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BUSINESS IN BRIEF 22/7

 Food producers find ray of hope in byproducts; TKV says higher tariff hinders coal export; Cai Mep-Thi Vai port to be leased in 30 years; One-fifth of firms eye expansion

Food producers find ray of hope in byproducts

While many food producers are struggling to find markets, some companies have found success in exporting byproducts.

Nguyen Van Dao, CEO of Go Dang Company in Tien Giang province, said they invested VND50 billion (USD2.4 million) in a second production line in Ben Tre province for fish oil and fish flour. "Consumption of these goods is stable in Asian markets such as South Korea, Singapore and China. In three years we expect to recoup our investment and make up for the losses from the dwindling pangasius fish market." Dao said.

The high demand for fish oil and flour also brought back millions of USD to Thuan An Production Trading and Service Company in An Giang province, accounting for 70% of its total revenue.

Nguyen Van Phan, CEO of Hiep Thanh Group in Can Tho province, also shared that they have successfully started to produce biodiesel from basa fish oil and other fish parts. The biodiesel will not be exported, however, but used as fuel to supply Hiep Thanh Group's own factories as a cost cutting measure.

Meanwhile, Truong Thanh Phong, President of Vietnam Food Association, pointed out that Vietnam also has several rice bran oil factories for domestic and foreign demand, such as the Can Tho-based USD7 million joint-venture factory between Vietnam Vegetable Oils Industry Corporation and Singaporean Siteki Investments.

According to Nguyen Van Dao, CEO of Go Dang Company, many small-sized factories have been established recently without proper expertise in their fields. He added that this could have an adverse effect on the reputation of Vietnamese products.

As a result, a number of firms asked the government for tighter management to keep up high standards. The Vietnam Association of Seafood Exporters and Producers (VASEP) affirmed that high-tech equipment, competent staff and adequate financing prerequisites to a quality factory. In addition, they stated, the government must provide suitable policies to support the industry.

In early August, VASEP will partner with Vietnam Cleaner Production Centre, Hanoi University of Science and Technology, WWF-Austria and other stakeholders to start the “Establishing a Sustainable Pangasius Supply Chain in Vietnam” project which will cost EUR2.37 million. It is hoped that thousands of Vietnamese firms will benefit from the project.

More sluice gates to get off ground in city next year

Four sluice gates costing a total of nearly VND2.6 trillion are scheduled to get off the ground in the southern part of HCMC next year and be completed in 2017.

These works are designed to reduce flooding triggered by rising tide in the low-lying areas along the Ben Nghe Canal in districts 1 and 4, the Te Canal in districts 4 and 7, the Phu Xuan River in District 7 and Nha Be District, and to control water levels and regulate water transportation.

Funding for these sluice gates will be sourced from the municipal and central budgets, says a report the Steering Center of the HCMC Urban Flood Control Program sent to the Daily on Wednesday.

Currently, the city is developing a sluice gate to reduce flooding in the areas along the Nhieu Loc-Thi Nghe Canal in District 1 and Binh Thanh District, with total investment of VND290 billion from the city’s budget. Some 75% of the workload has been done and the sluice gate is expected to be operational in late 2013.

In addition to the four sluice gates scheduled to get going in 2014, three others are set for groundbreaking in 2015 and completion in 2017, namely Song Kinh, Rach Tra and Vam Thuat sluice gates. The total cost of these three projects is nearly VND2.3 trillion.

The above sluice gate projects are named in the plan for irrigation and flood prevention in HCMC approved in 2008. Under the plan, 13 sluice gates, with a length of 20-120 meters each, and a 173-km dike running along the Saigon River from HCMC and Long An will be developed.

Do Tan Long, head of the drainage unit under the Steering Center of the HCMC Urban Flood Control Program, said seven flood-prone sites in HCMC had been eradicated. The remaining 11 sites will be dealt with in 2014 and 2015.

To tackle flooding triggered by rain and high tide in the populated areas, nearly 6,000 kilometers of sewers must be completed soon, but so far, the city has had only 3,200 kilometers, said the center.

Exhibition to bring new foreign technology to town

Local manufacturers will have a chance to learn new foreign machinery and technology at an international exhibition on plastics, rubber, packaging, printing, food technologies and automation to be held in HCMC from September 3 to 6.

VietnamPlas, VnPackPrint, VnFoodtech, VnPrintLabel & Linkage Vietnam 2013 will take place at Saigon Exhibition & Convention Center in District 7, with nearly 460 booths set up by over 260 companies from 15 nations and territories.

