Investors leasing new apartments to thaw market

Many property investors have converted apartments for sale to those for lease to cut the selling price.

In the past two years, Vingroup gave up on selling apartments in many projects due to the downturn of the local property market.

A group representative said the move aimed to protect the interests of customers who had already bought apartments, adding that the group had a long-term leasing strategy.

The investor of a luxury apartment project in Le Van Luong avenue also planned to lease the apartments instead of selling them.

At the Elegant Tay Ho project, which has 400 apartments for sale, the investor considered leasing 60 rather than selling them.

Do Quang Lam, deputy general director of Tan Hoang Minh Group, said that whether such conversions were successful depended on the location of the project as well as the financial ability of the investor.

CBRE Vietnam Co Ltd said demand for serviced apartments was still stable in terms of number of inquiries, but tenants' budgets had declined by approximately 10 percent quarter on quarter.

Serviced apartments on the west side of the capital city continued to be in high demand, especially for units in the 1,000-2,000 USD range, due to the emergence of the office hub along Pham Hung road and growing Japanese and Korean communities in the surrounding area.

The upcoming Samsung factory in northern Thai Nguyen province is also expected to generate increased demand for serviced apartments in Hanoi and on the edge of the city.

Rents are expected to become more competitive due to companies' tightened budgets. In terms of location, the Tay Ho area will face pressures to reduce rents as more supply comes on line, particularly when Lotte Center Hanoi opens in the second quarter of 2014.

Projects in the central business districts (CBD) still face competition from new projects on the western side of the city.

Unsold condominiums or parts of hotels are being increasingly converted into serviced apartments and other serviced apartment projects are considering expansion possibilities, especially in the Tay Ho area.-

Golden promotion days boost sales in Hanoi

A golden promotion weekend held on November 16-17 tripled the number of customers at supermarkets and shopping centres in Hanoi, bringing a sudden increase in revenue to enterprises.

On November 16 alone, sales at the three golden sales points greatly contributed to the over 30 billion VND (1.4 million USD) revenue of the HC electronic and telecom stores system, according to HC Marketing Director Nguyen Hong Tien.

Since early November, HC stores have earned nearly 190 billion VND (9 million USD) in turnover, a sharp increase over the previous months.

Thanks to the promotion events, customers to the Pico mall increased 75 percent, bringing 20 billion VND (950,000 USD) to the owner, over two times more than on other Saturdays. The figure for the final promotion day is expected to further increase, said Pico’s Marketing Department Director Nguyen Quang Duc.

The company has prepared a broad selection of products to better serve the customer during the promotion month, Duc said.

Other general supermarkets also witnessed a significant increase in the number of shoppers.

During the two days of promotion, customers at Big C Thang Long enjoyed up to 49 percent discounts on a variety of products including household utensils, kitchen aids and electronic products.

During this year’s promotion month, Hanoi has organised 25 golden sales points at general supermarkets and large trading centres.

It offers the capital city’s shoppers a good chance to buy high quality products at reasonable prices.

Businesses also have an opportunity to resume and maintain the number of customers, which has fallen significantly due to the economic downturns.-

Vietnam strives to boost green growth

The involvement of authorities at all levels, enterprises, social organisations and people in developing green cities in Vietnam through promoting green growth is urgently needed.

The suggestion was made by General Secretary of the Association of Cities in Vietnam Vu Thi Vinh during a recent interview with Vietnam News Agency.

Green growth plays an important role in ensuring sustainable and effective economic development in Vietnam , significantly contributing to implementing the national strategy on climate change, Vinh said.

In 2012, the Prime Minister approved t he National Green Growth Strategy for the 2011-2020 period with a vision to 2050.

Green growth has been of increasing concern to many countries in the world in recent years. It is considered the shortest way towards sustainable economic development as it contributes to creating jobs, reducing poverty and improving the material and spiritual life of all people.

The establishment of a green growth economy is based on an investment increase in protecting the environment, development and efficient use of natural resources , reduction of greenhouse gas emissions and the improvement of environmental quality , thus stimulating economic growth, Vinh stressed.

On the other hand, green growth development should also be based on science and modern technologies which are suitable to Vietnam ’s conditions, she added.

Vietnam set a target of urbanising sustainably through making and managing plans. Areas which are affected by climate change are required to adjust infrastructure development appropriately to reduce losses to the economy.

The country has over 760 urbanised areas, of them 111 are cities and towns, Vinh said, noting that urbanisation, industrialisation and modernisation have brought many remarkable economic achievements, changing the landscape of Vietnam ’s urban areas.

