Developer Keangnam Vina refuses to show up in court for disputes with buyers

Keangnam Vina, the developer of Keangnam Landmark Tower in Hanoi, refused to show up in court for all three cases of dispute with apartment buyers that were brought before the law on January 7, 11, and 14.

The disputes arose over the area of the apartments sold. Specifically, the buyers claimed that the company added reinforced concrete pillars and electrical boxes into the units, but did not account for this in their calculations of floor space.

The trials will be held again 30 days after the first date. If representatives of Keangnam continues to not show up, the trials will go on without their presence.

Keangnam Hanoi Landmark Tower, developed by Keangnam Vina, the Vietnamese subsidiary of South Korean Keangnam Enterprises, is located on 4.6 hectares on Pham Hung street in west Hanoi, and is currently Vietnam’s highest building.

With a total investment capital of more than US$1 billion, the 72-storey tower features a 5-star hotel, offices and apartments for lease, and two 48-storey apartment towers with a total of 922 apartments. All of the apartments were sold at an average price of US$3,000 per square metre.

Since 2011, seven buyers of 10 apartments in Keangnam Landmark Tower have sued Keangnam Vina, claiming that the company violated several contract terms.

In July last year, Keangnam Vina was ordered by court to pay VND400 million (US$19,000) in one case to buyers claiming the company company miscalculated the USD/VND exchange rate in the sales contract, on top of miscalculating the area of the apartments.

In November 2015, a similar case was brought to trial and it was decided that Keangnam was to keep the apartment and pay the buyer VND781 million (US$36,000).

Earlier this month, AON was reported to be the new owner of Keangnam Hanoi Landmark Tower, Vietnam's tallest building, after buying it from Keangnam Enterprises.

Petrol prices fall to five-year low

The retail price of petrol was sharply cut by VND590 to reach a five-year low of VND15,442 (68 US cents) per litre at 3pm yesterday.

The ministries of industry and trade and finance also sent a document, asking petrol traders to lower the price of the E5 RON 92 biofuel by VND580 to touch VND14,759 (65 cents) per litre.

The price of diesel also dipped by VND912 to reach VND10,207 (45 cents) per litre, while the price of kerosene came down by VND886 to reach VND9,388 (41 cents) per litre.

The price of mazut fell by VND301 per kilogram to touch VND7,245.

The ministries said the average price of a barrel of petrol was $48.6 in the last 15 days, lower than $51.5 in the previous fortnight.

That was the reason why the ministries had kept the price stabilisation fund as well as the taxes and fees unchanged, while reducing the retail prices, they said.

Earlier, a representative of a petrol trader in the southern region had said the domestic retail prices could be slashed by VND400 to VND500 per litre if the factors of taxes, fees and the stabilisation fund remained unchanged.

The last price adjustment had been done on January 4, when the petrol price fell by VND370 to reach VND16,030 per litre. The price of E5 RON 92 was also reduced by VND571 to touch VND15,339 per litre.

Last year, the retail price of petrol was cut 12 times and increased six times.

Azimut Yachts adds distributorship in Vietnam

Italian luxury boat builder Azimut Yachts has announced plans to launch a distributorship in Vietnam, reports local newspaper Tri Thuc Tre.

The news comes on the heels of last year’s announcement that the company was reformulating its Asian distribution strategy to enter the Hong Kong, Thailand, Indonesia and Singapore markets.

For the prior 28 years Simpson Marine had been the exclusive dealer for much of Asia for Azimut Yachts, a partnership that saw both companies grow and prosper. The two companies have now parted ways due to changing business strategies.

Azimut Yachts is focused on a new single-brand partnership strategy as opposed to Simpson Marine’s strategy of growing as a multi-brand dealer, said a company spokesperson.

He said with the opening of Azimut Yachts distributorships throughout Asia and now in Vietnam, the company will offer sales and service with partners fully committed and focused on Azimut Yachts only.

The Italian shipyard he underscored, will provide all-around assistance from the purchase of a yacht to dedicated after sales services, including the offering of advice and assistance on servicing, berthing, licensing and registration.

Italian luxury carmaker Maserati arrives in Vietnam

Members of the public and invited guests have gathered to celebrate the official opening of an exciting new flagship Maserati dealership, a significant move for the marque.

Modelled along Maserati’s exacting global standards –  the new 500 square metre dealership located at 1-5 Le Duan Street in the Ben Nghe Ward of District 1 in Ho Chi Minh City – is an integrated 3S facility, offering sales, service and spares under a single roof.

Maserati has devoted their customer lounge to showcasing the marque’s illustrious history. The dealership also features a dedicated configurator area, where its discerning customers can customize their prized wheels to their satisfaction.

Partnering with Auto Modena, the dealership is offering some special grand opening deals with sales prices for a Maserati Ghibli S starting at US$223,250, while the GranTurismo MC Stradale is offered at US$410,780.

Mekong Delta positive about fruit export

The Mekong Delta’s fruit export revenue will surge in the next few years, said Nguyen Phuong Lam, Deputy Head of the Vietnam Chamber of Commerce and Trade (VCCI)’s chapter in Can Tho.

