BUSINESS IN BRIEF 2/10
Vinamilk expands its herd with 400 cows from Australia
Vietnam Dairy Products JSC (Vinamilk) received a shipment of four hundred dairy cows from Australia at Noi Bai International Airport in Hanoi on September 30.
The shipment is the first of a planned 3,000 cow expansion coinciding with an increase in the number of its dairy farms in Tay Ninh, Ha Tinh and Thanh Hoa from the current four to nine.
By the end of 2015, Vinamilk aims to increase its annual production capacity to 50 million litres of milk, meeting 40% of the nation’s domestic milk demand.
Gasoline prices reduce, gas increase
Petrol prices reduced VND150-380 a liter on September 30 as per instruction by the Ministries of Industry and Trade, and Finance while gas retail prices saw an increase of VND333 a kilogram today.
According to announcement from the Vietnam National Petroleum Group, Ron 92 price has gone down VND150 per liter to VND23,560 and diesel down VND380 to VND21,120 a liter.
Kerosene and engine oil selling prices were lowered by VND320 a liter and VND240 to VND17,860 a kilogram.
That is the sixth continuous cut in the petrol prices since July 28 with the total reduction of VND2,080 a liter.
The price cut is in accordance with down trend in the world petrol prices. The ministries said that contribution rate by businesses in the price subsidization fund has remained unchanged.
Meantime, Saigon Petrol Company announced a fall of VND4,000 per 12 kilogram gas cylinder beginning October 1. The retailed price now swing around VND381,000 a cylinder.
Although the world gas prices have been announced to be fixed at US$750 per ton in October, a reduction of US$15 over September; domestic gas prices still hike because transport and additional fees have rocketed up, said Saigon Petro.
Vietbuild 2014 opens in Can Tho
As many as 500 domestic and foreign construction and real estate enterprises are showcasing their products at the international exhibition Vietbuild 2014 which opened in Can Tho city on Oct. 1.
The annual event drew 200 booths featuring new and advanced products of local and global trademarks in the fields of building materials, interior and exterior decoration and real estate.
Vietbuild 2014 provides an useful playground for participating entrepreneurs, architects, and contractors to exchange experience, boost trade promotion, introduce their products, and seek business partners. It is expected to contribute to the development of the domestic construction and real estate sector.
Vietnam promotes tourism in Norway
The Vietnamese Embassy held a seminar in Oslo, the capital of Norway, as part of an effort to promote travel to Vietnam.
At the event, Ambassador Le Thi Tuyet Mai briefed participants on Vietnam’s culture, land, and a number of its more popular tourism destinations, highlighting the UNESCO natural and intangible cultural heritage sites and examples.
She also provided an overview of the recent visits to Vietnam by Norwegian King Harald V and Queen Sonja in 2004 and that of princess Mette-Marit and her husband Crown Prince Haakon, opening up opportunities for cooperation in a number of areas, including tourism.
At the event, representatives of travel agencies also presented a portfolio of attractive tour packages along with samplings of home-made traditional Vietnamese cuisine.
Vietnam – a potential market for UK businesses
Lord Mayor of London Fiona Woolf has called for further development of trade ties between Vietnam and the UK as Vietnam is considered an important market for UK investors.
The main tasks of London financial centre is to promote investment and trade in all fields, especially in service and the centre is eager to support investment attraction and boost Vietnamese exports, she said.
Ms Fiona Woolf expressed delight at the upcoming visit to Vietnam, saying as the Lord Mayor of London, she plays a crucial role as the ambassador for the UK’s financial services and professional consultancy sectors. Vietnamese import demands are expected to increase 250% in the next decade, which is much higher than other newly-emerging economies. This is also one of the reasons Vietnam is listed as one of the UK Trade & Investment (UKTI)’s 20 high growth markets in the world.
Meanwhile, the UK is the cradle of leading experts in the financial service and consultancy areas which has played an important role in developing the national economy.
Although several UK businesses have operated in Vietnam, a stronger strategic partnership between Vietnam and UK will enable them to provide these services to Vietnamese customers and partners.
The UK is selected as a long-term partner for Vietnam’s Public-Private Partnership (PPP) projects. The strong development of the oil and gas sector in the region is expected to become a potential cooperative field to deliver economic benefits to both nations in the time ahead.
Vietnam is the third largest owner of crude oil reserves in the South East Asia and UK companies areequipped with necessary technical expertise to support the development of the industry, paving the way for a new area for producing oil and gas and developing renewable energy sustainably.
Lord Mayor of London also emphasised the need for Vietnamese businesses to invest in training activities for future sustainable development. This offers huge potential for enhancing strategic partnership between the two nations as the UK has time-honoured tradition in granting the Education, Training and Qualifications (ETQ) certificates in financial service and professional consultancy
During an upcoming visit to Vietnam, Ms Fiona Woolf will grant a Mansion House scholarship to a Vietnamese student to study in London and strengthen cultural exchange between the two nations.
As the second female Lord Mayor of London , Ms Fiona Woolf has spent a great deal of efforts in promoting gender equality during her term of office.
She expressed desire that the forthcoming visit will give Vietnamese businesses the chance to enhance trade links with their UK partners, laying a solid foundation for future cooperation.
