5-star tourism complex for Phu Quoc Island

Hoa Binh Real Estate Company started construction of Star Bay Tourism Complex in Phu Quoc Island in Kien Giang Province earlier this week.

The complex is to have a 250-room hotel and 50 bungalows, built at a five-star standard. This is the first project in which the company took charge of both design and building construction. This arrangement is expected to bring convenience to investors and contractors.

The company also started construction of JW Marriott on the island earlier this month. This project has a total investment worth VND72 billion.

FLC Group acquires The Lavender project

FLC Group has acquired The Lavender project at a favourable location in the capital Ha Dong District centre, and renamed it FLC Star Tower.

Le Thanh Vinh, a member of FLC's management board, said that the details of the acquisition have not been revealed. However, the group will buy projects with attractive market and development costs. In addition, the project is expected to be a hit in the property market.

The Lavender has 41 floors with four underground levels, including offices, trade centres and apartments.

The FLC Group has bought two projects, Alaska Garden City and 36 Pham Hung.

Nakheel to re-invest in Ha Long Star project

The United Arab Emirates-based real estate developer Nakheel will re-invest in January 2015 in the Ha Long Star urban and tourism project in the northern Quang Ninh province.

The Dau Tu (Investment) newspaper reported that the commitment was made during a recent official visit to theUAE by Viet Nam's Deputy Prime Minister Nguyen XuanPhuc.

The 125ha, US$550-million project aims to build a five-starhotel with 250 rooms, a luxury hotel with 100 rooms and 226 villas, as well as 114 apartments and a commercial centre.

Though its groundbreaking ceremony was held in 2007, the project has been delayed due to the corporation's financial difficulties.

Course improves skills to promote trade in EU

A training course to develop strategies and improve skills to promote trade in the EU market was opened yesterday in the southern province of Kien Giang.

The two-day event is jointly held by the Export PromotionCentre (PROMOCEN) under the Ministry of Industry and Trade's Trade Promotion Department, the Tourism,Commerce and Investment Promotion Centre of KienGiang province (KITRA), and the European Trade Policy and Investment Support Project (EU-MUTRAP).

According to KITRA Deputy Director Nguyen Giai Phong,the EU is a potential market posing both opportunities and challenges to Vietnamese businesses. The course is expected to help organisations and enterprises to increase their ability to access this market. More than 50 participants were offered new trade promotion knowledge and skills, as well as methods of building strategies for small and medium-sized enterprises to enter the EU market.

After the course, the trainees will be able to evaluate the effectiveness of each form of trade promotion and select suitable promotions for their businesses. They will also learn how to build, develop services and protect product trademarks.

VN exports to France surge in first 11 months

Viet Nam exported US$2.12 billion of goodsto France in the first 11 months of 2014, up 6 per cent year-on-year, according to the Vietnamese Trade Office inFrance.

Among Viet Nam's key exports to the French market were telephones and components, footwear, textiles andgarments, home appliances and agro-forestry-fishery goods.

Despite this encouraging growth, Viet Nam's exports toFrance still lagged behind the potential of the two countries,Trade Counsellor Nguyen Canh Cuong said.

To increase exports to such a lucrative market, Cuong suggested domestic enterprises improve the quality of their products and offer better product designs. The firms should also take the initiative to seek new customers by participating in trade fairs held annually in France. .

Short-term foreign lending extended

The State Bank of Viet Nam (SBV) will extend short-term foreign currency lending to exporters and petrol importers by one year, in a move to support these businesses, said SBV Governor Nguyen Thi Hong.

Under the SBV's Circular No 29/2013/TT-NHNN on lending in foreign currencies, issued in 2013, lending would expire on December 31 this year. Beginning January 1, 2015, only a limited number of borrowers, exclusive exporters and petrol importers were to receive foreign currency loans.

Hong said that after scrutinising past lending, as well as targeting to meet the country's 6.2 per cent GDP growth rate next year, as approved by the National Assembly, the central bank decided not to call in loans by the end of this year, as planned, but to extend payments until the end of 2015.

Both businesses and bankers want the central bank to extend the deadline for lending in foreign currencies, because they have significantly benefited from this lending.

Economists have also advised the central bank to extend loan payments, saying that any signs of credit growth, no matter whether it is the Vietnamese dong or foreign currency credit growth, should be seen as good news in the current circumstances.

Circular No 29, released in 2013 but taking effect in early 2014, was aimed to ease more businesses in accessing dollar loans, as it expands the list of subjects that can receive dollar loans from banks, within the context of the country's economic difficulty and low credit growth.

The regulation, plus a stable dong/dollar exchange rate and a lower interest rate of dollar than dong loans, has prompted businesses to rush to borrow dollars, which had contributed significantly to pushing up the country's recent credit growth.

According to the central bank's statistics, foreign currency outstanding loans within the banking system increased 20.77 per cent as of the end of September, which was five times higher than dong outstanding loans.

