VN Paper Corp. unloads all of its shares in stationery firm

Viet Nam Paper Corp. registered to sell all 2.45 million shares of the Hong Ha Office Stationery Company between today and November 12, the Ha Noi Stock Exchange reported.

The corporation is the largest shareholder at Hong Ha, owning 41.55 per cent of this firm's equity.

Hong Ha has a market capitalisation value of about VND165.68 billion, with its shares being traded on the unlisted public company market, or UPCoM, at about VND28,000 ($1.24) per share.

During the first half of this year, Hong Ha reported 10 per cent year-on-year growth in turnover at VND282.72 billion ($12.57 million), and 32 per cent year-on-year growth in after-tax profits at VND15.29 billion (679,550). 

German delegation assesses investment environment

A delegation of German businessmen arrived in Vietnam on October 12 for a visit to assess the country’s investment environment, according to Vietnam’s Foreign Ministry. 

The delegation, which includes executives whose companies are looking to invest in Vietnam, or are already doing business in the country, will conduct a five-day evaluation, visiting German subsidiaries in Hanoi and other parts of the country.

The German Industry and Commerce (GIC) is to hold a forum to provide domestic businesses a chance to meet with and discuss cooperation opportunities directly with members of the delegation.

Last year’s bilateral trade between the two nations hit 8 billion Euro and posted an average growth rate of 15-20% over the past five years.

According to a spokesperson for the GIC, Germany is a strategic and key partner of Vietnam. At present, there are around 300 businesses operating and/or investing in Vietnam. 

Vietnam most positive on the TPP across consumers and businesses

A recent snap poll by Edelman, a leading global communications marketing firm, reveals that Vietnam businesses and consumers rank the most positive across the Trans Pacific Partnership (TPP) signatory nations.

The polling, conducted between October 7- 9, reveals broad support for TPP and with 93 per cent of Vietnam businesses and 96 per cent of consumers demonstrating confidence that the partnership will benefit Vietnam’s economy compared to the global average of 69 per cent of businesses and 67 per cent of consumers.

Since the announcement of the agreement on October 5, commentary across the member nations and those watching from a distance have focused heavily on the challenges around the required ratification by each nation.

The poll of 1,000 consumers and 1,000 businesses surveyed across the TPP nations, excluding Brunei and Peru, was conducted to understand the business and consumer awareness and perspectives around TPP.

In Vietnam, awareness of the partnership ranks 2nd highest across the partner countries with 83 per cent of businesses and 86 per cent of consumers aligned with their beliefs that the partnership will bring beneficial transformations to the economy.  

“In the days since the TPP agreement, we have seen significant commentary around what this means for businesses and consumers. Vietnam has been touted to be among the biggest winners from the partnership and from our findings, Vietnamese consumers and businesses are the most aware and have indicated their belief that the deal will positively boost our economy,” said Bui Ngoc Anh, managing director, AVC Edelman.

Across the TPP signatory nations surveyed, Vietnam businesses also rank the highest in terms of being prepared to take advantage of the TPP with 76 per cent compared to the global average of 52 per cent.

Similarly, Vietnamese businesses are the most confident of the positive impact to jobs and employment, 79 per cent compared to 53 per cent globally.

Vietnamese consumers are equally confident of the benefits that TPP will bring to them and their families, an overwhelming 80 per cent compared to the global average of 47 per cent.

“While each TPP government works out and ratifies the partnership, our polling shows that TPP is an issue that people care about and believe that it will positive benefits to them especially in Vietnam,” Anh noted.

In respect to the challenges following TPP enforcement, Anh commented, “Although the TPP has yet to be ratified, there is a broad consensus that it will happen in a year or so. Everyone must start to review their reputations and business methods right now. All member markets have different priorities but ultimately all companies are going to face significant new challenges in their marketing and business operations.”

Established in 1952 in the US, Edelman is a leading global communications marketing firm with 67 branches and affiliates world-wide, partnering with many of the world’s largest and emerging businesses and organisations, helping them evolve, promote and protect their brands and reputation.

Vietnam’s Mekong Delta emerges as new destination for giant retailers

Vietnam’s Mekong Delta, which consists of 13 provinces southwest of Ho Chi Minh City, has become a new destination for shopping mall operators, with such big names as Lotte and Vingroup among the latest to develop projects there.

South Korean retail giant Lotte will open Lotte Mart Can Tho on Thursday.

Spanning 15,700 square meters, the US$62 million mall is the 11thLotte mall property in Vietnam.

Lotte Mart Can Tho is a complex of one supermarket, a deluxe trade center, an entertainment area and food zone, with more than 90 percent of available goods made in Vietnam.

The Can Tho hypermarket is hoped to be the leading shopping mall in the Mekong Delta, with expected daily sales of VND1.3 billion ($58,036), Hong Won Sik, general director of the Vietnamese unit of Lotte, said in a statement.

Besides Can Tho City, which is directly administered by the central government, the Mekong Delta also includes such provinces as Long An, Tien Giang, Ben Tre, Vinh Long, Tra Vinh, Hau Giang, Soc Trang, Dong Thap, An Giang, Kien Giang, Bac Lieu and Ca Mau. 

