HCM City property market stalls

There are growing signs of a stalemate in HCM City's residential market, with prices in the primary market seeing little change in the first quarter.

"What we are seeing is a face-off between developers and buyers," said Marc Townsend, managing director of CBRE Viet Nam.

"Residential buyers will not buy property if they think prices will go down in the future.

"They simply expect prices to be lower next quarter and thus will not re-enter the market, while developers are attempting to show, in some cases, there is little more to give for, for over a year, they have offered discounts, gifts and lucky draws, and that has not turned the residential market around."

Adam Bury, CBRE's research and consulting senior manager, says with the economy now appearing more stable, calmer inflation, lower interest rates, and a rising stock market, developers, a couple of whom have had reasonable sales in March, may now feel the market is approaching the bottom.

If all this is true, buyers may have the confidence to reengage the market in the next two to three quarters, he adds.

But secondary prices continued to fall in the first quarter. The rate of decline also increased, with luxury, high-end and affordable flats recording a larger decline than the previous seven quarters.

The average asking price was $3,960 per square meter for luxury apartments, a 4 per cent q-o-q fall and 9.4 per cent y-o-y. It was $1,763 for high-end units, $902 at the mid-end, and $702 for affordable units, all falling by various degrees.

"Clearly there is still distress in the residential market, with owners finding it beneficial to reduce their prices in order to sell their units," Townsend says.

The affordable segment dominated the new completions in the first quarter, with 862 units in five projects hitting the market. They accounted for 65.5 per cent of all completions.

The segment has a larger target market than luxury projects, and in that respect it is not surprising that these projects were completed despite the continuing slump.

Michael Piro, country director for Viet Nam Sotheby's International Realty, says it is now the right time for buying luxury residences since prices have already declined, and buyers can have a look at properties already built rather than just on paper.

Indices rise on blue chip gains
 
A strong performance by blue chips led shares to close higher yesterday on both of the nation's stock exchanges.

On the HCM City Stock Exchange, the VN-Index closed at 468.26 points, a 1.2-per-cent gain on the day, as advancers outnumbered decliners by 228-35.

The value of trades fell from last Friday's profit-taking session, however, reaching just VND1.36 trillion (US$64.7 million) as the volume of trades dropped 26.5 per cent to 89.7 million shares.

Of the 30 leading shares by market capitalisation and liquidity, four retreated, including insurer Bao Viet Holdings (BVH), food processor Masan Group (MSN), Sacombank (STB) and Gemadept Logistics (GMD). With 25 other stocks tracked by the index gaining, the VN30 Index edged up by 1.3 per cent to 539.17 points.

Real estate stocks continued to outperform the market, as they have for a number of recent sessions. HCM City Infrastructure Investment Co (CII) posted a 34-per-cent growth in net profit in the first quarter of the year compared to the same period last year, while Thu Duc House (TDH) announced yesterday that it would divest from some financial projects to concentrate its resources on its core operations. On the Ha Noi Stock Exchange yesterday, the HNX-Index rose over 2.5 per cent to 80.37 points. Value was essentially unchanged from Friday's session, totalling VND1 trillion ($47.6 million) on a volume of 91.3 million shares. Gainers outnumbered losers by 256-45.

With nearly 9.5 million changing hands, Habubank (HBB) again became the most-active share nationwide.

Kim Eng Securities Co analysts said their technical analysis suggested that the benchmark indices on both stock exchanges were in a sustained upward trend. "We think holding shares or opening buy positions are both appropriate strategies at this time," they said.

Sounding a note of caution, however, the State Securities Commission has put about 10 per cent of listed companies on both bourses under strict control due to a lack of profitability, predicting that more were to come once more enterprises released their updated financial reports.

Women shatter glass ceiling

More and more women are climbing to senior management positions, with the number rising to 27 per cent now from 24 per cent a year ago.

It gives Viet Nam the 17th place on a list of 40 countries surveyed, according to a report by the auditing and consulting firm Grant Thornton.

But in Southeast Asia, other places like Thailand, the Philippines, Malaysia and Hong Kong are seeing the number of senior women managers gradually falling.

"The Government has been encouraging a programme of gender equality in the work-place," says Nguyen Thi Vinh Ha, deputy general director of Grant Thornton Viet Nam.

"The effort, together with an increase in the standard of education, has helped move the figures in the right direction."

The proportion of women holding senior management roles in Europe is also steadily increasing – despite rising unemployment – going up from 17 per cent in 2004 to 24 per cent in 2012.

But with the reverse being true in emerging markets, the global average remains at 21 per cent, barely higher than the 2004 level.

We're ready for T+3, say brokers

After the Vietnam Securities Depository said the settlement period could be shortened to T+3 if brokerages settle payments prior to 4 pm of the T+2 date, several securities companies confirmed their ability to deploy.

"I think many other brokerages will be capable of implementing," said Bao Viet Securities CEO Nhu Dinh Hoa.

It was a long-standing expectation of the whole market, he added.

Reducing the period would help brokerages minimise the risks of investment, as they could flexibly react to the fast-changing market, Hoa said.