However, urban development also shows many limitations, having a negative effect on natural resources and causing water pollution, she added.

For the success of green growth, political resolve of authorities is very important, according to the expert, who also underlined the important role played by enterprises and the private sector. She said enterprises should apply modern technologies to increase effectiveness of production and create environmentally friendly products, contributing to boosting sustainable development.

At the same time, people, as “green consumers”, should not use products that will damage their health and the environment. They are entitled to ask providers to create and supply eco-friendly products and services. Changes in awareness and habits in purchasing and using goods will contribute to changing society for the better.-

Over 3,000 southern farmers follow VietGAP rice field model

As many as 3,300 farming households in southern Tay Ninh province reaped great economic profits from this year’s crops by following the VietGAP large-scale model of cultivation.

Under the model, the farmers received technical support and applied advanced farming methods to reduce rice production costs and minimise harmful effects caused by pesticides.

Farmers cultivated a combined 5,400 ha of rice plantations, in collaboration with staff from the province’s plant protection stations and with technical consultation from the Plant Protection and Cultivation Departments under the Ministry of Agriculture and Rural Development.

During the year’s winter-spring and summer-autumn crops, the rice production of local farmers reached an average of 6.2 tonnes of rice per hectare, up 300kg compared to previous crops.

Notably, they could reduce production costs by 1.3 million VND (61.61 USD) while their income increased by 3 million VND (142 USD) per hectare thanks to their involvement in the model.

The province is expected to raise the area of VietGAP rice cultivation to 6,000 ha with the participation of 4,000 farming households and will establish several co-operatives producing quality rice varieties to meet farmers’ demand and help improve the effectiveness of rice cultivation.

Italian press: Vietnam to be attractive destination for investors

With the signing of the Trans-Pacific Partnership (TPP) Agreement, Vietnam will become an attractive destination for foreign investors as it boasts an abundant, young and skilled workforce.

So said Italy’s biggest economic daily “Il Sole 24 Ore ” in a recent article titled “ Vietnam: the signing of the TPP will bring new opportunities for foreign companies.”

The article, published on November 13, said that Vietnam, with its young population and rapid development, has integrated into the 610 million-strong ASEAN, one of the most attractive economic regions in Asia.

The upcoming TPP signing will allow Vietnam to share its prospects with a 12-country bloc that accounts for 40 percent of the world’s GDP and one third of global trade, it said, adding this is a big chance that Italian businesses can not miss.

According to the article, Vietnam is also attractive for investors because of a Free Trade Agreement (FTA) it expects to sign with the European Union (EU) in 2014.

Through the FTA, the Italian Government hopes that Vietnam will open its door for foreign investors to areas that they find otherwise difficult to access, such as pharmaceuticals, financial services, phones and food.

Meanwhile, Italy ’s news agency ANSA described Vietnam as a gateway to the Southeast Asian market for made-in-Italy brands. It quoted Italian Ambassador to Vietnam Lorenzo Angeloni as saying that Vietnam is a country full of potential and acts as a bridge for Italy to reach out to major markets in Asia.

Italy now ranks ninth among EU countries investing in Vietnam , with 50 projects capitalised at 257 million USD by September this year.

Vietnam ’s exports to this European market increased to 1.8 billion USD last year.-

Workshop looks at sustainable product innovation

A comprehensive overview of product innovation and the move towards sustainability in Viet Nam to date was discussed at a workshop in Ha Noi on Thursday.

Under the theme "Product Innovation – Key for sustainable Future", the workshop also included sustainable design developments from Southeast Asia.

Specifically, it reported on achievements and experiences of the Sustainable Products Innovation (SPIN) project in Viet Nam, Laos, and Cambodia which began in April 2010 and wraps up this December.

SPIN worked with more than 500 small and medium entrepreneurs in four sectors; textile, furniture, handicraft, and packaging.

It has supported them in innovating with product design, product strategy and clean technology consultancy.

According to the Regional Project Coordinator Nguyen Hong Long, SPIN created clusters of sustainable technologies and a community of entrepreneurs with a strong commitment to sustainable development, which will be the foundation for a sustainable future in Viet Nam.

"Through the project, most companies now understand that it would be not too difficult to re-design their products and still ensure their competitiveness," he said.

He also added that these companies have been motivated to take action in product innovation and technology transfer in order to utilize waste to create the input materials for production and to use natural resources efficiently.

More than 30 sustainable technologies have been developed, utilized and bunched into smaller groups to be applied to the natural conditions of Viet Nam and the specific context of its business environment.