Switzerland helps improve SME capacities
The Ministry of Industry and Trade (MoIT) Trade Promotion Department hosted a seminar in Hanoi on September 30 examining ways to improve export competitiveness for Vietnam’s small and medium-sized enterprises (SMEs) through trade promotion scheme.
The scheme, using non-refundable official development assistance (ODA) from the Swiss Government, is being implemented in Hai Phong, Danang and Can Tho during the 2013-2016 period.
Miroslav Delaporte, Chief Representative of the Swiss State Secretariat for Economic Affairs (SECO) in Vietnam said the programme helped improve the skills and capacities of trade promotion agencies and trade organisations in the three regions.
Proposals to enhance local businesses’ export capacity were also put forth based on the localities’ trade promotion efforts. The proposals include a score of measures to support the export potential of enterprises operating in the selected sectors.
According to Deputy Minister of Industry and Trade Nguyen Cam Tu, Vietnam’s export turnover in 2013 hit US$ 264.26 billion, up by 15.7% over 2012. Since 2011, the country’s annual export turnover has increased by US$ 20 billion.
The joint efforts made by export businesses and Vietnam’s active participation in free trade agreement negotiations with its trade partners has markedly contributed to boosting exports, Tu noted.
Property market shows positive signal
Real estate business is currently ranked second in attracting foreign investors, said the Vietnam Business Forum Magazine (VBF).
According to the Ministry of Planning and Investment, as of 20th August, 2014, Vietnam attracted 992 newly licensed projects with a total registered capital of US$7.246 billion (up 29 percent over the same period in 2013), along with US$2,985 billion of additional capital for 349 on-going projects.
The total registered capital in real estate projects of foreign investors this year has been up to US$10.232 billion.
There are many opportunities to trade on the real estate market, but the chances are for those with strong financial potential. At present, it is very difficult to access the medium and long- term loans from banks even with the high interest rates of 13 to 13.5 percent per year.
Currently, more than 70 percent of real estate investment capital comes from the banks or their major customers.
The total real estate loans in the country are estimated at about more than VND260 trillion, accounting for 8 percent of the total outstanding loans of the whole banking system.
Wood and timber exports hit US$4.41 billion
Vietnam’s wood and timber exports jumped 13.5% to US$4.41 billion in the first nine months of this year, according to the Ministry of Agriculture and Rural Development (MARD).
There is an upward trend in shipping the products to major markets, including the US (up 14.41%) and Japan (up 23.71%). Only China saw a decline of 1.69% in its wood imports from Vietnam.
By the end of August, the US, China and Japan were the top three importers of Vietnam’s wood and timber products, accounting for 62.33% of its total export earnings.
In nine months, local businesses imported nearly US$1.74 billion worth of wood materials, up 61% against the same period last year. Four major suppliers are Laos (making up 30.1%), Cambodia (13.4%), the US (10.2) and China (9.6%).
Investors return to stock market
Both foreign and domestic investors have returned to Vietnamese stock market this year as the economy has showed recovery signs after a downturn beginning 2007, according to Saigon Securities Incorporation.
Since early this year, a large amount of foreign currencies have been invested in the stock market.
Over 400 foreign investors attended the Gateway to Vietnam 2014 conference in September, a platform for domestic and international financial investors as well as local enterprises to look for new cooperation opportunities.
Mr. Francis G.Rodilosso, representative of Van Eck--the largest exchange traded fund in the Vietnam stock market, said that Vietnam stock market is not large compared to other nations in the Asian region. Its growth rate and liquidity is not as high as Thailand and Singapore markets'.
However, the Vietnamese market is attractive partly thanks to political and Vietnamese dong stability. Besides, inflation rate has been curbed below 5 percent and investment environment has become more dynamic, he added.
Bloomberg statistics shows that foreign investment funds purchased a net volume of over US$277 million in the Vietnam stock market in the first eight months this year, up 5.3 percent over last year.
They have created a net purchase of VND1.3 trillion for the last couples of weeks this year.
According to local stock companies, foreign sector has concentrated on purchase of stocks in real estate, oil and gas fields and blue-chips.
They might broaden purchase of shares from small and medium companies with good liquidity, said Rong Viet Securities Company.
Positives signs in the stock market have not only lured foreign but also domestic investors as there are not many choices for residents to find positive investment channels.
Profit from savings has much fallen. Savings interest rates have been very low especially in short terms, said Mr. Yun Hang, director of the emerging market division of the Korea Investment and Securities.
Meantime, VN-Index was up 20 percent last year. This year, it has increased 25 and is forecast to hit 650 points in the rest months. Investors should buy stocks for higher profit than savings, he said.
Mr. Nguyen Hoang Minh, deputy director of the State Bank of Vietnam in Ho Chi Minh City, said that reduction in the savings interest rate has positively affected to the stock market.
Leisure cash has been invested in other channels including stocks instead of savings as earlier, especially after banks continuously cut deposit interest rates, he noted.
Bad debt casts shadow over banking restructure
Some economists have pointed out that the biggest obstacle in the ongoing banking restructure effort is the problem of bad debt.
