Made-in-Vietnam goods gain in popularity

Over 80 percent of stockpiles in Hanoi supermarkets and wholesale hubs are made at home, with various and high-quality brands gaining in popularity.

Tellingly, 90 percent of stationery are made in Vietnam, Dao Van Binh, head of the central steering board for the campaign “Vietnamese prioritise Vietnamese goods”, said at a Hanoi meeting on July 17 to review the drive since it was launched five years ago.

Binh recognised that the campaign has involved all sections in society, successfully spreading its message of using locally-made items.

Many local enterprises have warmly responded to the campaign by embracing technological advances to turn out affordable and better products.

Last year, they brought 526 batches of goods to 13 communes in four outlying districts. This year alone, the capital plans to host 34 trade fairs and bring nearly 500 batches of merchandise to 13 mountainous districts.

In the coming time, the board will continue focusing on clearing several business bottlenecks and bringing more Vietnamese goods to industrial zones in rural areas.

Steel producers boost sales in home market

Local cold-rolled steel makers have been boosting their sales in the domestic market to offset a decline in outbound sales caused by the recent anti-dumping accusations, the Saigon Times Daily reported.

Sales of welded steel pipes of local producers in the domestic market rose remarkably compared to a decline of 19 percent or 18,200 tonnes in their exports in the first six months this year, according to the Vietnam Steel Association (VSA).

For instance, sales in the local market of Nam Kim Steel (NKG) and Hoa Sen Group as of June 2014 had soared 127 percent (11,933 tonnes) and 117 percent (53,922 tonnes) year on year respectively.

In addition, consumption of steel products on the local market accounted for 84 percent of the total quantity sold by steel makers in the same period.

On the other hand, there were changes in market shares of local steel producers in the first six months of this year, according to VSA.

Vietnam Steel Corporation (VnSteel) and its joint-venture enterprises gained market share of 47 percent in 2013, but their combined market share tumbled to 41.7 percent in this year’s first half.

Meanwhile, other firms aside from VnSteel, which occupied the remaining 52.4 percent last year, saw their combined market share shooting up to 58.2 percent this year.

According to the Ministry of Industry and Trade, Vietnam’s total steel consumption recorded a slight increase in the first half of this year.

Statistics from the ministry show that in the reviewed period, the consumption of rolled steel reached 1.72 million tonnes, a year-on-year rise of 25.4 percent, while 1.74 million tonnes of steel sheets and bars were sold, up 7.4 percent.

Raw steel consumption saw a decrease of 2.9 percent to nearly 1.4 million tonnes.

WB provides soft loans for five projects in Vietnam

The World Bank will provide Vietnam with soft loans worth 876 million USD, which account for 57 percent of its total funding for the country in the 2014 fiscal year starting from July 1.

Agreements on five programmes and projects using the loans were signed in Hanoi on July 17 by visiting World Bank President Jim Yong Kim and Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh.

Of the sum, 500 million USD will be halved for the Economic Management Competitiveness Credit 2 (EMCC2) programme and the northern mountainous urban development programme.

The project to build policies for the reform of the power sector receives 200 million USD.

Meanwhile, the medical personnel training project and development policy lending programme on climate change (phase 3) receive 160 million USD and 70 million USD, respectively.

This is the first time WB President Jim Yong Kim, who is on a two-day working visit to Vietnam from July 17, has directly inked lending documents with the SBV Governor.

At the signing ceremony, President Kim announced the institution’s assistance worth over 3.8 billion USD for Vietnam in the three coming years, making the country the second biggest recipient of the WB’s International Development Association (IDA) loans.-

M&A Forum to honour successfully equitised SOEs

The upcoming Vietnam Merger and Acquisition (M&A) Forum 2014 will select outstanding State-owned enterprises (SOEs) which have been equitised successfully and performed well, heard a press conference on July 17.

Head of the organising board Nguyen Anh Tuan, Editor in Chief of the Dau tu (Vietnam Investment Review) newspaper, said the honouring aims to fuel the equitisation of SOEs in the coming time.

Dang Xuan Minh, General Director of the AVM Company – co-organiser of the event, said the first M&A wave arose from 2008 to 2013 amid an array of economic difficulties, forcing many businesses to restructure themselves to overcome such a situation.

The value of M&A deals in Vietnam jumped to 5 billion USD from 1 billion USD over the period, and a number of firms made good use of this opportunity to become strong enterprises, he added.

This year’s forum on August 7 in Ho Chi Minh City will evaluate M&A trends in hot sectors such as banking – finance, food and consumer goods, technology and e-commerce.

Issues regarding M&A strategies and technical problems will also be included in the agenda.

