Licence for cloth production factory

The southern province of Dong Nai granted an investment licence on Wednesday to South Korea's JingWoo Vina Co Ltd, allowing them to start the construction of a US$14 million cloth producing plant.

Covering an area of 4ha, the plant will be built in the Tan Tao garment and textiles industrial zone in Nhon Trach district.

In 2005, the company constructed a $15 million factory in Long Thanh industrial zone.

Due to its implementation of foreign investment incentives, Dong Nai has become one of the leading provinces for attracting investment from overseas.

Vietnam, Italy step up financial ties

Vietnamese Deputy Finance Minister Do Hoang Anh Tuan is on a visit to Italy from June 15-20 to seek stronger ties with Italy’s Ministry of Economy and Finance.

At a working session with Italian Deputy Minister of Economy and Finance Stefano Fassina on June 17, deputy minister Anh said he hopes the two countries’ Governments and finance ministries will set out concrete plans of action to increase economic links in general and cooperation in finance-customs, tax and debt management in particular.

He urged the Italian Ministry of Economy and Finance to play an active role in promoting the friendship between the two countries.

The Vietnamese Deputy Minister spoke highly of Italy’s economic cooperation with Vietnam. He expressed hope for more direct investment from Italy in Vietnam, adding that the Vietnamese finance ministry will create favourable, equal and transparent conditions for Italian businesses who want to operate in Vietnam.

In reply, the Italian Deputy Minister appreciated Tuan’s visit saying that it is a step to realise agreements reached by the two countries’ high-ranking leaders earlier this year.

The Vietnamese delegation is scheduled to have working sessions with experts at the Italian ministry. The two sides hope the sessions will map out measures to fulfill bilateral cooperation programmes in the time to come.

CEO must avoid losses to keep job

The Chief Executive Officer (CEO) of the Viet Nam National Textile Garment Group (Vinatex) will be dismissed if the firm suffers losses in two consecutive years, according to new Ministry of Industry and Trade (MoIT) regulations.

Vinatex have agreed to the draft of a new Charter and Regulation which will see CEOs lose their job if targets are not met.

Vinatex is a limited liability company, which is 100 per cent owned by State and has charter capital of VND3.4 trillion (US$162 million).

The Government wants to develop Vinatex as a specialist in the textile industry.

While the State allows the company to set up financial funds in order to perform its specific tasks, they are not permitted to exceed the firm's charter capital.

Seven drinking water firms suspended

Southern Dong Nai Province's Department of Food Safety and Hygiene yesterday decided to suspend production at seven drinking water producers for violations of food safety standards.

Among the companies, Tan Hoa Duc in Ho Nai Ward and Thien Hao in An Binh Ward were shut down indefinitely.

The move was made after the department's latest inspections of 26 drinking water producers in the province this month.

Right time to invest in property: expert

Having already hit bottom, the property market is now ripe for new investment, chief economist Alan Pham of Vina Capital said at a Family Day event for investors and buyers recently held in HCM City.

Alan Pham, who has 30 years of experience in working in the financial market in the US, said that property cycles often lasted about six years, with three years of decline, and then a gradual upward trend.

Speaking at the event organised by Vina Dai Phuoc, a joint venture between Vina Capital and DIC Corp, Alan Pham said the property market in the US began to decline in 2008 and then had a hard landing in 2011.

Since that time, it has seen modest improvements, he said, adding that Viet Nam would see the same cyclical movement.

He said that Viet Nam's stagnant period in the property market began in 2010 and was continuing this year.

But next year, it would pick up, he added.

With such an outlook, investors should begin seriously looking at the market, Alan Pham advised.

Besides the expected upward trend next year, the Vietnamese economy is showing signs of stability after the Government took steps to control inflation and the value of the dong, he said.

In addition, the VN Index has jumped 18-20 per cent since the beginning of the year.

Property firms, including Nam Long and Tu Liem Urban Development JS Co, have begun to see price increases on the HCM City stock market as well.

"The Government has paid a lot attention to the property sector because it has a major role in increasing the country's GDP," he said.

The property sector also influences the volume of factory construction activity and the creation of jobs for labourers.

With such a key role in the economy, the Government has issued a VND30 trillion support package designed to help the property sector to get back on its feet.

