MBV posts sales growth of 43%, doubles warranty

The manufacturer of luxury cars Mercedes-Benz Vietnam finished the first quarter, posting a sales increase of 43% year-on-year in the sedans and sport-utility vehicle segments, reaching 328 units. This is more than double the average growth of the Vietnam Automobile Manufacturers Association (VAMA) members (21%), and much more than the overall automobile market.

The company has just announced a sustained program to improve customer care services by introducing a two-year warranty for spare parts, with immediate effect this month. This program, together with the automaker’s plan to launch numerous new vehicles this year, is meant to assert its leading position in the local luxury car segment.

With the warranty extension, Mercedes-Benz Vietnam becomes the first premium manufacturer in Vietnam to offer such long warranty which doubles that offered by other rivals in the same segment.

The German-invested automaker announced the two-year warranty for parts purchased and installed at its 10 authorized service dealers throughout Vietnam. All these genuine parts will be replaced at no extra costs during this two-year parts warranty period.
With the introduction of the two-year parts warranty, Mercedes-Benz sets the benchmark in service and underlines its leadership in the luxury segment in Vietnam, with a market share of more than 50%  and has been rated as the leader in the after-sales service in the luxury segment in 2012 by the leading consumer watch group, J.D. Power.

With such efforts, the number of sedans and sport-utility vehicles sold by the company in the first quarter this year rose 43% year-on-year, reaching 328 units, more than double the average growth of 21% as reported by VAMA. Mercedes-Benz globally delivered nearly 325,000 units to customers in March, posting the best sales month in the company’s history.

The two-year warranty campaign for spare parts and a significant outperformance of the market are two of the five commitments of Mercedes-Benz this year. The other commitments are introducing a range of new and exciting cars to Vietnam, putting its advanced technology electro-dipping coating into operation, and opening up the brand for young first-time buyers.

To celebrate the success of Mercedes-Benz in the first quarter and the Mercedes AMG Petronas F1 team, the automaker is inviting Vietnamese customers to support Lewis and Nico live in Singapore. The tickets are available for all AMG customers until end of May 2013.

Long An calls for investment in 17 major projects

The southern province of Long An has recently attracted a significant number of local and foreign investors, becoming an economic spearhead sector the Mekong River Delta region.

An April 16 seminar featuring foreign investor participants from a variety of nations and territories have discussed Long An’s potential for cooperation and sustainable development.

The province briefed investors on 17 projects with a particular focus on seeking interest in developing a high quality and environmentally friendly industrial zone, an advanced technology zone, the agro-forestry and fishery industries, environmental management services,and human resource, infrastructure, and tourism sector improvements.

Addressing the seminar, Deputy Prime Minister Vu Van Ninh emphasised the need for infrastructure development to echo the demands of the broader modernisation effort and prioritise strategic projects connecting the key southern economic zone to the Mekong River Delta.

He said the province should pay attention to training sufficiently qualified human resources, encouraging the application of science and technology, and facilitating technology transference. It should enhance administrative reforms to address difficulties facing enterprises and investors and to create an open and attractive investment environment.

The FDI sector’s has increased its contributions to Vietnam’s GDP from 2 percent in 1992 to around 20 percent last year. The foreign-invested sector currently represents around 25 percent of the country’s total investment, constituting 55 percent of total export turnover (including crude oil) and generating two million jobs.

Vietnam-Singapore economic connectivity strengthened

HCM City hosted the 9th Vietnam-Singapore Ministerial Meeting on Economic Connectivity on April 16.

The Vietnam-Singapore Economic Connectivity Agreement was signed in 2005, focusing on links in finance, education and training, transport, information-technology and communications, investment, trade, and services.

At this year’s conference, both sides discussed measures to expand cooperation with a way that maximises the potential and accords with the advantages of each nation most effectively.  

They reviewed the achievements recorded in six cooperative fields since the 8th meeting and devised new measures to strengthen bilateral economic relations.

Under the framework of the original agreement, Vietnam has affirmed its stance and concern over economic cooperation with Singapore, suggesting appropriate initiatives for further consideration, and encouraging businesses to intensify their investment in Vietnam for the mutual benefit of both nations.

The annual conference aims to review progress made on the agreement’s implementation and to formulate future plans for action.

Singapore, Vietnam boost service cooperation

Singapore wants to have fruitful service cooperation with Vietnam and Ho Chi Minh City, in particular.

Singaporean Minister of Trade and Industry Lim Hgn Kiang was speaking at the meeting with the city’s leaders on April 16.

Kiang said Singapore is ready to cooperate with Vietnam in the fields of finance and banking, logistics, retail business, education and health care.

Le Thanh Hai, Secretary of the Ho Chi Minh City Party Committee, welcomed the Singaporean Minister as co-chair of the 9th Vietnam-Singapore Ministerial Meeting on Economic Connectivity and the Vietnam-Singapore Business Forum on April 16.

Ho Chi Minh City is actively joining efforts with other localities to connect the two economies of Vietnam and Singapore, he said.

