Ford, Toyota unveil promotions

Ford and Toyota have announced a promotion through August, offering discounts and free insurance and free diesel.

Ford Vietnam is offering discounts of 5 to 9 percent on the Mondeo 2.3 AT and Fiesta 1.4L MT.

For the Everest, it is offering a discount of US$1500 and car loans at only 0.99 percent a month for the first six months.

Buyers of the 16-seat Transit will get 2,100 liters of diesel or its equivalent in cash.
Toyota is offering a one-year free maintenance and insurance package worth $2500 to $5000 to on its seven-seat Innova G, V, and GSR.

The Vietnam Automobile Manufacturers Association said car sales recovered in July to 8544 units, rising 12 percent from June, after two months of dips.

Japan completes funding for VN's $1.6 bln plant

Two Japanese banks signed a $95 million credit contract on Friday with state oil and gas group Petrovietnam, the final funding package to help build a $1.6-billion coal-fired power plant in central Vietnam.

The Japan Bank for International Cooperation (JBIC) will provide $57 million, or 60 percent of the loan, and the remaining $38 million will come from Sumitomo Mitsui , Petrovietnam said in a statement.

It said the credit provided an opportunity for the group to seek more funds from Japanese banks for its thermal power projects as well as its projects in other areas.

JBIC's funding is Petrovietnam's first with the Japanese lender.

Earlier on Friday, Petrovietnam Deputy Chief Executive Nguyen Tien Dung was quoted by the Dau Tu (Investment) newspaper as saying the $95 million loan was the last in the funding package of $1.2 billion for the plant.

The first generator of the $1.6 billion 1,200-megawatt plant in Ha Tinh province is expected to start operation in July 2012. Petrovietnam is the sole investor of the plant.

Petrovietnam has been using its own funds to finance 30 percent of the project while taking the remaining 70 percent from commercial loans, the statement said.

In April, it borrowed $904 million for the project from a consortium of foreign banks that included HSBC , China Development Bank, Bank of Tokyo-Mitsubishi UFJ, Credit Suisse and Italy's top retail lender Intesa SanPaolo.

Petrovietnam said the credit arranged by HSBC consisted of $758 million worth of commercial loans and $146 million in insurance covered by China's Sinosure and Germany's Hermes.

A power master plan projected that thermal plants in Vietnam will need 67.3 million tonnes of coal a year by 2020, when the fossil fuel may account for almost half its power mix.

Abandoned Cambodian aircraft remains unclaimed

The Ministry of Transport is still deciding what to do with a Cambodian aircraft which was left at Hanoi’s Noi Bai International Airport 4 years ago because of technical problems.

According to Vo Huy Cuong, head of Civil Aviation Administration of Vietnam (CAAV), the Boeing 727-200 aircraft was owned by Cambodian firm Royal Khmer Airlines (RKA) and licensed for Siem Reap - Hanoi flights in 2007.

After a few flights, it had to be grounded in Hanoi due to technical problems. Cuong said on September 8, 2007, CAAV reported the case to the Civil Aviation Administration of Cambodia and RKA.

But the Cambodian administration said RKA had been delisted from Cambodian air fleets since it couldn’t be reached for a long time.

Cuong said CAAV was thus now working on a plan to either sell this aircraft and put the money into public funds or give the money back to those who suffered losses when the aircraft broke down.

SBV likely to be sole gold exporter: draft decree

The State Bank of Vietnam (SBV) is likely to be the sole gold exporter of Vietnam, Thoi Bao Kinh Te Sai Gon newspaper quoted Nguyen Van Binh, the SBV new governor, as saying.

Another solution is that the SBV may designate relevant agencies or credit institutions to conduct the trading on its behalf, said Binh, adding that the central bank is working on the draft law.

Those meeting SBV’s norms will be chosen to buy and export gold collected from the public, he said.

The development of a comprehensive and flexible legal framework for gold trading management is well under way with a view to ensure controllable market-based operations, he added.