Speaking at the event, Mike Gammel, general director of Vina Dai Phuoc, called for investment in the Dai Phuoc Lotus Ecological Urban Area's Sen Phuong Nam Villa project in Nhon Trach District, southern Dong Nai Province.

Eighty-five out of 332 villas have already been handed over to buyers. The villas, which measure 200-400 square metres each, cost VND10 million per sq.m.

The Sen Phuong Nam Villa project requires $64 million in capital. It includes a park, entertainment zone and sport centres, all of which are expected to be completed in July.

The project won the award for the Best Residential Development in Viet Nam at the Asia-Pacific Property Awards in Kuala Lumpur this year.

Gammel said the eco-urban area will increase in value, especially after road infrastructure projects are completed in District 9 and Nhon Trach District, as well as a road extending from the eco-urban area to the new Long Thanh airport.

The Long Thanh – Dau Giay Highway will also be completed by the end of this year, he said.

Country has 104 projects dedicated to social housing

There were 104 social housing projects nationwide as of the end of May, 47 of which were converted from commercial ones, according to the construction ministry.

There were also 38 projects for housing workers in industrial zones.

Deputy Minister of Construction Nguyen Tran Nam said that low-income houses would cost less than VND12 million ($572) per square metre.

HUD warned to pay fees for Ha Tinh housing project

Central Ha Tinh Province's People's Committee urged the Housing and Urban Development Corporation (HUD) to pay land use fees worth VND97 billion ($4.62 million) for its housing project in Ha Tinh City.

If HUD did not pay the debt before June 20, the project would have its licence revoked, the committee said.

The housing project, covering 9.1ha in the north of the city, was licensed in 2011. But HUD still has not paid the land use fee, even when pressed by provincial authorities.

Construction of SeABank Tower kicks off in HCM City

SeAbank started the construction of SEaBank Tower in District 1's Nguyen Thai Binh Ward, HCM City last week

The tower is to cover an area of more than 578 metres, with 18 floors.

It will include the bank's head office in HCM City as well as other offices for lease.

Savills sees good signs for Nha Trang property market

Housing demand in Nha Trang will sharply increase in the coming months, as local residents live in smaller families and many people from Ha Noi and HCM City buy second homes in the seaside city, according to Savills Viet Nam.

Home prices in townships range from VND1.3 billion (US$61,910) to VND2.5 billion ($119,050) per unit, while villas cost VND3-5.5 billion per unit.

Viet Nam aims to master sophisticated construction

The Ministry of Construction aims for Viet Nam to master sophisticated construction technologies by 2030, including building skyscrapers and underground and sea projects.

The aims were included in the construction science and technology development strategy issued recently.

If the development of construction science and technology reached regional and world levels, this would help promote the sustainable development of the industry, the ministry said.

The country also aims to improve technologies for designing and building nuclear power plants, manufacturing advanced building materials and treating water.

Ministry approves first ten investors for loan package

The Ministry of Construction recently approved the first ten real estate companies for its VND30 trillion (US$1.42 billion) loan package.

Those include Dang Xa's Viglacera social housing project, Song Da Construction and Investment JSC's project in the Ha Dong area of the capital, Dai Hue Investment Construction Company's Dong Dau project in central Nghe An Province and 579 Company's project in Da Nang.

The companies were pioneers in constructing social housing projects following the Government's Resolution 02/NQ-CP, so they will receive loans with an interest rate of 6 per cent per year for 10 years.

These loans will account for VND9 trillion of the VND30 trillion package.

The list is currently being reviewed by the State Bank of Viet Nam.

ANZ offers preferential interest rate to homebuyers

ANZ Bank is offering a preferential lending interest rate of 6.5 per cent per year for the first three months on home purchase loans or loans with a housing mortgage.

The rate reverts to the normal 10.5 per cent at the end of three months.

The bank also provides property loans with a fixed interest rate of 12.5 per cent for two years.

Generali Vietnam Life opens branch office in capital city

Generali Vietnam Life (GVL) officially opened its branch office in Ha Noi last week.

Generali Vietnam Life obtained its business license in 2011 from the Vietnamese Ministry of Finance. It launched its group business the same year and its tied agency for individual business in HCM City last April.

GVL is the latest Generali Group venture to expand into the Asian market.

Founded in Trieste (Italy) in 1831, the Group is one of the world's leading insurers with an annual premium income of 70 billion euros (US$93.4 billion) and over 65 million customers.

