Vietnam, Indonesia explore trade, tourism potential

Vietnam and Indonesia have plenty of opportunity for cooperation in food and energy security and oil and gas exploration.

At a joint business forum in Ho Chi Minh City on June 13-14, Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said Vietnamese and Indonesian businesses involved in the seafood processing sector should work closer together in supply activities.

Indonesian businesses can also invest in rubber production for support industry in Vietnam, Loc added.

He cited tourism industry as another promising sector as more than 74,000 Indonesian visitors came to Vietnam last year.

Indonesian Ambassador Mayerfas said many Indonesian businesses have penetrated the Vietnamese market over the past two years.

By the end of last year, PT Semen bought 70 percent of shares from Vietnam’s Thang Long Cement Company and PT Madiri Bank opened a branch office the country.

Last April PT Nikko Securities spent US$10 million buying a major of share equal to 20 percent of Hoa Binh Construction & Real Estate Corporation’s chartered capital.

On June 13, PT Telin signed a memorandum of understanding (MoU) on strategic cooperation with CMC, one of the leading technology groups in Vietnam.

Le Phuoc Vu, Director General of Hoa Sen Group, said at its recent annual general meeting the group decided to invest in a project in Indonesia.

The Hoa Binh Corporation is arranging for 20 engineers to work under some construction contracts in Indonesia, while Acecook Vietnam is keen to export instant noodles to the country.

A representative from Indonesian authority said most of food items imported into the country are tax-free.

According to the Foreign Investment Agency (FIA) Vietnam has seven mineral exploration, oil and gas, and communications projects operating in Indonesia with a registered capitalisation of US$106.7 million.

Deputy Head of the Department for Planning and Investment Dang Xuan Quang said by May 2013, Indonesia had poured US$285.2 million into 35 projects in Vietnam, ranking 27th among foreign investors in the country.

Indonesian investment focuses on the processing, manufacturing, food and drinks services, healthcare, and social support industries.

Last year, Indonesia was Vietnam’s fourth largest Southeast Asian trade partner, with two-way trade rising to US$4.6 billion from US$2.5 billion in 2008.

In the first four months of this year, Vietnam exported steel, garments, rice, coffee, telephones and components, machines and equipment, vehicles and many other products worth US$745.7 million to Indonesia.

The two countries were committed to raising bilateral trade exchanges to US$5 billion in 2015, but, this target is almost within reach.

LED technology lures foreign investment

Foreign investors have shown their interest in production of lighting systems using light-emitting diode (LED) technology which are 30-90 percent more efficient than incandescent light bulbs.

At the recent Environment and Energy Technology (ENTECH) Hanoi 2013 Exhibition, China’s Hua Bo Industrial Company said it will build a US$5 million factory in Vietnam to produce LED lights.

The company has applied for an investment certificate, which is expected to be granted in the next one or two months. It will start operation next September, with over 200 types of LED lights and devices used in the electronics industry.

The Vietnam Academy of Science and Technology (VAST) said Hua Bo is one of numerous LED projects to be implemented in Vietnam in the coming time.

The adoption of LED technology in Vietnam and other countries proves that this technology will gradually replace traditional household lighting.

At present, there are only a few foreign companies investing in manufacturing LEDs in Vietnam and most products are imported into Vietnam.

One of these companies is Green Power Kim Dinh (Fawoo Kidi), a joint venture between Vietnam’s Kim Dinh company and Fawoo from the Republic of Korea.

It has been successfully installing LED lighting systems at numerous large works such as Thuan Phuoc bridge in Danang city, Hoa Lac hi-tech park in Hanoi, and Hi-Tech Park in Ho Chi Minh City.

Nguyen Thi Bac Kinh, an expert from VAST, said the performances of several world-class companies in LED technology such as Philips, LG, Osram and Nitria in Vietnam are very good.

According to an Osram representative, the company’s revenue in Vietnam is US$7.5 million per year. It is now deploying a range of projects in many five-star hotels in Vietnam, including Sheraton, Sofitel Plaza, Metropole Plaza, Hilton and Movenpick in Hanoi, Sheraton, Kum Ho, Saigon Centre and Liberty Riverside in Ho Chi Minh City.

Osram is only involved with high-class projects, since the price of LED lighting is still higher than normal products, he added.

Kinh said the high price of LED lights is limiting their appearance in households and public works.

To ensure the effectiveness and sustainable development of Vietnam’s high efficiency lighting market, Chairman of the VAST Science and Technology Council Phan Hong Khoi stressed the necessity of support for the domestic lighting industry, to approach and master the modern lighting technology, especially LED technology.