Of the total foreign currency outstanding loans, exports and petrol imports accounted for roughly 30 per cent. Further, lending on export businesses made up 24 per cent and the remaining 6 per cent of loans had been to petrol importers.

HCM City office space market remains stable: CBRE report

In the fourth quarter the HCM City office buildings market has remained stable with limited new supply in grades A and B in both the central business districts and elsewhere, according to property consultant CBRE.

The Government's success in reducing inflation (and lending rates), cutting back spending, attracting foreign direct investment and achieving reasonable GDP growth of 5.6 per cent have improved market conditions, which in turn have improved the confidence and outlook of both established businesses and new investors.

This demand in the market combined with limited supply has helped to stabilise rents and reduce vacancy rates. In the fourth quarter rents for both grades A and B have been quite stable (0.1 percentage points down from the previous quarter).

In terms of vacancy rates, grade B performed slightly better than grade A as they declined by 3 and 1.8 percentage points from a year earlier.

Net absorption in the quarter improved significantly for both grades A and B – by 59.8 pps and 31.7 pps – which the latter continuing to perform better than the former.

The five most active sectors were banking, finance, insurance, drugs, manufacturing and IT/technology even as relocation for cost reasons ceased to be a major driver.

Expansion and new leasing are expected to drive the office market next year given the economy is improving and Viet Nam returns to the radar screen of investors.

For small- to average-sized occupiers, the market does still provide some viable options, but for occupiers seeking quality, international standard, and managed buildings in the central business districts, limited new supply will come from large scale, mixed-use projects and from those developed partly for owner occupation.

The notable projects coming online in 2015 include Vietcombank, Viettel, and SSG .

So while construction can be seen across the central business district, the reality is that for large tenants planning an occupancy solution, the market will remain tight until the end of 2014.

As a result rent levels will remain stable at least until Q1 2015 when the next wave of supply comes online.

Demand high for cheap homes

The northern Quang Ninh Province faces a large demand by low-income earners and workers for houses, as the total number of labourers is expected to reach 800,000 by 2020.

However, the supply of social housing projects remained modest, according to Department of Construction Deputy Director Nguyen Manh Tuan.

No commercial housing projects were converted into social housing projects in the province thus far. Meanwhile, there were only few low-priced commercial housing projects.

Currently, only two projects at Ha Long Marina Urban Area invested by Syrena Viet Nam, a member of BIM Group, are eligible to borrow from the government's VND30 trillion (US$1.4 billion) support package.

However, experts disclosed that the disbursement of the $1.4 billion support package remained slow due to the scarce low-priced housing supply and complicated procedures for loan acquisitions from the package.

Do Van Khanh, a representative from the provincial Labour Federation, said that the demand of accommodation for workers and low-income earners is very large in the province, which has 11 industrial zones and many industrial clusters.

However, incomes of local labourers remained low, which only amount to an average of roughly VND3.5 million–4.5 million ($165–212) per month. These salaries are not enough for residents to set aside money to purchase houses – even low-priced apartments, he added.

Do Thi Loan, deputy director of Vietcombank Quang Ninh, pointed out that complicated procedures for preferential loans from the support package has been one of the major problems.

Statistics from the State of Viet Nam's branch in Quang Ninh Province showed that 56 individuals have been provided loans from the package, with a total outstanding loan of VND33.5 billion ($1.58 million), as of the end of October.

Syrena Viet Nam Sales Manager Pham Van Nam noted that property investors would cooperate with banks to support home-buyers in completing the loan procedures.

Low inflation leaves room for interest rate cuts

Inflation is expected to dip lower next year, which could give the central bank room to cutback loan interest rates, according to the Ministry of Planning and Investment.

Initially, the inflation rate was projected to be four per cent next year, as revealed in a meeting on Wednesday, Vneconomy reported.

The Ministry of Planning and Investment said any price adjustments, whether in case of products or services in domains such as healthcare, education, power and petrol, must be carefully considered to prevent any significant impact. Similarly, any decision to adjust the price of oil should be critically deliberated upon, as well.

This followed the Electricity of Viet Nam's proposal to raise power tariffs by an average of 9.5 per cent, beginning this month.

According to the ministry, the input-output analysis (I/O) revealed that a 9.5 per cent increase in power price would raise the production cost by 0.55 per cent. It would also cause the end-consumption of households to decline by 0.58 per cent and the gross domestic product (GDP) growth rate to decrease by 0.45 per cent.

In addition, cutting the loan interest rate by one per cent would increase the GDP growth rate by 0.45 per cent and cause the inflation rate to decline by 0.76 per cent.

An expert said that the loan interest rates of Viet Nam remain high, putting immense pressure on businesses. If loan interest rates are not lowered, then it would be difficult for the economy to attain stable growth in medium and long term.

The government of Viet Nam has prioritised macroeconomic stability and inflation curbing in the past.

Last month, Prime Minister Nguyen Tan Dung had said Viet Nam's inflation rate this year was likely to remain below three per cent, its lowest level in decades.

