Buy-to-let offers ideal investments

Buy-to-let property has been highlighted as a possible bright point in an otherwise gloomy property market.

According to Truong An Duong, head of the Ho Chi Minh City research department from Savills Vietnam, at the peak of the residential market several years ago, individual investors and speculators tended to focus on capital gain potential when evaluating an asset.

“However, this investment psychology has changed drastically. Besides the capital gain aspect, investors now also pay attention the property’s ability to bring in a stable flow of revenue,” Duong said.

The instability of gold or stock markets has also encouraged individual investors to lean towards the buy-to-let option.

 He said in some of the  projects Savills was selling there were an increasing number of apartments that have been bought and leased out.

Savills’ study shows that the current gross yields from buying and leasing apartments have reached 4 to 6 per cent per year.

Due to the interest rate ceiling being continuously adjusted downward since last year, this yield rate is quite attractive to investors, especially those who have favoured real estate as an investment channel.

For buy-to-let investors, having a stable source of tenants remains critical when reaching a purchase decision.

Some developers have offered numerous programmes to support purchasers of buy-to-let apartments, such as guarantees of leasing revenue during the first year, or aid in searching for tenants without commission fees.

Some developers offer buyers flexible payment schedules such as partial payment upon handover, with the remainder being paid during the next two to three years with little or no interest.

Reasonable prices are another reason that the buy-to-let option has attracted investors.

Buy-to-let apartments on mid to high-end developments are preferred by most foreigners who currently work and reside in the cities.

Besides expatriates who reside in serviced apartments or villas, foreigners with a more limited housing budget opt to rent buy-to-let apartments.

The rent for buy-to-let units is normally 20 to 30 per cent lower than serviced apartments in the same location and development.

Foreign Direct Investment (FDI) inflows to Vietnam have recovered, which is also a positive indicator that demand for mid to high-end apartments may increase.

Ho Chi Minh City’s districts 1 and 3, the eastern area around District 2 and Binh Thanh and the south around District 7 and Phu My Hung New Urban Area are some of the most popular areas.

Foreign tenants often prefer Grade A or Grade B apartments.

There are a range of housing for lease in Hanoi, from high-end apartments (100 to 150 square metres) leased at VND18 to 30 million per month per unit, mid-end apartments from VND12 to 18 million per unit per month, and low-quality houses at VND1.5 to 2 million per unit per month.

FDI increase set to follow Yen Bai’s new incentives

In an effort to boost foreign direct investment, the northern province of Yen Bai, is implementing a number of solutions and incentives.

In order to attract foreign direct investment (FDI), especially investment capital from Japan, Yen Bai will establish additional industrial parks (IPs) and clusters, as well as focus on human resources training so as to meet investors’ requirements.

From 2010-2015, the province will set up five IPs covering a total area of 1,182 hectares, and 19 handicraft and industrial clusters covering 1,100 hectares.

Currently, site clearance and infrastructure at some IPs and clusters have been completed and are available for investors. The 120-ha Au Lau IP, the 112-ha Minh Quan IP, the 12-ha Dam Hong industrial cluster and the 70-ha Au Lau cluster are all now ready to welcome investors.

Another 400ha IP in the south of the province has so far succeeded in attracting 17 projects with a total financial commitment of VND2 trillion ($95.2 million).

In addition to the establishment of IPs, Yen Bai is granting a series of incentives to investors in terms of land rental. The province is also giving support to investors in terms of site clearance, construction of infrastructure, training local labourers and trade and investment promotion activities. For instance, Yen Bai applies the lowest land rental and can supplement 50 per cent of site clearance costs for investors.

The province has also simplified administrative procedures to cut time, cost and redtape for investors.

“Yen Bai pledges to provide the most favourable conditions and support as much as possible administrative procedures, helping investors to start their projects as soon as possible,” stressed Pham Duy Cuong, chairman of the provincial People’s Committee.

According to the Yen Bai Department of Planning and Investment, the province has attracted 21 FDI projects, capitalised at $109.6 million.

In 2013, Yen Bai licensed two FDI projects to build export garment factories. Noticeably, these FDI firms made combined revenues of $26.18 million, up 20 per cent on-year. Businesses seeing good performance in 2013 included R.K Vietnam Marble with revenues of $15.84 million and YBB Calcium Carbonate, generating $8.67 million.

Yen Bai province, situated in the centre of the northern midland region, has an important position in the Kunming-Lao Cai-Hanoi-Haiphong economic corridor. The province has a large forestry land area of 469,968 ha and forest coverage rate of 51 per cent, ranking third in Vietnam.