The depository centre's plan, according to the CEO, was feasible, because there would be no additional technical problems.

Meanwhile, HCM City Securities CEO Trinh Hoai Giang said that market liquidity would improve by 20-30 per cent if T+3 payment was applied.

"In addition, securities firms will have more chances to increase earnings from fees, as well as develop risk management systems, particularly in margin trading," he noted.

However, he said it was just a short-term measure, while the domestic stock market still needed a long-term solution of the T+0 date to form the base of derivatives.

Before reaching the T+0 payment, Tan Viet Securities CEO Nguyen Van Dung proposed to sell securities on the T+1 date while payment remained as T+3.

"This method could help boost market rotation by eight times and enhance transactions in the afternoon session," he added.

During a meeting last week, the depository centre said it worried about the capacity of brokerages if the settlement period was shortened. However, the number of troubled firms was small, and watchdogs should not delay such a beneficial measure, Maritime Bank Securities Co responded.

Da Nang small businesses face difficulties

Small- and medium-sized enterprises (SMEs) in the central coast city of Da Nang were struggling to make profits, said Van Huu Thiet, vice chairman of the provincial SME Association.

According to a survey, over 50 per cent of SMEs said they had to scale back their business operations, 20 per cent did not make any profits and broke even, and 27 per cent faced bankruptcy, said Thiet.

In addition, 82 per cent of SMEs could not secure sources of capital. Also, the sharp cost increases of inputs such as fuel, electricity and transportation had exacerbated SME losses.-

Quang Nam's export value soars in first quarter

The export value of businesses in the central province of Quang Nam reached US$35 million last month, contributing to a total of $94.4 million for the first quarter of this year.

The first quarter result registered a rise of more than 65 per cent against the same period last year, marking the highest increase in export value during the last three years.

Exports by the foreign-invested economic sector saw a 2.7 times increase in value over last year, reaching $71 million and accounting for more than 75 per cent of the province's total export value.

Items seeing surges in export value include gold, dried seafood, textiles and garments, leather and footwear.-

Policies help boost shares

Economic movements will continue to hinder stock indices from conquering new high levels, predicts Viet Dragon Securities Co analyst Nguyen Thi Phuong Lam, noting that the nation's stock market has already absorbed the postive effects of last month's supporting data.

Business operations in the first quarter of this year did not appear positive, Lam added.

"However, as investors foresaw the situation, that may not have much influence on the market," she said.

Likely to have a more positive impact was news of improved liquidity within the nation's banking system, which has already contributed to the recent rally.

Foreign investors have also been net buyers in the first quarter by a margin of VND3 trillion (US$144.2 million), once the shares of Sacombank (STB) sold by ANZ Bank to Eximbank (EIB) are excluded from the net calculation, suggesting that foreign players gave good reviews to the efforts of the Government to control negative forces in the economy.

"In an infant stock market like this, interest from foreign investors gives strong psychological leverage to domestic investors," Lam said.

On the HCM City Stock Exchange last week, the VN-Index closed on Friday at 462.52 points, an increase of 2.6 per cent over the previous week's close. The VN30 retreated on Friday to 532.3 points – a level that nevertheless represented a 4-per-cent net gain over the preceding week.

The average daily value of trades hit nearly VND1.5 trillion ($72.1 million) per session, a 58-per-cent rise, as volume averaged 96.4 million shares per day, an increase of 46.5 per cent over the prior week.

On the Ha Noi Stock Exchange, the HNX-Index concluded the week on Friday up nearly 2.8 per cent to 78.38 points. Avearge daily value was up 31 per cent to VND956.5 billion, while the daily volume averaged 96.6 million shares, a rise of 22 per cent.

Profit-taking was seen during the last two sessions, even as economic policies became a catalyst for the overall rally during the week. The real estate sector was buoyed by a looser credit policies from the central bank, allowing real estate stocks to attract new capital flows during the week. The expectation of a recovery in the property sector also benefited shares in the construction and steel industries.

"Bank and securities stocks will further benefit and create a spillover effect," predicted analysts for the financial website vietstock.vn.

The State Bank of Viet Nam reduced the refinancing rate last week from 14 per cent to 13 per cent per year, while cutting overnight interbank rates from 15 per cent to 14 per cent and the rediscount rate from 13 per cent to 12 per cent.

"We believe that the move has already been partly reflected in both the bond and stock markets in the last couple of days," VietCapital Securities Co analysts wrote in a note. Bonds were trading at lower yields while treasury bills were snatched up at recent auctions, they noted.

Overall gains on the market so far this year will help securities companies post more solid financials, even as the State Securities Commission looks forward in the coming week to announcing those brokerages which it is placing under special control pursuant to Circular No 226.

"There should be no surprise if clients of smaller firms are transferred to larger firms," said vietstock analysts.

Looking forward to the rest of this month, Lam predicted investors would take in stride new policies aimed at curbing infaltion and unfreezing investment capital, rather than look for new grounds to hope for a market rebound.