SSC advises against making hasty invesments amidst market turmoil

The State Securities Commission (SSC) has reassured investors and asked them to not make hasty investments amidst the stock market turmoil of the past month.

The SSC said in a press release, issued late Thursday following another steep plunge in the market, that the macroeconomic condition had improved substantially this year. In addition, the business performance of the listed companies reflected positive changes. Therefore, both domestic and foreign institutions should maintain optimistic views about the country's economic recovery.

The watchdog pointed out that interest rates and prices of raw input materials on the world market would continue to decline in the long term, which would help cut back on production costs and improve business efficiency and profitability.

Liquidity has increased despite the declines in stock indices due to the active purchasing activities of securities companies and investment funds.

Viet Nam's stock market was recently hit by a number of difficulties, including constant slides in the global oil price and stricter bank lending terms for securities investment. Both VN-Index in HCM City and HNX-Index in Ha Noi lost more than 10 per cent in value over the past month.

According to analysts, recent steep slumps in the market may have been the result of the massive selling of mortgaged shares by securities companies. It may also be partly due to the predatory short sells of several "shark" investors as part of efforts to further depress the stock prices.

The SSC said that it was closely monitoring movements in the market. It would also promptly handle any violations it discovers to ensure the sound development of the market.

The Ministry of Finance has affirmed that the declines in oil prices had negatively affected the state's budget. However, the whole economy is benefiting from this trend due to the higher value of gasoline imports compared with the export value of crude oil.

The ministry's data show that total imports of gasoline in the first 10 months reached US$7.2 billion, while exports of crude oil earned the country $6.3 billion.

The impact of Circular 36, which restricted lending to stock investments to only five per cent of the banks' charter capital, remains unclear due to inadequate stock lending information in the market. However, the market watchdog said that it would observe the market's development to make recommendations following the circular's enactment.

The stock market has more than 700 companies and 80 securities companies listed. The business performance of most companies have substantially improved compared with the past year. Data show that the nine-month profitability of these companies rose to over 10 per cent year-on-year.

Many large companies, such as PV Gas (GAS), PetroVietnam Drilling and Wells Service Corp (PVD), Hoa Phat Group (HPG) and Hoa Sen Group (HSG), have even completed and surpassed their profit targets for this year.

Japan jumping into Hanoi real estate market

Japanese real estate investors are diving into the Hanoi real estate market head first, particularly keen on the office, retail, and housing development segments.

The trend of market expansion in Asia is Vietnam, Indonesia, the Philippines and Singapore (VIPS), in that order, says Humphrey Morgan-Head of Japanese Customer Care Department from Savill Hanoi.

Some major Japanese companies have even decided to relocate their offices to Hanoi so they can be where the action is at and keep on top of the fast paced market.

A Japanese company is preparing to close on one of Hanoi’s top office building which demonstrates that Japanese investors recognize the potential of the Hanoi real estate market, Morgan revealed.

He added that the revised Housing Law approved recently that allows foreigners to buy and own houses in Vietnam holds promise for the property market in 2015.

Mekong Delta rice output to reach 25.2 million tonnes

The Mekong Delta region’s unhusked rice output is likely to reach 25.2 million tonnes this year, according to the Cultivation Department under the Ministry of Agriculture and Rural Development.

The figure represents an increase of 708,000 tonnes compared with the harvest last year and 56 percent of the country’s total output.

The three provinces of Kien Giang, An Giang and Dong Thap together produce 11.7 million tonnes.

That impressive output must be attributed to the fact that provinces in the region increased the area of rice cultivaton to nearly 4.4 million hectares, according to Nguyen Phong Quang, deputy head of the Steering Committee for the Southwestern Region.

The use of new high-yield and disease-resistant rice varieties also helped increase the output as well as the quality of husked rice, Phong added.

The Mekong Delta is likely to export 5.85 million tonnes of rice in 2014 worth 2.9 billion USD, equal to the last year’s value, according to the Steering Committee for the Southwestern Region.

The region shipped abroad 5.6 million tonnes of rice as of December 15, and is going to export an additional 250,000 tonnes in the remaining days of the year.

Forum gathers 500 outstanding young entrepreneurs

As many as 500 young successful entrepreneurs from across Vietnam shared their start-up experience at a forum in Ho Chi Minh City on December 19.

The Vietnam Young Leaders Forum 2014, held by the Business Startup Support Centre under the Vietnam Youth Federation’s HCM City chapter and the HCM City Young Entrepreneurs Association, was the first of its kind so far.

Organisers said the event was aimed to encourage young businesspersons’ determination of doing business and sense of responsibility towards the community.

It was also meant to connect young entrepreneurs nationwide to form a community that will together improve their knowledge and innovative spirit, thus contributing to national development.

During the forum, exemplars from various sectors shared their stories and discussed with their peers issues such as breakthrough vision, challenges of integration, personnel trademark, and responsibility to the society.