Appropriate rules of exporting and importing material gold will come soon, so will regulations on gold prices.

In the meantime, he suggested that gold import and export should be viewed normal businesses of the economy.

Without the new law, jewelry items that has more than 80 percent gold content has been levied a 10 percent export tax under the Ministry of Finance's new regulation so as to deter material gold export.

Footwear exports lag with low-value products

Although Vietnam is among the world’s top five footwear exporters, 70 percent its leather and footwear businesses still export low-value-added products.

According to Nguyen Duc Thuan, Chairman of Vietnam Leather and Footwear Association (Lefaso), the local leather and footwear industry may earn US$6.2 billion in export revenues this year, which will be nearly $1 billion higher than last year, making 2011 the second consecutive year in which it enjoys an annual growth rate of 20 percent.

But compared with China, which accounts for 70 percent of global footwear exports, Vietnam is still lagging far behind, Thuan said.

Lefaso’s statistics show that 70 percent of Vietnam’s leather and footwear businesses still produce export items under subcontracts for an added value of only 10 to 15 percent.

Nguyen Tien Vi, head of the Ministry of Industry and Trade’s planning department, said the next 10-15 years’ target would thus focus more on quality growth for the leather and footwear industry.

Vi said it means that the industry will develop the production of materials and accessories, raise added values, improve productivity and product quality, shift from subcontracting to manufacturing, increase design capability and develop new products.

Vi said except for distribution in foreign markets which will remain out of reach for Vietnamese businesses, the leather and footwear sector will focus on the three remaining segments in the value chain: marketing and designing, developing human resources, and organizing production.

Marketing-designing and new product development will help the sector seize 50-70 percent of local market shares, and the number of products developed by local design companies will account for 70 percent of market shares, Vi said.

Meanwhile, the other two segments, which local businesses can undertake, will help expand export markets. The success or failure of human resources development will play a decisive role in increasing production value and competitiveness for footwear exports.

For the time being, the localization rate of the leather and footwear sector has reached 50 percent. The figure is expected to rise to 60-65 percent in 2015 and 80-85 percent in 2025, Vi said.

He said this target is not too high because the Vietnamese market, with its annual capacity of about 750 million pairs of shoes and more than 80 million handbags, is big and attractive enough for manufacturers of materials and accessories.

If the sector can maintain the growth target of 8.2-9.4 percent per year, within the next 10 years, the country will be able to turn out at least 1.6 billion pairs of shoes and 300 million leather products annually, mainly suitcases, wallets and handbags.
But Vi said whether these targets can be achieved or not will depend in part on government policies.

In late February, the Prime Minister issued Decision 12 to support various industries including footwear and leather. Incentives for footwear and leather under this decision are fairly broad, covering land, premises, loans, import and corporate income taxes, and other forms of financial support.

But Vi said most incentives had already been covered in documents issued earlier, so it would be less likely for Decision 12 to bring about a breakthrough.

The most interesting issues to businesses and investors—incentives for land and premises, and investment credits—are only stipulated generally, Vi added.

Vi said what would ultimately matter was whether these incentives would be carried out.

Steel industry warned about anti-dumping suits

The Vietnam Steel Association (VSA) has urged local steel manufacturers to look into the selling price of steel pipes bound for the US and steel rods shipped to Indonesia to prevent anti-dumping suits.

VSA said made-in-Vietnam steel pipes could face actions from American enterprises, while Indonesian authorities were also investigating whether Vietnamese cold-rolled steel rods were dumped on their market.

VSA added the cold-rolled steel exported to Indonesia was mainly produced by Posco Vietnam Co., Ltd., which opened a new plant last year.

According to a source from VSA, Indonesian enterprises have protested the large amount of cold-rolled steel imported into their country and claimed it has adversely affected steel makers there, and VSA has sent a document requiring Posco to give satisfactory explanations to Indonesian authorities on the issue.

