Searefico sells 20% stake to Japanese partner

Searefico Refrigeration Industry Joint Stock Company (SRF) signed a strategic partnership agreement last Friday to sell a 20% stake to Taisei Oncho, a Japanese firm in the same industry.

The agreement allows Taisei Oncho to buy over 1.3 million shares, or a 16.45% stake, from SRF and the remaining 3.55% from large shareholders, raising its total ownership the local firm to 20%.

This is the biggest ever share transfer of SRF and Taisei Oncho is the largest strategic shareholder of the enterprise up to now.

Le Tan Phuoc, general director of SRF, said the Japanese firm would give technical training and help SRF improve project management capability to international standards.

Taisei Oncho will also assist SRF to expand its business to Cambodia, Laos, Myanmar and India. Besides, it will give technical support and marketing to help SRF approach Japanese projects in Vietnam.

Established in 1977, SRF is a mechanical & electrical (M&E) and industrial refrigeration contractor in Vietnam while Taisei Oncho is one of 10 leading contractors in this field in Japan.

OTC trading quiet

The over-the-counter (OTC) market is no longer as lively as in 2009 and 2010 since investors now have to wait for very long to complete a transaction and not so many OTC stocks are actively traded.

On the website sanotc.com, where OTC trading is the busiest, bank stocks are currently the most popular. Up to 15 bank stocks are on offer here.

Most OTC stocks are quoted below the par value, but their prices do not fluctuate as widely as prices of listed stocks. A number of stocks are still priced at the level of two years ago, such as TienphongBank at VND4,500 per share and DongABank at VND8,400 per share.

From the average price of some VND18,500 on December 29, 2011, BIDV stock is offered at VND11,000 today. It is one of the most traded bank stocks in the OTC market at present.

In addition to bank stocks, other actively traded stocks are Sabeco of Saigon Beer, Alcohol and Beverage Corporation (VND66,000 per share), Quasuco of Quang Ngai Sugar Joint Stock Company (VND66,500 per share) and Cadivi of Vietnam Electric Cable Corporation (VND23,000 per share), said Chau Thien Truc Quynh, head of retail brokerage at Viet Capital Securities Company.

An OTC broker remarked OTC stock prices did not fluctuate on information about bourse debuts anymore. It is because even some stocks when listed on bourse can hardly mark up.

Not so many OTC brokers are seen at Viet Capital now. Quynh said the number of brokers declined in line with the demand for OTC trading.

Thus, Viet Capital’s revenue from OTC brokerage fee payments is insignificant, mainly sourced from the companies with shareholder books at the company, while most OTC brokers are now active on the official exchanges.

In HCMC, the OTC trading floors of Dong Duong Securities and VN Direct have been shut down.

It is not too hard to buy OTC stocks, but when wanting to sell them, investors have to wait for very long since many investors now only trade stocks on the official exchanges. For this reason, many securities companies want to liquidate OTC stocks as the stock market has been going down since 2007-2008 but they can hardly do so.

It is not strange that OTC stocks are struggling with poor liquidity, when a lot of stocks have not recorded any transaction on even the Hanoi Stock Exchange and in the market for unlisted companies (UPCoM).

In the year to date, the value of each UPCoM session has not exceeded VND5 billion. For example, less than VND1 billion worth of stocks was traded on Monday, even though there are over 100 stocks listed in this market.

HCM City issues municipal bonds next week

HCMC will issue municipal bonds in the first phase on August 21 with a total value of VND1.5 trillion with an aim to mobilize capital for socioeconomic development including traffic infrastructure in the city.

Under the municipal bond issuance plan already approved by the city’s government, the total value of the bonds is projected at VND3 trillion.

Municipal bonds to be issued will have three-year, five-year and ten-year terms with a face value of VND100,000 each. Apart from the first-phase issuance of VND1.5 trillion scheduled for next week, the balance is set for issuance in the next quarter.

According to a resolution passed by the city’s People’s Council, capital construction in 2013-2015 sourced from the city’s State budget totals around VND43.29 trillion, exclusive of official development loans. Of the hefty amount, capital volume for 2013 is estimated at VND12.9 trillion, while that for 2014 is some VND14.5 trillion and about VND15.92 trillion for 2015.

Traffic infrastructure development alone needs a combined US$39 billion from now to 2020 as calculated by the local authorities.

Import of cashew material surges

The volume of cashew imported and processed last month was estimated at 95,000 tons worth US$88 million, raising the cashew import in the seven-month period to 333,000 tons with a value of US$330 million.

With such figures, the import of cashew material in the period shot up by 79.8% in volume and 77% in value year-on-year.

