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BUSINESS IN BRIEF 20/4

 Double textile export to U.S. in sight; Firms seek diversification for tra fish exports; Rice prices fall despite successful bid for export; HCM City calls for investments into Thu Thiem
HCM City aims high for river tourism development

HCMC will pour more investments into river tourism in the coming time with specific programs and plans initiated in a draft strategy on river tourism development being put forth for comments.

Nguyen The Ky, deputy director of the HCMC Department of Transport, said that the department was working with relevant agencies on the river tourism strategy for the 2013-2015 period and a vision towards 2020 which would be presented to the city’s government.

According to the draft strategy, the city expects to boost the average growth of tourists buying river tours by around 20% each year and achieve an annual revenue growth of 30%, making make river tourism the city’s major tourism product in the coming years.

To achieve this, HCMC will upgrade 22 piers and build 28 others, develop 65 tourist attractions in districts having river routes, and develop three tourist community sites in Cu Chi, District 9 and Can Gio.

The city will organize three cultural, sport and tourism events annually at the downtown area encompassing Bach Dang Wharf, Nha Rong Wharf and Mong Bridge. Besides, tourism products combined water sports, leisure and medical treatment will be developed in the three districts above.

Specific solutions and measures concerning infrastructure development, landscape and environment improvement, transport safety, product design and human resource training will assigned to different agencies.

HCMC will set side VND1 trillion from its budget and call for investments of around VND10 trillion to carry out the river tourism development program.

The current river tourism planning of HCMC for the 2010-2020 period consists of five main routes, which are the urban route, the westward route, the northward route, the eastward route and the southward route.

Petrol price drops on global decline

Fuel distributors in Viet Nam yesterday reduced the retail price of 92-octane petrol by 1.7 per cent to VND23,640 ($1.13) per litre and trimmed prices of several other oil products, the second cut in less than 10 days.

The price of diesel will drop 0.47 percent to VND21,350 per litre as of 7pm, and kerosene will also ease 0.93 percent to VND21,400 a litre.

Global oil prices have been easing since April 9 when Vietnam made its previous retail price cut, the finance and the trade ministries said in a joint statement.

Brent crude oil futures had fallen by around 10 per cent in April, but were trading up $1.14 at $98.83 per barrel on Thursday morning after hitting a nine-month low of $96.75. 

Developing automobile industry in new period

The Ministry of Industry and Trade (MoIT) has finalised a new plan for automobile development until 2020 with a vision to 2030 for Government approval.

At a meeting in Hanoi on April 17, the related ministries and departments agreed that developing automobile industry is necessary for Vietnam to help limit the trade deficit in the current process of national industrialisation and modernisation.

Participants reviewed the results of automobile industry development in the 2000-2012 period, which showed an annual growth rate of 15-18 percent. The domestic automobile industry is capable of producing or assembling 500,000 vehicles per year, but it can turn our less than 100,000 units only.

Participants proposed developing some certain brands of automobiles which are popular in both regional and international producition chains. Businesses should apply advanced technologies to improve the quality of products and raise domestic production proportion.

Deputy Prime Minister Hoang Trung Hai emphasised that the focus will be on developing the automobile industry into one of six key strategic sectors in the future.

Prospects for Vietnam-Brazil economic ties

Nearly 70 Brazilian businesses attended a recent seminar in Sao Paolo state to seek opportunities for economic, trade and investment cooperation with Vietnam.  

Vietnamese ambassador to Brazil Duong Nguyen Tuong noted that despite the encouraging results in bilateral trade over the years, the economic, trade and investment ties between Vietnam and Brazil are yet to match their potential.

The market share of Vietnamese goods in Brazil remains modest, and both sides need to work harder to share information and create conditions for their business circles to penetrate each other’s markets, said Tuong.

In his presentation, Vietnamese Trade Counsellor Pham Ba Uong introduced Vietnam’s Doi Moi (Renewal) process, its economic development and integration, and economic-trade ties with countries, including Brazil.

He highlighted incentives the Vietnamese government offers to foreign companies to operate efficiently in the country and confirmed that Vietnam welcomes foreign businesses, including those from Brazil.

Representatives of Brazilian companies asked for more contacts with their Vietnamese counterparts to early make fact-finding tours and take part in specialised exhibitions and trade fairs in Vietnam in 2013.

Brazil is a large market of more than 190 consumers in South America who have great demand for consumer goods imported from other countries. This is a great chance for Vietnam to penetrate this lucrative market.

Two-way trade between Vietnam and Brazil last year reached US$1.73 billion, a year-on-year increase of 14.5 percent. Of the total, Vietnamese exports were valued at US$710 million, up 19 percent.

Made-in-Vietnam goods favoured in Myanmar

Vietnamese goods of different kinds are now on sale in many markets and supermarkets in Myanmar.

Vietnamese Trade Counselor to Myanmar Tran Phuoc Anh said that local consumers are looking for Vietnamese products which are better in quality and cheaper in price than those imported from China and Thailand.