Accordingly, the State should list lighting manufacturing using LED technology in the high technology field, upgrade the two quality check laboratories from national to international standards, and build a national quality standard for LED light sets.

More importantly, there must be incentive and support policies for enterprises and research institutes to approach and develop high efficiency lighting technology in general and LED technology in particular, Kinh added.

Vietnam private equity outlook bounces back

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

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

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

Hence the number of respondents who decided to increase their portfolio in Vietnam has improved significantly from 29% in quarter 4, 2011 to 45% in quarter 2, 2013, although the country is still suffering from the economic downturn.

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

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

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

Vietnam is ranked fourth in terms of the most attractive market in the world for the retail sector, which has grown robustly in recent years.

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

The fourth most attractive sector, according to the survey, is real estate, which got 37% of the respondents’ votes.

Merger and Acquisition (M&A) deals in the real estate sector were forecast to increase in 2013. Many real estate developers facing financial difficulties were forced to transfer their projects, creating investment opportunities for buyers with long-term strategies.

The largest investment in the sector last year was by Japan’s Tokyu Group with total capital of US$1.2 billion.

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

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

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

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

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

A big challenge for livestock industry

he domestic livestock industry is likely to lose out to regional rivals in the coming years unless a proper development strategy is drawn up to increase its competitiveness.

Vietnam has joined the ASEAN Free Trade Agreement (AFTA) which regulates that its domestic pork, chickens and eggs will no longer enjoy tax protection and subsidies by 2015.

This means that similar products from Thailand, Indonesia and Malaysia will face no barriers on the way to Vietnam.

Pham Duc Binh, Vice Chairman of the Vietnam Animal Feed Association, said the Vietnamese livestock industry falls behind regional rivals in terms of scale, productivity, prices and quality.

Once the subsidy policy is removed, it will put farmers and businesses at a distinct disadvantage, he said.  

Thailand, for example, he said, has a comprehensive investment strategy for the sector and its businesses manage and produce feed, additives and minerals for their animals by themselves, rather than depending totally on imports like Vietnam.

In addition, they have advantages, such as access to low interest loans and no value added tax (VAT) on livestock feed, that help keep their prices at least 15-20 percent lower than those of Vietnamese breeders.

Suffering from long term losses, many foreign businesses are reducing the number of chickens they breed in Vietnam.

Nguyen Dang Vang, Chairman of the Vietnam Animal Breeding Association, said in 2011 CP, Emivest and Japfa raised more than 120 million chickens, but a year later they cut that number to only 70 million.

Nearly half of the poultry farms in northern provinces have ceased operating and large numbers in the south are in the same situation.

Aside from AFTA competition, Vietnam’s livestock industry is also under tremendous pressure from the EU, US and Brazil.

Over the past three or four years, hundreds of thousands tonnes of meat at considerably cheaper prices have been imported into the country annually.

In the first four months of 2013, about 5,000-7,000 tonnes of chickens were shipped into Vietnam every month, equal to half of the total domestic breeding production.

To save costs, many businesses even use frozen pork from the US to produce hotdogs, canned meat and Chinese sausages instead of purchasing domestic pork.

Restructuring better solution for Vinalines, Vinashin: Deputy PM

Deputy Prime Minister Nguyen Xuan Phuc said that Vinashin and Vinalines are still taking huge losses, but it is better to restructure them than allow them go into bankruptcy.

Speaking at the 13th National Assembly’s Q&A session on June 14, the deputy prime minister said after being the restructure, Vietnam Shipbuilding Industry Group (Vinashin) has operated better.

Under the government’s restructuring plan, the group will retain eight businesses with around 8,000 employees. The remaining stakes in the other 216 businesses must be sold.

About 170 vessels have been built and sold over the past three years, among them 66 vessels worth USD1.215 billion have been exported.

“If the Vinashin restructure is successful, Vietnam will have a promising shipbuilding industry and retain a good part of the qualified workers and technicians employed in the industry," Phuc said.

Answering National Asembly deputies’ questions about the reasons the government decided to restructure Vinashin instead of allowing it to fail, the deputy PM said Vinashin is a wholly stated-owned enterprise, and, if it allowed to go bankrupt, the government would be left with the debts and thousands of workers and their families would be affected. He added that there was a hope that the company would have better operations when the global economy improved.

According to the deputy PM, Vinalines has withdrawn its investment capital from 16 enterprises and completed privatisation of four businesses. It has also finished debt restructuring.