The sixth annual forum will comprise five main activities, namely conference, MAF Expo, Vietnam M&A Awards, M&A market report and Gala Dinner.

Some 400 domestic and foreign entrepreneurs are expected to take part in the event.

Cashew exports increase in volume and value

Cashew export turnover is likely to reach 2.2 billion USD this year, the Vietnam Cashew Association (Vinacas) was quoted by the Saigon Giai phong (Liberated Saigon) online newspaper as saying.

Cashew exports have included cashew nuts, nut shell oil and other processed products.

Last year, cashew exports yielded 1.8 billion USD.

In the first half of this year, Vietnam exported 133,000 tonnes of cashew nuts worth about 847 million USD, up 20.1 percent in volume and 22.1 percent in value over the same period last year, according to the Ministry of Industry and Trade.

According to Vinacas Chairman Nguyen Duc Thanh, the United States has become the largest importer of Vietnam’s cashew products with 40 percent, followed by European countries with 30 percent, China with 20 percent and Australia 11 percent.

Vietnam expects to earn 146 billion USD from exports in 2014

Based on the results of the first six months, the Ministry of Industry and Trade (MOIT) forecast that Vietnam’s export value of 2014 would reach 146 billion USD, up 10.6 percent compared with previous year, the Vietnam Economic News reported.

According to the newspaper, the country’s import value would reach 145.5 billion USD, up 10.2 percent so that Vietnam would have a trade surplus of about 500 million USD this year.

Statistics from the MOIT show that in the first half of 2014, Vietnam exported an estimated 70.88 billion USD worth of products, a rise of 14.9 percent compared with the same period last year and equal to 44.7 percent of the annual plan.

The export value of most key products increased with that of 13 products reaching over 1 billion USD each. These included telephones and components, textiles and garments, footwear, computers, electronic products and components, machinery, equipment, instruments and spare parts, crude oil, seafood, wood and wood products, transportation means and spare parts, coffee, rice, handbags, suitcases, headwear, umbrellas, fiber and yarn.

“These impressive results reflected the ceaseless efforts of ministries, sectors, associations and businesses, especially in the context of numerous export difficulties in the recent period,” Deputy Director of the Agency of Foreign Trade under the MOIT Phan Thi Dieu Ha was quoted as saying at a recent meeting held by the ministry to review the results of foreign trade in the first six months of 2014.

Notably, with the import value reaching over 69.56 billion USD, Vietnam recorded a trade surplus of 1.32 billion USD, equal to 1.9 percent of the total export value, in the first six months of this year. This was the brightest point in the economic picture of the first half of 2014.

However, it’s not easy to achieve these results because the economy still faces numerous difficulties. The competition between countries which export to large markets such as the US, Japan and the Republic of Korea is becoming increasingly fierce. The export of agricultural, forest products and seafood continues to face difficulties in terms of price and market.

To achieve the export targets set for 2014, Ha said that the MOIT had issued some instructions and proposed many measures to boost exports, especially the export of agricultural products and seafood.

Recently, the MOIT and the Ministry of Agriculture and Rural Development met to discuss market-related issues to help businesses boost exports. They agreed that it was necessary to maintain a close relationship between agricultural production, the processing industry and value chains in order to create high-quality agricultural products.

The MOIT encouraged businesses to concentrate on investing in technological innovation to improve product quality and reduce production costs, increase the localisation rate and reduce trade deficit.

Aviation safety – top priority: CAAV chief

The aviation sector must define safety as the most crucial factor for its sustainable development, said Lai Xuan Thanh, head of the Civil Aviation Authority of Vietnam (CAAV).

In his interview granted to the Vietnam News Agency, Thanh admitted that poor infrastructure and human resources is the main factor affecting aviation safety, which is the main cause of a series of recent incidents such as landing mistake, increasing flight delays and cancellations, and expensive aviation services.

“Frankly speaking, human resources fail to meet the sector’s development requirements, for example we do not have any pilot training centre and have to hire foreign pilots,” he said, adding that skilled technicians are also in shortage.

Thanh noted that the State and involved businesses have tried to mobilise investment in aviation infrastructure, but the low rate of return has deterred investors. Therefore, poor infrastructure remains the main obstacle to the sector’s development, he said.

According to the CAAV leader, the Ministry of Transport has launched a national flight safety programme with specific regulations on the obligations of State management agencies and businesses in the aviation sector.

It has also set up a series of mechanism on information control and collection and risk assessment as well as a safety management system for aviation businesses, airports and air service providers in line with requirements of the International Civil Aviation Organisation (ICAO).

The ministry has also announced a runway safety programme to prevent outside objects from entering runways.