VN shrimp regain Japan reputation  

The reputation of Vietnamese shrimp has been restored in Japan after the Ministry of Agriculture and Rural Development banned farmers from using the antibiotic enrofloxacin in shrimp breeding.

The Viet Nam Association of Seafood Exporters and Processors said a warning from Japan reported that only one consignment from Viet Nam was found to be infected with enrofloxacin during March, a good signal for the shrimp export industry.

Association representative Nguyen Thai Phuong said the result reflected efforts by exporters, shrimp raisers and authorities in controlling residues of enrofloxacin in unprocessed shrimp.

Japanese authorised agencies had raised the control level to 100 per cent of import consignments from Viet Nam, Phuong said. Japanese importers had conducted tests on processed Vietnamese shrimp in private laboratories in Japan and if any enrofloxacin residues were found, consignments of shrimp would be shipped back to Viet Nam immediately.

Such a measure would cause great losses to the exporter and blacken their name in Japan and possibly on the world market if the situation did not improve, Phuong said.

Exporters had been warned to make sure their products were not infected with enrofloxacin residues, she said.

Many shrimp breeders had since stopped using enrofloxacin in shrimp feed.

Japan remains the biggest shrimp export market for Viet Nam and shrimp exports account for the highest proportion of the total seafood export turnover of the country. Meanwhile, purchasing power from key importers like the EU and the US has declined. In addition, abundant shrimp supplies from India and central American countries have weighed on shrimp export prices.

According to the latest statistics, shrimp exports to Japan in the first two months of this year reached US$67.5 million, a year-on-year increase of nearly 12 per cent. In February alone, shrimp earned an export turnover of $34.9 million or a year-on-year increase of 50 per cent.

Travel expo returns to HCM City

The 8th edition of the International Travel Expo (ITE) will be held at the Sai Gon Exhibition and Convention Centre in HCM City from September 13-15 this year.

The first two days of the exhibition will be opened only to trade visitors, which include hosted buyers and sellers. Public visitors are welcomed to join the event on the last day.

ITE HCMC 2012 expects to gather over 200 participating companies from more than 30 countries and anticipates 18,000 to 20,000 international and regional visitors.

Organisers said that the exhibition sought to provide a unique platform to launch inbound and outbound travel businesses in the Greater Mekong Sub-Region. It would also present an excellent opportunity for avid travelers to enjoy massive promotions and discounts extended especially for the event.

The organising committee, comprising the Viet Nam National Administration of Tourism (VNAT), the HCM City Department of Culture, Sports and Tourism, VINEXAD and IIR Exhibitions, has put together a series of new and exciting features and programmes for the exhibition, catering to tourism industry professionals, dignitaries, ministries and the general public.

In conjunction with the exhibition, a ministerial conference will be held for the first time to congregate top ministries and tourism experts to share their insights on inbound and outbound tourism through face-to-face dialogues.

The conference will expose participants to thought-provoking sessions, presenting them with the knowledge they require to penetrate their potential markets.

Along with the conference, there will be seminars on interesting topics pertaining to current trends and the future of tourism, which are bound to attract buyers and sellers.

La Quoc Khanh, director of the HCM City Department of Culture, Sports and Tourism, said: "We are proud to present ITE HCMC 2012, which promises to deliver a balanced emphasis on both inbound and outbound tourism, showcasing key exhibitors from the industry, interesting activities and promotions for visitors."

He said several programmes had been developed to provide invited buyers and sellers with the opportunity to obtain knowledge of recent developments and understand the business potential within the region.

In addition to national pavilions, the exhibition will also feature themed ones focusing on the luxury travel segment, golf tours, cruise services, special attractions and education and medical tourism. These pavilions will be among the main highlights at ITE HCMC as they are key segments within the tourism industry of the Greater Mekong Sub-Region (GMS).

Other key features returning to the event include FAM trips, Hosted Buyers' Programme, Hosted Media Programme, lucky draws, special performances and the Tourism Alliance Awards (TAA).

Seafood firms call for better access to capital

The Viet Nam Association of Seafood Exporters and Producers (VASEP) on Thursday asked relevant bodies to help the industry deal with capital difficulties to boost exports.

In a written document sent to the Ministry of Agriculture and Rural Development, the association said that seafood producers and exporters were facing a severe capital shortage as the country tightened credit and the industry's input costs rose by 10-35 per cent against last year.

The association said that credit demands of tra fish producers and exporters alone was estimated at VND14 trillion (US$666 million) this year to invest in aquaculture areas and processing. Especially, seafood businesses are in urgent need of roughly VND500 billion ($23.8 million) for this quarter to ensure business and export performance.

However, seafood producers and exporters face difficulties accessing credit and still have to borrow loans at high annual interest rates of roughly 19 per cent despite the recent rate reduction.

Only a limited number of seafood exporters and producers could access loans with 15 per cent interest rates, the association said.

To help businesses, the association asked relevant bodies to assist producers and exporters in accessing preferential loans.