In addition, Yen Bai has a plentiful supply of minerals such as iron, quartz, limestone and gemstones.

With such advantages, the province is a favourable site for the development of agro-forestry attached to material zones such as forestation, paper and pulp processing, planting and processing of cinnamon, tea, coffee and cassava, fruit trees, flowers, mining, mineral processing and metallurgy.

Yen Bai has also shown great potential for the development of tourism as it is a mountainous province with various natural beauty spots such as Tham Le cave, Xuan Long grotto, Thuy Tien grotto, Thac Ba lake, Suoi Giang eco-tourism site and Muong Lo valley.

Early start urged for new airport

HCM City and neighbouring Dong Nai Province have asked the central government to start construction of Long Thanh Airport early, aiming to curb the overload currently facing Tan Son Nhat Airport and to boost economic development of Dong Nai.

HCM City's Tan Son Nhat Airport, which was earlier planned to accommodate 13 million passengers in 2015, is currently serving 20 million passengers a year, the chairman of the HCM City People's Committee, Le Hoang Quan, said during an online meeting with the Government on December 23.

If work on Long Thanh Airport project cannot start early, Tan Son Nhat Airport will face severe overload in the next two or three years, hindering socio-economic development of HCM City and the region as well, said Quan.

Dinh Quoc Thai, chairman of the Dong Nai provincial People's Committee, added that the Government should begin the Long Thanh Airport Project early to help speed up economic development of Dong Nai Province.

Thai said over 10,000 people would be affected by land reclamation for the airport project, adding that there must be two large resettlement projects with total capital of VND7.2 trillion ($342.86 million) to pave the way for the Long Thanh Airport project.

"To help boost Dong Nai Province's economic development, we have asked the Government to start the Long Thanh Airport Project early," said Thai.

According to the Airport Corporation of Viet Nam (ACV), the first stage (2014 - 20) of the airport project requires investment of $5.6 billion and the capital would be raised from various sources. State funds and Official Development Assistance capital will make up around 53 per cent.

The 5,000-ha airport project, approved by the Government in 2005, should begin soon so the first stage will be completed in 2020 to share the burden with Tan Son Nhat Airport.

It will be 32km long from Bien Hoa military airport, 43km from Tan Son Nhat Airport and have a maximum capacity of 100 million passengers and five million tonnes of cargo each year.

According to Japanese consultants, construction of Long Thanh Airport will cost over $7.8 billion and land reclamation expenses will be $730 million, compared with an estimated cost of over $9.1 billion required for the expansion plan of Tan Son Nhat Airport.

Dong Nai Province has proposed that the Government allocate VND4.1 trillion (over $193 million) for a construction resettlement area and nearly VND4.2 trillion for site clearance during the first stage.

Low-to-mid end real estate set to make a recovery in Da Nang

Interest in the property market in the central city is expected to rise in low and medium priced neighborhoods after the Da Nang People's Council announced new rates for 2014.

Under the new rates, land fronting Nguyen Van Linh, Hung Vuong and Le Duan streets will become the central city's most expensive real estate, with prices of VND25.2 million (US$1,200) per square metre or 37.5 per cent less, in comparison to last year's price of VND40.32 million ($1,920).

Meanwhile, each square metre of commercial real estate in the main downtown is to range from VND15.2 million ($723) to VND21.8 million ($1,038).

Further, a square metre of new residential property in outlying areas will be priced at VND5 million ($238).

The decreased price of land is meant to end the stagnation in the real estate market in the central city, as seen in recent years.

According to vice chairman of the city's Property Association Vo Van Cuong, sales of real estate in the city in 2013 saw a sharp decline of 80 per cent.

"It's actually a poor year for selling property in the city. We estimated that 12,000 plots of land from 26 projects had been available, even as they were intentionally offered with large discounts under special promotional programmes," Cuong said.

"In the final quarter of the year, investors offered a mass sale at reduced prices, but the city's property market saw a slump in different sections of resettlement and residential apartments and urban areas," he said.

"Sun Group, a property developer, has reduced sales prices for lands in its urban project in Cam Le District from VND500 million ($23,800) for a 100sq.m plot to VND340 million ($16,200)," he mentioned.

He added that the Golden Hills urban project in Lien Chieu District has offered the public a 50 per cent price decrease, from VND4.5-5.5 million per square metre to VND2-2.3 million, to boost sales in the final quarter of the year.

Meanwhile, Nguyen Minh Tien, a real estate broker, said land prices in the central city have been falling sharply.