The Vietnamese banking system has been carrying out its policy of banking restructure for three years, along with the restructure of public investment and state-owned enterprises (SOEs). According to experts, the restructuring process has brought the country considerable benefits. However, some roadblocks remain.
In those three years, nine weak banks have been merged without intervention by the State Bank of Vietnam. This has been the trend in many other countries as well. Mergers have helped to save many poorly-performing banks from bankruptcy. Economists have said that the biggest benefit to this is ensuring the liquidity of banks, which in turn ensures stability for the nation's economy.
Some economists have pointed out that the biggest obstacle in the ongoing banking restructure effort is the problem of bad debt.
The establishment of the Vietnam Asset Management Company (VAMC) is also important. The company has helped to speed up the settlement of bad debt after banking restructure. By the end of July this year, VAMC will have bought nearly VND54 trillion (USD2.57 billion) worth of bad debt.
As of June 2014, Vietnam’s rate of bad debt had gone up by just over 38% from early this year. However, compared to the same period last year, the rate remained relatively under control. In the first halves of 2011 and 2012, the rates of bad debt increased by 43.7% and 48.9% respectively.
Liquidity in the banking system has also improved since the restructuring process. Both deposit and lending interest rates have been cut, creating better access to credit.
Despite these improvements, many economists say the biggest difficulty after banks are restructured is the lingering bad debt.
To add to the problem, there has been contradictory numbers released about the amount of bad debt within the system. The most-used statistic is a rate of 10.3%, which is considered manageable and better than many other foreign countries. However, some economists warn that there is an urgent need to work out the rate more precisely and create a more specific plan to settle the bad debt.
According to Dr. Nguyen Duc Thanh, director of the Viet Nam Centre for Economic and Policy Research, during the three-year banking restructure process, only the role of VAMC has been clearly defined, and both long and short-term solutions for the bad deb problem remain vague.
Thanh added that the bad debt settlement does not depend solely on VAMC, which buys bad debt by special bonds with five-year terms. If VAMC cannot settle the debts, they are returned back to the banking system.
Moreover, restructuring has not been going as well with the public investment and SOEs. This has had a great affect the efficiency of the banking restructure. He explained that up to 60% of bad debt comes from SOEs, and if their restructuring process does not get better, the bad debt problem will remain unchanged.
Foreign visitor arrivals up
Viet Nam welcomed more than 6 million international arrivals during the first nine months of 2014, up by 10.42 per cent compared to the same period last year.
The number of domestic tourists hit 32.4 million during the same period, an increase of 7.6 per cent, according to the Viet Nam National Administration of Tourism (VNAT).
Tourism has generated VND179 trillion (US$8.44 billion) so far this year, a year-on-year rise of 19.24 per cent.
The launch of a brand new hydro-plane service earlier this month linking Ha Noi and Ha Long Bay, a World Natural Heritage site, is expected to attract more tourists to the country.
The Hai Au Aviation Joint Stock Company has scheduled one to three flights between Ha Noi and Ha Long City per day, and five to ten daily sightseeing flights over Ha Long Bay.
The company is planning to open new routes from HCM City in the near future, including to Mui Ne in Binh Thuan Province, Nha Trang in Khanh Hoa Province, Con Dao Island in Ba Ria – Vung Tau Province and Phu Quoc Island in Kien Giang Province.
During the nine-month period, Ha Noi received nearly 1.5 million tourists, up 17.1 per cent year-on-year.
HCM City, the country's southern economic hub, earned roughly VND19 trillion ($896 million) from hotel and tourism services, up by 8.3 per cent year-on-year.
SBV circular regulates consumer lending
The State Bank of Viet Nam (SBV) recently released a draft circular on consumer lending following the setting up by commercial banks of subsidiary finance companies for the purpose.
The circular aims to specify and limit risks on consumer loans of commercial banks to non-standard clients, including those with either low incomes or credit scores, or with no credit history.
According to SBV, there are currently no specific legal regulations on finance companies' consumer lending, which is becoming increasingly important to the country's socio-economic development and is helping to raise people's living standards.
Commercial banks and finance companies are the two major providers of consumer lending in Viet Nam, so the promulgation of a law to regulate this activity is essential, the SBV said.
In recent years, several commercial banks have set up subsidiaries for consumer lending, including HDBank, which bought Viet-SG Finance Company, and VPBank, which purchased Viet Nam Coal-Mineral Finance Company.
Also, a number of foreign companies with experience in consumer credit were likewise setting up finance companies for consumer lending in Viet Nam. The SBV predicted the setting up of subsidiaries in consumer lending to become a major trend in the coming years.
According to the draft, recently released for comment, finance companies will be allowed to provide consumer lending through hire-purchase arrangements, overdraft via credit cards and issuance of buyers' passes.
The draft also said the interest rates would be based on agreements between finance companies and consumers which, in turn, would be based on consumers' solvency and compliance with the SBV regulations on interest rates.
Interest rates on overdue debts must be made public and will not be allowed to exceed 150 per cent of the interest rate for consumer lending that had been agreed on in the lending contracts.
BKAV launches first online web directory in VN
BKAV Corporation, Viet Nam's leading internet service provider, yesterday introduced an online web directory that provides internet addresses on demand.
