BUSINESS IN BRIEF 17/5
Myanmar, Vietnam aim for stronger growth
The Association of Vietnamese Investors in Myanmar (AVIM) recently announced that Vietnam and Myanmar are aiming to boost cooperation and expand two-way trade to US$600 million by 2015.
An AVIM spokesperson also said that the two countries are targeting increasing total investment to US$1-1.2 billion and increasing Vietnamese tourism to Myanmar by 30 % in 2015.
To reach these objectives, AVIM suggests that Vietnamese companies give priority to investment in fields that Vietnam has advantages such as agriculture, food processing, banking and finance, and tourism.
AVIM Chairman Tran Bac Ha recommends that the Vietnamese Government instruct relevant agencies in Vietnam and Myanmar to lay-out a long-term investment strategy between the two countries and establish a joint working group to provide oversight in the implementation of bilateral trade and investment agreements.
As of the end of 2013, 45 Vietnamese companies had been granted licenses to operate in Myanmar and the top 7 had been licensed with registered investment capital of over US$600 million in the Southeast Asian nation.
Tinh Bien – An Giang Int’l Fair opens
As many as 175 Vietnamese, Thai and Cambodian emprises are showing their wares at the 8th Tinh Bien – An Giang International Fair 2014 which opened at Xuan To industrial zone in southern An Giang province on May 16.
Nearly 400 booths feature a wide range of items such as agricultural and aquatic products, foodstuff, household appliances, footwear, garments and textiles, machinery and equipment, construction materials and tourism products.
The event running until May 21 provides an excellent opportunity for domestic enterprises, especially those in the Mekong Delta region, to boost goods exports, promote their brand names, and investment cooperation with other partners in the Mekong Sub-region, and strenghthen trade connectivity between Vietnam’s Mekong Delta provinces and neighbouring Cambodia and other ASEAN countries.
Dong Nai courts Thai investment
Southern Dong Nai province is avidly courting more Thai investment in such fields as infrastructure, agriculture, industry, and hi-tech, provincial People’s Committee Chairman Dinh Quoc Thai.
Mr Thai made the statement during a reception for Thai ambassador to Vietnam Panyarak Poolhup on May 15.
The province has established 31 large-scale industrial parks and is investing heavily in infrastructure at Long Thanh international airport to transform it into the largest airport in the country in its bid to attract Thai businesses to the province, Mr Thai said.
For his part, Mr Panyarak Poolhup said that following the success of the first phase in Amata Industrial Park in Dong Nai province, Amata Vietnam plans to implement a giant Amata Express City project in the province.
The ambassador also affirmed that the strategic partnership between Vietnam and Thailand has been strengthened coming as a direct result of Party General Secretary Nguyen Phu Trong’s visit to Thailand in June 2013.
Furthermore, 2016 will mark the 40th anniversary of Vietnam-Thailand friendship and cooperation, which will help boost all-around cooperation between the two nations, especially in the fields of economics, investment, agricultural development, culture, health, education and training, tourism, he added.
He expressed his hope that the province will continue to support Thai businesses to operate effectively in the future.
Thailand has so far had 34 projects with investment of over US$500 million, ranking ninth among 40 nations and territories investing in Dong Nai.
SBV to resume gold auctions if demand rises
A representative of the State Bank of Vietnam (SBV) in Ho Chi Minh City said on May 14 the central bank would inject gold into the market through auctions if demand increases in the coming days, according to a local newspaper.
The Saigon Times Daily on May 15 quoted Nguyen Hoang Minh, Deputy Director of the central bank’s HCM City branch, as saying that the agency was closely keeping a close watch on the local gold and foreign exchange markets to timely propose measures for the central bank and the HCM City government to intervene.
Minh noted that strong increases in gold prices on May 14 were mostly attributed to consumer anxiety as in reality trading of this yellow metal was not bustling. Therefore, consumers should be careful about their purchases.
Minh said gold prices on the domestic market were still higher than the world’s rates and any supply increase from the central bank would lead to immediate price falls and consumers would suffer as well.
The price of SJC gold bars soared VND730,000 per tael on May 14 over the previous day to VND36.45 million per tael. Compared to late last month, a tael – which equals 1.2 troy ounces – was VND1 million higher.
