VN aims for stable timber supply
 
Viet Nam has drawn up plans to sustainably grow its wood product processing industry by 2020, according to the Minister of Agriculture and Rural Development.

The industry is to give priority to investing in and utilising domestic forests while reducing raw wood exports and better managing supply.

Minister Cao Duc Phat said the modernised and market related processing and trade of wood products would be key to economic development.

By 2015, small- and medium-sized factories would be reviewed and upgraded accordingly before attention shifts to large-scale establishments, Phat added.

Nguyen Ton Quyen, general secretary of the Viet Nam Wood Product Processing Association, said that quality and growth in the industry had been low and unsustainable.

Viet Nam needs an annual average 3-3.5 million cubic metres of raw wood materials while domestic supply is currently only capable of meeting 20 per cent and foreign imports 80 per cent.

By 2020, the nation expected to import 4-4.5 million cubic metres yearly, Quyen said.

Therefore, the government should offer soft loans to investors to increase raw material supply.

Quyen added that the State should grant certification to create a legal basis for the sustainable development of large-scale forests.

The Department of Agricultural, Forestry Product Processing and Trading and Salt Industry said the nation presently had 3,900 wood processing enterprises, 95 per cent of them private firms.

Foreign-invested enterprises make up only 16 per cent of total wood processors, but hold 50 per cent of total export volume and value.

Last year, Viet Nam gained a year-on-year increase of 15.13 per cent in the export value of wooden products to around $4 billion. It is expected to increase by 12 per cent to $4.37 billion this year.

Key export markets include the US, the European Union, Japan, China, South Korea, Australia and Canada.

Markets slow on inflation worries
 
The VN-Index concluded Friday at 438.52 points, a gain of 1.48 per cent over the previous week's close. The VN30, which tracks the HCM City Stock Exchange's 30 best stocks, also rose by 2 per cent to 496.87 points.
The average daily value of trades during the past week declined by 24.4 per cent, however, to just VND1.3 trillion (US$61.9 million).

The market fluctuated over the course of the week, with stocks taking a hit on Friday from investor concerns about last week's decision by the Ministry of Finance to hike petrol prices by 10 per cent and the impacts the move was expected have on inflation, with economists now predicting an annual inflation rate this year of 14.5 per cent.

"The possibility of a rise in electricity rates and in inflation in March is getting a lot of investor attention," said Maritime Bank Securities Co analyst Tran Quoc Hoan. "But if the central bank considers a gradual reduction in interest rates, inflation can be controlled."

Among blue chips, heavy gains by such key stocks as food processor Masan (MSN), real estate developer Vincom (VIC) and insurer Bao Viet Holdings (BVH) in some trading days had a distortional impact on indices. Bao Viet posted gains throughout the week, leading an across-the-board gain by insurance shares that average over 19 per cent.

Rumours about possible takeovers also contributed to erratic movements on the market last week, although the rumours actually had a positive influence on indices on Tuesday, when talks of a possible Sai Gon-Ha Noi Bank (SHB) takeover of Habubank (HBB) promoted trading in other banking shares. Officials quickly moved to squelch the rumours.

Logistics firm Gemadept (GMD) was also the subject of talk of a possible takeover.

On the Ha Noi Stock Exchange last week, the HNX-Index closed up by 1.68 per cent to 72.76 points, but the average daily value of trades fell by 7.4 per cent from the previous week to VND878.8 billion ($41.8 million).

Last week, foreign investors were buyers on both bourses by a margin of VND708.2 billion ($33.7 million), with foreign investors in HCM City focusing on Sacombank (STB) and real estate developer Hoang Anh Gia Lai (HAG), while shares of Tien Phong Plastics Co (NTP) were favoured in Ha Noi.

While many stocks on the VN30 Index were heavily sold last week, speculative cash would likely to continue to pour into the Ha Noi market in the coming week, Hoan predicted.

The market could rally this week, but today might be see an additional session in retreat, he said. "It will be a decisive session. If volume is enough to absorb all shares at their peak value, the rally will be defined."

Stocks finish up after erratic morning

Shares fluctuated during today's morning session, tumbling most of the time but finally closing up on both stock exchanges.

Trading value on the HCM City Stock Exchange reached only 61.9 per cent of its level on Friday morning, standing at VND619.2 billion (US$29.4 million) on a volume of nearly 40.9 million shares.

The VN-Index added 0.4 per cent to 440.17 points, while the VN30 rose 0.6 per cent to 499.75 points.

Five of the 10 leading shares by capitalisation posted gains, including Vietcombank (VCB) which hit its ceiling price of VND28,300 ($1.3).

Software developer FPT (FPT), Sacombank (STB) and insurer Bao Viet Holdings (BVH) retreated. Notably, Bao Viet plunged to the floor price after topping the list of insurance stocks last week.

Military Bank (MBB) and Sacombank Securities Co (SBS) were the two most active stocks on the southern bourse with more than 2.9 million shares changing hands.

On the Ha Noi Stock Exchange, the HNX-Index increased 0.8 per cent to 73.34 points.

Trading value dove 38.8 per cent from last Friday morning to VND505.6 billion ($24.1 million), and trading volume reached 54.1 million shares.

VNDirect Securities Co (VND) emerged as the most active code nationwide with 9.6 million shares exchanged, finishing the session at the ceiling price of VND11,100 per share.

The market will resume at 1.00pm.

Container-trains to ease roads' burden

The Viet Nam Railway Corporation has set a target of transporting more than one hundred of the containers from northern Hai Phong Port to outside provinces by rail by 2013.

The goal is included in the corporation's two phase-plan to carry containers by trains rather than trucks to ease the burden on roads, particularly national highways which have been seriously damaged by container transportation.