The website, the first of its kind of in Viet Nam, will also house web content internet services based on the setting of users, said officials of the company, with headquarters in the capital city.
BKAV said the site would help internet users to find addresses to which they have daily access in secure settings. "We have provided the service to several customers before officially launching it, and we have received much positive feedback," said Bach Thanh Le, vice chairman of the BKAV IT department.
Le added that the site was designed to meet the increasing demand for web-based online services, which would soon be replacing application-based online services.
Established in 1995, BKAV is Viet Nam's leading company in network security, software programming, smartphone manufacturing and smarthome services. In the field of network security, BKAV's anti-virus and mobile security software programs are being used in more than 100 countries all over the world.
Bright future seen for E-commerce
Online shopping has developed strongly in Viet Nam in recent time and is forecast to further develop in the coming years, according to the E-commerce and Information Technology Department.
Viet Nam is one of the top three countries with the highest rate of growth of internet and mobilephone subscribers in Viet Nam, with more than four million people using internet a day, offering great potential for online shopping development, according to Tran Huu Linh, head of the department.
Revenue of the e-commerce sector increased year-by-year, reaching US$2.2 billion last year. The value is estimated to hit more than $4 billion by 2015.
Besides e-commerce companies, manufacturing firms have also sold their products via their websites.
In addition, a large number of individuals are taking part in selling goods through their social media pages.
Goods sold via the internet are diverse, ranging from factory-made to home-made ones.
Compared to open shops, selling goods via the Internet saves costs and does not require large investment capital.
Nguyen Quang Huy, chairman and general director of Caganu Retailer Group, for instance, said his company had obtained a high growth rate since joining the e-commerce market in June last year, adding that it planned to expand services to many other cities and provinces nationwide.
But while e-commerce had seen significant growth, many Vietnamese consumers had not participated in online shopping because of security fears and complicated shopping online procedures, he said.
In addition, some e-commerce sites delivered low-quality products that are not in line with what is introduced on websites, discouraging consumers to make purchases online.
Do Ngoc Binh, chairman of the Viet Nam Post Corporation, said that 38 per cent of its surveyed respondents complained about late delivery.
The e-commerce market would expand more quickly if existing problems were solved, Binh said.
The Ministry of Industry and Trade had promoted regulations stipulating e-commerce operations, Linh said, adding that it was collecting opinions for a draft circular on managing operations of e-commerce websites, including social media.
The move aimed to support the development of the e-commerce market in the coming time, he said.
To promote online shopping, the department in collaboration with the Viet Nam E-commerce Association on Thursday launched the "Online shopping day 2014", which will take place on December 5 at www.onlinefriday.vn or www.ngaymuasamtructuyen.vn.
During the day, consumers would enjoy special discounts and free shipping costs and other incentives from participating businesses when they purchase items online, Linh said.
This is the first time such a large-scale event has been organised in Viet Nam for online shopping, with about 500 businesses expected to be involved.
CEO Group's listing fetches profits
Multi-industry company CEO Group (CEO) had a successful debut yesterday on the Ha Noi Stock Exchange, hitting the ceiling price of VND15,000 (US$0.7) with 2.6 million shares changing hands.
The CEO Group is mainly involved in real estate and education. It owns 16 projects in Ha Noi and the provinces of Ha Nam and Bac Ninh, covering more than 700ha of land. In the education field, CEO Group combines training with export of labour.
In the first six months of this year, its revenue and net profit climbed 125 per cent and 145 per cent year over year, reaching VND100.5 billion ($4.7 million) and VND15.4 billion ($726,000), respectively. Sales from the real estate sector accounted for 67 per cent of the total revenue.
The company plans to start the sale of three projects next month, hoping to reap remarkable profit for the remaining period of the year.
According to its Chairman Doan Van Binh, the CEO Group used primarily its own capital for developing business. Therefore, the amount of its bank loans is relatively low so far, reaching VND50 billion ($2.3 million).
Hoang Son, head of analysis of MB Securities Company, valued CEO's shares at VND16,000 to VND18,000 per unit. "It is suitable for both short-term and long-term investment," he said.
CEO's charter capital is VND343 billion ($16.1 million), and the company expects to increase its charter capital up to VND2 trillion ($94.3 million) within the next three to five years.
Winners of e-commerce website contest announced
The Viet Nam E-commerce and Information Technology Agency last week announced the winners of its competition for e-commerce websites in various categories.
For prestigious website and most transparent information, lingo.vn won the prize; megabuy.vn won for best individual information protection policy; zalora.vn for best contract signing policy; pvionline.com.vn for most creative website; and vietjetair.com got the most votes from users.
The contest had attracted 200 websites providing e-commerce services, having a.vn domain name, and being been in business since before 2013.
VECITA, Ministry of Industry and Trade agency, organised VietWeb 2014 in collaboration with the Viet Nam E-commerce Association to honour successful e-commerce businesses that have contributed to developing the industry in the country.
The organisers said Vietweb also sought to promote online shopping.
Fisheries group seeks export assistance
The Viet Nam Pangasius Association has asked the Ministry of Agriculture and Rural Development to continue negotiating with the Customs Union of Russia, Belarus and Kazakhstan to allow all Vietnamese pangasius enterprises to export to their market.