More than 30 ton gold injected into market

In 31 gold auctions, the State Bank of Vietnam (SBV) has pumped 787,300 taels of gold, or 30.2 tons of gold, into the market.

On June 14, SBV sold 25,700 taels of gold out of a total 26,000 taels offered to 11 bidders with highest bid at VND40.44 million a tael, and lowest at VND40.37 million.

With the Central Bank continuously injecting gold into the market, the final settlement of credit institutions has been met. However, the amount of gold for this purpose has lessened and is expected to be added fully before June 30.

Forecasts said that gold demand in the market will drastically drop after the end of this month, reducing gap between domestic and global gold price. The current gap was at about VND5.4 million a tael.

The price of SJC-brand gold sank to the lowest level in the past two months yesterday. Particularly, at 9.30 am, in Ho Chi Minh City, Saigon Jewelry Company bought gold at VND40.22 million a tael and sold at VND40.52 million.

At the same time, in Hanoi City, DOJI fixed SJC-brand gold at VND40.3 million for buying, and VND40.5 million for selling.

By 4.30 pm, the buying rate of SJC-brand gold rose to VND40.25 million but selling rate slid to VND40.46 million, the lowest since April 16.

Government helps farmers by buying 1 million tons of rice for stockpile

The Vietnam Food Association (VFA) in cooperation with food companies in the Mekong Delta on Saturday began buying one million ton of rice for stockpile under a Government direction.

Rice buying campaign will last until the end of July when farmers in the delta completely harvest the summer- autumn rice crop.

The campaign is planned to help farmers protect profit after rice prices have currently decreased because of rice export slowdown.

Food companies have been provided loan with low interest.

Although the campaign has been deployed, rice prices are still under the costs.

Heavy rains for several days have affected rice harvest and made farmers feel sitting on the fire. Agricultural officials in the delta said that if the heavy rains continued for couple days rice quality would be low.

Vietnam has signed agreements to export 4.8 million tons of rice this year and supplied 2.8 million tones already. However, average rice export prices have decreased by US$24/ton in comparison to the same time last year.

Rice exporters said that 70 percent of stockpiled rice harvested in the winter- spring rice crop had still not sold yet and they have suffered from the heavy losses.

In order to reduce rice inventory and purchase rice for farmers, VFA has cut down rice export prices by US$ 5/ton.

Chinese potatoes selling as Da Lat home-grown potatoes

Authorities on June 15 destroyed 26 tons of low quality potatoes brought in from China and being sold as Da Lat grown potatoes.

The huge volume of potatoes was discovered in a warehouse belonging to Nguyen Thi Nguyet in Da Lat City.

Nguyet said he had bought 52 tons of Chinese potatoes in all, 26 tons from Anh Quan Company in Hanoi and 26 tons from Van Linh Company in the Lao Cai Province. All the batches had quarantine certificates issued by Tan Thanh Plant Quarantine Station.

However, two samples of potatoes were found exceeding permissible limits of Chlopyrifos pesticide.

As per receipts presented by the trader, Chinese potatoes fetch VND3,344 per kilogram while Da Lat potatoes are sold at VND15,000-20,000 a kilogram. As consumers prefer Da Lat potatoes, Chinese potatoes are sold as Da Lat grown potatoes at an exorbitant profit margin.

This practice has been going on for years but authorities found it confusing to handle as crooked sellers wrap Chinese potatoes with red soil to show as Da Lat potatoes.

At the end of 2012, a company in Ho Chi Minh City was caught red-handed applying this method to deceive consumers and deceptively earn more profits.

Vietnam faces energy challenges

Due to increasing energy demand, Vietnam is trying to find new energy sources but the process is not easy as they have certain disadvantages.

Dr. Ngo Duc Lam, an energy expert, said Vietnam’s total energy capacity had reached 25,100 MW last year, including 45.5% from hydropower, 33.6% from gas-fuelled power sources, 15.3% from coal-fired power sources and 1.4% from diesel-fuelled sources.

The country’s basic energy demand is forecast to reach 250 million tonnes of oil equivalent by 2030, a five-fold increase compared to the figure of 2009.

All major hydropower sources would be put into operation in the next few years and fossil-fuelled energy sources are declining, forcing the country to import coal for power production since 2011, instead of in 2015 as earlier forecast.

In order to increase domestic power supply, the country has imported electricity from China. However, this is not a reliable source as Chinese partners have recently sharply increased prices to 7 US cents per kWh from an earlier 4.2 or 4.5 US cents.

