Hanoi ready to help businesses through difficulties

The Hanoi municipal People’s Committee met with local businesses on February 15 to listen their proposals to iron out snags in 2012.

The Chairman of the Hanoi municipal People’s Committee, Nguyen The Thao, suggested that through organizations and associations, businesses reflect their opinions on the city, policies and mechanisms on a regular basis.

For their part, businesses need to build investment strategies to promote production, increase the effectiveness of business management, raise the standard of living for workers and contribute to ensuring social welfare funds.

Every six months, the city will meet with businesses to discuss actions plans. Its tax department, customs department and other agencies will join efforts to help them through a hard time.

GMS policy-makers discuss growth amid water, energy and food challenges

Policy-makers from the Greater Mekong Subregion (GMS) began discussions today on the challenges and opportunities for balancing economic growth with environmental sustainability in Bangkok.

The two-day conference, entitled The GMS 2020: Balancing Economic Growth and Environmental Sustainability, is organised by GMS countries including Viet Nam, Cambodia, China, Lao, Myanmar and Thailand in collaboration with the Asian Development Bank.

Strategic measures are expected to ensure economic growth is balanced with food, water and energy security, especially in light of increasing climate variability.

Since the six countries sharing the Mekong River formed the economic co-operation program in 1992, gross domestic product growth in the subregion has averaged about eight per cent a year, while real per capita incomes more than tripled between 1993 and 2010. However, as the economies grow, so do competing demands for natural resources.

Conference participants, including government officials, development partners, academics and private sector representatives, will examine how growth has impacted the environment and look at the future of water in the region. They will also look at whether economic growth has led to poverty reduction, forecast food and water needs to 2050, and discuss ways of scaling environmental and economic challenges.

GMS countries have already co-operated on the Core Environment Program Biodiversity Conservation Corridors Initiative, which addresses adaptation and mitigation measures, as well as environmental implications for agriculture, energy, tourism and transport planning and investment decisions. The GMS leaders have also endorsed a 10-year strategy to enhance agricultural development, pro-poor sustainable tourism, low-carbon development and management of the sub-region's richly diverse ecosystems.

Since 1992, ADB has provided the GMS Economic Co-operation Program with technical assistance worth more than US$57 million for specific environmental initiatives.

Viet Capital Bank’s new chairperson appointed

Nguyen Thanh Phuong, a member of Viet Capital Bank’s board of directors, has been appointed the bank’s new chairperson, according to the bank’s new organizational structure newly publicized on its website.

With the new appointment, Phuong will displace replace the former chairman Do Duy Hung, the current general director of Viet Capital Bank.

It is the bank’s latest move of the bank after having its name changed from Gia Dinh Commercial Joint Stock Bank early last month. Gia Dinh Commercial Joint Stock Bank increased its chartered capital from VND2 trillion to VND3 trillion to ensure legal capital requirements last year.

The 31-year-old Phuong is the current chairperson of Viet Capital Fund, Viet Capital Securities Joint Stock Co and Viet Capital Real Estate Joint Stock Co.

She holds a Bachelor of Business Administration in Banking and Finance from the National Economics University, Vietnam, and an MBA in Finance Management from the National University in Geneva, Switzerland.

She then has worked as deputy finance director of Holcim Vietnam, a multinational corporation with headquarters in Switzerland and then served as chief investment officer of Swiss investment fund VietnamHolding, which is listed on London Stock Exchange.

Phuong is the daughter of Prime Minister Nguyen Tan Dung.

Shares gain with improved value and volume

Shares extended last Friday's rally on higher trading value and volume during this morning's sessions on all three of the nation's exchanges.

Following the Dragon Capital Fund's assessment of the Vietnamese stock market for the next two quarters, the VN-Index on the HCM Stock Exchange added 2.65 per cent to 413.98 points. Gainers outnumbered losers by 212-35 with more than 100 stocks hitting their ceiling prices.

The markets could increase strongly in the second quarter as lower inflation would help the central bank reduce interest rates, said the fund's chief executive officer Dominic Scriven.

Market value on the exchange this morning jumped 25 per cent over Friday to VND684.9 billion (US$3.6 million) as trading volume reached nearly 49 million shares.

Meanwhile, the VN-30 edged up 3.15 per cent to 465.44 points. The value of its stocks accounted for 53.2 per cent of the entire city's market value.

Blue chips such as insurer Bao Viet Holdings (BVH), Vietinbank (CTG), property developer Hoang Anh Gia Lai (HAG), steelmaker Hoa Phat (HPG), Sacombank (STB) and Vietcombank (VCB) all hit their ceiling prices.

Ha Noi-based real estate developer Vincom (VIC) was among the 35 codes to fall.

Eximbank (EIB) was the most active stock in HCM City with around 3.7 million shares changing hands. It ended the morning up 3.8 per cent at VND16,500 per share.

On the Ha Noi Stock Exchange, the HNX-Index rose by 4 per cent, fetching 64.27 points.

Gainers largely overwhelmed losers by 273-30.

