BUSINESS IN BRIEF 1/9
1,000 businessmen to attend CEO forum
1,000 domestic and foreign entrepreneurs will come together in the CEO forum 2014, which will take place in Ho Chi Minh City on September 24, said the HCMC Young Entrepreneurs Association yesterday.
With themed “New game – which moves”, this year program will refer to opportunities and challenges from global integration, and participation in the ASEAN Economic Community and the Tran-Pacific Partnership agreement.
The forum is expected to find out measures for sustainable development and Vietnam’s strong economy.
MoF bends again on rubber tax, now zero
The abolition of the export tax on rubber, starting October 2, is expected to ease some of the difficulties currently plaguing rubber firms.
According to Circular 111/2014 issued by the Ministry of Finance, the export tax rate on rubber will be reduced to 0 per cent from the current 1 per cent.
Listed rubber firms saw a sharp on-year drop in profits in the first half of this year, mainly due to low global demand.
Phuoc Hoa Rubber Joint Stock Company (HOSE:PHR), the largest listed rubber firm, earned VND120.735 billion ($5.8 million) in net profit, down 13 per cent on-year. The next biggest firms, Dong Phu Rubber Joint Stock Company (HOSE:DPR) and Thong Nhat Rubber Joint Stock Company (HOSE:TNC), saw their net profits more than halve to VND70.615 billion ($3.35 million) and VND11.262 billion ($52,000) respectively in the first half.
The Ministry of Agriculture and Rural Development estimated that Vietnam exported 548,000 tonnes of rubber valued at $989 million in the first eight months of this year, down 9.8 per cent in volume and 31.9 per cent in value on-year. The average rubber export price in the first seven months was $1,830 per tonne, down 24.96 per cent against the same period last year.
Difficulties are expected to persist for rubber firms, as there looks to be a surplus of 652,000 tonnes of rubber latex this year, reported London-based consultancy company Rubber Economic.
Husbandry sector reliant on imports
Viet Nam spent billions of dollars each year on importing animal feed, nearly 40 per cent of which came from China, head of the Ministry of Agriculture and Rural Development's Husbandry Department Hoang Thanh Van said at a conference yesterday.
In the first six months of this year, Viet Nam paid about US$2.42 billion to import 5.9 million tonnes of animal feed, increasing 55 per cent and 29 per cent in quantity and value from the same period last year. The imported feed included corn, wheat, soybean, fish powder and rice bran.
Viet Nam also spent billions of dollars on animal breeds. The country imported more than 1,600 pigs and nearly 945,000 poultry for breeding purposes in the first seven months of this year, costing $1.45 million and $3.67 million respectively.
Van said Viet Nam had to import more feed and breeding stock to meet the increasing demand of local producers. While the country could produce more than 1 million tonnes of corn each year, local demand had risen to 5-6 million.
"We need to shift a number of areas used for rice cultivation to planting corn so we can increase the local supply," he said.
Minister of Agriculture and Rural Development Cao Duc Phat said that the animal health sector should also pay more attention to animal disease prevention and control, management of animal medicine and food safety and hygiene. The husbandry sector also needed restructuring in order to boost the competitiveness of its products, Phat said.
Time-honoured porcelain company a true comeback story
Hai Duong Porcelain Factory (now Hai Duong Porcelain JSC), born more than half a century ago in the northern province of the same name when the industry was just fledgling, once was a cornerstone in the domestic porcelain industry.
The company’s brand is deep rooted in the mindset of generations of Vietnamese people, particularly those in northern areas.
The company, however, has since taken a steep fall due to its obsolete management style and operating structure when the economy began to function under the market mechanism.
In 2008 the company was buried in losses and debts totalling 140 per cent of its charter capital. At the same time employee wages fell to an average VND1 million ($47) per capita per month and the brand nearly faded into nothingness.
“At that time there was an overwhelming supply of unsold porcelain products in the factory’s workshops, causing tremendous waste of materials and workforce,” recalled the company’s chairman and general director Nguyen Do Ha.
At the same time, more than 41,000 square metres of workshop space was in disrepair and resultantly ineffective production lines.
“How could a brand that had such a long history and strong track record find itself on the verge of bankruptcy?” was the question all of the company’s management were asking.
After carefully considering the situation, the management decided to cut back on production, focusing only on 44 product lines, rather than the 1,300 at the firm’s peak. They also went to work restructuring their output market.