FTA to create more rooms for Vietnam-Customs Union cooperation

The signing of a free trade agreement (FTA) between Vietnam and the Customs Union of Russia, Belarus and Kazakhstan will be an effective tool for Vietnamese exporters to make inroads into the union boasting a population of over 170 million with high per capita income.

Minister of Industry and Trade Vu Huy Hoang and Trade Minister of the Eurasian Economic Commission Andrei A.Slepnhev signed a joint statement on the conclusion of the Vietnam-Custom Union Free Trade Agreement (VCUFTA) on December 15 in the southern province of Kien Giang .

Witnessing the event, Prime Minister Nguyen Tan Dung said the signing and implementation of the agreement will be an important progress to enhance bilateral relations in economy, education-training, science-technology, and culture. He urged the two sides to finalise all necessary procedures to put final touches on the agreement in early 2015.

Vietnam and the Custom Unions kicked off their FTA talks in March 2013. After eight rounds of negotiation and many technical discussions, they have initially agreed on contents of the agreement on a wide-ranging scope and high-level commitments while ensuring mutual benefit in line with international practices and regulations of the World Trade Organisation (WTO).

The contents cover trade in goods and services, investment, rules of origin, trade remedy, customs facilitation, technical barriers to trade, sanitary and phytosanitary measures and legal and institutional issues.

Andrei A.Slepnhev, head of the union’s negotiation delegation, said the signing of the pact will boost two-way trade vigorously and promote investment ties among economic members.

From 2015, the Customs Union will be changed into the Eurasian Economic Union with the admission of Armenia and Kyrgyzstan . This will enable Vietnam to become a bridge linking the two economic regions, he said.

Minister Vu Huy Hoang described the union as a promising market. With the VCUFTA, local exports to Russia , Belarus and Kazakhstan could increase by 63 percent, 41 percent and 8 percent, respectively, he said.

The union provides Vietnam with preferential tariffs to facilitate its export of staples such as farm produce, seafood, garments and textiles, footwear and wood furniture.

Meanwhile, Vietnam agrees to open its market under a set roadmap for several commodities from the union, including husbandry products, machines, equipment and vehicles, which will not compete with made-in-Vietnam goods, but help to diversify the domestic market.

Vietnam is the union’s first FTA partner, which will make Vietnamese businesses integrate into the union earlier than others with more preferential conditions. Once the agreement becomes effective, two-way trade is expected to rise by 18-20 percent a year, from 4 billion USD in 2014 to 10-12 billion USD in 2020.

Vietnam business should be careful in Russia trade amid rouble crisis - economist

Sharp declines in the value of the rouble were posing a serious risk to companies in Vietnam, particularly exporters, doing business with Russia, a leading economist has said.

Le Dang Doanh, former head of Central Institute for Economic Management (CIEM), told reporters the rouble had dropped by more than 50 percent in value in US dollar terms and warned of serious consequences for Vietnamese companies doing business with Russia.

“I am concerned about the ability of Russian importers to pay their bills," he said.

Vietnam's Ministry of Industry and Trade said bilateral trade with Russia has been growing, from USD400m in 2000 to USD1.01bn in 2007 after Vietnam was admitted to the World Trade Organisation.

Bilateral trade was reported at USD1.83bn in 2010, USD2.76bn in 2013 and is expected to be worth USD4bn in 2014, with growth forecast to reach USD10-12 billion in five years. Russia is Vietnam's 23rd largest trade partner. Over the past three years, Vietnam has posted trade surpluses with Russia, of more than USD1bn in 2013 and USD669 million in the first ten months of 2014.

The collapsing rouble may slow the Russian economy, with adverse consequences for Vietnam's exports.

Vietnam's major imports from Russia include oil, fertiliser, steel, iron ore and coal from Russia, with the depreciation of the rouble likely to increase competition for local producers by making the imports cheaper.

The collapse of the rouble was also having an impact on trade with the former Soviet republics of Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan, Kazakhstan, Armenia and Belarus, which have suffered currency declines of five-to-20 percent against the US dollar as a consequence of their close relationship with the rouble.

Doanh warned that Vietnamese companies should be careful in transactions with Russian partners.

“It is important to regulate clearly whether the deal is in US dollars or roubles," Doanh said.

Thanh Thuy-Tianbao checkpoint elevated to international border gate

Vietnam and China have agreed to upgrade the Thanh Thuy-Tianbao checkpoint to an international border gate in a move to boost trade between the two countries and the ASEAN region.

The announcement was made on December 19 by the Ha Giang People’s Committee and the People’s Government of Yunnan.

Vietnam’s Deputy Minister of Foreign Affairs Dang Minh Khoi said the upgrade is significant for promoting international integration of Ha Giang and Yunnan provinces as well as strengthening connection between countries in ASEAN and China.

The Thanh Thuy-Tianbao is the first Vietnam-China checkpoint to become an international border gate since the two countries completed land border demarcation.

Deputy Minister Khoi asked the Ha Giang authorities to co-ordinate with the Yunnan government to improve infrastructure and simplify customs clearance procedures to stimulate cross-border trade through the Thanh Thuy-Tianbao checkpoint.