By the end of 2012, the city claimed to have more than 600 projects registered by Singaporean investors with a total capitalization of over US$5 billion, equal to one-fourth of Singapore’s foreign direct investment (FDI) in the whole country.

Rice market awaits news on Filipino buyers

The local rice market was even flatter last week than a slow March after buying activities for the one-million-ton rice stockpiling program wrapped up, prompting rice exporters to turn to information on rice exports to the Philippines.

According to experts from the farm produce market forecast firm Agromonitor, local companies are looking forward to information on signing government-to-government contracts with the Philippines given the current gloomy market, with weakened demand and abundant supply at home.

There were rumors last week that Vietnam had successfully completed negotiations with the Philippines to ship 185,000 tons of 25% broken rice to the ASEAN nation this month. Other sources, however, said the nations’ talks over rice export contracts are still incomplete while the Vietnam Food Association (VFA) remains tight-lipped.

VFA has just sent an announcement to corporate members, saying it will temporarily stop attesting rice export contracts clinched with the Philippines from last Monday. VFA is entrusted by the State to authenticate rice export contracts, and local customs only perform export procedures for involved enterprises based on the association’s confirmation.

The Philippines reinstated the governmental-level rice buying program after its agricultural statistics department reported total rice volume in stock posted at its lowest level since 2008 as of March 1, 2013, at 1.94 million tons, shrinking 22% against early 2013 and 3.7% over the same period of 2012.

Stockpiled rice volume of the Philippines’ National Food Authority has slumped 25.6% from 780,000 tons to 580,000 tons. Compared to February, 2013, rice volume that the nation is holding in stock has slipped 3.9%.

The offering export price of Vietnamese rice saw a decline last week while that of Pakistan, Thailand and India remained stable, Oryza.com reports. In Vietnam, broken rice prices tumbled US$5 a ton to US$335 a ton, with 5% and 25% broken prices staying stable versus late last week, at US$385-395 and US$355-365 per ton respectively.

Many Chinese traders have offered to buy Vietnamese rice but their payment methods make local sellers hesitant to sign export contracts, rice exporters in the Mekong Delta province of An Giang said.

The country as of March 31 had exported 1.45 million tons of rice, up 35% in volume over the same period last year. Rice exports in the period brought home some US$641.35 million in FOB value, a surge of 22.7%, while the average export price only reached about US$442 a ton, a reduction of US$44.52.

CapitaLand tops out second project in city

CapitaLand Limited together with its partner Khang Dien House Trading and Investment Company on Wednesday held a topping out ceremony for PARCSpring, its second apartment project in HCMC.

According to the Singaporean investor, the project’s structure consisting of three blocks of 12-18 floors on Nguyen Duy Trinh Street in HCMC’s District 9 has been completed. After completion, the project will supply over 400 apartments for the market.

Yip Hoong Mun, Deputy CEO of CapitaLand (Vietnam) Holdings, said that completing the project’s structure on schedule was great effort of the firm amid current economic difficulties.

CapitaLand does not take out bank loans but uses its own capital to develop the PARCSpring project, which requires total investment of around US$71 million. CapitaLand holds a 95% stake in the project and Khang Dien the balance.

The price of PARCSpring apartments starts from VND1.5 billion per unit.

To attract customers, the investor has offered some promotions such as a furniture package worth VND200 million as well as flexible payment methods and even no bank interests for customers taking out loans at Standard Chartered, VietinBank, HongLeong Bank and Military Bank.

According to CapitaLand, although the property market is facing many challenges, Vietnam is still an important market due to a high housing demand. In addition to implementing current projects, CapitaLand will look for other projects in the coming time.

CapitaLand is currently involved in six housing projects in Vietnam with a total of some 6,000 apartments. Besides, via the subsidiary The Ascott, CapitaLand is running 12 projects with around 1,800 serviced apartments in Hanoi, Haiphong, Danang and HCMC.

Property trading to be put under tighter control

Property enterprises may be subject to heavy fines or even have their licenses withdrawn if failing to comply with forthcoming regulations on property trading activities.

The requirements are included in the draft decree on administrative sanctions prepared by the Ministry of Construction.

According to the draft decree, enterprises will be fined VND100-120 million if they do not sell their products via trading floors, fail to perform procedures orderly and provide inaccurate information about products for buyers.

In addition to the fine, enterprises are required to correct false information, or they may lose their license for six months to two years if they violate the regulations a second time.

Similarly, trading floors will be fined heavily if they sell products that are not qualified, such as apartments in projects with unfinished platform construction, or employing brokers who do not have trade certificates.

New-look Trang Tien Plaza opens for business

Trang Tien Plaza, one of the most modern shopping centers in Hanoi City, officially re-opened last Saturday after several years of renovation.

Located in the heart of the capital city, the center has spent over US$20 million in the facelift, featuring 112 luxury brand names in high-end fashion, watches and perfume such as Christian Dior, Cartier, Burberry and Louis Vuitton. Up to 95% of retail space in this project is occupied.

