Port premises find investor
The premises of the Nha Rong-Khanh Hoi port facilities will be handed over to Vingroup Joint Stock Co. for commercial and residential development following agreements between the company and Saigon Port.
The two sides have basically completed agreements for converting the prime site in District 4 into a commercial center-office building-apartment complex, said Nguyen Ngoc Toi, secretary of Saigon Port’s board of members.
The two sides will establish a new entity this month tasked with the development job, and “matters related to the project have been submitted to the Ministry of Transport for consideration,” said Toi, who is also spokesperson of Saigon Port.
With this cooperation, Saigon Port as operator of the port complex will have a financial source from Vingroup to relocate port facilities in the area to Hiep Phuoc complex in HCMC and Cai Mep-Thi Vai in Ba Ria-Vung Tau Province.
Meanwhile, Vingroup can use this golden land site after port facilities are shut down.
After receiving approval from the Ministry of Transport, Vingroup will pour VND1 trillion into the new entity to finish the Saigon-Hiep Phuoc port project which is now thirsty for capital.
Some VND700 billion will be used to execute the port project’s first phase and the rest will be spent on building the road D3 leading to Saigon-Hiep Phuoc port.
After four years of construction, Saigon-Hiep Phuoc has developed 200 meters of the pier No. 3, two 20,000-DWT berths, three cranes and other heavy-duty equipments. Besides, the 400-meter pier No. 2 and the storehouse are being constructed.
However, as the road D3 is not completed due to capital shortfall, the port is running ineffectively.
A problem that may hinder the cooperation between Saigon Port and Vingroup is that the current urban zoning plan for the port premises restricts residential development, which will make the development project commercially unviable.
Therefore, Saigon Port and Vingroup will petition the city government to make changes to the urban zoning plan by reducing the area of the commercial center and increasing that of commercial apartments.
This proposal is to be submitted to the city government for approval, according to an official of the city’s Department of Planning and Architecture.
Eco-friendly bags more popular at supermarkets
Up to 80% of supermarkets and convenience stores in HCMC now are offering environmentally friendly bags to shoppers, which is a drastic change compared to before July, 2012 when plastic bags were overwhelming, said the city’s Environment Protection Fund.
Environmentally friendly plastic bags contain bio-degradable additive and starch that can be self-destroyed within two years. There are many environmentally friendly plastic bags producers active citywide, supplying supermarkets and convenient stores, said the Environment Protection Fund at the Green Bags Festival in the city on Sunday.
According to the Fund, a local resident gets an average of four to five bags at a traditional market, about three bags at a supermarket, and one to two bags at a convenience store. This means that the city discharges a total of around nine million plastic bags equivalent to some 45 tons per day, with 250 bags equaling one kilo.
While supermarkets and convenience stores have gradually shifted to using bio-degradable plastic bags, traditional markets mainly use normal plastic bags that cannot be decomposed. The number of normal plastic bags used at local markets amounts to 98% of the total while that of commercial centers is nearly 71%.
A recent survey conducted by the Environment Protection Fund indicates that besides getting plastic bags for free, up to 45% of customers still have the habit of asking for more bags for other purposes at home. Locals often use the free bags to contain household waste and then discharge them with the waste.
Hanoi’s office supply to double in 2017: CBRE
Office supply in Hanoi is growing rapidly and is projected to double the current volume in 2017, according to CB Richard Ellis Vietnam (CBRE Vietnam).
Speaking with the Daily, Greg Ohan, director of office leasing services section of CBRE Vietnam, informed that the office leasing market in Hanoi would receive an extra 133,000 square meters in this year’s second half. Besides, nearly 210,000 square meters of office areas will be launched onto the Hanoi market next year, he said.
CBRE expects an additional 500,000 square meters of office areas to be put into service in Hanoi from 2015 to 2017. “This means that the supply of office for lease in Hanoi will double the current volume to a total of over two million square meters by 2017,” Ohan remarked.
CBRE believes the additional supply will exert higher pressure on office rental in the city. The office leasing market of grade-A and -B buildings will continue to be bustling given the surging supply and the stronger moving demand from tenants seeking to cut expenses and increase spaces and efficiency of using business areas, according to the property service provider.
The fact shows that offered rental of grade-A buildings in Hanoi will be declining since project owners now are rushing to compete with attractive promotional policies to lure new customers and to retain existing ones. Meanwhile, offered rental of grade-B properties is estimated to continue to face enormous pressure of decreasing caused by the rising local supply.