In the first phase starting this year, trains will carry overweight containers and 40ft containers from Hai Phong Port to Ha Noi and the northern province of Lao Cai. The work is presently carried out by trucks running on Highway 5 and 70.

By carrying 100 40ft-containers and 35 20 ft-containers per day, trains will remove hundreds of lorries from the national highways.

The cost of train transportation on routes over 400km are much lower than that of road transport.

In the second phase of the plan in 2014-15, the corporation will transport containers via other train routes.

The plan is supposed to contribute to traffic safety on the highways.

EVN’s monopoly main reason for high power prices: experts

The monopoly currently held by the Electricity Group of Vietnam (EVN) in the country’s power sector should be completely broken to free consumers from high prices and create a healthier power price management system, a conference heard Wednesday.

“There is a loophole in directive no 24, which allows EVN to hike power prices by a maximum 5 percent” said Vu Xuan Thuyen, a senior expert from the Ministry of Planning and Investment at the conference on power price management in accordance with market forces held by the Institute of Finance.

This means the power selling price can be as high as 10 cents a kWh, while EVN has only paid power generating plants 2 – 4 cents a kWh, added Thuyen.

He said EVN has monopolized the market by buying power at lower prices and selling at far higher rates.

“Inspections should be conducted into the buying prices EVN has made with other power suppliers,” urged Thuyen.

Thuyen continued, revealing that in 2006 EVN reaped VND18 trillion (US$864 million) in revenue by announcing a price increase.

But the entire sum has been sunk in non-core investments, he said.

“If power production grows by 20 percent a year, power prices can be cut by 2 percent,” said Pham Minh Thuy, an official from the Institute of Finance and Economics under the Ministry of Finance, citing figures from a recent study.

Thuy added that many power generators have faced difficulties in negotiating selling prices with EVN.

In response, Dang Huy Cuong, head of the Electricity Regulatory Agency under the Ministry of Industry and Trade, said the current power price is only 6.5 cent a kWh, not 10 cents, as claimed by Thuyen of the Ministry of Planning and Investment.

“It is said that hydropower has a low price, while it has in fact amounted to 4.5 cent a kWh,” said Cuong.

Regarding the troubled negotiations power generators reportedly encountered in dealing with EVN, Cuong said EVN has to demand a purchase price that will not cause it to lose money.

Meanwhile, Doctor Nguyen Thi Dieu Hien, former member of the government’s researcher board, said the power sector still provides large subsidies to the steel and cement manufacturing industries.

“While poor households only receive a monthly subsidy worth VND30,000, the figures granted to the two industries are as much as VND2.5 trillion,” she elaborated.

For his part, Cuong said that if power prices sold to the cement and steel sectors are hiked, the prices of the two commodities will also soar.

“A solution for this is to ban steel exports, or calculate a particular price scheme for steel and cement,” he said.

Thuyen said that while power price increases are inevitable, what should be done is to create a transparent and competitive power market.

“At present, EVN has its hands in all three sectors of the market -- generating, transmitting, and distributing,” said Thuyen.

“Some parts of EVN, such as the Power Selling and Purchasing Co, and the National Load Dispatch Centre, should be detached to be an independent body from EVN.”

As for a competitive power market, Thuyen said it is completely feasible, and can be done immediately.

For instance, the power distribution task should be assigned to non-EVN companies, which will have to win tenders to distribute power directly to households at competitive prices, he said.

Meanwhile Thuy, of the Institute of Finance and Economics, demanded that any power price hikes be approved by the Ministry of Finance, rather than the Ministry of Industry and Trade, which is EVN’s watchdog body.

“Moreover, the Electricity Regulatory Agency should also be separated from EVN,” he added.

US$2 million to be invested to Tay Ninh

A contract was signed yesterday allowing Sopura S.A, the long-standing Belgian chemical company, to be rented out of the 200 ha sport of land in the export processing zone and industrial park III in the southern province of Tay Ninh.

This contract is a long-term foreign investment between Sepzone- Linh Trung Ltd, a company specialising in investing and developing infrastructure of export processing zones and Industrial parks 1, 2 and 3, and the Belgian Sopura S.A.

According to Monique Coppieters, general director of the Belgian company, it will invest about US$2 million in the rented land in order to provide cleaning and sanitising products for the brewing, beverage and food industry and then be exported to Asian and Pacific countries

The plan is expected to begin at the end of this year.

The Export processing zone and Industrial Park III has attracted 67 enterprises and 15,000 laborers to run the businesses. About US$267 million has been invested in the area, said Tay Ninh's authority.

Linh Trung's Export processing zones and industrial parks are a joint venture between Vietnam and China, with a total investment of $55 million for three business infrastructures taking up 300ha of land in industrial areas. The export processing zones and industrial parks 1 and 2 are located in Thu Duc District, Ho Chi Minh City covering about 100 hectares.

Vietnam to test-run first alumina plant in Q2

Vietnam will test-run the country's first alumina plant early in the second quarter starting in April, before moving to full production, a newspaper said on Friday, indicating a slight delay in the project.

Up to 99 percent of work has now been completed at the Tan Rai plant owned by the National Coal and Mineral Industries Group (Vinacomin), Nhan Dan (People) daily said, quoting Vinacomin.

Industry and Trade Minister Vu Huy Hoang, who visited the site in the central highland province of Lam Dong in early March, had asked the alumina plant operator to test-run the facility in April, Vinacomin said on its website.

Alumina is a white powder made from bauxite ore that is used to produce aluminium.

In early December, Vinacomin said alumina production had been delayed until the first quarter of 2012 from an earlier target for the end of 2011 after rain held up construction.

Vinacomin has forecast alumina output at the US$460 million Tan Rai plant at 300,000 tonnes this year, around half its projected annual capacity, ramping up to 500,000 tonnes in 2013 and 650,000 tonnes in 2014.