"Investors could earn a big profit from lucrative land purchases in the past few years, but they rarely spend money in property speculation. Brokers now only expect a small profit to deal with huge inventories," Tien said.

He also suggested that speculators would earn profits in the long term through the purchase of small and medium plots for housing.

Investors also offer a five-month deferred payment for land plots valued at VND500 million to lure buyers.

The vice chairman of the Da Nang Property Association, Cuong, said he expects apartments with prices of VND3-5 million per square metre would be attractive to buyers in the first quarter of next year.

At the same time, tourism property developments has attracted foreign investment.

According to the city's investment promotion centre, investment in resorts and tourism made up 22 per cent of the city's total FDI projects in 2013.

Cement sector grows while steel market stagnates

The construction material sector has seen a rebound in cement and ceramic tile production, while steel and brick production remained stagnant.

Vice chairman of the Viet Nam Cement Association Hong Trong Kim said that the cement industry will meet the target of selling 56 million tonnes of cement this year.

With trade promotion methods succeeding in expanding the market, despite a price hike of VND80,000-120,000 (US$3.63-5.45) per tonne in the third quarter, the country's largest cement producer Vicem has expanded its share in the domestic market from 34 per cent in 2012 to 37 per cent this year. It has also enhanced exports to the Middle East and Africa.

Another large cement producer Fico also reported that it met this year's target by early December, with a total sales of 1.7 million tonnes of cement, earning it a turnover of VND2.2 trillion ($100 million) and a profit of VND50 billion ($2.27 million).

Deputy-general director of ceramic tile producer Viglacera Nguyen Minh Tuan said the company is also expected to earn a turnover of VND10.5 trillion ($477.27 million) this year. The company aims to achieve an export turnover of $75 million by 2015, a 25 per cent increase.

Not as optimistic as cement and tile producers, construction brick producers, especially small-sized ones, estimated that industry consumption will dip in 2013 as compared with last year and that the sector will not meet its annual target of selling 20 billion units of bricks.

The steel sector also faced difficulties this year due to decreasing demand in the wake of economic hardships.

Vice chairman of the Viet Nam Steel Association Nguyen Tien Nghi said that the sector sold roughly 4.6 million tonnes of steel this year out of 5 million tones of output. Of the 4.6 million tonnes, 2.5 million tonnes were exported.

Due to the low demand, steel producers had to cut prices by VND700 per kilo from the third quarter to boost sales.

Nghi forecast that it will be difficult for consumption to rise next year, adding that it will grow only around 2-3 per cent. Steel producers also plan to increase their exports to 30 per cent.

Exporters target EU quality standards

Local firms should focus on improving competitiveness in the quality of export products for the European Union (EU) market in the future, said a trade official.

Vu Ba Phu, Minister Counsellor of the Viet Nam Embassy in Belgium and the EU (Luxembourg concurrently), told thoibaokinhdoanh.vn that the EU has been an important market for Viet Nam since 2012.

He added that the EU is now Viet Nam's largest export market with a total trade value of US$30 billion for 2013, followed by the United States, China, the ASEAN countries and Japan.

The EU has been a commodities market for Viet Nam, with export products including coffee, cashew, textiles, garments, leather, footwear, electronics and telephone products, Phu said. He noted that the EU offers higher export value than the other markets. However, it has strict quality standards.

This year was a difficult one for the EU market because it didn't make much of a recovery, but Viet Nam's firms made efforts to export their products there, especially high-tech products such as electronics, telephones, textiles, garments, leather and footwear.

The export of textiles, garments, leather and footwear products have maintained stable growth, while the export of electronics and electrical and telephone products have made a year-on-year increase of 50 per cent, Phu noted. But the export of seafood and coffee products to the EU has dropped sharply.

However, the EU has seen growth in some economic sectors, and it will overcome the economic crisis after implementing numerous solutions, Phu said.

Therefore, Viet Nam expects a recovery in market demand and international trading activities in the EU next year, including commercial activities with Viet Nam that will continue to grow, Phu stated.

To enter the EU market, local exporters should access Belgium's market first because if Vietnamese exports make a mark there, they will be successful in the EU market also, Phu said.

Additionally, they should change the focus from competitiveness in price to competitiveness in output, quality and efficiency because the EU market accepts high import prices and asks for high quality, stability, customer care services and commitment to product quality, he pointed out.

The local enterprises should invest in building factories in Belgium to complete the last process of export products because they can introduce new products, meant for the EU market, in Belgium first.