CBRE, however, finds it difficult to know when Hanoi’s office for lease market will hit the floor.
The foreseeable huge supply in the office leasing market in Hanoi is seen as a threatening signal to project owners but good news for local tenants who will be given more of a choice with the bigger supply.
Land lots, budget homes still find buyers
Property enterprises have launched many new projects onto the local market over the past time with most of them being land lots and low-priced condos to meet demands of most customers.
For the land lot segment, Kim Oanh Real Estate Joint Stock Company has repeatedly offered new projects in a short period and gained some successes. The enterprise has sold 900 out of 1,000 land lots of Civilized City project in Binh Duong Province and 100 out 120 land lots of Green Life City in Dong Nai Province within just several months.
For the BenCat Center City project, the enterprise has sold its entire 200 land lots to customers in less than a week.
Kim Oanh Company announced to launch the sale of the first stage of the BenCat Center Point project in Binh Duong Province on September 20. The enterprise will offer land lots at VND1.5-2.7 million per square meter.
Invested by Becamex Group, the project covers 55 hectares, of which traffic, water supply and drainage and greenery works have been finished. The project is near high-class villa projects such as EcoLakes, Rose Mary, Sunrise River and College Town that are first choices of specialists and businesspeople living in the southern province.
Dang Thi Kim Oanh, general director of Kim Oanh Company, said that there is a rising demand for low-priced land lots in Binh Duong Province due to the fast pace of urbanization, developed infrastructure and strong foreign investment there.
Meanwhile, Phuc Khang Construction & Investment Joint Stock Company has been popular to customers through Sun Flower City and Eco Village project in Dong Nai Province. At the recent international real estate fair Vietbuild in HCMC, the enterprise also introduced Eco Town project in Hoc Mon District with the total area of nearly three hectares.
A leader of the company said that it is collecting bookings from customers. The enterprise expects to launch the sale of the project in October at VND600-900 million each land lot.
In HCMC, The EverRich 3 in District 7 project invested by Phat Dat Real Estate Development Joint Stock Company is one among few land lot projects launched over the past time. The high-class project includes nine condo towers and some land lots on the total area of nearly 10 hectares.
The investor has just offered to customers 41 land lots for houses and 34 land lots for villas at around VND40 million per square meter.
The Sun City Minh Son project in District 9 has also drawn attention from homebuyers. The project covers over 13 hectares with 60 house land lots, 24 villa land lots and other facilities such as swimming pools, a park and a nursery school. The land lots are offered at around VND12.5 million each.
Meanwhile, the condo market has seen not many new projects launched given difficulties of the economy and high stockpiles. Most new projects target at low-income earners.
Located on Phan Huy Ich Street in Tan Binh District, Phuc Yen 2 project includes condos measured at 79.6 to over 106 square meters each and priced from VND15.3 million per square meter.
Homebuyers have to pay for only 20% of the condo value and will receive preferential loans from banks for the remaining. The investor expects to hand over the flats to customers from the first quarter of 2015.
Meanwhile, Chuong Duong Garden project in Tan Phu District has supplied the market with 360 condos and other facilities. The apartments are from VND13.5-14 million per square meter.
EHome 4 Saigon North project of Nam Long Investment Joint Stock Company has reported the strongest sale over the past month. The investor was even able to sell 147 condos within a morning thanks to low prices from VND450 million each flat and special financial supports.
The project is in Thuan An District, Binh Duong Province, comprising of 2,100 apartments, schools, parks, sports areas, shops and entertainment areas.
Customers in central Vietnam can pay power bills at ABBank
Individual and corporate customers in central Vietnam can now pay electricity bills at An Binh Commercial Bank (ABBank) following the signing in Danang on Thursday of a deal between the bank and Central Power Corporation (EVNCPC).
ABBank is authorized to collect monthly power fees through its transaction offices, ATMs, online banking service, and the third party like Vietnam Post Corporation that is in turn authorized by the bank to collect power fees.
ABBank’s electricity fee collection service has already been in place in five central provinces and cities – Danang, Khanh Hoa, Gia Lai, Hue, and Quang Nam – since 2007. Total electricity fees in these five provinces collected by the bank in the first eight months this year amounted to VND1.3 trillion.
With the new cooperation agreement signed, ABBank will expand this service to the entire central region.
Nguyen Thi Ngoc Mai, deputy director of the bank, said in a statement that through its cooperation in fee collection for companies in the electricity, insurance, and telecommunication sectors, ABBank expects to contribute to raising awareness of non-cash payment among Vietnamese enterprises and households.