“Vietnam is trying to develop nuclear power sources, which is still causing public concern over safety. However, we’ve yet to work out a better solution to increase power supply. The country expects that nuclear power would contribute 20% to the national total power capacity by 2020,” Lam said.

According to him, nuclear power costs USD3,000 per kWh to produce, compared to USD2,000 per kWh of wind power.

Vietnam is speeding up the implementation of the first nuclear power projects with two plants that have a combined capacity of 4,000 MW. It has signed a cooperation agreement with Russian partners to build the first plant at a cost of from USD6,500-USD7,000 per kWh, promising high safety.

“Nuclear incidents like in Chernobyl and Fukushima are a result of backward technologies which have been used for 40 years. However, nothing is absolutely safety, especially in cases of tsunamis or earthquakes. Vietnam has invited nuclear experts from North Korea, Russia, Japan and the US to provide nuclear safety training for Vietnamese officials and staff,” he emphasised.

Even though the further development of coal-fired power sources would mean that country wpuld be more dependent on imported coal sources in the future and produce increased greenhouse emissions, Vietnam still has no other better choices, he admitted.

The country is trying to set up renewable energy sources. Renewable energy sources currently account for only 3.5% of the country’s total power capacity and the rate is expected to increase to from 6%-6.5% by 2020.

Despite great potential for renewable energy in Vietnam, such sources of energy are not really stable and investment costs are a considerable concern. Prices of hydropower and thermal power are from 4-5 US cents per kWh but the price could be even ten folds higher for solar power.

“Among renewable energy sources in Vietnam, wind power seems to be the most suitable and feasible due to costs, which are the same as investment costs for small-sized hydropower. However, wind energy in Vietnam is rather limited, estimated at between 5,000 MW and 6,000 MW, mainly in the central coastal provinces of Binh Thuan, Phu Yen, Ninh Thuan and Binh Dinh,” he noted.

Lam said that Vietnam can reduce current total power consumption by from 15%-20% if it successfully applies energy saving measures. This could save the costs for the production of one or two new major power sources.

“Vietnam is among countries that have the highest rates of power leakage due to the use of backward technologies. Energy consumption in the country’s industry sector is from 2-2.5 times higher than other countries in the world,” he emphasised.

Even though the country has passed the Law on Energy Saving and Efficiency, the enforcement has been inefficient due the lack of proper attention to raising people’s awareness of the issue, he commented.

Vu Chi Thanh, Director of the Hanoi-based FPT Polytechnic, said Vietnam should learn from several initiatives abroad to boost energy saving and efficiency as well as foster the development of green energy sources.

“We should pursue sustainable development that meets the needs of present generations without compromising the ability of future generations to meet their own needs,” he added.

Pham Ngoc Thang, head of iSave project, who won the first prize for Green Initiative in 2009, said, “After a period of time working in the field of communication on energy saving I see that people still lacks awareness on the issue. It’s not easy to change common people’s mind and behaviour but it’s even more difficult to persuade the better-off groups to save energy as electricity bills are just a minor part of their monthly expenses.”

Rescue package to help a property market all at sea

The government’s credit and policy support will  have a positive impact on part of the real estate market, but it is still a long way to go for the market to recover from the current stagnancy. Bich Ngoc reports from the seminar “Revitalising Vietnam’s Property Market” co-held by VIR and Cushman & Wakefield last week in Ho Chi Minh City.

Vietnam’s real estate market has experienced a standstill over the past two years, which is considered as a reason causing non-performing loan problem at local banks currently and having negative impact on the economic growth.

According the latest report from the Ministry of Construction total value of unsold houses and apartments was been estimated at around VND125 trillion ($6 billion) till March 2013, and there were about 34,000 apartments, 15,300 houses, and 9.8 million square meters of land unsold in 55 provinces and cities.

On January 7, 2013, the government promulgated Resolution 02/NQ-CP including a group of measures which aimed at easing difficulties for enterprises and encouraging local consumption in many sectors, including property market.

Some of the measures have been implemented so far. Just one month ago, the Ministry of Construction issued the Circular 07/2013/TT-BXD detailing who will receive financial support from the government for buying and developing social housing.

The State Bank has also issued the Circular 11/2013/TT-NHNN specifically regulating government’s subsidiary for homebuyers purchasing social-housing. The interest rate subsidiary will last within 10 years, and the annual interest rate will be 6 per cent this year and then below. According to the State Bank, the subsidiary package is worth VND30 trillion ($1.4 billion) which has been disbursed from June 1, 2013 for three years.