In detail, Renewable Energy, Renewable Materials and the Zero-waste Knowledge Farm are considered more successful.

The model of a zero-waste knowledge farm embodies 25 sustainable technologies to create a closed loop process in order to maintain a balanced environment for crops and livestock.

The model, developed from a traditional agricultural model integrated with new applied technologies, has been deployed in 10 households in the suburban districts of Ba Vi and Soc Son outside Ha Noi.

The SPIN project, implemented in Viet Nam, Laos and Cambodia, is hosted by the Delft University of Technology, the Netherlands with the participation of the Viet Nam Cleaner Production Centre, UN Environment Programme, Asian Institute of Technology in Viet Nam, Lao National Chamber of Commerce and Industry, and Cambodia Cleaner Production Office.

Under the programme, 2,000 products have been re-designed and newly-designed to be environmentally friendly, non-poisonous to human health, and are to be launched on the market.

They include handicraft products, bags, kitchenware and furniture.

Total cost of the project is EUR2.8 million (US$3.8 million), of which 80 per cent is funded by the SWITCH-Asia programme of the European Union.

Vingroup official bond issuance debuts on Singapore Exchange

The international bonds issued by real estate giant Vingroup (VIC) at the beginning of this month hit the Singapore Stock Exchange on Thursday.

Vingroup debuted on the international debt capital market with a US$200 million issuance of 4.5 year bonds, which were snapped up by more than 100 investors.

In the first nine months of this year, Vingroup earned more than VND11.6 trillion ($552.38 million), an increase of 129 per cent over the same period last year and 95 per cent of the company's annual goal.

After-tax profits in the nine-month period reached VND6.05 trillion ($288.09 million), up 311 per cent over last year.

A majority of the group's turnover in the third quarter came from apartment sales at its two major projects, Royal City and Times City in Ha Noi.

The group's other businesses also performed well, including office leases (up 44 per cent), hotels (up 31 per cent) and healthcare services (up 81 per cent).

The total asset value of Vingroup was estimated at VND61.58 trillion ($2.93 billion), VND5.756 trillion ($274.09 million) higher than the end of 2012.

Each share of the HCM City-listed company currently sells for VND66.500 ($3.12).

Dong Nai earns $24 million from cashews

The southern province of Dong Nai has so far this year exported 40,000 tonnes of cashew nut oil worth US$24 million.

Chairman of the provincial Cashew Association Nguyen Thai Hoc also revealed that Viet Nam exports 60,000 tonnes of cashew nut oil a year, earning $50 million.

The extraction of cashew nut shell liquid not only brings economic benefits to the producers but also provides jobs and positively impacts the environment, said the Chairman.

Of the country's total 80 million tonnes of cashew nut shell liquid output, Dong Nai's production accounts for 60 per cent, he added.

He made known that the province produces hundreds of thousands of tonnes of oil a year and exports its products to not only China but also Japan and the EU.

Many producers have applied modern technology for higher export value as well as supplying material for other industries in the province, Hoc said.

New VN leather brand looks at new market

A new luxury leather brand launched by a local entrepreneur seeks to fill the void created by the dominance of foreign products and imitations made in China.

Felix Leather opened its website www.felixleather.com on Wednesday, showcasing its first collection FFFWXIII, which features what the firm says are environmentally-friendly products, including handbags, smartphone cases and table covers.

Ho Huu Luc, chief designer of Felix Leather, said that he ensures the products use certified accessories from Viet Nam and raw material from India.

Deposit, lending rates inch ever closer

The domestic financial market is witnessing a rare phenomenon that is lending and deposit interest rates have get so close to each other.

Within three recent months, many banks have silently or noisily participated in a race in raising deposit interest rates to mobilise more money from the public.

Agribank typifies the trend. The interest rate of its deposits with the three-month term has increased by 0.5 per cent to 7 per cent per year, while the interest rate of over 12-month deposits has climbed to 8 per cent per year.

Vietinbank has increased the interest rate of dong deposits with less three-month terms from 6 per cent to 6.5 per cent per year, and those with terms from 3 and 7 months to 7 per cent per year.

A similar situation is also seen at Vietcombank at which the interest rate of deposits with terms from 6 to 12 months has been raised to between 7 and 7.5 per cent per year. The rates of 6.5 or 6.8 per cent have been applied to deposits with terms from two to three months.

The deposit interest rate race at commercial banks seems more tense. After Techcombank has raised the interest rate of less 12 month deposits to 6.75 and 7.45 per cent per year.