Lychee exports to China expected to double this year

The volume of fresh lychees exported to China through the border gates of northern mountainous Lao Cai province is expected to reach 50,000 tonnes in 2013.

The figure represents a two-fold increase over last year's exports, according to the Customs Department of Lao Cai International Border Gate.

So far this year, nearly 20,000 tonnes of lychees, mainly from northern Bac Giang province, have been exported to the neighbouring country through the Kim Thanh border gate.

Before the harvest, many Chinese dealers came to Bac Giang province to sign all-in contracts and inspect lychee quality. Meanwhile, Vietnamese traders were responsible for packaging, transporting and exporting the fruit.

The Bac Giang Department of Industry and Trade also worked with Lao Cai authorities to create convenient conditions for the export of agricultural products in general and lychees in particular and ensure that farmers would benefit from the arrangement.

Finance ministry may implement export tax for gold items

Viet Nam may start imposing export taxes on gold items, irrespective of gold content, according to a draft circular recently disclosed by the finance ministry.

Gold (including platinum-plated gold) in unprocessed or semi-manufactured or powder forms will be subject to export tax of 2 per cent.

Import tax for other products, including jewelry and jewelry parts in precious metal or clad with precious metal, is expected to be 1 per cent.

Green Nhon Trach power plant scoops top award

The Nhon Trach 2 Combined Cycle Power Plant (CCPP) is making an eco-friendly contribution toward alleviating the country's power shortages.

With a capacity of 750 megawatts (MW) and a plant net efficiency of over 57 percent, the power plant received the gold award in the Fast-Track Power Plant of the Year category at the Asian Power Awards 2012.

It was the first Vietnamese company to receive the prestigious award.

The Asian Power Awards, dubbed as the Oscars of the power industry, is organised annually to recognise top achievers in the region as they strive for quality and excellence.

The Nhon Trach 2 CCPP began commercial operations in late 2011 after a fast-track construction period of only 28.5 months, 1.5 months earlier than the contracted schedule.

According to a report from Petro Viet Nam Power Nhon Trach 2 Joint Stock Company, the project was judged as highly safe, effective and economical, with a short construction schedule.

Thanks to advanced Siemens burner technology, the plant's nitrogen oxide emission at full load on gas is very low, at 25 ppm (parts per million) or less.

The power plant also tops the contractual figures both for power output and electrical efficiency, as well as lower emissions.

The plant thus sets a new power quality benchmark for Viet Nam's power industry.

Using modern technologies, Nhon Trach 2 CCPP has achieved the highest efficiency of all thermal power plants in Viet Nam, with high stability and usability as well as environmental friendliness.

The plant has contributed 5 billion kwh of electricity to the national power grid.

In the first nine months of 2012, the plant hit 3.2 billion kwh, meeting the assigned plan, even during difficult economic times.

Viet Nam is one of the fastest-growing countries in Southeast Asia with a pronounced increase in its power demand at around 11 to 13 percent per year.

The installed electrical capacity nationwide is approximately 21 gigawatts, which can accommodate only 10 percent of the overall demand.

Stock options aim to help retain top staff

A growing number of listed companies are launching Employee Stock Ownership Plans (ESOP) in a bid to increase their charter capital while providing incentives to retain qualified employees.

ESOP is a type of employee benefit plan that buys and holds company stock for the benefit of a broad group of employees. This programme is also used to align the interests of a company's employees with those of the company's shareholders.

Earlier this month, leading private sector business Masan Group (MSN) issued nearly 18 million shares out of a total of 20 million shares planned for its ESOP this year to 28 employees. The company said this share distribution aimed to reward employees for their accomplishments at work.

These types of shares are freely tradable on the stock exchange after their distribution. MSN shares are being traded at around VND100,000 (US$4.76) a share.

Also in early June, software giant FPT Corp (FPT) reported it issued over 1.35 million shares to 89 employees who made outstanding contributions to the company last year.

These shares are subject to a transfer restriction within three years of issuance, however. FPT closed yesterday at VND45,000 ($2.14) a share.

Many other listed companies at their shareholders' meetings this year revealed similar ESOP programmes.

Sacombank (STB) leads the trend with a plan to issuing 32.2 million shares to its key employees. Sucrerie De Bourbon Tay Ninh (SBT) is close behind with a plan to distribute 6.57 million ESOP shares, equivalent to 4.93 per cent of its charter capital, to its loyal staff.