Vice Governor of the Yunnan People’s Government Gao Shuxun said the upgrade of the Thanh Thuy-Tianbao checkpoint will open new opportunities for co-operation between border provinces of the two countries and help build a border of peace, stability and development.

The Thanh Thuy-Tianbao border gate officially opened in June 1993.

Vietnam’s cocoa development needs to be re-oriented

The Cultivation Department under the Ministry of Agriculture and Rural Development (MARD) must review cocoa development plans and draw specific measures to encourage farmers to grow this industrial tree.

At a recent conference in Hanoi on opportunities and challenges for cocoa development in Vietnam, MARD Deputy Minister Le Quoc Doanh urged the building of a project on the development of Vietnam’s cocoa industry to be submitted to the ministry in the first quarter of next year.

He said his ministry has deployed a number of agricultural promotion programmes to make cocoa the country’s major produce.

The ministry has planned about 50,000 ha for cocoa cultivation by 2020 but only 16,000 ha has been put into use to date, he said, adding that unclear development orientations have made the crop less attractive to farmers.

Phan Van Don, Vice Director of southern Binh Phuoc province’s Department of Agriculture and Rural Development, attributed insufficient investment and poor farmers’ knowledge to the unsuccessful development of the cocoa industry.

He suggested good credit sources to encourage farmers to grow cocoa as well as the involvement of businesses in building a value chain for the crop.

Participants at the conference agreed that in order to boost the cocoa development, the Government and relevant agencies should equip farmers with farming techniques as well as help them better access consumption markets.

According to the Cultivation Department, Vietnam’s cocoa industry sees a great opportunity as world demands remain high. At present, the country only produces about 6,000 tonnes of dry cocoa bean per year due to low productivity and modest cultivation areas.-

More Japanese businesses invest in service in HCM City

There is a growing tendency of seek investment opportunities in the field of service among Japanese companies, heard a workshop in Ho Chi Minh City on December 18.

The workshop, held by the Japanese External Trade Organisation (JETRO), saw about 60 Vietnamese businesses and 17 Japanese enterprises, including renowned trademarks such as Comline, Musashi, Doutor Coffee, in attendance.

According to the organising board, the Japanese businesses are interested in estate-related information and seeking spaces for restaurant and beauty care services in major commercial centres and shopping malls in HCM City.

They also seek partners in a bid to expand Japan’s high-quality retail chains.

Ho Xuan Lam, Vice Director of the Investment and Trade Promotion Centre, said that Japan’s investment in the field of service is increasing along with its strong investment industry in Vietnam.

Since 2013, Japanese businesses have injected their money in more than 100 projects in the field of service in southern Vietnam, mainly in Ho Chi Minh City, according to JETRO.

Additional US$54.8 mln injected in Can Tho industrial parks

The Mekong Delta city of Can Tho attracted US$54.8 million in investment in this year, US$7 million higher than 2013, bringing the total capital in the locality’s industrial parks to US$1.91 billion.

The new investments came from five new projects and 14 expanded others, Vo Thanh Hung, head of the Management Board of Can Tho Industrial Parks, told a meeting to review this year’s investment attraction in Can Tho city on December 18.

Can Tho is home to 214 valid projects, including 23 foreign-invested ones. Of the total, 192 projects are operational while 22 others are under construction. They generated stable jobs for 32,000 workers.

Despite difficulties in production and business, enterprises at industrial parks raked in US$1.4 billion in revenues, equal to that of last year. Of the figure, industrial production value reached US$1 billion and trade service, US$391 million.

Over the year, the industrial parks’ export was US$582 million, up 8% from a year ago and accounting for 43% of the city’s total goods value.

Of the city’s all eight industrial parks, Tra Noc I and Tra Noc II have the highest proportion of land hired by businesses with 100% and 91%, respectively, Hung said.

In a bid to attract more investors, Can Tho has pumped VND213 billion (US$10.1 million) in building waste water treatment plants with a total capacity of 12,000 cubic metres per day in the two industrial parks. The plants are expected to be operational in the beginning of next year.

Credit organisations continue to offer foreign currency loans

The State Bank of Vietnam continues allowing credit organisations to decide on their hard currency loans to exporters and petroleum dealers throughout 2015, as part of its support measures to achieve the 2015 economic growth of 6.2 percent set by the National Assembly.

SBV Vice Governor Nguyen Thi Hong told the media on December 18 that short-term loans in hard currency will help businesses save borrowing cost in comparison with loans in Vietnamese dong while credit institutions will find it easier to fulfill their credit growth target since hard currency credit is one of the key drivers of the growth.

Currently, foreign currency loans of exporters and petroleum dealers account for a meager 6 percent of the total outstanding debt so that the foreign exchange market is less prone to volatility, Hong added.

Outstanding debt held by the export and oil & gas sectors makes up about 30 percent of the banking system’s total foreign currency debt. As of the late September, the outstanding foreign currency debt expanded over 20.77 percent, five times higher than that in Vietnamese dong.