The volume of trades surged 43.8 per cent compared to the previous session to 53.2 million shares, pushing trading value 45 per cent higher to VND439.6 billion ($20.9 million).

With 13.1 million shares exchanged, Habubank (HBB) was the most active code nationwide. It also reached the daily increase limit of 7 per cent.

Tight credit policy depresses shares
 
Substantial gains on Friday helped mitigate the stock market's overall downward trend last week, as well as give a boost to investor psychology heading into this week's trading.

On the HCM City Stock Exchange, the VN-Index closed out the week at 403.30 points, a decline from the previous week of just 0.43 per cent, while the VN30 Index slid 1.53 per cent to 451.22.

On the Ha Noi Stock Exchange, the HNX-Index also fell by 1.43 per cent from the previous week's close, concluding Friday's session at 61.79 points.

Gloom pervaded trading at the beginning of last week, following the announcement of State Bank of Viet Nam Directive No 01, which continued to cap lending to securities and real estate investors.

Many investors believe that the central bank has turned its back on the stock market, and analysts confirm that capital flows into the market in recent months have mainly come from investors' own sources. Therefore, they conclude, the new directive will not essentially change the situation already extent on the market.

Phan Dung Khanh, head of analysis for Kim Eng Securities Co, suggested to the newspaper Thoi bao Kinh te Sai Gon (Sai Gon Economic Times) that many investors had pulled capital from other investment channels (gold and foreign currencies) and put it into stock market in order to take advantage of depressed share prices.

"However, these aren't stable investment flows, and there is no economic information strong enough to support the stock market for the time being," Khanh said.

Resulting investor caution pushed total market volumes down strongly on both bourses last week. Volume on the HCM City market was down 22.6 per cent from the prior week, averaging nearly 38.5 million shares and a value of VND662.2 billion (US$31.5 million) per day.

The volume of trades on the Ha Noi market also plunged by over 21 per cent to a daily average of 34.7 million shares and an average daily value of VND288 billion ($13.7 million).

Bank shares were the biggest victim of Directive No 01. With shares like Eximbank (EIB), Sacombank (STB), Military Bank (MBB), Ha Noi Housing Bank (HBB) and Sai Gon-Ha Noi Bank (SHB) consistently among the most-active shares on both of the nation's stock exchanges last week, the index of financial group Vietstock which tracks banking stocks showed bank shares losing over 6.7 per cent of their value.

Setting aside the impact of Directive No 01, market insiders noted that bank shares had seen strong increases in recent weeks, making a wave of profit-taking inevitable.

Sacombank (STB) was the heaviest loser, with a loss of 16 per cent, as rumours circulated around its upcoming shareholders meeting.

Foreign investors were again net buyers on both markets last week, picking up a combined net of VND243 billion ($11.6 million) worth of shares. However, Sai Gon Securities Inc deputy director Nguyen Hong Nam suggested that the net buys by foreign investors were simply a reflection of normal activity by investment funds – including disbursements by established funds simply reacting to low stock prices and the upcoming dividend season.

The coming week might bring news that some major banks had begun reducing their lending interest rates, as well as news of a slight acceleration of inflation during February, Vietstock analysts wrote in a report.

White collars entering unemployment lines

People registering for unemployment benefits in Ho Chi Minh City is on the rise, not only among blue-collar workers, but those who worked in high-level positions.

Nguyen Cao Thang, head of the municipal Office of Unemployment Benefits, said the number of former managers looking for unemployment benefits has been on the rise for some time.

“Last year, white-collar workers accounted for 7% of the total number of unemployment benefactors in the city.  Spending for unemployment insurance came to over VND124 billion (USD5.93 million) for the year,” Thang noted.

According to Thang, most of of these jobs were dissolved because of companies going under or going bankrupt.

He added that there is also a decrease in the number of people formerly in the managing class who have qualms about applying for such benefits.

Tran Anh Tuan, Deputy Director of HCM City Human Resource Forecasting Centre, said that this trend is likely to continue into 2012. The result, he said, would be more formerly high-profile people collecting State benefits.

Among those seeking unemployment benefits at the HCM City Job Placement Centre on February 13, was a man who had worked as chief clerk at a foreign-invested software firm in HCM City’s District No. 1. His salary had been thousands of USD per month.

This man said, “Even though I’ve just found a new job, I still decided to apply for unemployment benefits for the time when I was out of work. The payment would be considerable, around VND10 million (USD478.7) per month.”

At another unemployment insurance office in Binh Thanh District, many people aged between 40 and 50 were applying for such benefits.

According to Thang, the municipal Office of Unemployment Benefits started receiving an increasing number of applications from this group of labour force last year.

Among those who applied for such benefits in early 2012, many had very high salaries in the past, ranging from VND18 million to VND40 million (USD861.65-USD1,914) per month. Hundreds of people received unemployment insurance payments from VND4 million and VND10 million (USD191.47-USD478.7) per month, he added.

An anonymous social insurance expert said that under current regulations, employers are encouraged to pay unemployment insurance based on 20 months of a minimum wage of VND830,000, instead of actual incomes.