ABBank now has nearly 17,000 corporate and 410,000 individual clients nationwide.
Loan-to-deposit ratio slightly declines
Local commercial banks reported loan-to-deposit ratio (LDR) of 76.2% in July, meaning that they lent 76.2 out of every 100 mobilized, while the ratio was 79% as of the end of 2012, according to statistics of the State Bank of Vietnam.
The ratio reflected the real situation of banks who are struggling to find qualified corporate borrowers.
However, individual consumer credits increased strongly as finance and leasing companies have seen steady rises in LDR during the Jan-Jul period, from 126.3% at the end of 2012 to 161.9% on May 31, 164.3% on June 30 and 168% as of July 31.
The enterprises currently only mobilize term deposits from organizations. However, to supplement capital for lending activities, they can take out loans from banks or parent companies to enjoy interest rate differences.
Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said that credit institutions also saw high consumer credit growth, at 40% as of August 31 compared to the end of 2012. Individual credits currently account for 8-9% of total outstanding loans at credit institutions in the city.
Meanwhile, State-owned banks saw the LDR almost unchanged, edging down from 96.77% at the end of 2012 to 96.69% at July 31. The banking system had posted LDR of 87.75% as of July 31, a decline against the end of last year’s 89.35%.
However, the return on equity (ROE) of State-owned commercial banks declined strongly against the end of 2012 while joint stock banks bounced back as at July 31 after slumping in March.
State-run banks reported ROE of 5.28% in July 31, joint stock banks 3.05%, joint venture and foreign banks 3.23%, finance-leasing companies minus 4.94% and the entire banking network 3.86%.
Meanwhile, banks in HCMC also saw credit growth slowing down as of August 31, inching up just 0.05% against the previous month.
The banks reported credit growth of 4.87% in Jan-Aug, lower than that earlier estimated by the central bank at 5.8%.
Minh said that low credit growth was the result of a slump in foreign currency credits. Compared to the end of 2012, foreign currency loans tumbled 19% while dong loans increased 11.6%. Meanwhile, the demand for dong capital has also declined.
Interest rates are no longer a big problem for enterprises as lending rates have dropped sharply in recent times. Lending rates applied for the five priority groups are less than 9% per annum, Minh said.
VAMC targets more bad debts
Vietnam Asset Management Company (VAMC) expects to issue a maximum VND35 trillion worth of special bonds to buy bad debts from local credit institutions from now until the end of the year instead of the earlier target of VND30 trillion.
Le Quoc Hung, permanent vice chairman of VAMC, told the Daily that VAMC leaders have adopted a special bond issue plan and it will be submitted to the central bank for approval soon.
A special bond issued is equivalent to a bad debt transaction contract. For bad debts which are syndicated loans, VAMC will issue special bonds to each credit institution joining the credit contract.
The bond will carry a face value equivalent to the bad debt buying price. For syndicated loans, VAMC will apply various par values of special bonds for banks joining the loan contracts.
Special bonds issued by VAMC will enjoy depository fee exemptions at the central bank.
After the two circulars guiding implementation of Government Decree 53 on bad debt trading were released, VAMC leaders finalized debt trading regulations as backbone rules for the activities. Officials of the enterprise have also agreed on other content related to special bonds.
A staff group of VAMC will work with some commercial banks in the southern region this week. They are expected to be the first clients of the debt trading firm.
“We are ready this week and will sign contracts immediately,” said a leader of VAMC. For State-owned banks, Agribank is expected to be the first to sell bad debts to VAMC.
VIB reassigns responsibilities of key positions in its leadership
The board of directors of Vietnam International Bank (VIB) has reassigned responsibilities of some key positions, with Dang Khac Vy picked as chairman of the bank and State Bank of Vietnam approval sought for Han Ngoc Vu to take the role of CEO.
The decision, which took effect on September 16, was made after VIB accepted Dam Bich Thuy’s resignation from the position of CEO, who will take on a new role.
Vy has continuously served as a board member since establishment of the bank in 1996. Vu, meanwhile, joined VIB in 2006 and was the CEO of the bank from 2006 to 2008. He has been chairman of the bank from 2008 to the effective date of the decision.
Dang Van Son has been elected vice chairman of the bank as per the decision.