Right now, the National Assembly is also discussing to approve the amendment to Law on Corporate Income Tax, value-added tax and other measures to reach socio-economic development targets in 2013, that will also include some incentives for property developers.

But whether these policies would help recover the property market remains an open question that was hotly discussed at the seminar “Revitalising Vietnam’s Property Market” held in Ho Chi Minh City last week.

Dang Huy Dong, Deputy Minister of Planning and Investment, said the world’s economy remained shaky with innumerable latent risks in 2013. Domestically, alongside some achievements multiple hardships persisted, having negative impacts on the real estate market.

“Relevant ministries, state agencies and local governments have proven proactive in handling Resolution 02 over the past months. However, the property market has yet to get out of the woods and difficulties still exist which were shown in imbalanced supply and demand, high inventory and unpaid capital amounts casting bad impacts on the economy,” Dong said.

Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, turned down the idea that Resolution 02 was for rescuing the property market and property investors.

“It is wrong to say so. We should see that this is the State’s necessary interference into the market, in which a great part of the policy is focused on helping low-income labourers have houses. The resolution is centred not only on supporting enterprises, but also helping solve difficulties for the whole economy,” Vo said.

Whilst many experts argued that the $1.4 billion credit package would not help reduce the huge stockpile of apartments and houses, others such as Tran Le Khanh, chairman of the Kien A Corp, believed the package would be surely to have a good impact to the real estate market in the coming time.

“Even though this package focuses only on the low and mid-range product but it still has contagion influences in the whole market. This is because the real estate market has different segments but they have been closely connected each others,” Khanh said.

Nguyen Viet Manh, head of the State Bank’s Credit Department, stressed that the package had an active impact to the market, especially existing loans.

“Due to the decrease of interest from banks, developers now can adjust their price to be more affordable and their products become more attractive to customers,” Manh said.

“This package is not a rescue boat for the market, but it is a fundamental basement for the mid-range segment first, then expanded to other segments,” Manh said.

He said the package was a drastic measure that helped prop up the low-cost housing segment. “There was high demand for housing among low-income earners, especially those in urban areas, but low supplies. The revived low-cost housing segment was expected to lead a spillover affect on other property segments,” he added.

Nguyen Tran Nam, Deputy Minister of Construction, said the $1.4 billion credit package was not aimed at rescuing the real estate market, but reinvigorating part of the market – namely social housing and low-cost housing segment – that would help ignite other segments.

Owing to the government’s support in social housing developers, an increasing number of developers are venturing into this segment, leading to a boom in construction of low-cost housing.

Nam said the ministry had urged localities to scale up construction of social housing projects and to date there had been a total 157 social housing projects in the pipeline across the country designed with 68,500 apartments at development cost of $957 million.

Nam added that the market in Hanoi and Ho Chi Minh City had also seen an increasing number of transactions of apartments, particularly low-priced and small apartments. “Affordable housing segment in Hanoi and Ho Chi Minh City has been warming up recently,” he said.

However, Chris Brown, country manager of Cushman & Wakefield, said there would be no quick fix or “silver bullet” to recover the market. Recent measures could prolong the agony and average recovery period should be six years.

“Sentiment is key to recovery. With the recent measures bring back confidence quick enough to stimulate market recovery, market needs to deleverage as soon as possible,” Brown said.

He said the market would not recover until non-performing loans (NPLs) were recycled at a price low enough to create widespread confidence.

Participants at the seminar also mentioned to the establishment of the Vietnam Asset Management Company (VAMC) which will be effective from July 9, 2013. With the chartered capital of VND500 billion ($25 million) the company will be operated under the direct control of the State Bank.

Manh said the establishment of VAMC would be supportive to the market. “Bankers can not solve bad debts by themselves and this problem must be co-addressed by different sectors, including the State, banks, developers and even buyers as well,” Manh said.

Brown said that the establishment of VAMC was a positive move, however, its budget was still limited. “Banks are not required to disclose their NPLs. Poorly managed banks will take advantage to transfer their NPLs to VAMC instead of deleveraging. NPLs are not attractive to investors at book value when reality is they have decreased by from 30 to 40 per cent,” Brown said.

M&As top of the pops

Vietnam’s mergers and acquisitions market is expected to be more vibrant thanks to a raft of simplified legal procedures.

The latest Stoxplus report showed that in 2013’s first quarter, the mergers and acquisitions (M&A) market size reached $675.6 million, with 14 deals recorded, including 10 foreign-backed and four domestic M&A deals.

