industry obtained relatively high growth, the Vietnam Economic News reported, adding that while the sector’s inventories decreased gradually the market for industrial products remained difficult.
The General Statistics Office (GSO)’s data showed that Vietnam’s Index of Industrial Production (IIP) grew 5.2 percent in the first quarter of this year, while the growth was five percent during the same period time last year. Of this, the processing and manufacturing industry grew 7.3 percent (compared to 5.3 percent growth in the first quarter of 2013), contributing 5.1 percentage points to the country’s IIP growth.
Sales saw positive signs. The sales index of processed and manufactured goods on March 1, 2014 was 4.3 percent higher than the same time last year. Some segments of the processing and manufacturing industry reached a sales index higher than the same time in 2013.
They included electrical equipment production that grew 29.8 percent, leather and related products (up 19.5 percent), motorized vehicles (up 16.6 percent); garments (up 13.5 percent), metal products (up 10.5 percent), chemicals and chemical products (up nine percent), paper and paper products (up 8.5 percent), and food processing (up eight percent).
Meanwhile, the sales index of beverage production rose only 5.9 percent, that of textile increased 4.8 percent, that of metal products fell nine percent, and that of electronic products, computers and optical products decreased 14.7 percent.
The inventory index of the whole processing and manufacturing industry on March 1, 2014 was 13.4 percent more than the same time in 2013. This growth was lower than that in previous years. Segment with a decreased inventory index growth included garment manufacturing (up 9.6 percent), electrical equipment production (up 5.1 percent); production of products from non-metallic minerals (up 3.3 percent), beverage production (up three percent), textiles (up 2.9 percent), and motorized vehicle production (down 28.7 percent).
Segments with an increased inventory index included metal production (up 126.8 percent), production of pharmaceuticals and pharmaceutical materials (up 61.4 percent), metal production, except machinery and equipment (up 59.4 percent), manufacture of chemicals and chemical products (up 54.2 percent) and production of leather and related products (up 53.6 percent).
On March 1, 2014, the processing and manufacturing industry’s inventory rate was 84.4 percent, while the rate of the medicine, pharmaceutical chemical and pharmaceutical material production industry was 181.5 percent, that of chemical production was 152.9 percent, that of furniture (bed, wardrobe, table and chair) production was 122.6 percent, and that of metal production was 122.4 percent.
The above-mentioned inventory rates showed that the market demand for the processing and manufacturing industry had not improved considerably. The price index of the industry’s products in the first quarter of 2014 rose only 0.89 percent, while the price of raw materials and inputs for production increased about 2.84 percent, and transport and warehousing charges increased about 2.56 percent compared to the same time last year. This has been causing a high pressure on the development of processing and manufacturing enterprises in 2014.
According to the newspaper, to improve the situation, apart from the macro solutions for sale promotion and demand stimulation, businesses need to take the initiative in development, be creative, improve product and service quality and competitiveness to increase sales, prepare all the necessary conditions to take advantage of opportunities to expand the market, especially when a series of trade agreements between Vietnam and international partners are signed in the near future.-
Businesses oppose ministry’s proposal to stop licensing new projects
The Ministry of Construction has proposed the Government to stop licensing new commercial housing and urban areas projects by 2014 with aiming to prevent further waste.
Besides, this is to force real estate businesses to concentrate in completion of incomplete projects to better urban landscape and create vitality for new projects, according to proposal.
Vietnam’s real estate market has climbed on the bandwagon causing supply far exceed demand. Businesses have much invested in the high-class segment and paid less attention in the common segment, said Minister of Construction Trinh Dinh Dung.
More than 4,000 new urban area projects worth VND4,500 trillion (US$ 213.28 billion) were approved over 102,000 hectares nationwide last year, according to the ministry. Inventory value totaled VND94.5 trillion (US$ 4.48 billion).
The ministry proposal is irrational and goes back up market economy rules, said Le Chi Hieu, chairman and director general of Thuduc House Company.
Licensing is almost the final phase in a process which investors have to do lots of procedures to implement a project, he said.
If the new projects meet with buyers’ demand, businesses should be permitted because they will take responsibilities for their investment capital, Hieu added.
There is no regulation which bans commercial housing licensing, according to deputy director of a real estate company. In case that such regulation exists, it should be implemented after a route to ensure the market rules.
The proposal is also contradictory with the ministry’s report that the housing inventory reduced early months of 2013 and the real estate market is showing signs of recovery, he added.
Besides, the Government’s VND30 trillion (US$1.42 billion) credit package has been disbursed too slowly to assist the real estate market, which the ministry blamed for shortage of housing products for buyers to purchase. Why the ministry doest not license more new projects to create more products.
He wondered if the licensing halt is to protect businesses with high stocks.
Other businesses said that the ministry should not equal the licensing halt with inventory reduction. If the ministry wants to ‘clean’ the real estate market, they should issue stricter requirements before licensing and take more actions against behind-schedule projects.