Can Tho, with its moderate income consumers and a strategic role in the Mekong Delta, is an ideal destination for retailers, according to Hong.

Entering Vietnam in 2008, Lotte is now running ten Lotte Mart hypermarkets in Ho Chi Minh City, Hanoi, Da Nang, Dong Nai, Binh Duong, Binh Thuan and Vung Tau.

The Lotte Mart Can Tho thus marks its first presence in the Mekong Delta.

Lotte is also slated to open one new hypermarket each in Ho Chi Minh City and the south-central city of Nha Trang by the end of this year, with its plan to reach 60 outlets across the country by 2020.

In the meantime, Vietnam’s top realty developer Vingroup also turned the first sod at its Vincom Rach Gia shopping mall in Kien Giang Province on Monday.

Vincom Rach Gia will have a 15,000-square-meter shopping mall and a 33,000-square-meter housing area, called Vincom Shophouse, upon completion.

Vingroup first entered the Mekong Delta market with the Vincom Can Tho in July this year, but this is the first time it has brought the Vincom Shophouse project to the region.

Vincom Rach Gia is scheduled for completion in 2016, and expected to become a new get-together destination for people in Rach Gia, the capital city of Kien Giang.

The cost of the project is not disclosed by the developer, Vincom Retail.

Hanoi-based Vingroup announced in February that it will open 25 new shopping malls, under the flagship brands Vincom and Vincom Mega Mall, throughout the country in 2015.

By the time of the February announcement, Vingroup had had five Vincom malls – two each in Hanoi and Ho Chi Minh City and one in the northern province of Quang Ninh – along with two Vincom Mega Mall venues, both in the capital city.

The list has since been extended with facilities in Ho Chi Minh City’s Go Vap District, the central city of Da Nang, the southern city of Bien Hoa, the northern city of Hai Phong, and Can Tho.

Vietjet heads to Myanmar

Vietjet Air celebrated the opening of its newest international route on October 9, connecting Ho Chi Minh City with Yangon, Myanmar, on the occasion of 40th anniversary of diplomatic relations being established between Vietnam and Myanmar.

According to a representative from Vietjet, sharing similarities in economic development and culture, Myanmar and Vietnam have recently become popular destinations for international investment in the region and have both recorded impressive economic growth. “For these reasons Vietjet takes Yangon as the next important spot in its plans to expand its international network,” the representative said.

The new route will be operated at a frequency of five return flights a week, on Monday, Wednesday, Friday, Saturday, and Sunday. Flight time is around two hours and 15 minutes.

Flights will depart Ho Chi Minh City at 10.25am and arrive in Yangon at 12.10pm (local time), returning at 1pm (local time) and landing in Ho Chi Minh City at 3.45pm. On the first flights all passengers will receive special gifts from Vietjet.

With a convenient flight schedule, high quality services, and affordable airfares, the route is expected to meet the travel demand of people from the two countries and contribute to economic and cultural exchanges and the global integration efforts of each.

Vietjet is the first airline in Vietnam to operate as a new-age airline with low cost and diverse services to meet customer demand.

The airline now boasts a fleet of 28 aircraft, including A320s and A321s, and operates 190 flights each day. It has already opened 35 routes in Vietnam and across the region to destinations in Thailand, Singapore, South Korea, Taiwan, China, and now Myanmar, carrying more than 18 million passengers to date.

Thua Thien Hue teams up with Bitexco

Bitexco signed a memorandum of understanding (MoU) on October 12 with the Thua Thien Hue Provincial People’s Committee regarding strategic investments.

As a strategic investor Bitexco will mobilize resources to conduct and study projects in the central province and also attract other investors. The province, meanwhile, commits to creating the conditions and policies necessary to attract investors and projects.

According to the Provincial People’s Committee, Bitexco will research and develop projects in tourist infrastructure of international standard and tourism products of high quality to attract visitors to Hue, such as building luxury hotels and resorts under its Aman Resort brand or equivalent in the city, with total investment of $8.5 million, the My An hot springs resort with investment of $13.5 million, upgrading the Sai Gon Morin Hotel with estimated capital of $10 million, and establishing a consortium of hotels and resorts with total investment of $30-$50 million, including a resort and seminar and conference facilities in order to promote MICE tourism.

“Bitexco will work with the province and major partners in the research and planning of urban areas, industrial zones, economic zones and tourist sites to bolster Hue’s attractiveness as a destination for tourism and promote socio-economic development in the province,” said the Chairman of the Bitexco Group, Mr. Vu Quang Hoi.

Bitexco has already invested in The Manor, a luxury apartment and shopping center on To Huu Street in Hue, with investment of VND600 billion ($26.7 million). It has also invested in two hydro-power plants in the province, with an average power output of 200 million KW, contributing more than VND30 billion ($1.3 million) to the local budget each year.

Thai group to manage new Hoi An resort

The ONYX Hospitality Group, an international hotel group from Thailand, has recently signed a cooperative agreement with the HB Group to manage the OZO Hoi An project, a beachfront resort with 364 rooms expected to open at the end of 2016.