With a total population of around 60 million, Myanmar imports a huge volume of goods (about 70 percent) for domestic consumption, and this is a good chance for Vietnamese exporters to save transport costs, he said.

Many Vietnamese businesses have already set up their representative offices and opened a number of retail shops in Myanmar, Anh added.

The national flag carrier Vietnam Airlines has increased the number of its flights from HCM City and Hanoi to Yangon to meet the growing demand of Vietnamese passengers to Myanmar. However, he suggested, Vietnamese businesses should carefully study market trends in Myanmar to develop suitable strategies.

According to Anh, Myanmar exported over 1.2 million tonnes of rice in 2012, and is expected to ship 5 million tonnes abroad by 2020. This will open up a good opportunity for Vietnamese businesses to export fertilizers and strains to Myanmar’s rice growers.

He also proposed that Vietnamese investors focus on other potential areas such as tourism, food processing, consumer goods, and construction materials production.

HCM City hosts Lifestyle Vietnam 2013

LifeStyle Vietnam 2013, the 4th version of the international home decor and gifts fair, is taking place at Ho Chi Minh City’s Tan Binh Exhibition and Convention Centre from April 18–21.

The event attracted more than 800 booths representing domestic businesses and their foreign counterparts from countries including Thailand, Indonesia, Cambodia, and Laos.

The event’s participating businesses are showcasing products like fine arts and handicrafts, home decoration, timber furniture, household items, embroidery, giftware, jewelry, fashion footwear, accessories, and support services.

LifeStyle Vietnam 2013, co-organised by the Vietnam Handicraft Exporters Association (Vietcraft) and trade promotion organisations, creates an opportunity for industry members to introduce their newest ranges, negotiate partnerships, and expand their export markets.

A series of high-level talks and seminars updating developments in the Japanese, EU, and US markets will also be held under the framework of the fair.

Annual report on Vietnamese businesses unveiled

The Vietnam Chamber of Commerce and Industry (VCCI) released 2012 edition of its annual report on Vietnamese businesses in Hanoi on April 18.

The report reviewed developments in economic growth, the import-export balance, the state of foreign investment, and the implications of world market events.

Addressing the conference, VCCI President Vu Tien Loc said the annual report includes an overview of Vietnamese business development from 2002 until 2011. Transitions, business capacity, and market accessibility are all discussed.

The report also made recommendations to improve Vietnam’s business environment and sharpen domestic businesses’ competitiveness.

World Bank Chief Economist Deepak Mishra said his institution has coordinated with the VCCI on sharing the visions of a favourable Vietnamese business environment and offered advice on appropriate policy responses to World Trade Organisation (WTO) membership.

Businesses cited in the report urged the government to accelerate the progress of administrative reforms, improve the investment environment, ensure transparency, monitor economic planning, and keep the market under control.

Businesses want local authorities to increase management capacity and extend more support.

The report states that as of April 1, 2012, Vietnam boasted more than 312,000 valid businesses. Vietnamese businesses follow a general trend of reducing labour force scale while increasing quantities of capital.

Building trademarks for Vietnamese exports

Ho Chi Minh City hosted an April 18 seminar discussing ways to develop the international reputation of Vietnamese export trademarks.

The event, organized by the Online Trade and Investment Information Portal (ITPC), also aimed to provide businesses with an overview of trademark building strategies and methods of cementing a distinguished position amidst the fierce competition of the international market.

ITPC Deputy Director Nguyen Truong Nhan said the intangible value of a respected trademark must not be underestimated by businesses.

During the international integration process, many exporters have secured a foothold on the global market but neglected trademark development.

The seminar guides businesses through re-assessing their current trademarks, products, and services with a view towards improving their reputation and competitiveness.

Richard Moore Associates Executive Director Richard Moore said an internationally renowned trademark is indispensable if businesses wish to earn and maintain the trust of consumers.

Businesses should tailor their approach to building their trademarks on the basis of research into target consumers’ culture, habits, and tastes.

Mexico stops Vietnamese shrimp import

Mexico has decided to stop importing shrimps in all forms from China, Malaysia, Thailand, and Vietnam.

The government made the decision following the outbreak of the early mortality syndrome (EMS) in order to protect domestic shrimp farming, the Mexican Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Food (Sagarpa) said on April 18.

Sagarpa asked the national food hygiene and safety administration to keep a tight grip on the import of shrimps from other countries free from EMS.

It insisted that the domestic shrimp farming industry is able to meet the local consumer demand without increasing imports from other countries.

Mexico has nearly 1,400 shrimp farms covering a total area of more than 71,000ha. Last year, it harvested nearly 100,000 tonnes, mostly for domestic use.

The North American nation imports nine tonnes of shrimp from China, Malaysia, Thailand, and Vietnam.

Food & Hotel Vietnam attracts 385 firms

As many as 385 local and foreign enterprises have registered to attend Food & Hotel Vietnam 2013 which will take place on April 24-26 at Saigon Exhibition and Convention Center in District 7.

According to the organizer, the number of enterprises participating in this year’s exhibition rises by around 10% from the previous event in 2011.