“Therefore, I think we have put in place an adequate aviation safety system, and the question now is to raise our operating capacity,” Thanh said.

In order to fix the above-said shortcomings, the CAAV leader said the sector will implement a project to improve the operational efficiency of aviation infrastructure.

At the same time, he emphasised the need for the early construction of the Long Thanh International Airport to ease pressure for the Tan Son Nhat International Airport .

Reorganising air routes, establishing a north-south flying corridor, and shifting from radar to satellite for air traffic control are some of the solutions to facilitate aviation growth.

The sector will try to establish its own facilities for training pilots, air traffic controllers and technicians, Thanh said, adding that his agency is working on a project to improve the State management on civil aviation.

The equitisation of aviation businesses is also a measure to attract investment in improving fleets and equipment, he said.

Lending interest rates in VND forecast to decrease slightly

More than 70 percent of credit organisations predict that both deposit and lending interest rates in Vietnamese dong this year will reduce by 1.24 percent and 1.43 percent a year, respectively, in comparison with the levels at the end of 2013.

According to a survey conducted by the Monetary Statistics and Forecast Department under the State Bank of Vietnam from May 20 to June 9, 90 percent of credit organisations expect their mobilised capital and loan outstanding balance will grow by 3.4-3.6 percent in the third quarter and 14.2 percent for the entire 2014.

Over 90 percent of the organisations also believe their liquidity will remain stable or improve in the second half of the year, while 80 percent of them think their bad debt/ outstanding loan ratio remains stable or decreases slightly in the second and third quarters.

Meanwhile, around two thirds expect an improvement in their business in the third quarter and the whole year, and a recovery in customers’ demand for banking products and services.

In the second quarter, credit organisations focused their resources on improving their policies and customer services, as well as increasing the quality of products and capacity of risk management.-

Provinces take action to drive socio-economic growth

People’s Councils of some northern and central provinces held sessions from July 14 – 16, stating their resolve to fulfil annual socio-economic goals through concrete measures to be taken in the second half of this year.

For the rest of 2014, northern mountainous Son La province will focus on removing difficulties for business operation and strengthening management of the use of State budget for local projects.

It will also summon all resources for flood and storm prevention and mitigation as well as the building of new-style rural areas.

Son La reported a gross domestic product (GDP) of 7.12 trillion VND (339 million USD) for the year’s first half, up 8.93 percent from a year earlier.

Meanwhile, its neighbouring Hoa Binh province plans to better local people and businesses’ access to capital, continue streamlining administrative procedures, and step up investment promotion.

The provincial economy grew by 7.51 percent in the past six months while budget collections reached 942 billion VND (44.86 million USD), accounting for 55 percent of the assigned yearly figure.

In the central region, Ha Tinh province aims at further riding out obstacles to enterprises, preventing corruption and wastefulness, and developing tourism and trade in the remaining months.

The province’s GDP in the year’s first half picked up 12.1 percent against the previous same period. It fulfilled 60 percent of the target State budget collection with 4.3 trillion VND (204.76 million USD).

Central Thua Thien-Hue province, for the rest of the year, will invest in building infrastructure for urban areas, industrial parks, and tourism.

It will also launch tourism stimulus packages along with a programme connecting banks with the business circle to assist the latter’s activities.

Local GDP growth rate stood at 7.9 percent, and over 2.2 trillion VND (104.76 million USD) was channelled to the State budget in the reviewed period, representing 46.4 percent of the set target.

Meanwhile, the central province of Binh Thuan will prioritise the development of industry and service sectors and expand its export markets. It will also provide more support to offshore fishing and logistic services at sea.

Binh Thuan’s GDP expanded by 8.6 percent from the same period last year, and it contributed more than 3.2 trillion VND (152.38 million USD) to the State budget.

Rubber plantation owners urged to reduce latex exploitation

The Vietnam Rubber Association (VRA) has urged rubber plantation owners nationwide to scale down their latex exploitation as one of the measures to deal with falling latex prices, the Saigon Times Daily reported.

VRA said price declines on global markets have led to lower latex prices on the local market, forcing a number of rubber tree farm owners to reduce or even suspend their latex extraction since mid-May to cut costs.

Many households in the Southeastern and Central Highlands regions have chopped down both old and young rubber trees in their plantations to plant other industrial trees and high-yield crops.

Statistics from the Department of Cultivation showed 3,000 hectares of rubber tree has been cut and shifted to other industrial plants and crops as of June this year.

VRA has worked with associations in other major rubber-producing countries such as Thailand and Malaysia to scale down latex exploitation and manage to peg their prices to those on global markets.