Company such as seafood processor Hung Vuong Corp (HVG), property developer Tan Tao Investment Industry Corp (ITA), Saigon Securities Inc (SSI), Ben Tre Aquaproduct Import and Export Co (ABT) and furniture maker Dai Chau Group (DCS) are also devoting attention to ESOPs.

All of these companies announce their ESOPs as part of efforts to retain high-performing employees.

However, according to many market observers, companies should make clear how this programme will be carried out and who can enjoy this benefit to ensure fairness and transparency.

Steel firms struggle to cut inventory

Domestic steel producers are facing difficulties because of the quiet real estate market, decreased selling prices, imported steel and shortage of capital.

The Ministry of Construction reported last month's steel output was 270,000 tonnes, up 13,000 tonnes over the previous month. As a result, steel inventories grew from 330,000-350,000 tonnes.

Statistics from the General Department of Customs also showed that imported steel had reached 800,000 tonnes so far. The imports were still higher than domestic steel production and consumption though the amount was 11.6 per cent lower than the same period last year.

Several steelmakers reported they had not been able to access loans at low interest rates.

In addition, the steel industry was faced with a range of challenges from European Union countries which had applied anti-dumping taxes on Vietnamese steel imports.

The Viet Nam Steel Association said the most difficult factor for the industry was a shortage of capital. Steel businesses had to depend on loans, imported materials and old-fashion technologies, resulting in high production costs and low competitiveness.

The association's figures showed that nearly 30 per cent of steel makers had used backward technology, 40 per cent used average technology and 30 per cent used modern and advanced technology.

The association said the businesses should gradually introduce new technology as the cost of energy had been on the rise. This should be a long-term solution for the industry, it said.

The sector should also invest in material production and be less dependent on imports.

Do Duy Thai, chairman of Pomina Steel Company's Management Board said interest rates for mid-term loans should be reduced to support steel producers.

The association chairman Pham Chi Cuong added the businesses should themselves find solutions by proper and regular planning and setting up distribution networks.

Cuong suggested businesses promote relations with agents and update market information.

Project to help SMEs be more competitive

For the last two years, over 2,200 small and medium enterprises (SME) across Viet Nam have been provided with information and legal knowledge to help them become more competitive.

The effort was part of a project to enhance the capacities of SMEs, especially those in rural areas, after Viet Nam joined the World Trade Organisation six years ago.

It was organised jointly by the Viet Nam Association of Small and Medium Enterprises, Science Institute for SMEs and the Beyond WTO Programme.

Under the project, 23 SME consultancy offices were set up at association branches in 23 provinces nationwide, including Thai Binh, Hung Yen, Nghe An, Dak Nong and HCM City.

Association vice president Dinh Hanh said that in the past, when enterprises sought help from the association in terms of tax policy, capital and market information, the branches had to rely on other agencies.

But now, all would be available at consultancy offices.

Project director Pham The Hung said SMEs in rural areas were in need of advice on capital access, technology application, trade promotion and legal documents about Viet Nam's commitments when joining the WTO, as well as international law.

"The project also offered training courses for businessmen and consultants at SME consultancy offices while developing an online database that helped them better access information," he said.

The online database, or "online integration library" as it was known, at , and , provided nearly 3,000 documents about economic integration, domestic and international regulations and policies, business start-ups, business governance and market studies.

Dr Nguyen Nghia, from the Viet Nam Intellectual Property Association, said information access was vital for enterprises if they were to become innovative and more competitive.

Challenges in global economic integration should be viewed as a motivation for growth, Nghia said, emphasising that when equipped with better understanding, enterprises could make use of information and apply higher technology to add more value.

Assistant Professor Nguyen Manh Huan, of the National Economics University, said the SME consultancy offices could help boost links between enterprises, policymakers and research institutions, including universities.

Such a network of offices would help share information and other resources, he said.

The project costing around US$290,000 was implemented in November 2011, as part of the Beyond WTO Programme, and funded by the Australian Agency for International Development (AusAID) and the UK Department for International Development.

Fishing teams protect Phu Yen

Nearly 7,000 fishermen and 787 vessels have been recruited to improve safety off of Vietnamese shores as part of an initiative set up in coastal Phu Yen Province.

The manpower has grown to produce 103 fishing teams under the provincial Border Guard in co-ordination with 27 coastal communes and wards since the force was first set up in 2005. Initially, four teams were established with just 28 vessels at their disposal.