Some typical M&A cases in the first quarter included American-based KKR investment fund increasing its ownership in Masan Consumer from 10 per cent to 18 per cent, with additional value of $200 million, Mekong Capital withdrawing 6.7 per cent equity at Mobile World Joint Stock Company for a financial investor with $110 million and Vingroup transferring Vincom Center A Commercial Hotel Complex in Ho Chi Minh City to VIPD worth $470 million.

“From this time until the year end and next year, the market will be busier because of the trend to shift from direct investment to indirect investment via M&As,” said Nguyen Quang Thuan, general director of Stoxplus.

He said local businesses offered attractive prices for foreigners because of Vietnam’s struggling economy and legal barriers to the M&A process had been loosened, especially in the banking sector with the government easing restrictions for foreign ownership in some weak banks.

According to Stoxplus, M&As in the banking sector would be more vibrant due to its restructuring roadmap, as the number of commercial banks would be reduced from 39 to 13-15 by 2017.

Recently, the government considered raising the foreign ownership limitation to above 30 per cent, with Saigon Commercial Joint Stock Bank (SCB) as a pioneer. Among the 39 current joint stock commercial banks, 15 have strategic partners in the same sector, three banks stay in special supervision or have less demand for merging or transferring.

Consumer finance M&As are also predicted to be busy after the government allows domestic and foreign financial institutions to merge or equitise with retail bank, with the merger of PVFC and Western Bank a typical case.

Robert Tran, a senior executive of Robeny Group - a Canadian consultancy firm, said he expected M&A deals to occur in the food and beverage sectors, pharmaceuticals, breeding food and education. “Currently, we receive requirements from U.S and Canadian companies seeking pharmaceutical factories to process commodities in Vietnam and ASEAN markets,” said Tran.

Currently, Japanese firms remain at the top of foreign-backed M&A in equity investments into Vietnam enterprises. Besides some significant deals, Japanese investors have been searching for investment opportunities in niche markets with small and medium target enterprises.

To reflect the trend and contribute to enhancing the efficiency of M&A activities in Vietnam, since 2009, VIR and AVM Vietnam have initiated the annual M&A Vietnam Forum.

The Vietnam M&A Forum 2013 will be held on August 8, 2013 in Ho Chi Minh City.n

Since 2009, the forum has become the biggest annual event on M&A and strategic investment in Vietnam. The forum is expected to welcome leaders of Ministries, sectors, experts, leading financial enterprises, M&A consulting companies, hundreds of other Vietnamese and foreign enterprises and the media.

Corporate bonds look good-in comparison

Good times are on the way for Vietnam’s corporate bond market thanks to a sharp decrease in government bond yields and banking interest rates.

“With the anticipation of ticked up credit growth as well as the plunge of lending rates in coming months, we expect the corporate bond market would turn to vibrant mode in the coming time, especially infrastructure sector,” said Vietcombank Securities’ Monthly Fixed Income Report released last week.

A management fund representative said his fund was considering slashing investment in government bonds and raising capital for corporate bonds, due to government bond yields quickly dropping in recent months.

Currently, the government bond yields for two- and three-year terms stayed at 6.55-6.75 per cent per annum, compared with the expected inflation rate of 6 per cent for 2013. Meanwhile, the corporate bond yield remained high at 12-14 per cent per year, for some asset backed issuance.

A monthly report by BIDV’s Treasury Department also forecasted that the corporate bond would be more buoyant in June. “A stable exchange rate, curbed inflation and a liquidity surplus, especially downtrend of interest rate are important factors to support enterprises to issue long-term fixed income debt instruments,” said the report.

At some banks’ treasury departments, bond traders said demands for safe corporate bond deals had increased amid the sharp decrease in government bond yields. Recently, a number of enterprises have announced plans to raise capital via corporate bonds issuances, however, detailed information has not been revealed.

Giants in the real estate sector plans to offer VND950 billion ($45.6 million) of three-year corporate bonds while one big name in the consumption sector is seeking for capitals through bond issuance, with worth of VND2 trillion ($96.1 million) this year and the yield applied for the first payment of 11.5 per cent.

A large state-run bank also plans to issue VND2 trillion ($96.1 million) in corporate bonds with terms of 10 years.

In the first quarter of this year, many big deals had been completed such as Ho Chi Minh City Infrastructure Investment (CII) with VND1 trillion ($48 million) worth of six-year corporate bond issuance that Vietcombank bought wholly with a fixed coupon rate of 13.2 per cent per annum and the country’s largest mining firm Vinacomin with VND2.5 trillion ($119.6 million) worth of five-year bonds with the yield applied for the first year of 14.5 per cent.