On an area of 400 ha the resort has total investment of $1.5 billion and includes a combination of retail, dining, and recreation venues, apartments, and the OZO Hoi An hotel, which features a restaurant, a gym and conference rooms.

“Vietnam is one of the fastest-growing tourism countries in the region and OZO Hoi An is part of our expansion plans,” said Mr. Peter Shelley, Director of the ONYX Hospitality Group. “The central coast has attracted a lot of attention from not only domestic but also foreign tourists.”

He also believes that OZO Hoi An is a great choice for guests and that the HB Group will promote the OZO brand among Vietnamese people.

The ONYX Hospitality Group is a hotel management brand from Thailand that owns four hotel brands: Saffron, Amari, Shama, and OZO. It has 58 hotels, resorts, and residential areas and is expected to own 80 hotels by 2018.

Agricultural export turnover shrinks, automobile import rockets

Agricultural, forestry and fishery export turnover posted a year on year reduction of 9.9 percent in the first nine months this year to US$15.14 billion, reported the Ministry of Industry and Trade at a meeting on October 12.

Items with down export value and volume were mainly seafood, rubber, coffee and rice. The most import reduction was from the U.S. with 47 percent, the EU with 30 percent and Asian countries with 10 percent. 

The export volume of fuel and mineral did not decrease but export price fall dragged value down. Fuel export value dropped 49.7 percent and petrol declined 41.3 percent. 

Manufacturing industry saw export turnover up 19.2 percent. Of these, computers and electronic items posted the highest growth rate with 52.8 percent, phone and components up 34.3 percent, garment 10.6 percent, machine and equipment 9.8 percent. 

Imports of commodities subject to import restrictions reduced 2.9 percent comprising tobacco, automobiles, motorcycles and spares, consumer goods, alcoholic beverages, and cosmetics. 

The main reduction was from consumer goods. Only automobiles saw a strong increase, completely built units (CBUs) of less than nine seaters up 50 percent while components and accessories up 45 percent. 

Total automobile consumption output in local market touched 163,500 ones, up 53 percent over the same period last year. Of these, sales of locally assembled products increased 52 percent. 83,000 CBUs were imported, surging 93.2 percent, import tariff hit over VND21 trillion. 

Total export turnover in the last nine months was US$120.7 billion, a year on year rise of 9.6 percent. Trade deficit was estimated at US$3.86 billion.

Cao Bang steel complex starts operation

The Cao Bang Cast Iron and Steel Complex in northern mountainous Cao Bang province officially went into service on October 13.

The 80ha complex located at Chu Chinh commune, Hoa An district is one of the largest investment projects in the province with capital of over VND1.9 trillion (US$85.5 million).

Construction of the facility started in October 2012, invested in by Vietnam National Coal Mineral Industries Group (Vinacomin).

It consists of four main factories, including a factory producing sintered ore, an iron metallurgy mill, a steel metallurgy mill and an oxygen factory, using cutting edge technologies to reach a capacity of 220,000 tonnes of steel billet a year.

The complex uses locally sourced materials from Na Rua iron mine 7km from its factories and other mines located in the province to produce billets from iron ore.

According to director of the Cao Bang Cast Iron & Steel JSC Nong Minh Huyen, the facility helps create over 1,500 jobs for local workers and another 15,000 related employments. The project is expected to help promote development of the local industry sector and facilitate national defence and security in the mountainous northern border areas.

Tra fish export revenue forecast to fall 3.5% this year

Association (VN Pangasius) has estimated that outbound sales of tra fish this year could reach only US$1.7 billion, down 3.5% over last year.

Vo Hung Dung, vice chairman and general secretary of VN Pangasius, said the projected fall in tra fish exports is attributable to the volatile exchange rate between the U.S. dollar and the Vietnam dong instead of a decline in foreign orders.

“The exchange rate volatility led to a sharp drop in tra fish exports in the first months of this year, so more shipments in the final months of this year could not prevent tra fish export turnover from sliding in all of this year,” Dung said   

By August, Vietnam had earned more than US$1.2 billion from exporting tra fish products to 113 markets, decreasing 9.1% year-on-year.

According to VN Pangasius, Vietnamese firms had signed contracts to export 721,200 tons of tra fish as of end-September. Fish fillets made up a majority of the volume but export orders for these products and the proportion of value-added products had declined in the period.

Particularly, the volume of tra fillets ordered by importers in the third quarter accounted for 76.65% of total export volume compared to 77.25% in the second quarter and 83.6% in the first quarter.

The percentage of value-added tra fish products also dropped in export proportion as they made up 1.78% of total tra fish exports in the first quarter but went down to 0.55% in the second quarter and 0.53% in the third quarter.

However, the export proportions of whole tra fish and tra fish cuts had stayed stable in the year to September, accounting for 7.02% of total tra fish exports in the first quarter, 8.71% in the second quarter and 8.63% in the third quarter.

The proportion of fish powder increased sharply to 3.88% in the second quarter and 7.35% in the third quarter.