With the majority operating offshore, the teams account for 11 per cent of existing fishing vessels in the province.

Team members are educated by the border guard stations on national border law, the 1982 United Nations Convention on the Law of the Sea, the Government's declaration on territorial sea, contiguous zones, special economic zones and Viet Nam's continental shelf, thus raising their awareness of regulations on seafood exploitation at sea.

Since 2011, the teams have been backed by VND64 billion (US$3.07 million) to install 120 pieces of satellite positioning equipment using Movimar technology to help update weather conditions, while enabling authorised agencies to monitor the vessels' sea routes and fishing grounds, as well as provide support to boats in distress.

Over the past three years, the teams have taken part in 254 rescue operations, including the assistance of four foreign ships.

In January's most recent case, the PY 90144 TS tuna fishing vessel captained by Luong Cong Xuyen from Phu Dong Ward, Tuy Hoa City, saved four Filipino fishermen who had been stranded at sea for days.

The Filipino fishermen were safely taken to the mainland, where they were given medical care, food and accommodation before returning to their homeland in early May.

Delta hit by low rice prices

Cuu Long (Mekong) Delta farmers are hoping that the programme to purchase rice for reserves will boost the low market prices existing as the summer-autumn crop is harvested.

On Friday, prices of paddy and rice remained very low. In the Cuu Long (Mekong) Delta provinces like An Giang, Long An and Tien Giang, undried paddy sold for VND3,550 – VND3,600 per kilo while dried paddy fetched VND4,850 – VND4,950 per kilo.

The prices of long-grain paddy was VND5,100 – VND5,200 kg, much lower than the 2012-2013 winter-spring crop.Do Anh Tuan, a farmer in Tan An Commune, Kien Giang Province's Tan Hiep District, said his family has harvested over one hectare of IR 50404 paddy, but "the price was very low, only VND3,700 per kilo. Therefore, I have to dry it for preserving.

"There will be more fields to be harvested in the coming days. We will run out of warehouses to store the paddy from the harvest. So it will be sold at any price."

Le Chi Vung, Deputy Director of the Dong Thap Department of Agriculture and Rural Development, said purchasing for reserves started a little late in his province because the crop is being harvested earlier than in other delta localities.

The late start makes it difficult for Dong Thap farmers to sell their paddy, because over 60 per cent of the fields under the summer-autumn rice crop have already been harvested, said Vung.

Le Minh Duc, Director of the Long An Department of Agriculture and Rural Development, said the province has over 230,000ha under this year's summer-autumn rice crop, of which 20 per cent has been harvested so far. Duc proposed that funds allocated by the Government to purchase rice reserves are made directly to the provinces (instead of trading enterprises). This would enable provincial authorities to use them and give three-month interest free loans to farmers that the latter can use to repay bank loans and buy farming materials.

Huynh Van Ganh, Director of the Kien Giang Department of Industry and Trade, said a big problem is that there is no co-operation between the Viet Nam Food Association (VFA) and provincial authorities.

He said provincial authorities are the ones who always know how much rice is sold in each locality, but the VFA does not consult or inform them when it allocates quotas for reserve purchases among its member enterprises.

According to Tran Quang Cui, Deputy Director of Kien Giang Department of Agriculture and Rural Development, by the end of last week, the province had harvested over 35,000ha of the 240,000 ha under the summer-autumn crop, with an average output of 5.4 tonnes per ha.

"Kien Giang farmers have come under increasing pressure when the summer-autumn crop reached its peak, because a large volume of paddy from the last winter-spring crop is still unsold," Cui said.

Delta farmers warned of dragon fruit glut

Many farmers in the Cuu Long (Mekong) Delta have switched from rice and other crops to cultivating dragon fruit, prompting warnings from local authorities of a market glut and unsustainable expansion.

The farmers have been attracted by the high profits that dragon fruit currently offers, especially with cultivation using lamps in the night to stimulate off season flowering.

This can bring in VND400-500 million (US$19,000-23,800) per hectare a year, much higher than rice and other fruit, according to Long An Province's Department of Agriculture and Rural Development.

The area under dragon fruit cultivation in Long An has already reached 2,200ha, exceeding the area targeted for 2015, department officials said.