Nguyen Cong Tuong, Deputy Sales Manager of Saigon Jewelry Holding Co. (SJC), said the hike in gold prices resulted from increasing demand. The company sold 3,000 taels of gold compared to the daily average of 1,000 in previous days.
Compared to the world’s price, domestic gold is VND3.2 million per tael higher than the world’s.
For the foreign exchange rate, Minh said supply and demand in the banking system remained stable as the rate was VND21,115-21,120 per US dollar.
One US dollar was exchanged for VND 21,250 on May 14 at unofficial channels, up around VND130 compared to earlier this week while the Bank for Foreign Trade of Vietnam (Vietcombank) sold one US dollar for VND21,120, the same as previous days.
Global gold on www.kitco.com on May 14 evening was quoted at US$1,302 an ounce, up US$8.5 against the closing time of the New York stock exchange the previous night.
Measures ease workload for exporters
The Ministry of Industry and Trade has taken numerous measures to grant more Certificates of Origin (COs) to exporters in Mekong Delta provinces and Ho Chi Minh City in a bid to help the firms expand their markets.
Nguyen Van Toan, deputy head of the ministry’s office for managing import-export activities in southern Tien Giang province and its surrounding localities, said his office has supported local businesses to make declarations of origin for their exports and promptly solved administrative procedures for the firms within a day.
The office has also organised conferences and refresher courses to instruct local enterprises to make CO declarations, update relevant information in an accurate and prompt manner and reduce their costs.
Since the beginning of this year, the office has granted 1,736 COs for businesses’ exports totally worth nearly US$129.5 million. The exports were mainly shipped to ASEAN, the Republic of Korea, Japan and India.
To date, 108 enterprises in the region have registered to make CO declarations for their exports.
Between 2011 and 2013, the office provided 8,830 COs for the exports of businesses, which helped bring home US$604 million and increase the competitive edge of Vietnamese exports.
Vietnam helps Laos develop financial sector
Vietnam will do its best to help Laos develop its financial, monetary and customs sectors, Deputy Prime Minister Vu Van Ninh has said.
At his Hanoi reception for visiting Lao Finance Minister Liane Thykeo on May 15, Deputy PM Ninh confirmed the dispatch of financial and economic experts to Laos to assist it in surmounting its current difficulties.
He suggested the two finance ministries pay special attention to the training of high-skilled workers in spurring the development of the financial and banking sector.
Lao Minister Liane Thykeo declared that the two finance ministries have reviewed their cooperation programmes and agreed to concentrate on efficiently tackling the existing problems to their cooperative financial sources.
He expressed hope that the comprehensive cooperation and longstanding friendship between the two nations will be further promoted.
Foreign banks invest US$1.5 bln in house construction chain
The Vietnam Construction Bank (VNCB) will work with foreign financial organisations to raise US$1.5 billion in capital, to be paid in instalments for building and upgrading houses.
The information was revealed by Pham Cong Danh, General Director of Thien Thanh Corp, an affiliated party providing construction materials for the construction, at a ceremony to introduce the project in Ho Chi Minh City on May 14.
As a joint effort between the VNCB, foreign lenders and the Thien Thanh group, the chain is part of the VND50 trillion (US$2.38 billion) credit package announced earlier this year in Ho Chi Minh City and Hanoi. It aims to boost links among investors, contractors, material suppliers and banks in providing houses and house repair services for customers facing financial difficulties.
The chain is expected to bring about a 5-10 % reduction in construction cost, while solving material inventory problems and stimulating the real estate market.
Borrowers joining the chain can borrow up to 100 % of the construction cost in terms of 15-20 years with an annual interest of 9 % in the first year.
The programme will be first conducted in Ho Chi Minh City, then expanded to Hanoi, Danang and Can Tho.
According to Nguyen Tri Hieu, Deputy General Director of the VNCB, the VND50 trillion package and a separate VND30 trillion (US$1.42 billion) package introduced last year share the same purpose of removing difficulties for the property market, reducing bad debts and recovering economic growth against the backdrop of a high property inventory.
However, while the older package targets customers with low incomes, this year’s one aims to unite the four sides in constructing and completing housing projects, he said.
Hieu also noted that the State Bank of Vietnam has assigned eight banks, including Saigon-Hanoi Bank, Mekong Housing Bank and the VNCB, to conduct the construction chain.