It also recommended the ministry to ask banks to apply flexible policies for borrowers in the industry. Short-term loans based on size and payment times for export orders should be given to seafood exporters as it helps them avoid having to sell their products at low prices for due maturity at banks, the association said.

The association also asked the ministry to remove regulations on inspecting and granting health certificates for seafood export consignments to Japan and Canada.

The association said the regulation increased inventory and waiting time for results from 7-10 days to arrange schedules and procedures for export, which not only increased input costs but also directly affected the competitiveness of Viet Nam's seafood exporters.

VASEP General Secretary Truong Dinh Hoe said that the removal of the procedure would help seafood exporters gain capital returns, avoid inventory products and cut input costs in the context of restricted capital.

Despite difficulties, the seafood industry in the first three months of this year fetched $1.26 billion, up 13 per cent over the same period last year.

Travel firms urge tax extension, lower rates

The HCM City Tourism Association has urged the Government to extend the deadline for tax payments and cut lending interest rates for local travel firms that have been hit hard by falling demand for tour bookings.

Nguyen Thi Khanh, vice chairwoman of the association which now represents 130 tourist companies, hotels and restaurants in the city, said the majority of its members have predicted their business situations would deteriorate.

This year, the domestic tourism segment would no longer be a "life buoy" for the local hospitality industry as it had been three years ago, said Khanh, blaming the trend on falling incomes and rising prices.

Many tourist companies also complained they had to keep the prices of their tours unchanged following contracts signed previously with counterparts in the context of increasing input costs and rising prices for petrol, transportation and meals. This would result in lower profits and even losses, they said.

The Young Generation Company's deputy director Tran The Dung said bookings for tours are falling while prices for services were seeing unexpected rises.

"Our current business situation is quite bleak as the number of booked tours for the coming April 30 and May 1 holidays is set to drop by 30 per cent over the same period last year," said Dung.

"For example, during this incoming holiday season, our company had to compensate VND90,000 (US$4.3) for each visitor to tourist attractions in the central city of Thua Thien Hue as the visiting fees were raised without any notice. These emerging costs would lower our profits."

Customers were no longer generous as before. That had forced tourist companies to slash tour prices. Thus, service price hikes were a huge challenge, he said.

Viet Nam Tourism Company (Vitours) director Cao Tri Dung said he agreed as increased transportation costs have a huge impact on local travel companies.

The number of booked tours to destinations in the central region were slumping due to skyrocketing air fares, he said.

Vice chairwoman Khanh said some small travel companies had to shut down their business to avoid further losses.

"Only large tourist companies with sufficient financial capacity and strong brands could survive in the such a gloomy situation," she said. "However, most travel companies in the city were small or medium sized and therefore the general situation is not so bright," Khanh said.

Saigon M&C towers above its opposition

The Asia Pacific Property Awards is part of the long-established International Property Awards.

Saigon M&C real estate company is toasting its Best Property award at the Asia-Pacific Property Awards 2012 for its mix-used property and office building.

The winner clinched two awards thanks to its Saigon One Tower. It is the second tallest building in Ho Chi Minh City with international standard offices, commercial centre, luxury apartments and five parking basements.

Located in the city centre, the 41-storey tower was uniquely designed to harmonise its surroundings. It was built by famous French builder Bouygues Batiment International. It also boasts intelligent building management systems (iBMS), such as Cisco’s Smart+Connected.

With clear views to Nha Rong port and Bach Dang wharf, Saigon One Tower is expected to become operational this year and become an iconic part of the city. The Asia Pacific Property Awards is part of the long-established International Property Awards.

Later this year, the highest scoring Asia-Pacific Property Awards winners will compete against other winning companies from Europe, Africa, the Americas and the Middle East to find the world’s best performers.

VSIP Bac Ninh is busy looking for the fountain of youth to live on

Leading industrial park and township developer VSIP wants to extend the lifetime of its key Bac Ninh province project to 70 years.

The joint venture between Becamex IDC and Singapore’s Sembcorp Parks Holdings proposed Bac Ninh People’s Committee give VSIP Bac Ninh another 20 years, a source at the province’s Industrial Parks Management Authority said.

“VSIP wants to extend the project’s lifetime because it wants to enhance the effectiveness of this project,” said the source. Vietnam’s Investment Law, promulgated in 2005, restricts foreign direct investment projects to 50 years.

Bac Ninh People’s Committee this month sent a document to Prime Minister Nguyen Tan Dung proposing the government meet VSIP’s wishes.

Chairman of the provincial committee Nguyen Nhan Chien said the extension would further create favourable conditions for the foreign investor to implement its project and contribute to the province’s economic development. The $103.7 million VSIP Bac Ninh Industrial Park and township, located on the border of Hanoi’s Gia Lam district and Bac Ninh province and 18 kilometres from downtown Hanoi, covers 700 hectares.

VSIP received an investment certificate for this project in 2007 and the industrial park, covering 500ha, will be home to non-pollutive, high-tech, high value-added, capital intensive industries such as those in the electronic and pharmaceutical sectors.