According to Luu The Hung, deputy director in charge of external affairs at Posco Vietnam Company, his company had received official documents from the Ministry of Industry and Trade and VSA and was preparing papers to reply to Indonesia.

Explaining the low price of his company’s steel products, Hung said Posco Vietnam had managed to cut costs by shortening its production process and sourcing cheaper materials.

Though Hung did not reveal the amount of cold-rolled steel exported to Indonesia, he assumed the steel market share of the company in Indonesia was much lower than that of rivals from China and Japan.

Meanwhile, steel from China, Korea, and Japan was also being inspected for a possible anti-dumping action in Indonesia after an Indonesian steel enterprise lodged a complaint against them, saying the imported steel was sold below costs and the imported amount was increasing strongly.

In 2010, Indonesia imported 900,000 tons of cold-rolled steel, up nearly 60% against the previous year. The steel was mainly used in auto, furniture and building industries.

1/5 plastic firms close down due to high rates

Nearly 400 companies, or 20 percent of the domestic plastic industry, have to shut down operation due to high lending interests, fluctuating export markets, and heavy reliance on imported materials, a conference heard Thursday.

Speaking at the conference on boosting the development of the plastic sector jointly held by the Vietnam Plastic Association (VPA), Vietnam Technological and Commercial Joint- stock Bank (Techcombank) and Dun & Bradstreet Company, Ho Duc Lam, VPA’s deputy chairman cum general secretary, said the domestic industry had yet to manufacture products with high value, but only focused on making common products with low prices to export.

“This will pose difficulties for the plastic companies to find alternative outputs in case their main export markets get fluctuated,” he said.

For his part, Pham Quoc Anh, business development assistant of SABIC Asia Pacific Corporation, attributed a major obstacle of the plastic sector to the heavy reliance on imported materials.

He said the companies had to import nearly 85 percent of the materials needed to make their products.

“Since material costs account for 70 percent of the product price and the Vietnamese firms only focus on the low-cost products to compete with China, only a couple of input cost hikes could drive them to bankruptcy,” he said.

VPA said the plastic industry had an export turnover of US$1.5 billion annually, but it also had to import $4 billion worth of materials.

The companies might face more difficulties in importing materials at this year’s end when exchange rates were expected to change, the association said.

Doctor Le Dang Doanh, former head of the Central Institute for Economic Management, suggested that the plastic industry pay attention to other markets such as Laos, Cambodia and Myanmar as the US and EU, their traditional markets, have less demand.

“These neighboring markets have large demand for cheap plastic products, which could help the companies cover their lost contracts in the US and EU markets,” Doanh said.

US tells VN to up safety standards for products

Safety standards for children’s products are set to become more stringent in the US, American officials told Vietnamese exporters at a conference held in Ho Chi Minh City Thursday.

Richard W. O’Brien of the US Consumer Product Safety Commission (CPSC) said from August 14, under the Consumer Product Safety Improvement Act, children’s products would not be allowed to contain more than 100 parts per million (ppm) of lead.

The existing limit is 300 ppm.

The lead content in paint and other materials covering the products would be limited to 90ppm, he said.

O’Brien said the products recalled the most on child safety grounds in the US were Vietnamese garments.

“The most common violation is designing garments with drawstrings in the hood, neck, and waist areas,” he said.

“Such garments are completely banned in the US since they pose a strangulation hazard to children.”

The conference was organized by the Vietnam Chamber of Commerce and Industry and the US consulate in the city.

Kien Giang cancels more tourism projects

The Mekong Delta province of Kien Giang remains tough on delayed tourism projects as it cancelled four more development plans on Phu Quoc Island Thursday, bringing the total number of cancelled projects to 25.

The provincial People’s Committee revoked the licenses of Thai Nam Co., Bien Xanh Co., Bien Sang Seafood Co. and the Ministry of Public Security’s General Security Department after these investors failed to settle site clearance compensations with the committee.