Trang Tien Plaza is also a venue for culinary culture of Vietnam and other countries such as Singapore, Italy and Korea. The commercial center also includes well-known children’s fashion brands.  

The renovation project was initiated by the State Capital Investment Corporation and Hanoi Trade Corporation, which hold 90% and 10% stake in the shopping center respectively. Imex Pan Pacific Group carried out the project.

The center has an upgraded interior while its exterior architecture remains unchanged. The center restarted normal operation on January 30 before the official inauguration last week.

HSBC Vietnam unveils profit for the first time

HSBC Vietnam Bank in a statement released on Wednesday announced its pre-tax profit of nearly VND1.9 trillion in the fiscal year 2012, making it the first time this lender has unveiled earnings in the local market.

HSBC Vietnam is one of five 100% foreign-owned banks in the country that won operation licenses in 2008. The four remaining banks have never announced business results in the local market.

In 2012, the bank earned total revenues of around VND4 trillion while its total expenditure was nearly VND1.8 trillion. As of the end of last year, its credit risk provision funds accounted for around 1.1% of the total outstanding loan.

HSBC Vietnam general director Sumit Dutta said that the bank last year had a capital adequacy ratio (CAR) of 12% compared to the minimum level of 9% as required by the central bank.

Last year, its deposits added by VND5.3 trillion to VND44.6 trillion while credits rose VND9.2 trillion to VND32 trillion.

HCM City told to review chip industry viability

HCMC should carefully review the program for the chip industry development, especially the aspects of consumption markets and competitiveness, said Deputy Prime Minister Nguyen Thien Nhan.

The city should clarify whether chips would be made for export or just to reduce dependence on imports, said Deputy Minister of Planning and Investment Nguyen The Phuong.  Sharing this view, Nhan questioned: “Does Vietnam need to produce chips?”

“Can a poor country with per capita income of US$1,300 per year compete with giants with long experience in this area?” he said at a meeting with HCMC Vice Chairman Le Manh Ha on Tuesday. Still, he recognized the importance of this industry to the economy and national security.

Vice Chairman Ha hoped the HCMC chip industry development program would be a breakthrough in supporting industries for Vietnam to move from mere assembly to industrial production. However, he did express his worry about the fierce competition.

HCM City says to choke off slow-moving projects

The HCMC government will stop providing investment capital for 86 projects having less than 30% of capital disbursed as of the end of last year.

The city’s investment list for 2012 shows that up to 86 projects financed by the State budget in the city had less than 30% of their capital disbursed.

The projects facing the axe include the Phu Dinh Port that has been arranged VND4 billion by the city’s authorities ten years ago, but only VND160 million has been spent on development, a disbursement ratio of a mere 4%.

Other projects under tenterhooks include a project to upgrade infrastructure for poverty-stricken residential areas near the Tan Hoa-Lo Gom Canal basin. This project has been arranged VND20 billion to upgrade infrastructure at 63 residential areas around the canal basin encompassing districts 4,7, 8, 9 and 10 in 2008-2011, but the project owner has disbursed only VND2.8 billion so far, or 14% of the total.

Another foot-dragging scheme is a VND20-billion project to improve Thu Duc District’s Go Dua intersection to tackle the chronic congestion there, but the work’s disbursement rate has only reached 0.9%, equivalent to a mere VND185 million.

Besides, other necessary projects in the city like kindergartens, high schools, hospitals, transformer stations or site-clearance compensation for urban traffic schemes also suffer slow deployment.

In an announcement sent to related agencies last Friday, the city’s government also criticized 53 agencies, district authorities and developers for slow-moving projects within their jurisdiction.

Moreover, units and project owners of schemes having low disbursement ratio will face stricter penalties from the local authorities.

Unlike others, more beer consumed in crisis

Beer consumption sharply rose in contrast with the decline in macroeconomic indicators in 2012.

About three billion liters of beer was sold last year, versus 2.6 billion liters in 2011, said Hoang Viet Ha, operation director of Bao Viet Holdings, at a press briefing held by Bao Viet.

All economic indicators decreased year-on-year in 2012. GDP growth fell from 5.89% to 5.03%, while export saw its growth dwindle from 33.3% to 18.3%.

Similarly, import growth slid from 24.7% to 7.1%, credit growth from 10.9% to 8.9%, total retail sales from 24% to 16% and State budget revenue from 13% to minus 10%.

The growth of the insurance market also dropped 18% in 2011 to 12% in 2012. Bad debt ratio surged from 3-4% to 8.9%, pointing to a decline in debt quality

Such unwelcome changes are clearly demonstrated in a report released by Vietnam Report Co. this Tuesday at a ceremony for announcement of the list of 500 fastest-growing companies in Vietnam (Fast500) in 2012.

According to the report, finance and real estate firms last year suffered drastic growth slowdown unlike hot growth in the previous period. However, chemicals, mechanical engineering and especially food-beverage companies stand out, achieving the highest return-on-assets (ROA) ratios.