Vietnamese participants are mainly sales agents of foreign firms or those importing components for assembly, said Pham Quynh Giang, deputy general director of Vietnam National Trade Fair & Advertising Company (VINEXAD), at a press conference on Wednesday.

The exhibition is co-organized by VINEXAD, Chan Chao International Co. of Taiwan, Yorkers Trade & Marketing Service Co. of Hong Kong, Paper Communication Exhibition Services Co. of Hong Kong, Vietnam Plastics Association (VPA) and Vietnam Rubber Association (VRA).

Advanced technology products and services will go on display at the exhibition, offering chances for trade, market approach, partner search and technology exchange.

Huynh Thi My, general secretary of VPA, said the exhibition would give local firms access to modern machinery.

Despite the tough times, plastics makers have still invested in machinery and technology to improve their competitiveness. In the first half of 2013, plastics exports generated over US$1 billion, up 9.3% year-on-year.

Tran Thi Thuy Hoa, secretary general of VRA, said the event would help Vietnamese businesses introduce their natural rubber production capacity and locally-made rubber products.

Vietnam can become a destination for rubber production given a rich source of natural rubber and an abundant workforce. Vietnam is currently the fifth largest natural rubber producer and the fourth largest rubber exporter in the world, with a natural rubber output of 863,000 tons.

Hoa said export of products made from rubber like tires, rubber gloves and mattresses had recorded good growth despite the shrinking demand from the Chinese market. In 2012, exports of rubber products brought in over US$1 billion.

VPA members will have 10 booths at the exhibition. VRA members will also set up 10 booths to display their products.

TKV says higher tariff hinders coal export

The imposition of a higher export tariff has forced Vietnam National Coal and Mineral Industries Group (TKV) to raise coal price and thus chased buyers away, the company lamented.

TKV has failed to sign any big export contracts since June 20 as its coal price is higher than that of other suppliers, the group’s deputy general director Nguyen Van Bien said.

The group has lately signed contracts of exporting only thousands of tons of some high-quality coal categories while it is unable to sell medium-grade coal which is often exported under contracts of over one million tons each.

The reason for this as explained by Bien is the export tax increase from 10% to 13% on July 7, causing TKV to raise the export price correspondingly by at least US$3 per ton depending on different categories.

The prices of different categories of coal offered by TKV have gone up by a couple to dozens of U.S. dollars per ton.

China’s Guangzhou coal of the 11A category is priced at US$55-56 per ton while the same coal of TKV is offered at US$69.

“We have continuously reduced production costs but still had to increase the prices,” said Bien. While many countries impose a 0% export tax, the export tax in Vietnam is 13%, which is unfavorable for local businesses.

To reduce costs, TKV cut workers’ wage by 10% last year from the previous year and by 5% early this year. However, as coal is now exploited at greater depth and even if technological costs are cut, it is impossible to lower the prices.

According to TKV, if the consumption reduces by 10%, some 10,000 workers will lose jobs.

With the tax increase of 3 percentage points and supposing that TKV exports three million tons of coal each month, the State budget will have an additional VND100 billion of tax sums. However, due to the high prices, TKV will fail to compete with other exporters, so the export volume will tumbled, resulting in a loss of over VND1 trillion for the State coffer in terms of natural resource tax, environmental fee and VAT, according to Bien.

TKV has proposed the Ministry of Industry and Trade and the Ministry of Finance to lower the export tax. Nevertheless, the new tax rate has been imposed recently, which will impact the group’s export volume.

As per the group’s business plan, TKV’s coal consumption volume, including both domestic consumption and export, will be around 43 million tons this year, but only 38-39 million tons is obtainable.

The power industry is the largest consumer of coal. However, the price of coal sold to the power industry is equivalent to 83-87% of the coal production cost. Normally, TKV uses profits earned from coal export to cover losses caused by such low selling price.

Cai Mep-Thi Vai port to be leased in 30 years

The Vietnam Maritime Administration are conducting procedures in preparation for a bidding round to select operators of Cai Mep International Terminal and Thi Vai General Cargo Terminal in Ba Ria-Vung Tau Province in 30 years.

For Cai Mep terminal, the fixed package price is US$219.57 million, while the package price for the other terminal is US$130.51 million, all for a term of 30 years.

The selection of terminal operators will be made via bidding which is scheduled for the third or the fourth quarters.