This means that a person earning a salary of VND40 million per month is allowed to pay an insurance rate based on a salary of VND16.6 million (USD794.6). This person would be eligible to receive a monthly payment of VND9.96 million (USD476.7) from the unemployment insurance fund.

From the beginning of 2012, social insurance payments has accounted for 24% of labourers’ total monthly minimum salary, up 2% from the previous year. Under the new rules, employers will have to pay 17%, with 7% being paid by the workers.

Out of the total insurance fund, 3% will go to unemployment insurance.

Despite economic difficulties several business giants manage to do well

While a large number of enterprises in Vietnam are struggling, a number of large corporations have managed to continue to earn large profits.

Because of the sheer size of their assets, these companies can tough it out through the rough economic times.

According to last year's financial reports, the Masan Group, a leading investment firm in Vietnam, ranked first in possession of assets.

Even though Masan’s net profit was down nearly 14% from year before, to approximately VND1.97 trillion (USD94.3 million), they still held an estimated around VND9.573 trillion (USD458.25 million) in property and currency as of December 31, 2011. The figure showed an increase of VND6.2 trillion (USD296.79 million) from the previous year.

The Masan Group focuses on investment, and various subsidiaries involved in production, such as instant noodles, fish sauce and mining.

PetroVietnam Fertiliser and Chemical Corporation (PVFCCo) or DPM ranked second for their ownership of assets, worth VND3.748 trillion (USD179.41 million).

DPM made a net profit of VND3.139 trillion (USD150.26 million) on revenues of VND9.226 trillion (USD441.64 million) in 2011. The figures indicated an increase of 84% in profit and a rise of 39% in revenues compared to one year earlier.

In 2012, the company targets an increase revenue by 70%.

The firm is seeking approval from the Government to distribute fertiliser products made in Ca Mau. If this is approved, the company could hold around 90% of the domestic fertiliser market.

PetroVietnam Technical Service Corporation (PTSC) ranked third, with money and property worth VND3.621 trillion (USD173.33 million), as of December 31, 2011.

In 2011, PTSC made a net profit of VND1.147 trillion (USD54.9 million) on revenues of VND9.356 trillion (USD447.86 million), up 66% and 23% on year, respectively.

They were followed by Vietnam Dairy Products Joint-Stock Company (Vinamilk), with VND3.101 trillion (USD148.44 million), Financing and Promoting Technology Corporation (FPT) with VND2.9 trillion (USD138.82 million) and Bao Viet Group with VND2.7 trillion (USD129.24 million).

Other large Vietnamese companies include Hoang Anh Gia Lai Group, whose total assets were worth VND2.335 trillion (USD111.77 million) and Hoa Phat Group, with VND1.064 trillion (USD50.93 million).

Central Highlands road severely deteriorated

While it is expected to help ease traffic pressure on the National Highway 1A on the North – South route, the National Highway 14, the part of the Ho Chi Minh Road passing through the Central Highlands, still remains an unfinished construction site.

National Highway 14 is the key route connecting the Central Highlands with the Southeastern and Central parts of Vietnam, yet the road is in a critically deteriorating state, said Le Huu Khanh, head of the secretariat of the Department of Transport of Dak Nong Province.

The highway these days see lines of trucks slowly crawling by due to a large number of huge potholes scattering its surface.

Somewhere along the road are groups of workers using tar to temporarily patch the damaged surface.

The temporary repairs have been made for months, but the road quickly returns to its poor condition, locals said.

Sharing the same fate are the roads passing the Dak Gan, Nam Giang, and Truong Xuan communes.

More than 170 potholes, 0.5m to 3.2m wide, have been found on the 75-km road from Dac Cay District to Cay Chanh District, constructed by the Duc Long Dak Nong BOT-BT Co, according to figures from the Dak Nong traffic inspectorate.

Ho Ngoc An, regional representative of the management board of the Ho Chi Minh Road project, said the board has assigned many different constructors to repair the part of the Ho Chi Minh Road from Kon Tum Province to Binh Phuoc Province.

“However, construction work has been progressing slowly since many investors cannot access bank loans due to high interest rates,” he said.

“And yet the road has increasingly deteriorated.”

An official from Dak Nong People’s Committee said traffic on the road has been nearly blocked due to the slow repairing and construction progress.

“So we have no idea when Ho Chi Minh Road will be able to meet the expectation of easing traffic congestion on National Highway 1A.”

Khanh of the Dak Nong Department of Transport said the poor condition of the road passing by the National Highway 14 has adversely affected the economic development, goods circulation, and linkages between the Central Highlands provinces.

A passenger who usually takes long-haul buses traveling by the road said no matter how comfortably equipped the bus is, he still finds it hard to sleep at night due to the rocky road.

Some buses even choose to take another road to avoid passing through National Highway 14, although it means they have to travel twice the distance.

Long-haul bus companies travelling between Buon Ma Thuot and HCMC lamented that it used to take them less than 8 hours to cover up the 350-km road.