The chemicals industry had the highest ROA of 12.44%, followed by food-beverage with 12.36%. On the other hand, 3.62% and 5.2% were the average ROA ratios of finance-banking and property respectively, meaning enterprises in these two seemingly profitable sectors earned less than one dong with every ten dongs spent.

In the period 2007-2010, finance-banking had a compound annual growth rate (CAGR) of over 70%, while construction, real estate and building materials enjoyed a rate of more than 53%. However, in 2011, CAGR of the property sector dropped to 38%, while that of finance-banking stood at 47%.

Cement firms move with quick feet

Cement firms have their thinking caps on to sustain current market oversupply.

In 2013’s first quarter, Vicem Hoang Thach Cement, based in Hai Duong province, sold nearly 700,000 tonnes of cement and around one million tonnes of clinker, a 38 per cent jump against the same period last year.

Despite these positive sales, the company fears consumption could come to a standstill in the following months unless comprehensive measures were taken.

In 2012, the company had dropped its consumption, revenue and profit targets. Accordingly, it raked in revenue of VND4.005 trillion ($190 million) against proposed VND5,002 trillion ($238 million) and profits of VND250 billion ($12 million) against a planned VND427 billion ($20.3 million).

To abate unsold stock, from 2012 the company closely controlled input material sources to be certain it is close to production demands, according to company’s deputy general director Nguyen Thi Tao.

Its concern came as cement sector production now reaches 68 million tonnes per year whereas consumption this year (including export) is forecast at around 54 million tonnes only, similar to that in 2012.

Amid hardships in consumption, most cement firms set out modest revenue and profit targets.
Vicem Hoang Thach set revenue at VND4.374 trillion ($208 million), a bit more than 2012’s actual level and profit at VND222 billion ($10.6 million) this year.

In this context, Quan Trieu Cement based in Thai Nguyen province, contemplated running at 90 per cent of designed capacity only, generating 700,000 tonnes of cement with an estimated revenue of VND570 billion ($27 million). However, its sales in the first quarter were 135,000 tonnes only, leaving the task of achieving 2013 consumption target extremely hard.

“Our company will make strides to increase sales in some pivotal areas like Hanoi, Bac Giang and Thai Nguyen to reach the set goal,” said the company’s director Tran Dang Quy.

In other case Vicem Hoang Mai, based in north-central Nghe An province, set its profit target in 2013 at around VND90 billion ($4.3 million) against VND113 billion ($5.3 million) last year. The company had incurred losses of approximately VND10 billion ($476,000) in the first quarter of 2013.

Vicem Hoang Mai has implemented wide-ranging cost-saving measures such as lowering power and calorie usage in clinker production to avoid hiking prices, an important factor to help it reach 2013 business targets, said company director Nguyen Truong Giang.

According to Ministry of Construction figures, by the end of March 2013 cement and clinker inventory had exceeded 3.1 million tonnes, of this unsold clinker was 2.3 million tonnes and that of cement was 850,000 tonnes. Cement consumption was 11 million tonnes in the first quarter, 95 per cent compared to in 2012.

Garment exports hit $3.8 billion in first quarter

Vietnam’s garment exports fetched $1.3 billion in March, raising the total export turnover of this product in the first three months of 2013 to $3.8 billion.

According to the Vietnam National Textile and Garment Group (Vinatex), Vietnamese garments enjoyed a growth of over 10pct in the US market and remained a 20pct increase in the Japanese market.

Meanwhile, the EU market showed signs of increasing demand for textile products from Vietnam.

At present, local textile and garment businesses are focusing on producing products meeting high technical and quality requirements, thus raising the export turnover.

Modern rice storage system installed in Mekong Delta

A storage system capable of storing up to 4 million tonnes of paddy rice in the Mekong Delta is expected to be operational by the end of this year, after three years of construction.

Located in 52 locations in 13 Mekong Delta provinces and cities and Ho Chi Minh City, storages will be operated mechanically and automatically, enhancing productivity and controlling technical parameters during the process of rice preservation.

Once being put into operation, the system will help buy up rice among local growers and reduce after-harvest loss, thus ensuring stable rice production and supply as well as raising efficiency in performance of rice producers, processors and exporters.-

Forum smoothes the way for exports

The Vietnam Export Promotion Forum 2013 took place at Giang Vo Trade Fair and Exhibition Centre in Hanoi on April 11 as part of the 23rd Vietnam Expo.

Themed “Promoting sustainable export development”, the forum focused on exchanging issues of common concern for Vietnamese exporters, including market updates, impacts of new policies on exports, and experience sharing in trade and export promotion, in order to help enterprises boost export efficiency.

Opening the event, Do Thang Hai, Director General of the Trade Promotion Agency (VIETRADE) under the Ministry of Industry and Trade (MoIT) - the organiser - said that in 2012, despite economic difficulties, Vietnam’s foreign trade gained remarkable achievements, with total export turnover reaching its highest ever level of over 114.5 billion USD, an increase of 18.2 percent against 2011.

The result helped the country reach a trade surplus of 780 million USD for the first time in 20 years, he noted.