Pan-Tonkin Gulf Economic Cooperation Forum opens
Nearly 200 delegates from China and South East Asian (SEA) nations attended the Pan-Tonkin Gulf Economic Cooperation Forum which opened in Nanning, China's Guangxi Zhuang Autonomous region on May 15.
Addressing the opening session, Deputy Minister of Transport Nguyen Hong Truong affirmed Vietnam’s willingness to cooperate with China and ASEAN countries to implement an expanded Tonkin gulf Economic Cooperation.
Vietnam also asked nations to closely cooperate in priority areas such as infrastructure, environmental protection, rural agriculture andpeople-to-people exchange, especially in capital mobilisation and funding for major projects under the cooperative framework.
Regarding the East Sea situation, Deputy Minister Truong said political stability should be maintained to build a favourable environment for peace and cooperation on the basis of equality, mutual benefits and respect for international law, independence, sovereignty and territorial integrity of participating countries, especially the 1982 UN Convention on the Law of the Sea (UNCLOS) and the Declaration on the Conduct of Parties in the East Sea (DOC).
Delegates also discussed issues related to finance, investment, industrial development, maritime cooperation, and the building of transport networks to promote trade, investment and cross-cultural exchange between China and ASEAN nations.
Samsung Vina increase global market share
Samsung Vina Electronic Company aims to increase its exports this year and grab 30% of the global mobile phone market, according to its Deputy General Director Nguyen Van Dao.
Currently, 97% of Samsung VN products are exported to 50 countries and territories around the globe, while its domestic consumption accounts for the remaining 3%. Dao said that Samsung VN will continue to strive to enhance its domestic sales, develop its plant in Thai Nguyen, and increase the number of and quality of production lines at its facilities.
He also noted that the company is planning to invest in a number of other fields in Vietnam including airports, telecom infrastructure, and construction.
Auto sales climb 29% in April
Vietnam auto sales jumped 29% year-on-year as the auto industry sold more than 11,340 cars, trucks and multipurpose passenger vehicles in April, according to the Vietnam Automobile Manufacturers’ Association (VAMA).
This is the second month sales have surpassed 11,000 vehicles this year and represents the 13th consecutive month that sales have trended upwards and outpaced the prior year.
More than 41,300 cars, trucks and multipurpose passenger vehicles were sold over the past months representing a year-on-year increase of 48% and 24% for small cars and trucks, respectively.
VAMA reports that the auto industry is keeping on track to sell a record setting 125,000 units by the end of 2014.
Petrolimex Aviation supplies fuel for 18 foreign airlines
Petrolimex Aviation Fuel Joint Stock Company has started supplying jet fuel for Turkish Airlines, taking to 18 of the number of foreign carriers the firm serves at Vietnam’s airports at the moment.
Petrolimex Aviation said it would pump jet fuel for Turkish Airlines aircraft flying from HCMC to Suvarnabhumi Airport in Thailand in a one-year contract effective from this month that the two sides clinched previously.
Petrolimex Aviation, the second largest jet fuel supplier after Vietnam Air Petrol Company (Vinapco), is looking to attract more of the around 50 airlines active in this market.
Petrolimex Aviation was established five years ago after Vinapco, an arm of Vietnam Airlines, stopped pumping fuel for an aircraft of low-cost carrier Pacific Airlines at Tan Son Nhat Airport due to the airline’s unpaid bills. The 2008 incident caused delays of some 30 flights and affected more than 5,000 passengers of this low-cost carrier.
Later, Vinapco was fined over VND3 billion under a lawsuit the carrier filed against it for the abuse of monopolistic power as stated in provisions 2 and 3 of the Law on Competition by unilaterally suspending fuel supply for an aircraft of Pacific Airlines, which was later transformed into Jetstar Pacific.
Petrolimex Aviation is now unable to compete on par with Vinapco but its revenue has grown strongly in recent years. Last year, Petrolimex Aviation posted nearly VND3 trillion (over US$142 million) in revenue and targets for revenue growth of 28% and profit of VND15 billion (less than US$712,000) this year.
Defects found in major expressway project
In addition to the slow implementation pace of existing packages, a lot of defects have been found on the newly built HCMC-Long Thanh-Dau Giay Expressway.