Latex prices in Vietnam’s Southeastern region have dropped to 35 million VND per tonne, down 2 million VND compared to last month.

A latex trading firm said it is difficult to predict the natural latex price on the local market as it varies depending on global demand and prices.

According to the Ministry of Agriculture and Rural Development, Vietnam posted export revenue of 644 million USD from shipping 337,000 tonnes of rubber in the first six months this year, down 12 percent in volume and 33 percent in value over the same period last year.

The ministry said the average export price of natural latex in January-May stood at 1,842 USD per tonne, down 29 percent compared to the same period last year.

New markets for southern coconut firms

Businesses from the southern province of Ben Tre have found new markets for their coconut products in the Republic of Korea, China’s Taiwan and Eastern Europe.

This is an optimistic result of local efforts to reduce reliance on the Chinese market which previously accounted for between 40-50 percent of the province’s coconut export value, head of the Export Management section under the provincial Industry and Trade Department Nguyen Van Phong said at a review meeting on July 16.

In the first half of this year, the province earned 27.32 million USD from sales of farm produce, mainly coconut and coconut products, to China, accounting for 9.69 percent of the total export revenues. The ratio for the entire year is projected to stand around 15-20 percent.

According to Deputy Director of Luong Quoi coconut processing company Huynh Thi Cam Chau, canned coconut milk and desiccated coconut are selling well in the Middle East and the US.

The provincial Department of Industry and Trade has asked businesses to enhance processing capacity and diversifying products for both domestic and foreign consumption, while limiting shipments of fresh coconuts to China.

Kien Giang province heeds sea-based economic growth

Authorities from the Mekong Delta province of Kien Giang have granted licenses to 340 investment projects totalling 166.5 trillion VND (7.93 billion USD) for the development of sea-based economy for the 2010-2013 period.

Of the total projects, Phu Quoc island alone hosts 112, according to the local Department of Planning and Investment.

The province now counts 183 operational projects which focus on breeding, processing farm produce and seafood, transport system and tourism services, among others.

In the foreseeable future, it will pay heed to improving the management capacity and administrative formalities to expedite the implementation of sea and island development plans.

Special attention will be paid to programmes coping with climate change and sea rising as well as protecting marine ecology in a sustainable manner, said Vice Chairman of the local People’s Committee Le Khac Ghi.

Kien Giang emerged as an economic spotlight in the Mekong Delta in 2013, with economic growth rate hitting 9.4 percent, ranking fourth among the 13 provinces and city in the delta.

New customs system troubles firms, authorities alike

Although expected to help simplify customs clearance procedures, VNACCS/VCIS has proved confusing for both firms and customs authorities.

Deputy director of the customs department of Ba Ria-Vung Tau province Le Van Thung explained to the media that the short test-run was ineffective at acclimating businesses with the system.

Similarly, an officer at Vung Tau port – airport customs office expressed concerns about the new system. He said that in dealing with products relating to oil and gas drilling and exploitation, inserting product codes into the system has proven a major difficulty.

Responsibility now belongs to the head of the department, instead of team leaders, as before. With 53 possible scenarios to be essentially memorised by the people in charge, the pressure on customs agencies has therefore intensified, added the officer.

Businesses are also struggling with the VNACCS/VCIS system. Jinjiro Kimura, general director of Ukina Ltd. Vietnam, a manufacturer located in Tan Thuan export processing zone in Ho Chi Minh City’s District 7, said his firm and 200 others have been waiting for customs clearance for about two weeks.

In particular, nearly 1,000 product declarations had to be re-registered, upsetting several firms operating in Tan Thuan export processing zone. “The re-registrations were primarily due to the input of the wrong product codes,” said Kimura.

Thang Loi International Garment JSC chairman Ngo Duc Hoa said containers holding their products have been sitting around at Cat Lai port for three weeks, causing significant losses for the company. “I think the main reason is officers are not yet used to the system. Solutions are needed immediately,” Hoa underscored.

The officer from Vung Tau port said companies are willing to work with the new system, but are fearful the new process will result in errors and delays that hurt their business results.

Despite complaints, other businesses have given good feedback concerning the system. “I am pinning my hopes on VNACCS/VCIS because it is three times faster than the e-customs procedure. This is very good for businesses,” said Nguyen Duc Tinh from U&I freight forwarding company, a customs agent serving 29 companies in Binh Duong province.

The Vietnam automated and consolidated cargo and port system and Vietnam customs information system (VNACCS/VCIS), funded by the Japanese government, was applied on April 1 this year. It has been implemented at over 100 customs branches under 34 provincial and municipal customs sub-departments across the country.