In previously banks were allowed to consider lending foreign currency to those in need of short-term, mid-term and long-term loans for payment for foreign partners, including fuel traders, and overseas direct investment.

Coffee exports end 2014 on high note

Vietnam's coffee exports for the year ended 2014 surged 32% in value on-year to a new record high of US$3.6 billion, according to the Vietnam Coffee and Cocoa Association (Vicofa).

For the year, the country exported more than 1.7 million tons of coffee, an increase of 33% in volume, with an average price of US$2,086/tonne per ton, 2.46% lower than 2013.

According to the Ministry of Agriculture and Rural Development (MARD), the US was the largest importer, accounting for 11.7% of the country's total coffee exports, followed by Germany (10.1%).

Markets posting a high growth rate included Belgium (up 92.8% in volume and triple in value) and the Netherlands (46.4% in volume and double in value), reports MARD.

Currently, Vietnam has ascended to become the world's second largest coffee producer and exporter, trailing Brazil in the number one spot.

According to the (Vicofa), Vietnam’s coffee market share in the world has improved significantly, making up 19% of the global market, up 21.3% from 2013. In the local market, the price of coffee was only VND30.700 per kilo putting Vietnamese coffee at a disadvantage.

Another disadvantage is that Vietnam mainly exported raw coffee which has made up over 90% of the total value. The country has some 100 businesses involving in exporting coffee beans.

Fourteen out of the 30 export businesses with the largest turnover have been foreign invested ones. These businesses have faced fierce competition from FDI businesses in order to become the main supplier for international coffee roasters and grinders.

Le Tien Hung, general director of the Daklak September 2nd Import-Export Company Limited (Simexco Daklak) says  major exporters have long been in need of high quality coffee to sell at high prices without selling directly to foreign roasters and grinders.

Moreover, foreign grinders do not want to purchase all of their coffee from one nation like Vietnam while purchasing coffee through a broker to ensure the timely supply source of materials.

Consequently, Vietnamese businesses would have to export through brokerage channels and have to suffer a loss.

Vicofa predicts that in the new crop, Vietnam’s coffee output would decrease 20-25% compared to the 2013-2014 period as Arabia coffee drops 30% and Robusta coffee in the Central Highlands has been hit by severe drought.

The nation aims to export 1.4 million tonnes of coffee next year, grossing over US$3 billion, down 200,000 tonnes compared to the previous crop.

The Institute of Policy and Strategy for Agriculture and Rural Development has forecast that Vietnam’s coffee growing area would remain at some 626,000 hectares with output reaching 1.3 million tonnes.

However, foreign news agencies namely Group Sopex and Bloomberg analyzed Vietnam’s coffee output would increase in the new crop with an estimated volume of 1.8 million tonnes and 1.6 million tonnes, respectively.

Vietnamese market analyst Nguyen Quang Binh appeared pessimistic about the export growth next year due to inventories. He expressed belief that the coffee prices would not increase sharply as there are huge coffee stockpiles in the country.

Luong Van Tu, Vicofa President said Vietnamese coffee would face challenges due to the signing of free trade agreements (FTA) and the establishment of ASEAN Economic Community (AEC) in the coming time.

Local businesses would have to face tough competition from regional nations in terms of price and volume.Vicofa would co-ordinate with the Ministry of Health's Food Safety Department to build a set of standards for Vietnamese coffee in 2015 with a focus on helping farmers re-cultivate coffee and call on businesses to become involved in the processing field.

G2G rice export contracts hard to win

Global markets still have high demand for rice through government-to-government (G2G) contracts next year but insiders said it will be difficult for Vietnam to win such contracts given rising competition from other major rice exporting countries.

Huynh The Nang, general director of Vietnam Southern Food Corporation (Vinafood 2), told the Daily that there remains high demand of major markets for rice import next year, especially via G2G contracts.

The Philippines is expected to import around 600,000 tons of rice and organize a tender in January next year although its National Food Authority (NFA) previously rejected the information about the country’s need to buy more rice due to the impact of Typhoon Hagupit.

Malaysia and Indonesia have plans to import rice. Nang forecast regional markets would import 2-2.5 million tons of normal rice, including 5%, 15% and 15% broken types next year.

However, domestic rice exporters have yet to sign any G2G contracts to ship large volumes of rice next year. To win such deals, Vietnamese enterprises will have to beat competitors from other major rice exporting countries, Nang said.

A rice export analyst said domestic rice exporters will see more pressure from Thailand as this country is trying to reduce its large rice inventories. On top of that, the demand of China, which is among Vietnam’s top rice importers, is seen unpredictable.

“We can’t make any predictions about the Chinese market,” the analyst said. “It will be hard for us to compete in exporting normal rice in the short and medium terms.”

The Vietnam Food Association (VFA) and rice traders said Vietnam’s rice quality is not stable, thus putting Vietnam in a disadvantageous position when it comes to competing with rivals. Some importers require rice grains to be identical in terms of size and color.