According to VIB, the reassignment of some key leaders aims to promote capabilities and experiences of the bank’s senior personnel that have been working at VIB for a long time towards the next period of its strategic development. VIB is confident to maintain its inherently stable operation and continue to grow over coming periods.
The board of directors of VIB now has eight members, including Bradley LaLonde as an independent member, who has had 26 years of experience in the banking industry and used to be the first CEO of Citibank Vietnam.
Commonwealth Bank of Australia (CBA), a key strategic shareholder of VIB, has sent two senior executives to join the board. These two board members have around 40 years of experience in the banking industry.
CBA has also appointed an executive, who is now its manager of financial services in Asia Pacific, to be a member in the Supervisory Board of VIB.
The board of directors of VIB also includes members who are successful Vietnamese executives both at home and abroad.
Vy has earned a Doctoral degree in Economics and has many years of working experience in many countries worldwide. He also serves as chairman of Mareven Food Holdings, a large company of overseas Vietnamese, with its products distributed in more than 25 countries throughout Europe and Vietnam.
Vy has also been working with VIB since its early days of establishment, and has laid the foundation for development strategies of the bank.
VIB currently has equity of around VND8.6 trillion and capital adequacy ratio (CAR) of 19.6%. With a workforce of 3,500, VIB is serving nearly 1.3 million individual customers and over 25,000 corporate customers, including foreign direct investment (FDI) enterprises at nearly 160 branches and transaction offices in 27 provinces and cities across the country.
As of the end of June, the bank had had total assets of over VND68.5 trillion, up 5.4% against early this year. The total outstanding loans amounted to around VND34 trillion, of which home loans obtained a growth rate of 18%. Its total mobilization was over VND36.6 trillion and pre-tax profit was VND203 billion.
A representative of VIB said that the bank continued to focus on risk management, especially in lending activities, and focused on customers with stable financial capability. VIB is seeking approval from the central bank to increase its credit growth quota in the final half of this year.
“We focus on banking services and do not join non-core businesses such as real estate, stock and gold. We are a safe bank in Vietnam,” the representative said.
In addition, VIB continued to optimize the operation expenses to VND780 billion during the period to end-June, a 15% reduction compared to the average level of 2012. The bank posted up an average income per capita at around VND181 million a year.
VIB launched its new head office into operation at 16 Phan Chu Trinh Street in Hanoi City in June.
Banks reactivate asset management firms
Local commercial banks have activated their asset management companies (AMC) again to tackle mounting debts after leaving the units in a sluggish situation for a long time.
Earlier this week, Vietnam Asset Management Company (VAMC) sent documents to State-owned banks and banks with high non-performing loan ratios, asking them to suggest bad debts that need to be sold to VAMC. While Agribank is ready to sell debts to VAMC, the three remaining State-run banks have yet to give any feedback.
These banks are still busy checking operations of their AMCs, which have been in sluggish operation over the past two years. Aside from the AMC of VietinBank that has been rather active in handling mortgaged assets for secured loans, AMCs of Agribank, BIDV and Vietcombank have been performing poorly in recent times.
Over the past 13 years, administering agencies have failed to pay adequate attention to 20 AMCs of credit institutions around the country. Many regulations have not been updated while others are not suitable in the current economic context.
As a result, AMCs are considered not helpful to local banks while at foreign banks they are an efficient arm. Some AMCs have undergone wrong functions but there are no sanctions against such violations.
As banks are hesitant to sell bad debts to the central bank-governed VAMC, they have become more aggressive lately in addressing bad debts by strengthening their own AMCs.
VietinBank has plans to increase charter capital of its AMC from VND30 billion to VND500 billion. BIDV is also recruiting more staff for its AMC, which so far has operated like a department of the bank during the past year.
Agribank has established a new AMC after dissolving the old company. Other commercial banks have also injected capital and reinforced human resources for their AMCs.
The general director of an AMC with strong operations on the market this year said that banks are still struggling in reducing bad debts. “I believe that no banks could reduce bad debt ratio in the Jan-Aug period. Statistics might show that bad debts of banks dropped back, but by nature, debts did not decrease,” he said.
During the period, his company evaluated over 2,100 assets worth over VND37 trillion, of which real estate accounted for 90%.
VAMC has been established to give special support to banks in a certain period. However, AMCs must also revive to help banks deal with bad debts VAMC may not pay attention to for at least the next six months, he said.
VTV launches Internet service
Vietnam Television Cable Corporation (VTVcab) and CMC Telecom Infrastructure Co. (CMC Telecom) on Thursday jointly launched the fixed broadband Internet service VTVnet in Hanoi.