Vinacomin and China's Yunnan Metallurgical Group (YMG) have a 30-year deal for the Vietnamese firm to sell 600,000 to 900,000 tonnes of alumina to Yunnan Metallurgical each year to feed its smelter, Yunnan Aluminium Industry Co Ltd.

Vinacomin, which is also Vietnam's top coal producer, has also been developing the Nhan Co alumina project in the neighbouring province of Dak Nong, with projected initial output of 300,000 tonnes in 2014, which could be raised to 650,000 tonnes by 2016.

Philippines plans to import rice from Vietnam

The Philippines’s National Food Authority plans to purchase 120,000 tons of rice from Vietnam or Cambodia for its reserve stocks this year, according to Philippines Minister of Agriculture Proceso Alcala.

Alcala said that the Philippines will import rice from Vietnam until 2013 under an agreement signed between the two countries’ governments.

The Philippines is the largest importer of rice in the world with a record of 2.45 million tons in 2010.

The Philippine’s Ministry of Agriculture reported that in the fifth-month crop in 2012, the country is likely to harvest 18.46 million tons of paddy rice, up 1.78 million tons over 2011.

The country has set a rice import quota of 500,000 tons this year, but looks to become self-sufficient in rice by the end of 2013.

New Zealand firm lends helping hand in wood treatment

New Zealand-based Timbalink looks set to inaugurate a wood treatment plant in Bien Hoa Industrial Park 1 in Dong Nai Province next month to help process wood products for Vietnamese manufacturers.

New Zealand’s consul general and trade commissioner Graham Sims told a function held here on Wednesday to introduce the Timbalink Vietnam that the facility would provide customers with an internationally proven treatment process and system able to significantly enhance the durability of softwoods, including pine.

“This greater durability will give Vietnamese wood manufacturers the ability to add value to their wood products,” Sims told the event, which was attended by many specialists in Vietnam’s wood industry. “This will also be supported by a 25-year guarantee against rot, decay and insect attack.”

Kerry Bloor of Timbalink told the Daily at the function that the US$3-million plant would treat and process wood products of Vietnamese manufacturers for both local sale and export.

Bloor added that the treatment capacity would be increased depending on demand for the plant.

Timbalink Vietnam, a joint venture between Vietnamese and New Zealand partners, decided to establish the first wood treatment facility of its kind in Vietnam in response to the growing woodwork industry in this ASEAN market.

The consul general Sims told the Daily before the function that New Zealand’s timber exports to Vietnam had increased by up to 38% since 2008, accounting for roughly US$80 million last year.

Sims said two-way trade between New Zealand and Vietnam grew from approximately US$430 million in 2008 to US$725 million last year, with New Zealand’s exports taking around US$480 million.

Sims told the event that the forestry industry made a major contribution to New Zealand’s economy and was the country’s third largest export earner, making up over 3% of the country’s gross domestic product value.

Last year, New Zealand harvested more than 24 million cubic meters of timber, up 18% over the previous year. Sims said by 2025, the forestry industry would produce 60% more than it did in 2011.

Sims said a delegation from New Zealand would come to Vietnam soon to share experience in developing the forestry industry in a sustainable manner.
 
Planning minister calls for better FDI policies

Viet Nam should continue to improve policies for foreign direct investment (FDI), said Minister of Planning and Investment Bui Quang Vinh at a conference in Ha Noi yesterday.

Altering and managing FDI capital sources would be a critical part of restructuring the domestic economy and aiming at efficiency, productivity and quality, he said.

This plan was in accordance with the Government's instruction to strengthen FDI implementation and management in the coming years, he added.

Do Nhat Hoang, director of the ministry's foreign investment agency, urged sectors to call for environmentally-friendly projects that utilise modern technology and to generate competitive products that can contribute to the global production network and value chain.

He highlighted fields such as technology, mechanics, communications, pharmaceuticals, biology and all areas that use clean energy and new materials.

He suggested that changes be made to regulations and policies governing investment and business, land management and environmental protection in addition to FDI promotion.

Hong Sun, general secretary of the South Korea Chamber of Commerce and Industry in Viet Nam, told Bao Dau tu (Vietnam Investment Review) that those were right steps, but the country should not attempt to tackle all areas at once.

"We need time, we need support industries," he told the newspaper, adding that Viet Nam should receive an influx of capital providing that investment projects did not harm its socio-economic development.

He also suggested Viet Nam select multi-national corporations as they are often accompanied by support-sector firms.

Phan Huu Thang, director of the University of Economics and Business' FDI research centre, said labour force training would be of special importance in order to meet the increasing demands of FDI enterprises and especially hi-tech companies.

"Our goal is that, by 2020, vocational training should meet the demand of the labour market in terms of numbers, quality and structure—and even reach the level of developed countries in the world," said Nguyen Ngoc Phi, Deputy Minster of Labour, Invalids and Social Affairs.

Duangdej Yuaikawam-dee, an official from Reed Tradex Co (an ASEAN exhibition organiser) said the Government should consider investments more carefully and consider the country's advantage of cheap labour.

He said there were now two groups of investors: one group brings advanced technology to Viet Nam looking for co-operation and investments, and the other brings outdated technology wishing to take advantage of cheap labour.

"Viet Nam should be cautious in selecting FDI projects and have suitable policies to attract quality FDI inflows," he said.

"Government agencies should pay more attention to social polls and enterprises' opinions about matters relating to their function and authority," said Nguyen Mai, former vice chairman of the State Committee for Co-operation and Investment.

"They should be truly attentive listeners to help investors and FDI firms solve their problems most promptly and efficiently," he said.