The company focused on serving and deepening its roots in 15 northern provinces and municipalities within a radius not exceeding 200 kilometres from the factory site.
“Not many people know that in 2008 we were still selling products directly from our production facility. We then revolutionised our sales strategy and brought products to the customers, rather than waiting for them to come,” said the company’s research department head Thu Hang.
The company also took the bold step of cutting down production lines from three to only one to bolster efficiency.
Staff training was also a top priority, alongside applying a cross-check scheme to assess the work quality of each labourer on a monthly and quarterly basis.
These improvements breathed new life into the company’s development.
In the first year after embracing renovation, Hai Duong porcelain was back in the black and later gradually offset its cumulative losses, paid off its bank loans and raised its workers’ salaries, which are now four times what they were in 2008.
In March 2014, one of its main shareholders – the State Capital Investment Corporation (SCIC) – successfully sold its 36 per cent stake in Hai Duong Porcelain at a public auction and got a return on investment more than triple what it had paid.
At present, the company markets about 1.5 million items per month and can only satisfy one-third of order volume.
Therefore the management is reportedly mulling ways to make further headway. “Hai Duong porcelain still has a ways to go in reconfirming its position in the market and further bolstering its traditional Vietnamese brand,” Ha explained.
Online tax payments increase efficiency
Online tax payments, first applied in August 2013, have vastly increased efficiency, vice director of HCM City's State Treasury Nguyen Hoang Hai said on Tuesday.
Previously, taxpayers had to go to the State Treasury to submit the required paperwork and the Government agency had to complete four or five procedures. At HCM City's State Treasury, there were only two transaction sessions each day. Now, thanks to collaboration between the Treasury and commercial banks, people can pay their taxes via the Internet as well as ATMs or Vietinbank, BIDV, Agribank and Vietcombank branches.
In addition to halving the amount of paperwork, this also helped avoid overlap when inputting taxpayer information to the State Treasury and bank systems, Hai said.
Since last August, Vietinbank's system was used for about three million tax payments worth trillions of Vietnamese dong, according to Director General Le Duc Tho.
While the online system increased efficiency, it was still difficult to deal with foreign currency and unstable Internet transmission lines during peak times such as the end of the working day or month, said director general of the State Treasury Nguyen Hong Ha.
Enterprises will no longer have to declare and calculate value added tax (VAT) if importers return their goods or the goods are circulated within sectors of the enterprises after a new Finance Ministry circular takes effect next month.
The circular also regulates that enterprises will not have to fill out invoices and declare VAT if they export machines, equipment, materials and goods for borrowing or returning.
The move, which aims to help enterprises save over 200 hours on tax procedures, is part of the ministry's response to an order by the Prime Minister to cut the time enterprises take to complete tax paperwork below 300 hours a year by the end of 2014.
The average Vietnamese business spends 537 hours each year dealing with tax procedures, while the average time in other ASEAN member countries is only 171, according to the World Bank. The Prime Minister urged the tax sector to reduce the duration of tax procedures to that regional level in 2015.
Leading urea maker suffers from input price rise, increased competition
PetroVietnam Fertilizer and Chemicals Corporation (HOSE:DPM) posted a sharp drop in profits in the second quarter this year due to an increase in the input price and more fierce competition from domestic and foreign producers alike.
Despite stable production, DPM’s net profit in the second quarter dropped sharply to VND279.6 billion ($13.25 million) from VND908 billion ($43 million) in the same period last year.
The first reason for the decline in performance was the gas price increase. As required by the government, starting on April 1 the Vietnam National Oil and Gas Group (PetroVietnam)’s PVGas calculated the price of gas sold to DPM using a new formula, which resulted in the price increasing to $7.4/million BTU from $6.56/million BTU in 2013.
Cao Hoai Duong, general director of DPM, said gas makes up 70 per cent of DPM’s total input cost. If the price of gas rises by $1/million BTU, DPM’s input cost will rise by VND400 billion ($19 million). Evidently, DPM’s Q2 financial statement shows input cost of VND1.526 trillion ($72.3 million), up from VND1.218 trillion ($57.7 million) in the same period last year.