The region has approximately 288,000 hectares of fruit crops, which produce 3.5 million tonnes of products per year. The delta accounts for about 38 percent and 44 percent of the country’s fruit plantation and production, respectively.

VCCI Can Tho sees that the conclusion of the Trans-Pacific Partnership deal and free trade agreements that Vietnam sealed in 2015, such as those with the Republic of Korea, the EU and Russia, will bode well for the region’s fruit exports. The formation of the ASEAN Community should help, as well.

To capitalise on future opportunities, the major drawback that local enterprises need to work on is their loose connection with farmers in both production and distribution, Lam noted.

Nguyen Van Nguyen from the Southern Steering Committee said these businesses ought to update their knowledge about integration and enhance their competitiveness.

He underscored that the community will need support to collect market information and promote their products.

According to the Southern Fruit Research Institute, 85 percent of fruit harvested nationwide is consumed domestically and many of them have to compete with imports from the US, Australia and Japan.

Concerning the delta’s rice production, despite difficulties in early 2015 due to narrowed Asian markets, rice exports increased by the year’s end. Last year, the region shipped 2.37 billion USD in rice overseas.

The upbeat records for rice and fruit could enable the Mekong Delta to welcome an influx of Japanese investment, which is expected to boost agricultural management and technology in the region.

As such, the region aims to form new business sectors in IT, logistics and biotechnology, among others.

Last year, the Mekong Delta grew 7.8 percent, with total export revenue reaching 13 billion USD. The region is calling for investment in Phu Quoc (tourism hub), Can Tho (socio-economic and political hub), and localities near Ho Chi Minh City.

SOEs share auctions earn 463 million USD for State

State-owned enterprises have earned 10.4 trillion VND (463.1 million USD) in 143 share auctions held on the HCM Stock Exchange and the Hanoi Stock Exchange, the bourses said.

Experts consider 2015 to be a year of well-implemented equitisation, divestments and initial public offerings (IPO).

The northern HNX bourse organised 93 auctions worth 5.94 trillion VND (264.5 million USD), while the southern HoSE bourse's 50 auctions helped to mobilise 4.45 trillion VND (198.1 million USD).

Thus, the average value of each session on HNX and HoSE was nearly 64 billion VND (2.84 million USD) and 89 billion VND (3.96 million USD), respectively.

According to HoSE, the most notable IPOs of the year were of the Vietnam Airlines Corporation, Sai Gon Port One Member Limited Company and the Vietnam Seafood Corporation.

Meanwhile, on HNX, the IPO with the highest offering was of Vinacomin's Power Corporation with 236.3 million shares, while the IPO that saw the largest number of participants was of the Hai Phong Water Supply Limited Company in which 652 organisations and individuals participated.

The northern bourse said large SOEs that conducted IPOs included the Vietnam National Coal – Mineral Industries Holding Corporation Limited, Viet Bac Mining Company, Vegetables and Agriculture Product Corporation and Vietnam Tea Corporation, besides the Vietnam Machinery Installation Corporation. HNX also held the auction of Vinamotor shares in early 2016, mobilising 1.2 trillion VND (53.4 million USD).

The two bourses said they organised several auctions for the first time in 2015 to attract more investors and saw good results. These included batch auctions of Cienco 5, Cienco6, Kim Lien Hotel and Ha Tinh Pharmaceutical JSC, besides Thanh Hoa Medical Materials and Food Joint Union.

HoSE plans to conduct more important equitisations of large SOEs this year, such as MobiFone, Sai Gon Commercial Corporation and Ben Thanh Corp.

Vietnam manufacturers optimistic on 2016

Enterprises operating in the processing and manufacturing sectors are optimistic about growth in export orders in 2016.

According to a recent report from the General Statistics Office under the Ministry of Planning and Investment (MPI) on business trends within the processing and manufacturing industries, more than 80 percent of the surveyed enterprises said in the first quarter of 2016 they would be stable or even better off than in 2015.

Meanwhile, only 17.7 percent of these enterprises said 2016 would be a tougher year than 2015.

About 91.6 percent of the enterprises anticipate higher production volume in 2016 as compared with 2015, while 66.7 percent expect more stable production costs this year.

The statistics office said this trend clearly showed Vietnam's business climate had improved significantly.

More than 94,750 new firms were established in 2015 in Vietnam, with a total registered capital of 601.5 trillion VND (27.3 billion USD), up 26.6 percent in number and 39.1 percent in capital, respectively, as compared with 2014.

New businesses generated nearly 1.5 million jobs for workers, a year-on-year increase of 34.9 percent.

In the same year, the number of enterprises that resumed operations was 21,500, a 39.5 percent rise compared with 2014, while the number of dissolved businesses was 9,467, down 0.4 percent against 2014.

The ministry said the Enterprises and Investment laws, which came into effect on July 1, 2015, have had positive impact on enterprises' activities.