Conference participants said the Government should create a more transparent, even-handed and efficient business environment and improve administrative procedures to attract more investors.

They agreed that in the long term, ministries, sectors, localities and business communities should boost co-operation in every investment phase to ensure a competitive investment environment and maximise the efficiency of FDI inflows.

The Ministry of Planning and Investment said it was drafting a new document to revise Government Decree No 108/2006/ND-CP issued in 2006, which guided the Invest-ment Law.

At the end of February, the country had 13,530 operating FDI projects with a total registered capital of nearly US$200 billion, conference organisers reported in a press release.

Japan, Singapore and South Korea had the largest capital value in Viet Nam, while Ha Noi, HCM City and the southern province of Ba Ria-Vung Tau were leading localities in attracting FDI.

It is a common misconception that foreign invested enterprises (FIEs) with a stable source of capital can remain healthy and enjoy export growth in the midst of global economic difficulties.

According to a recent survey on FIEs conducted by the Viet Nam Chamber of Commerce and Industry (VCCI), the scale of FIEs operating inside the country was relatively small compared to international standards.

About 63 per cent of FIEs possess investment licences with capital of less than US$2.5 million, while only 13 per cent had investment capital of over $25 million.

Enterprises from East Asia such as South Korea, Taiwan, Japan and mainland China accounts for 66 per cent of the survey.

Viet Nam had the advantage of cheap labour costs, yet the FIEs had relatively small workforces, with 75 per cent employing less than 300 personnel, and 37 per cent with less than 50, the survey said.

"Most enterprises are relatively small in scale and often focus on exports as sub-contractors for multinational corporations," the VCCI said.

Key findings showed that although FIEs achieved higher revenues last year, they were less optimistic about business prospects for the near future.

"The country has so far attracted only foreign investment in the manufacturing sector with low cost and low added value," the VCCI said. Meanwhile, high quality foreign investment projects required the enforcement of intellectual property rights, better control of corruption and qualified human resources, the chamber added.

According to the Ministry of Industry and Trade, FIE export revenue – excluding oil – is nearly $8.6 billion, accounting for more than half of the total exports in the first two months this year. This is noteworthy, as commodity consumption is still at a difficult stage.

The availability of industrial parks and raw materials are alluring to foreign investors. The country has been warned by economic experts that FIEs would come to take advantage of cheap labour and exploit its natural resources.

However, the lack of connection with the domestic private sector had limited the widespread effects of technology and management experience absorption, said Jim Winkler, director of the USAID-funded Viet Nam Competitiveness Initiative project.

Seminar concludes consumer rights lack protection

The Government needs to get its act right to better protect consumers, a seminar heard in HCM City on Wednesday.

Participants, who said consumer rights have not been protected, also urged civil society groups to help.

The seminar was held to mark World Consumer Rights Day, March 15.

In Viet Nam, the Law on Consumer Rights Protection, which took effect last July, was a big step in making producers more accountable to consumers. But with fake products being rampant and the Government seemingly unable to prevent it, food security, people's health, and the environment were all affected, the seminar heard.

To make enforcement of the law easier, deputy chairman of the HCM City People's Committee, Le Manh Ha, said it is necessary to further propagate its provisions.

He also called for severe punishment for violation of the law.

The Market Management Department has so far this year found 11,400 cases of violations and levied fines of VND23 billion (US$1.1 million) and seized goods worth billions of dong.

But it is not easy to identify fakes since they have become more sophisticated and require expertise and equipment to do so, vice president of the Viet Nam Standards and Consumer Rights Protection Association, Nguyen Manh Hung, said.

"While the Government plays an important role in protecting consumer rights, the role of civil society groups is also vital," delegates said.

The HCM City Consumer Rights Protection Organisation, which was set up in 1999 to help raise awareness of consumer rights and their protection, has helped thousands of consumers.

But its functioning has been hampered by lack of financial support.

Sai Gon Giai Phong has quoted its president Nguyen Mong Hung as saying that it has been depending on financial assistance from enterprises, banks, and other sources.

His organisation has asked the city for financial support but has yet to hear from the People's Committee, he said, warning that it faced closure without funding.

Many other civil society groups involved in consumer rights protection too have been hobbled by lack of finances.

The HCM City Consumer Rights Protection Organisation on Wednesday signed agreements with four city-based companies in which they committed to protect consumer rights.

Raising community awareness on consumer rights protection is the goal of a month-long programme of activities is being held in HCM City.

The HCM City Department of Industry and Trade (DoIT) was organising the activities throughout the city with the theme "Our Money, Our Rights" yesterday, the official World Consumer Rights Day.

Green strategy key to sustainable growth

Sustainable development will depend on a shift to a green economy, officials said at a seminar held in HCM City on March 15.

Pham Hoang Mai, head of the Ministry of Planning and Investment's Department of Science, Education, Natural Resources and Environment, said it is important to shift to a green economy, citing examples in the Republic of Korea, Mexico and the Philippines .

The seminar was organised by the Vietnam Chamber of Commerce and Industry (VCCI) in collaboration with the Ministry of Planning and Investment and the United Nations Development Programme.

RoK, for example, has implemented a green-growth strategy based on development of advanced science and technology and an abundant labour force.

"In Vietnam , although the economic growth rate has reached 6.5-7 percent every year, the competitiveness of the economy is still low," Mai said. Economic growth is based largely on exploiting natural resources. The country still has out-of-date technology, environmental pollution and climate change challenges."

" Vietnam 's economic restructuring must be towards green growth by promoting environmentally friendly lifestyles and production, reducing CO2 emissions, adapting to climate change, and developing a modern infrastructure."

Localities need to focus on the efficient use of human and natural resources and restructure agricultural production in a more environmentally friendly way, such as paying attention to appropriate use of fertiliser and pesticides and recycling by-products of agricultural production.