The new Internet service is supplied by CMC Telecom using the cable infrastructure of VTVcab under an agreement between the two sides signed in March this year. VTVnet operates on the cable modem termination system (CMTS) technology meeting Euro Docsis 3.0 criteria with a data transmission speed of a maximum 40/40Mbps, much higher than the speed of 8Mbps/768Kpbs of ADSL technology.
Thanks to the CMTS technology, the broadband base of VTVnet could be maximized to meet added value services like online monitoring cameras, teleconferences and other applications for smart buildings. Sharing the same television cable infrastructure, the installment of VTVnet is based on VTVcab’s infrastructure available in over 50 provinces and cities.
The two partners now offer four packages having monthly fees of VND135,000, VND180,000, VND210,000 and VND390,000.
With the only one signal transmission line, over two million users of VTVcab now can watch TVs via cable and HD services whilst using Internet service at a high speed besides many different additional services.
VTVnet at first only targets customers in Hanoi but it will be expanded nationwide in the near future.
Hoang Ngoc Huan, general director of VTVcab, declined to elaborate on the proportion each side will get from the deal but informed a member company under VTVcab would be set up by both sides to take charge of the new service.
Nguyen Duc Thanh, general director of CMC, said that his firm this year would provide Internet service via VTVcab’s infrastructure in Hanoi before expanding it to other provinces and cities next year in line with the agreement. CMC expects to lure 200,000 Internet subscribers to realize the target of obtaining total revenues of VND1 trillion with the new service during six years of cooperation.
VTVcab earlier teamed up with EVN Telecom to introduce the fixed broadband internet service but the collaboration was terminated after the latter was transferred to Viettel.
Japan not yet confident in Vietnam’s real estate
Japanese investors are largely shunning Vietnam’s real estate market due to uncertainties regarding the business environment rather than the gloomy situation now, said a senior Japanese executive.
Yasuzumi Hirotaka, executive director of the Japan External Trade Organization (Jetro), told the Daily on the sidelines of a conference in HCMC on Thursday that Japanese investors take a more cautious approach to Vietnam’s property market despite high potential in the domestic industry.
While Japanese investors have been aggressive in pouring capital into the manufacturing industries here lately, they are more prudent when it comes to the property market, he said after the conference on attracting Japanese investment.
In Vietnam’s property market, Japanese investors are concerned about the low legal compliance, unclear tax and fee regimes and informal costs, Hirotaka said.
They see more risks in investing in the real estate market in Vietnam compared to other nations like Singapore, he observed.
In his opinions, investors in the property market do not have a lot of know-how and expertise to have a good competitive edge like their peers in the manufacturing sector, and therefore, they will only engage in the industry when there are good opportunities in a stable business environment.
The local real estate market is undergoing extreme hardship, prompting many players to take flight by selling off their projects at low prices, which is seen a promising opportunity for bargain hunters.
Hirotaka agreed on the point, but stressed the discreet stance among Japanese developers. Though prices of property projects have tumbled, Japanese investors will still not venture into the market as long as the business environment remains uncertain, he said.
In fact, some Japanese investors have entered Vietnam’s property market in the past two years.
For example, Tokyu Group is developing an urban project worth up to US$1.2 billion in Binh Duong Province via a joint venture with the local partner Becamex.
Hirotaka noted that Tokyo decided to make the investment as it found a good local partner. Therefore, when finding trustworthy partners and good projects, Japanese investors would still come, such as the case of Japan’s venture fund EXS Capital pouring US$37 million into Vietnam’s Kim Son Land, he said.
But in the medium and long term, Japanese property investors may come knocking, said Neil MacGregor, managing director of the realty consultant Savills Vietnam.
He said in a press release that Savills Vietnam had coordinated with Savills Japan to organize several conferences in Japan for property investors. Japanese investors had shown strong interest in Vietnam’s property market as a destination in the long term, he noted.
Toll station staff struggle to find work
Almost 1,000 employees lost their jobs after 20 toll stations up and down the country were removed after the introduction of the road maintenance fund earlier this year, with only 144 workers managing to get a new job.
Statistics of the Directorate for Roads of Vietnam show that 837 workers of the removed stations have not yet been placed in other positions. Some VND40.8 billion was expected to be spent on supporting these employees but only half of the road maintenance fund has been disbursed.