Another project licenced in Ha Nam

The northern province of Ha Nam on January 18 granted an investment licence to Japan’s Fuji Engineering Vietnam Co., Ltd to build houses and launch services for Japanese experts and labourers at the Dong Van I Industrial Park in Duy Tien district.

Covering an area of 11,500 sq.m, the three buildings will cost 10 million USD. The project includes three phases, with the first to last until December this year.

Nguyen Xuan Dong, Chairman of the provincial People’s Committee, pledged the best possible conditions for investors in the locality, including Fuji Engineering Vietnam.

Ha Nam will ensure round-the-clock electricity, clean water, waste water treatment, favourable customs procedures and security, and other services in the industrial park, he said.

Fukuda Yasuo, General Director of Fuji Engineering Vietnam, said he hopes the province will continue to create optimal conditions so his company can ensure the progress and efficiency of the project.

Ha Nam boasts eight industrial parks with a total area of 2,000 hectares. Of these, four are now operational. Local authorities intend to develop 18 industrial clusters covering a total of 500 ha.

Foreign investors from 11 countries and territories have poured 1.4 billion USD into 155 projects in Ha Nam province so far.

Local authorities granted investment licences to 35 foreign-invested projects in 2015. FDI firms have contributed over 320 billion VND (14.4 million USD) to the State budget, making up 17.18 percent of the province’s budget collection.

The province plans to attract 180 trillion VND (8 billion USD) in investments between 2016 and 2020.-

Ca Mau expands large-scale fields

Nearly 9,000 farmers in southernmost Ca Mau province worked to produce 540,000 tonnes of rice on more than 10,760 hectares of large-scale paddy fields in 2015.

The large-scale field is a centralised production model that utilises coordination among farmers, businesses, scientists and State agencies to facilitate the application of technology in cultivation, improving the value of agricultural products and farmers’ incomes.

The model has enabled locals in Ca Mau to use greener technology, and deal more effectively with unfavourable weather and harmful insects.

These efforts have led to lower prices and higher profits, with an average local household’s earnings reaching up to 20 million VND (900 USD) per hectare.

According to Nguyen Van Tranh, Deputy Director of the Provincial Department of Agriculture and Rural Development, said productivity rose by between 15 and 20 percent, thanks to the model.

Ca Mau will continue expanding these paddy fields throughout 2020 and calling for corporate support for farmers, Tranh said.

Additional measures will also be applied to curb volatile prices, he added.

As of September 2015, Vietnam had about 556,000 hectares of large-scale rice fields, 450,000 hectares of which are in the Mekong Delta.

Apartment market in two major cities rising

Vietnam's real estate market is expected to continue recovery this year after gaining good business results last year, with the market reaping benefits from favourable macro conditions, experts said.

According to property service provider CB Richard Ellis (CBRE) Vietnam's report on Hanoi property market in the last quarter of 2015, the average consumer price index (CPI) grew 0.63 percent this year, which is the lowest level since 2001, and fell way below the annual average level of 5 percent recently.

This low level of the inflation rate supported the growth of consumption and investment level in 2015. Similarly, the low mortgage rate also supported activities in the real estate market last year. Credit growth improved in 2015, recording 18 percent, significantly higher than the 12 percent to 14 percent average level in the 2012 to 2014 period, according to the State Bank of Vietnam.

Although the interest rate in Vietnam has increased slightly after the United States Federal Reserve hiked its interest rate in late December, it is forecast that there will be no drastic change in interest rates in 2016, since most of the effect has already been factored in the interest rate's current value.

This is good news for real estate investors as this real estate investment has been proved to yield better returns than other types of investments such as currency, gold, oil, or government bonds, in recent years. It is likely that more fluctuations will happen in these markets in 2016.

Housing transactions in Hanoi last year hit a record 21,100, surpassing the sector's peak in 2009, according to CBRE Vietnam. High-end apartment transactions accounted for 32 percent of the total, up from 20 percent in previous years.

A number of property investors have sped up delayed projects. Several apartment projects have been restructured in both size and price in accordance with market demands.

The mid-range and low-cost apartment transaction rate was down compared to 2014, however, it still accounted for a large share of the total sales due to reasonable pricing.

In 2015, about 28,300 apartments were put on the market in Hanoi, up 70 percent compared with the previous year. High-end apartments accounted for 28 percent of the total share compared to the peak of 21 percent in 2009.

Average prices of new projects increased between 3 percent and 5 percent year-on-year (YoY), and between 5 percent and 7 percent for high-end projects, Nguyen Hoai An, vice director of CBRE Vietnam's Hanoi branch said.

Last year also marked a firm recovery in HCM City's housing market with strong launches, positive sales volume and improved prices, particularly for mid- to high-end properties.

More than 41,900 condominiums were launched in 78 projects, mostly in the east (47 percent) and south (27 percent) of the city, an increase of 122 percent YoY, according to a quarterly report of CBRE Vietnam on HCM City market.

It was the highest ever in a single year, due to the introduction of Vinhomes Central Park in Binh Thanh District and Masteri Thao Dien in District 2, as the continued positive market momentum boosted the confidence of developers.