Transport minister firm on Keangnam delay

The two final packages for the northern Noi Bai-Lao Cai expressway may soon have the capital necessary for completion. State-owned Vietnam Expressway Corporation (VEC) deputy general director Le Kim Thanh said that Korea’s Keangnam Enterprises, which developed the final A4 and A5 development packages of the expressway, had transferred $4 million from South Korea to pay cash-strapped sub-contractors.

Keangnam planned to transfer another $6 million in the coming time to boost construction of the packages, so the expressway could open by late August this year, Thanh added.

Keangnam’s motivation to supply the financing came after a stern warning by the Minister of Transport Dinh La Thang who told the company’s representatives in a meeting late last month that if the company failed to transfer the funds to Vietnam to complete the packages, VEC’s contract would be immediately terminated.

Before issuing his ultimatum, Thang personally examined implementation of the packages, which he determined to be slow and not likely to hit the August deadline, as previously committed by Keangnam. He noted that a particular part of the under-construction road he saw had yet to lay any base or sub-base, despite the looming deadline.

He reported that the 41.15 kilometre A5 package in the northern province of Yen Bai, around 26 per cent of the project still uncompleted.

VEC’s general director Mai Tuan Anh said that the South Korean side had previously pledged to pump $10 million into the packages to ensure construction finished before June 30, but the funds never arrived. “VEC has asked Keangnam Enterprises’ president to visit Vietnam to discuss the packages, but we have seen no co-operation from their side. Only the company’s vice president paid a visit, and no cash has been transferred so far,” Anh said.

The A4 and A5 packages were inked in early June 2010 in Hanoi between VEC and Keangnam Enterprises. Under the contract, construction was due to be completed within 36 months.

Transport minister Thang added to his warning that if the packages failed to be completed by August 31, this would constitute grounds for dismissal of certain VEC leaders. He also ordered that Keangnam’s work would be reduced to only five kilometres while the remainder would be taken over by the ministry’s Cienco 1, Cienco 4 and Van Cuong Company. The 264km expressway includes eight construction packages and two equipment installation packages, with the total investment capital of nearly VND20 trillion ($952.4 million) for the first stage. It started construction in the third quarter of 2008 and runs through Hanoi as well as four other provinces – Vinh Phuc, Phu Tho, Yen Bai and Lao Cai.

Apartment market sees green shoots of recovery

Both the Ho Chi Minh City and Hanoi apartment markets have seen an uptrend through the first half of the year.

At the end of May, Vingroup announced its second phase of Times City Hanoi was up for sale at starting price of VND1.9 billion ($90,000) per unit with numerous incentives and financing options.

In just two days, nearly 600 units were sold. This reveals that market demand exists for the right products and Vingroup was timely in putting the units up for sale.

Developer FLC made a market splash last week when it announced it would sell units in its tower at 36 Pham Hung street for VND23 million ($1,050) per square metre, compared to the roughly VND30 million ($1,400) per square metre for neighbouring projects.

Many projects are reporting solid sales, such as Thang Long Number One, Discovery Complex and Royal City.

In Ho Chi Minh City as well, a range of projects are experiencing rocketing sales such as 8X Thai An, Hung Ngan Garden, Sunview Town and 4S Linh Dong.

According to Savills Vietnam, the apartment market overall has seen an upswing in terms of both liquidity and price.

In the second quarter of this year, approximately 1,900 units were sold in Hanoi, up 54 per cent on-quarter thanks to strong sales of Grade B projects. rding to Savills, projects with good construction progress and strong development credibility generated good sales this quarter. Most buyers were end-users who expected real products.

From the third quarter onward, 83 projects with more than 65,800 apartments are slated to start construction in Hanoi. But 50 per cent of those are still in the planning stages. The second half of 2014 will welcome approximately 5,000 units from nine projects, and more than 4,900 apartments from five projects are expected to launch in 2015.

Meanwhile, in Ho Chi Minh City, Savills reported that the overall absorption rate was 17 per cent, up 7 per cent on-quarter and 9 per cent on-year.

“The number of transactions in the second quarter was approximately 2,500 units, up a notable 60 per cent on-quarter and 115 per cent on-year. Grade C accounted for nearly 70 per cent of transaction volume, which was the highest in the last three years in the southern market,” reported Savills. In the second quarter, Ho Chi Minh City’s districts 2 and 7 continued to see the highest transaction volume, accounting for 46 per cent of total sales, followed by Go Vap, Tan Phu, Binh Tan, and Thu Duc, with 34 per cent.

“Competitive mortgage rates helped support buyers and strengthen residential demand. Flexible payment terms in a number of Grade B and C projects also encouraged buyer confidence,” Savills noted.