Nguyen Van A, who has a 0.5ha dragon fruit garden in Long An's Chau Thanh District, said the method of having the cacti flower during the off-season has boosted his household's income.

A said he earns profits of about VND100 million ($4,700) a year from his garden. He switched from rice to dragon fruit cultivation after he saw other farmers in the district do well.

In Cho Gao District, which is the major dragon fruit producer in the delta's Tien Giang Province, the area under the fruit cultivation has increased to 3,500ha from just 1,800ha three years ago.

Farmers in other provinces like Tra Vinh and Vinh Long have also cut down other trees to plant dragon fruit, local officials say.

They caution that with the areas exceeding zoning plans made by local authorities, farmers could face a shortage of irrigation water as well as electricity for lighting used to stimulate off-season flowering.

They warn further that about 80 per cent of dragon fruit produced is exported to China, a notoriously unstable market.

The quantity of dragon fruit exported to the US, Japan and EU is still small, so farmers should not expand dragon fruit cultivation and focus instead on improving the quality of existing orchards, officials advise. They also say that farmers should adopt Vietnamese and Global Good Agricultural Practice (GAP) norms to enable exports to stable overseas markets.

Dragon fruit has recorded the highest export growth among Vietnamese fruit in recent years, according to the Southern Fruit Research Institute.

Delta rice stockpile project begins

Enterprises have begun purchasing 1 million tonnes of rice for stockpile in the Mekong Delta under a Government programme that aims to ensure farmers make a profit.

The purchase, carried out at a time when the farmers in the nation's biggest granary have harvested their summer-autumn rice, will last until the end of next month.

The Government has covered 100 percent of interest rates on loans for a three-month term for businesses buying rice. Assigned by the Vietnam Food Association, 115 eligible enterprises have joined the programme with a targeted amount in each province. For example: Long An province 91,000 tonnes, Kien Giang 85,000 tonnes and Bac Lieu and Hau Giang 10,000 and 15,000 tonnes.

According to leaders of Vinh Hung district of Long An province, farmers have been waiting for enterprises.

The price fixed by the Ministry of Finance is 4,142 VND average per 1kg of unhusked rice.

According to the association, with such a low price, plus difficulties in export markets, the programme could only guarantee a low profit for farmers, less than the 30 percent expected by the Government.

Head of the sales department of the Dong Thap Food Company, Dang Van Khuong, told Radio The Voice of Vietnam (VOV) that a 30 percent profit could only be gained if the unhusked rice was sold at 5,400 VND.

Minister of Agriculture and Rural Development Cao Duc Phat has also admitted it was a problem, but it could not be settled during the economic downturn.

Other support policies will be worked out to help both businesses and farmers, he said.

For example, a special preferential credit programme would be provided to farmers so they would stockpile their products.

But in the long run, he said, there must be stable contracts signed between the two sides to ensure an outlet for farm produce, particularly rice.

The ministry has also worked with localities in another programme to encourage replacing rice with other cash crops on poor quality farming land such as maize or soya bean.

Earlier this month, in a meeting to seek solutions to consume farm and aquatic produce, Deputy Prime Minister Hoang Trung Hai requested the association guide their business members to buy rice.

Any businesses found to cause damage to the export enterprise community and farmers must be excluded from the association, Hai said.

However, according to many businesses, their biggest challenge was the large stockpile of rice from previous seasons.

Managers of the Docimexco JS Company in Dong Thap province said due to the fall in the rice price after the stockpile of the last winter-spring season, the company still has 30,000 tonnes in storage, despite looking for partners to export the remainder.

Association chairman Truong Thanh Phong assured businesses that the rice market would pick up from July.

The association figures showed Vietnam had exported 2.79 million tonnes of rice in the first five months, an increase of about 10 percent from the same period last year.

In June, some 750,000 tonnes are expected to be exported, raising the exported figure in the first half this year to 3.5 million tonnes, 100,000 tonnes up from last year's corresponding period.

Vietnam private equity outlook bounces back

Investors viewing Vietnam’s investment environment favourably has increased over the last six months, according to a bi-annual survey on the nation’s private equity outlook done by Grant Thornton Vietnam.

The survey found 41 percent of respondents saying they feel Vietnam is a more attractive place to invest compared with other destinations, an increase of 14 percent over the previous survey six months ago.

The financial distress is Europe and weakening of the US dollar are the main factors for private equity activities continuing to rise in Asia , especially Southeast Asia .