While the banks are vying with each other to raise their deposit interest rates they have also made efforts to cut their lending interest rates, sometimes making them even lower than their deposit rates.

ABBank, for instance, has recently launched a VND1.5 trillion (US$70 million) preferential credit package with the interest rate of only 7.9 per cent per year for enterprises. The lending rate is only 0.4 per cent higher than the deposit rates of Oceanbank, Vietcombank and Techcombank.

On the occasion of its 20th anniversary, SHB has offered the lending interest rate of only 8 per cent for enterprises.

Meanwhile, OceanBank is lending household-based businesses at the interest rate of just 8.5 per cent per year, 1 or 1.5 percentage point higher than the popular deposit rates.

Some commercial banks are even ready to get loss when they offer consumer loans at the interest rate of just between 5.99 and 6 per cent per year to enterprises and individuals to help them buy autos and housing.

According to a CEO of a commercial bank in HCM City who declined to be named, the disparity between the lending and deposit rates now is under 3 per cent, much lower than the 5 per cent level in the previous time.

A source from the State Bank also says that the ceiling interest rate of 7 per cent is being applied for under 6-month deposits, down by 2 or 3 percentage points as compared with the rate recorded in early the year.

Meanwhile, the lending interest rate of 9 per cent is applied to the five prioritised sectors, down by 3 or 5 percentage points.

As a result, the interest rate spread between loans and deposits is only 2 per cent per year.

With such a small disparity, the banks' profit is predicted to significantly reduce while the banks will have to use a majority of it for the risk prevention fund (provision for bad debts), paying deposit insurance premiums, and other operating costs.

This also means that the banks would find it difficult to realise their profit targets set for the year.

Appetite for gold

On November 8, the State Bank of Viet Nam sold 14,800 gold taels of the 15,000 that it offered at its 69th auction. The remainder of 200 taels was par for the course, with previous auctions recording similar figures.

However, a representative of the SJC Company who did not want to be named, said trading in gold taels was very slow on those days.

His company was only trading between 700 and 2,000 taels each day, much lower than the 8,000 to10,000 taels recorded during the same period last year.

While people seem to have turned their back on gold, they have queued to buying gold jewellery in great quantity.

Many factors have contributed to this change from the long-standing habit of keeping savings in gold bars. One factor is the disparity between domestic and global prices of gold bullion is too large, often at over VND3 million, or even between VND5 and 6 million per tael.

Also, people cannot deposit their gold at banks, and the number of places where they can trade their gold bars has reduced significantly. So thousands of shops that once traded in gold bars now just sell jewellery.

"The people who are saying no to gold bullion are shifting to 24-carat gold jewellery, mainly gold rings.

This is because the price of pure gold jewellery is not so different from the global rate, and it can be easily sold at any gold shop," said Nguyen Van Dung, chairman of the HCM City Association of Fine Arts, Gold Jewellery, and Gemstone.

The owner of a gold shop in southern Long An Province's Ben Luc District also said that people's demand for pure gold jewellery had risen ever since the gold bullion market was tightened.

He said transactions related to gold bars in the locality decreased sharply and locals shifted to keeping their savings in pure gold rings.

The sharp decrease in demand for gold bullion suggests that the central bank should reconsider conducting less gold bullion auctions .

Some analysts say that the domestic gold market should be let to work as it used to, meaning enterprises should be allowed to continue importing the precious metal and the central bank should act as a manager of the market, not continue its current role as a gold trader.

They expect the central bank to face liquidity problems if it continues to auction gold. It would have to use a lot of dollars to import gold for auctions, and this could create a local shortage of the greenback.

In addition, when the central bank is directly participating in trading gold as it is doing now, it will face the risks associated by fluctuations in gold prices, as will the domestic gold market.

But there are others who still support the central bank's gold auctions.

They say that the auctions, held for nearly one year, has helped stabilise the gold market, and pushed domestic and global prices closer to each other. But they also feel that the frequency of such auctions should be reduced.

Export growth

Although Viet Nam, like many other countries, has faced innumerable difficulties because of the prolonged economic downturn, some domestic industries have still achieved remarkable growth rates, making positive contributions to recovery.

The textile and garment industry is among the industries that have led the country in boosting export values.

In the first 10 months of the year, it posted an 18.5 per cent year-on-year growth in export value, and expects to earn US$2.5 billion by the year-end.

Similarly, after the US International Trade Commission announced that Vietnamese shrimp products exported to the country did not have to face any anti-subsidy duties, that sector has shown strong signs of picking up.