They should also develop sources of renewable energy and encourage businesses to transfer technology to improve production effectiveness, Mai said.

The green growth strategy for the 2011-20 period and its vision towards 2050 will be submitted to the Government by the end of the year.

Nguyen Nam , deputy director of KPMG Vietnam, said targets are in line with international trends towards reducing energy and carbon emissions, lowering greenhouse-gas emissions, and increasing GDP.

To maximise the impact at the least cost, the strategy must work synergistically in order to effectively address climate change, energy security, population growth and natural resources scarcity.

To finance green-growth transition, the use of public-private partnerships should be considered, as well as the use of carbon markets.

Measurement, reporting and verification (MRV) of emissions reduction and other key indicators are critical for ensuring transparency, accountability and effectiveness of implementation.

A rigorous MRV system is key for attracting international finance, according to Mai.

"The country's green-growth strategy should be a long-term objective for any enterprise," said Nguyen Quang Vinh, director of the office for sustainable development of the VCCI and secretary general of the Vietnam Business Council for Sustainable Development (VBCSD).

Raising awareness of sustainable development among businesses, especially SMEs, is also important.

Firms in craft villages get e-commerce supports

Vietnam Chamber of Commerce and Industry (VCCI) on Wednesday signed a cooperation agreement with Vietnam Craft Village Association to launch a program helping member companies of the association apply e-commerce in exporting activities.

Under the cooperation, ten selected enterprises of the association will receive supports in building online retail stores and increasing the competitiveness. Besides, they will be provided with latest e-commerce solutions which help them reduce expenses during the economic woes.

Luu Duy Dan, chairman of the association, said that the cooperation not only helped enterprises expand their markets but also promoted products of craft villages. Enterprises can easily introduce and sell their products with low costs, he added.

According to the association, most enterprises are aware of benefits of e-commerce in boosting exports. However, the number of firms participating in e-commerce is still modest.

Ha Van Lam from Bat Trang Pottery Village in Hanoi City has applied e-commerce to introduce and seek customers, but he said the efficiency from this channel was not as good as expected. It is because information posted on online stores is monotonous and products have yet to meet customers’ demand.

Besides, some enterprises of Bat Trang Village fail to keep their customers as the prices given are unreasonable.

“In addition to losing customers, enterprises also lose out product designs to foreign firms (when posting images online),” Lam said.
 
‘Cut inflation, investors will follow'

The Vietnamese Government should lower entry barriers for foreign companies and continue to fight inflation if it wants to attract more foreign investment, a Belgian business leader has said.

Guy Balza, chairman of the Belgian Luxembourg Chamber of Commerce in Viet Nam (Beluxcham), made his remarks at a Beluxcham Business Achievement Awards Ceremony held yesterday in HCM City.

A Belgian Economic Mission is currently visiting Viet Nam. Prince Philippe, various Belgian ministers, the Belgian ambassador and the honorary consul of Belgium, together with several members of the Belgian economic delegation and 30 Beluxcham members, participated at the awards ceremony.

Speaking at the ceremony, Balza said that the country should devote more attention to promoting Viet Nam's market attractiveness and its great potential to investors.

He pointed out Belgium's strong presence in Viet Nam. For example, the Dinh Vu Industrial Zone is a joint venture between Rent-a-Port and the Hai Phong People's Committee.

When the Bridgestone tyre manufacturing project is completed, it is expected to be the largest FDI project ever in Viet Nam.

Another successful project, Jan De Nul NV, is part of the Steel Mill Complex and Son Duong Port Contract in the central province of Ha Tinh, the largest foreign direct investment project ever licensed in Viet Nam, with total investment capital of nearly US$8 billion.

The Belgian-owned Saigon River Factory, which was founded in 2004 and has 200 employees, is producing decoration materials and floor and wall tiles.

Last year, the business grew up by 25 per cent. The company exports to several retailers in Europe and the US, and has strong potential.

Balza said he had encouraged Belgian companies to increase further business development in Viet Nam.

Beluxcham promotes the development of business cooperation between the two countries through the Beluxcham Viet Nam Achievement Awards.

Launched in 2011, it also aims to honour the considerable achievements of Belgian/Luxembourg enterprises and leaders in Viet Nam.

Rewarding Belgian companies and entrepreneurs and Belgian business leaders in Viet Nam gives them visibility in the business community here.

This year, Saigon River Factory won in the category "companies active in Viet Nam for more than three years" and Jan De Nul Group won in the category for "companies active in Viet Nam for less than three years."

The prize "Senior Belgian managers active in Viet Nam for more than three years" went to Bart Verheyen, who is procurement and merchandising director of food at Metro Cash & Carry Viet Nam, and is on the company's board of directors.

A prize for long-standing business achievement in Viet Nam was awarded to the Dinh Vu Industrial Zone, which is a Belgian and Vietnamese joint venture.

VN, Indonesia hold talks on fiscal management

A delegation of senior officials from the Finance Ministry headed by Deputy Minister Tran Xuan Hieu are currently on a visit to Indonesia from March 15.

The delegation met with officials and specialists from the Indonesian Finance Ministry to exchange views on issues of mutual concern, focusing on the rise in inflation, the role State-owned enterprises play in the economy and the best ways to restructure State-owned enterprises.

Deputy Minister Hieu discussed current market mechanisms that have been under State management for more than 20 years in Vietnam , and lessons learned when trying to reform and improve the efficiency of State-owned enterprises, which are vital to the country’s economy. He stressed on the need for the government to manage the state of the country’s macro-economy, inflation and a stable market.

The Indonesian party gave their guests a presentation on their market regulations from an economic prospective, as well as the implementation of measures to manage prices, control inflation, and restructure and raise the efficiency of their own State-own enterprises.