Although Africa needs some 14 million tons of normal rice a year, Vietnamese exporters have not won any contracts from importers in East Africa while they have been able to ship small volumes of rice to West Africa.

VFA said its member enterprises had contracted to export some seven million tons of rice as of November 20 this year. If they can ship 6.2 million tons of rice this year as targeted, they will carry forward the remaining 800,000 tons for export to next year.

Vietnam consumer confidence falls

The ANZ-Roy Morgan Vietnam Consumer Confidence has fallen by 5.3 points to 135.6 points in December as found in a recent survey conducted in seven provinces and cities in the country.

The decrease is primarily attributable to a drop in confidence in economic conditions in Vietnam over the next 12 months and the next five years.

Results showed respondents have significantly reduced their confidence in the local economy. Only 50% of participants, down 13 percentage points, said the economy will have ‘good times’ financially during the next 12 months. Meanwhile, 15% of the total figure, up 10 percentage points, project ‘bad times’ financially, the highest on record for this indicator since June.  

Of the total respondents, 59%, down nine percentage points, expect Vietnam will have ‘good times’ economically over the next five years compared to 8%, up three percentage points, who expect ‘bad times’ economically.

In terms of personal finances, 34% of Vietnamese, up five percentage points, said their families are ‘better off’ financially than a year ago compared to 22%, down one percentage point, who said their families are ‘worse off’ financially.

Some 58% of respondents, up 10 percentage points, expect their families will be ‘better off’ financially this time next year, the highest on record for this indicator since early this year, compared to just 5% (unchanged) who expect to be ‘worse off’ financially.

“The Vietnamese economy, and the consumer in particular, continues to slowly but surely transition back to normal after a difficult few years after the credit crunch,” said Glenn Maguire, ANZ Chief Economist for South Asia, ASEAN & Pacific.

“The resilience in family financial assessment stands in contrast with the economic assessment for the next year, with 50% of respondents (down an unusually large 13 percentage points) saying Vietnam will have good times over the next year.”

The drivers of Vietnamese consumer confidence appear to be decoupling from the overall drivers of the economy, and equity and gold prices, and the aligned wealth effects from both of those, are likely to play a key role.

According to Maguire, if gold prices were to stabilize or rise, in the U.S. dollar terms, then with a gentle depreciation of Vietnam dong, the increase in local gold prices could be somewhat firmer than expected over next year.

Samsung mulls many major projects in Vietnam

Samsung is expected to increase its registered capital in Vietnam to US$20 billion in 2017 if the South Korean giant’s planned projects go as planned, according to a recent report of the Ministry of Planning and Investment.

The report, which the ministry submitted to the Government, said Samsung has registered an additional investment of US$5.4 billion this year, accounting for 31% of total foreign direct investment (FDI) approvals as of last month.

With the fresh investment pledge, Samsung is now the biggest foreign investor in Vietnam with accumulated capital commitments amounting to over US$12.6 billion.

Samsung is currently working on a number of major infrastructure projects in the country.

Samsung C&T has signed a memorandum of understanding with the Ministry of Industry and Trade to develop Vung Ang 3 thermal power plant in Ha Tinh Province under the build-operate-transfer (BOT) format. The investor plans to submit the feasibility study for the 1,200-MW power project worth US$2.45 billion early next year.

Samsung is also seeking to participate in the Long Thanh airport project in the southern province of Dong Nai. The enterprise wants to invest, build and operate some components of the multi-billion-dollar airport project in Long Thanh District.

The company is also considering investing in a shipbuilding complex covering 300 hectares in Cam Ranh, Khanh Hoa Province. The project worth US$2.6-2.8 billion will become one of the ten biggest shipyards worldwide if it is materialized. But the shipyard project will only be decided when Samsung Heavy Industries and Samsung Engineering merge in the coming time.

Besides, Samsung has agreed on the location for a research and development center at The Manor Central Park in Hanoi. The company will also work with Viettel to develop a smart bus, healthcare management system in Vietnam.

Electronics is still the strength of Samsung in Vietnam. In July, Samsung Display got an investment license to produce display screens in Thai Nguyen Province. The plant at Yen Phong Industrial Park will manufacture 50 million products per year, use 8,000 laborers and have an annual production value of US$6 billion.

Samsung Electronics has been licensed to develop the Samsung CE Complex at Saigon Hi-Tech Park in HCMC’s District 9 to produce electronic items. The project will get off the ground early next year and be commissioned in the second quarter of 2016.

The Ministry of Planning and Investment has proposed the Government tell relevant agencies and localities to review and facilitate the projects planned by Samsung as they match Vietnam’s development demand and help boost the confidence of the FDI business community in Vietnam.

Survey: Businesses upbeat about economic recovery

Vietnamese enterprises are optimistic about the current business environment and the country’s economic recovery from a slowdown in the past years, according to a recent survey by Vietnam Report.