Currently, only certain firms are allowed to export, creating animosity from those who cannot.
Five Vietnamese tra and basa processors have taken advantage of the removal of the temporary suspension of seafood imports to the market. However, others were not able to capitalise on the end of the Russian ban.
Electric bike with iPhone link sold for $4,285
Terra Motors Corporation of Japan has announced it has manufactured and sold in Viet Nam an electric motorcycle that can function with an Apple iPhone.
The 4000i motorcycle, the first of its kind in Viet Nam, is equipped with a 4,000-watt lithium-ion rechargeable battery and can travel 65 kilometres per charge on a flat road at constant speed. It takes 4.5 hours to charge the battery, which has a life that lasts 50,000 kilometres.
A 4000i has been sold at VND89.99 million (US$4,285), and its owner was awarded free maintenance for nine instances in three years.
Kia to increase prices of three car models
Thaco Kia will raise the prices of Kia Morning, Rio and Carens from VND2 million to VND5 million this October, company officials told Bizhub.
The officials also said the company would be reducing the promotion programmes for Kia Sorento and K3, as well as other imported cars, next month. They explained that the company had offered different preferential and promotions programs for customers in the second and third quarter this year.
Last month, Thaco Kia sold 913 cars, the highest sale figure in the past four months, because of high demand for Morning, Sorento and K3.
Vinpearl Resort Phu Quoc to open in early November
Vingroup has announced it will officially inaugurate its five-star resort in the Long Beach area in the district island of Phu Quoc on November 1.
The resort is spread over 300 ha and will include a five-star hotel, villas, an entertainment centre and a 27-hole golf course. It also boasts a 1,500 square-metre convention centre, capable of accommodating over 1,000 people.
Vingroup is also set to build an entertainment complex in Nha Trang which includes indoor and outdoor games, a water park and a aquarium zone with sea creatures from the Amazon River.
Economists demand reporting of non-wage incomes of leaders of state-run corporations
Economists believe that the Ministry of Industry and Trade should require state-run corporations and groups to make public extra-salary incomes of their leaders.
Economist Ngo Tri Long said the ministry recently only reported the monthly wages of leaders of corporations and groups. According to Long, these wages, not mentioning extra-salary incomes gives a skewed picture of their earnings, as much of their income is earned through methods other than collecting salary.
Long said that it is important to know be transparent about the extra-salary incomes of leaders, and that tax agencies should scrutinise them.
Economist Le Dang Doanh said Vocarimex reported profits in 2013 much higher than other corporations and groups, even though it has a much smaller revenue and number of employees.
According to the financial report of Vorcatimex, in 2013 the revenues of the whole year were more than VND4.1 trillion. However, management cost of the company more than VND66.9 billion, bringing the net profit to just VND48.4 billion.
According to Doanh, it is good news that the ministry released a report on the monthly incomes of the leaders of state-run corporations, since these businesses have a great impact on the nation's economy, but the ministry needs to take further steps to guarantee transparency.
Deputy Nguyen Thi Kha, a member of the Committee on Social Affairs of the National Assembly, said that the wages of leaders of state-run businesses must be in line with their companies' profits.
Kha also demanded that the ministry audit the profits and wages at these firms to ascertain whether earnings are fair or not, then publicly announced the incomes.
Three major challenges of economy
The Vietnamese economy is facing three major challenges, namely low credit growth, slow pace of non-performing loan settlement, and sluggish business and production, according to former Deputy Minister of Planning and Investment Cao Viet Sinh.
Although credit growth rose steadily from 3.15% in July to 4.08% in August and 6.62% in September this year, capital has not been effectively pumped into the economy. As a result, it is hard to expect strong growth.
Meanwhile, banks’ non-performing loans tend to increase mainly due to low credit growth and slow settlement of bad debts. For instance, the ratio rose from 3.61% at the end of 2013 to 4.07% last May and even 4.17% in June.
So far this year, the Viet Nam Asset Management Company purchased around VND 19,600 billion of bad debts compared to the preset target of VND 70-100 trillion for 2014 alone.
For business community, the former Deputy Minister said he really feels worried as the number of dissolved and suspended enterprises went up 13.8% , equivalent to 48,330 enterprises, against the previous year.
The number of newly-established businesses and registered capital volume have not much improved, he added.
To overcome the above challenges, the Government has tasked inferior levels to realize a series of solutions to facilitate production and business while stepping up the implementation of the Master plan to restructure the economy.
The General Statistics Office has reported that the economy expanded 5.62% in the first nine months of 2014.The figure, as Mr. Sinh commented, goes beyond expectations.
Specifically, the GDP climbed from 5.09 percent in the first quarter to 5.42% and 6.19% in the second and third quarters, respectively, according to the statistics agency.
The index of industrial production also rose on the quarterly basis, from 5.3% in the first quarter to 6.9% in the second quarter and 7.7% in the July-September period.
Other positive signals include increases in both foreign direct investment inflow (reaching US$8.9 billion, up 3.2%) and official development assistance (US$4.1 billion, up 10% compared to the same period last year).
Purchasing power sees slight increase
The total retail sales of goods and services reached VND244.5 trillion (US$11.6 billion) in September, an increase of 0.7% over August, a year-on-year increase of 9.1%, according to the General Statistics Office (GSO).