According to the Ministry of Agriculture and Rural Development, compared to the cashew export turnover in the January-July period which was US$759 million, the added value of cashew export is quite low as the sector still depends much on imported material.

According to the director of a cashew processing firm, many local enterprises do not have money to import material but mainly accept outsourcing orders to process cashew for foreign traders to maintain jobs for workers.

The lack of cashew material for processing results from the impact of the weather and low cashew prices, which prompt farmers to replace cashew by other crops, according to experts.

According to the Vietnam Cashew Association (Vinacas), Vietnam needs to import around 180,000 tons of raw cashew in the final months of the year to process. Cashew is imported mainly from Cambodia, Ivory Coast, Ghana, Nigeria, Guinea-Bissau and Indonesia.

Nguyen Van Chieu, vice chairman of Vinacas, said that Vietnam could process over 800,000 tons of cashew nuts each year but the current material supply failed to meet the need of enterprises. This is the reason for the strong increase in cashew import in the January-July period, he added.

Kien Giang wants fate of inactive power project decided

The government of Kien Giang has suggested ways to handle Kien Luong Thermoelectricity Center, a long-delayed project worth US$6.7 billion run by Tan Tao Investment & Industry Corporation (ITACO).

Vice Chairman Pham Vu Hong of the province last week wrote to the Ministry of Industry and Trade, asking the ministry to decide the fate of this foot-dragging power project, according to the website of Kien Giang Province.

Work on Kien Luong Thermoelectricity Center has been held up for three years, making those citizens forced to move to make room for the project very displeased. As the project is inactive, a number of households have arbitrarily grown crops in its land, posing many problems to the local government.

Moreover, the slow progress of this power project brings socioeconomic damages to Kien Giang Province and affects the Power Master Plan VI and power supply in the southern region.

Therefore, the provincial government has suggested two ways to handle this project.

If ITACO remained capable of developing this project, it must comply with the schedule given in Decision 3594/QD-BCT of the Ministry of Industry and Trade dated June 25, 2008. ITACO previously pledged to start operating two generators with a combined capacity of 1,200 MW between 2013 and 2014.

If ITACO was no longer capable, the ministry should revoke its right to develop the project and call on other investors to take over the project.

On October 8 last year, the government of Kien Giang met with ITACO to discuss the problems the project owner was facing. ITACO was asked to find ways to continue the project and send a report to the provincial government prior to December 31.

On February 27 this year, another meeting took place between Kien Giang’s government and ITACO, and the project owner was given more time to come to the final decision whether it will continue the project or change the investment format. But so far, ITACO has yet to make its decision.

Kien Luong Thermoelectricity Center is a national key project approved by the Prime Minister. Thus, to revoke the approval in principal, Kien Giang has to make a report to the Prime Minister.

In August 2008, the Government approved Tan Tao Group as owner of Kien Luong Thermoelectricity Center with a capacity of 4,400-5,200 MW. The project consists of two phases, with the first scheduled for completion in late 2013.

The project is planned for development over an area of 555 hectares, costing a total of some US$6.7 billion, excluding the cost for Nam Du Deep Water Port.

Nam Du Deep Water Port will also be developed by Tan Tao in Kien Hai District, Kien Giang Province, about 60 kilometers away from Kien Luong Thermoelectricity Center. It will play an important role in importing coal for supply to Kien Luong Thermoelectricity Center and other thermo-power plants in the Mekong Delta.

The detailed plan for this US$800-million project was approved in February 2010, but it remains on paper now.

As per the original plan, Tan Tao Group will cover 20% of the total cost of Kien Luong Thermoelectricity Center and the rest will be sourced from foreign loans. However, as the project costs a large sum, the project owner needs the Government guarantee and undertaking (GGU) to access international loans.

In July 2009, Tan Tao Group reported to the Ministry of Finance on the financial plan for the project in accordance with the regulations on GGU granting and management.

At a meeting between ITACO and the government of Kien Giang in September 2010, a leader of the provincial Department of Planning and Investment remarked: “ITACO is a wholly private company, and to date there has been no case of the Government providing a private company with guarantee to borrow foreign loans.”

In its latest document sent to Kien Giang’s government, ITACO stated it had poured a total of US$240 million into Kien Luong Thermoelectricity Center.

Mobile advertising seen growing

Mobile advertising, a medium that has yet to attract the attention of Vietnamese consumers, is poised to grow in the coming time, according to Kantar Media Vietnam.

This forecast is based on the fact that the country has more than 107 mobile subscribers though the population is around 90 million.

A survey which Kantar Media Vietnam conducted in the nation’s four major cities, Hanoi, HCMC, Danang and Can Tho, indicates mobile advertising ranks third after television advertising and billboards.