But now due to its poor condition, they have to spend up to 10 hours, with expenses overrunning by 15 percent, to go through the road, they said.

Cargo truck drivers also said the rocky surface has resulted in more flat tires for those who drive on it, not to mention the increasing number of street accidents.

“Even worse, there are as many as seven toll booths on the road, which is only 350km long,” the owner of a bus company said.

“It is unfair that we have to pay a toll while the road remains so deteriorated.”

According to the Ho Chi Minh Road management board, the 3,167-km Ho Chi Minh Road passes through 30 localities around the country.

The road was scheduled for completion by the end of 2010, but was delayed until 2015 due to investors’ capital shortage.

The Dak Lak’s people’s committee has also repeatedly called on the government to provide funding to complete work on the part of the road passing through the province.

For his part, Dinh Viet Hung, deputy head of the management board’s representative office in Da Nang, attributed the slow progress of work on the road to the weak financial muscles of the investors, and the exorbitant lending interest rates.

“Meanwhile, the government has yet to provide capital support in time.”

Central bank offers money exchange for market fire victims

The State Bank of Vietnam (SBV) will offer a money exchange to traders for burnt currency resulting from the fire at Quang Ngai Market, said Nguyen Chi Thanh,  Head of the SBV’s Vault and Treasury Department.

Addressing a press conference on Feb 14, Thanh said that the State Bank had issued an official dispatch to the Quang Ngai Branch requesting the branch, and other banks in the area, to quickly proceed with the exchange.

According to the SBV, the bank also sent a team of experts to Quang Ngai in order to assist with checking of the money brought by traders for exchange.

Thanh added that, in order to avoid fraud, Quang Ngai Branch would coordinate with relevant agencies to make a list of traders whose notes did not conform with the regulations. The list would then be sent to the governor for direction from the PM on how to proceed with these cases.

He also explained that, in order for any note to be exchangeable, it must be at least one-third undamaged, and have security signatures intact to prove that it is real.

By Tuesday afternoon, many traders had already received new notes in return for their burnt ones. Only one case, involving paper notes worth of VND 436 million, did not meet the regulations. This case is still on hold.

In addition to the money exchange, the SBV is also calling on local banks and other lenders to allow traders to borrow at preferential interest rates so they can resume their businesses quickly.

Thanh also suggested lenders permit the traders to defer scheduled payments on existing debts.

The fire at Quang Ngai Market caused no casualties, but destroyed nearly all the inventory of 424 traders. The damage is estimated to be VND200 billion (US$9.6 million), according to the market's managers.

Foreign retailers sell Vietnamese goods abroad

Many global retailers have recently put Vietnamese-made foods, garments, handicrafts, and household products on shelves at supermarket chains around the world.

According to Nguyen Xuan Hai, Southern managing director of France’s Big C, last year the supermarket chain exported three groups of Vietnamese commodities including fiber, food, and household products and handicrafts, to be distributed in the nine countries where its mother company, Casino Group, is operating.

The food’s export turnover was worth US$10 million, while the respective figures for the other two groups were $8 million, and $3 million, Hai told newswire Saigon Times Online.

Hai said the export volumes rose by 20 percent against 2010, and many products such as coffee, seafood and garments have been favored by international consumers.

Meanwhile, the Korean Lotte Mart retain chain has managed to bring 89 brand names of 31 Vietnamese businesses to 97 supermarkets in Korea.

Of these, 69 brand names belong to processed foods like Trung Nguyen coffee, Vinamit, Vifon, and Vinamilk.

Export volume has risen by 25 percent compared to the first shipment of Vietnamese products to Korea, Saigon Times Online quoted Lotte representative as saying.

“We have gained positive results, with sales surging by up to 40 percent as expected,” he said.

“Vietnamese products currently account for around 15 percent of the total imported goods to be sold in our supermarkets in Korea. The figure can be higher in the area where many Vietnamese people live.”

Lotte Mart said it is completing preparations to distribute Vietnamese goods to 94 supermarkets in China, and 28 in Indonesia

Global retailers said they want to increase the appearance of Vietnamese goods at supermarkets worldwide to meet the real demand of consumers in those countries.

Besides, Vietnamese-made products have ensured quality, they said.

The retailers’ promotional program to introduce Vietnamese goods to global consumers also contributed to the increasing sales of the products in supermarkets worldwide.

For instance, in November 2011, Big C ran a ten-day event to promote Vietnamese goods at the Casino’s Géant Massena supermarket in Paris. Nearly 200 products have been introduced to French consumers.

Similarly, Lotte Mart also held a trade fair to display 117 Vietnamese products in Seoul in last November.

While appreciating the quality of Vietnamese goods, the retailers also said that local businesses should pay close attention to logistics in order not to affect the former’s distribution tasks.

“Goods should be shipped on schedule as contracted, so that it will not affect our promotional programs in the countries,” said Hai of Big C.

Property market needs solid legal footing
 
The domestic property market needs a legal system that can manage activities on the market and develop housing and apartment building for lease projects, said the deputy prime minister.