Vietnam earned 29.69 billion USD from exports in the first quarter of this year, a year-on-year rise of 19.7 percent.

Export growth was seen in almost all key export products, and in both domestic and foreign direct investment (FDI) business sectors.

Export turnovers to all markets increased positively, with 16.9 percent in the US, and 32.2 percent in the European Union and 29.5 percent in ASEAN countries.

At the forum, local and international experts analysed export opportunities brought by free trade agreements (FTA), especially that between Vietnam and the EU.

Vietnam has so far signed eight FTAs with other countries that account for 25 percent of total global consumption.

According to Tran Thanh Hai, deputy head of the MoIT’s Import-Export Department, FTAs play an import role in boosting Vietnamese exports as they help increase products’ competitiveness in big markets.

However, experts said Vietnamese businesses failed to capitalise on the opening of markets that FTAs bring about, saying many neither understand nor pay due attention to tariff preferences, thus reducing their competitiveness overseas.

The MoIT is speeding up negotiation of FTAs, considering it a key solution to increasing exports from now until 2020.

In his presentation, Dao Ngoc Chuong, Deputy Director of the MoIT’s Asia-Pacific Department provided an overview on trade and expectation of Vietnam’s trade with the region in the coming time with special attention given to measures to reduce the excess of imports over exports in major markets.

Also at the forum, Dao Thu Trang, an expert from Germany’s Industry and Trade Office in Vietnam had a detailed presentation on the German market, business chances and necessary attention needed to be taken regarding this market.

Vietnam’s loan rates highest in the region

Currently, Vietnam’s interest rates on loans are still highest in the region despite strenuous efforts by the State Bank of Vietnam (SBV) to adjust them since mid-2012.

Most recently, the SBV has fixed ceiling short-term loan rates at 11 percent per year for businesses operating in five prioritised fields and at 12-15 percent for those in other fields. In addition, interest rates for individuals buying houses or cars hover around 15 percent.

In the meantime, loan rates are much lower from foreign commercial banks, for instance, around 5-6.5 percent at the People’s Bank of China, 7.3-8 percent at Bangkok Bank and 8.25 percent at HSBC and Deutsche Bank AG in Thailand.

The Bank of Indonesia (BI) in particular has managed well to fix interest rates at 5.75 percent but other banks in Indonesia keep them at 7 percent.

The crux of the matter is that Vietnam’s frequent loan rate adjustments have made it difficult for domestic businesses to grow steadily in the long run.

Since 2008, China has adjusted deposit and loan rates several times and tried to keep them at around 5-7 percent per year, but Vietnam has done dozens of times. In neighbouring countries, the rates differ slightly within a range of 2.5-3 percent, while in Vietnam they fluctuate widely from 5-8 percent.

Economist Bui KienThanh says the discount rate is 0.1-0.25 percent in the US, and 0-0.1 percent in Japan. The long-term loan rate is 5 percent a year in the US and just 1-2 percent in Japan. By comparison, the loan rate in Vietnam is 1.5-2 times higher than that in regional countries and 3-4 times higher than in some European countries and Asian developed nations.

Thanh cites some reasons such as overheated growth, sharp increases in credit funding and bank loan rates. Another reason is that commercial banks operate inefficiently and simply apply high interest rates to make a quick profit. Consequently, domestic businesses have become so cash-strapped and weak to compete with others in the region which operate within the WTO platform.

High interest rates often make production costs higher, and domestic products less competitive than imported ones.

Thanh confirms that no businesses in the world can manage well with interest rates as high as in Vietnam.

Former Governor of the State Bank of Vietnam, Cao Si Kiem, who is president of the Small-and Medium-Sized Enterprises Association, says domestic businesses are unable to pay high interest rates on bank loans. In fact, most products imported from Thailand and China are cheaper in price than domestic products of the same bond on the market.

He insists that it is imperative to lower interest rates to help businesses access more capital so that they can stand firm on home turf.

The Government has already requested the State Bank of Vietnam to further reduce credit rates in April, accelerate the checking of commercial banks, simplify borrowing procedures, give priority to the agricultural and rural sector, stabilise exchange rates and tightly control the value of the Vietnam Dong.

Garment business potential not yet fully tapped

Garment businesses are not yet taking full advantage of the country’s political stability, incentive policies, low labour costs and long working hours that allow them to fill their orders quickly.

They also need to clarify the reasons foreign partners chose to order their goods from Vietnam.

The remarks were made by experts at a recent workshop in Ho Chi Minh City on the competitiveness of the Vietnamese garment industry, held jointly by the Vietnam National Textile and Garment Group (Vinatex) and the Centre for the Promotion of Imports from developing countries (CBI) under the Netherlands Ministry of Foreign Affairs.

China remains the largest garment exporter to the EU while Vietnam is only number ten. However, EU businesses are now looking for other suppliers besides China, they said.

Therefore, Vietnam must grasp this favorable opportunity and show its strength in order to gain a better place on the list of suppliers chosen by the EU.

Some experts said the country has proven its ability to ship and deliver a wide range of products in a timely manner.