Up to one-fourth of respondents said they did not like mobile advertising while 19% said they liked it. Billboard advertising comes in second in terms of viewership, according the Kantar Media survey.

TV advertising has remained the leading advertising medium, with “likes” accounting for 87% of respondents. This explains TV stations made up 92% of VND10.94 trillion ad revenues in the first half of this year.

The country has seen a sharp pickup in Internet users with more people using the Internet on their mobile devices. Of note is the Internet is the second most-used medium after television in the four cities.

In terms of demographics, people in the age group of 14-25 spend 50% of their time on the web while Internet use gets less among older groups.

The number of people using the Internet on their computers and mobile devices would leap when more people join the 14-25 age group. This means demand for mobile advertising would rise accordingly.

Television remains a medium that has the biggest influence on consumers’ buy decisions, with more than 45% of respondents agreeing with this point. Meanwhile, the proportion among mobile device users is only 1.75%, according to the survey done in March this year.

Mobile advertising revenues now represent a mere 1% of the total on the market. Most of those ads are texted as spams, thus frustrating users of mobile devices.

A few companies like Densu and Goldsun Media Focus have made use of good ad technology, such as augmented reality on mobile devices.

Popular advertising forms in use on the market include PopUp, CatFish, Sponsored Post, CPA and Apps while interactive ad technologies include barcode, Qrcode, Augmented Reality.

An interesting point found by the survey is 10% of the population with the highest incomes and education use the Internet longer than those watching TV on a daily basis.

The survey found these Internet users spend 207 minutes a day on the web while TV viewers spend just 197 minutes.

With the four cities as a whole, TV remains a medium on which consumers spend most of their time each day, around 208 minutes, compared to 91 minutes for the Internet.

HCM City hosts digital technology expo

hree dimension (3D), Full HD and cloud computing technologies are the latest creations that companies will introduce to local consumers at the digital technology era exhibition to be opened in HCMC at the end of this month.

The annual event is organized by the International Data Group (IDG) Vietnam in coordination with the HCMC Computer Association with an aim to offer a technology playground for hardware and software makers at home.

The exhibition is expected to attract more than 200 stalls of big companies like Canon, HP, Sony and Microsoft this year so as to introduce new technology products to partners and consumers.

On the occasion of the new school year, producers at the expo will offer a host of discount and promotional programs for those buying computers and tablets besides launching many other educational software products.

Organizers expect this year’s event to lure around 200,000 visitors.

There will be a Demo 2013 seminar on new technologies by companies and startup businesses at the exhibition, where speakers share their startup experiences and ways to draw investment to develop technology.

Two events will both take place at the Riverside Palace Convention Center at 360D Ben Van Don Street in District 4 from August 30 to September 1.

Eximbank finances power projects in central region

The Vietnam Export-Import Bank (Eximbank) and the National Power Transmission Corporation have signed a credit financing contract valued at 1.546 trillion VND (72.6 million USD) in the central city of Da Nang on August 15.

The package will be used for power projects in the central region, including the second phase of the Thanh My 500KV transformer station; a 220KV transmission line linking Song Bung 4, Song Bung 2 and the national power grid; a 220KV transmission line between Vinh Tan and Phan Thiet; and a 220KV Son Ha-Doc Soi line.

Work on the Thanh My station, which will transmit electricity from Xekaman 3 hydropower plant and those in the west of Quang Nam province to the national power grid, will be launched in October and is scheduled for completion in late 2014.

The other projects are also expected to become operational by the end of 2014 and are expected to serve the livelihoods of people in the central region.

Hanoi’s economic growth to hit target

Hanoi’s economic growth is expected to reach the 8.1 percent target set for this year, it was reported during a meeting between the Ministry of Planning and Investment (MPI) and the Hanoi municipal People’s Committee on August 15.

During the first half of this year, Hanoi’s gross domestic product (GDP) posted an increase of 7.67 percent with positive growth seen in such areas as services, industry-construction and agriculture.

The city’s social investment stood at more than 101 trillion VND (4.7 billion USD), representing a year-on-year rise of 11.4 percent.

However, Hanoi is forecast to miss the target in state budget collection due to the impacts of the ongoing economic turmoil and the Government’s tax cuts to support businesses and the market.

MPI Minister Bui Quang Vinh said the city’s budget failure is partially attributable to unrealistic projection, which is 20 percent higher the figure recorded last year.

He urged the capital city to seek resources to achieve the completion of unfinished projects.

Chairman of the Hanoi People’s Committee Nguyen The Thao agreed and asked the ministry to submit concrete credit solutions to the Government to promote investment and consumption, helping the city overcome its difficulties and achieve economic recovery.-

Qatar less appealing to export labourers

Qatar in the Middle East is losing its charm as one of Vietnam’s major labour export markets due to tough climate and uncompetitive wages.