Another difficulty DPM faces is surplus of urea. A report by the Vietnam National Chemical Group (Vinachem) showed that Vietnam’s total supply of urea in 2013 was 3.25 million tonnes, including over two million tonnes produced by the four domestic urea factories, namely Phu My, Ca Mau, Ha Bac, and Ninh Binh, and 1.2 million tonnes imported from China, much higher than the domestic demand of 2.2 million tonnes.
The surplus exists not only in Vietnam but also around the world, resulting in a downtrend of the global fertilizer price. The FOB price of Chinese urea fell from $460 per tonne in 2011 to $415 per tonne in 2012 and then $330 per tonne in 2013. The price is expected at between $305 and $310 per tonne in 2014.
DPM currently holds 40 per cent of Vietnam’s urea market. In July, DPM closed its three-year-old Cambodian branch. In the future the company plans to expand production to other types of fertiliser, including NPK, DAP, and SA, as well as further innovating its current product line.
Taiwan’s Formosa and partners may have exaggerated May riot damage
Hung Nghiep Formosa Ha Tinh Steel Limited Company (FHS) and its contractors in Formosa Plastic Group’s steel and Son Duong deep-water seaport complex in the central province of Ha Tinh may have overstated the value of the damages caused to them by the riots in May.
Formosa Ha Tinh project - photo source TienPhong
During a first check, the Ha Tinh People’s Committee discovered in some of the damage reports submitted by firms that some of the facts didn’t check out, such as the amounts of steel, wood, electrical wires and machinery stolen.
From the reports, the province’s damage assessment committee valued direct damages to FHS and its contractors at VND616.5 billion ($29.2 million), of which direct damages to FHS were valued at VND13.5 billion ($640,000). FHS and its contractors initially reported combined damages of VND4.934 trillion ($208.2 million). Their reports did not segment out direct and indirect damages.
“The financials submitted by the firms have not yet been checked,” said a representative of the province, “as the firms have not yet submitted any documents to back up their claims.”
The province has asked FHS and its contractors to soon provide these documents, and asked FHS to work with its insurance companies to determine which of the damaged assets are covered and then report back to the committee.
Of the 86 contractors working on the $10 billion complex, 59 reported damages from the riots that occurred in mid-May following China’s illegal placement of an oil rig within Vietnamese waters.
Ha Tinh has punished 38 individuals for causing unrest, as well as retrieved some of the stolen equipment. It has also taken a raft of measures to support damaged firms, including asking Viet-Lao Vung Ang Port JSC to reduce its port rental fees for FHS goods and the customs department to accelerate procedures for the import of FHS machinery and equipment.
Vietnam part suppliers raise white flag even on simple hi-tech items: official
Despite given chances to join Samsung production in Vietnam, local part suppliers are not qualified to make even the simplest items of the 170 different types of parts for which the South Korean company is seeking suppliers, a Ministry of Industry and Trade official has admitted.
Samsung Vietnam has submitted a list of 170 different types of parts for its flagship Galaxy S4 smartphones and Galaxy Tab 7 tablets, which the company believed could be domestically manufactured, to the Ministry of Industry and Trade.
“But electronics associations and businesses, even those with up to 50 years of history, all replied when asked about the list that they are unable to make such parts,” Truong Thanh Hoai, deputy head of the ministry’s Heavy Industries Department told Tuoi Tre (Youth) newspaper in an interview earlier this month.
The Vietnamese businesses said they could not meet the technology specs and prices proposed by the South Korean electronics giant, which operates a complex in the northern province of Bac Ninh.
What shocks Hoai the most is that among the parts are simple items such as smartphone chargers, USB cables, plastic cases, and earphones.
The official said Vietnamese part suppliers missed a tremendous opportunity for failing to qualify to be a Samsung partner.
“Samsung said they need around 400 million chargers of various types a year,” he said.
“Provided that Vietnam was able to make the device and the profit rate was US$0.5 per charger, it would rake in $200 million.”
Being the part suppliers for global hi-tech giants such as Samsung will help engage Vietnamese businesses into the global production chain and enhance the country’s technologies, Hoai added.
The official admitted that Vietnam’s support industries are still developing and relying too much on imported parts and equipment, mostly from China.
“This increases production costs and the possibility of a trade deficit, while reducing product competitiveness,” he remarked.
Hoai said the industry and trade ministry has submitted a draft decree on further developing support industries to the government.
Under the plan, centers for support industry development will be set up in the country’s key economic areas.
The centers will assist part suppliers in designing, testing, and checking product quality in order to meet requirements from global hi-tech companies.