Among participants, 82-85% are foreign enterprises that will introduce technology and machines used in restaurants and hotels.

In addition, a conference on franchises in the restaurant and hotel sectors as well as other activities about food will also be held.

Food & Hotel Vietnam is organized every two years by VCCI Exhibition Service Co.

Double textile export to U.S. in sight

Vietnam fetched US$7.7 billion from textile export to the U.S. last year and the value is expected to double once the nation signs the Trans-Pacific Partnership (TPP) agreement with the U.S., said Le Quoc An, consultant of the Vietnam Textile and Apparel Association (Vinatas).

He was speaking at a seminar on further tapping the U.S. market in HCMC last Friday.

Vietnam until 2001 exported some US$45 million worth of garment to the U.S. annually but the country’s apparel export stateside shot up to nearly US$1 billion a year since 2002 before hitting the record high of US$7.7 billion last year, he remarked.

Vietnam is in talks over a number of free trade agreements with other nations, An noted, but the TPP agreement that the nation is seeking to finalize is very important to help local garments bound for the U.S. enjoy lower tariff than products from other rivals like China.

For instance, he said, China holds a 37% share of all apparel items exported stateside while Vietnam only seizes 8%. If joining the TPP agreement, Vietnam will be able to get a share of ten percentage points from China’s position because Vietnamese garment will enjoy more advantages in the U.S. compared to Chinese items that aren’t involved in the agreement, An analyzed.

Currently, Vietnam’s garment-textile products are levied an average 17% when entering the U.S., but if the tariff is halved or brought down to 0% under TPP, Vietnam will enjoy a huge advantage, according to An.

Many U.S. enterprises are making plans to take advantage of TPP from 2015, An told the seminar. As for Vietnamese textile companies, they need to improve production management and clarify origins of products to cash in on the agreement, he said.

Vietnamese garment export to other nations has marked up continuously in recent years, with export value amounting to US$4.2 billion in January-March alone, up 19% year-on-year.

In the last five years, Europe has shifted to importing garment from its previous position as a garment exporter. In the meantime, Central American nations have still exported textile but their shipments have sharply fallen.

Similarly, South America has heavily relied on imported garments. In Asia, Taiwan, Singapore and South Korea used to be textile exporters but now they have become importers already.

As such, there are few apparel suppliers globally and China is the biggest textile supplier in Asia, followed by Vietnam, Indonesia, Bangladesh and Cambodia.

Free trade agreements that Vietnam is negotiating with related countries therefore are expected to boost the nation’s garment exports further.

Firms seek diversification for tra fish exports

Many local tra fish exporters slapped with high anti-dumping taxes stateside after the final result of the eighth administrative review on Vietnam’s frozen pangasius fish fillets of the U.S. Department of Commerce (DOC) are seeking new markets.

Tran Le Duc Thinh, deputy general director of Viet An JSC which is levied a tax rate of US$1.34 per kilo as announced by DOC a month ago, said his firm has prepared a solution to diversify import markets to reduce its reliance on the U.S. market.

Instead, the company will seek outlets in Central America and expand the traditional markets like Europe, Russia, Ukraine and Australia.

Besides, Viet An also has plans to boost distribution channels at home and has acquired orders sufficient for this quarter’s production, Thinh said. The US$1.34 tariff imposed on one kilo of tra fish of Viet An will force the firm to withdraw from the U.S. market according to the local seafood community.

However, Thinh noted that the solutions are only for the short term. And the firm plans to return to the U.S. market in March next year or March, 2015, as the lawsuit that it is involved in might last only two to three years, he said.

The director of a tra fish processor in the Mekong Delta city of Can Tho revealed that entities levied with high tax rates can ask for help from those taxed with lower rates. But he said the measure is temporary and is only workable for already-signed orders and that he has to look for other substitute markets in the long run.

It is impossible for local tra fish exporters to afford a high tax rate of US$1.34, so they will have no other choice but to come up with other business plans, said Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers. He said the lawsuit could last for three years, meaning the fate of local firms facing the sky-high tariff stateside still remains unknown until then.

Sharp meat price falls hit husbandry farmers

Prices of pork, chicken meat and eggs have fallen continuously following the Tet holiday, while input material prices, especially animal feed prices, still continue rising, causing huge losses among husbandry farmers in Hanoi City.

Tran Van Chien, leader of Co Dong Cooperative in Hanoi’s Son Tay District, recorded a free fall in poultry prices at his cooperative in recent times, causing heavy losses for member farmers.

For instance, Chien cited, chicken prices now hover around some VND30,000 a kilo, slipping by VND7,000-8,000 per kilo versus the prices before Tet. Co Dong farmers suffer a loss of up to VND4,000 for a kilo of chicken meat, he said.

Despite not suffering any losses, Nguyen Van Lam, owner of a farming area with more than 500 pigs in Quoc Oai District, Hanoi, is upset as the constant fall of pig prices since the Tet holiday has eroded his family’s income against previous years. Pig prices only stay at VND41,000-42,000 a kilo in Hanoi, declining VND7,000-8,000 a kilo from pre-Tet period, he said.