Overall, market sentiments remained positive throughout the year as 2015 ended with record sales for a single year – an estimated 36,160 units and up 98 percent YoY.

These included sales to individual buyers and en-bloc sales to institutional investors and property agents, in which sales to individual buyers were estimated at 33,348 units, up 83 percent.

According to Savills Vietnam, in HCM City market, apartments saw the highest new supply and transaction volume in the quarter. Around 11,800 units were launched from 17 new and another seven existing projects, up 20 percent quarter on quarter (QoQ) and over 100 percent YoY.

This was the largest new supply by a quarter over the last five years. Almost 7,700 units found buyers, up 47 percent QoQ and 86 percent YoY.

Projects with good locations, investment opportunities, developed infrastructure and comprehensive urban planning attracted buyers' attention, Savills Vietnam said.

In the future, the new exchange rate mechanism that was applied from December 2015 would not make any remarkable impact on the Vietnamese real estate market, An said.

The Vietnamese dong remains stable compared to other foreign currencies in the region, she explained, adding that Vietnamese still account for 90 percent of investors in the real estate sector, and domestic capital flows dominate the market.

According to the CBRE experts from Singapore and Hong Kong, Vietnam's exchange rates remain stable and positive among other Southeast Asian countries.

They attributed the attractiveness of Vietnam's property market to a growing population that has led to increased demand for housing.

Meanwhile, with the revised Law on Housing and Law on Real Estate Business coming into effect from July 1, 2015, the market recorded a certain level of interest from foreigners in major high-profile projects by reputable developers in both Hanoi and HCM City, according to CBRE Vietnam.

As the market is developing towards a more open and internationalised environment, while overall pricing is still attractive as compared to other matured markets, it is expected that more foreign buyers will look into Vietnam market as more guiding laws are issued to foster investment activity.

Both homebuyers and developers need to prepare for a changing market with evolving laws and regulations: Compliance and transparency are important in managing these changes.

The demand growth on the domestic property market will remain positive this year, supported by continued strong investor sentiment and the availability of housing credit, according to property consultancy Jones Lang LaSalle (JLL) Vietnam.

Hoi Xuan Hydropower Plant receives WB’s support

The Hoi Xuan Hydropower Plant in the northern central province of Thanh Hoa, which is set to use renewable energy to reduce dependence on thermoelectricity, will receive support from the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA).

The World Bank announced the news on January 18, adding that MIGA will issue a credit guarantee worth 239.7 million USD for a group of lenders including Goldman Sachs Bank and The Bank of Tokyo Mitsubishi. The 15-year guarantee covers the risk of non-honouring of sovereign financial obligations in respect of the government’s repayment guarantee to the lenders.

The guaranteed financial source will be used for the Xuan Hydropower Plant’s design, construction, operation and maintenance. The 102 MW hydropower plant will produce and sell power for Electricity of Vietnam.

Vice Chairman of Investment Banking in Asia Ex-Japan at Goldman Sachs Tim Leissner expressed his delight over collaboration with the Vietnamese Government and MIGA to meet the country’s increasing power demand.

Clean, renewable projects like the Hoi Xuan Hydropower Plant are crucial for Vietnam as the country continues its rapid GDP, he highlighted.

Meanwhile, MIGA Executive Vice President and CEO Keiko Honda said that together with financial resources, Vietnam is diversifying its energy mix to increase energy supply and security. MIGA is glad to be an important part of the process, she added.

Businesses and AEC’s tariff policy

Many Vietnamese businesses have begun preparing themselves to meet the challenges and opportunities that will be brought about by the ASEAN Economic Community (AEC), which ASEAN officially established in late 2015.

Deputy Director of the Central Institute for Economic Management (CIEM) Vo Tri Thanh said the comprehensive integration process has indicated that Vietnam should innovate in certain areas in order to growth further.

He said import-export tariff reductions will help businesses reduce production costs and escalate investment, export opportunities, and goods’ and services’ competitiveness.

He went on to say free trade deals have created enormous opportunities for Vietnam in attracting investment – especially foreign direct investment and domestic investment. The country will gain access to many big markets with high purchasing power.

Besides, trust in the country’s reforms will be enhanced, making Vietnam more attractive for investment.

The researcher added that however, it will still be difficult for Vietnamese businesses to join chains and networks as most domestic ones are of small and medium sizes.

Meanwhile, Danapha Pharmaceutical Joint Stock Company’s Finance Deputy Director Nguyen Thi Van Tho said that in the context of international economic integration, the AEC’s formation and its new tariff policies have created numerous opportunities for businesses to bolster exports to new markets.

However, pressure will increase in terms of competition and rules on quality, product origin and technology, forcing businesses to invest more in research activities and develop skills for workers, she added.

Do Ha Nam, General Director of Intimex Group Joint Stock Company, said several free trade agreements, including the Trans-Pacific- Partnership (TPP), AEC and other trade deals have generated great opportunities for Vietnam’s high-quality processing products to enter new markets, which traditionally impose high tariff on processed goods.