Hence the number of respondents who decided to increase their portfolio in Vietnam has improved significantly from 29 percent in Q4, 2011 to 45 percent in Q2, 2013, although the country is still suffering from the economic downturn.

Health care and pharmaceutical industries have been the most favoured investment areas in the last three surveys.

High growth rates, demand for expertise as well as favourable demographics have created a significant opportunity for investors to invest in Vietnam ’s health care sector, the survey found.

Education is the second most attractive sector for survey participants with the same proportion as last year survey (39 percent). It has been in the top run for more than three years in succession.

Vietnam is ranked fourth in terms of the retail sector, which has grown robustly in recent years.

The Government’s approval for foreign investors to establish 100 percent foreign invested companies has made this sector highly attractive to investors.

The fourth most attractive sector, according to the survey, is real estate and property, which got 37 percent of the respondents’ votes. Merger and Acquisition (M&A) deals in the real estate sector are forecast to increase in 2013. Many real estate developers facing financial difficulties were forced to transfer their projects, creating investment opportunities for buyers with long term strategies.

The largest investment in the sector last year was by Japan ’s Tokyo Group with a total capital of 1.2 billion USD.

On investment obstacles, 82 percent of the respondents considered corruption and government red tape as problems when investing in Vietnam , with the latter component showing an increase of 10 percent since the previous survey.

Current difficulties and challenges in the economy means PE investors are becoming more prudent in their investment strategy and focusing on long term growth opportunities, the survey found.

Transparency in business activities emerged as the second most important factor in making investment decisions. This factor has always been in the list of the top three most important factors to consider when investing in Vietnam , the survey report said.

The third most important factor was cash flow, the life blood of every business.

Other factors included corporate governance and the skill as well as experience of existing management.-

Exports of wood products increase in first 5 months

Wood products are expected to fetch US$5.5 billion in export value this year as targeted, according to the Ministry of Agriculture and Rural Development (MARD).

In the first five months, wood and wood products gained a year-on-year increase of 10.4 per cent in export value to $2 billion.

Those products achieved an average export value of $400 million each month during the first quarter this year. The figure saw a year-on-year surge of 35.2 per cent in the first two months to $809 million and grew 15.7 per cent in the first three months to $1.17 billion.

Viet Nam also increased wood and wood product exports to its various markets, excluding Germany.

The country saw a surge of 20.7 per cent in wood and wood product exports to South Korea, as well as growth of 19.1 per cent in export to China, 16.3 per cent to Japan and 6 per cent to the US.

Vo Truong Thanh, head of the Truong Thanh Wood Technical Group, said the economy in major export markets for these products had recovered, while rivals had reduced competitiveness in production and exports.

He predicted that demand for wood and wood products would increase again in the coming months.

MARD estimated that the export value of processed wood products would see a year-on-year increase of 10-15 per cent to $5.5 billion.

However, enterprises exporting wood products would face many difficulties in production and business due to high input costs.

Many enterprises were forced to import 70 per cent of the raw materials they needed, as local companies could meet only 30 per cent of their requirements.

Viet Nam will reduce the volume of natural wood exploited this year and plans to stop exploiting natural wood next year, so the local timber industry must make plans to maintain and expand production in order to achieve its export turnover target of $5.5 billion this year, the ministry said.

The country has drawn up sustainable growth plans for the wood product processing industry up to 2020, according to MARD.

The industry will prioritise investing in and utilising domestic forests while reducing raw wood exports and improving management of supply.

Viet Nam needs an annual 3-3.5 million cubic metres of raw wood materials on average.

As domestic suppliers are currently only capable of meeting 30 per cent of the demand, the nation would import 4-4.5 million cubic metres yearly by 2020, the ministry said.

Money men snub real-estate investment

Fund management companies in Viet Nam show little interest in setting up real-estate investment funds under new Ministry of Finance regulations coming into force on July 1.

According to a study by Dau tu chung khoan magazine (Securities Investment), of the top 10 fund managers, none has yet developed specific plans to get involved.

This indifference does not reflect the high enthusiasm of fund managers after the introduction of Circular 183/2011/TT-BTC early last year guiding the establishment and management of open-ended funds.

VinaWealth Fund Management Joint Stock Company, backed by VinaCapital, one of the leading investment management and real estate development firms in Viet Nam, had been expected to soon take the lead in introducing a real-estate fund.