“We learned this model from South Korea. Their support industries post a $100 billion trade surplus every year, but still need such centers. The centers are crucial to help the incapable Vietnamese part suppliers,” Hoai emphasized.
Experts optimistic of apartments market
The domestic apartments market is expected to continue recovery by year-end and beyond because of the increasing number of advantages for it in market and state policies, experts said.
A view of the Sai Dong Urban Area in Ha Noi's Long Bien District. Viet Nam's real estate market is expected to continue its recovery despite challenges. - VNA/VNS Photo Tuan Anh
Savills Viet Nam, a foreign property consulting service provider, revealed that in the second quarter of 2014, an estimated 1,900 apartment units were sold in the capital city, representing a 54 per cent quarter-on-quarter increase resulting from strong sales in Grade B projects.
The average primary price was approximately VND28 million per square metre, representing a 15 per cent quarter-on-quarter increase.
In HCM City, the overall absorption rate was estimated to be 17 per cent, representing a quarter-on-quarter increase of seven per centage points QoQ and a year-on-year increase of nine per centage points. An estimated 2,500 apartment units were sold, representing a 60 per cent quarter-on-quarter increase and a 115 per cent year-on-year increase.
Real estate traders have continued doing business in the seventh lunar month in spite of the belief about it being an unlucky month for activities such as moving into new homes, getting married and opening new businesses.
A number of companies are offering properties for sale this month, especially low-cost apartments that have attracted customers. These include the Bac Ha Tower of Bac Ha Construction and Trading Joint Stock Company, the CT9 apartment building under the Van Phu Victoria project of Van Phu Investment Joint Stock Company, the Ehome3 project of Danh Khoi A Chau Real Estate Joint Stock Company, and the 8X Plus project of the Hung Thinh Property Company.
The Dien dan Doanh nghiep newspaper quoted property expert Do Minh Duong as saying that a survey on proposed amendments to nine real property laws was conducted at a meeting of the National Assembly Standing Committee this month.
The National Assembly is expected to approve the amendments to such laws as the Investment Law, Enterprise Law and Housing Law.
Also, the Prime Minister recently asked the Ministry of Natural Resources and Environment and concerned ministries and sectors to implement land administration reform, Duong added.
"These are factors that have a direct effect on the domestic real estate market. If the state implements these reforms, they will have a positive effect on the market and boost the confidence of investors and customers who want to purchase property," the expert said.
Property experts agree that Viet Nam's real estate market will recover further, though a number of challenges remain as a result of high market demand, market recovery following a recession and active monitoring of the market by investors.
In previous years, domestic demand for real property remained high, resulting in a significant number of successful transactions in the property market.
Based on official figures, Viet Nam has an average housing area of 25 sq. metres per capita and needs 2.5 billion sq. metres of housing area for an estimated total population of 100 million by 2020. The nation now has 1.4 billion sq. metres of housing area and needs 100 million sq. metres more per year for the construction of new houses and apartments.
In previous years, land area for housing and apartment construction reached 80 million sq. metres.
Therefore, demand for housing and apartment construction remained high, and enterprises should maximise every opportunity to develop property to meet market demand, Duong said.
Experts noted that in Viet Nam and the rest of the world, the property market followed a cycle of development and recession, with each cycle lasting five years.
Viet Nam experienced recession in its property market from 2009 to 2013, when leasing and selling prices for property were reduced. But, recently, the property market had been experiencing a resurgence amid positive signals such as the reduction in interest rates for loans on real property and high demand for certain kinds of real estate.
Experts also noted that domestic and foreign and investors had become more active in monitoring developments in the real estate market.
Figures from the Ministry of Planning and Investment showed that the country attracted US$5.7 billion in disbursed foreign direct investments (FDI) in the first half of the year, showing a one per cent increase year-on-year. FDI poured into the property sector accounted for approximately 10 per cent of the total, mainly through merger and acquisition (M&A) activities.
Savill Viet Nam said M&A activities in Viet Nam's real estate sector were expected to continue surging, given the perception that the country remained one of the most promising growth markets.
The Trans Pacific Partnership Agreement should be signed soon and would support the growth of the national economy and increase FDI flows into Viet Nam, Savill said.