Furthermore, a 200ha township will be developed near the industrial park, including commercial and residential developments as well as services to support Bac Ninh province. This new industrial and township is part of VSIP’s big footprint in northern Vietnam after the success of two projects in southern Binh Duong province, VSIP I and VSIP II.

VSIP Bac Ninh has attracted several well-known transnational companies such as PepsiCo and Nokia. PepsiCo, the world’s second largest food and beverage manufacturer, decided to build a $70 million beverage factory there and Nokia will build a mobile phone manufacturing factory.

SP Setia, a leading Malaysian property developer, is preparing to develop a large eco-urban project within VSIP Bac Ninh.

Investors despair over continuing financial fraud

While securities authorities struggle to improve management of listed firms, discrepancies when it comes to companies' financial statements and auditors' reports are continuing to muddy the waters.

As this conduct becomes more widespread, investors says they are more and more concerned about insider trading.

"Whatever the reason, our trust in the companies is lost," said securities investor Nguyen Anh Tuan.

He said that some companies tried to hide their true earnings to make it possible to defraud traders.

Nguyen Thanh Ky, general secretary of the Viet Nam Association of Securities Business, also said he was aware of insider trading in a number of listed firms.

Many auditors said the troubled economy had caused firms to lose huge sums of money which some tried to offset by fraud. Making matters worse, he said auditors had failed to pick up on the fraud.

In addition, a number of enterprises were not compulsorily audited, said an official at one of the biggest auditing firms Ernst&Young.

Meanwhile, current financial regulations were insufficient, experts said.

According to published audited financial statements for last year, profits in many companies plunged after auditing.

For example, the Viet Nam-Italy Steel Co (VIS) initially posted profits of VND110 billion (US$5.2 million). After auditing, that figure was revised down to VND27.2 billion ($1.2 million). Meanwhile, the Viet Nam General Import and Export No 1 (TH1) reported a 42.3 per cent decrease in profits, worth VND21.46 billion ($1 million).

Meanwhile, other firms saw profits increase after auditing by between 86-273 per cent, such as Thac Ba Hydropower (TBC), paper producer Dong Hai Ben Tre (DHC) and property developer Coma 18 (CIG).

Key southern region needs support to develop warm investment climate

Southern Vietnam provinces need government help to attract quality foreign direct investment.

In southeast Vietnam many industrial parks and manufacturers needed supporting industries to increase their competitive edge, said Nguyen Van Lai, director of the Ho Chi Minh City Department of Industry and Trade.

Seventy per cent of the raw materials used in manufacturing and assembly in Vietnam is imported and exporters are crying out for a strong supporting industries in Vietnam. This was the message from the 13th Conference on Industry and Trade in Ho Chi Minh City last week.

Exports from southern provinces are considerable, but few are high-quality processed products. Assembly and raw material processing was king in the region, said Vu Van Long, vice director of the Ba Ria-Vung Tau Provincial Department of Industry and Trade.

The region was the only area that is recording a trade surplus, while everywhere else in Vietnam has a trade deficit. In 2011, the area had a trade surplus of $11.3 billion, it was reported at the conference.

However, exports from the area were mainly semi-processed products and assembled products with low added-value, while what was imported was expensive equipment, raw materials and industrial products. In addition, imports increased the demand of foreign currency and reduced the competitive edge of domestic products.

Tran Nguyen Nam, deputy director of the Ministry of Industry and Trade’s (MoIT) Domestic Market Department, said a special programme was needed to encourage the growth of supporting industries in Vietnam.

Nguyen Van Khoa, vice director of Dong Nai Provincial Department of Industry and Trade, said: “Let corporate income tax remain at 10 per cent for the first 15 years and provide a land tax exemption for the first 11 years for a supporting industry project.” Long suggested a supporting industry bureau be established. “We are implementing a plan to develop an industrial zone that will attract investment in supporting industries from Japan,” said Long. Recently, Dong Nai established a 280 hectare Long Duc Industrial Park to call for supporting industry investors from Japan.

In a similar development, Ho Chi Minh City is negotiating with Japanese partners to build a 200ha zone in the Hiep Phuoc Industrial Park for supporting industries.

Flexible approach pays dividends

Bending with the times is keeping firms ahead of the times.

Vifon saw around 20 per cent export growth in 2012’s first quarter against the same period in 2011 and its chairman Nguyen Trung Dung attributed the company’s surging exports to a sales agent network ready to move with the times.

Vifon’s instant noodles have now gone to 50 countries and territories around the globe.

“We produced sample products, tested purchasing capacity and then when opportunities arrived we rolled out breakthrough products in both domestic and foreign markets,” said Dung.

Its efforts got due rewards. For example, in 2011, Vifon products won plaudits from Polish consumers as most favoured food products.

When around half of wood processing enterprises are running perfunctory production or face going bust, Minh Phat 2 Company specialising in wooden art work export has emerged as a shining spot with its opened minded approach.

The company’s exports grew 12 per cent on-year in the first quarter of 2012. Three factors helped the company weather the storm in 2012’s first quarter, said its director Dien Quang Hiep.