Dat Xanh acquires new projects, restructures operations

Property developer Dat Xanh Group has clearly started a shake-up, with a number of acquisitions in the pipeline and an acceleration of plans for its broker network.

The Ho Chi Minh City-based company will sell its holdings in two subsidiaries, Dat Xanh Binh Duong (57 per cent) and Mekong Delta Real Estate (51 per cent), at prices at least par with book value.

The move is part of a plan to turn different Dat Xanh Group brokers across the country into four regional brokerage firms – Dat Xanh South, North, Central Region, and South East. The group will hold 51 per cent of each South, North and South East, and 55 per cent in Central Region.

The value of the deals is less important than the main purpose of streamlining the subsidiaries system, said Viet Capital Securities Co. specialist Nguyen Ngoc Hoang Hai.

Dat Xanh has decided to take over the 7.4-hectare Green City residential project in Ho Chi Minh City’s District 9 from the previous developer for VND800 billion (around $38 million).

Green City will be Dat Xanh’s largest project in the city in terms of area, making its 3.6ha Sunview Town project the second. Green City is located near Hanoi Highway and is close to one of the stations for the city’s under-construction Metro Line No.1, which will run from District 1 to District 9. The railway is expected to start operations in 2018.

The project, a combination of mid-class apartments and villas, will cost around VND1 trillion ($47.62 million). Of this total, 20 per cent will come from loans and the balance from the group’s own capital. Dat Xanh will offer additional shares to help finance the project.

Excessive supply leaves office demand flat

Though building mixed-use complexes was a rising trend from 2007-2010, the now-finished buildings are largely vacant now with their office floors largely unused.

Take EVN for example, the state-owned electricity giant build two towers, 29 floors and 33 floors, respectively, on Cua Bac street in Hanoi as a hub for the company’s operations.

The towers were completed in December last year and offices went up for lease in the first quarter of 2014. Though many EVN subsidiaries have moved into the buildings, a great deal of space is still available.

Another case was VCCI Tower, located near key streets Le Duan, Tay Son and Dai Co Viet. While ranked a Grade A office building with rents starting at $25 per square metre per month, like EVN, most of the space is vacant.

According to CBRE, the Hanoi office leasing market blossomed in 2007, when no more than five per cent of office spaces were empty. Rents held stable at around $37.45/m2/month for Type A offices and $26-28/m2/month for Type B.

The rising number of newly constructed mixed-use complexes since the beginning of this year has put enormous pressure on the office rental market.

In the first half of this year, five towers entered Hanoi’s office leasing market, adding around 104,000 square metres to the city’s total. They include HANDICO, VCCI, Gelex, EVN, and PSID.

According to statistics from Savills Vietnam, the average Hanoi office rental has gone down from VND540,000/m2/month (around $26) in the second quarter of 2012 to VND374,000/m2/month (around $18) in the second quarter of this year. In particular, Grade A and B fell by 3 per cent and 1 per cent, respectively, compared to the first quarter this year.

As reported by Savills, office demand has reached 76 per cent, increasing by 2 per cent on-year. Despite higher demand, office space is selling miserably due to the huge amount of new space that has entered the market.

Savills’ Research and Consultancy senior manager Ngoc Thi Huong Giang said there be an additional 85,000 square metres available for lease from five new projects in the second half of this year, including Lotte Center Hanoi with more than half of that total.

In 2016, Hanoi will welcome 27 new building projects with more than 500,000 square metres, raising the total office space for lease to around 2 million square metres. Rising office demand is only expected at 65 per cent of this total.

Property sector in H1 defined by M&A flurry

An increase in M&A in the real estate sector has been highlighted by two significant announcements in the first half of 2014.

Novaland, a domestic real estate investor, recently announced it would take over three housing projects in Ho Chi Minh City. Also, Korea’s National Housing Organisation announced that it would invest in 14 housing projects in Vietnam.

In the first quarter of this year, Vinaland, the real estate arm of VinaCapital, divested its stake in Vina Properties, which owns the luxury Movenpick Saigon Hotel in Ho Chi Minh City.

Many other developers are divesting from their projects and issuing shares in order to mobilise more capital investment.

CEO Group has bought out the Sonasea Villas and Resort in Phu Quoc island, which looks set to becoming one of the country’s most lucrative tourist markets.

In the case of FLC group, in addition to recently taking over Alaska Garden City in Hanoi, the group also has their eye on many projects in other provinces.

Apart from that, there have been many other undeclared transactions.

In its latest shareholders meeting, the Hoang Anh Gia Lai group announced that it had sold a 35-hectare project to the Him Lam group, with a value of VND1,100 billion ($52 million).