The Ministry of Finance has regulated that allowances for employees of the removed toll stations will be funded by the unemployment reserve funds of enterprises, the national fund for enterprise arrangement support and the road maintenance fund.
Central Road Maintenance Fund’s office chief Le Hoang Minh told the Daily that the fund has disbursed over VND20 billion to pay unemployment allowances for these toll station workers. This is one of nine spending areas of the fund.
Relevant agencies and ministries discussed and reached agreement on unemployment allowance payments for these workers before the toll stations were removed. The Government also gave approval to the road maintenance fund to pay allowances, Minh said.
Concerning expenditure of the fund, Thai Van Chung, general secretary of the HCMC Goods Transport Association, said that it is unfair if the fund gives allowances to employees of some toll stations but those at other stations do not receive benefits. It is necessary to publicize spending of the fund, especially expenditure for the operation mechanism from the central to grassroots levels.
Do Xuan Phu, director of Minh Lien Transport Company, was concerned that the fund has been used for too many purposes. While calling for people and enterprises to pay road use fees, the Ministry of Transport has insisted that the only purpose of the fund is to maintain roads in the country.
According to the Central Road Maintenance Fund, car owners paid over VND2.7 trillion worth of road maintenance fees as of July 1. The Ministry of Finance has also given VND375 billion to the fund.
HCM City arranges roads for discount sales
Consumers in HCMC can now look for many discount items on five major roads in Tan Binh District under a sales promotion program lasting until September 29.
The five roads chosen for the program are Hoang Van Thu with 104 stores, Hoang Viet with seven stores, Ut Tich with 24 stores, Xuan Hong with 18 stores and Xuan Dieu with 20 stores.
The participating stores are offering a vast array of goods at reduced prices such as backpacks, bags, footwear, electronics and foods. In addition to discounts of 5% to 49%, the shopper can also get gifts from the seller.
The program, as part of the city’s broader big sale month, is co-organized by the city’s Department of Industry and Trade and Tan Binh District.
Consumers can also go shopping at a sales promotion session running until Sunday in Tan Binh with 97 stalls of 62 firms selling clothes, wooden items, electronics and telecom products.
Concurrently, a marketplace for students is being organized at Nong Lam University in Thu Duc District with the same schedule. The market attracts 80 booths of 70 companies offering products like laptops, foods and beverages.
Vietnam wants milk prices declared
The Ministry of Finance has asked the Prime Minister for approval to work with the Ministry of Health over a plan in which prices of nutritional foods and supplements that were previously called milk must be declared.
According to the Ministry of Finance’s proposal, if those products are actually milk or have dairy properties, the Ministry of Health would have to ask the Government and the National Assembly Standing Committee to include them in the list of items subject to price stabilization as regulated by the Pricing Law to protect consumers, especially children.
The proposal was submitted on Thursday, just two days after the Ministry of Health sent a similar document to the Prime Minister stating that no matter how those products were called are still on the price stabilization list. Therefore, this is a responsibility of the Ministry of Finance, according to the Health Ministry.
The problem emerged when the Ministry of Health allowed a series of products for children to have their names changed from milk to nutritional food products or supplements. This name change has effectively made those products immune from the Pricing Law since January 1, 2013.
As a result, production, distribution and trading enterprises of dairy products are not required to declare prices of powered milk for children aged under six when they change prices.
According to the Ministry of Finance, the name change has led prices of many dairy products for children to increase.
Nielsen: Earned ad most credible to local consumers
Up to 81% of Vietnamese consumers trust in recommendations from the persons they know, a form of earned media, according to Nielsen’s Global Survey of Trust in Advertising.
Meanwhile, branded websites come in second with 75% of Vietnamese respondents reporting their trust in this form of advertising.
Nielsen’s advertising trust survey interviewed 29,000 consumers in 58 countries about 19 forms of paid, earned and owned advertising formats.
The survey indicates that 64% trust consumer opinions posted online which is the third most trusted advertising form in Vietnam but still lower than the region’s average of 73%.
Advertisements on paid channels such as TV, magazines and newspapers still maintain their consumer trust with 55%, 54% and 52% respectively.
Regarding online advertising, 48% of Vietnamese respondents say they trust advertisements of emails they signed up for while 44% and 34% trust search engine results and online banner advertisements respectively.
Word-of-mouth advertising like recommendations of families, friends and online opinions leaves the greatest impact on the consumers with 90% and 85% saying that they would buy or inspect recommended products.