"The New Land Law, which took effect last July 1, allows foreign-invested enterprises to be allocated land for residential housing projects. This regulation amendment is expected to ensure transparency and offer equal opportunities to local and foreign investors, making Viet Nam's real estate market more attractive in the eyes of investors," it added.
"The market continues to see residential development projects changing hands, including the apartment sector, landed property sector and township projects. Investors also have a strong appetite for operating assets with stable yields and lower risks," Savill noted
"The interest of Japanese and Korean investors, who have accounted for the majority of M&A activities in the last two years, is expected to remain strong," the property consulting service provider said. "Besides, there is growing demand from Singaporean and Taiwanese groups for both residential and commercial office buildings. There will be continued activity in these sectors over the coming months and in 2015."
COFICO appointed to build Vista Verde
CapitaLand Limited (CapitaLand) and its joint developer Thien Duc Trading-Construction Company Limited (Thien Duc) just appointed Construction Joint Stock Company No.1 (COFICO) as the main contractor, to develop Vista Verde, a residential project on a prime site in the heart of District 2 in Ho Chi Minh City.
The signing ceremony with COFICO, held at the project site on August 28, in Dong Van Cong street in Thanh My Loi ward, was witnessed by a total of 100 guests, including senior management from both CapitaLand and Thien Duc, officers of Ho Chi Minh City’s District 2, as well as representatives and business partners.
Le Dang Xu, chairman and CEO of COFICO, said: “After the success of PARCSpring in Ho Chi Minh City, we are proud to continue partnering CapitaLand as the main contractor to build the high-end Vista Verde project in Vietnam. By combining the reputation and experience of CapitaLand and COFICO’s execution performance, we believe we will be able to develop a quality project on schedule.”
Comprising 1,152 high-end apartments across four 35-storey residential towers with spectacular views of the Saigon River, Phu My bridge and the surrounding city, Vista Verde showcases lush green landscaping and features designed to bring a symphony of nature to residents.
Policies needed to make life at sea attractive
Maritime transport enterprises have asked authorised agencies to create favourable policies to encourage people to work on their vessels.
They described the job as a dangerous occupation with a harsh working environment.
Vuong Ngoc Son, general director of Vinaship JSC, said apart from professional skills, those who worked as crew members are subject to long hours, a harsh working environment and prolonged separation from their families.
Due to these reasons, many countries had created special incentives on healthcare, social welfare and preferential taxes for crew members, but Viet Nam had paid little attention to this issue, he said.
Son cited personal income tax as an example. The current regulation imposes the same tax rate for all labourers, even if they work at sea.
Deputy Director of Vinalines Sea Transport Company Hoang Long agreed. He said crew members should be exempt from tax due to the hardships they suffered.
In terms of food allowances, Son said crew members were allocated VND93,000 (US$4.3) per day for domestic routes, and VND170,000 ($8) for international routes.
However, crew members were asked to pay 30 per cent of the total, and the rest would be paid by their employers. The International Convention on Marine Labour stipulates that crew members should be provided food free of charge while they are working.
Son also said the convention stipulated that each crew member should be given 30 days off annually, which was higher than the regulation in Viet Nam's Labour Code.
In reply to these issues, the Viet Nam Maritime Administration said the recommendations made by maritime transport enterprises were completely legitimate.
The administration would make proposals to the Government to address these issues soon.
Figures from the administration showed that last year, 32,000 crew members were licensed to work aboard vessels. However, 60 per cent of them have left their boats due to old-age or to find other jobs.
Solutions sought for steel importers
Seeking to end regulatory obstacles that might slow their growth, steel importers met with government officials to discuss concerns about Circular 44/2013/TTLT-BCT-BKHCN.
The steel importers, along with the Ha Noi Small – and Medium-sized Enterprises Association (HAMESA), met yesterday with officials of the Ministry of Industry and Trade (MoIT), Ministry of Science and Technology (MoST) and other governmental agencies to review concerns they had about Circular 44/2013/TTLT-BCT-BKHCN.
Bui Quang Chuyen, Deputy Director of the Heavy Industry Department under the MoIT said, "During the implementation of the Circular, there were some problems which have caused negative effects in the steel business."
According to officials in the steel industry, major problems included losses caused by the time it takes to receive quality certifications, as well as complicated procedures and the requirements for businesses to work with combinations of governmental organisations.
Mai Van Doi, General Director of Viet Nam Boiler Joint Stock Company, said that their import schedule had been unstable, resulting in the company having to repeatedly register, which is costing them significant amounts of money.