The AEC’s objective is to create a market of over 600 million people in ASEAN countries. There will be free flow of goods, services, investment capital and skilled labour following the liberalisation. These will include tariff reductions and streamlining of certain administrative procedures.

Investment deal on thermal power plant signed in Nam Dinh

The General Department of Energy, under the Ministry of Industry and Trade, on January 18 signed an investment agreement with Taekwang Power Holdings Co. Ltd of the Republic of Korea (RoK), and Saudi Arabia’s Acwa Power to build a thermal power plant in northern Nam Dinh province.

The 2 billion USD plant will house two turbines with a total capacity of 1,200 MW, using coal supplied by the Vietnam National Coal-Mineral Industries Group.

The build-operate-transfer (BOT) project is significant to the economic development of Nam Dinh and other northern provinces, as well as to ensuring national energy security.

Addressing the signing ceremony, Minister of Industry and Trade Vu Huy Hoang asked the project’s relevant sides to promptly complete investment licence procedures.

He also urged Nam Dinh to make preparations for measuring, compensation and land clearance work to implement the project as soon as possible.

The project, together with the Vietnam-RoK Free Trade Agreement which took effect on December 20, testifies to the two countries’ efforts in realising their strategic partnership, the official said.

Representatives of the General Department of Energy, and local leaders also promised optimal conditions for the investors to ensure the progress of the project.

FDI begins flowing into HCM City

In the first two weeks of 2016 the HCM City Export Processing Zone Authority (HEPZA) has licensed two FDI projects with a combined registered capital of over 30 million USD.

They include a 25.6-million-USD joint venture between Saigon Co.op and Singapore's Wilmar International Limited to produce sauces for local consumption and exports to be set up at the Hiep Phuoc Industrial Park in Nha Be district.

A spokesman for the Singaporean partner said the plant would help exploit the strengths of the two partners, making their products more competitive and helping develop the country's sauces and spices industry.

The other is a project by Nippon Paper Viet Hoa My, a joint venture between Japanese and Vietnamese companies to be located at the Tan Phu Trung Industrial Park.

The 4.4-million-USD plant will manufacture high-quality paper cups, bowls, and trays for domestic consumption as well as export.

According to HEPZA, this year the hi-tech park targets total FDI of 700 million USD, with priority given to technology and supporting industries and four other major sectors — manufacturing, electronics – IT, chemicals – rubber – plastics, and food and foodstuff processing.

HEPZA said many textile and garment, electronics and supporting-industry companies based in HCM City industrial parks have plans to expand investment and production to take the opportunities arising from bilateral and multilateral trade agreements signed or to be signed by Vietnam.

"These are signs indicating that FDI flows into HCM City will increase sharply this year," a HEPZA spokesman said.

Prime Minister approves equitisation plan for VNCC

Prime Minister Nguyen Tan Dung has approved the equitisation plan to transform the State-owned Vietnam National Construction Consultants Corporation (VNCC) into a joint stock company on January 15.

After the equitisation, VNCC, under the Ministry of Construction, will have chartered capital reserves of 357.7 billion VND (15.89 million USD), or 35,774,448 shares at a par value of 10,000 VND (43 US cents) per share.

Under the plan, the MoC, representing the State capital, will hold 18,244,968 shares, or 51 percent in the corporation, while as much as 1,779,500 shares, or 4.97 percent of the charter capital, will be sold to employees.

Further, MoC will decide upon the number and prices of shares to be sold during the initial public offering to strategic investors.

In 2015, the corporation earned revenues of 1.128 trillion VND (56.8 million USD), an increase of 8 percent, and profits of 70.85 billion VND (3.14 million USD), up 13 percent over 2014.

Plans also call for the corporation to divest partly or wholly in its core and non-core business.

Similar to VNCC, according to the local media, MoC plans the equitisation of four large enterprises under its umbrella in 2016. The SOEs of Song Da Corporation, Housing and Urban Development (HUD), Vietnam Urban and Industrial Zone Development Investment Corporation (IDICO) and the Vietnam Cement Industry Corporation (VICEM) have largely completed their corporate evaluations. Those companies were working with the State Audit of Vietnam to assess their values before the figures are approved and announced by the ministry.

Currently, the ministry has nearly finished its target of having all SOEs equitised. Most enterprises under the ministry are large, with some firms reporting assets of over 10 trillion VND (445 million USD) and State ownership ranging from 1 trillion VND to 15 trillion VND.

Also, many companies own land use rights, offices, workshops, urban areas, industrial zones and none-core businesses.

Five-year bond yield seen rising this year

Yields of Government bonds with terms five years or longer will likely rise this year, VPBank Securities said in a recent report.

The research said the G-bond market experienced its most successful trading in the fourth quarter of 2015 with bonds sold at auction at between 70 and 90 percent. The Government mobilised 131 trillion VND (5.8 billion USD) in the quarter, thanks to the 3-year bond supply and newly launched products from the State Treasury in December such as long-term bonds and zero-coupon bonds that sold at 100 percent.