In terms of markets, the United States, the European Union (EU), ASEAN, China and Hong Kong were major importers of Vietnamese tra fish in the first three quarters of this year, according to VN Pangasius.

Of the total export orders, 18% were from China and Hong Kong, 11.1% from the ASEAN countries, 14.1% from the EU and 10.6% from the U.S. in the third quarter.

VN Pangasius expected Vietnam to harvest one million tons of tra fish this year from a total area of 3,500 hectares, falling 5% in volume and 8% in farming area against last year.

To prop up tra fish exports, VN Pangasius is making necessary procedures to set up an e-commerce trading floor at mekongfishmarket.com, Le Ngoc Anh, a member of the association, told a news briefing on tra fish production and trading in the first nine months of this year in Can Tho City last week.

The ultimate goal of the website is to boost tra fish sales, instead of displaying products of this fish only, Dung told the Daily on the sidelines of the event.

Currently, tra fish enterprises mostly sell their products to those buyers they have met at trade fairs and in promotion trips.

Anh said e-commerce is growing fast in the world and online transactions in developed countries have made up 90% of the world’s total. It is forecast that in the next five years, revenue from online transactions in Asia will account for 25% of total online trade value in the world.

However, Dung said it will require a lot of effort to form an online trading floor for tra fish because it needs members and regulations on product quality and payment methods. Therefore, the website will focus on introducing tra fish products in the first stage before it can help promote sales and build a strong brand for Vietnamese tra fish.

VN Pangasius expects that the website will come online between April and September next year.

VCCI to propose solutions to wage hike issues

The Vietnam Chamber of Commerce and Industry (VCCI) will propose solutions to the controversial region-based minimum wage hike, the director of the Bureau for Employers’ Activities at the organization said.

Phung Quang Huy told reporters on the sidelines of a seminar on labor quality in Hanoi last week that the current solutions do not help create a high consensus among the parties concerned.

In particular, members of the National Wage Council will have to join a working group to discuss and agree on survey criteria for the minimum wage increase including the marco economy, inflation, decisive factors for wages and workers’ basic living standards in the early months of the year. After that, they will conduct a survey until September and negotiate a minimum wage hike.

Conflicting opinions of the parties concerned after the council makes a final decision on the minimum wage increase will not be accepted, Huy said after the Vietnam General Confederation of Labor wrote to the Prime Minister suggesting a regional minimum wage rise of 14.4% for next year.

The wage raise sought by the labor confederation is higher than 12.4% decided by the council at a third meeting of the council in Hanoi in early September.

Huy said that last year VCCI and the confederation were at odds over some criteria including accommodation rental for workers.

“Therefore, the parties concerned should agree on survey criteria and methods from the beginning, otherwise disagreement among them will never end,” Huy said.

The minimum wage rise of 12.4% for next year was reached by over 90% of the council’s members at the meeting on September 3. Deputy Minister of Labor, Invalids and Social Affairs Pham Minh Huan, who is also chairman of the council, told a press briefing held after the meeting that the level of consensus was the highest ever.

However, less than one month later, many industry associations said the wage increase was too high and proposed just 6-7%. For instance, the Vietnam Textile and Apparel Association (VITAS) late last month suggested the Government increase the minimum wage by only 6%.

According to VITAS, the minimum wage increase of 12.4% as proposed by the council will make life tough for textile and garment enterprises, especially when enterprises will have to pay higher social insurance based on their workers’ incomes instead of minimum wages from 2018. 

Early this month, the labor confederation asked the Prime Minister to approve a rise of 14.4% instead of 12.4% as agreed earlier by negotiators of the council.

Mai Duc Chinh, vice president of the labor confederation, said though the council decided the wage rise at 12.4%, the confederation was still dissatisfied with it.

According to Chinh, the confederation’s new wage rise proposal is to protect the rights and interests of laborers as a number of business associations want modest rises of 6-7%.

HCM City says no to cement grinding station relocation

The HCMC government has turned down Ha Tien 1 Cement Joint Stock Company’s (JSC) plans to relocate its Thu Duc cement grinding station to District 9 and scale up the capacity of its Phu Huu grinding station.

In a document sent to the HCMC Department of Natural Resources and Environment and related agencies last week, HCMC vice chairman Tat Thanh Cang said the city government had rejected the relocation of Thu Duc grinding station to Phu Huu grinding station in District 9 and the expansion of the latter.

The 104-hectare Thu Duc cement grinding plant is located by Hanoi Highway in Truong Tho Commune in Thu Duc District. The relocation plan for the facility has not been carried out although it is one of the many polluting facilities forced to move out of the city.

The municipal departments of planning-investment and natural resources-environment wrote to the city government in May and September seeking approval for Ha Tien 1 Cement Joint Stock Company to relocate the facility to Phu Huu.

However, the city government said no to the proposals and urged the company to find a new location for the Thu Duc grinding plant at end-2016 in line with master zoning plans for the construction sector in the southeastern and Mekong Delta regions.

The company has pledged to find a new site for the Thu Duc grinding plant and complete the relocation by the end of 2016.