He added that Vietnamese enterprises also endured high risks due to trade frauds, but could not afford to file international lawsuits against foreign companies.
Meanwhile, Trinh Thanh Thuy, representative from International Son Ha Joint Stock Company, said that the time required for processing paper work would result in heavy losses for enterprises and has become a waste of efforts for management agencies.
Additionally, customs procedures, testing and accreditation processes should be reduced and a set of corresponding standards should be developed to compare Vietnamese steel products with those manufactured overseas, according to Thuy.
Nguyen Thi Nhan, representative from Thai Hung Limited Company, said that remission formalities, as well as random testing mechanisms, were unclear and complicated for businesses and management.
She added that steel importers had not yet received commitments of accountability, or a listing of obligations, from governmental organisations.
In addition, Nhan recommended that customs offices take responsibility for testing and reducing the term of testing and evaluations of imported products at customs posts.
In response to questions raised by steel-importing companies, Tran Van Vinh, Deputy General Director of Quality Testing Head Office, said that his office had set up a number of quality testing units to meet demands from businesses.
He suggested that businesses not depend on a specific unit, but report violations that slow progress.
Head Office officials also said they were importing evaluation standards from overseas organisations to speed the customs process.
Bui Quang Chuyen, representative from MoIT, added that companies that have numerous import schedules during the year could ask the ministry to confirm their plans, so that confirmations would be completed within 20 working days.
Further, Dao Trong Cuong, an expert from MoIT, said enterprises should comply with administrative formalities to avoid wasting time and efforts.
Also, Tran Van Binh, representative from Ha Noi Customs Office, said that the Office would allow steel companies to transport products and materials to their warehouses in Ha Noi.
The Office believed that such actions would help companies avoid losses and expirations of goods and products at customs post, he said.
Land-use projects stuck in red tape
Enterprises have not benefitted from the Government's Resolution 43/NQ-CP, issued more than two months ago to reform the administrative procedures for investment projects that involve land use.
The resolution was issued in June, with focus on reforming administrative procedures for land-use projects, to improve the business environment by reducing the waiting time and costs for project investors.
With the removal of 12 types of administrative procedures and simplification of many others, the duration for the implementation of administrative procedures for land-use projects was cut by half from 155 to 865 working days previously, to 80 to 480 working days.
This was good news to investors during a difficult economic situation as the resolution was expected to help ensure transparency and investors' rights, while the concerned authorities could have a common voice for controversial issues such as land auctions.
However, experts said that many problems still need to be tackled to ensure that the resolution is applicable in reality for improving the business environment.
According to Deputy Director of HCM City Department and Planning and Investment Le Thi Huynh Mai, the resolution failed to define specifically what land-use projects were, causing difficulties during its implementation.
The resolution has already repealed the investment certification procedures for land-use projects which were not included in the provisory investment fields. But it did not point out whether projects in industrial or export processing zones needed investment certification, Mai added.
There were also overlaps in investment procedures regulated by different laws, according to Deputy Director of the central Phu Yen Province's Department of Planning and Investment.
The management of investment projects is currently regulated by many laws, including Investment Law, Construction Law, Land Law and Environment Law.
Chairman of NHS Construction Investment Company Nguyen Hoai Nam was worried about the inconsistencies between the resolution and other existing laws which could cause confusion.
In addition, the lack of coordination among relevant authorities caused difficulties to project investors.
According to Ngo Da Tho, president of the Phu Yen Business Association, enterprises are forced to spend a lot of time with different departments for the implementation of investment projects, even as business opportunities pass them by.
He said any disagreements between the concerned departments might cause the projects to get stuck and investors would be forced to wait.
Chu Duc Luong, chairman of the Phu My Group, said some projects had to wait for at least two years to complete administrative procedures, while they needed only nine months to complete construction and make the projects operational.
A tourism project of the Sao Viet Company in Phu Yen Province's Tuy Hoa City has already spent four years in completing land-use procedures.
In order to assess the implementation of the resolution, experts said the relevant departments must coordinate with each other to simplify administrative procures for land-use projects because just one problem could slow down the process.
Companies set for share listings
The number of companies filing to list shares on the stock exchange would rise significantly next year, deputy general director of the HCM Stock Exchange Tran Thi Anh Dao said.