In the first 10 months of the year, $10 billion worth of shrimps were shipped, making the greatest contribution to the entire seafood industry's total export value $5.38 billion.

Tra fish has also become a leading seafood export earner with shipments so far valued at over $1.23 billion.

Despite these success stories, the sectors are still struggling.

Enterprises exporting shrimp and catfish, for instance, face a severe shortage of materials for processing. Even in provinces that have large areas of shrimp farms, like Ca Mau Bac Lieu, Soc Trang and Kien Giang, local firms are not able to find enough raw material for processing.

Many seafood processing plants in these localities complain that they can only run at 40 to 50 per cent of their capacity.

According to a representative of the Ca Mau Seafood Processing Association, many Chinese enterprises came to Viet Nam and bought raw shrimps from farms in the delta, thus causing a shortage for local processors.

The shortage has pushed shrimp prices very sharply, imposing much higher costs on seafood exporters.

In fact, shrimp prices have recently increased strongly by VND40,000-VND50,000 per kilo, according to Bac Lieu Province's Industry and Trade Department.

Meanwhile, tra fish prices have surged VND4,000- 5,000 to VND23,500 and 24,000 per kilo.

From now until the end of the year, tra fish exporters will need about 300,000 tonnes of materials for processing, but the domestic market can supply only 50,000 tonnes, some reports say.

Explaining the shortage, analysts say that supply has become seriously short because farmers who incurred heavy losses in previous crops have left fish ponds idle.

In fact, many of them want to continue farming, but they cannot borrow capital from banks without repaying old debts.

Meanwhile, only 30 out of 70 tra fish processing establishments have their own farms, so the others have to rely on supply from individual farmers.

Seafood exporters need to do several things to deal with the situation, officials and industry insiders say.

They say the firms should develop their own production farms, source guaranteed quality raw material from other countries and effectively promote sales if they are to succeed in current market conditions.

FDI boosts property sector in Binh Duong

An influx of foreign direct investment projects is warming up the real estate market in southern Binh Duong Province.

According to the province's Department of Planning and Investment, the many foreign-invested projects currently underway.

These include a Taiwanese-invested project capitalised at US$1.7 billion, a $1.2 billion-Tokyu Binh Duong Garden City project developed by Becamex Tokyu Co and the $170 million EcoXuan project financed by Malaysian Setia Lai Thieu Co.

Detailed planning, improved infrastructure and streamlined administrative procedures made the province an attractive destination for foreign investors, local experts said.

Binh Duong's lower prices as compared to its neighbour HCM City also make it an attractive destination.

Nguyen Thi Hong, a buyer from HCM City, said that she had come to Binh Duong because of the low prices, which ranged from VND3 million ($143) to VND3.5 million ($167 million) per square metre.

Demand for housing remained strong despite the frozen real estate market, said Tac Dat Tac Vang Corporation general director Nguyen Vu Khoi.

However, local people found it difficult to buy into these projects because the prices were much higher than their income.

Investors leasing new apartments to get property market moving

Many property investors have converted apartments for sale to apartments for lease to cut the selling price.

In the past two years, Vingroup gave up on selling apartments in many projects due to the downturn of the local property market.

A group representative said the move aimed to protect the interests of customers who had already bought apartments, adding that the group had a long-term leasing strategy.

The investor of a luxury apartment project in Le Van Luong also planned to lease the apartments instead of selling them.

At the Elegant Tay Ho project, which has 400 apartments for sale, the investor considered leasing 60 rather than selling them.

Do Quang Lam, deputy general director of Tan Hoang Minh Group, said that whether such conversions were successful depended on the location of the project as well as the financial ability of the investor.

CBRE Viet Nam Co Ltd said demand for serviced apartments was still stable in terms of number of inquiries, but tenants' budgets had declined by approximately 10 per cent quarter on quarter.

Serviced apartments on the west side of the capital city continued to be in high demand, especially for units in the US$1,000-$2,000 range, due to the emergence of the office hub along Pham Hung Corridor and growing Japanese and Korean communities in the surrounding area.

The upcoming Samsung factory in northern Thai Nguyen Province is also expected to generate increased demand for serviced apartments in Ha Noi and on the edge of the city.

Rents are expected to become more competitive due to companies' tightened budgets. In terms of location, the Tay Ho area will face pressures to reduce rents as more supply comes on line, particularly when Lotte Center Hanoi opens in the second quarter of 2014.

Projects in the central business districts (CBD) still face competition from new projects on the western side of the city.