According to Nguyen Van Sau, deputy head of the management board for the investment and development of Phu Quoc Island, 21 projects to build resorts, amusement parks, and ecotourism areas with the total area of 1,736 ha had been canceled as of July.

Most of the cancelled projects were licensed from one and two years ago, but the investors either didn’t begin work as promised or failed to mobilize necessary financial resources.

In a separate development in Phu Quoc Island, the government has recently approved a US$4-billion project to construct a complex of five-star hotels, convention centers and casinos spanning over 135 ha in the Bai Da Chong area in Bai Thom Commune, the Vietnam News reported.

Under the government’s master plan, Phu Quoc Island will be developed into a centrally administered Special Economic Zone by 2020, attracting two to three million visitors per year.
 
HCMC to scrutinize illegally-built brewery

The Ho Chi Minh City Inspectorate said Thursday it would further investigate a brewery that had been built illegally for possible violations in land use, taxpaying and food safety.

Previously, the beer plant Vinaken of Tien Dong Co. Ltd. in Ba Diem Commune, Hoc Mon District was found to have been built on 13,104 ha within the residential project of a real estate agency, Hoang Hai Company, without a license.

The inspectors said the brewery was a joint investment between Tien Dong Company and Ngo Quang Truong, former director of Hoang Hai Company.

Truong has been arrested for hiring a gang to attempt to kill Hoang Hai Company’s deputy director Dang Xuan Sy, who opposed Truong’s faking documents in the brewery project, Phap Luat Thanh Pho Newspaper has reported.

Early this month, Vinaken was also involved in a dispute over the treating of a large amount of expired beer.

Last June, Vinaken, under the approval by the municipal Department of Natural Resources and Environment, signed a contract with HCMC-based Tan Chau Binh Vina Company to treat 54,000 cartons of expired beer.

But the Environmental Crime Prevention and Fighting Police Department (C49) last month found that Vinaken was not licensed to treat the beer and as its wastewater treatment system was set up only to treat its own wastewater.

The environment authorities immediately halted the project.

Fitch rates Vietnam's debt ‘B+’ with stable outlook

International rating agency Fitch has retained Vietnam's long-term debt rating at ‘B+’ and said this grade would be maintained if the Vietnamese government continues to tighten monetary policy.

Vietnam's national ratings were also unchanged at B+ and the country's short-term debt rating in foreign currencies also remained unchanged at B.

Fitch considered Vietnam's Resolution 11 as a positive move but stressed that Vietnam should continue to be committed to this plan and tighten monetary policy or the country would risk undermining the credibility of its policy shift.

The State Bank of Vietnam hiked its key lending rate to 15% from 17% between February and June, but cut it to 14% in July amidst evidence of a credit squeeze on businesses.

Vietnam's public debt accounted for 50% of GDP by the end of 2010 but Fitch forecast this rate would fall thanks to the country's efforts to strengthen financial capacity and GDP growth.

However, Fitch warned that Vietnam's ratings might be lowered if it doesn’t aggressively tighten monetary policy, control inflation, and boost confidence in the local currency.

Fitch said reform in the banking sector would help Vietnam keep its current ratings.

Ministry eyes hike in minimum wage

The Ministry of Labor, War Invalids and Social Affairs has drafted a proposal to raise minimum wage across the board and make it uniform for both foreign and domestic firms, with the highest proposed rate being VND2 million (US$96) per month.

If approved by the Government, the new rates will take effect in all four wage zones starting October 10, the ministry said.

The minimum wage for Zone 1 will become VND2 million while for Zones 2, 3, and 4, it will be VND1.78 million, VND1.55 million, and VND1.4 million.

Zone 1 comprises the cities of Hanoi, Da Nang, HCM City, and Vung Tau and the provinces of Binh Duong, Quang Ninh, and Dong Nai.

Zone 2 consists of Can Tho and Hai Phong cities and Vinh Phuc, Thai Nguyen, Khanh Hoa, Binh Phuoc, Tay Ninh, Long An, An Giang, and Ca Mau.