Both agreed to boost cooperation in this area as it would be mutually beneficial and speed up the regional integration of both nations towards an ASEAN Community by 2015.

Japan searches for site to develop eco-city

A delegation of Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) on Wednesday had a meeting with HCMC authorities to discuss the land site for developing the Eco City in Vietnam.

Previously, the HCMC Department of Planning and Architecture and the HCMC Institute for Development Studies recommended sites in Thu Thiem Peninsula in District 2 and Binh Quoi Peninsula in Binh Thanh District.

However, despite highly appreciating the recommendations, Deputy Director General of MLIT’s City Bureau Hirofumi Hanaoka said at the meeting that prudence must be taken in riverside developments.

Tokyo used to develop an eco-urban area at a riverside, and “we have so far spent billions of U.S. dollars overcoming the consequences,” said Hanaoka.

Hanaoka and HCMC vice chairman Nguyen Huu Tin shared the opinion that the study of the project must be carried out carefully to avoid bad effects on the environment.

Japan has also showed interests in Binh Duong New City in Binh Duong Province while Hanoi City is also a potential locality for the eco-urban area.  

The Japanese delegation will also fly to Hanoi City on Thursday and work with the Ministry of Construction and the capital city’s authorities.

A memorandum of understanding on developing an eco city in Vietnam will be signed this Saturday between the two countries.

The Eco City project started in a meeting of the prime ministers of the two countries is now being deployed by MLIT and Vietnam’s Ministry of Construction.

Do Tu Lan, deputy head of the Department for Urban Development under the ministry, said that developed countries have applied many urban development models. Currently, the eco city model has started to be developed in Vietnam like Ecopark in Hung Yen Province, Ecolakes My Phuoc in Binh Duong Province and Diamond Island in HCMC.
 
Developer disputes downgrade

Real estate developer Hoang Anh Gia Lai (HAGL) reacted on its website yesterday to the announcement by international credit ratings agency Fitch Ratings on the revision of HAGL's outlook from ‘stable' to ‘negative' due to the stagnation of the Vietnamese property market.

Fitch also rated HAGL's long-term foreign and local currency Issuer Default Rating (IDR) at ‘B'; downgraded HAGL's senior unsecured rating and its US$90 million bonds, issued in Singapore last year, from ‘B' to ‘B-'; and revised the recovery rating on the bonds to ‘RR5' from ‘RR4'.

The outlook revision reflected the higher credit risk HAGL has faced due to the sharp decline in property sales in HCM City.

"As a result, HAGL was saddled with completed but unsold inventory of VND3.5 trillion ($159 million) at the end of 2011," Fitch said. "In addition, the company's net debt increased to VND8.7 trillion at the end of 2011 from VND2.3 trillion a year earlier, following accelerated non-property related capex.

"This far exceeded Fitch's previous expectations and has worsened recovery prospects on HAGL's senior unsecured debt."

HAGL was addressing these problems, although it remained unclear whether these efforts would be sufficient to avert further deterioration in HAGL's financial profile, particularly in light of a VND1.1 trillion currently out-of-the-money convertible bond maturity in August 2013, Fitch said.

"HAGL has no plans to launch new property projects in the near term and instead is focusing on liquidating its existing inventory," the agency noted, adding that some of its non-property-related businesses had commenced operations and were likely to improve cash flow in 2012, including an iron mining investment.

Three of its 17 planned hydroelectric projects have begun generating power or were likely to come on-stream in 2012, and management remained committed to expanding its rubber plantation business.

"Fitch is only relying on book value to calculate the senior unsecured rating, and this is not reasonable," said HAGL deputy director Vo Truong Son. "Our rubber plantation and property holdings have market values much higher than book value, which Fitch did not consider. In fact, Fitch discounts these assets, which isn't illogical."

Son also complained that Fitch was viewing unsold properties as "completed" even though they were still listed on HAGL's books as uncompleted.

The inventory includes Block 5 of the Phu Hoang Anh project (first phase), which would begin sales in the first quarter of 2012, and the An Tien project, being projected to turn over in the third quarter of 2012. Other projects waiting on sales included the Phu Hoang Anh project (second phase) and the Thanh Binh and Hoang Anh Incomex projects.

"It's easy for HAGL to sell property to recover capital," Son said. "We don't need any pressure to force the sales. We believe in the efforts of the Government and the State Bank of Viet Nam to cut interest rates. When the rates are lower, demand will return and that will be a good time for sales.

"In terms of financial resources, HAGL had cash flow of nearly VND2.9 trillion ($131.8 million) at the end of 2011, and the company has arranged capital for projects" Son added. "We entirely believe that we are in a position to match investment progress with liquidity.

"We have overcome the impediments caused by the global economic crisis and continued operations," he added. "The last nine months of 2012 are not a big deal."

However, Fitch warned, "Further negative action might be taken if the company is not on track to meaningfully reduce property inventory or if, in any quarter this year, funds from operations fall below 2.0x interest coverage.

"The rating outlook may be revised to ‘stable' only when the company's property inventory has been substantially liquidated and the iron ore and hydropower businesses begin contributing meaningfully to the company. These events will alleviate current liquidity risks."

Auto makers offer promotions to boost sales

As demand is low, auto makers are racing each other to attract buyers with many promotion programs.

VinaMazda, the official maker and distributor of Mazda cars in the local market, this Monday said buyers of Mazda 2 and 3 within this month would be given discounts and one-year car insurance.

The company has decided to cut the price by up to VND45 million to between VND755 million and VND817 million for Mazda 3 1.6 liter engine of automatic and manual transmissions respectively.

Also, the firm will reduce the price of the subcompact Mazda 2 by VND13 million for customers besides giving them accessories attached to the cars.