The environment department said 698 production facilities have moved out of the city due to their heavy pollution. The factories include Viet Huong Hai Fish Sauce Co. Ltd., Saigon Textile Co. Ltd., Petrolimex Shipbuilding Co. Ltd., Binh Trieu Shipbuilding Co. Ltd., Gia Dinh-Phong Phu Garment and Textile JSC, and Thang Long Paper and Packaging Co. Ltd.

VFA reveals brand building plan for VN rice

The Vietnam Food Association (VFA) plans to build a brand for Vietnam’s rice based on the Jasmine type as fragrant rice products have contributed significantly to the nation’s rice exports in recent years.

The proportion of fragrant rice shipments jumped from 3% eight years ago to 26% of Vietnam’s total exports in the first nine months of this year. Fragrant rice has brought more export revenue for the nation as it is now shipped abroad at US$600 per ton, much higher than US$460 in the past.

Huynh The Nang, chairman of VFA and general director of Vietnam Southern Food Corporation (Vinafood 2), said the export of fragrant rice has edged up over the years, so the association has considered picking one of these products to build a strong brand for Vietnamese rice and Jasmine is one of the options.

However, Nang said it is not easy to build a Vietnamese rice brand any time soon as it will take time.

One of the most important things for implementing the rice branding plan is to invest in large-scale fields for fragrant rice production to secure stable supply for export rather than relying on farmers only, Nang said.

Nang said Vinafood 2 will join forces with a number of corporate partners to develop such large-scale fields for fragrant rice production.

Earlier, Vinafood 2 reportedly teamed up with Loc Troi Group, formerly known as An Giang Plant Protection Joint Stock Company (AGPPS), for the fragrant rice production model. 

According to the Ministry of Agriculture and Rural Development, Vietnam earned US$1.92 billion from exporting 4.47 million tons of rice in the first nine months, down 10% in volume and 16% in value year-on-year.

The average rice export price in January-August neared US$431 per ton, down 5% compared to the year-earlier period. China remained Vietnam’s biggest rice importer, making up over 35% of the total in the period.

VNREA: Home loan program produces results

The Government’s VND30-trillion home loan program has produced good results despite lower-than-expected disbursements, said Nguyen Tran Nam, chairman of the Vietnam Real Estate Association (VNREA).

Nam told a recent seminar on housing development in the Mekong Delta city of Can Tho that as of September 30, banks had pledged VND20 trillion (US$889 million) in loans under the program for real estate firms and home buyers, with VND12 trillion of it already disbursed.

He said such disbursements had contributed to the recovery of the real estate market as reflected by more real estate transactions at a time when banks are still practicing caution over lending to property projects.

There were nearly 30,000 housing transactions last year but the number was almost the same in the first nine months of this year. Nam said transactions are forecast to rise sharply in the final months of 2015 and the figure for the whole year may double that of 2014.   

He said last year saw transactions of social houses and those for low-income buyers faring well but sales of high-end apartments were good from the end of 2014 to September 2015.

“Units costing VND30-40 million and even VND50-60 million per square meter at prime locations have sold well,” Nam said, adding the real estate sector has attracted much capital from different sources.

Of some US$18 billion in foreign direct investment (FDI) approvals for projects Vietnam in January-September, 20-21% went to property projects. In HCMC, FDI pledges for property projects made up 65% of the total.

Incoming remittances are estimated at US$12 billion per year with 25% of it reportedly funneled into the real estate sector. Residents have spent more buying housing.           

Nam said enterprises use their own capital to cover 30% of the total funding required for their property projects and the remainder from bank loans.

Property firms race to sell luxury apartments

The number of housing projects for high- and medium-income buyers launched by developers this quarter is higher than those for low-income people though demand for the latter segment remains huge.

Earlier this month, An Gia Investment launched its luxury apartment project An Gia Skyline in District 7 in HCMC. Creed Group is spending VND500 billion (over US$22.2 million) on the project as part of the Japanese investment fund’s pledge to pour US$200 million into the local real estate company.

TNR Holdings Vietnam along with property distribution firms Danh Khoi Real Estate Trading and Service Co. Ltd. and Khuong Thinh Construction Trading Corporation have kicked off the second sale phase of the Gold View project in District 4.

Meanwhile, Hung Loc Phat Real Estate Service Joint Stock Company has introduced a model house for its Hung Phat Silver Star project on Nguyen Huu Tho Street in the outlying district of Nha Be.

Novaland Group has started work on seven luxury housing projects in HCMC with each having apartments, offices and townhouses. These projects include Sunrise Cityview in District 7; Sunrise Riverside in Nha Be District; Golden Mansion, Orchard Parkview and Newton Residence in Phu Nhuan District; Park Avenue in District 11 and Duxton Residence in Tan Binh District.

Dat Xanh Group plans to introduce 20 new projects with half of them in the medium-cost segment at a Dat Xanh expo late this month.

Real estate service provider Jones Lang LaSalle Vietnam forecast that 7,000 new apartments will be added to the market in the final quarter of this year. Most of them are now under construction.