Before 2008, Qatar was one of Vietnam’s key markets for labour export. Around 40 local businesses provided several thousand Vietnamese labourers to work in this market every year.

However, things were changed from mid 2008 and only several hundred local labourers came to work in this market in some recent years.

“Export labourers face tough weather conditions when working in Qatar. The temperature here is often above 40 degrees Celsius. Qatar is an Islamic country, so its culture and food is largely different compared to Vietnam and there are few entertainment forms,” said deputy head of Ministry of Labour, Invalids and Social Affairs’ (MoLISA) Overseas Labour Management Department Dao Cong Hai.

“Besides, many export labourers incur high pressures stemmed from their dear costs for going abroad to work,” Hai said.

Qatar was also reported as one of the markets facing the highest number of violations from Vietnamese export labourers. During the period 2007-2009 Qatar’s side had ceased granting visas to Vietnamese export labourers three times due to such violations.

In the recent first meeting of the Vietnam-Qatar Joint Committee in Doha, Vietnam’s MoLISA and Qatar’s Labour Ministry agreed to riveting bilateral cooperation in labour between the two countries.

“Qatar is in fact a huge and potential market for labour export. Export to this market would rebound once local labor export firms followed close regulations on labour recruitment,” said MoLISA’s Deputy Minister Nguyen Thanh Hoa.

It proves hard for Qatar and several other countries in the Middle East to attract export labourers now because of low wages and tough working conditions, according to a source from Hanoi-based Labour Export and Commercial Tourism JSC (Colecto).

“Only several hundred local labourers left for Qatar to work in the year to date, so that resuming labour export to this market proves challenging,” Hai noted.

Beverage industry thrives despite tough times

While many industries are suffering from the economic downturn, the beverage industry has continued to grow over the first half of this year.

During the review conference about the industry's activities, Nguyen Van Viet, president of Vietnam Beer, Alcohol and Beverage Association (VBA), said that in the first six months of this year the industry has grown by 10.5% compared to the same period last year.

They have produced nearly 1.4 million liters of beer, an increase by 10.7% compared to last year. The majority of  the market share is still controlled by Saigon Beer-Alcohol-Beverage Corporation (Sabeco), Hanoi Beer-Alcohol-Beverage Corporation (Habeco), Heineken and Carlsberg brewery corporations.

The volume of beer production by Sabeco and Habeco reached 673 and 299.8 million liters respectively, while other companies' total beer volume was 400.2 million liters. The volume of non-alcoholic beverage in the first half of the year has also seen impressive growth, with 4.2 billion liters produced; an increase of 20% over the previous year.

25,000 businesses in other industries had to shut down in the first six months of the year because of capital shortage and high inventories. However, the beverage industry still contributes over VND20 trillion (USD959 million) to the state and creates millions of jobs across the country each year.

On the other hand, a conference about domestic brand names and consumer protection pointed out that many domestic beverage brand names are being threatened in this competitive market. Only a few Vietnamese beverage companies, such as Tan Hiep Phat, can still stand up against Coca Cola and Pepsi; and recently, Taiwanese food processor Uni-President, has taken over major shares of Tribeco Company.

Viet also pointed out that the market is being flooded by various kinds of cheap and low-quality products. In addition, authorities must be quick to deal with FDI firms that use transfer pricing to avoid tax.

Deputy head of Industry and Trade, Ho Thi Kim Thoa, asked firms to contribute information and ideas in order to create a level playing-field for everyone concerned.

Local textile, garment firms in doldrums

One year ago, local textile and garment firms were expanding markets in the country, however, now they are shrinking production and trying to survive under the current economic crisis.

One year ago, textile and garment firms invested in production for the local market as they wanted to get a grip on the market with population of nearly 90 million people.

Textile firms expanded distribution channels and retail stores nationwide.

During 2011 and 2012, distribution agents and outlets had mushroomed in the country along with advertising campaigns.

Textile and garment outlets sprung up in crowded streets and shopping malls to lure consumers.

However, due to the long-standing economic crisis, purchase power declined sharply and with retail sales dropping, textile and garment consumption suffered.

Not only luxury goods, but also commonplace commodities were affected. Nguyen Huu Toan, Deputy Head of Saigon 2 Garment Joint-Stock Company with Gidini and Sanding brand names, said they have seen a decline in purchase power in retail stores, supermarkets and schools; therefore, the firm makes perfunctory production and has cut down on quantity of each design to curb inventory.

For years, Sanding was part of the City subsidized program, offering discounts of 10-15 percent. Nevertheless, purchase power still declined and parents cut spending by buying cheaper clothes in markets.