Zone 3 comprises Hue and 18 provinces while Zone 4 includes the rest of the country.

Currently, the minimum wages are different for domestic and foreign companies, ranging between VND830,000 and VND1.35 million for the former depending on the zone, and VND1.1-1.55 million for the latter.

Emerging Asia still attractive to investors: ADB

Vietnam will continue to attract foreign investment after the crisis in the securities market thanks to its high economic growth, the Asian Development Bank has said.

If anything distinguished newly-emerging Asia from the rest of the world it was the region’s strong macro-fundamentals, Iwan Azis, head of the bank's Office of Regional Economic Integration. said in a report titled "Asia Capital Markets Monitor."

The current crisis in the global financial market would not stop the flow of investments in the medium term to the 11 emerging Asian economies, namely China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.

Along with the strict control of the financial market and foreign exchange reserves, the Asian region also had surplus reserves and liquidity after the Asian financial crisis in 1997. Therefore, there were many financial tools to attract investors.

The region's economies grew a composite 9.2 percent in 2010, and were forecast to grow 7.7 percent this year, and 7.6 percent in 2012.

However, the region's exports to traditional markets such as the US and Europe would decrease and policymakers needed to develop tools to deal with volatile capital flows that could lead to boom and bust cycles.

To cope with instability in the US and euro zone, drastic measures were needed to win investor trust and reduce strong fluctuations.

Analysts see Vietnam as being more vulnerable than its neighbors to seismic shifts in investor sentiment given its weaker external accounts position. But to its advantage it is not as exposed to short-term flows, or hot money, that can be quickly withdrawn.

Countries like South Korea and Indonesia that have attracted large investments in stocks and bonds could feel the pinch of foreign withdrawals more sharply than others, even though their longer-term fundamentals remain favorable.

China not to mine bauxite in Vietnam: president

Vietnam does not have a policy of allowing Chinese investors in bauxite projects in the Central Highlands, President Truong Tan Sang has said.

Meeting with voters in Ho Chi Minh City’s District 4 yesterday, the newly elected president said: “I would like to confirm to you that the politburo has decided not to allow Chinese investors to exploit bauxite in the Central Highlands.”

Asked about the fact that there were Chinese workers at the Nhan Co Aluminum Plant in Dak Nong Province and the Tan Rai Aluminum Bauxite Plant in Lam Dong Province, he said some Chinese contractors had won bids to build the two plants and had brought their workers to Vietnam for the construction.

“When the work is complete, the workers will return to China.”

The Vietnam Coal and Mineral Industries Group had been entrusted with mining bauxite, he said.

“It is normal for workers to go from country to another to work. The issue is that those workers must comply with the laws of the country where they are working.”

As for Chinese workers working in some provinces without work permits, he blamed it on local labor management agencies, which he said had failed to exercise control.

Replying to some people who said the National Assembly was not properly supervising construction projects, he said: “The NA will have to renovate itself to improve its supervision activities.”

“To know if [something] has been built in accordance with the design or meets quality standards, we need to have an independent appraisal organization.”

India to open 1st bank in Vietnam

Indian Overseas Bank (IOB) is finalizing procedures to establish its subsidiary bank in Ho Chi Minh City which will also be the first branch of an Indian bank in Vietnam, said IOB’s managing director Nupur Mitra.

The new branch, which will be built upon IOB’s representative office in HCMC, may be launched some time this year, Mitra said in a recent press briefing in HCMC.

She said having an Indian bank in Vietnam would help support bilateral trade cooperation between India and Vietnam, especially after India signed a commercial cooperation agreement with ASEAN.

Two-way trade between Vietnam and India in the first five months of this year reached US$1.55 billion, or a 30 percent year-on-year.

Founded in 1937, IOB has over 2,200 branches in India and 5 foreign branches in Singapore, Hong Kong, Sri Lanka, Thailand and South Korea and four representative offices in Vietnam, China, Malaysia and Dubai.