The validity of a future Vietnam-EU Free Trade Agreement (FTA) is another advantage for the garment sector to boost exports to the market.

Dhyana Van Der Pols, CBI senior expert, advised Vietnamese businesses to focus on a specific market and work out appropriate export strategies for their goods.

Hanoi resolves to improve PCI

Hanoi is determined to improve its provincial competitiveness index (PCI) this year, in the wake of its sharp drop in 2012.

The capital dropped 15 places to number 51 in the 2012 CPI ranking due to complaints about its cumbersome administrative procedures, poor management of the real estate market, lack of adequate support for the business community and labourers, and weak FDI attraction.

Chairman of the municipal People’s Committee Nguyen The Thao, has asked relevant agencies to clarify the causes behind these problems and work out effective ways to address them in 2013.

He said the city will devise strict and drastic measures to restore its economic growth, tackle business challenges and boost production and trade.

The seven areas of focus include supporting the market; dealing with goods inventories; facilitating access to capital to boost production and trade; effectively implementing fiscal policies; resolving difficulties in the real estate market; improving the investment, production and trade environment; enhancing mass media information campaigns and establishing a steering committee to monitor measures that address these issues.

Hanoi will also do its best to improve the quality of public services and speed up reforming procedures related to investment, land, credit, taxation, customs and business registration.

The city has organised two dialogues between the authorities, banks and businesses in the city to listen to investors’ needs and demands.

Since the beginning of this year, the capital has seen positive economic signs. In the first quarter, the gross regional domestic product (GRDP) rose 7.5 percent over the same period last year, with the service and agricultural sectors both reporting improvements.

However, industry and construction plunged and the real estate market still shows no signs of recovery, while a number of construction projects have been delayed or rescheduled.

US$20 mln factory granted licence in Dong Nai

The southern province of Dong Nai has given the green light for the Japanese company Pegasus-Shimatomo Auto Parts to start construction on a factory for automobile and motorbike spare parts.

The US$20 million plant will be built at the Long Duc Industrial Zone, in Long Thanh District.

The plant is the 11th project in Dong Nai for the first quarter of 2013 with total investment in the province totaling US$155.5 million.

Japan took the lead in foreign investment flows in the province with eight projects, bringing in US$134.5 million in the first quarter.

Japan has also increased investment in eight other registered projects with the total investment coming up to US$58.8 million.

The province’s industrial zones have attracted US$288 million of foreign direct investment and US$59 million of domestic investment in this period.

Vinacomin exports 4 million tonnes of coal in Q1

The Vietnam National Coal and Internal Industries Group (Vinacomin) sold 10.7 million tonnes of coal in the first quarter of this year, 4 million tonnes of which were exported.

The group earned VND24,046 billion in the first quarter, up 6 percent over the same period last year. Of that figure,  VND14,250 billion from coal earnings (up 8 percent), VND825 billion from minerals (up 62 percent) VND2,309 billion from electricity (up 52 percent), and VND6,661 billion from other fields.

The average monthly income for its workers was VND7.5 million.

However, the group only fulfilled 23.8 percent of this year's targeted revenues due to low coal prices.
Vinacomin’s sales will continue to face more challenges because of the negative global and domestic economic situation. It expects to sell  around 10.5-11 million tonnes of coal in the second quarter, including 3 - 3.2 million tonnes for exports.The group is still planning to meet more than half of its basic targets set for the first half of 2013.

Boosting Vietnamese exports to Hong Kong

Vietnamese businesses need to the make the best of Hong Kong as a gateway for bringing Vietnamese goods to other markets.

Economic experts highlighted Hong Kong as a potential export market for Vietnamese goods during a recent seminar to discuss ways to boost exports via the port city.

Director of the Export Assistance Centre under the Vietnam Trade Promotion Agency, Le Xuan Duong, said despite its population of more than seven million, the Hong Kong Administrative Region recorded a very high per capita income of US$36,000 in 2012. Agriculture makes no contribution to the region’s GDP while services, including transport, telecom, banking, finance, healthcare and education, constitute nearly 93 percent.

Hong Kong primarily imports food and foodstuffs from abroad due to its shortage of cultivated land, which creates favourable conditions for the Vietnamese agricultural sector to push exports to this lucrative market.

Its main advantages are modern transport infrastructure, low tax rates, minimal government interference in business, and well developed services for retail and wholesale trade.

The region also has the busiest airport in the world for transporting international cargo and the third busiest container port.

As an important financial and trade centre for Asia and the world, Hong Kong is  considered an ideal destination for major Asia Pacific companies as well as a trade and investment gateway linking China with other countries.

The region ranks 11th in global trade volume with an import turnover of US$504 billion in 2012, up 3.9 percent, and US$443 billion in export earnings, up 2.9 percent over the previous year.

The double tax avoidance agreement between Vietnam and Hong Kong effective from January 2010 adds fresh impetus for increasing Vietnamese exports to Hong Kong.