Striving to retain traditional customers, making product quality and punctual delivery at top priority and restructuring production to boost labourers’ efficiency.

“Though Chinese-made items are now overwhelming the domestic market, this does not mean the door is shut towards Vietnamese goods wanted to enter Chinese market,” said chairman Nguyen Lam Vien at Ho Chi Minh City-based Vinamit Trading Company Limited.

“Like Vietnamese consumers, Chinese consumers also prefer using imported products. So, deeply processed items like those of Vinamit or Trung Nguyen Coffee are deepening roots in this huge market,” said Vien.

Vien is reportedly to lead a Vietnamese business group to join Canton Fair in China from May 2-6 sourcing opportunities to access modern distribution channels and directly contact Chinese partners.

On this occasion, the Vietnamese business group will work with Shenzhen Trading Centre Authority on leasing 6,000 square metres for displaying Vietnamese products. As planned, under the umbrella of Chinese local authority Vietnamese firms showing products there would enjoy special incentives in the first five years.

Irrigation fee reduction boosts production
 
The Government's policy to reduce irrigation fees for farmers has cut their production costs by 3-10 per cent and increased their yield.

Deputy head of the Irrigation Department under Agriculture and Rural Development Ministry Vu Van Thang said the area of irrigated farmland reported had increased 4-10 per cent since the policy was launched in 2008, meaning farmers qualified for more water, which had helped improve productivity.

Under the previous fee system farmers were understating the amount of land under cultivation to save money on water fees. They were thus getting less than the optimum amount of water for the true area and the crops were suffering.

Now that farmers were accurately reporting areas under cultivation, they were qualifying for more water and thus production had increased.

The Government partly funds irrigation service providers to operate irrigation works (for example, canals and pumping stations). To get water from the sluices to inner-field irrigation systems, farmers pay a fee to the service providers.

However, Quang Tri Irrigation Ltd vice director Tran Van Tho said while fees were reduced, the fund the providers received from the Government remained the same and had not kept up with inflation, posing difficulties for the company.

Another shortcoming of the policy was that irrigation work in remote mountainous regions required more maintenance due to harsh conditions, and the funds provided by the Government were not enough.

Head of Nhon Hau Agriculture Co-operatives in central Binh Dinh Province Mai Duc Anh said inner-field irrigation fees were too low for the company to cover the costs of service delivery, including costs to pump water to the fields.

Deputy Minister Dao Xuan Hoc said policy makers would review the shortcomings and propose solutions, including reasonable Government funding, to ensure benefits for both farmers and irrigation service providers.

Agricultural expo spotlights safe produce
 
The first safe agricultural products festival opened yesterday in Dong Thap Province's Cao Lanh City to help southern farmers find new markets for their products.

Speaking at the opening ceremony, Dr Vo Mai, deputy chairwoman of the Viet Nam Gardening Association, said the festival was a tribute to the achievements in agriculture and rural economic development in the region, and demonstrated the close ties among the Government, scientists, businesses and farmers in sustainable agricultural production in the South.

She said the fair would be an opportunity for farmers involved in growing fruit and vegetables, fish rearing and animal husbandry in 13 provinces and cities in the South to enter into long-term co-operation and investment agreements.

The theme of the festival is "Agriculture-Farmer-Rural Area".

There are about 250 stalls displaying the latest farming technology and equipment, organic and healthy agricultural products and seedlings, among other things. There will also be seminars on producing safe agricultural products.

"Consumers tend to require high standards when it comes to food safety. The application of GAP (agricultural production practice) standards will help consumers feel more secure when buying Vietnamese farm produce, especially fruit and vegetables," Mai said.

A number of localities had applied VietGap or GlobalGap standards in agricultural production, but more farmers needed to embrace the programmes, she said.

She also pointed out that the lack of awareness among consumers about VietGap-certification meant that farmers who applied these standards were losing out to those that produced fruit and vegetables and raised livestock more cheaply.

"Therefore the Government should quickly come up with a logo for products produced under VietGap standards," she said.

Meanwhile, Nguyen Van Duong, deputy chairman of the provincial People's Committee, said that despite difficulties caused by flooding and disease, agricultural production in Dong Thap Province had increased continually over the past few years due to better farming practices.

"The province is aiming to form large-scale commodity production areas to provide goods for export, including large-scale rice fields in Tam Nong, Thap Muoi and Thanh Binh."

The province is home to 500,000ha of rice cultivation, which yields 3.1 million tonnes a year, placing the region third in terms of rice production in the Cuu Long (Mekong) Delta.

In addition, the province also has a large area given over to tra fish farming where GlobalGap standards are applied, providing the market with about 350,000 tonnes of catfish a year.

Agricultural production would continue to be a key economic sector in the province in the coming years, Duong said, adding that he hoped the agricultural fair would encourage more businesses to form relationships with farmers in Dong Thap.

Organised by the Viet Nam Gardening Association and Rural Economy newspaper, together with Dong Thap Province, the fair will run until April 20.

The association, which was established in 1986, has helped farmers boost production under the garden-pond-pigsty model over the past few years.