“In the meantime, the production cost of a kilo of pig is some VND40,000, meaning livestock farmers like me have still earned scant profits while households taking out bank loans will face losses for sure,” he remarked.

Similarly, egg prices have slumped considerably. Dang Dinh Loc, owner of a farm of over 4,000 egg-laying chickens in Chuong My District, said the average daily expense including feed, electricity and water and medicine for one chicken is about VND1,400.

However, the price of first-grade eggs only stands at some VND1,700 each, and that of second-grade ones ranges between VND1,600 and VND1,650 each. As the price has dropped by VND500-600 each over pre-Tet period, farmers will only make profits when chickens lay eggs regularly, otherwise, they will break even or even face losses, he complained.

Rice prices fall despite successful bid for export

Rice prices in the Mekong Delta fell again after inching up VND50-100 per kilo in the middle of last week even though Vietnam had won bid to export 187,000 tons of rice to the Philippines.

In Dong Thap’s Cao Lanh District, intermediary traders last weekend bought the fresh paddy IR 50404 grown in the early summer-autumn crop at VND4,400-4,450 per kilo, down VND100-150 against the level in the middle of last week.

Similarly, in Soc Trang, Tra Vinh and An Giang, the price dropped sharply to VND4,400-4,500, while the long-grain type was sold at VND4,550-4,650 per kilo.

In An Giang, Can Tho and Dong Thap, prices of material for the 5% broken rice are fluctuating at VND6,700-6,750 per kilo and the 15% broken rice material at VND6,600-6,650, losing VND100-150 each kilo compared to the level in the middle of last week.

Duong Van Men, a rice trader in Dong Thap’s Lap Vo District, said enterprises restricted buying rice at present.

Pham Thai Binh, director of Trung An Co. Ltd. in Can Tho, said that although Vietnam had earned the deal for selling 187,000 tons of rice to the Philippines, rice for sale would be sourced from the volume previously purchased for temporary storage. Therefore, there will be little effect on the domestic rice market.

Prof. Vo Tong Xuan, rector of Tan Tao University in Long An, said farmers would gain nothing whether rice prices went up or down as rice had already been bought by enterprises or intermediary traders.

According to the Vietnam Food Association (VFA), the 5% export broken rice is being offered at US$380-390 per ton and the 25% broken rice at US$355-365 a ton. Vietnam currently has the lowest rice export offering price among the world’s leading rice exporting countries including Thailand, India and Pakistan.

HCM City calls for investments into Thu Thiem

The HCMC government will hold an investment promotion conference on May 8 to attract investments into Thu Thiem Peninsula in District 2 now that vast areas of cleared land are available and major infrastructure projects are set to go up soon.

Detailed information of 12 big projects and investment incentives in Thu Thiem are being prepared carefully for the investment promotion, said Nguyen Le Dung, deputy director of Thu Thiem Investment and Construction Authority.

According to the authority, some key projects in Thu Thiem such as the marina, banking-financial-commercial center and the software park will be marketed to investors at the forthcoming conference.

In preparation for the conference, the city’s government has assigned relevant departments and agencies to create some incentives for investors and is seeking the Government’s approval to pick contractors rather than to organize competitive bids to choose them.

To avoid the clumsy situation of investors incapable of executing projects, the authority requires investors to prove their financial and professional capacity.

The site clearance in Thu Thiem has so far virtually be completed, and the planning on 1/2000 scale has been approved.

Meanwhile, the four main roads in Thu Thiem new urban area will start construction on April 28, said the city’s government at a meeting held on Saturday.

In fact, Vietnam Infrastructure Development and Finance Investment Company (VIDIFI) as the project owner three years ago held a ground-breaking ceremony to construct these roads. However, due to lengthy procedures and site clearance problems since then, the project will not officially begin until late this month.

Trang Bao Son, deputy head of Thu Thiem Investment and Construction Authority, said that the four roads would be constructed by the VIDIFI-Dai Quang Minh consortium under the build-transfer and “land in exchange for infrastructure” formats.

Having a total investment of some VND10 trillion, the project consisting of an arch avenue, a lakeside road, a riverside road and an elevated road is expected to be completed after three years of construction.

In addition, Dai Quang Minh Real Estate Company will also begin construction of a low-rise housing project in the southern residential area.

Thu Thiem currently has nearly 20 other projects under construction such as resettlement apartment projects, the multifunctional tower, the convention center and the central square.

Supermarket fined for mis-labelling local grapes with Chinese flag

Big C The Garden, a branch of BigC Hanoi, has been fined VND35 million (USD1,669) after mislabelling local geen grapes with a Chinese flag.

The supermarket admitted it violated Government Decree 75 based on the Advertisement Law. The regulation bans using national flags to label products for advertising.

On April 15, Nguyen Thi Nhu Mai, Director of Hanoi’s market watchdog said that grapes sold at Big C The Garden mislabelled with a Chinese flag were actually sourced from Vietnam’s central province of Ninh Thuan.