Firms also launched promotions and discount sales and even closed stores reporting poor sales.  Nguyen Thi Dien from An Phuoc Company with An Phuoc - Pierrre Cardin brand name said the company had to reconsider expanding more outlets due to slow consumption and high rentals. At first the company planned to open 100 retail stores but stopped with only 85 outlets.

Since difficulties have arisen with the economy downturn, the Association of Garment and Textile Embroidery and Knitting (Agtex) have decided to hire foreign experts to manage retail in the country.

Nguyen Van Hung, Deputy Director General of the company, said that before the company had intended to open 80 outlets but foreign experts proposed cutting down on number of outlets to only 40.

This difficult economic period should be used by firms to restructure their businesses and move towards the right direction in development and growth.

EUR50 million metro rail project gets the green light

The Hanoi Metropolitan Railway Management Board (MRB) and the French Development Agency (AFD) signed a EUR50 million financing agreement on August 14 to modernise the metro rail system.

Construction of eight new stations under the Hanoi pilot metro line No.3 from Nhon Station to Hanoi Station along with an 8.5km elevated section linking Nhon Station in Tu Liem suburban district to Thu Le Station in Cau Giay district is to start this month, said the MRB.

The construction should be completed within 57 months under the supervision of Republic of Korea general contractor, Posco E&C.

Smart-phones are changing consumer behavior: Google

mart phones are inducing drastic changes in the consumer behavior and thus enterprises need to make changes as well to better approach their customers, Google experts told a press conference in HCMC on Tuesday.

At the press conference, Google experts said smart-phones had become an indispensable part of life and that a smart-phone revolution was going on.

According to a survey conducted by Google in the first quarter this year, the number of smart-phone users accounts for up to 20% of the total population of Vietnam.

The report shows that up to 70% of the respondents said they used smart-phones to access the Internet while 50% said they wouldn’t leave home without taking the gadget along. This indicates enterprises could connect and approach new consumers if they know how to combine smart-phones into their business strategies.

Simon Kahn, chief marketing officer of Google Asia Pacific, stressed smart-phones have already changed consumer behavior.

As per the survey, up to 92% of smart-phone users replied they could do many things at the same time while 64% said they used the phones whilst listening to music. With the information, companies can make think of developing multimedia campaigns to gain access to consumers more effectively.

Smart-phones are also an effective tool supporting consumers in shopping according to the survey, with 60% saying they buy products via smart-phones, meaning enterprises need to optimize website interfaces on mobile foundations to serve customers.

Advertising on mobile phones also has huge potential as up to 97% of smart-phone users search for information on the gadget, of which 97% take action based on the acquired information such as goods purchase or direct contact with enterprises.

Normally, at big brands, advertisement campaigns are always combined together and in this case mobile phones will become a supporting element for other channels. In other words, smart-phones have become a multi activity portal.

In fact, few local companies advertise on smart-phones while the total budget for advertisement on smart phones amounts to 20% in other developed markets, noted Kahn.

The report is part of a global smart-phone research program conducted by Google in 48 countries in the first quarter.

In Vietnam, Google cooperated with Ipsos Media CT to interview more than 1,000 Internet users aged between 18 and 64, including those accessing the Internet via smart-phones. Up to 58% of the interviewed people said they spent much time using Internet services via smart phones in the last six months while 78% said they looked for information on smart-phones per day.

Non-life insurance market suffers low growth

Non-life insurance premium revenue in the first six months of 2013 picked up only 2.5% year-on-year as many businesses are performing poorly in the tough economic times, according to Vietnam Insurance Association.

According to reports by non-life insurers, the premium revenue in the first half of the year totaled some VND11.7 trillion, a slight increase of 2.5% year-on-year, said Phung Dac Loc, general secretary of the insurance association.

Last year, the non-life insurance market recorded a growth rate of 12.7% in the first six months and 10.3% over the whole year.

Still, it is encouraging that premium revenue rebounded in the second quarter with a growth rate of 7.5% after dropping 5% in the first quarter. “This partly shows that the economy is on the recovery path,” said Loc.

Non-life insurers in the year’s first half paid total compensation of VND4.6 trillion, or nearly 40% of the total premium revenue.

Bao Viet took the lead in terms of premium revenue with VND2.58 trillion, a meager increase of 1.32% over the same period last year, followed by PetroVietnam Insurance (PVI) with VND2.46 trillion, up 12.4% year-on-year.

Bao Minh and Petrolimex Insurance (Pjico) came next with VND1.17 trillion and VND1.01 trillion, picking up 6.8% and 3.8% respectively. Only Post & Telecommunication Insurance (PTI) suffered a decline in revenue, earning VND793 billion, down 15% year-on-year.