In co-operation with provincial departments of agriculture and rural development, the association has organised training courses for farmers on the application of GAP standards, as well as instructing them on better production techniques.

Ministry continues its promotion of safe practices in agriculture

The Ministry of Agriculture and Rural Development (MARD) has confirmed that there are farmers abandoning the Good Agricultural Practices (GAP) standard but asserted their number is small.

Media reports have said that farmers in the southern Cuu Long (Mekong) Delta region, especially those from Tien Giang and Vinh Long provinces, have been jettisoning the GAP practices because they are not bringing in promised benefits.

The Tien Giang-based Lo Ren Vinh Kim Star-Apple Co-operative and My Hoa Nam Roi Grapefruit Co-operative in Vinh Long were the country's first two collectives to get the GlobalGAP certification – in 2008 and 2009, respectively.

The certification assures consumers of quality and food safety at each stage of crop cultivation, animal husbandry, or aquaculture.

In the early days, the two co-operatives' products were exported to the US and Netherlands at high prices. But since last year, as the exports have gone down, farmers have been forced to sell their produce at the same price as ‘normal' products.

Since 2008, 70,000ha of agricultural land have come under GAP, of which more than 460ha have received GlobalGAP certification.

Besides GlobalGAP, the agriculture ministry has been also granting VietGAP certification to vegetables, fruits, tea, rice and coffee.

Farmers have to meet more than 300 standards and pay at least US$3,000 to get the GlobalGAP certification, which is only valid for one year, according to Prof. Vo Tong Xuan of the Long An-based Tan Tao University.

The high cost of getting the certification and low benefits accruing from it have been the main reasons for many farmers abandoning GAP practices, experts say.

A lack of guidance and support from authorities for farmers to build brands and find markets as well as poor co-operation among enterprises, farmers, buyers and suppliers have also been blamed for farmers giving up on GAP.

The agriculture ministry, however, has said there are many successful entities still applying international practices with help and guidance from the State and export firms.

Coffee production in the Central Highlands, for example, has seen nearly 20,000 households with a total productivity of 100,000 tonnes being granted UTZ certification, which guarantees that raw materials have been grown and harvested in a responsible manner.

The central province of Binh Thuan has more than one third of its 15,000ha of dragon fruits adhere to VietGAP standards. More than 500ha of these orchards have been contracted to supply fruits for export to the US. It is planned that by 2015, all 5,000ha will meet VietGAP standards.

The agriculture ministry plans to further promote the application of GAP standards in production, which would help compliance with the Law on Food Safety.

The ministry has said that the GlobalGAP standards will be applied for special products aimed at international consumption. Compliance with other international standards such as UTZ Certified, 4C and Rainforest Alliance will be required for key export products like tea, coffee, cocoa and pepper.

It envisages that these crops will be produced and exported via public-private partnership contracts involving enterprises and international groups that guide and help farmers receive GAP certification and promote consumption of their produce.

Farmers will be encouraged to practice VietGAP for products consumed in Viet Nam, and later upgrade the practices to meet international standards.

Supporting homebuyers a lifebuoy to realty market

Offering homebuyers preferential loans is considered a solution to remove the current difficulties of the property market and improve the market liquidity.

This was given at the dialogue between property firms and members of the National Financial Supervisory Commission organized by the HCMC Real Estate Association (HoREA) in HCMC on Wednesday.

Vu Anh Tam, general director of Tai Nguyen Construction, Manufacture and Trading Company, said the local property market has been plunging in the last four years as trading moves flat in all segments and project owners are struggling with unsold products.

Given the sluggish liquidly of the market, no bank wants to give out loans to property firms, said Tam.

He stated the key point is to bring homebuyers to the market, through providing them with soft loans to buy houses. When the realty market turns rosy, construction, cement and steel sectors will also enjoy benefits.

Dang Hoang Vu, general director of Thanh Binh Real Estate Trading Co., shared Tam’s view, saying instead of pouring capital into enterprises, the State should adopt policies to directly assist homebuyers.

Tran Dinh Thien, director of the Vietnam Institute of Economics, wondered if the Government is capable of saving the troubled property market. He described the rescue as an art to inject an amount of money enough to stimulate the market.

With the latest move of the central bank, credit for property will be loosened. Particularly, property credit will be further extended with loans for all purposes such as buying houses to live or as an investment, and property development.

Meanwhile, instead of giving loans to realty firms to finalize their projects, the banks choose to offer loans with supporting interest rates to homebuyers.

ANZ Vietnam has slashed the lending rate to 15.5% a year for customers borrowing more than VND500 million to purchase houses. Compared to last month, the interest rate of home loans has dwindled two percentage points.

Asia Commercial Bank (ACB) has also announced to use VND1 trillion as home loans with the interest rate of 18-19% per annum. Most lately, following the central bank’s decision to pull down the deposit rate cap to 12%, HSBC Bank has reduced the lending rate for house and car buyers by one percentage point, or to 17%.