The land lot segment is heating, driven by 550 lots of Dau Giay Center City 2 urban-commercial-service area of Kim Oanh Real Estate Joint Stock Company in Dong Nai Province put up for sale. Meanwhile, Long Dien Real Estate Joint Stock Co has started the second sale phase of its Sakura Valley urban area in the southern province.

Among 20 projects of Dat Xanh Group, ten are villa and land lot projects in Dong Nai Province and Phu Quoc Island off Kien Giang Province.

Data of CBRE Vietnam showed the volume of successful housing transactions in HCMC and nearby localities surpassed 24,000 apartments in the January-September period.

The medium housing segment will continue leading the local real estate market and lure more customers, according to Savills Vietnam.

The company provided the figure to prove that demand for medium-cost condos accounts for up to 70% of total housing demand on the market. It said the final months of the year will see higher demand.

However, due to the limited supply of new apartments in the medium segment, investors such as Nam Long, Dat Xanh, Thuduc House and Hung Ngan will take the opportunity to sell the remaining units of their old condo projects.

According to Savills Vietnam, more new apartment projects for medium-income buyers will go up in HCMC’s outlying districts such as 8,9,12, and Binh Tan as the land price is lower than many other parts of the city and infrastructure development is fast.

Gov’t: Inflation much lower than projected

The Government has estimated the consumer price index (CPI) would rise by 1.5-2.5% this year, much lower than the projected 5%.

According to the Government’s report on the January-September socio-economic performance and 2016 forecasts presented to the National Assembly Standing Committee on October 12, the CPI picked up 0.4% last month against December 2014, and rose by 0.74% year-on-year in the first nine months.

Despite such a low rise, the Government said there were no signs of deflation as domestic sales and aggregate demand improved considerably in the period. Total retail sales of goods and services, with the price factor excluded, increased 9.1%, higher than the figure in previous many years.

However, this year’s CPI is estimated to inch up by 1.5-2.5%, with the highest possible increase just half of the projection.

Last year the NA’s resolution capped inflation at 7% but the actual rate was a mere 1.84%.

According to the NA’s Economic Committee, such differentials were seen positive and helped contribute to marco-economic stability and boost trust in the Vietnamese currency.

Nevertheless, tightened monetary and fiscal policies have dealt a blow to enterprises and consumption, which is evident in the high number of suspended and dissolved enterprises.

Around 60,000 enterprises suspended operations and went bust in 2013, 67,800 in 2014 and 54,566 in the first nine months of this year. This will cause negative medium and long-term impact on the economy.

According to the Government, this year’s GDP will be higher than the target by 0.3 percentage point (6.5% compared to the target of 6.2%). In addition, export growth will be around 10% this year while the ratio of trade deficit to exports will be equivalent to or lower than the forecast (3.6% compared to 5%).

However, crude oil pumping surpassed the target by 1.2 million tons. Besides, the agro-aqua-forestry sector picked up only 2.08% in the nine-month period while the increase of last year’s same period was 3%.

Other worrying signs are a recurrence of trade deficit after a three-year period that ended last year, the lingering trade deficit of domestic enterprises and the trade surplus of the foreign direct investment (FDI) sector.

Real estate sector recovery in sight

Statistics of the Business Registration Agency unveil further signs of recovery in the property sector when the numbers of suspended and dissolved firms fell sharply in the first nine months of this year.

According to the agency, over 54,000 companies were dissolved or suspended in January-September, lower than last year’s same period. However, there was a sharp decline in the number of realty firms being dissolved or suspended.   

The number of dissolved enterprises in the real estate sector in the period tumbled 30% year-on-year, according to the agency under the Ministry of Planning and Investment. However, the agency did not detail the number of dissolved firms in the sector. 

In all, nearly 7,000 businesses completed procedures for dissolution and suspension in January-September, down 0.9% year-on-year. Dissolved enterprises in the information and communications sector rose by over 130%, the art-recreation-entertainment sector by 75.8%, the power-water-gas sector by 41.9% and the education-training sector by 24.8%.

The agency said over 47,600 companies had to suspend operations due to difficulties in the first nine months, up 15.3% year-on-year. Meanwhile, the period saw a drop of 7.2% in the number of real estate firms halting operations.

Experts said the decline in the number of ailing enterprises in the property sector indicated that the property sector had undergone a steady recovery. 

There were more than 68,340 business startups with total registered capital of VND420.9 trillion (US$18.8 billion) in January-September, up 28.5% in number and 31.4% in capital compared to the same period last year. Of them, new businesses in the property sector jumped 78.7%.       

The sector has steadily recovered in HCMC. The city government’s report on economic restructuring in the 2011-2015 period showed that real estate inventories have plunged. Realty inventories had amounted to 14,490 apartments as of the end of 2012, and 76.5% of them or 11,088 apartments, had found buyers as of August 2015.  

Nguyen Tran Nam, chairman of the Vietnam Real Estate Association, told a seminar on housing development in the Mekong Delta city of Can Tho last week that successful housing transactions in Vietnam totaled 30,000 in the first nine months, nearly the same as the figure recorded in all of 2014. He predicted transactions in 2015 would likely double that of last year. 