In its financial statement, PTI says the company had incurred a loss of VND10.16 billion from production and business operations by the end of the second quarter, lower than VND26.5 trillion in the first half of 2012. However, its financial investment generated a profit of VND41.8 billion, giving the company a total pre-tax profit of VND27.6 billion, identical to the figure last year.

Meanwhile, life insurance premium revenue in the first six months of 2013 amounted to VND9.15 trillion, a significant increase of 13.6% year-on-year. In the same period last year, life insurance premium revenue was over VND8 trillion, up 10.4%.

As citizens are burdened with many fees such as tuition and hospital charges and the traditional investment channels are less profitable, many of them choose life insurance to invest for the future and to hedge on possible risks, said Loc.

Low quality drugs wave causes major headache

Vietnam’s weak drug quality control policies have allowed pharmaceutical firms to sell low-quality products in the country.

According to statistics from the Ministry of Health’s (MoH) Drug Administration, from January 1, 2011 to July 15, 2013, the administration banned the nationwide circulation of 137 types of medicine, including 63 manufactured by Vietnamese firms, 56 by Indian firms, seven by South Korean firms, two by Cypriot companies and two by French firms.

Some Indian firms were recently found to have violated Vietnamese medicine regulations, such as XL Laboratories and Umedica Laboratories Pvt. Ltd on four occasions each, while AMN Life Science Pvt., Ltd., Flamingo Pharmaceuticals Ltd.India, and Minimed Laboratories Pvt Ltd were found guilty three times respectively.

Their violations are due to the poor quality of their products and their failures in correctly meeting the contents of registration dossiers already approved by the MoH.

“Getting these products off the market is in line with Vietnam’s pharmaceutical management regulations,” said the administration’s vice director Nguyen Viet Hung.

Do Ngoc The, a doctor from a large military-run hospital in Hanoi, told VIR that many types of imported medicines were illegally marketed in Vietnam. He gave the example where local drug firms were allowed to import and distribute one million doses of medicine in Vietnam, but they could illegally import double that amount and evade taxes on the extra doses brought into the country.

“Vietnam’s medicine bidding regulations are too weak, helping low-quality drugs enter medical establishments,” The said. “During a bid, cheap prices are prioritised, while medicine quality is less important”

At present, under the Law on Bidding issued in December 2005, and the governmental Decree 85/2009/ND-CP guiding the implementation of the law, a contractor offering the lowest price and technical standards meeting only 70-80 per cent of the project’s technical requirements could win the contract. This has created a situation where a contractor meeting all the technical standards but charging higher prices could not be selected.

However, the MoH’s Drug Administration director Truong Quoc Cuong said in order for a drug product to win a tender, its technical standards and quality needed to be appraised in advance before bids for the lowest price were selected.

Footwear, handbag production jumps on strong Japanese orders

The leather and footwear sector expects to surpass its target of 9.7 billion USD in turnover this year, as many Japanese importers have shifted their orders from China to Vietnam.

Turnover is expected to increase even more if the Trans-Pacific Partnership (TPP) and the Free Trade Agreement (FTA) between Vietnam and the EU are signed.

Many importers, including those from Japan, have shifted orders from China to Vietnam. Exporters already have had orders through the first quarter of next year, according to the Vietnam Leather and Footwear Association.

Luu Van Thanh, director of Hoang Kim Handbag Ltd Co in Ho Chi Minh City’s Binh Tan District, said the company has been meeting with visiting Japanese groups nearly every day. He said he has never seen this many Japanese businesses coming to Vietnam.

Thanh's company, which employs 100 people, exports all of its products, to Switzerland, Germany, France, and Japan.

Many importers viewed Vietnamese standards for handbag production as higher than those of other ASEAN countries such as Indonesia, Cambodia and Myanmar, he said.

Truong Thi Thuy Lien, director of Lien Phat Footwear Ltd Co in Binh Duong province, said that after two months of surveying the market and sending samples, her company has received its first orders from a Japanese partner.

The company's export orders are full until the end of the year, according to Lien.

The leather and footwear association said the TPP and FTA would cut tariffs to zero percent, which would make Vietnamese exports more competitive with China and India .

In the first six months of the year, the footwear sector earned more than 3.99 billion USD in turnover, an increase of nearly 14 percent compared to the same period last year.

The US accounts for 32 percent of export turnover (1.27 billion USD).

Bag and suitcase products also saw an export growth rate of 22 percent in the first six months, with a turnover of 911 million USD.

Exports to the US accounted for 44 percent of total export turnover (391 million USD), an increase of nearly 30 percent over the same period last year.-

Da Nang applies IT to water, transport management

The central city of Da Nang on August 14 officially started a project on applying information technology to water and transport management funded by IBM group .