Moreover, direct investment in Belgium could help the enterprises to reduce the production cost of export products and also to increase their competitiveness.

At present, enterprises from Viet Nam and the EU expect the bilateral free trade agreement to be finalised as soon as possible because it will bring low tariffs for products from Viet Nam and the EU in the two markets, with the aim of reducing prices and diversifying goods.

It will be a great chance for local firms to increase their exports to the EU when the agreement comes into effect, Phu remarked.

Central highlands region develops cooperative economy

Cooperative economy model has boomed in the central highlands over the recent years, says the Tay Nguyen Region Steering Committee.

The cooperative model has made considerable contributions to the socio economic development in the region, changed minority people’s old farming habit and renovated rural agriculture, added the committee.

The cooperative economy model has been seen in agriculture, industry, handicraft, transport, services, construction, credit organisation and commerce areas. Cooperatives have been mainly operated in the rural areas of the region.

Individuals, ethnic families have invested capital or properties in cooperatives. They have operated, managed cooperatives by themselves.

Local authorities in the central highlands have offered financial, training and technology policies to support cooperatives in the region.

Provincial authorities in the central highlands have provided working capital, machinery, or land to help ethnic minority people develop their agricultural cooperatives.

The central highlands region has currently attracted hundreds of thousands labourers working at its three cooperative alliances, 949 cooperatives and 10,513 collective units.

Vietnam’s export to Germany hits 4.3 billion USD

Vietnam earned 4.3 billion USD from exports to Germany in the first 11 months of this year, representing a year-on-year increase of 15.8 percent, according to the Ministry of Industry and Trade.

With the figure, Germany remains the largest European trade partner of Vietnam and an important entrepot gateway for Vietnamese wares to enter other European countries.

Vietnam’s major export lines to the European country during the period included telephones and spare parts, garments and textiles, footwear, coffee, computers, electronic products and spare parts , aquatic product, wood and wooden products.

In the first half of this year, the two countries posted a two-way trade value of nearly 3.7 billion USD, up 29.5 percent over the same period last year.

Last year, it was over 6.47 billion USD, up 16.3 percent over 2011.

HCM City has 26,000 new businesses in 2013

In 2013, Ho Chi Minh City, which is Vietnam’s economic and business hub, saw the establishment of 26,000 new businesses and at the same time the dissolve of the existing 19,000 businesses due to economic difficulties.

The figures were unveiled by the HCM City Business Association, which also pointed to a hard year in 2014 for those businesses which still use backward technologies and yet sharpen their competitiveness.

At the association’s recent meeting to review its performance in 2013, the municipal authorities informed that the attraction of foreign direct investment was fruitful, noting a surge in both number and value of projects from Japan.

They also noted that almost all State corporation and groups headquartered in the city generated profits and the city’s GDP grew 9.3 percent against 2012.

These good performances have created momentum for businesses to move forward in 2014, the municipal authorities said, however, asking these players to persist in restructuring their operations and work together with their association to promptly address troubles that may arise.

From January 2014, the city will continue allowing businesses to register their operation online along with further streamlining administrative procedures to facilitate their smooth, efficient activities.-

Fungus farming models promise to mushroom

Mushroom farming models can be applied on small acreage and suitable for all regions of the country as they boast abundant natural materials. Overview by Vietnam Economic News.

A recent prime ministerial decision highlighted mushrooms as a national product; and the Ministry of Agriculture and Rural Development (MARD) also signed a national product development project for edible and pharmaceutical mushrooms.

This is an important legal framework for the country in general and Hanoi in particular to further develop mushroom farming models.

Foreseeing the development trend of the mushroom market, right from 2011, the municipal Department of Science and Technology has supported Thanh Cao Kinoko Import Export Co., Ltd to deploy an edible and pharmaceutical mushroom production project on the company’s three-ha area in Doc Tin commune, Chuong My district.

The area was converted from inefficient sericulture to mushroom production. The successful mushroom farming model will be replicate in many other localities. It is estimated that every year, the company and its member units use from 1,000-1,500 tonnes of straw, sawdust, bagasse, stems and cobs to grow mushrooms, and produce from 500-700 tonnes of fresh mushrooms worth of 10-15 billion VND.

“The resources of straw, sawdust, stems and cobs in the commune are enough to produce thousands of tonnes of mushrooms per year, meeting fresh food demands of Perfume Pagoda tourists and Hanoi’s population,” Director of Thanh Cao Kinoko Import Export Co., Ltd Duong Thi Thu Hue said.