Nguyen Nhat, director of the Vietnam Maritime Administration, said his agency has set up teams in charge of technical, financial and procedure issues to help accelerate preparations for the bidding. The bidding is held to ensure that terminals are run by units with financial capability and professional capacity in operating terminals.

The Government has previously agreed to the plan of leasing Cai Mep and Thi Vai terminals.

The Cai Mep-Thi Vai port complex located in Ba Ria-Vung Tau Province’s Tan Thanh District was opened in late January. The project worth nearly VND13 trillion was financed by Japan’s ODA loans and Vietnam’s reciprocal capital.

Cai Mep terminal consisting of two piers of 600 meters in length can handle vessels of up to 100,000 DWT and has an annual capacity of around 700,000 TEUs. Thi Vai terminal also has two piers but handles ships of 50,000 tons with a capacity of 1.6-2 million tons per year.

Chances still there for property investors, says CapitaLand

The property market which is going down has placed many investors on fire, but in the eyes of CapitaLand the market still has many opportunities for patient investors.

Olivier Lim, group deputy CEO of Singapore-based CapitaLand, said Vietnam’s property market has encountered plenty of difficulties in the past time, and CapitaLand has also been affected somehow. However, CapitaLand will be patient to overcome the difficult period and will expand investments in Vietnam.

Speaking at a press meeting on Wednesday, Lim said that CapitaLand has decided to reduce housing investments in Thailand and India due to unfavorable conditions there.

Nevertheless, the group will keep on following the long-term investment strategies in Vietnam and Malaysia. A strong financial resource enables the company to expand investment in the Vietnamese market.

According to Lim, the total asset value of CapitaLand in Vietnam has amounted to some US$1.1 billion, with around US$200 million invested in serviced apartments via its subsidiary Ascott and the rest in housing projects.

CapitaLand has moved its office from Kumho building on Le Duan Street in District 1 to its building The Vista in District 2.

Consisting of five towers, The Vista supplies the market with around 750 commercial apartments, 100 serviced apartments and some 4,200 square meters of office space.

According to Lim, business conditions are improving as the number of customers caring about projects has increased considerably in the past six months, and the property market is expected to improve more in the coming time.

Local farms still lukewarm to electronic traceability

Local agricultural enterprises have shown little interest in an electronic traceability system that the Danish Embassy wants to provide them to replace the current manual information record, hear a seminar in Hanoi on Wednesday.

At the seminar “Raising the competitive capability for Vietnam’s farm produce and seafood: information transparency-the way for development” in Hanoi on Wednesday, Danish Ambassador to Vietnam John Nielsen said making information transparent via electronic traceability is one of the effective ways to export Vietnamese farm produce to choosy markets like the U.S., the EU and Japan.

The Traceverified program is part of a development assistance program of the Danish government aimed at increasing the capability for the Vietnamese private economic sector with a total cost of VND216 billion.

However, despite its deployment since October, 2012 with free supports for participants until 2014, the program has only attracted 14 enterprises so far, mainly big seafood companies.

Nguyen Huu Dung, vice chairman of the Vietnam Association of Seafood Exporters and Producers, ascribed the unexpected situation to the fact that local firms are afraid of publicizing information and they only join the program when demanded by partners.

To make the farm produce market transparent and to enhance food hygiene and safety management, John Nielsen suggested that the State should apply regulations and sanctions to force entities, especially small- and medium-sized enterprises, to join the advanced system.

Ly Hoang Hai, deputy director of the scheme, meanwhile, said the project aims to build up and provide seafood and agricultural product supply chain with information on electronic traceability, laboratory management services and how to upgrade training activities for technicians.

Traceability helps related sides get right information on products at all processes in production and consumption chains. It also helps establish if suppliers make great efforts in making high-quality products or if these products’ quality is controlled strictly in the whole supply chain. But in fact, a majority of local companies have still carried out the manual method, with information recorded by hand and kept as hardcopies.

“This method is non-transparent and risky since only entities can read and understand the code for tracking the origin of products while consumers don’t really know about the products they buy. Furthermore, as information of many kinds of products must be kept within six months to two years, companies will need a lot of space to store the information, which is very risky,” Hai noted.

In the meantime, with the electronic traceability system, information will be stored in the computer system as the sole code for original track for every shipment in line with international standards. On top of that, information of the system could be accessed anytime and anywhere swiftly.