“The conclusion was reached by the watchdog and the municipal police’s economic security office,” Mai said.

The incident happened on March 15 when consumers found green grapes at the market labelled with a Chinese flag along with brief introduction saying that they were Vietnamese fruits.

The watchdog conducted an inspection at the supermarket and found that Quang Minh, a company headquartered in Hanoi’s outlying district of Dan Phuong was the major green grape provider for the supermarket.

The company then proved that it has just provided green grapes for the supermarket since March 22.

The situation forced the supermarket to admit that they had made a mistake and that the grapes were bought from Pham Thi Hao, an owner of a kiosk at Long Bien wholesale market.

Hao agreed, saying that she bought the fruits from Cao Thi Vuong from the same market. Vuong bought such grapes from Nguyen Nhu Duc, a man in Phan Rang, Thap Cham City who was authorised by Ninh Thuan provincial government to trade in local grapes.

Nguyen Thi Anh Thinh, Deputy Director of the market’s management board said there were no Chinese green grapes available in the market during March. Chinese green grapes were only available during June and July.

All traders at the market said they bought green grapes sourced from Ninh Thuan over the past few months.

Nguyen Trung Thu, Chairman of Ninh Thuan Grapes Association, affirmed that they had sold green grapes to Hanoi markets in March.

“Among 1,000 hectares of grapes in Ninh Thuan, green grapes account for 2% of the total. Traders transport the grapes to Hanoi by themselves,” the association noted.

Apart from the fine, the supermarket was also found to have been lax in its management of point of origin documentation.

The chain was enforced to strictly discipline to its staff member who mislabelled the grapes.

Inspectors denounce drug trading firms

The Government Inspectorate has just made public the names of six pharmaceutical companies found to be trading illegal products.

Imexpharm Pharmaceutical JSC sold over four million Nucofed drugs that contain addictive substances from 2010 to 2011. This company also sold seven types of drugs containing addictive substances to Cambodia without the Ministry of Health's or the custom's permits.

Tripaco Company was found to have mistakenly sold 400,000 of psychotropic drugs to people without doctors prescriptions while Satada-Vietnam Joint Venture Company sold hundreds of medicines without permits in 2011.

HCM City Medical Import and Export JSC sold 500 kg of unlicensed materials to Minh Hai Pharmaceutical Company. Minh Hai Company also wrongly sold 500,000 psychotropic drugs to people without doctors prescriptions and sold 5 million of Artenfes drugs through forged trading invoices. Ha Tay Pharmaceutical Company is also accused of selling 1.5 million medicines to wrong patients.

Previously, seven companies accused Truong Quoc Cuong, chief of the Drug Administration of Vietnam, of allowing pharmaceutical companies to import mass quantities of pseudoephedrine, however, Tran Duc Luong, Deputy Inspector General said the accusations were unfounded.

During the inspection, the government issued and revoked trade licenses or business permits. The procedure to review and issue operating licences for foreign enterprises is said to take longer than regulated.

Furthermore, pharmaceutical companies haven't fully applied the good practice standards (GPs).

The Government Inspectorate concluded that this problem was the responsibility of the Ministry of Health and asked the ministry to deal with its shortcomings in management activities and create favourable conditions for pharmaceutical enterprises.

Aside from these companies, the inspectors requested to punish four more companies, including Mediplantex National Pharmaceutical Company, Tien Giang Company, OPV Company and Ha Tay Pharmaceutical Company.

Deputy Prime Minister Nguyen Xuan Phuc expressed his agreement with the inspectors' conclusions.

Trade promotion programs lose flavor with firms

Trade promotion programs are considered an effective means to help firms increase exports amid the present economic slump, yet most firms are avoiding such programs.

Many firms in the wood furniture industry have decided to participate in ‘Life Style Vietnam 2013’, a home décor, gift and household goods fair in Ho Chi Minh City, instead of joining a trade promotion fair in Panama, with both taking place at about the same time towards end of April.

Nguyen Manh Hung, a representative of a wood furniture company in Ho Chi Minh City, said although the Government will support a part of travel costs to Panama, firms still have to spend on hotel and other expenses. Firms now face tighter budgets hence they chose to participate in the local fair.

Every year, departments such as Vietnam Trade Promotion Agency under the Ministry of Industry and Trade, and Ho Chi Minh City Investment and Trade Promotion Center (ITPC) organize many trade promotion programs in foreign countries to help local firms maintain a relationship with traditional clients as well as seek new clients.

For instance, ITPC alone has many trade promotion programs in Cambodia and Myanmar each year. However, in reality, these programs have gradually discouraged firms as they did not produce great results.

Most firms said that trade promotion programs rarely focus on only one field or sector while the cost for participation is high.

Nguyen Bao, Vietnam’s Trade Counselor in Australia, also shared that trade promotion programs mostly do not bring the desired results. He suggested that the Government invite importers from other countries to Vietnam so as to save cost for local firms and help foreign importers learn first hand about local businesses.