According to the Centre for Plant Biotechnology under the Agricultural Genetics Institute, with a great number of mushroom farming skilled workers, relatively widened mushroom markets, and abundant resources of straw, sawdust, stems and cobs, Hanoi is fully conditional for production of one million tonnes of mushrooms per year.

Centre director Dinh Xuan Linh said Hanoi currently has a number of units able to produce mushrooms industrially but somehow spontaneously and on small scales. Therefore, to replicate mushroom farming models, Hanoi needs to have mushroom development projects and related incentives to support mushroom producers such as preferential land rent and loans.

By a rough reckoning, farming mushroom may yield 20-fold higher than farming rice and 10-fold than farming vegetables per ha; meanwhile, farmers can utilise resources of straw, sawdust, stems and cobs.

In the coming time, the municipal Department of Industry and Trade ought to develop a mushroom development project until 2020 focusing on a number of pilot models for replication, along with conducting researches for high quality varieties and promoting mechanization in mushroom production.

Mushroom farming models can be applied on small acreage and suitable for all regions of the country. However, mushroom production requires implementation of a series of closed technologies from the stage of breeding, material handling, care, harvesting, storage and processing. So, when replicating mushroom farming models in rural areas it is important to focus on training and science and technology transfer to farmers./

Binh Dinh invests 2.7 mln USD in rural roads

The central province of Binh Dinh has so far this year invested more than 57.4 billion VND (2.7 million USD) in improving transport in its rural areas to help local residents and ensure production.

According to Director of the provincial Transport Department Tran Chau, the province also paid attention to a programme that helps extend concrete roads in villages, with 167 tonnes of cement for every kilometre.

In 2013, more than 142 kilometres of new roads were built, bringing the percentage of the province’s concrete roads to 64 percent.

The provincial People’s Committee is also directing authorities and localities to work with investors to well implement compensation and ground clearance work for projects to upgrade and expand National Highways 1A, 1D and 19 in the province.-

Dong Nai fails to fulfil yearly export target

The southern province of Dong Nai earned nearly 11 billion USD from exports this year, up 9.4 percent over 2012, fulfilling only 92 percent of its yearly target.

According to the provincial Department of Industry and Trade, the target failure was caused by the impacts of the gloomy economy and fierce competition from other countries, forcing businesses to revise their plans and strategies.

Some enterprises had to switch over to the domestic market, while export markets contracted and the price of some agricultural products dropped sharply, the department added.

In December alone, the province’s export revenue was 929.4 billion USD, increasing 1.5 percent over the previous month and 17.5 percent over the same period last year.

The state-owned sector contributed 76.2 million USD to the total, a 3.4 percent rise year on year, while locally-run enterprises earned more than 1.17 billion USD, up 4.2 percent over the same period in 2012.

Particularly, foreign-invested businesses recorded the highest revenue in exports at over 9.636 billion USD, up 10.2 percent year on year but equivalent to only 93 percent of the set target.

The US, Japan, China and European countries were the major markets of Dong Nai, consuming the locality’s key products of garments and textiles, footwear, computers, electronic accessories, wood and wooden products, coffee, rubber and cashew nuts.

In 2014, Dong Nai will strive to reach 9-10 percent in export growth compared to 2013.

Contract signed for Soc Trang thermal power plant

An engineering, procurement and construction contract was signed in Hanoi on December 27 for a thermal power plant which is expected to help boost socio-economic development in the Mekong Delta province of Soc Trang.

The signatories were the Vietnam National Oil and Gas Group (PetroVietnam) - investment owner of Long Phu Thermal Power Plant 1 - and the contractor consortium between Power Machines, BTG Holding and PetroVietnam Technical Services Corporation (PTSC).

Long Phu Thermal Power Plant 1 has a total investment of nearly 30 trillion VND (roughly 1.5 billion USD). It has a capacity of 1,200 MW and is capable of generating 7.8 billion kWh a year.

The construction of the plant’s first generator is scheduled to last 48 months, and 52 months for its second.

PetroVietnam said the coal-burning plant, part of the Long Phu power complex which also includes two others with a combined capacity of 4,400 MW, once operational will help ensure national fuel security and make contributions to socio-economic development and economic restructuring in Soc Trang province and the Mekong Delta in general.

Vietnam looks to attract ODA capital to agriculture

Vietnam has become a middle-income country, leading to a decline in Official Development Assistance (ODA) capital. Therefore, the Ministry of Agriculture and Rural Development has agreed a series of measures to attract ODA capital in 2014 and subsequent years. Vietnam Economic News reports.