Deputy Prime Minister Hoang Trung Hai said while meeting the central steering committee of housing policy and real estate market on Tuesday that this year, the legal system for housing management and the real estate market should be completed, including property tax and prices, individual income from property trading, registration of property and mortgage of land use rights. Cities and provinces would manage housing policies and the property market based on those regulations.

"We could not manage an active and highly-competitive property market by administrative orders. The market needs a fully-complete system of legal documents. Additionally, the management offices should build database systems for housing and the real estate market," Hai said.

These issues are still weak. With further investment, the management offices could make better management decisions.

To ensure success in implementing the National Housing Strategy approved by the government, Hai asked the Ministry of Construction to issue documents that guide the national housing strategy that focus on research and development of rented properties.

Additionally, the ministry should find suitable investors and managers for developing rental properties to meet the high demand on this segment, said Hai, adding that a housing saving fund should be built to add an effective channel of providing capital to the property market.

The Deputy Prime Minister said the real estate market does not have a long-term capital mobilisation channel, while the only banking system is responsible for providing long-term capital for the market. So, the real estate market should soon find a new capital mobilisation channel to reduce reliance on the banking system.

The ratio of credit for real estate continues to be controlled by ensuring the inflation target.

Deputy Minister of Construction Nguyen Tran Nam said an important task in 2012 is to fund unfinished real estate projects, recover the market and the trust of customers in the market.

Nguyen Manh Ha, Director of Housing and Real Estate Market Management Department of the Ministry of Construction, said the ministry has proposed the house saving funds have two kinds. One kind is for low-income people getting loans to buy or lease social houses and the other is for middle-income people getting loans to buy commercial house. If the two funds get approval, these models will be built on trial at Ha Noi and HCM City.

At the meeting, Deputy State Bank Governor Nguyen Dong Tien said current price of property products was too high in comparison with affordability of the people and real value of property products. So, addition of capital to the market must be very careful.

According to plans set out each year, Viet Nam will develop an additional 100 million sq.m of new houses. But in 2010 and 2011, the country developed only 80-90 million sq.m of new houses each year.

Last year was a hard year for the domestic property market because of too high prices and tightening policies of credit for the market so there was low capital for development of property projects and buying of property projects.

The domestic property market was expected to recover this year with the addition of more investment from home and abroad, as well as a looser credit policy, experts said.

Provinces to get tough on delayed projects

Many provinces this year are determined to root out delayed, inefficient and unfeasible projects.

The southern province of Ba Ria-Vung Tau, for instance, has a modest target of US$500 million in foreign direct investment (FDI) attraction this year, or a half of last year’s result.

The province’s vice chairman Ho Van Nien said the locality would pay more attention to the disbursement of US$27 billion at 298 projects licensed in the past few years.

Last year, the province decided to revoke investment certificates of 24 projects due to slow or zero progress.

At present, Ba Ria-Vung Tau is also reviewing other projects with slow deployment.

In case investors have no plan for deployment or lack capital to implement the projects, the province will withdraw licenses and transfer projects to other investors.

Meanwhile, the Mekong Delta province of Long An is imposing strict measures on the projects designed to develop industrial clusters and residential zones.

Nguyen Minh Ha, director of the provincial Department of Planning and Investment, said his agency would propose to the higher provincial authorities to eliminate unviable projects or transfer those projects to more competent investors.

The department’s report shows that 22 projects in the province were revoked last year, with the total area of over 1,600 hectares.

The Central Highlands province of Lam Dong has also become tougher on delayed projects.

The latest data show that the province last year decided to cancel 45 local and foreign-invested projects, worth VND10 trillion (US$480.3 million) and $30 million respectively.

Over 40 other projects will also likely to have their licenses revoked.

Most of the cancelled projects are small and medium-scale hydropower projects, and projects in tourism, agriculture and forestry.

Similarly, the southern Ho Chi Minh City has officially withdrawn investment certificate of the billion-dollar Thu Thiem software park project in District 2 to call for other capable investors to carry out the project.

Other localities like Binh Thuan, Danang and Bac Ninh have also become stricter to investors in order to steadily remove unfeasible projects and incompetent investors.

Provincial authorities said they didn’t want to revoke certificates of licensed projects since the procedures are cumbersome but they were left with no choice because inefficient projects would negatively affect the economy.

According to Phan Huu Thang, director of the Foreign Investment Research Center of National University-Hanoi, the biggest challenge for FDI attraction is that the registered capital of about $108 billion has yet to be disbursed, leading to multiple delayed projects that cause waste of land and product shortage, and this affects the image of Vietnam’s investment and business environment.

If Vietnam managed to accelerate the disbursement of this capital source, it would be more likely to promote and call for new investment, he said.

The country’s FDI approvals in January reached a mere US$37.3 million, or 2.5 percent of the figure recorded a year ago, suggesting a tough year ahead for FDI attraction.