Truong Hai Auto JSC (Thaco), which sells Kia products, previously announced it would reduce prices of some locally-assembled cars. Kia Sorento CKD’s prices at Thaco are slashed by VND15 million as the highest discount besides a combined VND45-million promotional programs.

The prices of other assembled CKD cars of Thaco like Carens and Forte are also revised down while buyers of Kia Morning receive gifts.

Due to poor sales performance over the last 2 months, Toyota Motor Vietnam (TMV), the leading auto firm in the local market, has come up with a special program for clients of Fortuner vehicles by offering buyers of Fortuner V, G and TRD Sportivo insurance for their cars.

Ford Vietnam has also launched promotions, with discount levels ranging between VND18.5 million and VND53 million from last month to this month.

At the same time, the company imposes a fixed rate of 14.2 percent a year for the first 6 months on those customers who borrow loans via its sales agents nationwide.

The program runs until late this month, applicable for Focus, Escape, Everest, and Transit.

Similarly, Mercedes-Benz Vietnam (MBV) and Euro Auto, the official distributor and importer of BMW cars in Vietnam, have just finished their promotion programs to support registration fees for consumers.

In fact, MBV agreed to pay 3 percent of registration fees for buyers of C-Class and E-Class models.

Before last Thursday, customers of Euro Auto were also offered respective fee support worth VND158-168 million and VND190-200 million when buying BMW 325i and X1.

Regarding the move to launch promotions among industry players, local experts believed this was just an initial step to stimulate domestic demand to improve low sales.

A recent report by the Vietnam Automobile Manufacturers Association (VAMA) showed its members only had a total of 10,390 units consumed in the first 2 months of the year, dropping by 44 percent year-on-year.

Viet Nam firms at seafood show

Twenty six Vietnamese companies exhibited their products at the Boston International Seafood Show, which attracted nearly 1,000 enterprises from over 120 countries from March 10-13.

According to the Deputy President of Viet Nam's Seafood Exporters and Producers (VASEP) Association, Nguyen Huu Dung, this was the 14th time that Vietnamese firms attended the fair.

The event provided companies the opportunity to meet new importers and partners.

Most acknowledged they had to improve the quality of their workforce and processing operations as well as law knowledge to avoid anti-dumping tariffs imposed by the US Department of Commerce.

Central Vietnam hydropower plant secures funds

A signing ceremony for a loan contract between Japan’s Sumitomo Mitsui Banking Corporation (SMBC) and the Buon Don Hydropower Joint Stock Company took place on Mar. 15 in Hanoi.

According to the contract, SMBC will provide the Buon Don Hydropower JSC with US$64.2 million to continue construction of the Srepok 4A Hydropower Plant in the Buon Don district communes of Ea Wer, Ea Huar and Krong Na in the Central Highlands province of Dak Lak.

Before the signing ceremony, EVN Finance JSC and the Saigon-Hanoi Commercial Joint Stock Bank provided bridging loans to the company to ensure the implementation of the project.

The plant, with a capacity of 64 MW, is expected to become operational in 2013 and generate 308.35 million kWh per year, contributing to economic development in the central and Central Highlands regions.

VDC co-operates with IBM

Viet Nam Datacommunication Company (VDC) and IBM Wednesday unveiled their onsite V-Backup system, enabled by the computer giant's SmartCloud Managed Backup Service, providing security-rich and managed protection of critical business data.

The service provides secured data backup with high frequency, retention and retrieval anywhere, anytime to help reduce operational risk and total cost of ownership.

VDC and IBM Viet Nam expected the service to attract small- and medium sized enterprises due to their limited finances in developing information technology services to ensure the security and quality of their activities.

VN needs to drive FDI in necessary fields

Vietnam needs to have policies to drive foreign direct investment (FDI) in necessary fields and overcome negative outcomes, including backward technology, environmental pollution and transfer pricing, said Minister of Planning and Investment Bui Quang Vinh.

Minister Vinh made this statement at a seminar in Hanoi on Mar. 15, on measures to improve the quality of foreign investment flow into Vietnam .

“Some issues need immediate attention, some must be carried out in the medium term, but the most important thing is to carry them out in a comprehensive manner with consensus and concentration,” he said.

According to Vinh, over the past 20 years, foreign investment has made important contributions to the country’s socio-economic development, creating a huge resource for economic restructuring with modern management and technology.

FDI enterprises contribute over 18 percent to the Gross Domestic Product (GDP) and more than 50 percent to the country’s export turnover.

However, several localities attracted investment with backward technologies and produced products with low competitiveness, while industrial waste from some projects caused environmental pollution.

The Prime Minister has issued an instruction on regulating investment activities, restructuring the economy and rearranging the growth model, following the trend of raising efficiency by applying high technology to produce competitive products.

Therefore, FDI attraction must focus on gaining cutting-edge and energy-efficient technology to make product prices competitive.

Moreover, FDI flow will be driven in the fields of support industry and some areas of the country’s advantages in spite of investor preferences.

Head of the Foreign Investment Agency Do Nhat Hoang informed the seminar that the Government assigned the Ministry of Planning and Investment to review foreign investment activities over the past 20 years to make orientations until 2020. -VNA

However, to take full advantage of FDI to develop the socio-economy, all ministries, sectors, localities and enterprises need to join hands to provide solutions to raise the quality and efficiency of FDI capital and the competitiveness of the investment environment.

By February of this year, the number of operating foreign invested firms was 13,530, valued at nearly US$200 billion.

Japan , Singapore and the Republic of Korea have been the biggest foreign investors in Vietnam in terms of capital.

Ho Chi Minh City , the southern province of Ba Ria-Vung Tau and Hanoi are the leading localities in the country in attracting FDI.