In the 1993-2013 period, Vietnam attracted ODA capital of 78 billion USD from over 50 donors worldwide. The agriculture and rural development sector attracted 5.5 billion USD from 41 donors in this period, accounting for about 7 percent of the total ODA capital for Vietnam.

Two major multilateral donors in the agriculture and rural development sector remained the World Bank (WB) and the Asian Development Bank (ADB). As of 2013, these two partners funded 3.15 billion USD, accounting for 57.3 percent of total ODA for agriculture. ADB remained the largest donor with 1.6 billion USD, accounting for nearly 30 percent of total ODA capital for agriculture.

In terms of bilateral donors, Japan remained Vietnam’s largest partner in the agricultural sector, funding 70 projects with a total capital of 1.3 billion USD for the sector, including 60 technical assistance projects.

According to the Ministry of Agriculture and Rural Development, total ODA capital for the agricultural sector has significantly contributed to the development of the sector in recent years. In particular, ODA capital for the agricultural sector has contributed to reducing the poverty rate in Vietnam from 60 percent in 1993 to 10 percent in 2012.

In addition, thanks to ODA capital, agricultural infrastructure, power infrastructure, schools and communal medical stations have been improved. Moreover, ODA capital has contributed to promoting the application of scientific and technological achievements into agriculture and strengthening scientific research and technology transfer through technical assistance projects. In particular, many plants and livestock have been researched and put into production.

Vietnam has become a middle-income country. Therefore, to continue to attract ODA into the agricultural sector, the Ministry of Agriculture and Rural Development agreed a series of measures. One of important measures is to continue attracting ODA capital at preferential interest rates.

To attract more ODA capital, the ministry said it would select programmes and projects in accordance with the sector’s standards; and improve mechanisms, policies and management apparatus to implement ODA projects, contributing to gaining the trust of donors.

It will also propose to the government to prioritize investment in agricultural infrastructure such as irrigation and dykes; restructure the agricultural sector to ensure sustainable development; improve rural socioeconomic infrastructure; implement the new rural area construction programme; and adopt measures to respond to climate change.-

CII issues VND2.3 tril. of bonds next year

The HCMC Infrastructure Investment Joint Stock Company (CII) will issue VND2.3 trillion, or some US$110 million, worth of bonds next year to finance its expansion schemes in 2014, CII leaders said at a meeting with investors on Thursday.

The total amount will include VND1.13 trillion worth of convertible bonds to its existing shareholders and VND1.2 trillion worth of ordinary bonds for the firm’s financial restructuring.

In particular, the convertible bond sales will be used to finance projects in the investment portfolio of CII, service interest and principal sums of the firm’s bonds issued six years ago and supplement its working capital.

The five-year term bonds will have a face value of VND1 million and a coupon of 12% per annum. At the time of conversion, the price of one share used for converting one bond is fixed at VND11,000.

According to CII general director Le Quoc Binh, issuing convertible bonds with a high coupon is to ensure its success in attracting investors to meet rising capital demand for new schemes.

If the new bonds are not sold out, they will be issued to CII staff members totaling around VND40 billion, Binh said, adding if failing to realize the bond sales as planned, CII will seek to mobilize capital from other investors.

Besides the aforesaid convertible bonds, Binh reported that VietinBank already committed to buying VND1.2 trillion worth of bonds issued by CII next year to ensure the funding for projects to be carried out by the company. The bond coupon set for Vietinbank is the 12-month average deposit rate plus 3.6 percentage points annually, he stated.

Also, Vietinbank will purchase all the debts of CII and its subsidiaries with a total value of roughly VND3.4 trillion besides offering new loans to the enterprise to execute its investment portfolio.

Regarding the 2014 sales and profit plan, CII has set a target of some VND768 billion for revenue and VND233.7 billion for after-tax profit, which are seen as pretty high figures by investors at the meeting in the context that this year’s January-September after-tax profit only posted over VND10 billion.

At the meeting, CII leaders presented an operational restructuring plan towards reshuffling a number of operational segments and establishing five member companies. The new subsidiaries will include CII Land specializing in real estate investment, CII Bridge and Road in infrastructure development, CII Water in water treatment, CII Service in infrastructure services, and CII E&C in infrastructure work construction.

CII will maintain a minimum stake of between 40% and over 50% at the aforesaid companies, Binh said.

Restructuring will make it easier for the company to evaluate operational efficiency of every investment segment to make prompt decisions on expanding or divesting capital without affecting other areas, according to Binh.