One-fifth of firms eye expansion

One-fifth of respondents to a business survey conducted by the Enterprises Development Institute said they might expand operations in the second half of 2013 despite the current tough economic conditions.

Of the 700 corporate respondents, 66.7% said they would maintain their scale, 22% might expand operations, 10.9% would reduce scale and 0.3% would likely suspend operations, said the institute under the Vietnam Chamber of Commerce and Industry (VCCI).

Some 28.1% of the firms said business expansion was aimed at catching the opportunities from the recovery of exports. A respective 20.7% and 18.3% said they wanted to make good use of tax incentives and business support programs.

About 18% of respondents said they found the economic outlook getting brighter and thus wanted to expand their business.

Pham Minh Dong, director of Asia Door, said many construction projects had been put on hold due to economic difficulties, leading to a decline in his company’s wooden door sales. This year, the company decides to diversify its products and upgrade its services to cater to civil works.

“We intend to make plastic doors, with machines and equipment imported from Germany. With this production line, our company will focus on individual customers,” said Dong. He expected the new products would be launched into the market later this year.

Explaining the decision to build a new factory in the current difficult context, Dong said the individual customer segment had recorded the strongest growth in recent years despite the crisis. “Under this decision, we will serve a wider range of customers, from high- to low-end, with various incomes,” he said.

Ngo Duc Hoa, chairman of Thang Loi International Garment JSC, said importers had shifted their orders from China and India to Vietnam because prices in those two foreign countries increased sharply in the early months. Thang Loi is operating at full capacity to fulfill the rising order volume.

“This time last year, we were struggling to find new orders. Now, we have to turn down small orders, which is such a waste. Therefore, we have decided to invest in new workshops,” said Hoa.

Thang Loi has decided to borrow VND10 billion to expand its operations after carefully considering the market growth prospect, the production capacity of the company and the lending rates.

Housing stimulus set to benefit all

The Government's VND30 trillion (US$1.44 billion) bank loan package designed to assist low-income property seekers would not be limited to State-owned enterprises (SoEs), the Ministry of Construction has said as it moves to dispel doubts the loans would not reach the private sector.

Do Duc Duy, head of the ministry's secretariat, said out of 30 approved projects, only four were from SoEs. These included the Viet Nam Glass and Ceramics Corporation (Viglacera), Building Materials Corporation No1 (FICO) and Viet Nam Urban and Industrial Zone Development Investment Corporation (IDICO) who would be able access the loans.

Miniter of Construction Trinh Dinh Dung said the difficulties of the real estate market, property stock and developing social housing projects were closely related.

Dung said if businesses were able to access the loans, they could build new projects or complete those that were half-finished to provide social houses for low- and middle-income earners.

He added that few investors were willing to embark on projects due to the narrow profit margins.

"This is the reason why we should encourage companies to join projects, while seeking solutions to unpick their problems," he said.

The minister said the Government had also provided support initiatives including land-use tax exemption and value-added tax reduction in certain cases.

The high stock in the market was due to an oversupply of high-end projects and a lack of affordable options.

He said the package would provide mid-term loans and that businesses would not be able to borrow more than 30 per cent of the package.

"The target of the loan package was to help low-income earners buy houses. The more enterprises that take part in the projects, the more houses will be provided to people," he said.

The ministry noted Viet Nam had around 10,000 families currently living in low-income housing projects and said businesses were required to use 20 per cent of their project's land area to build social houses.

It intended to convert some commercial housing projects into social ones and would submit the approved list of loan recipients to the State Bank of Viet Nam (SBV) in the next two weeks.

In addition, the ministry and the SBV would discuss how to resolve administrative difficulties to accelerate disbursement to home buyers.

Czech Republic trade reaches record

Bilateral trade between Viet Nam and the Czech Republic grew by 82.1 per cent over the past five months - its highest ever surge - to reach US$145 million, according to the Vietnamese Trade Office in the Czech Republic.

During the period, Viet Nam exported goods worth $114.1 million to the country while its imports reached approximately $31 million.

The Czech Republic regards Viet Nam as one of 12 priority markets in the 2011-15 period. Last year, two-way trade hit $242 million, up 10 per cent year-on-year.

SeABank among top 50 famous brands in Viet Nam

The Southeast Asia Joint Stock Commercial Bank (SeABank) has been recognised as one of the 2013 "Top 50 most famous brands in Viet Nam", the bank said yesterday.