IOB opened its office in HCMC in 2008.

The recent press briefing has been organized by NIVL Joint Stock Co, an Indian-owned agricultural product trader headquartered in HCMC.

It is the first foreign enterprise in Vietnam to start sugar production in the year 1996 with a sugar refinery and alcohol plant in Ben Luc District in Long An Province.

Vietnam Airlines offers discounts for senior citizens

Vietnam Airlines is offering a 15 percent discount on domestic routes for Vietnamese nationals aged 60 and above starting today (August 15).

The discounted fares will only be available at the carrier’s sales offices.

The carrier also recently began to sell tickets for flights before and after Vietnamese Tet (the Lunar New Year), which falls on January 23 next year.

It plans to operate additional flights during the New Year to meet the massive demand and eliminate speculation.

City expects success with price controls  

Goods sold under the price-stabilisation programme are expected to meet consumer demand in HCM City this year, according to the municipal People's Committee.
After four months of implementation, this year's price-stabilisation programme had been going well amid high inflation and increasing prices of input materials, said the deputy chairwoman of the HCM City People's Committee, Nguyen Thi Hong, at a meeting to review this year's programme on Friday.

Providers committed to ensure an adequate supply for the market, especially for Tet (Lunar New Year), Hong said during a meeting with the Vice Minister of Industry and Trade (MoIT) Ho Thi Kim Thoa.

The two officials discussed the expansion of the distribution network of the programme, which began this year in April with nine essential items.

Since that time, the volume of products has risen between 14-41 per cent compared to the same period when the programme was in effect last year.

The number of businesses participating in the programme has also increased to 22 from last year's 14.

More than VND437 billion (US$21.2 million) has been invested in the programme to help participating businesses ensure supplies, according to Hong. However, a number of them are investing their own money.

The People's Committee deputy head said prices under the stabilisation programme would remain at least 10 per cent cheaper than market prices, a commitment that providers must make to participate in the programme.

An adequate supply of goods would also offset any price hikes in the market, Sai Gon Giai Phong (Liberated Sai Gon) quoted Hong as saying.

"Having a secure supply is the most important factor in the programme's success," Van Duc Muoi, the general director of Vissan Limited Company, said at the meeting.

Pork is among the essential food and foodstuffs chosen for the stabilisation programme, and Vissan, which has 600 agents in HCM City and provinces nationwide, is a key supplier for the programme.

The company began stocking pork products in June to make sure it would have enough supply during Tet, Muoi said, explaining that the early storage was done because pork prices increased seven times this year.

Unstable food and consumer prices had become more common in the past few years, especially near the end of the lunar year amid high inflation.

The Vissan leader said the company was planning to store more than 4,000 tonnes per month for Tet, 10,000 tonnes more than its assigned monthly storage.

The vice director of the HCM City's biggest supermarket chain, Sai Gon Co.op, Bui Hanh Thu said that supply sources were key to the company's back-to-back 40 per cent increase in revenue.

Sai Gon Co.op has stored around 20,000 tonnes of goods for the stabilisation programme this year, at least three times what the corporation was assigned.

One of the key tasks to improve the programme and make it more popular is expansion of the distribution network for the goods in industrial parks (IPs), export processing zones (EPZs) and suburban areas.

Can Gio, the most distant district in HCM City, saw five more stabilised-goods distribution shops open last month, according to the People's Committee.

The city has appointed State-run businesses to spearhead the development of the distribution network so that private enterprises will be encouraged to join.

The number of stabilised-goods shops and distribution agencies has leapfrogged in the last three years. There have been more than 2,770 shops, compared to 248 in 2008.

The introduction of these goods in traditional markets, co-operatives, student boarding schools and mobile shops in suburbs, as well as IPs and EPZs, have been developed on a large scale.

"The HCM City stabilisation programme has become a national one following its success," Thoa, the MoIT vice minister, said.