One of the most anticipated listings will be from banks which will be forced to list in 2015 under the direction of the Prime Minister in an effort to strengthen transparency in the banking sector.
According to Dao, many banks wanted to make share offering but had to postpone their plans due to procedural difficulties such as high bad debt ratios which makes them unqualified for listing, or if they were involved in a restructuring process such as a merger or acquisition.
"With regard to these cases, their listings may be delayed but ‘reluctant' banks that do qualify to float must list shares on the stock exchange next year," Dao told Dau Tu Chung Khoan (Securities Investment) newspaper.
She said Techcombank had proposed a listing plan at its annual shareholders' meeting this year, while others such as Nam A Bank, VPBank and LienViet PostBank were considering suitable times for their debuts.
As well as banks, other companies including Thong Nhat Production and Investment Joint Stock Company, Van Dien Fused Magnesium Phosphate Fertilizer Joint Stock Company and Thin Viet Securities Joint Stock Company are likely to be approved for listing by the end of this year.
The exchange this month received two initial listing registration documents from Quang Binh Import and Export Joint Stock Company and Southern Fertiliser Joint Stock Company.
In the first half of this year, the southern exchange received only seven auctions and three new listings, a very modest number compared to the previous years.
On the Ha Noi Stock Exchange, several companies are also preparing to list shares by the year-end including C.E.O Investment Joint Stock Company and Viet Thanh Electric Cable Corporation.
According to market insiders, the market size will expand substantially with more listings as both stock exchanges are actively taking measures to compel public companies to join the stock market.
Recent new listings of Mobile World Joint Stock Company (MWG) and Central Hydropower Joint Stock Company (CHP) have seen significant growth and this should act as a confidence for companies to float their shares on the stock exchanges.
Raising capital through the stock market has also shown positive signs, with total money raised through this channel increasing to VND127 trillion (US$6 billion) in the first six months of this year.
Automobile imports surge despite slow growth
Viet Nam has bucked economic difficulties in August 2014 to achieve its highest level of car importation since 2011.
Figures from the General Statistics Office (GSO) showed that the country imported 6,000 cars worth US$120 million this month, its highest level since July 2011, when it imported 7,000 cars worth $122 million.
The figures for this month brought the total number of car imports in the first eight months of the year to 37,000 units worth $801 million, representing a 71.6 per cent increase in quantity and 90.7 per cent increase in value compared with that of the same period last year.
The country's car importation also maintained a momentum of growth in quantity in the last three months, with 5,000 units in May, 5,800 in June, 5,900 in July and 6,000 in August.
"The struggling economy seems to have no effect on car imports, with most brands reporting better business in the country," said Luong Dinh Hung, General Director of ASC Group, a prominent car importer in Viet Nam.
Meanwhile, the Viet Nam Automobile Manufacturers' Association (VAMA) said that it has readjusted its annual selling rate target to 130,000 vehicles, an 18 per cent increase over that of 2013, following better-than-expected sales results since the beginning of this year.
The association, which represents 21 car manufacturers in Viet Nam, said its members sold 12,609 vehicles in July, marking the 16th consecutive month that industry volume has been higher than that of the same month last year.
Jesus Aria, VAMA chairman, noted that sales from January to July this year also increased to 66,159 units, representing a 29 per cent year-on-year rise.
According to Duong Dinh Giam, Director of Viet Nam's Industrial Policy and Strategy Institute, the country is expected to go through a period of "automobilisation" once annual per capita income rises above $3,000.
"Viet Nam will soon reach a tipping point as incomes are seeing strong growth year-on-year," Giam added.
IMF estimates show the country's per capita income was $1,901 in 2013, the year that witnessed a marked increase in the volume and value of Viet Nam's car imports. In that year, the country imported 34,500 units worth $709 million, representing a 25.9 per cent rise in volume and a 15.2 per cent rise in value year-on-year.
Ha Noi needs logistics improvements
The capital city has a high demand for logistics services but is currently facing a shortage of professional purveyors.
At a conference of the City's Department of Industry and Trade on Wednesday, Tran Nguyen Nam, Deputy Head of the Ministry of Industry and Trade's Domestic Market Department, admitted this and said majority of logistics centres here could only cover an area measuring less than 10 hectares, meaning they could only cater to the needs of local businesses.
Nam said the logistics industry of the city in particular and Viet Nam in general were still small-scale and could not meet the demands of the economy.