Nguyen Ba Hoc, former chairman of Vietnam Cashew Association, also shared the same point of view as  Bao. He thought that organizing trade promotion programs in foreign countries is good but as for some key industries of the country, the Government should organize fairs in the country and invite foreign importers to Vietnam.

Meanwhile, trade promotion organizers explained that because expenditure for trade promotion by the Government was declining in recent years, such programs failed to yield great results.

According to Mr. Bao, amid economic difficulties, a trade fair model like Life Style Vietnam, which is held by the Vietnam Gift and Housewares Association (Vietcraft) and the Vietnam Trade Promotion Agency (Vietrade) in April every year and currently one of the well-known fairs in the country, should be applied widely in Vietnam.

Mr. Bao said that before each trade fair, Life Style Vietnam’s organizers usually contact commercial counselors to ask for help in popularizing this program to local firms. In 2012, Life Style Vietnam attracted 1,535 import companies from 25 countries and the contract value signed on the trade fair was around US$16 million.

Le Ba Ngoc, general secretary of Vietcraft, said that Life Style Vietnam succeeded because its exhibitors were chosen carefully. The exhibition was combined with impressive customer service that could meet every specific query from every importer.

In addition, exhibitors in Life Style Vietnam can also attend conferences on the US, Japan, and European markets delivered by foreign experts while foreign visitors can have a chance to participate in free field trips to manufacturing plants.

Some Vietnamese commercial counselors said that mass media plays an important role in popularizing made-in-Vietnam products so the Government should also invite foreign media companies to local trade fairs.

Of course, this does not mean that all trade promotion programs were ineffective and wasted. Trade promotion is necessary but it should be organized without causing an expense burden on both firms and the Government and focus on achieving results.

HCM City focuses on 23 traffic projects in 2013-15

HCMC focuses on only 23 key traffic projects in the period from now to 2015, according to a decision on adjustments to the city’s traffic development plan until 2020 made by the Government last week.

Most of the key traffic projects in the period 2013-2015 are road projects. They include construction of the road from An Phu Intersection to the Belt Road No. 2 with four lanes and expansion of the National Highway 1 section in HCMC.

The north-south road from Ong Lanh Bridge to Nguyen Van Linh Street with 4-8 traffic lanes and the east-west road connected to HCMC-Trung Luong Expressway with six lanes are also given priority. In addition, the Tan Son Nhat-Binh Loi road (6-8 lanes), the second phase of Provincial Road 25B (10 lanes) and Luong Dinh Cua Street (four lanes) will be implemented from now to 2015.

In this period, the new Mien Dong, Mien Tay and Da Phuoc coach stations will be built, together with a number of car parks in the downtown areas.

As for metro projects, HCMC focuses on only the Metro Line No. 1 and the first phase of the lines no. 2 and no. 5.

Three rapid bus transit lines, including line no. 1 along the East-West Highway, line no. 2 linking Mien Tay Coach Station, Nguyen Van Linh Street and Phu My Bridge and line no. 4 from Kha Van Can Street to Hoang Van Thu Park, will be put into service.

As for waterway projects, the city will carry out the Soai Rap River dredging project and the relocation of Ba Son Shipyard.

In comparison with the original plan, many changes have been made. For example, the city focuses on only 1-2 elevated roads, among four, and 2-3 metro lines, among six.

Moreover, some targets for development of transportation forms have been adjusted. By 2020, public transport will take up 20-25%, private transport 72-77% and other forms of transportation around 3%.

Developers lukewarm to home-for-rent segment

Many developers have ignored the idea of converting commercial condos into home-for-rent facilities as proposed by the Ministry of Construction in a petition just submitted to the Government, as the conversion is said to be not commercially viable.

In the petition, the ministry says that, besides converting commercial housing projects into low-cost homes, the development of the home-for-rent segment will help address the high demand of housing in cities on one hand and help developers reduce stock on the other.

Condo-for-rent schemes when in place will give more choices to tenants at home, especially low-income earners who cannot afford to own a home.

Five projects have been chosen for trial operation, including the Bee home project developed by C.T Group in HCMC’s Tan Binh District and the Binh Minh complex of Hoang Quan Consulting-Trading-Service Real Estate Co. in the Mekong Delta province of Vinh Long.

According to the construction ministry, condo projects for local workers in industrial parks will be leased out at VND35,000 a square meter a month as such projects are subject to land use fee exemption. Each person therefore has to pay some VND350,000 a month for a 40-square-meter room accommodating four.

As for schemes that aren’t entitled to land use fee exemption, the highest rent is VND65,000 per square meter a month, including maintenance and operation costs for the whole building.

However, property companies noted that with the aforesaid rent, the conversion of commercial projects or development of new ones for rent is unfeasible even when developers are exempted from land-related fee and are given soft lending rates.

Nguyen Van Duc, deputy general director of Dat Lanh Real Estate Co., said the problem facing industry insiders is their financial constraints, forcing them to mainly use money of homebuyers to construct housing schemes.

Not many enterprises dare to pour their own money into entirely constructing apartments and then sell the products or lease them out for monthly revenue, he said, adding several developers tend to rely on bank loans for investment capital instead.