The Government has entrusted the MoIT to improve the HCM City price – stabilisation programme so that it will be responsive to price hikes and continue to have a sufficient volume of storage to meet demand, according to Thoa.

The success of HCM City programme was due to the transparent criteria used for its implementation, and the appropriate selection of goods for essential products and businesses.

Other essential goods, including medicine, milk powder and students' school supplies, are also included in the programme.

State Bank plans to increase dong to dollar value

The State Bank of Viet Nam plans to increase the value of the Vietnamese dong against the US dollar over the next four months in a bid to protect the value of the domestic currency, State Bank Governor Nguyen Van Binh told Sai Gon Economic Times this week.

"Since February, the real value of Vietnamese dong has risen slightly," Binh said.

"If necessary, the central bank will consider further adjustment of the exchange rate," he added. "The primary target of foreign exchange policy is to stabilise the dong and keep it under control, not to fix it. Confidence in the domestic currency has been fading and we must immediately restore that confidence, which is vital to economic stability."

Binh advised the public that holding onto the dong was the best policy to keep people from flocking to invest in gold and to reduce dollarisation of the economy.

Strategies to protect the dong would include deposit interest rate reform that created predictable interest rates at levels of around 14 per cent for dong deposits and 2 per cent for US dollar deposits, he said.

Recent dollar speculation on the foreign exchange black market was a move to take advantage of soaring global gold prices, he added.

"In fact, the demand for dollars to pay for imports is not high, and even petrol importers are not demonstrating a high demand for dollars," Binh said. "The nation's foreign reserves are sufficient to offset any imbalance in the supply of and demand for dollars."

The central bank bought up over US$4 billion in the first seven months of the year. At the Consulative Group Meeting in June, the International Monetary Fund estimated that Viet Nam's foreign reserves totalled $13.5 billion, equivalent to 1.5 months of imports. Yesterday, banks quoted buy/sell rates of VND20,814/VND20,824 per dollar, while the greenback traded for under VND21,000 on the black market.

Last Tuesday, as domestic gold prices soared to an all-time record of VND46 million ($2,203) per tael, the dollar was traded at VND21,300 on the black market and around VND20,810 at banks.

Foreign real estate investors set to pounce

The State Bank of Viet Nam's tightening of monetary policies will benefit powerful foreign real estate investors and hamper local firms, according to property market analysts.

SBV and Government efforts to curb inflation since February this year, have made it difficult for real estate developers to access credit, leading to a decline in property projects.

Last May, CapitaLand announced that its subsidiary-CapitaValue Homes had bought a 65 per cent stake in Quoc Cuong Sai Gon JSC for VND121.2 billion (US$5.9 million).

In addition, CapitaValue Homes purchased three other projects in Viet Nam, including the acquisition of An Khang real estate company in District 2, HCM City.

According to HCM City authorities, there had been 20 real estate transactions between foreign, joint venture and domestic firms this year.

In Ha Noi, there have been fewer M&As but the trend is still up on last year.

Georgia (US) -based Archi Group now holds a large number of shares in real estate developers Song Da River Tourism Company and Kim Boi Tourism JSC.

Nguyen Van Duc, deputy general director of property firm Dat Lanh, said buying and selling was mostly conducted through banks and that tightened lending policies had made life difficult for local firms.

Duc added that there was a real danger of foreign firms cashing in on the depressed Vietnamese real estate market.

Duc fears that most real estate projects will fall into the hands of foreign investors. He attributes the difficulties the real estate market is facing to an imbalance in supply and demand. He said most people could not afford to buy an apartment costing VND2-VND4 billion (US$96,000-$193,000) without taking out a mortgage. As a result of a tightening in bank lending, a large proportion of mid – to high-end flats cannot be sold, he said.

Neil MacGregor, deputy director of Savills Viet Nam, said increasing inflation, economic instability and high lending rates would result in a spurt in M&As in the real estate market this year.