However, the head of Retail Sales at VinaWealth, Dang Vi Thanh, said his fund had no interest in setting up a real estate fund now as it was focusing on launching two new open-ended funds - a securities-investment fund and a money-market fund, which would come into operation in July and August.

Each type of fund (bonds, securities, real estate) has specific characteristics that require a lot of expertise as well as financial resources.

Financial asset managers are unlikely to invest in funds not included in their core products.

The lack of immediate interest in real-estate investment funds by fund managers has not helped property developers, who have been struggling to survive in a market frozen for the past three years.

Experts believe that the launching of a real estate fund now would have many advantages as property prices have plunged substantially.

They add that the more transparent policy and Government incentives will help reduce fund operating costs.

The head of a securities company told Dau tu chung khoan that his company was working with a fund manager to introduce a real estate trust by the end of this year or early next year.

He said the company was doing research on on-going real estate projects (legal status, quality and prices) and would securitise them to sell to investors.

Direct selling on the rise in Viet Nam

Direct selling companies in Viet Nam had made business more competitive and provided more choices for customers, according to Bach Van Mung, director of the Viet Nam Competition Authority.

At the opening ceremony of Nu Skin Viet Nam's branch in Ha Noi late last week, Mung said he was delighted to see the company's expanding operations in Viet Nam.

Last year, Viet Nam joined a list of 10 Nu Skin markets in Southeast Asia. It became the 53rd market globally. This year, the company had set a target of earning US$15 million in Viet Nam.

Luxembourg is Vietnam’s key partner in Europe

Vietnam’s Foreign Investment Agency (FIA) has described  Luxembourg as an important trade, investment, and economic partner in its broader European cooperation strategy over  the 2011–2015 period.

The Vietnamese industrialisation process could be accelerated by freeing up foreign investment flows from developed countries like Luxembourg, capitalising on their remarkable technological and experiential advantages.

Luxembourg is currently 19th among the 101 countries and territories investing in Vietnam. Its favoured investment sectors include mobile information, house and office construction, light industry, and food processing.

General Department of Vietnam Customs statistics reveal the two nations’ 2012 import-export revenue totalled US$32 million, of which US$29 million came from Vietnamese exports.

To attract more Luxembourg investors, Vietnam needs to improve its investment environment, clarify economic legislation and policy, extend and diversify opportunities for investment, remove planning barriers, and support businesses in minimising their production costs.

Local businesses are encouraged to broaden their promotional efforts in Luxembourg to help introduce the country’s special advantages to prospective investors.

There are also calls for the FIA to grant Luxembourg’s successful Vietnamese investments preference, particularly when it comes to the European nation’s finance and banking specialties.

Footwear exports gain momentum

Vietnamese footwear exporters are looking forward to big gains this year as their revenue in the January - May period surged 11.4 % year-on-year to US$3.1 billion, a positive figure amid the global economic malaise.

According to the Vietnam Leather and Footwear Association (LEFASO), domestic footwear producers have secured a stable supply of orders. Apart from sports and canvas shoes for export, the sector is focusing on briefcases and handbags to rake in higher returns.

To earn U$9.7 billion from exports this year (10 % higher than last year’s figure), the sector is seeking more orders from South America. Domestic companies are stepping up research and development to supply footwear materials to potential partners in India and Brazil.

Notably, Vietnam was honoured with five international shoe design awards for Asia after beating 180 entries from 8 regional countries.

The rate of locally-made materials is a mere 40 %. This is expected to increase to between 60 and 65 % this year once the Trans-Pacific Partnership agreement is signed.

The Ministry of Industry and Trade (MoIT) is encouraging companies to enhance investment in materials production using environmentally friendly technology. The move is expected to put Vietnam in the top five footwear producers and exporters by 2020.

Once the Vietnam–EU Free Trade Agreement comes into effect, preferential taxes will be cut from 14.3 to zero %. From early next year, Vietnam’s footwear products destined for EU markets will enjoy tariffs in the Generalised System of Preferences (GSP).

Capitalizing on future trade agreements between Vietnam and the EU, numerous UK and German footwear exporters are seeking business opportunities in Vietnam.

The US remains Vietnam’s leading footwear and leather importer with a turnover of US$755 million, ahead of the UK (US$149 million), Belgium (US$140 million), Japan (US$121 million) and China (US$114 million).

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