Respondents of the annual study titled Policy Debate No. 8 released by Vietnam Report on Wednesday said they believed in strong growth of the local economy from 2015 to 2020.

The study was conducted among 5,000 companies in Vietnam with an aim to build up the VNR500 List for this year that ranks the 500 largest firms by revenue growth.

The macro-economic picture has improved basically. This year, there have been positive signs such as better macro stability and economic growth. Exports have increased while inflation is low.

Many experts expected that the economy would perform better next year and the nation would become an attractive destination for investors.

Most large enterprises said that their revenues have increased or stabilized compared to the previous year. The ratio of enterprises downbeat about the business situation has dropped steadily in recent years, from 21.9% in 2012 to 9.1% in 2014.

Big companies have been more confident thanks to their better operations. According to the VNR500 List, the total revenue of the top 10 firms has reached an estimated VND2.4 trillion, up 14.8% from the previous year.

Besides, they said interest rate cuts for loans is the top priority in the current context as it will help reduce loan pressure on companies and speed up credit growth.

Having suffered adverse impacts from the economic recession, enterprises have reported higher credit demand to expand business and production. However, some firms, especially small and medium ones, still find it hard to access bank loans.

Regarding obstacles to business operations, 44.4% expressed concerns over prolix administrative procedures, followed by infrastructure bottlenecks (37.4%), input material prices (31.3%) and trade promotion and market expansion (31.3%).

Japanese restaurant firms eye Vietnam

Many Japanese operators of restaurant chains are visiting Vietnam to explore investment opportunities and look for franchisees.

They are among the 17 service companies of Japan active in the restaurant, food, education, retail and beauty fields touring Vietnam at the moment.

At a business matching meeting held by the Japan External Trade Organization (JETRO) in HCMC on December 18, Toma Koji from Gyushige Dream System Co. Ltd. said the company wants to open barbecue eateries in Vietnam, offering lunch of over US$10 and dinner of over US$20 per person.

Gyushige Dream System expected to cooperate with restaurant businesses in Vietnam to establish joint ventures or run businesses under other forms.

Like Gyushige Dream System, other Japanese restaurant enterprises such as Comline Co. Ltd., Musashi Co. Ltd., Bigchoice Co. Ltd. and Y.S.Food Co. Ltd. also want to invest or franchise in Vietnam.

According to Kameda Michihiko from Y.S.Food, the company opened a restaurant in HCMC last August and plans to expand its presence in Hanoi and other cities. The company targets at least ten restaurants in the country.

Yasuzumi Hirotaka, managing director of JETRO in HCMC, told reporters on the sidelines of the meeting that restaurant business takes up a large proportion of Japanese investments in the service sector in Vietnam.

Hirotaka said as many Japanese service enterprises have invested in Thailand, new investors tend to pick Vietnam to avoid tough competition. Besides, incomes of Vietnamese people are rising and the country is regarded as a market of great potential.

Fuel enterprises make big bucks

Fuel wholesalers are earning profits of as high as VND1,300 and VND1,000 for each liter of petrol and oil sold respectively until the planned next fuel price adjustment tomorrow under the prevailing regulations on fuel trading.

Joint Circular 39/2014/TTLT-BCT-BTC issued by the ministries of finance and industry-trade regulates that fuel price management agencies announce the base fuel prices every 15 days for wholesale firms to adjust their retail prices.

Therefore, the next adjustment will come on December 20 because the latest revision of fuel prices was made on December 6.

A source from a fuel trading firm in southern Vietnam said the base prices are now VND1,300 per liter of petrol and VND1,000 per liter of oil lower than the current fuel retail prices on the local market. These figures do not include the fixed profit of VND300 that wholesalers are permitted to get for each liter of fuel sold.

Since Decree 83/2014/ND-CP on fuel trading came into force on November 1, fuel wholesalers have waited for the two ministries’ instructions over retail price revisions.

On December 5, the Ministry of Finance increased import tariffs on petrol, diesel and kerosene to 27%, 23% and 26% respectively. This move led to a lower-than-expected reduction in fuel retail prices despite tumbling oil prices on global markets.

According to the ministry, the allowable maximum import tax rate of fuel is up to 40% if world oil prices fall to below US$60 per barrel.

The global fuel prices have fallen sharply compared to the period before retail prices were reduced on the domestic market on December 6.

According to data on the Ministry of Industry and Trade’s website, RON92 petrol cost US$64.77 per barrel on global markets on Tuesday while the respective prices of diesel 0.05S, kerosene and heavy fuel oil stood at US$73.4 per barrel, US$74.5 per barrel, and US$312.6 per ton.

Local wholesalers are offering discounts of a hefty VND850-900 per liter of fuel for dealers, according to the owner of a gas station selling products of PetroVietnam Oil Corporation (PV Oil) in the north-central province of Thanh Hoa.

The existing regulations set the standard fuel trading cost at VND1,050 per liter of petrol, VND950 per liter of kerosene and diesel, and VND600 per kilo of heavy fuel oil.