However, the corporate bond market stayed quiet with no successful corporate bond issuances recorded in May.

Amata maps out $2bn Quang Ninh complex

Thailand’s Amata Corporation has taken  a big step toward developing a $2 billion hi-tech park and township complex in Quang Ninh province.

Nguyen Van Doc, chairman of Quang Ninh People’s Committee, said the provincial committee had agreed to allow Amata Corporation Public Company and its domestic partner, Tuan Chau Au Lac Limited, to implement feasibility study of this project on a 500ha site in Quang Yen district.

“We consider Amata as a long-term investor and we also want Amata to consider Quang Ninh as a strategic investment destination. Thus, we will support them [Amata and Tuan Chau] to develop this project,” said Doc.

According to Amata’s proposal, the hi-tech park and township complex comprises a green industrial park, residential urban area, sport facilities, convention centre, schools and university and entertainment facilities.

Bordering Lang Son, Bac Giang, Haiphong and Hai Duong provinces and Chinese Guangxi province, Quang Ninh is now the third largest economic hub in northern Vietnam, after Hanoi and Haiphong. It is also home of the largest coal mine in the country and the Cai Lan deep-seaport.

The government sees Quang Ninh as part of the pivotal economic development triangle of Hanoi-Hai Phong-Quang Ninh in the north of Vietnam, that would drive economic development in the northern region.

If Amata’s project was built in Quang Ninh, it would help attract more foreign investment to the province, Doc said.

This project also shows Amata’s ambition to expand its investment in Vietnam through the development of large-scale industrial and urban property project.

Penetrating Vietnam in 1994, Amata now owns a 700ha industrial park Amata Bien Hoa City in southern Dong Nai province. This is a well-known industrial park in Vietnam where attracted over 120 multinational companies to set up investments.

The Thai developer last year announced a plan to develop a giant Amata Express City project in Dong Nai, which is almost double the size of Amata City. The project comprises a 760ha new urban area next to the river, a 420ha high-tech industrial area and a 105ha new urban area.

In a bid to expand in Vietnam, Amata early this year decided to list its subsidiary, Amata Vietnam, on the Stock Exchange of Thailand and raise funds to invest in the expansion of its business in Vietnam.

“Amata Vietnam’s industrial estate is considered a premium project, which attracts many high-end clients, especially foreign manufacturing companies. The company plans to utilise the IPO proceeds to develop a new industrial estate [Amata Express City], which is now under approval process from the authority,” Amata said in an announcement.

Vietnam’s first steel radial tyre factory opens in June

Vietnam’s first steel radial vehicle tyre factory will be fully operational on June 29 with an annual capacity of 600,000 tyres, according to the Vietnam National Chemical Group (Vinachem).

The plant’s construction began in 2011 and is the biggest undertaking to manufacture tyres in Vietnam.

It is built on an area of over 10 hectares in Lien Chieu Industrial Park, Da Nang city, and was funded by a Vinachem affiliate-Da Nang Rubber Joint Stock Company-with capital totalling 2.95 trillion VND (141,000 million USD).

Radial tyre consumption makes up a mere 10 percent of the nation’s vehicle tyre consumption. Once operational, the plant is expected to satisfy domestic and foreign partners’ radial truck tyre demand, and help the country keep up with the trend of modernisation and industrialisation in the world.

Another Vinachem affiliate, the Southern Rubber Industry Joint Stock Company (or Casumina), is accelerating the construction of an other radial tyre factory with annual capacity of about one million tyres.

Domestic coffee “wakes up” to Starbucks

Following the appearance of Starbucks in Vietnam in February this year, the race for market share in the domestic coffee industry is hotter than ever.

Recognising that boosting domestic consumption is one way to raise their products’ added values, domestic coffee makers have tried to outdo one another by introducing their own new products.

In late April, G7-X2, the latest product from Trung Nguyen coffee made its debut.

Also in April, the Passio Coffee chain opened another shop in Ho Chi Minh City , raising its total shops nationwide to 11.

Even retailer Saigon Co.op has released a new three-in-one instant coffee under the Co.op Mart brand. Co.op Mart Deputy General Director Nguyen Thanh Nhan said the demand for instant coffee is increasing and Co.op Mart had a chance to cooperate with the supplier to launch its own brand.