Le Hoang Chau, chairman of the HCM City Real Estate Association, said M&As would enable local firms to weather tough economic times.

William Young, MIPIM ASIA's senior project director, said at a recent press briefing in Ha Noi that Viet Nam was an ideal destination for real estate investment this year.

He predicted that in the next two to five years, Viet Nam's real estate market would become increasingly attractive due to growing liquidity.

Within the short term, investors would chiefly plump for apartments, trade centres and hotels, Young added.

Salt price falls in Mekong Delta  
 
Price of salt has fallen considerably in the Mekong Delta Province of Bac Lieu, causing much despair for salt workers.

Phan Minh Quang, deputy head of the Department of Agriculture and Rural Development in Bac Lieu Province, said that salt prices had soared earlier when some companies had purchased large amounts to meet demands from other provinces.

Once their quota was met they stopped buying, which led to the drop in the price of salt. Salt workers are maintaining a stock of about 4,000 tons of salt.

The Dong Hai factory in the province is currently buying black salt at about VND 350 to 450 per kilogram and white salt from VND 600 to 800 per kilogram.
 
Foreign investors eye health sector
 
Viet Nam is recognised as a potential market for foreign investors in medicine and healthcare, said Allan Yeo, Chief Executive of the Happy Hospital under Singapore's Thomson Medical Centre, which is planning to expand investment in Viet Nam.

In comparison with other fields like finance, securities and real estate, health-related industries are not as well represented by foreign investment in Viet Nam.

Dau Tu (Investment) newspaper said that foreign investment flow into Viet Nam's health sector was boosted by information on the Indian group Fortis Healthcare, which intends to buy 50 per cent of the shares in HCM City's Hoan My Medical Group for US$100 million.

If successful, the transaction would help Fortis Healthcare increase its presence in Asia, where the Economist Magazine's EIU forecast the per capita expenditure for health services to increase 55 per cent in the 2010-15 period.

Many foreign investors have successfully entered Viet Nam's health sector and are now expanding their operations, including the Thomson Medical Centre and Vien Dong Co Ltd, which invested in the France-Viet Nam Hospital in HCM City.

According to Yeo, Singapore is considered the country with the greatest potential among foreign investors involved in Viet Nam's health service.

Recently, Parkway Health of Singapore, Asia's leading private medical group, entered the Vietnamese market by becoming manager of the HCM City high-tech health centre, a project of the Hoa Lam-Shangri-La joint venture.

UK and Vietnam cooperate on Business Law Review project  

Vietnam Chamber of Commerce and Industry has been put on onus to conduct a project on reviewing business laws, according to an agreement signed this week between the chamber and the UK government which will financially support the project.

Within the agreement, Vietnam Chamber of Commerce and Industry, also known as VCCI, will lead the project to review and develop recommendation papers and reports concerning 16 important laws to improve the investment and business environment for domestic and international businesses as well as citizens.  

The papers will provide evidence and comments from stakeholders in civil society and the private sector (including foreign businesses) about current problems in implementing these laws, and how they can be improved through better implementation, repeal and amendment, etc.

"The project will support further improvement of the business environment and the legal system which governs it in Vietnam. This will boost the sustainable development of Vietnamese enterprises and enhance the competitiveness of Vietnam’s economy in an increasingly globalized world,” Ms Kate Harrisson, Charge d’Affaires at the British Embassy in Hanoi said.

The laws to be reviewed include the Accounting Law, Law on Value Added Tax, Law on Corporate Income Tax, Law on Tax Management, Law on Customs, Law on Land, Law on Real Estate Business, Law on Construction, The Enterprise Law, Investment Law, Law on Tendering, Commercial Law, Environment Law, Maritime Code, Civil Code and Intellectual Property Rights.

Updates on the project will be posted on VCCI website (www.vibonline.com.vn; www.luatsuadoi.vibonline.com.vn). Several workshops concering the issue will also take place in Hanoi and Ho Chi Minh City.

PV