According to the Ministry of Planning and Investment’s Foreign Investment Agency, the first month of the year saw 25 new projects licensed with total capital pledges of $29.5 million, equivalent to 33.8 percent of the number and 2.4 percent of the capital posted in the same period last year.

Meanwhile, 5 operational FDI projects registered an additional capital of $7.8 million.

Discounts accelerate bike sales
 
Motorbike makers in Viet Nam produced 384,800 units last month, a year-on-year increase of 11.3 per cent, fuelled by discounts in retail prices, statistics released yesterday showed.

According to the General Statistics Office (GSO), the number of motorbikes sold saw a 16 per cent increase last month, which saw the inventory level for January drop to 31.4 per cent compared to last year's 41.7 per cent.

The revival of the motorbike sector was attributed to the mass discount of retail prices to trigger demand.

"There is no other way to ignite demand than by cutting retail prices," said Pham Manh Sy, general director of the Viet Phu company, a prominent Yamaha retailer in Ha Noi.

Sy told Viet Nam News that economic difficulties and increasing cases of motorbike fires had decelerated the market.

"However, the appeal of lower prices drew buyers back," he added.

Sy said retail prices of some models were cut from 5 to 10 per cent.

Meanwhile, the country imported 5,000 complete-built-unit (CBU) motorbikes worth US$8 million last month, according to the GSO.

While the figure represents a 70 per cent rise in volume and 100 per cent increase in value over December 2011, it also represents a 69.5 per cent drop in volume and a 71 per cent decline in value over the corresponding period last year.

According to the Ministry of Transport, as many as 35 million motorbikes now run throughout the country.

The Ministry of Industry and Trade predicted that Viet Nam would have a population of 99.6 million and 33.5 million motorbikes by 2020, or one motorbike for every 2.97 people.

Most big scooter brand names in Ha Noi have seen sharp decreases in sales prices, some experiencing drops of VND10 million ($476) lower than proposed prices.

At Honda's HEAD shops in Thanh Xuan and Dong Da districts, most selling prices have been lower than price tags. For example, the selling price of a Honda Vision was VND26.3 million ($1,252) while the price tag was VND28.5 million ($1,357).

Lead scooters have been sold at VND34-34.2 million ($1,619-1,628) against the proposed price of VND35 million ($1,666).

PCX scooters have seen the highest decrease among Honda's scooter range with a proposed sales price of VND59 million ($2,800) against the actual price of VND53 million ($2,500).

The prices of Yamaha scooters have also decreased. Nozza, the producer's best selling scooter, has been sold at VND33.5 million ($1,595) while the proposed price was VND33.9 million ($1,614).

The producer's Nouvou scooter has been sold at VND500,000 to VND1 million ($24-48) lower than its proposed price.

Most scooter retailers in the capital said it has been an unusually quiet time for the market. A scooter trader in Hue Street said several people rushed to buy motorbikes before the end of last year to avoid increasing fees of registration.

A HEAD retailer in Giai Phong Street said the number of scooters provided from producers to retailers had risen, causing a surplus of products due to low demand.

Truck importer aims for $5.7 million in profit

Hoang Huy Group (HHS), which debuted on the HCM City Stock Exchange on Wednesday, has targeted earnings this year of VND850 billion (US$40.5 million) and a net profit of VND120 billion ($5.7 million). The company imports trucks from China and is a strategic partner of China's Dongfeng Group. It is also co-operating with Thailand's Pruka International to develop low-income housing in the northern city of Hai Phong. Hoang Huy, the 335th listed firm on the HCM City bourse, posted a profit last year of nearly VND105 billion ($5 million), good for earnings-per-share of about VND10,500.-

Port developer sets sights on 30% dividend

Dinh Vu Port Development and Investment Co (DVP) has targeted a profit of VND140 billion (US$6.7 million) this year and a dividend rate of at least 30 per cent, the company's board of directors announced earlier this week. Total earnings were expected to reach VND435 billion (US$20.7 million). Last year, DVP posted a net profit of VND150.3 billion ($7.2 million) on which it paid a dividend of 40 per cent.

Financing costs eat into builder's revenues

Hoa Binh Corporation (HBC), a construction and real estate development firm, posted VND127.6 billion (over US$6 million) in net profit last year, a decline of 8.3 per cent from the previous year. The decline was due to a sharp increase in financing costs in the fourth quarter, compared to the same period in 2010, the corporation said – with costs of loan servicing tripling to VND49.7 billion ($2.4 million). The corporation's overall earnings grew last year by about 74 per cent to to a total of VND3.1 trillion ($147.6 million).-

New policies needed to increase investor trust among investors

Viet Nam needs to develop specific policies and measures that will increase investors' trust, economists said at a Super Investors Day held yesterday in HCM City.

The event attracted the participation of renowned entrepreneurs and economists to discuss macro-economic issues, investment opportunities and financial investment channels for 2012.

Nguyen Tan Thang, an economist at the HCM City Securities Corporation, said: "Viet Nam needs to stabilise the macro-economy in the long term, be consistent in policies, and create a healthy investment environment."