With an apartment priced at VND13 million a square meter, Duc calculates that the rent prescribed by the construction ministry is merely enough for his firm to service a preferential loan rate of 6.5% annually.

In other words, if his firm borrows VND13 million to build a square meter for lease and if the lending rate is 0.5% a month, it will have to pay an interest sum of VND65,000 a month for banks. Therefore, the monthly rent of VND65,000 is barely enough to service the bank loan only, not to count other expenses.

Frasers manages first serviced condo project in city

Frasers Hospitality Pte, a Singaporean serviced condo management company, is going to put into operation its first project in HCMC’s District 7, offering more choices to tenants in the city.

Charlie Feng, general manager of the Capri by Fraser project in Phu My Hung urban area, said the building will provide 175 serviced apartments equipped with top amenities for businessmen, visitors and families. Capri by Fraser is one of Frasers Hospitality brands and the second project of the company in Vietnam after the first was launched in Hanoi five years ago.

Frasers offers flexible leasing for yearly, monthly and daily terms like hotels, with the starting price from VND1.6 million or US$75 a night and VND25 million or US$1,200 a month.

It is expected that the new brand’s presence will increase competition in the local serviced condo market, not only among similar buildings but leasing apartments owned by individuals.

There are around 3,800 condos for lease at 68 buildings in HCMC, Savills Vietnam reports.

The average occupancy rate of the whole market in the first quarter posted 78%, a fall of seven percentage points compared to the previous quarter, with the leasing price averaging out at VND500,000 a square meter a month.

The condo-for-lease market mainly targets long-term foreign expatriates working for international organizations and companies with high incomes in HCMC. Most tenants of serviced condos are from other Asian countries, according to Savills Vietnam.

Savills forecasts that 20 housing projects with about 3,400 condos will be launched onto the market in the next four years, pulling down leasing prices as well as fueling competition among local housing schemes.

Apartment market turns more bustling

Apartment project owners are trying to accelerate development of their projects to have products for sale, making the market more bustling in recent weeks.

Dozens of apartment projects from low- to high-end segments are now on offer, with payment extensions for homebuyers. Most of these projects are near completion, and some already have condos available for occupation.

Yip Hoong Mun, deputy CEO of CapitaLand Vietnam, remarked the market was lacking in confidence among homebuyers. In addition to price, homebuyers are concerned about reputation of investors and their commitment to project progress.

The Singaporean investor has recently finished shell building of the PARCSpring project in HCMC’s District 9 and some 400 apartments have gone on sale at VND1.5 billion per unit. The project owner applies a flexible payment method, offers homebuyers a furniture package worth VND200 million, and even pays loan interest sums for them.

Nam Long Investment Corporation last Saturday held the topping-out ceremony for the Ehome 3 Saigon West project in Binh Tan District.

On this occasion, 160 flats were launched into the market at about VND710 million per unit. Homebuyers can take out interest-free loans from Vietnam International Bank (VIB) and do not have to pay principal sums until homes are handed over.

Nguyen Vinh Tran, deputy general director of Nam Long, said most homebuyers were now end-users, so they really cared about the project progress. Handover of homes and other utilities represents prestige and capacity of investors in the current context, he said.

Most of the projects on sale apply a zero interest installment plan to dispel homebuyers’ fear of paying bank loan interest sums.

Thu Duc Housing Development Corporation has renewed the sale program for its two projects TDH-Truong Tho in Thu Duc District and TDH-Phuoc Binh in District 9. Customers can occupy the apartments after making a 40% down payment; the rest will be paid by installment in five years with no interest.

In the high-end segment, project owners have also applied flexible payment methods. Take The Estella of Keppel Land in District 2 as an example, homebuyers will pay half of the price in the initial installment and the remainder in two years with no interest.

Similarly, Phu My Hung Corporation has extended the payment period to 30 months for customers of its Happy Valley project in District 7.

According to Savills Vietnam, the number of transactions in the first quarter grew 25% year-on-year. Two-bedroom apartments covering 60-85 square meters each achieved better sales last quarter.

Around 1,800 apartments will be launched into the HCMC market in the second and third quarters, Savills forecast.

Kinh Do shelves realty projects, focuses on food

Kinh Do Corporation this year will stick to its core operation namely food and will not restart the property projects that it put on hold last year.

Speaking to the Daily on the sidelines of the 2013 shareholders’ meeting last Friday, Tran Le Nguyen, CEO of Kinh Do, said the real estate market remained difficult, so his firm would not be active in this sector this year.

Instead, Kinh Do will focus on the food industry. This June, the company will launch an instant noodle product targeting middle-class customers, which it does not directly produce.

Meanwhile, a sauce product directly made by Kinh Do is set for debut late this year. In addition, the company has drawn up a plan for cooking oil production, but it has not mentioned the time for product launch.

Moreover, Kinh Do will get involved in any food-related product that still has room to grow, said Nguyen.

Responding to shareholders’ question about the cooperation between Kinh Do and Japan’s Ezaki Glico, representative of Kinh Do said the cooperation had been successful, generating US$3 million of revenue, exceeding the target.