Another investor from Hong Kong, Sunwah, has bought a 90-hectare area in the Binh Thanh district of Ho Chi Minh City to develop a complex with investment capital of more than $200 million.

According to Phan Xuan Can, chairman of SohoVietnam, M&A activity in the real estate market has been the highest it has ever been in Vietnam.

“Many investors come to us and require information about projects on offer, from apartment buildings, to offices, to high-end resorts and complex buildings. The real estate market now is in a recovery phase and this is a good time for sellers to offload their projects at the best price. Meanwhile, buyers can now target projects,” Can said.

Can added that it was hard to get a successful real estate project for both sellers and buyers because of the many procedures and financial details required. This is compounded by the fact that neither sellers nor buyers want to declare these details.

Minister for Construction, Trinh Dinh Dung said the real estate market is facing many difficulties at present, and that local authorities should be more careful when it comes to licensing new projects. Several local authorities have stopped granting new projects.

“This is a good reason for developers to consider M&A projects. That is why I predict that the M&A trend in the real estate sector for 2014 and 2015 will become even more popular,” Dung said.

Kien Giang attracts 340 projects in sea, island development

Southern coastal Kien Giang Province has granted investment certificates to 340 projects in coastal areas and islands in 2010-2013.

These projects, under the Viet Nam Sea Strategy till 2020, cover a total area of 20,200 ha and worth VND166,500 billion.

Phu Quoc Island alone has attracted 112 projects with a total capital investment of VND135,087 billion.

Of the total, 183 projects have come into operation and 18 ones in Phu Quoc Island have been completed to serve for the region’s sea economic development.

These projects mainly focus on agriculture-aquatic processing, mineral exploitation, infrastructure and tourism services, water, electricity and traffic.

Number of super-rich Vietnamese on the rise

A number of reports by domestic and international organisations seem to show that the number of super-rich people has been increasing in Vietnam, a trend that is expected to continue.

Swiss Bank UBS forecast last year that the wealthy population in Vietnam would increase sharply in the next ten years, making for a total of about 300 "super-rich" people. This number is said by many analysts to be too high in comparison with Vietnam's developing economy, yet many experts claim that the actual number is even higher.

Few wealthy individuals make their assets public or hold much of their wealth in the stock market. The reports also piqued public curiousity since they do not mention any names, only the number of rich individuals.

On July 11, ANZ Commericial Bank announced that the middle-class in Vietnam is growing faster than any other Asian country, including China. It is forecast that Vietnam will have 2 million more people join the middle-class each year. The news seems to prove that Vietnam's economy has grown considerably. There are about 700,000 enterprises in Vietnam, providing more jobs to citizens.

Moreover, the World Bank's report, released last week, showed that Vietnam has about 110 people with net worths of at least USD30 million.  

This number is three times higher than a decade ago.

According to World Bank, this number is about what is to be expected when compares to other countries which have the same per capita income. The World Bank also expressed worries about the growing gap between the rich and the poor, as well as the means people use to accumulate wealth.

Some of the most well-known people are Pham Nhat Vuong, founder and chairman of Vietnamese conglomerate Vingroup; Doan Nguyen Duc, chairman and founder of Hoang Anh Gia Lai Group and a football club; Tran Dinh Long of steel producer Hoa Phat Group, and Dang Thanh Tam of housing developer KBC.

Experts optimistic about credit market

Experts have shown optimism despite the slow credit growth over the past six months, which had raised concerns over the banking system's ability to reach the year's target of 12%-14% growth.

According to statistics from the State Bank of Vietnam, the credit growth rate in the first six months of this year was only 3.52%, while the growth rate over the same period last year was 4.7%. However, many experts said this did not pose a problem because growth is usually slow in the first two quarters. In addition, weak absorptive capacity, budget arrears, cumbersome bureaucratic procedures and the still recovering world economy are also to blame.

On the other hand, some key sectors saw a high rate of growth, including exports, supporting industries and the hi-tech sector. Social and agriculture programmes also saw positive signs.

"I think this is a highlight for our economy. For years, we have complained that our economic development was too shaky. Firms couldn't improve operations on their own and depended entirely on bank loans. Low credit growth means our adjustments are on the right path," said Nguyen Duc Kien, deputy head of the NA Economic Committee. He went on to say that forcing the economy to sustain high rates of credit growth will result in unintended consequences such as bad debt.

The State Bank will continue to closely monitor credit institutions and foreign exchange rates to issue appropriate adjustments and quickly deal with any problems. They will also ask the government to revise its credit policies in rural areas and the agricultural sector.