The country should continue to restructure its banking system so that it could deal with bad debts, he added.

Banks with weak financial health and poor management capacity should be disbanded or merged with healthier banks.

Bank liquidity would need to be improved and credit growth in the non-production sector should be limited.

"Improved liquidity is a prerequisite to revitalise the stock market," he said.

The absence of standards for releasing financial statement information has led to a lack of transparency and information about stocks in Viet Nam over the past few years, according to Thang.

As a result, companies and investors have become skeptical about the market. Companies continue to insist on listing their shares despite their weak management and lack of transparency.

Alan Phan, chairman of Viasa Fund Ltd., said that other investment channels such as gold were a good defensive channel but not particularly safe.

Investing in property, for example, depends on consumer's income, economic situation and interest rates.

Foreign currency investment is safer and more profitable.

Speaking at the event, Dang Doan Kien, representative chief of Aureos Capital Viet Nam, pointed out that M&A (mergers and acquisitions) was a popular activity to develop economies. M&A activity in Viet Nam is expected to increase sharply this year and in the future.

Recent volatility in the market has directed major investors to M&A, a new investment channel.

Under this type of investment channel, corporate infrastructure, basic technology systems and personnel are ready to use.

Investors do not have to spend time training staff or wait for the completion of construction of infrastructure to do business and begin production.

They do not have to build up their brand from the start, and the customer base and networks are already available for development.

According to research from the Nexus Group, for the first nine months of last year, the value of M&A deals in Viet Nam was recorded at $2.67 billion, an increase of 150 per cent compared to 12 months in 2010.

Consumer goods, finance and property topped the list of sectors which saw high M&A activities.

Le Thanh An, the United States consul general in HCM City, said that Viet Nam's macro-economy still faced obstacles, including inflation of 20 per cent. It needed investment strategies for the medium – and long-term.

US investors want to cooperate with Vietnamese partners in trade and investment, franchising, energy, infrastructure, and in the education and health sectors.

Leading economist Le Dang Doanh said according to the International Monetary Fund's forecast in January, the world economy would have a slow growth rate this year.

In the first two quarters of this year, the Vietnamese economy would have a difficult period, especially for exports to Europe.

Germany, the most stable economy in the European region, would see a growth rate of only 0.4 per cent this year, according to the Organisation for Economic Cooperation and Development.

Doanh said this year would be a difficult one for Vietnamese exports. In January, export turnover fell by 28.5 per cent compared to December last year and 11.1 per cent compared to January 2011.

Viet Nam recorded a low growth rate in January. It managed to have foreign-direct investment (FDI) worth $37.3 million, only 2.5 per cent of the figure recorded last year.

New registered enterprises fell 36 per cent in number and 56 per cent in capital volume compared to the same period last year.

"The Government aims to keep this year's inflation in single digits. However, it's a very positive sign if inflation drops to 12 per cent," he said.

He said Viet Nam should seek new export markets, such as South America and the Middle East.

"However, we also need to set a firm foothold in the domestic market, especially in rural areas for sectors such as footwear and furniture, which may see a decrease in exports," he said.

Economic restructuring is a must, offering opportunities as well as many challenges. State-owned enterprises are being compelled to slash their financial expenses by 5 per cent.

"This restructuring has occurred not only in banking and investment but also in the Government apparatus and State-run bodies, and Government's policies in particular," he noted.

For increasing efficiency of foreign investment, investors should disburse more registered capital, he said.

Agencies as well as investors should also resolve problems related to issuing of licenses and site clearance, Doanh added.

The event was co-organised by Entrepreneur Magazine in collaboration with Vinabull, Le Bros Company and Info TV Channel.

Fund to increase stake in pharmaceutical

The Viet Nam Azalea Fund Ltd will buy 1.24 million shares in pharmaceutical company Traphaco (TRA), increasing its holdings in the company from 25 per cent to 35 per cent. Traphaco shares are listed on the HCM City Stock Exchange, where they currently trade at around VND45,000 (US$2) per share. VNDirect Securities Co was selected as the agent for the transaction.-

Vinamilk invests in Viettel software

The country's top dairy manufacturer Vinamilk signed an agreement with Viettel Corporation in HCM City yesterday to buy management software from the telecom company.

The new software, to be integrated with Vinamilk's existing software, will allow company managers to obtain any information at any time.

All data related to distributors and staff nation-wide will be available at the click of the mouse.

The software will allow staff to feed live images to headquarters and the system will be warned if staff do not follow regulated processes.-

Infrastructure work gets materials tax break

Building materials used for constructing, repairing and maintaining infrastructure in non-tariff zones will be exempted from export taxes from March 20 this year under Circular 11/2012/TT-BTC recently issued by the Ministry of Finance.

Under the circular, documents must be submitted registering the list of tax-exempt export goods, their quantity and the reasons for tax exemption, as well as technical design documentation. In addition, the subject must also take legal responsibility for the accuracy of exported items.-

Tightened verification of vegetable exports

The Minister for Agriculture and Rural Development, Cao Duc Phat, has asked the General Department of Customs to work with the Plant Protection Department to tighten verification of vegetable exports to the EU. The order was signed by the Minister in an official letter on Tuesday.