Nam was quoted by VietnamPlus as saying that the local property market has attracted more capital inflows. Around 12% of total outstanding loans, or VND360 trillion, had gone to projects in the sector. 

Incoming remittances channeled into the sector are estimated at US$3 billion while Vietnamese also invest in houses.

Job bazaar for FIEs attracts fewer jobseekers than expected

Around 400 jobseekers came to a major job bazaar for foreign-invested enterprises (FIEs) in HCMC on October 13, far below 1,000 expected by organizers.

The job bazaar was attended by 34 FIEs including 22 Japanese and seven Taiwanese enterprises. They registered to recruit a total of 1,213 employees at the event.

Besides 1,213 job vacancies on offer at the event, the enterprises plan to recruit many workers. For instance, Korean-invested sports shoe firm Samho Vietnam wants to recruit 10,000 workers while Yakult Vietnam Co. Ltd. seeks 500 and B Smart needs 130.

However, many companies at the bazaar were disappointed by a small turnout. Duong Nhu Huong, head of the sales department at Kamogawa Vietnam Co. Ltd., said she was unable to find any qualified candidates on October 13 morning though she interviewed some applicants.

Nguyen Thi Kim Huyen, human resources executive of Key Plastic Company, said if the company wanted to recruit employees, especially senior staff, it had to work with job placement centers and pay high fees.

Le Thi Le My, HR executive at Olympus Vietnam Company in Dong Nai Province, said the number of jobseekers at on October 13’s job fair was much lower than what the organizers said at a press conference earlier.

Nguyen Cao Thang, deputy director of the HCMC Center for Employment Service (CES), told the press conference that nearly 1,000 candidates would join the event, including university graduates and trainees from Japan and other countries and students of foreign language schools in the city.

CES organized the bazaar in collaboration with the HCMC Export Processing and Industrial Zone Authority (Hepza).

Fertilizer firms unable to cut prices despite VAT exemption

Domestic fertilizer enterprises have said though they enjoy a value-added tax (VAT) exemption, they are unable to reduce selling prices of finished products as they are not allowed to deduct the tax paid for materials. 

Law No. 71/2014/QH13, which took effect on January 1, 2015, clarifies fertilizer products are entitled to a VAT break. However, as VAT is exempted instead of a reduction to 0%, domestic fertilizer enterprises cannot get tax deductions and this has eaten into the competitiveness of their products.

At a seminar on fertilizer production and trading in Hanoi on Monday, Pham Quang Tuyen, general director of Lam Thao Fertilizers and Chemicals Joint Stock Company, said the company produces 280,000 tons of chemicals and 1.6 million tons of fertilizer products. Every year, the company pays over VND180 billion in tax for materials subject to a tax rate of 5-10%. Such tax payments are not deducted for finished fertilizers due to the VAT break.

“As a result, we have to include such tax payments in our production cost and this leads to an increase of 3.6% in the selling prices of our fertilizer products,” Tuyen said.

Le Quoc Phong, general director of Binh Dien Fertilizer Joint Stock Company, said farmers were excited about VAT exemption applicable to fertilizers as they thought that fertilizer prices would go down but the price had gone up in reality.

Phong explained that fertilizer producers now have to pay a tax rate of 10% for most input materials and if products are free from VAT, tax payments of input materials cannot be deducted.

However, if the law states that fertilizer products are subject to a 0% rate, enterprises can deduct tax payments for materials. This is why the VAT exemption does not help lower production cost as expected. 

Meanwhile, imported fertilizers are sold at lower prices than those of domestically-made products as the former enjoy a 5% VAT reduction, hitting sales and production of local fertilizer companies.

“Lam Thao saw fertilizer sales dropping by 16% and fertilizer output falling by 4% in the first nine months of this year,” Tuyen said. 

However, enterprises can enjoy tax deductions for their fertilizer exports. Phong said Binh Dien ships abroad US$60-70 million worth of fertilizers per year. So Vietnamese fertilizers are sold to foreign markets at lower prices than on the domestic market.

“Tax policy should support local farmers, but other countries buy these cheap fertilizers so their farm products have a competitive edge over Vietnamese farm products,” Phong said.

Nguyen Hac Thuy, vice chairman and general secretary of the Vietnam Fertilizer Association, said farmers and enterprises do not benefit from the law on tax amendments.

The association estimated that after the law came into force, the production cost of fertilizers picked up 7-7.6% for urea fertilizer, 7.3-7.8% for DAP fertilizer, 6.5-6.8% for phosphate fertilizer and 5.2-6.1% for NPK and organic fertilizer.

Therefore, the law directly reduces the competitiveness of local products compared to imported fertilizers which are now subject to an import tax rate of 6% instead of a 6% import tax and a 5% VAT.

This is the reason why NKP fertilizer imports soared almost 45% to 260,000 tons in the first half of this year compared to only 180,000 tons in the same period of last year.

Therefore, corporate representatives attending the seminar requested the law to be revised and amended.

First multi-storey factory building put into use in city

HCMC’s first multi-storey factory building with eight floors and one basement was put into operation at Tan Thuan Export Processing Zone (EPZ) in HCMC’s District 7 on October 13.