The road has sunk by 3-5 centimeters and the lower-than-designed thickness of asphalt has been found in a 20-kilometer expressway stretch that was opened to traffic in January.
According to results of an inspection by the State Council for Construction Work Acceptance last month, packages No. 5A and 6 of the expressway project are behind schedule.
The 20-kilometer section, which connects HCMC and Dong Nai Province’s Long Thanh, has sunk in some areas where the foundation is weak.
The road surface of package 5A has higher-than-permitted levels of gravels and big stones and even tree roots. The toll station’s design does not meet technical requirements.
Therefore, the council has asked the expressway developer to deal with such problems.
The project earlier made headlines also as substandard crash barriers were found along the section in use.
The 55km HCMC-Long Thanh-Dau Giay Expressway has a first-phase investment of VND20.63 trillion sourced from ODA loans and Vietnam’s reciprocal capital.
Bitexco chosen to zone Binh Quoi-Thanh Da urban area
Bitexco Group has received approval from the HCMC government to draw up a 1/2000-scale zoning plan for Binh Quoi-Thanh Da ecological urban area in Ward 28, Binh Thanh District.
Bitexco will cover all the expenses for the job, which will be evaluated by the HCMC Department of Planning and Architecture as assigned by the city government.
The 426-hectare Binh Quoi-Thanh Da green residential area is envisaged to be home to 41,000-50,000 citizens and connected with other parts of HCMC by the bridges over the Saigon River.
The investor plans to build two bridges across the river at Thao Dien in District 2 and Hiep Binh Chanh in Thu Duc District. Besides, there will be bridges spanning Thanh Da peninsula and connecting to Tan Son Nhat-Binh Loi outer ring road, Belt Road No. 1 and Hanoi Highway.
According to a zoning plan for the Binh Quoi-Thanh Da urban area approved in 2007, the township covered 426 hectares and was able to accommodate some 30,000 residents as well as around 500,000 visitors and visiting workers per day. Saigon Construction Corporation was chosen as the investor of the project at that time.
In a related development, the authorities of Binh Thanh District have announced an urgent relocation of 1,000 residents living at the deteriorating apartment blocks in Thanh Da by June 30 this year.
Duong Hong Thang, vice chairman of Binh Thanh District, said after the relocation was completed, the district would call for investments in building two apartment blocks and completion was scheduled three years after construction began.
HCM City delays using automated customs system
HCMC has delayed the application of the Vietnam Automated Cargo Clearance and Port Consolidated System and Vietnam Customs Information System (VNACCS/VCIS) to next month.
The General Department of Customs last week wrote to Saigon Port customs offices of regions 1 and 3, and Tan Cang customs office asking them to switch to the system on June 9 instead of May 19 as originally planned.
Meanwhile, the start date set for Saigon Port customs office of region 2 and the office at Hiep Phuoc Port is June 16.
The customs offices responsible for express delivery and outsourced goods and the one at Tan Son Nhat Airport will start using the system on June 23. Besides, at Saigon Port customs office of region 4 and those at Linh Trung and Tan Thuan export processing zones, the system will be put into use on June 30.
Meanwhile, in other provinces and cities, the automated clearance system will be turned on sooner than planned such as June 9 in An Giang, May 21 in Binh Dinh and June 2 in Binh Phuoc.
Explaining the time adjustments, the General Department of Customs said it wanted stable and efficient operations of the system.
With over 14,000 importers and exporters, HCMC has been picked to deploy the system after many other provinces in the country.
VNACCS/VCIS has been operational at 10 customs offices nationwide.
Many problems have been encountered while the system is in use.
Railway corporation faces comprehensive inspection
Minister of Transport Dinh La Thang has decided to launch a rigorous inspection into Vietnam Railway Corporation due to fresh corruption allegations and prolonged weaknesses of the railway sector.
The sector has not proactively grasped business opportunities, said Deputy Minister of Transport Nguyen Ngoc Dong at a meeting in Hanoi last week.
The sector lacks business plans, its service quality is poor, goods transport depends much on goods owners, and each unit has its different ways of doing business, which have weakened the overall transport capacity.
Though the corporation’s restructuring scheme received approval years ago and it has held many meetings with the transport minister, little has been done to improve its performance.
Besides, train fares are too high compared to other means of transport.
Vietnam Railway Corporation is also required to submit an audit report within this month. Last year saw the firm attaining revenue of VND11.32 trillion and profit of VND170 billion.