Unsold condominiums or parts of hotels are being increasingly converted into serviced apartments and other serviced apartment projects are considering expansion possibilities, especially in the Tay Ho area.

Delta province eyes Japanese cash flow

The provincial authorities of Tra Vinh have called for Japanese investment in 19 major projects in agriculture, forestry and aqua-culture during a seminar in HCM City on Tuesday.

Representatives from Tra Vinh said the province has been attracting investment for projects that would breed tra fish for export along the Tien (Anterior Mekong) and Hau (Posterior Mekong) rivers.

The province called for an investment of VND600 billion (US$28.4 million) for a project to grow fruit trees on 5,000ha, and another investment of VND300 billion for a project to cultivate hi-quality rice for export.

Tra Vinh also asked Japanese firms to invest in building facilities in the province's industrial parks such as Dinh An, Cau Quan and Co Chien.

Dong Van Lam, deputy chairman of the Tra Vinh People's Committee, said the province would take measures to curb hindrances facing the province's economic development such as underdeveloped infrastructure.

Administrative reforms will be further enhanced to create favourable conditions for investors, said Lam.

Tra Vinh University, which has established cooperative relations with 62 partners from 11 countries and territories around the world, will be able to supply a high-quality labour force for investors, he said.

In addition, preferential tax rates will be offered to investors that come to Tra Vinh, located 120km from HCM City, he added.

Tra Vinh's Long Duc Industrial Park has 26 tenants, including 12 foreign-invested enterprises and 14 others invested by local companies, with total investment of VND2,027 billion (US$96 million).

Nation cements tighter trade ties with India

Vietnamese and Indian entrepreneurs came together at a business forum in New Delhi yesterday to discuss the investment climate and opportunities in both countries.

Le Thai Hoa, deputy head of the Department of Africa, West Asia and South Asia Markets under the Vietnamese Ministry of Industry and Trade, highlighted the traditional friendship between Viet Nam and India first set up by late President Ho Chi Minh and Indian Prime Minister Jawaharlal Nehru.

He noted that both countries had signed a number of co-operation agreements on trade, double taxation avoidance and promoting investment stimulation.

The two parties released a joint statement on a comprehensive co-operation framework for the 21st century and sealed a Memorandum of Understanding recognising Viet Nam's market economy.

India is one of Viet Nam's key economic partners, with two-way trade recorded at over US$3.9 billion in the first nine months of this year.

Viet Nam mainly imports corn, animal feed, medicine, iron and fabric from India while exporting computers and mobile phones, machinery, coffee and rubber.

However, bilateral exchanges have yet to match potential, Hoa said, suggesting that local authorities from the two countries actively realise the terms set in co-operation documents, especially the ASEAN-India Free Trade Agreement, in order to create favourable conditions for their respective enterprises.

Businesspeople of both nations should increase exchanges to seek partners and partake in trade fairs and exhibitions, Hoa added.

Participating businesses took the occasion to introduce themselves to potential partners and learn the latest news about the business environment.

Real estate sector not yet out of woods

Despite early indications that market sentiment is improving after a lackluster period of several years for the real estate sector, a number of key areas should be examined before champagne corks are popped.

The comment was made by to the latest report from Jones Lang LaSalle Viet Nam, a global real-estate services firm.

The report notes that inflation in September was 6.3 per cent, far lower than its peak of 22 per cent in September 2011.

Interest rates fell from 15 per cent in early 2012 and stand at 7 per cent, with further decreases on the horizon, according to the report.

Foreign direct investment has reached US$15 billion, up 36.1 per cent year-on-year, although considerably behind the dizzy heights of $71 billion registered in 2008.

For the first time in many years, the country has registered a small but significant trade surplus which stands at $124 million, and GDP growth stands at 5.14 per cent, with steady improvement quarter-on-quarter.

The VN Index has seen a dramatic increase of nearly 34 per cent over the past 12 months.

Disbursements into the country are ranked 10th in the world, reaching $8.6 billion in the first nine months, while the foreign exchange rate between the US dollar and Vietnamese dong is stable at about 21,100.

All of these factors paint a much improved and a considerably more stable economic picture, the report said.

"The banking sector continues to attract all the headlines and will prove to be the single most critical factor in determining the speed of the recovery." the report said.

"If the current level of non-performing loans can be reduced and absorbed by the newly formed Viet Nam Asset Management Company, we will see a faster momentum in the recovery of the market as much needed credit will start being released," it said.

The big question is whether the structure of VAMC will prove an effective and adequate vehicle in dealing with bad debt, according to the report.