In September, the total retail sale of goods reached VND186.1 trillion (US$8.8 billion), 0.9% higher than last month and 10.4% higher than the same period last year.
Sales of items on culture, education and worship reached VND2.9 trillion (US$136.3 million), an increase of 2.9% over last month that achieved the highest growth in sales.
Meanwhile, hotel, restaurant and service sectors reached VND31.3 trillion (US$1.6 billion), a month-on-month decrease of 0.9% but a year-on-year increase of 9.5%.
In the first nine months of this year, the total retail sales value of goods and services reached VND2,145 trillion (US$107 billion), up 11.1% over the same period last year.
Over the past nine months, foreign-invested enterprises posted the highest revenue rise of 21.6%, followed by the local private sector, with 11.1%. Notably, State-owned companies saw an 8.4% slump in total retail sales.
According to the GSO, commodity prices were quite stable over past months, and for this reason, the purchasing power of Vietnamese residents has registered a slight increase.
VCA anti-dumping ruling too sluggish
The process that led to Vietnam’s first-ever decision to levy an anti-dumping tax on imported stainless steel revealed institutional shortcomings that the investigating agency hopes will be addressed to enhance the country’s ability to protect its industries.
On September 5, Vietnam concluded its first anti-dumping investigation with the decision to impose a tax of between 3.07 and 37.29 per cent on stainless steel imported from Malaysia, Indonesia, China and Taiwan. The decision came a year and four months after Vietnam’s Posco VST and Inox Hoa Binh, whose combined output accounts for 80 per cent of the country total, submitted their petition claiming material injury.
The process to arrive at this decision, according to the investigating Vietnam Competition Authority (VCA) revealed several weaknesses both in regulations and agency capability.
According to the anti-dumping law passed in 2004 by the National Assembly’s Standing Committee, the time between the start of investigation and the preliminary decision should not exceed five months and a preliminary tax rate would be applied for four months.
The regulation therefore led to a window existing between the end of the preliminary period and the final decision for importers to continue exporting steel into Vietnam without any levy being imposed.
“Firms waited for the preliminary tax to become invalid to import stainless steel from the three investigated countries and one territory in huge volumes,” said Pham Chau Giang, head of the investigation team, citing the General Department of Vietnam Customs.
If the regulations were not changed, the VCA would be forced to conclude any investigation within nine months, which was too short a time frame, she said.
A second weakness is the disagreement between Vietnamese and WTO regulations in technical matters such as determining the dumping margin and injury and investigation procedures. The incongruence significantly slowed down the process.
A third weakness, which resulted in firms, especially those from China, getting a better tax rate than they deserved, is agreements between these countries to recognise each other as market economies. The agreements disallowed Vietnam from using a proxy country to make fairer dumping margin calculations.
The final weakness is the investigation agency’s lack of experience. “Our people need an understanding not only in the field but also of the way foreign firms work,” said Giang. Checking the data provided by a foreign firm proved difficult especially when the firm used a different language and system of accounting, she explained.
ANZ bids SSI farewell
Saigon Securities Inc. (SSI) has announced that ANZ plans to sell the bank’s entire stake in the local brokerage after seven years as strategic shareholder.
ANZ will divest more than 61 million shares, or 17.51 per cent through a negotiated sale, according to a statement just released by SSI.
ANZ has made significant contributions to the development of SSI, particularly in terms of expanding its client network, and the brokerage house said its relationship with the bank remains ‘good’. The exit is merely a new move in ANZ’s business strategy to focus more on the commercial banking sector.
SSI chairman and CEO Nguyen Duy Hung and his younger brother Nguyen Hong Nam, member of the board of directors and deputy general director, as well as a group of other domestic investors will reportedly buy the shares to be sold by ANZ.
The divestment will open up room for other foreign investors to step in, as the foreign ownership cap has kept any further investment into SSI closed off. A government decision to raise the foreign ownership cap is still pending.
Hung claimed that, “ANZ’s exit will not affect our business. Many foreign investors want to join us as foreign strategic investors, but have been unable because of the ownership cap.”
SSI is the biggest securities firm in Vietnam in terms of registered capital with VND3.538 trillion ($167 million) as of the end of June and the second largest in terms of aggregate market share with 10.7 per cent by the end of the first half of this year.
French emergency service firms hunt for opportunities
Many top French firms are hunting investment and business opportunities in the civil and security industry in Vietnam.
Last week nine leading French search, rescue and emergency service firms came to Vietnam, including Airbus Helicopters, Aquasure/APB Environment, Boche, Groupe Leader, Hydr’am, Piriou, Sides, Systel and Thales.
When asked by VIR whether Airbus Helicopters would consider constructing a factory in Vietnam, Airbus Helicopters sales promotion manager Benoit Terral said “Why not? We are discussing to have a major project about flying ambulances with the government. We want to create a flying ambulance network in Vietnam with at least 30-40 helicopters. We also have lots of major partners worldwide that can help local partners manufacture helicopters.”
“We have lots of expectations in the Vietnamese market, because its quantity of helicopters remains quite low. We will have lots of things to do here. We have had some big partners here like Vietnam Airlines (more than 20 helicopters) and several small private partners,” he added.