Binh, however, noted that the restructuring might push up management and operation costs and that such a time-consuming plan might cause bad impacts on CII’s activities in short-term.

Lending rates lower than deposit rates

Many local banks have offered lending rates lower than deposit rates to push up credit growth in the final month of this year, prompting the central bank to ask its inspectors to look into the matter.

According to a former banker, the phenomenon has rarely happened. Capital has piled up at banks in recent times, so lenders have applied this measure to extend more loans to businesses. In fact, banks will suffer losses from the low lending rates.

Many banks have a lot of demand deposits at an interest rate of just 1-2% per annum but they have used just a small part of the deposits to give loans. Given a six-month deposit rate of 6.5% per annum plus 1.5-2% cost, banks will suffer huge losses when lending at 5-6% per annum, the banker said.

Of course, only good customers can enjoy such low lending rates. As the number of strong corporate clients has declined, banks are trying to keep the customers at any price, he added.

In addition, some good enterprises have forced banks to give them low lending rates since they are ready to shift to another lender.

Earlier, only large banks could offer low lending rates while small lenders with limited capital sources failed to join the race. However, many small banks have also slashed lending rates as the competition has turned fierce.

Tran Ngoc Tam, deputy general director of Nam A Bank, said that preferential loans are always available to good enterprises but the credits make up a fraction of the total outstanding loan.

Banks must try to raise earnings from lending activities. Otherwise, they will get hurt by their own preferential loan programs, Tam said.

Many banks have offered loan programs with lending rates lower than mobilization rates but the programs are often limited in scope and value. Besides, banks just apply the low rates in the first three months, so the credits will not cause strong impacts on their earnings.

The central bank has sent a document to its local branches, asking them to inspect credit institutions that offer lending rates below mobilization rates.

Liquidity of banks has improved sharply in recent months, raising competition in lending activities.

More fruit products in Dong Nai meet VietGAP standards

Grapefruit and mango grown in Vinh Cuu district in the southern province of Dong Nai have received the Vietnam Good Agricultural Practice (VietGAP) certificate, bringing the number of recognised fruit products in the province to four.

The two others kinds of fruit cultivated in line with VietGAP standards are rambutan and durian.

The Agricultural and Service Cooperative in Tan Trieu commune has 21 out of its 350 hectares of grapefruit trees certified as meeting the standards.

Meanwhile, the Agricultural, Service, Trade and Tourism Cooperative in Phu Ly commune received recognition for 32 hectares of mangoes with an annual output of 6,000 tonnes.

Chairman of the Vinh Cuu People’s Committee Nguyen Huu Ly said that over the past two years, the two cooperatives have received financial and technical assistance from the provincial and district authorities in grapefruit and mango cultivation following VietGAP standards.

Head of the Tan Trieu Cooperative Phan Tan Tai said in the upcoming Lunar New Year event, his cooperative will sell over 300 tonnes of certified grapefruits at 500,000 – 700,000 VND (24-33 USD) per dozen.

Vietnam to export 6.5-7 mln tonnes of rice next year

Vietnam’s rice exports next year will reach 6.5-7 million tonnes, equivalent to its export value in 2013 due to many difficulties in sales, forecasts the Vietnam Food Association (VFA).

According to the VFA, the export situation in 2014 will continue to be difficult because of excess supply and competition.

Although a decline in demand, Southeast Asia will remain Vietnam’s traditional market. China is the largest importer of Vietnam.

The VFA forecast that the quantity of rice exported in 2013 fall by 1.12 million tonnes compared to last year, equivalent to 14.5 percent. By November 30, rice exports reached 6.143 million tonnes..

Mekong economic hub to boost industry

The Mekong Delta key economic zone, including Can Tho city and An Giang, Kien Giang and Ca Mau provinces, is striving to raise its industrial proportion to 40 percent by 2020, up 8.3 percent against this year’s figure.

According to the Steering Committee for the Southwestern Region, in order to fulfil the target, the localities will rearrange State-owned enterprises operating in seafood processing, which is seen as the regional spearhead industry.

The enterprises will receive support to upgrade their equipment and technologies while increasing their processing capacity, using on-the-spot materials in Ca Mau and Kien Giang.

The localities will expand seafood exports to countries in Asia, Europe and North America, contributing to raising the export value by 13.5 percent annually to 20 trillion VND ( 940 million USD).

Apart from fisheries, the economic hub will also focus on building canned food facilities in Can Tho and fish oil processing plants in Kien Giang, Ca Mau, An Giang and Can Tho.