According to Nielsen, the rate of consumers affected by advertisements by branded websites is 85%, TV 79%, magazines 78% and print newspapers 78%. Meanwhile, text advertisements on mobile phones receive the least trust from the consumer.
Suppliers cry foul at supermarkets’ own brands
The trend of supermarkets producing commodities under their own brands have thrown many suppliers into hot water, with some saying they have fallen into the so-called self cannibalism when it comes to competition in this modern retail channel.
At supermarkets, consumers can easily spot products bearing the brands of Big C, Metro and Co.opMart, from toothpicks and cooking oil to coffee and plastic items. These supermarket-owned brands compete directly with commodities from their same-product suppliers on the same shelves and they often prevail.
Such products are displayed at eye-catching positions and their prices are 5-30% lower than those of the same categories, according to an expert.
Besides, supermarket staff introduce to customers that products bearing supermarket brands and those of the same kind of other brands are “produced by the same firm with the same ingredients.” It is because supermarkets outsource all production stages to their very suppliers.
Supermarkets’ own brands get the upper hand in competing with items produced by small and medium enterprises (SME) as store operators offer lower prices, which used to be the competitive edge of SMEs.
In reality, failing to compete with products bearing the brands of supermarkets, many enterprises have had to withdraw from the market.
According an expert, Big C is the first supermarket chain in Vietnam to develop its own product brand.
Supermarkets are expanding their business scale in Vietnam and thus their own brands are also growing.
Big C has 25 stores nationwide while Co.opMart has 63, not to mention its convenience stores.
Co.opMart now has five products bearing its own brand such as food, appliances and apparels whose prices are 5-20% lower than similar products of other brands.
An expert who works at a big consumer goods company in Vietnam said that it was not easy to have statistics about such types of products as supermarkets declined to supply information.
However, she forecast that this trend would be growing stronger at supermarkets.
With the boom of modern shopping, the chance is also growing for suppliers to have more distribution channels but at the same time they have to compete with products whose production is outsourced to themselves by supermarkets.
Enterprises, if wanting to survive in the supermarket channel, have to build their own pricing and sales promotion strategies, and must create unique values for their brands, said the expert.
According to her, when supplying goods to supermarkets, producers should keep confidential all production stages, including information on ingredients and formulas. It is meant to avoid the situation of business secrets being pirated, as a certain supermarket may use such ingredients and formulas and have the products manufactured by other enterprises.
BIDV sells over VND3.1 trillion of bonds
Bank for Investment and Development of Vietnam (BIDV) on Monday announced that it has sold over VND3.1 trillion worth of long-term bonds to raise funds for huge projects in the country.
The bonds were issued on August 30, carrying a term of 10 years and one day and interest rate of 10.5% per annum in the first five years. For the remaining period, if BIDV does not buy the bonds back, the interest rate will be 11% per annum.
The interest rate is considered high at present as five-year government bond now carries a coupon of just 8.5% per annum and that with a 15-year tenor bears a rate of 9% per annum.
Government bonds rates continued to increased slightly on the secondary market last week, staying at 7.68% per annum for two-year term, 7.94% for three years and 8.64% for five years.
BIDV has the right to buy back all the bonds before they fall due. However, the bank cannot buy a part of the bonds within five years after the issuance date.
Currently, short-term mobilization capital accounts for over 95% in local banks. Therefore, they are short of long-term capital to finance large projects in the country.
Aside from BIDV, many banks and large enterprises also have plans to mobilize long-term funds from the local and international bond market. However, the issuers have to consider issuance time carefully as it will decide success of the bond issuance.
UK firms eye oil and gas deals
Oil and gas companies from the United Kingdom are seeking to make inroads into Vietnam’s oil and gas market as the government’s restructuring of state-owned enterprises opens the doors for new players.
Caroline Lofthouse, business development manager of NOF Energy, a prestigious business development organization representing over 420 UK companies within the oil, gas, nuclear and offshore renewables sectors, said that Vietnam’s growing demand for oil and gas equipment as well as its political stability and attractive investment climate had prompted NOF to bring eight oil and gas companies to Vietnam last week in search of business opportunities.
“Many more of our 420 companies will come to Vietnam with the same purpose in the coming months,” Lofthouse said.
These eight companies held discussions with Vietnam’s state-owned giant PetroVietnam and other private partners like Premier Oil and Perenco about potential projects and business plans in Hanoi, Ho Chi Minh City and Ba Ria-Vung Tau province.