Airbus Helicopters under the Airbus Group is the world’s number one helicopter manufacturer. It has over 3,000 customers in 150 countries.
Meanwhile, Aquasure’s country manager Vietnam David Tran said his company had developed clean water treatment systems which would be particularly useful in emergency situations.
“They are simple and easy to operate even at the commune level. In Vietnam, Aquasure is willing to support emergency services,” Tran said.
For Piriou, its regional manager Stephane Doll also said Vietnam was developing its maritime economy and the shipbuilder and repair firm’s services would be in strong demand.
As France’s third-largest shipbuilding, ship repair and navel engineering group, Pirou is present in Europe, Africa and Asia. It generated sales of €143 million in 2013. It produces a range of vessels for oil spill mitigation, fire fighting and tug duties, defence, search and rescue, and police actions, among others.
“We are seeking partners in Vietnam,” Doll said.
Thales’ business development manager Thomas Queteville also said Thales wanted to expand business to Vietnam. With revenues of €14.2 billion last year, Thales is a global technology leader in aerospace, transportation, and defence and security markets.
“We are discussing possibilities for us to distribute their products in Vietnam. We hope to land contracts with them soon,” said Tran Manh Ngoc, director of Tritaco Ltd which already distributes security products for Spanish, German and Belgian producers.
French Ambassador to Vietnam Jean-Noel Poirier said civil and security co-operation had been prioritised by Vietnam and France over the past seven years. In 2007, the two countries signed a security co-operation deal.
Vietnam is one of the five countries most affected by the impact of global warming. Some 75 per cent of the Vietnamese population is potentially exposed to climate risks.
“So the need for efficient and modern facilities is a major priority for the country,” Poirier said.
“French technologies are critically needed in Vietnam, because the country’s increasing economic development, increasing impact of climate change and natural calamities also mean more risk of fires and accidents,” said Doan Huu Thang, vice director of the Ministry of Public Security’s Department of Prevention, Emergency-Rescue and Firefighting.
He reported that during 2009-2013, Vietnam experienced 40,000 accidents, over 2,000 fires, with about 300 deaths, and damages running into hundreds of millions of dollars every year.
VWS gets nod to expand Da Phuoc
The HCMC government has allowed Vietnam Waste Solutions (VWS) to raise the capacity of its Da Phuoc Integrated Waste Management Facility to 10,000 tons of garbage per day.
Currently, the Da Phuoc facility in Binh Chanh District takes in around 3,000 tons of waste per day and handles it by burying, recycling and producing compost fertilizer.
According to the city’s plan, the third landfill in Phuoc Hiep Waste Treatment Complex in Cu Chi District will stop operating by March 31 next year and garbage normally transported to the landfill will then be moved to Da Phuoc complex for treatment.
The city government calculates that Da Phuoc facility can receive an additional amount of 2,000 tons of garbage a day.
Therefore, the municipal government has adjusted the investment certificate of VWS so that the company can raise the designed capacity of Da Phuoc to 10,000 tons per day.
The actual amount of garbage the facility takes in each day will be based on a contract which VWS and the HCMC Department of Natural Resources and Environment will sign.
In the coming time, the city’s Department of Transport will make it easier for trucks to transport garbage to Da Phuoc.
It will limit the number of other vehicles running on National Highway 50 during the time those trucks operate, which are between 8:30 a.m. and 10:30 a.m., between 2 p.m. and 4 p.m., and between 6 p.m. and 6 a.m. of the next day.
The city also requires VWS to quickly make a new environment impact report given the additional amount of garbage which will be taken to Da Phuoc.
In early 2012, Da Phuoc opened its park for public viewing so that residents can visit the largest waste complex of the country, which covers an area of 128 hectares and costs an investment of more than US$100 million.
Vice tax gets nod from NA Standing Committee
The National Assembly Standing Committee has given the thumbs-up to the government’s proposal to raise the special consumption tax on cigarettes, beer and spirits.
The move is aimed at limiting consumption of these products and generating more revenue for the state budget.
At last week’s National Assembly Standing Committee meeting, Minister of Finance Dinh Tien Dung proposed an amendment to the Law on Special Consumption Tax (SCT) under which rate hikes would be applied to cigarettes and beer (see box 1). He said the SCT on wine and spirits over 20 proof would increase from the current 50 to 65 per cent, and 25 to 35 per cent for wine and spirits less than 20 proof.
These SCT increases will be further discussed at the 13th National Assembly’s eighth session slated for this October-November.
“We need to increase the SCT on these products to limit their consumption and help raise funds for the state budget, which is facing mounting difficulties,” said Phung Quoc Hien, head of the National Assembly’s Finance and Budget Committee. “During the 2015-2018 period, Vietnam will have to reduce import taxes on many types of goods, and this will further inhibit budget revenue”.
National Assembly Vice Chairman Uong Chu Luu said he totally agreed with this proposal. “But we must take into account the effect on enterprises.”
Luu’s view was echoed by the whole National Assembly Standing Committee, including National Assembly vice chairwomen Nguyen Thi Kim Ngan and Tong Thi Phong, who both said the SCT increase was vital to helping bolster the state budget.