The Minister instructed customs agencies to allow customs clearance for vegetable batches only after they have received verification certificates. Recently, vegetable exports to the EU have been reported to have violated food safety and vegetable verification regulations.-

VDB sells off Government-backed bonds

The Viet Nam Development Bank has raised VND5 trillion (US$238 million) in an auction of Government-guaranteed bonds, announced the Ha Noi Stock Exchange.

The winning rate was 12.09 per cent per year for VND2 trillion worth of three-year bonds, and 12.2 per cent per year for VND3 trillion worth of five-year bonds. All of the Government bonds on offer during the auction were sold.

This week, Ha Noi Stock Exchange will auction more than VND10 trillion ($476 million) worth of Government bonds, Government-backed bonds and bonds from the Viet Nam Expressway Corporation (VEC).

Last week the bank successfully auctioned VND4 trillion ($190 million) worth of Government bonds. The winning rate was 12.2 per cent per year for VND2 trillion worth of three-year bonds, and 12.25 per cent for VND2 trillion worth of five-year bonds.

New Asia asset management brand debuts

Prudential Corporation Asia announced its new global brand for regional fund management business in Asia, Eastspring Investments, during a press conference held in Ha Noi earlier this week.

The new brand will operate in Hong Kong, Singapore, Malaysia, Taiwan, Japan, South Korea, the United Arab Emirates and Viet Nam, it said.

During the event, Eastspring Investments Fund Management, previously named Prudential Viet Nam Fund Management, said it planned to invest US$200 million in Viet Nam's real estate and stock markets in coming years.

Up to 25 per cent of the sum would be invested in listed shares, while the remainder would be dedicated to real estate investments, with a focus on commercial properties and hotels.-

Green law turns red

Scores of plastic firms face retrenching production in the face of the Environmental Protection Tax Law from early 2012.

Vietnam Plastics Association (VPA) chairman Le Quang Doanh said more than a month after the Law on Environmental Protection Tax came into force many member firms had complained about the law’s unclear and insufficient guiding documents.

“Firms are in a spin in shaping future production and business plans since there is no criteria as to what environmentally friendly plastic products are, meanwhile inspection mechanisms remain vague,” said Doanh.

Duc Anh Plastic director Truong Anh Luan said taxing plastic bags was a smart move, but improper enforcement of the law could break the local plastic packaging industry.

Tan Dai Hung Plastic chairman Pham Trung Cang said there were differences in PE plastic bag taxing practices. Particularly, thick PE cement plastic bags are taxed in Vietnam, while it is not being taxed in EU market.

Cang said it was not rational that every PE plastic bag was taxed and that was why his firm could not sell PE plastic packaging to Viet Nhat Fertiliser Firm, which recently shifted into importing the products from ASEAN country to supersede local items due to tax issues.

“Imposing VND40,000 ($1.9) per kg of PE plastic bags would make foreign firms doing business in Vietnam turn to ASEAN countries for importing the products, thus driving local firms in a bind,” said Cang.

VPA deputy chairman Ho Duc Lam said lack of criteria about tax free environmentally friendly plastic bags bothered firms.

“Vague regulations may mislead firms unless tax authorities introduce explicit instructions,” said Lam.

From that practice, the VPA has presented three proposals to competent state agencies. Accordingly, it proposes temporarily delay taxing plastic packaging, apply the Law on Environmental Protection Tax following a specific roadmap in which competent state agencies should hold dialogues with businesses to be able to present suitable roadmap and the VPA should be allowed to contribute inputs to guiding documents’ drafting process.

In 2011, the plastic industry housed 2,200 businesses providing jobs to 200,000 labourers. The sector’s export value came to $1.32 billion, surging 28 per cent against 2010. Its major export markets are the US, Japan and Germany.

JS Group to produce door and window frames in Vietnam

Japan’s JS Group will build a new factory to produce door and window frames in Vietnam to reduce risks like those faced by Thailand during last year’s historical floods.  

The new plant is expected to take shape in the southern province of Dong Nai on an area of 55 hectares with a total investment capitalization of $385 million.

On completion in mid-2013, JS Vietnam will raise its design capacity to 30,000 tonnes per year, equivalent to 10 per cent of the group’s total productivity.

Door and window frames will be exported to Japan and other Asian nations.

Currently, JS Group produces only 70 per cent of door and window frames in the country, and 30 per cent in Thailand. However, a factory in Thailand has stopped operating since last October after being badly affected by the flooding. The group has decided to build a new factory in Vietnam where there is plenty of cheap and diligent labour. This is part of its trade liberalization after joining Trans-Pacific Partnership (TPP) agreement negotiations.

JS group has entered the Vietnamese market since 1998, specializing in manufacturing sanitary ware products with INAX brand. The group plans to raise its total revenues in foreign markets to 1,000 billion of yen by 2016, up 25 times compared to last year’s figure.