The report notes that the property market experienced a meteoric rise and fall in the past 15 years, which has seen many investors, developers and owners make and lose considerable sums of money.

It is unlikely the property market will see these peaks and troughs again in the near future.

"The downturn was inevitable as the speed and rate of growth was unsustainable and we are now seeing a correction in the market, resulting in more realistic and affordable prices and rentals being achieved," said Stephen Wyatt, country manager of Jones Lang LaSalle Viet Nam.

"However, many owners and developers consider their property values have not been affected by the downturn and continue to market their properties based on historic values," he added.

The proposed loosening of legislation on foreign ownership will assist the property market, provided that the legislation is clear and transparent and is in line with other countries in the region.

However, local parties need to understand that foreign investors will only invest in projects that are commercially viable and fit their investment strategy, based on medium – to long-term objectives.

The report concludes by saying there was more positive than negative news and the economy was in a much better position but that challenges remain.

It pointed out that the banking sector will need to restructure and lower the level of non-performing loans and start to increase lending.

Economic conditions will need to remain stable and show steady improvement, with lower inflation, interest rates and a stable VND/US$ exchange rate, it added.

Legislation will need to continue to loosen, attracting further interest from foreign investors.

The formation of the Trans Pacific Partnership (TPP) and ASEAN trade agreements will further boost Viet Nam's property market revival going forward, the report noted.

"The overall message is that the champagne can be put on ice, but it is still too early to open it," the report said.

SBV rolls out credit restructuring

The State Bank of Viet Nam (SBV) has identified a further eight credit institutions to undergo restructuring, calling for immediate plans to improve bottom lines, revealed SBV Governor Nguyen Van Binh.

In a report to the National Assembly, Binh said that the eight includes two banks and six non-bank credit institutions.

These institutions would have to submit restructuring plans for approval in order to ensure stringent management in accordance with a restructuring plan laid out for the 2011-15 period.

Under the plan approved by the Prime Minister, the central bank named nine credit institutions in the past two years that needed to be restructured; with controls handed down to improve the management of finances.

To date, eight out of them have completed the first phase of the approved restructuring plan on a voluntary basis.

The remaining bank will consult with SBV before seeking guidance from the Prime Minister on a voluntary restructuring, potentially with the involvement of foreign credit institutions.

SBV has so far received restructuring plans for 24 out of 25 joint stock commercial banks and approved the plans of 11 out of 25 banks.

It is also considering the restructuring plans for four banks and waiting on adjustments for nine banks.

For State-owned banks, SBV has directed banks that have completed their equitisation to complete appropriate restructuring plans to 2015, to submit to the Prime Minister for approval.

The performance of credit institutions has improved markedly with total assets rising by 5.53 per cent by the end of September to VND5,376 trillion (US$244.36 billion), according to SBV's new data.

Among the total, assets of State-owned commercial banks increased 7.04 per cent to VND2,356 trillion ($107.09 billion) and the rising rate of joint stock commercial banks was 2.88 per cent, equivalent to VND2,221 trillion ($100.95 billion).

Compared with late August, asset levels surged by more than VND83 trillion ($3.77 billion), of which State-owned commercial banks and joint stock commercial banks made up VND35.3 trillion ($1.6 billion) and VND42.78 trillion ($1.94 billion), respectively.

Meanwhile, reports on the third quarter showed the banking system's total equity holdings also grew by 6.87 per cent, compared with the end of last year, to VND455.236 trillion ($20.69 billion).

SSC encourages firms to consider market flotation

Healthy and transparent companies could still eschew difficult economic conditions by raising capital through stock market flotations.

This was heard at a Ha Noi conference jointly held by the State Securities Commission and Ha Noi Stock Exchange on Thursday.

At the conference, deputy director of the State Securities Commission's Department of Issuance Management Bui Hoang Hai said securities offerings had slowed down in recent years after their 2007-08 peak.

SSC statistics showed that in the 2007-08 pre-crisis period, the total value of shares issued hit VND100 trillion (US$4.76 billion), in comparison with the modest sum of VND1.7 trillion ($809.5 million) seen in the first seven months of this year.

Hai pointed out that market difficulties and share values slipping below their offering prices were among the main causes.

Many companies' registry documents for shares issuance also failed to meet requirements and had to be rejected, he added.

At the conference, many companies said now was not the right time for listings or securities offerings, especially in light of many listed companies leaving stock exchanges due to losses or difficulties in raising capital.