Tan Thuan EPZ is the first among the five industrial parks and EPZs in HCMC picked to develop multi-storey workshop buildings on a trial basis to attract small and medium enterprises active in supporting industries.

According to Tran Thanh Hong, deputy general director of Tan Thuan Co. Ltd, the investor of the project, the multi-storey factory building has total floor space of nearly 18,000 square meters with 12,490 square meters for lease, parking, power station, backup power generators and firefighting equipment.

The multi-functional facility worth around VND100 billion was designed with modern and solid structures to meet requirements and demands of different industries, Hong said.

The company will start work on the second factory building early next year for investors in supporting industries, especially mechanical engineering, electronics and automotive. It expected to recover the investment cost of some VND100 billion over five to seven years after the building is leased.

Though HCMC aims to attract small and medium enterprises to multi-storey factory buildings, the entire facility at Tan Thuan EPZ has been leased by Japan’s Furukawa Automotive Parts (Vietnam) Inc. (FAPV).

Kawakubo Akio, general director of FAPV, said the company’s lease of the multi-storey factory building lasts three years and that the firm would produce auto parts to meet rising demand of automakers in Japan and Thailand.

In addition to Tan Thuan EPZ, multi-storey factory buildings will go up at Hiep Phuoc Industrial Park, Dong Nam Industrial Park, Linh Trung EPZ and Saigon Hi-Tech Park.

Multi-storey factory buildings will have three to eight floors, with each floor ranging from 100 to 3,000 square meters. HCMC will carry out more such pilot projects in the 2015-2018 period at a total cost of VND600 billion.

According to the HCMC government, the multi-storey factory buildings help the city optimize the use of limited land and meet factory space demands of investors. They will support enterprises in need of production sites near the premises of big enterprises and open small plants to explore the market before making long-term investments in Vietnam.

Vietnam-Japan economic ties hoped to thrive after TPP

The Trans-Pacific Partnership (TPP) agreement is expected to help Vietnam and Japan move forward with win-win economic cooperation, specifically in the fields of support industry and agriculture, said Deputy Prime Minister Hoang Trung Hai. 

Vietnam hopes the Japanese Government and business community will continue to make investments in Vietnam, particularly in electronics, agricultural machines, agro-forestry processing, shipbuilding, environment, energy saving, and automobile spare parts manufacturing, Hai was speaking at a forum in Hanoi on October 14. 

He affirmed that the Vietnamese Government pledges to work closely with the Japanese side to improve business environment in order to make the country an attractive market for businesses in the future. 

According to a representative from the Japan External Trade Organisation (JETRO), the rate of using locally-produced components in Vietnam is now about 33%, compared to 55% and 43% in Thailand and Indonesia, respectively. 

To become a manufacturer and supplier of spare parts for foreign countries, it is imperative for Vietnam to develop support industry and small-and medium-sized enterprises (SMEs), he noted. 

JETRO will implement business connectivity between the two countries and introduce the latest agricultural technologies of Japan to Vietnamese partners, he added. 

The organisation revealed that among 521 Japanese SMEs wishing to invest in emerging markets, up to 130 companies want to pour cash into Vietnam. 

President of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc said the agency will actively work with JETRO and the Japanese Embassy in Vietnam to facilitate business cooperation between the two nations so that Vietnam could forge ahead with improving infrastructure, developing support industry and becoming a key supplier of farm produce and seafood for Japan. 

Japan is one of the biggest trade partners of Vietnam with over US$37.7 billion of registered investment capital in 2,661 projects operated by 1,500 businesses. Two-way trade hit US$27.6 billion last year and US$19 billion in the first eight months of this year.

Vietnam firms urged to increase trade safeguard knowledge

With competition anticipated from imported products, given the country's deeper integration into the global economy, businesses are being urged to enhance their awareness of trade defence instruments.

Despite being allowed under the World Trade Organisation (WTO) rules, the instigation and infliction of trade defence instruments, including anti-dumping, anti-subsidy and safeguard by Vietnamese firms remained modest.

At a meeting on October 14, organised by the Vietnam Chamber of Commerce and Industry (VCCI), Nguyen Thi Thu Trang, director of the VCCI's WTO Centre, revealed that Vietnamese export products encountered dozens of lawsuits in foreign markets.

In comparison, Vietnam initiated only four lawsuits against imported products so far, three of which related to safeguards and one had to do with anti-dumping.

A survey implemented by the VCCI with the participation of more than 1,000 businesses showed that about 70 % of firms said they knew trade defence instruments were tools to protect them from unhealthy competition.

However, Trang said the knowledge of Vietnamese firms about trade defence remained at the primary level.

In addition, there were limitations in the capacity and lack of experience of businesses as well as investigation agencies, which hindered the application of trade defence instruments, Trang said.

Findings showed that 86 % of surveyed firms said they would encounter with difficulties in raising financial resources for filing lawsuits, while merely 2 % did not see expense as a big problem.

Trang said that currently only big companies were capable of following up with lawsuits while small firms were those which were heavily impacted by unhealthy competition.

"This means that trade defence instruments still fail to protect rights and benefits of small firms," she said.

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