Tra fish export to Russia still on hold
Russia has shown little sign of reopening its doors to Vietnamese tra fish (pangasius) fillets as the fish could make their way back to this market by the end of April as earlier expected by relevant authorities.
Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said the association did not know when Vietnamese tra fish fillets could be re-exported to Russia although a delegation of the Ministry of Agriculture and Rural Development recently went to Russia for negotiations.
“As per results of the talks, we hoped that tra fish could be allowed in by Russia by the end of April. But some issues have arisen and when Russia re-opens its market for our tra fish is unknown,” Hoe said.
However, Hoe declined to talk about the issue.
Russia has suspended imports of Vietnamese tra fish fillets since January 31 and local exporters have attributed high food hygiene requirements to the suspension.
According to the National Agro-Forestry-Fisheries Quality Assurance Department (Nafiqad), 602 Vietnamese enterprises have been recognized as meeting food hygiene criteria for export to Europe but Russia accepts only 34 firms.
Hoe said those exporters meeting Russia’s criteria were allowed to send all seafood but tra fish to the market.
In 2008, Russia suspended imports of tra fish fillets from Vietnam due to high ice topping rates, reportedly at 30% per kilogram. Local companies were permitted to re-export in mid-2009 when meeting food safety criteria.
Again, Russia has stopped imports of Vietnamese tra fish fillets since early this year following its inspections of food safety at some farms and processing facilities of the enterprises exporting pangasius late last year.
Danang property market recovers
The central city of Danang has seen signs of recovery in the real estate market since late 2013 with many non-resident investors eying low-cost products.
Last month, Dat Xanh Mien Trung Joint Stock Company launched the sale of Vision City project with 100 land lots priced at VND215 million each and measured at 87.5 square meters each.
Tran Ngoc Thanh, general director of Dat Xanh Mien Trung Company, said customers from Hanoi City accounted for up to 60% of total clientele. According to industry insiders, investors from Hanoi City and other provinces have returned to Danang.
A representative of Cuong Hung Thinh Group Joint Stock Company said Hanoi customers have engaged in more transactions through its trading center since early this year. They have purchased a lot of land lots, focusing on cheap products at VND1 billion each or lower.
Thanh of Dat Xanh Mien Trung Company noted the number of investors in Danang has picked up following improvements in Hanoi and HCMC. For instance, the number of customers from Hanoi accounted for 10% of total transactions in the city in 2010 and then rose to 20% in 2013 and 50% early this year.
Notably, the number of Hanoi customers accounted for around 50% of total transactions but they snapped up 65% of available products, meaning each client bought more than 1.3 products, he said.
Explaining the recovery, Thanh said property prices in Danang City have dropped to their lowest in years.
With recent policies such as home credit loosening and lending rate cuts, buyers have jumped back into the market. When cash flows in the economy rise, the demand for property will bounce back. This is the rule of the market, he said.
A report of CBRE Vietnam said there are an increasing number of tourists from China, Hong Kong, Taiwan and Macau coming to Danang to buy property. Before 2012, customers from HCMC, Hanoi and some northern provinces dominated the condo and villa segments in Danang with the ratio of successful transactions at 70-80% but clients from China, Macau, Hong Kong and Singapore have shown increasingly strong interest in villa and hotel segments there over the past two years.
Duong Thuy Dung, deputy head of market research and consulting at CBRE Vietnam, said the number of customers seeking consulting services for seaside holiday properties in the first quarter surged three times against the same period last year.
SHTP applies nanotech to cosmetics production
The Research and Development Center (R&D) of Saigon Hi-Tech Park (SHTP) in HCMC on May 12 said it has succeeded in applying nanotechnology to cosmetics production.
The center will work with Moria Phuong Vy Ltd. Co. over a project to create skincare and whitening cream products by using the gold nanoparticle developed by the center.
The company will invest in a production line while the center will assist in nanotechnology application.
Moria Phuong Vy will consume all the finished items produced by the project which the two parties are cooperating in from six to twelve months before they decide to open a firm to make cosmetics using this technology.
The center will also continue to improve the technology in order to produce better cosmetics in the coming time.
Thai Thi Tu Phuong, director of Moria Phuong Vy, said the test-application of gold nanoparticle in cosmetics production had shown good results and this was the first time nanotechnology had been applied to this field in the country.