The move is part of IBM ’s “ Smarter Cities Challenge” scheme, with Da Nang being the first city in Vietnam and one of 33 cities worldwide selected to implement.

The Smarter Cities Challenge, launched in 2011 and worth 50 million USD, is one of IBM's largest philanthropic initiatives. Leading IT experts from IBM have worked with 100 cities around the world on key urban issues.

IBM has sent experts to Da Nang to look into its socio-economic development, and study ways to supply better urban services and attract greater participation of its citizens.

The corporation and local authorities will consider and propose ways to better manage transport, water supply and drainage, as well as waste water from industrial zones and factories and food safety and hygiene.

Over the next five to ten years, the city will apply IT solutions to the field of transport, urban, water, environment and health care management in order to improve living conditions for the city’s people, with water and transport given priority now.

Towards becoming a smarter city and an electronic government in the future, the city has been making strong strides in developing urban infrastructure and using advanced technologies for building and operating the infrastructure system, thus providing high-quality services to people, tourists and enterprises.-

Eximbank named best bank in Vietnam in 2013

The Vietnam Export-Import Bank (Eximbank) has won the “Best Bank in Vietnam 2013” Award of Euromoney, the world’s leading financial magazine.

The honour was presented by Marcus H. Langston, Regional Head-Asia of Euromoney, at a ceremony in Hanoi on August 14.

The magazine has highly valued Eximbank’s position in the domestic and regional financial market through a survey on its market capitalisation rate, revenue, asset and pretax profits over the past year.

It was the high growth rate that helps Eximbank become the best bank in Vietnam as voted by Euromoney this year, Marcus H. Langston said.

In May this year, the bank was also awarded the Best Managed Bank in Vietnam 2013 and the Asian Banker Leadership Achievement Award by the Asian Banker magazine.

Eximbank has increased the owner’ equity to 15 trillion VND (722 million USD) from 13.3 trillion VND in 2010.-

Experience Of Successful Start-Ups

Firms operating in Quang Trung Software City (QTSC) share their experience of forming start-ups and seeking customers. Competent human resources, product quality and strong support of QTSC are what ensure their success.

Currently staffed with 100 employees, half working in the U.S. and the remainder in Vietnam, software firm BTM Global has a history of 10 years. Andy Huynh, the company’s founder, says that a decade ago, Vietnam’s information technology (IT) was still in its infancy. So were the industry’s human resources and their foreign language skills. Huynh then had to bring back some overseas Vietnamese to instruct local employees while sending several local staff to the U.S. for training. “It took us four or five years to have the qualified personnel,” Huynh says.

Nguyen Thi Phuong Thao, CEO of DIGI-TEXX, says her company was set up in QTSC in 2003. As one of the early birds in QTSC, the company was also among the first to supply digital data services in Vietnam.

Overcoming initial difficulties, DIGI-TEXX has gradually gained significant achievements along with the development of digital data services in Vietnam thanks to its focus on corporate etiquette, ISO quality management system, personnel training to meet customer demands, and price stability. According to Thao, digital data services have recently developed strongly in Vietnam. More companies and agencies need BPO (business processing outsourcing) services to save costs and time. “Supplying BPO services for domestic and international customers over the past 10 years, DIGI-TEXX has been highly esteemed for its international standard quality, stable prices and several added values,” Thao said. “This success comes from our establishment of a global network, professional staff that understands cultures and languages of customers and various marketing channels.”

Andy Huynh says BTM Global has carried out many programs to seek new talents and retain old ones. In addition, the company has managed to compete with its rivals in Asia and work faster and more effectively to adapt to the current economic conditions of Vietnam and the U.S. “It takes time to have excellent people. Besides, the focus on specific retail segments has allowed us to earn profits every year,” Huynh says.

Andy Huynh says that even in economic crises, opportunities could be found because companies always need technological solutions. “The IT world has changed year after year, from policies to regulations and technology. So, our operation network has to change,” says Huynh. “The market has ups and downs. At present, multinationals should be thriftier and more effective. For instance, customers need to handle inventory and need a process to handle it more effectively, that means he or she needs our solutions to save millions of dollars.”

To take advantage of these opportunities, BTM Global continues to improve its human resources. “Vietnamese staff can now work directly with customers,” Andy Huynh says. “We have set up a process to develop our staff so that they can generate more profits to the company.”

Nguyen Thi Phuong Thao had the same idea, saying that companies and organizations are more interested in advanced technology and outsourcing services to save costs. Her company has expanded business to the U.S., Japan, Israel and Southeast Asian nations. DIGI-TEXX is going to increase its staff to 500 with annual growth of 30-50% aside from investment in infrastructure, advanced equipment, space and training.