Director of the Ha Noi Stock Exchange Tran Van Dung agreed that cash flow problems remained for listed companies in current conditions.

However, healthy companies with transparent management had lots of opportunities to raise capital from securities offerings, Dung said.

Hai added that the stock market had seen recent improvements as the economy began to show signs of a revival.

"It is time for unlisted enterprises to put their securities offerings into consideration," he said.

To create advantageous condition for companies, the SSC proposed applying restricted securities auctions to those which failed to fulfill offerings requirements.

Vice Director of the SSC's Inspection Department Vo Thanh Huong said Decree 108/2013/ND-CP, which came into force yesterday, would tighten punishments for slow listings.

Accordingly, joint stock companies which do not implement securities offerings within one year will be fined between VND100-150 million ($4,700-7,150).

This aims to hasten joint stock company listings and enhance transparency.

Statistics showed there were 3,000 joint stock companies nationwide, however, less than 1,000 were listed.

VN welcomes foreign investors

More than 600 foreign investors were granted stock transactional codes in the first ten months of this year, up nearly 40 per cent over the 2012 figure, according to the Viet Nam Securities Depository Centre.

Strongest interest from foreign investors was seen in March, April and May when on average 90 foreign investors were granted codes.

Not only blue chip but also small-cap and mid-cap firms attracted foreign capital. The operation of open-end funds helped foreign investors to indirectly hold blue chip vouchers

According to Cao Sy Kiem from the National Financial and Monetary Policy Advisory Council, as quoted in Dau Tu Chung Khoan (Securities Investment), the strong increase in the number of foreign investors being granted transactional codes this year reflected the overseas investors' interest in Viet Nam's stock market.

Foreign investors saw the stock market as an attractive investment in both the short and long terms, he said, adding that the proposal to raise the threshold for foreign ownership in local companies, which currently sits at 49 per cent, was a source of encouragement for foreign shareholders.

However, important factors in reassuring overseas investors included a complete legal framework and transparency.

Assab Viet Nam Steel company put into action

Sweden's Assab Pacific Group officially opened the Assab Viet Nam Steel Plant in southern Bien Hoa City's Amata Industrial Park.

The company is equipped with modern production lines that meet international standards with an initial design capacity of 400 tonnes per year. The project was granted a license in October 2012.

Assab aims to become the leading foreign distributor of quality steel tools and services in Viet Nam.

The firm specialises in manufacturing tool steel for blanking and forming of materials, die casting, extrusion and plastic moulding in cold conditions.

Vinamotor invests VND140 billion in Bac Giang venture

The Viet Nam Motor Industry Corporation (Vinamotor) received a license to invest in manufacturing automobiles in Dong Vang in the northern province of Bac Giang.

The VND140 billion (US$6.6 million) project has an annual production capacity of 3,000 buses and 5,000 lorries.

The province also granted an investment license to DV motor company for a VND16.5 billion project to manufacture motorbikes and electric bikes.

Medi Pharm Expo to open in Ha Noi next month

More than 150 local and foreign enterprises have so far registered to attend the Viet Nam International Hospital, Medical and Pharmaceutical Exhibition (Viet Nam Medi Pharm Expo 2013) in Ha Noi.

The 20th annual exhibition will be held at International Centre for Exhibition (ICE), 91 Tran Hung Dao Street, from December 4-6, said the organising board.

This event is expected to welcome exhibitors from countries and territories such as India, Russia, Germany, New Zealand, United States, Republic of Korea, China, Singapore and Thailand, added the organising board.

Notably, medical machinery and especially modern equipment used in minor surgery will be displayed at the booths of Russia and the Republic of Korea.

The expo is co-organised by the Ministry of Industry and Trade, the Health Ministry and the Viet Nam National Trade Fair and Advertising Company (Vinexad).

Over 500 contracts signed at 2013 Int'l Agro Fair

As many as 519 memoranda of understanding and cooperation contracts totally worth over VND150 billion (US$ roughly 7 million) were signed during the 2013 International Agriculture Fair.

The week-long event wrapped up in the Cuu Long (Mekong) Delta city of Can Tho on Thursday.

According to organisers, the fair successfully acted as a bridge linking the Government, scientists, farmers and businesses, thus enhancing farmers' insights into the integration period.

During the event, enterprises also clarified their business strategies, expanded trade promotion and trademark communications, and introduced their products.

Among the 5,000 products displayed at the fair, there were 1,000 new categories of machinery, agricultural equipment, fertilisers, pesticides and new and productive rice seeds as well as new agro-forestry products.

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