In the coming time, Kinh Do will distribute not only the pretzel stick product Pocky, but also dairy products made by Ezaki Glico.

Kinh Do’s revenue last year increased 1.1% against 2011, the lowest growth in nearly 20 years of operation. However, its pre-tax profit reached VND490 billion, up 40.3% over 2011.

Kinh Do sets a revenue target of VND5.2 trillion for 2013, or a growth of 21.3% against last year, with pre-tax profit of VND600 billion, up 22.5% year-on-year. The company will pay dividend at 20% in cash.

This year, Kinh Do will boost investment based on its strategy “Food & Flavor”, focus on its major products, promote its brand name and optimize the management system and the supply chain.

The shareholders at the meeting last Friday approved issuance of bonus shares to existing shareholders at the rate of 20%, which would be made after share issuance for Vinabico stock swap. In addition, Kinh Do will offer six million shares for its staff members and 500,000 shares to the board members at VND18,000 per share.

PetroVietnam Gas sets lower targets in 2013

PetroVietnam Gas Corporation (GAS) during its annual general meeting on Monday approved a revenue and after-tax profit targets of VND55.7 trillion and nearly VND7.7 trillion respectively in 2013, both lower than those obtained in 2012.

Speaking at the meeting, a representative of the company said that the lower targets will help it secure safeness in case of oil price decline. The enterprise has plans to pay dividend for shareholders at 20% this year.

In 2012, the company gained VND68.4 trillion in revenues and VND12.3 trillion in pre-tax profits, or 24% and 92% higher than last year’s targets respectively. Shareholders will receive 2012 dividend at 30%.

Shareholders of the company also approved the listing plan of PetroVietnam Gas Investment and Construction Joint Stock Company within this year. GAS currently holds a 76.5% stake in the affiliate.

In the first quarter of this year, the enterprise gained an estimated VND5.1 trillion in pre-tax profits, including VND1.1 trillion in non-recurring income.

Three core-banking systems merged at SCB

Three different core-banking systems of Saigon Commercial Bank (SCB), Ficombank and TinNghiaBank have been merged into one system at SCB.

At a function on the completion of the Oracle Flexcube Corebanking project in HCMC last Saturday, SCB informed this is a step to upgrade the information technology system at the bank.

According to SCB general director Le Khanh Hien, after the three lenders were merged into one earlier, SCB has faced many difficulties in administering operations and serving customers as data of the three previous banks was operated by three different core-banking systems. SCB therefore has had to deploy an integration system program and work with staff members of 230 transaction points to carry out personnel training and convert data from the three systems into one.

SCB had implemented the project for ten months and officially operated a single core-banking system from January 1, 2013.

The CoreBanking Flexcube system will help optimize operational costs for SCB and help the lender’s executives manage business activities and risks better, Le Minh Huan, deputy general director of the Information Technology Division of SCB, said.

The system helps shorten transaction time of customers, manage data effectively, improve utilities of online financial products and expand the network in the near future, he added.

Experts debate advertising costs

Debates over the permissible advertising costs have become heated again when law makers contributed opinions for the amended Law on Corporate Income Tax at a seminar held in Hanoi last Thursday.

Speaking at the seminar held by Nghien Cuu Lap Phap magazine, the Young Entrepreneurs Association and University of Economics and Law, lawyer Truong Thanh Duc said that all caps on advertising costs should be removed. “If it is to be retained, the cap should be raised to half of the revenues.”

Under the amended law, the Ministry of Finance proposed to increase the costs spent on advertising from 10% to 15% of the revenues. Besides, the ministry also proposed to remove the incentive which allowed newly-established enterprises to spend 15% of their revenues on advertising.

Duc said that an increase of five percentage points in advertising costs was too small and unrealistic.

Commenting on the ministry’s view that the 15% cap was aimed to protect local enterprises, Duc said that even when Vietnam controlled the advertising costs, foreign enterprises were still able to dominate advertisements on mass media means. Besides, the cap will kill small and medium enterprises which accounts for up to 97% of the total number of Vietnamese enterprises, he added.

Meanwhile, Dinh Sy Dung from the Government Office upheld the cap, saying that it is necessary to think twice in removing the cap as it would result in a budget decline, especially when the corporate income reduction was also being weighed.

The advertising cap increase from 10% to 15% has been discussed after it was raised from 7% ten years ago.

Since the regulation was issued, the Vietnam Business Forum (VBF), in annual dialogues between the Government and local and foreign businesses, has continuously proposed to remove the cap.

Speaking to the Daily, Preben Hjortlund, president of the European Chamber of Commerce, said that Vietnam should remove the cap on advertising costs.

He said that the Ministry of Finance promised at a meeting of VBF to remove it in 2008 when the Business Law was amended. However, no moves from the Government have been made, he added.

The cap has left a negative impact on Vietnam, consumers and enterprises since it was issued in 1999. Multinational companies might have considered investing in other markets which facilitate their investments, he said.

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

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