The research said the sale of G-bonds was still growing from 2014 with a total issuance of 243 trillion VND (10.8 billion USD), up 2.8 percent in G-bonds and government-guaranteed bonds.

Despite good demand in the last quarter, the State Treasury, the largest G-bond issuer in Vietnam, failed to meet their target for the year. The State Treasury issued 196 trillion VND (8.7 billion USD), completing 51.2 percent of the year's target and a reduction of 7 percent from 2014. Of the bonds, 3-year and 5-year bonds accounted for the highest proportion of sales.

At the same time, most of the bond yields rose higher than they were in 2014. By the end of the year, yields on 5-year bond in the primary market was 18 basis points higher reaching 6.58 percent per year while the yield of the 10-year bond reached 6.95 percent per year, up 76 basic points and yield of 3-year bonds rose 55 basic points to 5.74 percent per year. As the only exception, yield of 15-year bonds fell 15 basic points to 7.65 percent per year.

VPBank Security thought that the yield increased due to low demand for bonds and the fluctuations in the exchange rate and it believed that yields will continue to rise, estimating that 5-year (and more) bond yields could reach between 7 and 7.3 percent this year.

The increase will be due to the large amount of the bonds offered to support the state budget. The National Assembly only approved the issuing of 3-year bonds, the most attractive bonds, to not exceed 30 percent of the total issuance volume, so the last 70 percent of the bonds will have a term of 5 years and more.

Most investors focus on 3-year bonds because of higher liquidity and lower risk, while the supply of longer term bonds was larger but demand for them was lower.

Meanwhile, downward pressure on the dong, the fear of a devaluation of the Chinese yuan and possibly more interest rate hikes from the US Federal Reserve System may make investors set aside a portion of their capital to hedge instead of buying local bonds.

Furthermore, local credit growth was expected to be as high as 18 or 20 percent while the banking system will continue restructuring activities in 2016.

Consumer prices to jump more this year than 2015

The consumer price index (CPI) this year would rise more than in 2015 due to a number of factors, statistics official have forecast.

Deputy Director of the Pricing Statistics Department under the General Statistics Office, Do Thi Ngoc said some factors affected inflation this year including an increase in tuition fees, healthcare services and minimum wages.

Besides, Ngoc said, power supply is also set to improve this year as the rise in early 2015 was only 7.5 per cent, the lowest level in a plan suggested by the Ministry of Industry and Trade.

She said that the exchange rate would also have an impact on inflation this year. The rate could be also adjusted upwards next time in wake of a rise in the United States (US) dollar as well as an increase in lending demands.

However, Ngoc said, there would be some other factors that could restrain the CPI rise this year.

The oil price in the global market is forecast to continue its decline this year due to a high supply source while the price of agricultural produce is also likely to reduce in wake of fiercer competition.

In the latest macro report released last week, Bao Viet Securities Company (BVSC) also forecast that inflation could accelerate this year due to a number of factors.

These include the possibility of global commodity prices bottoming out, adverse effects of the El Nino phenomenon, the delay in the State Bank of Viet Nam (SBV)'s expansive monetary policy, and the higher consumer demand, the brokerage agency warned.

The BVSC forecast that the CPI would increase between 3 per cent and 5 per cent this year, compared to 0.6 per cent last year.

The brokerage agency expected inflation to be revised gradually to between 5 per cent and 7 per cent for the 2016 to 2020 period and the SBV would maintain a gap between interest rates in the dong and the greenback to ease upward pressure on the dong.

According to the BVSC, the dong could weaken by 3 per cent to 4 per cent against the US dollar in 2016, based on presumptions that Viet Nam's overall balance of payments would post a surplus of US$5 billion, the US Fed could lift the interest rate by 1 per cent and the Chinese yuan could continue to be devalued.

Interest rates on dong-denominated deposits are expected to rise 0.6 to 1 percentage point this year, driven by rapid credit growth in 2015.

The BIDV Securities Company this month also forecast that consumer prices could increase between 1.8 per cent and 3.5 per cent this year.

World Bank arm guarantees loans for Viet Nam

The Multilateral Investment Guarantee Agency, the political risk insurance and credit enhancement arm of the World Bank Group, announced its support to the Hoai Xuan Hydro Power Project in northeastern Viet Nam.

MIGA issued a $239.7 million guarantee to a consortium of lenders led by Goldman Sachs and Bank of Tokyo Mitsubishi to support financing for the design, construction, operation, and maintenance of the 102MW plant in Thanh Hoa Province.

The plant will sell electricity to national utility Electricity of Viet Nam under a power purchase agreement.

Demand for electricity in Viet Nam is expected to double between 2014 and 2020 due in large part to sustained economic growth that has transformed the country from one of the poorest in the world to lower middle-income status within a quarter of a century.

More than 70 per cent of investment in the country's new generation capacity is expected to come from the private sector.

MIGA's support to the power plant is expected to have broad demonstration effects in Viet Nam's hydropower sector, both with respect to future private-sector investments and international environmental and social best practices for such projects.