Trinh Van Tuan, general director of Orient Commercial Bank (OCB), said supporting homebuyers is the safest way to revive the property market at present, since lenders often choose customers with stable income and proven repayment ability to give out loans. On the other hand, providing more loans to property developers is risky as it is unknown when the market will warm up.
 
Lackluster business hits property firms

Local property firms are preparing for their shareholders meetings with modest business plans for this fiscal year as they have failed to achieve last year’s targets due to the market slowdown.

Thuduc Housing Development Corporation, shortly known as Thuduc House, reported a sharp decline in business performance with after-tax profit of less than VND31 billion, versus the year’s target of VND179.6 billion.

Economic woes, coupled with high inflation and lending rates, pushed up input costs, in which the total financial costs surged by 29% against 2010, said Thuduc House in its report.

Similarly, Van Phat Hung Corporation did not achieve the targets set for 2011, earning a mere VND6.6 billion, compared to the goal of VND64.8 billion.

The company said it could no longer scatter investments this year but would focus on key projects, such as selling 70 apartments of La Casa project in Phu Thuan in District 7, HCMC. In addition, the property developer is seeking to sell some small projects and transfer several others in districts 2, 7 and 9.

Meanwhile, Phat Dat Property Development Corporation is preparing to present its business plan at a shareholders meeting slated for Saturday next week, aiming at a profit of VND37 billion in 2012. The company last year expected to earn a hefty VND1.1 trillion in revenue and VND360 billion in pre-tax profit, but later revised down the targets to VND148 billion and VND8 billion respectively.

Phat Dat plans to issue 18 million shares this year. If this was successfully done, the firm would mobilize an additional VND180 billion for its business operations.

With the same purpose, Van Phat Hung said it would issue some 300 billion worth of convertible bonds with terms of 1-3 years if conditions allowed.

Given the dreary market outlook in 2012, Thuduc House, along with many other realty firms, will focus their resources on the major projects, and suspend the less important ones.

Local property enterprises have become more cautious about their business development schemes. Many of them are waiting for State policies to help revive the real estate market amid the protracted glum.

Though the central bank has announced to loosen property credits, it is too soon for this move to show any effect.

Property developers can seize this chance to borrow from banks and homebuyers can seek loans at lower interest rates. This will boost both supply and demand of the market, said the experts of Viet Capital Securities.

However, the company said lenders would remain cautious about giving out loans, especially when the enterprises are still in trouble and the market is still frozen.

Economic downturn forecast to hit Vietnam again

The country’s leading experts have voiced concern that Vietnam is entering into a fresh battle to stave off yet another economic downturn, citing the central bank’s latest ceiling deposit rate reduction.

Worse still, macro-economic indicators in the first quarter point to a high possibility that the economy is spiraling into stagnation.

Vo Tri Thanh, vice head of the Central Institute for Economic Management (CIEM), said: "Vietnam’s economy is actually coming to a standstill. For a developing economy like Vietnam, economic growth of a mere 4% means stagnation."

The Index of Industrial Production (IIP) growth of only 4% is the lowest in many years, he noted. While inventory has hit a record high, private sector investment and foreign direct investment (FDI) have taken a nosedive, and trade deficit has slid sharply.

Meanwhile, according the National Financial Supervisory Commission, the credit growth in Jan-Mar stood at a minus 2.13%. With prices factored in, the negative growth would be 4.79% in the first two months of the year.

The commission said production stagnation had dragged down the capital absorption capacity of the economy and businesses. As economic woes are taking their toll, a lot of enterprises have seen their financial position deteriorating rapidly, making it difficult for them to take out bank loans.

Tran Dinh Thien, director of the Vietnam Economics Institute, ascribed poor liquidity in the economy to the inability of enterprises to absorb credit though lenders have made more funds available for borrowers and have shown signs of cutting lending rates.

Cao Sy Kiem, chairman of the Association of Small and Medium Enterprises, said small and medium firms were still paying an annual lending rate of 18% to 19% even though the ceiling deposit rate has been lowered to 12%.

ANZ Bank described the recent rate cut as surprising as the central bank’s governor last month said the deposit rate cap could only be slashed by one percentage point each quarter.

The bank said monetary loosening might cause expectations of inflation to soar again and that if this happened, it would be difficult to keep inflation under control. In addition, as dwindling prices of foods are the major reason for inflation to ease, while prices of non-food items, especially fuels, stay high, the pressure on consumer price has yet to lessen.

The economy was in a fierce fight against inflation in 2008 but later struggled with an economic downturn in 2009. Thereafter, inflation control and macro-economic stabilization had always been top priorities.

Now, it seems the economy would face another economic downturn soon.

The Asian Development Bank (ADB) predicted inflation would be restrained at a single-digit level this year, and then rise to 11.5% in 2013. Such a prediction has sparked concerns, especially when the central bank has promised to lower the ceiling deposit rate on a quarterly basis.

Thien said the economy was stuck in a vicious circle of stagnation and inflation. The root cause of this circle is inefficient public investment, said Tomoyuki Kimura, country director of ADB in Vietnam.