Experts predict that domestic coffee consumption will increase sharply, contributing to gradually reducing raw material export and promoting coffee processing, therefore raising the value of domestic coffee.

Statistics from the International Coffee Organisation (ICO) show that Vietnam ’s coffee consumption continues to increase, from 48,000 tonnes in 2005 to 94,980 tonnes in 2011.

The increase is the result of European-styled coffee brands’ marketing strategies and users’ positive response.

However, according to ICO, Vietnam ’s annual coffee consumption per capita of 1.08 kg remains low, compared to that of Brazil (5.2 kg), the EU (4.83 kg) and the US (4.13 kg). This means big opportunities remain for Vietnamese coffee producers.

Mekong Delta fruit prices drop as harvest peaks, supplies skyrocket

With the Mekong Delta reaching the peak fruit harvest season and supply skyrocketing, the prices of many fruits have declined.

Cat Chu mango, a speciality of Dong Thap Province, is sold at the orchard for VND2,000-4,000 a kilogramme, down by around VND10,000 (US$0.4) since the beginning of this year.

Huynh Van Tan of Cao Lanh, Dong Thap's capital, said: "The price of Cat Chu mango is too low and many orchard owners have stopped harvesting their ripened mangoes."

Traders blamed the price decline also on competition from fruits arriving from the south-eastern region and Thailand.

In markets around the delta, fruits like mango, dragon fruit, rambutan, watermelon, and Nam Roi grapefruit are being sold cheap.

In Vinh Long Province and neighbouring Can Tho city, rambutan retails at VND5,000-7,000 per kilogramme compared to VND15,000-20,000 ($0.7-0.9)at the beginning of last month.

Dragon fruit is sold on roadsides in Can Tho at VND3,000-4,000.

In Tra Vinh and Soc Trang provinces, the price of mangosteen has plunged from VND30,000 ($1.4) a month ago to VND22,000-25,000.

The list goes on and on.

Bui Thanh Liem, head of the Cho Lach District Agriculture and Rural Development Bureau in Ben Tre, said many farmers have used ripening techniques so that they can harvest their fruits during the Doan Ngo Festival, one of the country's most popular traditional festivals, which fell onJune 12, the fifth day of the fifth lunar month.

This has caused a glut, he said.

In HCM City, unusually large quantities of fruits like king orange, guava, sour sop, mangosteen, mango, and rambutan from the delta are being sold.

More than 1,500 tonnes of various kinds of fruits are transported daily to the Tam Binh Wholesale Agriculture Market in the city's Thu Duc District, according to the market management board.

But even amid the glut, the prices of some fruits remain stubbornly high, according to traders.

Green-peel and pink-flesh grapefruits grown in Ben Tre Province are now being bought by traders at VND60,000 ($2.8), VND26,000 ($1.2) higher than a year ago.

The supply of the grapefruit cannot meet demand since output has declined because of diseases, according to traders.

The Ben Tre-based Huong Mien Tay Company, a fruit distributor, can only buy 10 tonnes of the grapefruit daily compared to 30-40 tonnes early this year.

The company sells 90 per cent of its purchases to the north and 10 per cent to HCM City.

It said it has had to reject orders from Germany and Canada because the supply cannot even meet domestic demand.

Hi-tech crime fighters handed award

Payments technology company Visa has recognised the efforts of Viet Nam's hi-tech crime fighting department under the Ministry of Public Security of Viet Nam.

The department was presented with a Visa Law Enforcement Award at the company's APCEMEA (Asia Pacific, Central Europe, Middle East, Africa) 2013 Security Summit held in Bangkok last week.

The department won the award for its "outstanding efforts" in the apprehension of criminals involved in card fraud during 2012 and significant contributions to the fight against card payment crimes.

The Ministry of Public Security has demonstrated a clear commitment to keeping payments safe for consumers, according Lorijon Bacchi, Country Manager, Viet Nam, Cambodia & Laos, Visa.

Ministry raises sugar import duties

The Ministry of Finance (MoF) has decided to raise sugar import duty to 15 per cent from July 22, 2013.

In a newly released circular, they have also revealed that import tariffs of maple sugar and maple-oriented syrup will increase from 3 per cent to 10 per cent.

Taxes in glucose and glucose syrup will rise from 10 to 15 per cent.

Pure fructose will be subject to a 15 per cent tariff, a large jump from the current rate of 3 per cent.

Meanwhile, export duty of man-made honey will be adjusted from 10 per cent to 15 per cent.

MoF also raised import tariffs of flavored sugar from 5 per cent to 15 per cent.