MIGA's executive vice president and CEO Keiko Honda said, "Viet Nam is diversifying its energy mix to increase energy supply and security, just as it is diversifying its financing sources to create a more secure base for infrastructure development in the future.

"MIGA is glad to play a role."

SBV to control real estate loans

The central bank will control property loans to limit risks this year, an official told a meeting in HCM City late last week.

State Bank of Viet Nam deputy governor Nguyen Phuoc Thanh said that although credits grew positively with the majority of loans poured into production and business activities last year, many banks pumped too much capital into the real estate market.

Xay Dung, a Ministry of Construction newspaper, reported that property loans grew by 18 per cent year-on-year last year, as commercial banks accelerated financing both property developers and homebuyers.

According to the central bank's credit department, outstanding loans in the real estate sector total about VND360 trillion (US$16 billion), a rise of 80 per cent from the figure recorded three years ago.

"What's worrying, many banks have ‘put all their eggs into one basket' – the realty sector. It is necessary to tightly monitor risks, or else bad debts in this area may soon rise again," Thanh said.

The deputy governor noted that bad debts remained an issue for the banking sector. He added that some banks were facing troubles with enterprises that asked for loan restructuring and lower interest rates to avoid bankruptcy.

The Viet Nam Institute for Economic and Policy Research under the University of Economics and Business said that rallies in the property market were positive signs for the the economy. But caution is needed to prevent "property bubbles" from occuring.

Minister of Construction Trinh Dinh Dung said recently that, at the moment, the property market did not have the conditions to form a bubble. "However, it cannot be ignored," he stressed.

In a resolution issued earlier this month on socio-economic in 2016, the Government asked the central bank to strictly control loans allocated in high-risk areas, including real estate.

This would be part of the central bank's policies to help the country control inflation, maintain macro-economic stability and accelerate economic growth.

Dung said the construction ministry would aim at enhancing the quality of property products in 2016, as the competitiveness of the construction sector remained low.

This was one among its efforts to boost the construction production value by 10 per cent against 2015.

Firms evading insurance face punishments

Enterprises that evade paying for insurance for their employees should be punished, said Deputy Prime Minister Vu Van Ninh yesterday following a report that insurance debt in Viet Nam reached more than VND7.6 trillion (US$339.2 million) in 2015.

The figure was made public yesterday in an online conference reviewing Viet Nam's social insurance.

Viet Nam Social Security Deputy (VNSS) General Director Nguyen Minh Thao said that the debt included three types of complimentary insurance that every enterprise with more than 10 employers is supposed to pay for their workers – social insurance, health insurance and unemployment insurance.

The Deputy PM said that the insurance debt was "huge" – accounting for about 3.54 per cent of the total insurance collected of VND216 trillion ($9.6 billion) - and "sufficient to run the whole sector's state agencies".

"VNSS will have the authority to inspect the insurance-paying activities from 2016, and it must strictly and publicly handle any organisations and individuals that evade or delay paying for the insurance," said Ninh.

The jurisdiction over inspection was first granted to the VNSS in the amended Law on Social Insurance in 2014 as an attempt to solve the long-standing insurance evasion issue, which stood at more than VND11 trillion ($488.8 million) two years ago.

"If we are not determined enough to tackle the problem, it would cause unfairness between enterprises and affect employees' rights," said Ninh.

In 2015 VNSS ran checks on its 19,000 sub-agencies in cities, provinces and districts nation-wide to find out that 472 units and individuals have committed wrongdoings regarding insurance, said Thao. The VNSS asked them to repay some VND107 billion ($4.77 million) for the insurance evasion.

The report also showed an increase this year in both the number of people using the three insurance programmes, at 70.2 million – 8.3 per cent higher than 2014's, and the amount figure collected of VND216 trillion ($9.6 billion) – nearly VND19 trillion ($848.1 million) more than that of 2014.

The number of people buying health insurance jumped "at a remarkable pace", said Thao.

"Viet Nam used to be a country where 29 localities had health insurance coverage less than 65 per cent. But by the end of 2015, the lowest locality had a coverage rate of 69 per cent while the national average reached about 77 per cent," he said.

Despite the promising figure, VNSS still has a lot of work to achieve universal health insurance, said the Deputy PM.

"In order to realise this target, we have to make health insurance accessible to the remaining 23 per cent of people. Yet it is extremely hard to increase just one per cent," Ninh said.

"Part of the reason for this is the habit of Vietnamese to buy insurance only when they are sick, or have financial difficulties," he said. "We should promote dissemination work to change the mindset of the citizens."

Firms to seek local suppliers

Vietnamese garment and textile firms are increasing their investments in locally made raw materials in an effort to satisfy strict rules of origin set by free trade agreements of which Viet Nam is a member.

"The garment and textile sector has depended on imported raw materials for a long time, under FTAs that the country has already signed or will sign, we cannot rely on imported sources any longer," Bui The Kich, chairman of Dong Nai Garment Corporation, said.

On average, the garment and textile sector has to import about 70 per cent of raw materials, he said.