In 2012, Vietnam ranked 17 out of the 30 countries with the strongest trade ties with Hong Kong, raking in US$4.7 billion in total export-import turnover, of which Vietnam exported US$3.7 billion, up 12 percent, and imported US$1 billion worth of goods, up 10.7 percent over a year earlier.

Key Vietnamese exports include agricultural produce, office and telecommunication equipment, computers, electronic and semi-conductor components.

Vietnamese businesses should seize opportunities and take advantage of low-cost product promotion packages to achieve greater penetration in other markets through Hong Kong.

The Hong Kong Trade Development Council (HKTDC) will coordinate with Vietnam’s Support Assistance Centre to launch trade promotions for Vietnamese businesses, which will enable them to display their products at trade fairs and exhibitions in Hong Kong.

Vietnamese businesses can also approach international customers and seek potential clients through HKTDC comprehensive marketing solutions such as advertising products online at hktdc.com and in HKTDC magazines, Duong said.

First rubber expo kicks off in HCM City

The country’s first international rubber and tyre industry exhibition opened on April 12 at the Saigon Exhibition and Convention Centre in Ho Chi Minh City’s District 7.

Conferences and seminars will be held during the three-day exhibition to discuss the future development of the local natural rubber industry.

Co-organised by the Minh Vi Exhibition and Advertisement Services Co., Ltd and the China National Chemical Information Centre, Rubber and Tyre Vietnam 2013 will provide a forum for domestic and foreign companies to compare notes and explore business opportunities .

Speaking at the opening ceremony, Bui Thi Thanh An, deputy director of the Vietnam Trade Promotion Agency in Ho Chi Minh City, said that rubber is among the country’s key export items.

Since 2006, the industry had recorded annual export revenue of more than 1 billion USD.

Vietnam is currently the world’s fifth-largest producer and third-largest exporter of natural rubber, An said. She added the Government has mapped out a plan to develop the rubber-based manufacturing industry to add more value to Vietnamese rubber products.

Build-transfer projects in Hanoi remain stagnant

A number of build-transfer (BT) projects in Hanoi are incurring lots of problems and need re-planning due to capital shortage or site clearance issues.

The municipal Department of Planning and Investment said the capital has caused delays to 63 BT projects. Of the total, 12 projects are underway, 20 have selected investors, 25 got approval from the prime minister but yet to find investors and six have good chances for their proposals.

To date, only five projects have been completed, of which four have been put in operation since October 2010, including the Hanoi Museum, Tri Thuc or Intelligentsia Palace, Bac Ha Dong Road and extended Le Van Luong Road. Yen So Wastewater Treatment Plant was completed last year and should be handed over to local authorities soon.

Of those five completed projects, only the Intelligentsia Palace has completed the auditing.

Among seven projects that have signed construction contracts, five have started building. Due to slow site clearance, construction of several projects has been stagnant including Bac-Nam road route in Ha Tay, Le Duc Tho – Xuan Phuong road route, and the Do Xa – Quan Son road.

The department said total investment of some of such projects would have to be adjusted or some provisions of the contracts may have to be changed to accelerate the construction.

The department attributed the stagnant construction to the impact of the economic downturn, hindering capital mobilisation.

The slump in the real estate market has also affected the construction of new urban areas and apartment buildings, impeding the implementation of such BT infrastructure projects.

Urban and satellite planning have yet to be approved, which hindered the scope of several BT projects, the department noted.

The lack of cooperation between contract management agencies and investors as well as slow site clearance has also affected the construction process of these projects.

The department proposed that the municipal government to require the contract management agencies of five completed projects to speed up the completion of a balance sheet.

Official: HCM City should change handicraft village development

HCM City should change its approach to the development of handicraft villages so that they are run more like businesses and less on the family-based economic model, said a local official.

Vice Chairman of the HCM City People’s Committee Le Minh Tri made the suggestion at a meeting on a project to restore and develop the city’s traditional handicraft villages in the 2013-2015 period, with a vision to 2020.

HCM City has around 65 handicraft villages, including those making girdle cakes, weaving, casting and growing bonsai trees.

The local Department of Agriculture and Rural Development proposed restoring, preserving and developing 13 traditional handicraft villages between 2013 and 2015. During the 2016-2020 period, the city will boost trade promotion programmes to seek outlets for these village’s products.

Le Hong Hoanh, Deputy Director of the Department of Agriculture and Rural Development said these villages have a long development process, including the Thai My weaving village and Phu Hoa Dong girdle cake village in Cu Chi District which has been around for more than 80 years.

However, the vice chairman said the focus should be put on suburban handicraft villages, not those in inner-city areas. He instructed the local Department of Agriculture and Rural Development to define those villages which should be preserved to best promote economic development and which should be focused on for their cultural value.

Vietnam’s garment export growth rate highest in the world

On Apr 13, the conference "Competitiveness of Vietnam textile industry: perspective in the eyes of international experts" was jointly held in HCMC by the Vietnam National Textile and Garment Group (Vinatex) and the Centre for the Promotion of Imports from developing countries (CBI) under the Netherlands Ministry of Foreign Affairs.