New logistics centre opens

The C.T Group has begun operating its logistic complex project although official inauguration is planned by this month's end.

Tenants have contracted up to 75 per cent of the total area available.

The C.T Song Than Logistics Complex project, including normal and specialised and bonded houses, processing, packaging and distribution workshops and a maintenance facility, is located on a 7.64-ha plot in the Song Than 1 Industrial Park, southern Binh Duong Province.

The location has the advantage of being within 15 km of HCM City and the provincial towns of Binh Duong and Dong Nai provinces. It is also located near major industrial parks such as Linh Xuan, VSIP, Saigon Hi-Tech Park, the wholesale farm market in Thu Duc District and the Hanh Phuc International Hospital.

Factory to improve wood durability

Timberlink Vietnam, a joint venture company between New Zealand and Vietnamese partners, announced on Wednesday the completion of its new wood treatment plant in southern Dong Nai Province that would help improve durability of softwood.

The treated softwood would be supported by a 25-year guarantee against rot, decay and insect attack, a JV statement said.

The plant, which will begin operation in Bien Hoa 1 Industrial Park early April, will employ new technologies including the light organic solvent preservative, the first of its kind in Viet Nam.

The greater durability would give Vietnamese manufacturers the ability to add more value to their wood products for both local and export markets, and give customers far greater confidence in using wood products for long term purposes, said Graham Sims, New Zealand Consul General and Trade Commissioner.

Firms reconsider brokerage services

Many securities companies have ceased offering brokerage services following two years of declining stock values, but a number might be reconsidering the move after witnessing the recent market recovery.

This month, however, the nation's stock market has rebounded strongly, and many wondered whether some of these companies might return to the market and resume offering brokerage services.

However, Duong said, companies seeking to reconstitute a brokerage department would need to recruit new brokerage staff and restore information systems. "This is not easy to do," he said.

SME Securities Co and Ha Noi Securities Co were among the most recent to cancel their brokerage services. Slapped with multiple violations for failing to settle its transactions, SME Securities announced early last month that it would suspend brokerage services between March 1 and August 31. Ha Noi Securities Co, meanwhile, cancelled its membership on the Ha Noi Stock Exchange last month and ceased offering brokerage services on February 17.

Earlier, Dong Duong Securities Co and Truong Son Securities Co also halted brokerage operations and transfered their client accounts to other firms.

When the market fell into its prolonged decline, over 100 securities companies were competing for an ever-decreasing number of clients. In many companies, revenues from brokerage operations were not enough to pay custodian fees.

Independent analyst Do Minh Duong told the online newspaper Dien Dan Doanh Nghiep (Business Forum) that the elimination of some weaker players in the field was unavoidable since too many securities firms were operating in a relatively small market, with few unique products or services.

VN, Laos sign gold mining deal

Viet Nam and Laos signed a gold exploration contract in Vientiane yesterday, Viet Nam News Agency's correspondent in Laos has reported.

The contract was signed by Lao Deputy Minister of Planning and Investment Bounthavi Sisouphanthong and representative of Global South Joint Stock company Cu Thanh Tien.

The gold exploration will be carried out in an area of 24 square kilometres in Xangthong district, Vientiane city.

At the signing ceremony, Tien said the company would use modern equipment, a team of experts and highly skilled workers. He added that the company would do its best to protect the environment of the district and would recruit local people to work for the company.

To mark the occasion, the mining company donated US$40,000 to build five charity houses for Lao war veterans.-

US$100 million commercial centre built in HCM City

Construction of a commercial centre, SC VivoCity, started on March 16 on Nguyen Van Linh boulevard, Ho Chi Minh City.

SC VivoCity will be built on 72,000sq.m, including 5 storeys and basement, at a cost of US$100 million as a joint venture of Saigon Co.op and Mapletree Company, two leading real estate groups from Vietnam and Singapore.

HOK – a leading design group in the US and the world - is responsible for designs, architecture styles and decorations.

The centre will be a place for world famous fashion trademarks, modern cinemas, entertainment and education sites and cuisine.

The first phase of the project will finish in the first quarter of 2014.

Vice Chairwoman of the Ho Chi Minh City People’s Committee, Nguyen Thi Hong and Singaporean Ambassador to Vietnam, Simon Wong Wie Kuen, expressed their hopes that the project will boost trade activities in Vietnam and gradually upgrade domestic commercial centres on par with those in regional countries.

Promoting MICE cooperation with Thailand

Vietnam and Thailand have agreed to cooperate in the Meetings, Incentives, Conferences and Exhibitions (MICE) industry to promote bilateral trade and market research in ASEAN and provide financial and non-financial assistance.

A cooperation document on this field was signed by the Director of Thailand Convention and Exhibition Bureau (TCEB), Supawan Teerarat, and the Vice Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), Hoang Van Dung, in Hanoi on March 16.

Last year’s two-way trade between Vietnam and Thailand rose 25 percent to US$9 billion with export earnings from Thailand being nearly double. Thailand, with a total of 230 investment projects in Vietnam, has become one of 10 leading investors in the country.

Dung said that the signing of the cooperation document will help enhance cooperation between businesses through MICE expert training programmes. In addition, VCCI will closely coordinate with TCEB in promoting trade and MICE activities to stimulate business development.

Vietnam is one of Thailand’s potential markets in the MICE industry, especially in the exhibition sector. Vietnam ranks fourth among ASEAN nations in the number of tourists to Thailand, after Malaysia, Singapore and Laos. From 2010-2011, Vietnam’s tourism growth hit a double digit figure of 30 percent.

According to Teerarat, the document will focus on human resources development and cultural and economic cooperation through MICE under which Vietnam’s market share will rise to 30 percent or US$2.5 million in value.