Meanwhile, experts suggested that the government needs to improve macro-policies while they are being carried out. NA deputy Tran Du Lich said, "The problem is how to help enterprises. Government needs to give more support while enterprises must reform and improve their competitiveness."

The economic growth in the first six months was 5.18%, an improvement compared to the 4.9% over the same period last year.

Private firms scale down operations

Despite the rising number of private firms in Vietnam in the 2002-2012 period, their operation scale, workforce and capitalization were all narrowed down, seen in their share in the national gross domestic product (GDP) shrinking from 15.5% in 2002 to only 11% in 2012, according to the Vietnam Chamber of Commerce and Industry (VCCI)

Senior economist Pham Chi Lan, who used to serve as a vice chairwoman of VCCI, asserted the private sector’s dwindling operations at a meeting with local media organized by the Business, Studies and Assistance Center (BSA) on Tuesday.

During the talks, Lan shared the knowledge she had gained from a fieldtrip with a research group of Vietnam Academy for Social Sciences to take comments from private businesses in HCMC, Binh Duong, Can Tho and An Giang.

A study by VCCI shows revenues, competitiveness, and confidence of private enterprises all declined. Particularly, less than 30% of them last year weighed expansion schemes.

The number of newly-registered companies was nearly 50,000 – 60,000 but as many as 40,000 – 50,000 ones shut down business within 2012 alone.

Concerning the legal system, many companies complained about the ambiguous law and unstable business environment, Lan said.

Although enterprises appreciated efforts by governmental agencies in revising and enacting new laws, they have not had faith in those legal documents that are described as unfeasible, complicated and troublesome. The overlapping rules and regulations also cause a lot of troubles to corporate operations.

Lan quoted remarks by economist Nguyen Ngoc Bich, saying that lawmakers have the mindset of politicians and do not understand business in general and private business in particular.

Policymakers in many instances do not see shortcomings in law enforcement but only take advantage of their power to put pressure on enterprises.

Lan also mentioned another obstacle concerning the State policies decried as unsynchronized and impractical. For example, certain State bodies encouraged export at any rate despite little profits or even losses while leaving the domestic market dominated by foreign companies.

It is difficult for state-owned, private and foreign direct investment companies to work together due to the lack of a common link while in many  foreign countries, all the big, medium and small companies are all connected together, Lan added.

Vinafood 2, AGPPS to jointly develop rice industry

Vietnam Southern Food Corporation (Vinafood 2) has joined forces with An Giang Plant Protection Joint Stock Company (AGPPS) for a  sustainable growth strategy for the rice industry in the Mekong Delta.

Huynh The Nang, general director of Vinafood 2, told the Daily that his company is working with AGPPS over developing large-scaled paddy  fields, a model which has been invested by AGPPS and other enterprises in the region in the past years.

AGPPS has successfully applied the model to some 10% of the total area under paddy farming in the Mekong Delta. Nang expected the cooperation with Vinafood 2 will help expand the acreage to 30%.

Vinafood 2 is the country’s biggest rice exporter with annual shipments of 2-3 million tons of rice while AGPPS is one of the leading producers  and suppliers of quality rice and other products for export.

“The advantages of the two sides will certainly create significant changes for the rice industry in the Mekong Delta,” Nang said.

Huynh Van Thon, chairman of AGPPS, the partnership with Vinafood 2 will help address shortcomings of the value chain in the rice industry,  enhance the quality of rice and improve incomes of local farmers.

Thon said AGPPS and Vinafood 2 will also work towards building strong brands for Vietnamese rice.

As part of the strategy, Vinafood 2 will ask AGPPS to become its strategic partner in the future.

Steel producers return to home market

Local cold-rolled steel makers have been boosting their sales in the domestic market to offset a decline in outbound sales caused by the recent anti-dumping accusations.

Sales of welded steel pipes of local producers in the domestic market rose remarkably compared to a decline of 19% or 18,200 tons in their exports in the first six months this year, according to the Vietnam Steel Association (VSA).

For instance, sales in the local market of Nam Kim Steel (NKG) and Hoa Sen Group as of June 2014 had soared 127% (11,933 tons) and 117% (53,922 tons) year on year respectively. In addition, consumption of steel products on the local market accounted for 84% of the total quantity sold by steel makers in the same period.

On the other hand, there were changes in market shares of local steel producers in the first six months of this year, according to VSA.

Vietnam Steel Corporation (VnSteel) and its joint-venture enterprises gained market share of 47% in 2013, but their combined market share tumbled to 41.7% in this year’s first half. Meanwhile, other firms aside from VnSteel, which occupied the remaining 52.4% last year, saw their combined market share shooting up to 58.2% this year.

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