Lam Nguyen Hai Long, deputy CEO of QTSC, says there are many requirements for a company to have good start-ups and sustainable business performance. QTSC has strongly assisted new businesses through incentives such as infrastructure expenses and direct promotions. “BTM, DIGI-TEXX, Infonam, GHP, Larion and other businesses operating in QTSC can contact our corporate team to seek support in new markets, technology transfer, intellectual property, new customers, IT events, business matching events or IT promotion programs to seek ways to thrive in the current context,” he says.

Bayer harnesses green house gas for production

Bayer MaterialScience, a subsidiary of Bayer AG – one of the world’s largest polymer companies – is aiming to commercialise the use of carbon dioxide as a new raw material for plastics following a successful test phase.

The company has started the planning process for the construction of a production facility at its site in Dormagen, Germany, where CO2 will be used to produce a precursor for high-quality foam. The objective is to initially make larger quantities of this precursor available to selected processors from 2015.

According to Bayer, the use of carbon dioxide benefits the environment. CO2 replaces the use of fossil raw materials such as petroleum, and the German company expects the new process to provide economic advantages over conventional production methods.

“After successfully completing the test phase, we are now launching stage 2 with the target of commercialising the product,” said Patrick Thomas, chief executive officer of Bayer MaterialScience, adding that the first use of the new CO2-based flexible foam will be for the production of mattresses.

“CO2 is taking on a new light. The waste gas is turning into a useful and profitable raw material. That makes us one of the first companies worldwide to take an entirely different approach to the production of high-quality foams,” said Thomas.

The planned production facility in Dormagen will have a capacity of several thousand metric tonnes. “This will not be enough to accommodate market demand, of course. It is Bayer’s patent-registered technology and we have not yet decided to be the exclusive producer of this innovative polyol. Licencing might also be a possibility,” he added.

With 2012 sales of 11.5 billion euros, Bayer MaterialScience is among the world’s largest polymer companies. Business activities are focused on the manufacture of high-tech polymer materials and the development of innovative solutions for products used in car manufacturing, electrical goods and electronics, construction and sports and leisure industries.

Bayer collaborated with partners from industry and academia to develop the process, which has been tested intensively over the last two years. As part of the publicly funded Dream Production research project – a pilot plant at Bayer’s main site in Leverkusen produced smaller quantities of the precursor polyol, in which CO2 was chemically bound.

The substance is used for the production of polyurethane foam. This high-quality material can be found in many everyday items, including upholstered furniture, automotive parts, refrigeration equipment and insulation material for buildings. In internal tests, the new foams show at least the same high quality as conventional material based entirely on fossil fuels.

Steel price picks up on power price hike

Construction steel price increased VND150,000 per ton on Monday under the impact of rising input costs, including higher electricity and fuel bills, said builders and steel dealers and manufacturers in HCMC.

Do Duy Thai, general director of Viet Steel Corporation, known for Pomina Steel, said: “Although the demand for steel has not improved much, higher transport costs, power prices and material prices force us to hike steel price rather than suffering losses.”

Representative of a steel outlet named Vinh Hung in Go Vap District said the retail price of construction steel in the city was about VND14.9 million per ton. Thus, VND150,000 is just a slight rise and will have no major impact on the purchasing power, he predicted.

The Vietnam Steel Association (VSA) informed its members in the first seven months of the year sold around 2.6 million tons of construction steel, up 3% year-on-year.

VSA General Secretary Dinh Huy Tam remarked construction steel consumption began to improve in June as the economy gradually picked up steam, interest rates went down and many property projects were restarted.

* Some 33.6 million tons of cement was sold in the first seven months, up 7% year-on-year, with cement and clinker exports picking up 50% to 6.7 million tons, said an official from the Ministry of Construction.

Talking to the Daily on Monday, Le Van Toi, head of the Building Materials Department under the construction ministry, informed 2.3 million tons of cement and 4.4 million tons of clinker had been exported in January-July, an increase of 50% over the same period last year. These products were mainly sold to the Middle East, Africa and some Southeast Asian markets.

Currently, the local cement industry still has around 2.6 million tons of unsold products, mainly clinker. This inventory level is not worrisome as it is equivalent to the quantity of materials for 12-14 days of production only, said Toi.

No cement price fluctuations were recorded in the first seven months of the year although the prices of coal, electricity and fuel and financing costs remained high, causing manufacturers many difficulties, according to the construction ministry.

Some products of Ha Tien Cement and Holcim on Monday retailed at VND800,000-820,000 per bag of 50 kilos. This price level has been unchanged in recent months.

The total capacity of the local cement industry is now approximately 66 million tons per year. Total cement consumption in 2013 is estimated at 56-57 million tons.

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