In addition, shortcomings in employee qualifications, management methods and the legal framework, as well as the general course for development, are hampering the sector's growth, he added.
Domestic businesses are finding it difficult to compete with multinational groups or companies backed by international investors. These businesses currently dominate the logistics market and set themselves apart from domestic logistics services through professional organisational structures and effective operations.
Official data estimated the number of logistics purveyors in the capital city, including State-invested, joint venture and private companies, to be about 800.
Foreign logistics companies accounting for a mere two per cent of the total number but have an 80 per cent market share. Private companies account for a majority but are mostly small-scale, with an investment capital of less than VND8 billion (US$377,500).
Nguyen Tuong, a representative of the Viet Nam Logistics Business Association, pointed out that the cost of logistics services in Viet Nam were currently high, accounting for nearly 21 per cent of gross domestic product. Transportation costs alone make up for up to 60 per cent of total logistics costs.
Accoring to Nguyen Thi Thu Ha of Dragon Logistic Company Ltd, infrastructure shortage is a major factor behind the price of logistics services in Viet Nam, which are higher than that of other countries in the region.
In addition, changing customs procedures, coupled with informal charges, have reduced the competitiveness of logistics firms, a participant said at the conference.
In response, the city department is urging concerned agencies to develop policies that will speed up the growth of logistics, promote effective workforce training opportunities and build a comprehensive development strategy for the sector.
Logistics firms were also urged to expand their operations, provide improved services at lower prices and enhance cooperation with each other to expand market share
Tuong said that in the short term, Ha Noi should initiate a logistics development project with a vision to 2030, including concrete targets and points of action to turn the city into a logistics hub for Viet Nam.
Meanwhile, Giao Thong Van Tai (Transport newspaper), a unit under the Ministry of Transport, cited figures from the Viet Nam Register showing that the number of companies currently operating in maritime transport have declined from 260 to 140 in the past two years. .
During the same period, the number of ships operating on international routes with a loading capacity of 500 GT (gross tonnage) were also reduced by 73 per cent to 372.
This showed that maritime shipping was in difficulty in recent years, according to Pham Thanh Truong of the Viet Nam Register quoted by the newspaper.
The difficulty was also reflected in the 22 per cent decline in the number of ships undergoing annual quality inspection, at 797.
Investment attraction far beyond expectations: HEPZA
The Export Processing and Industrial Zone Authority (Hepza) on Tuesday announced the total investment capital reached US$566.05 million as of August 19, accounting for 103 percent of this year plan and up 48.28 percent over the same period last year.
Hepza planned to attract US$550 million investment capital this year and the number has gone beyond the plan for four months.
Foreign direct investment totaled US$286 million, up 0.56 percent over the same period last year. Domestic sector invested VND5,892 billion (US$280.11 million), 188 percent year on year increase.
Seafood association proposes dialogue on tra fish decree
The Vietnam Association of Seafood Exporters and Producers (Vasep) has proposed the Prime Minister and the Ministry of Agriculture and Rural Development to hold a direct dialogue with tra fish businesses on a decree of tra fish farming, processing and export.
The government decree on tra fish farming, processing and export has been issued this year and is implemented by the ministry in efforts to streamline the overdeveloped and out of control tra fish industry.
Tra fish processing and exporting companies in the Mekong Delta have raised objections against some regulations in the decree.
Vasep has many times suggested in writing that the Prime Minister and the ministry should change some unsuitable regulations on the fish quality and procedures. However, it has not received any respond yet.
Therefore, the association one again proposed the Prime Minister to instruct related agencies to organize a public dialogue between leaders from the Ministry of Agriculture and Rural Development and tra fish enterprises in the Mekong Delta in early September.
The talk will be attended by representatives from the Ministries of Industry and Trade, Finance, and Justice, the Government Office, the Vietnam Chamber of Commerce and Industry and people’s committees from tra fish farming provinces, according to the proposal.
The dialogue is to prevent wrong information and incorrect evaluation about the businesses’ opinions and find reasonable measures.
According to the decree, tra fish farming locations will be reorganized. By the end of next year, all farms must meet VietGap quality standards.
Businesses are required to register their export contracts with the Vietnam Pangasius Association and get the association’s confirmation for customs clearance.
The decree comprises a floor price regulation to prevent losses for farmers.