Scientists of the center have worked for one year before they achieved the success. They said nano titandioxide would be used in the cream products to prevent ultraviolet Rays on the skin of users and forming of melamine pigment which can darken the complexion. Meanwhile, the gold nanoparticle helps whiten the complexion.
Local firms want to withdraw from Philippine rice contract
Some enterprises are seeking approval from the Vietnam Food Association (VFA) to pull out of a government-to-government contract to supply 800,000 tons of rice to the Philippines, citing strict quality requirements and fears of possible losses.
They have asked to return their rice export quotas to the VFA despite the association’s warning that they might be excluded from big export contracts in the future.
Lam Anh Tuan, director of Thinh Phat Company in Ben Tre Province, said the firm wanted to withdraw due to a lower export price of just around US$370 per ton, FOB Vietnam ports, than the current level. In addition, the firm is concerned about fines if its rice fails to meet quality standards.
Under the contract signed between Vietnam Southern Food Corporation (Vinafood 2) and the National Food Authority (NFA) of the Philippines, importers will check rice quality and fines will be imposed on substandard products. For instance, Vietnamese exporters would be fined US$30 per ton for failing to meet the broken ratio standard, Tuan said.
The director of a large rice company in Can Tho City said as the Philippines checked rice after the shipments arrived, local enterprises would not check their checking processes.
Viet Hung Company in Tien Giang Province has also sent a document to the VFA and Vinafood 2 asking for a halt of its export quota to the contract.
VFA chairman Nguyen Hung Linh confirmed withdrawals of some enterprises from the contract. He said the association would allocate those quotas to other firms. In the
future, the association would consider carefully before allocating rice export quotas to the enterprises that have pulled out this time.
Speaking to the Daily over the issue, the director of a rice export firm said that some exporters were willing to take the quotas after the others had walked away.
“We want to take part in the contract although we may not earn profit from it. For other export contracts in the future, the VFA may prefer our company to those withdrawing from this contract due to fears of losses,” he said.
Duong Van Men, a rice trader in Dong Thap Province, said some traders had purchased rice in Lap Vo District and Sa Dec City to export to China in recent times, pushing up rice prices in the Mekong Delta.
Prices of fresh paddy IR 50404 hover at VND4,450-4,550 per kilo, up VND100-150 a kilo against last week. The price of unprocessed rice has also increased by VND200 to VND6,700-6,750 a kilo.
Prudential offers new products for savings, protection
Life insurer Prudential Vietnam has introduced two new universal life products (ULP) named Pru-Flexicare and Pru-Protect Well to meet customers’ increasing demand for savings, protection and a flexible financial plan.
The two new products guarantee interest rates of return. Customers will receive interest from the investment performance of the Universal Life Fund and are also guaranteed a rate of return no lower than 6.5% and 5.5% for the first three years.
Furthermore, customers can increase the sum assured without health check requirements during important milestones such as getting marriage and having a baby. Pru-Flexicare is suitable for customers with stable incomes and needs for a safe and flexible financial plan.
Meanwhile, Pru-Protect Well is the first ULP that allows customers to pay all premiums at one time. This is a suitable choice for customers who have high idle capital and investment needs.
International exhibitions open in HCM City
Three international exhibitions opened on Wednesday at the Sai Gon Exhibition and Convention Centre.
The first Coatings Expo showcases a wide range of machinery, equipment, and products used in the fields of coating, dyeing, and inking. The other two exhibitions, Paper Viet Nam and Rubber and Tyre Viet Nam, feature the paper and pulp industry and rubber and tyre manufacturing.
"With the participation of nearly 200 companies from various countries, the exhibitions and seminars will act as an important bridge for Vietnamese businesses to network, promote trade, transfer technology and co-operate with leading international companies in the field," Phung Ha, head of the Ministry of Industry and Trade's Chemical Department, said.
Manoj Kumar, the acting Indian consul in HCM City, said: "I am quite confident that the exhibitions will provide business entities the right platform for exchange of information, to establish contacts and partnership for further enhancement of trade relations."
Besides exhibitors from Japan, the Netherlands, Malaysia, France, South Korea, Italia and Viet Nam, twenty one Indian companies are taking part in the events. They will end today.