Stuart Lawrence, managing director of Booth Industries Limited, said his company had recently received two big orders from Vietnamese partners.
“We want more orders from Vietnam-based partners. That’s why I have physically come here to meet them regarding more projects. We wish to establish a network with future clients in Vietnam,” Lawrence said.
Booth Industries, established in 1873, is world-famous in the design and manufacture of protective equipment for hazardous environments. Currently it commands a unique market position as the only provider of a complete portfolio of steel doors, from high integrity, purpose designed fabrications to commercial grade personnel doors.
Matt Smith, business development manager of Beck Prosper Ltd Asia Pacific region, said his company, manufacturing and distributing high integrity bolting products for the oil and gas industry, already has a large factory in Thailand and plans to build another in Vietnam.
“After Vietnam, we will build another two factories in Cambodia and Myanmar. These four factories will be our production bases for making export-oriented and locally-consumed products,” Smith said.
“I have met with some potential partners in Ho Chi Minh City and the discussions were fruitful. We also want to obtain general information on the oil and gas market in Vietnam, and to establish contact with more local companies,” he added.
“We highly value the lucrative Vietnamese oil and gas market and want to establish local contacts for future growth,” said Ron James, who is the regional sales manager of BEL Valves, one of the world’s leaders in designing and making high integrity valves for critical oil and gas applications.
Echoing his optimistic views, Bernard Whicher, managing director of Northey Technologies Ltd – designing and making dry and oil-free rotary compressors, vacuum pumps and systems, also said “Vietnam is currently covered by our Singapore agent, but we are looking for local representation in the country. We want to gain market knowledge, make contacts and look for potential new business.”
Other companies also came to Vietnam with the same purpose, saying that the Vietnamese government’s restructuring of state-owned enterprises would provide opportunities to engage in the country’s oil and gas industry.
“We want to explore business opportunities in the engineering, construction, operation and maintenance of Vietnam’s oil and gas market and develop business relationships with Vietnam’s oil and gas companies. Hopefully we will have some projects with local partners soon,” said Roy Armishaw, vice president of the Offshore Production and Operation Division of Petrofac, the UK’s leading provider of oilfield services to the international oil and gas industry.
Secrets of real estate price drops finally revealed
The real reason for the shock half price reduction by two major real estate developers was revealed last week.
Recently, Novaland, the developer of Sunrise City in Ho Chi Minh City, announced that it had decided to sell apartments in the North Towers residential building, the third phase of the Sunrise City project, at VND25 million per square metre - half the price of apartments in the project’s first phase South Towers.
According to Phan Thanh Huy, general director of Novaland, the new price would reflect a difference in quality between the units.
Huy said that the price of VND50 million per square metre had been applied in the first phase of this project when its quality was at five-star level. This new price – VND25 million per square metre, was applied for units with three-star equivalent.
Talking with a project salesman, VIR discovered that the North Towers have only one basement, with buyers granted space for just one car and motorcycle. While in the South Towers – where units were sold for VND50 million per square metre, have two basements containing much more parking space for residents.
“The expense of building one floor of basement is equal to that of three above ground. It’s clear that the developer can make great savings by reducing the number of basement levels,” said a construction expert.
Moreover, the design of the North Towers has from 8 to 12 units on each floor, reducing the total number of square metres per apartment.
The starting price of VND25-33 million, was initially considered remarkable, however they are for unfurnished units. In order to finish the units, buyers will require to invest an additional VND5 million for every square metre and will have to wait two years more for the project t be finished.
Meanwhile, the Phat Dat Real Estate Corporation also announced they would be selling landed houses and villas at The EverRich 3 project at prices of around VND40 million per square metre, a 50 per cent reduction on last year’s quotes.
According to the company’s financial declaration, Phat Dat had suffered from low turnover in the last several months.
Until the second quarter of 2013, the company had experienced eight continuous quarters with turnover of under VND40 billion per quarter. In some quarters, the company had only earned VND2 billion.
The short term debt of Phat Dat also increased from VND305 billion at the end of the third quarter of 2011, to more than VND1,500 billion in the beginning of 2013.
Rising debts and lack of income forced Phat Dat to sell their products as quickly as possible in the hope of raising cash in the short term.
According to Hoang Anh Tuan, general director of Tac Dat Tac Vang, Vietnamese developers have never had to make such large reductions in the past. “It’s difficult to define where the bottom of the market lies in regard to price” Tuan said.
He added that for those with spare cash under the mattress, now was an ideal time to invest in real estate.