The domestic content rate at his company has increased to 45 per cent, thanks to investments in producing nonwoven materials, he said.

Last year the company also invested VND300 billion (US$13.39 million) in building the Hung Long Industrial Complex in Dong Nai Province, targeting to become a concentrated garment and textile place, he said.

Vu Duc Giang, chairman of the Viet Nam Textile and Garment Association (Vitas), and chairman of Garment 10 Joint Stock Company, said domestic garment firms had been encouraged to invest in yarn, weaving and dye, but the safest and most suitable way was a capital contribution or purchase of a stake in domestic and foreign firms to ensure material supply sources.

In its investment plan for this year, the company plans to work with its partners to produce yarn, he said, adding that this would ensure material supply for products for export and domestic sale.

Nguyen Hong Giang, general secretary of the Viet Nam Cotton and Spinning Association, said Viet Nam enjoyed high export growth last year with total export revenue of $28 billion, but the domestic supply of raw materials and accessories was very modest.

For instance, the country needs about 8.5 billion metres of fabric annually, but it produces only three billion metres.

The supply of domestic fabric has not kept pace with demand, while both the yarn-forward rule of origin under the Trans Pacific Partnership (TPP), and the fabric forward rule of origin under the Viet Nam - EU free trade agreement require intensive local supply, he said.

Therefore, to be able to enjoy benefits from FTAs, Viet Nam must quickly increase capacity for fabric production.

Dang Phuong Dung, Vitas's general secretary, said to maximise benefits from FTAs, besides Government support, domestic firms should invest more in upgrading their production technology, designs and quality to gain a firm foothold in the world market.

She called for closer co-operation among domestic garment makers and raw material and accessory producers.

According to the Ministry of Industry and Trade, Vietnamese garments have to pay an average tariff duty of between 12-30 per cent when exporting to the US and EU.

For example, exports worth $10 billion require a tariff duty of $1.7 billion.

Once the TPP comes into force, tariffs will fall to zero, enhancing Vietnamese garments' competitiveness, the ministry said.

According to Vitas, rules of origin, including the yarn–forward rule of origin, of FTAs will pose a business challenge, but in the long term this will motivate businesses to improve investment strategies and adjust production to meet market demand.

Each firm must establish its own supply chain or join hands with counterparts to form a supply chain in order to add more value to their products as well as improve competitive capacity, Vitas said.

With tariff advantages under free trade agreements, the garment and textile sector expects to enjoy export growth of more than 20 per cent this year, according to the association.

Ha Noi hosts youth business forum

More than 700 outstanding students from leading Vietnamese universities participated in "Viet Nam Youth to Business Forum 2016," held on Sunday in Ha Noi

The event was jointly organised by AIESEC Vietnam, a branch of AIESEC – the world's largest international student organisation based in the Netherlands — and the Viet Nam Chamber of Commerce and Industry (VCCI).

The business forum, held with the theme of "Be the First Follower," was the seventh event among a series of AIESEC Vietnam annual events – Viet Nam Youth to Business – being organised since 2012.

This year, the forum comprised two main activities, which were "Youth to Business Forum" and "Career Fair".

More than 700 Vietnamese students and 30 representative businesses and enterprises, such as Unilever, Prudential, RMIT and British Council, besides HSBC, Standard Chartered, Nielsen and Suntory Pepsico, as well as Vinpearl Land, K+, Hatch and Deloitte, in addition to Beta Media and GLN attended the event.

They interacted to form a multi-generational interactive space for raising ideas, sharing insights and gaining new perspectives to create actionable outcomes and valuable changes for Vietnamese youth and business to move forward.

In his opening remarks, Nguyen Quang Vinh, deputy secretary-general of the Viet Nam Chamber of Commerce and Industry (VCCI), talked about the current situation in Viet Nam in the context of the country aiming to achieve 17 sustainable development goals (SDGs). He also stressed the important role of the youth and their challenges in achieving them.

In their speech, representatives from RMIT and Unilever provided information and spoke of the significance of "The First Follower" idea in achieving the SDGs.

The "Career Fair" enabled students to get an opportunity to directly interact with businesses, and helped enterprises introduce job opportunities as well as to share their experiences to encourage and nurture the entrepreneurial spirit of youth.

Project licenced to Japan firm in Ha Nam

The northern province of Ha Nam yesterday granted an investment licence to Japan's Fuji Engineering Vietnam Co., Ltd to build houses and launch services for Japanese experts and labourers at the Dong Van I Industrial Park in Duy Tien District.

Covering an area of 11,500 sq.m, the three buildings will cost US$10 million. The project includes three phases, with the first to last until December this year.

Foreign investors from 11 countries and territories have poured US$1.4 billion into 155 projects in Ha Nam Province so far. Local authorities granted investment licences to 35 foreign-invested projects in 2015. FDI firms have contributed over VND320 billion ($14.4 million) to the State budget, making up 17.18 per cent of the province's budget collection.

The province plans to attract VND180 trillion ($8 billion) in investments between 2016 and 2020.

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