According to the government’s report on the amendment, the SCT increase would supply a major source of revenue to the state budget (see box 2).
The report noted that Vietnam was listed as one of the world’s top 15 countries in terms of the most smokers.
According to the Ministry of Health, Vietnam reports more than 50,000 deaths a year from smoking. This figure is likely to soar to over 70,000 by 2030 if Vietnam does not promptly create anti-smoking measures.
The report also said alcohol abuse was a major health concern, and added that it also contributed to social disorder, crime and traffic accidents.
However, Deputy Minister of Industry and Trade Do Thang Hai disagreed with the proposal, saying that a roadmap was need for the SCT to increase gradually, as sudden increases would hurt enterprises.
“For example, increasing the SCT on cigarettes will likely lead to more smuggling, which is already causing a $200 million loss per year to annual producers. It will also affect enterprises’ revenue and industry employees,” he said.
Nguyen Van Viet, chairman of the Vietnam Beer-Alcohol-Beverage Association (VBA) told VIR in a recent interview that beer makers were extremely worried that domestic beer firms would lose even greater market position if the newly proposed SCT is passed into law.
Viet said the increased SCT would make consumers unhappy. “Vietnamese people prefer domestic beer such as Hanoi, Saigon and Truc Bach because the price is affordable compared to foreign brands, the most popular of which are Heineken and Carlsberg. Two domestic beer companies, namely Habeco and Sabeco, still hold a total two-thirds market share.
“If the SCT rates increase, foreign enterprises will feel little effect because their customers are generally higher income earners, while domestic beer firms supply all walks of life including low and middle-income earners. Domestic firms’ sales may fall if their prices after the SCT increase are less affordable,” Viet said.
“Policy makers should take a long-term perspective to the SCT and raise the tax step by step. A previous skyrocketing increase of 15 per cent could cripple domestic beer firms,” stressed Viet.
A cigarette expert from a foreign tobacco brand in Vietnam said the increase would seriously damage cigarette firms and force them to pass their losses on to consumers in the form of higher prices.
He said the total current tax imposed on cigarettes came to 75-80 per cent after SCT, VAT and import tax are all accounted for.
“Undoubtedly firms will struggle if the SCT is increased,” he affirmed.
Banyan Tree enjoys fruit from its Laguna Lang Co development
While many second-home developers in the coastal central region are struggling with low demand from local buyers, Singapore’s Banyan Tree Holdings has enjoyed a flurry of transactions at its Laguna Lang Co integrated resort, thanks to growing demand from foreign buyers.
Laguna Lang Co, a wholly-owned subsidiary of Banyan Tree in Vietnam, announced recently that it had sold 80 per cent of its first Laguna Park townhome block at a soft launch event on September 6.
The Laguna Lang Co project spans 280 hectares in Lang Co Bay in Thua Thien-Hue province. Banyan Tree plans to develop the project along the same lines as its famous Laguna Phuket in Thailand.
The Laguna Park residential component is the newest addition to Laguna Lang Co’s portfolio of luxury second homes after its Banyan Tree and Angsana Residences. Consisting of seven blocks, the area has a total 70 two-bedroom townhomes (195.6 square metres each). The project also features the award-winning championship course Laguna Lang Co Golf Club.
The first ten units of Block 1 opened for sale at the soft launch event with a special early bird price of $265,000. Construction on the first block recently started and will be soon followed by the opening of Block 2.
“Not one of the home buyers was Vietnamese,” exclaimed Phan Y Nhi, director of sales and marketing of property at Laguna Lang Co.
As well as the Laguna Park townhomes, Nhi also said the project had welcomed buyers of its $1 million luxury villas under the Banyan Tree brand, all of whom were foreigners. More than ten villas have been sold since the company opened the Laguna Lang Co Resort last year.
“No Vietnamese has ever bought a second-home at our integrated resort,” Nhi noted. In other words, she said, the Singaporean developer had not yet focused on marketing the offer of a second-home lifestyle to the Vietnamese market. Instead, the marketing campaign is focused on international markets, via Banyan Tree’s channels throughout Asia.
“Banyan Tree is a famous brand in Asia. We have our own customers from Hong Kong, Singapore, Thailand and Malaysia. So many foreign home buyers already know who we are and how they can benefit from our project,” Nhi added.
What Laguna Lang Co does is different from other second-home developers in the central region, who mainly rely on demand from domestic buyers.
Vietnam’s second-home market boomed in 2006-2009, when dozens of projects popped up along the coast of Danang and Hoi An, including the Hyatt Regency Danang, Ocean Villas, Vinpearl, Sun Villas, and The Dune.
But when the economy - and particularly the real estate market - fell on hard times, domestic demand for second homes plummeted. Meanwhile, developers also struggled to sell the villas to foreigners.
According to the latest report from property consultancy CBRE, the current unsold stock of second-home villas in Danang for example is nearly 400 units. No new projects have been launched in the city since the first quarter 2013 because of unsold stocks.
Nhi said the launching of Laguna Park townhomes at this time was a result of Banyan Tree’s confidence in the Vietnam market. “We are not seeing the risk that others are, we are still experiencing growing demand from foreign home buyers,” said Nhi.