Dhyana Van Der Pols, Consultant CBI of the Netherlands Ministry of Foreign Affairs said, according to the latest research is published, the growth rate of garment exports in the period 2005-2011 in Vietnam reached the highest in the world with 32 pct

While the similar speed of China is 15 pct, India 10 pct, Turkey, Malaysia, Thailand are about 7 pct.

Dhyana Van Der Pols, CBI senior expert, advised Vietnamese businesses to focus on a specific market and work out appropriate export strategies for their goods

In addition to the advantages of political stability, productivity, labor costs in Vietnam are relatively low and still more than competitive than countries like China, Indonesia, India.

Some experts said Vietnam has proven its ability to ship and deliver a wide range of products in a timely manner.

Thus, Vietnam should grasp this favorable opportunity and show its strength in order to become one of the top ten on the list of suppliers chosen by the EU.

The validity of a future Vietnam-EU Free Trade Agreement (FTA) is another advantage for the garment sector to boost exports to the market.

West Lake remains attractive despite market slump

Despite the real estate slump, land and housing around Hanoi’s West Lake is still highly priced and attractive to better-off people due to the convenient location.

Real estate experts said that land in the area is still the most expensive in Hanoi and prices are continuing to rise.

Nguyen Hai Minh, an Overseas Vietnamese who lives in France is looking for a land lot around the lake for his plan to build an apartment and service building for lease. To date, he has yet to make a final decision due to price issues.

“I was surprised to get to know that land prices around the lake could reach hundreds of millions of VND per square metre. Some good land lots are offered at as high as VND600 million (USD28,625) per square metre,” Minh said.

He estimated that it would cost him from VND80-100 billion (USD3.81 million-4.77 million) to buy an expected land lot for the plan.

Real estate broker Thanh is offering to sell a 165-square-metre villa near the Sheraton Hotel at VND350 million (USD15,698) per square metre.

According to Thanh, larger houses that have a garage often have higher prices. Buyers are mainly Overseas Vietnamese or businesspeople while lessees are often foreigners who are working in the capital.

Land prices in the area average at from VND300-500 million (USD14,312-USD23,854) per square metre. Land in Quang An Ward is the most expensive, at from VND500-600 million (USD23,854-USD28,625) per square metre.

Prices of apartments in the area reach VND85 million (USD4,055) per square metre.

Despite high prices, many better-off people are still interested in buying and trading in land there due to good geomancy and environment.

Tran Quyet Thang, from a real estate firm, said several investors have plans to build houses to lease to foreigners.

Nguyen Hai Minh has the same plan. He said that one of his friends is leasing a house in the area to a foreign agency at VND80 million (USD3,816) per month.

Reports by real estate consultancy companies showed that West Lake area is the most attractive living place in Hanoi. House rental prices in the area are the highest in the municipal market.

BRT routes should be prioritized over metro systems: experts

It is better to build up bus rapid transit (BRT) routes first in HCMC to identify which route has the most passengers to develop metro routes citywide accordingly, experts said at a seminar organized by the Ministry of Construction and the World Bank on Thursday.

With low investment capital but large transport capacity and environmentally friendly feature, BRT is believed to help reduce traffic overload in Hanoi and HCMC while metro routes are yet to be constructed in the cities.

Comparing expenses and construction complications between the two transport modes, Vu Thi Vinh of the Vietnam Urban Association said one kilometer of metro costs around US$100 million, or 20 times higher than BRT’s investment. Meanwhile, she said, construction of metro takes much longer time than that of BRT.

In HCMC, development of the Metro Line No.1 and 2 is many years behind schedule, so BRT will be a suitable solution for the city until the two metro lines and others get started, she said. With the metro system in place, BRT will become the transit mean between metro and other transport facilities.

Echoing Vinh’s view, Nguyen Trong Hoa, director of the HCMC Institute for Development Studies, noted the city should develop BRT first, and those BRT routes with sizeable numbers of passengers will be replaced by the metro system later.

Some cities in recent times have rushed to study developing public transport system with costly investments like metro instead of adopting an appropriate road map, he stressed.

Hoa warned that urban areas like Danang and Haiphong should not establish metro systems due to costly investment, and that the cities should focus on setting up BRT routes in stead. For instance, he said, HCMC should change some metro lines into BRT routes in a certain period of time while awaiting capital mobilization for the metro system.

In related development, vice chairman Nguyen Huu Tin and representatives of the World Bank (WB) at a meeting on the same day agreed on some contents relating to the Mien Tay Coach Station-Thu Thiem-Cat Lai BRT route.

At the meeting, vice chairman Tin informed Mien Tay Coach Station would be relocated to a new location in 2015-2016, so the route direction earlier prepared must be revised.

Tin also proposed Ajay Kumar, lead transport economist of WB, consider opening one more auxiliary route along the Saigon River to help connect new residential areas to be developed along the waterway like Ba Son, Tan Cang and Binh Quoi-Thanh Da Peninsula. Regarding this issue, Kumar responded that it is not a tough job.

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