More large-scale rice processing centres equipped with cutting-edge technologies will be established in An Giang, Kien Giang and Can Tho while a number of new storehouses will be set up in Can Tho, An Giang, Kien Giang and Ca Mau with capacity ranging from 18,000 tonnes to 450,000 tonnes.

Three power plants , including O Mon, Ca Mau and Kien Luong, with a total capacity of between 9,000 and 9,4000 MW will be developed in the service of industrial production.

The localities will also invest in infrastructure, especially the transport network, to connect the key economic zone with the Southeastern region and other regions nationwide.

They will also make its easer for enterprises and economic sectors to engage in infrastructure projects under Build-and-Transfer (BT) and Build-Operate-Transfer (BOT) agreements.

Vinh Long fails to fulfil yearly export target

The Mekong Delta province of Vinh Long has earned 332 billion USD from exports so far this year, down 11.16 percent from 2012.

The result, equivalent to only 82 percent of the province’s yearly target, was due to a decrease in exports of key products as well as difficulties from markets and a lack of diverse currency earners.

Decline was seen in five out of eight major export products, including rice, aquatic and agricultural products, vegetables and other goods. On the other hand, turnover from apparel, footwear and handicrafts exceeded their target by 5-10 percent.

According to Nguyen Van Con, Vice Director of the provincial Department of Industry and Trade, both rice and aquatic products faced difficulties in 2013 due to changes in import demand and policies.

Rice, which accounts for 42 percent of the locality’s total export turnover, saw a decrease of 23.32 percent in volume and 33.14 percent in value at 160 million USD, he revealed.

Meanwhile, the export of aquatic products, the second largest currency earner, also fell sharply by 42.81 percent, he added.

In 2014, Vinh Long will strive to raise its export turnover to 380 million USD. To reach the goal, the province will apply a number of measures to diversify its export products, focusing on pharmaceuticals, pottery and processed food.

The locality will support local businesses in enhancing trade promotions in traditional markets and promising ones such as Russia and African countries, he said.

In addition, Vinh Long will give incentives to aquaculture product processing and farming firms, enabling them to access credit sources to expand production, thus diversifying export products, Con added.-

Primary tasks of trade counsellors released

Minister of Industry and Trade Vu Huy Hoang has stressed five main tasks of Vietnamese trade counsellors and minister-counsellors to develop overseas markets at a meeting with trade counsellors in Hanoi on December 16.

Accordingly, together with strengthening trade promotion and actively participating in trade promotion programmes in the host countries, the trade counsellors have to intensify Vietnam’s industrial promotion to attract investment in ongoing projects or those about to be implemented in the country.

They also have to fulfil their tasks as staff of a Vietnamese trade representative office abroad, and learn about the models of importers in the host countries before introducing the models to domestic businesses to help them change their appropriate products.

Minister Hoang said that Vietnam’s total export turnover for 2013 is about 132 billion USD, up 15.3 percent from the previous year, surpassing the target of 126.1 billion USD set by the National Assembly.

Vietnamese products are now available in nearly 200 countries and territories.

Despite declining prices of several commodities and the narrowing of several markets, many major exports of Vietnam still exceed the set target, including garments and textiles, footwear, wood and wood products, computers and electronic products, Hoang said.

The minister noted that in the time to come, the ministry will intensify the process of transferring the industrial product structure to improve added value and ensure quality and safety requirements.

Priority will also be given to mobilising all resources to invest in projects to produce more goods for export.

He added that the ministry will also support businesses to help them make full use of benefits brought by bilateral economic agreements and the free trade area agreement between ASEAN and other countries to boost exports.

Credit growth yet to meet target

It is unlikely that the banking sector will reach its 12 percent credit growth target this year, when to date the figure is only 8.5 percent, according to Deputy Governor of the State Bank of Vietnam (SBV) Nguyen Dong Tien.

However, the Deputy Governor said banks have reported sharp credit growth in VND, while lending in foreign currency has dropped.

Additionally, mid and long-term credit also saw rapid increases, meeting the economy and businesses’ demand for long-term investment.

According to the Deputy Governor, the SBV has made certain adjustments in its credit growth policy, to make lending mechanism more flexible while preventing bad debts from rising.

At the National Assembly meeting earlier in November, SBV Governor Nguyen Van Binh said he expects credit growth to reach 11-12 percent in 2013.

Several economists, however, shared the view that it will be hard to meet the target, adding that the most important thing to do now is tackle bad debts and not let new ones develop.-

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