It is the third time in a row that the bank has been named on the list since 2010.

In recent years, the bank has continuously achieved steady growth in business performance and developed transaction bureaus in 22 provinces and cities across the country. The award is part of an annual celebration of well-known and competitive brands launched annually by the Viet Nam Intellectual Property Association (VIPA).

Rules on re-exporting to be tightened

The Ministry of Finance has asked provincial customs departments to tighten the management of goods which have been temporarily imported for re-exporting or stored in bonded warehouses, in a move to prevent trade fraud and smuggling.

The ministry also announced a halt to the procedure for transporting goods from abroad to bonded warehouses in Viet Nam. This will include those which have been levied with a special sales tax (liquor, beers, cigars, cigarettes and vehicles with less than 24 seats) and products that are subject to a tariff-rate quota such as sugar, salt and eggs with documentation issued after July 10.

Regarding temporarily-imported sugar for re-export, the ministry said that the taxes due must be paid to customs departments, and they will then be refunded at a later date, after the sugar is re-exported.

On-site checks must be carried out on every container that holds temporarily-imported sugar and smuggling or the illegal transportation of sugar must be handled very firmly, said the ministry.

Recently, the Viet Nam Sugarcane and Sugar Association said that domestic sugar producers were experiencing difficulties due to low prices on the market, increasing stockpiles and illegal imports from China.

The volume of unsold sugar totalled almost 490,000 tonnes in June, higher than figures released for the same period in 2012.

RoK businesses seek VN opportunities

Businesses from the RoK have invested nearly US$61 million in 12 projects in central Nghe An province, employing more than 10,000 locals. The figures were released at a meeting in Ha Noi last Friday, assessing the provincial investment environment and encouraging even more Korean investors to the province.

Nghe An People's Committee chairman Nguyen Xuan Duong said the province would soon complete its administrative reforms and better facilitate foreign investors, particularly those implementing projects using advanced technology in the locality.

The meeting also saw the signing of agreements between the provincial People's Committee and the Korean Trade Promotion Agency (KOTRA), the approval of Korean Strong Plus Elevator's US$10 million provincial project and the authorisation of Korean Global Sourcing International's $2.5 million garment export investment.

Bac Ninh holds dialogue with enterprises

Enterprises operating in the northern province of Bac Ninh showed their concern over provincial investment policies, administrative procedures and interest rate assistance during a dialogue yesterday with the local authorities.

During the event, the authorities and relevant sectors vowed to continue supporting local enterprises while speeding up procedural reforms to make its market more competitive.

Fishing teams need Government support

Fishing boats that work in teams play an important role in increasing the amount of catch, but they need more support policies from the government, according to experts.

The teams, which were created as part of a cooperative-model project, have been able to reduce production costs. Post-harvest services and rescue activities have also improved.

The country has 3,691 fishing teams, up from 1,600 two years ago. As of June 20, the teams had a total of 22,846 fishing boats and 158,723 fishermen, according to the Directorate of Fisheries.

The teams were first organised by fishermen in one province, and then other provinces followed suit.

However, some teams have fared better than others. Some of them have not organised logistic services well and have not worked together to sign contracts with processors. This has pushed down prices.

Also, many of the more ineffective teams have little contact with administrative agencies, and lack knowledge about weather forecasting and rescue activities.

Hoang Dinh Yen of the Directorate of Fisheries said that the fishing sector was currently facing a decline of fish resources and inclement weather.

The increase in prices for petrol and other input materials has also had an impact, but the price of fish has not gone up.

Some fishing boats have had to stay onshore because they are not earning enough money.

To stay in business, some fishermen on the teams have had to borrow loans from fish traders and then sell their fish to them, Yen said.

Vu Van Tam, deputy minister of the Ministry of Agriculture and Rural Development, said the loans were borrowed at high interest rates.

Government support policies for fishing teams are needed, especially for fishing boats with an engine of more than 150 horsepower.

The heads of fishing teams should also be reporting risks and accidents of their teams to administrative agencies, Tam said.

Many industry experts also agree that more policies are needed to help the fishing teams.

The loan support policy, they said, should involve the provincial People's Committees. The committees would act as guarantors for fishermen to borrow loans from banks.

Experts also expressed concerns about how to enhance the responsibility of members and the heads of fishing teams.

An official from the Ministry of Defense's Economy Department said a regulation should be created to require members to pay a fee to be part of a team. This would ensure that they remain on the team after getting help for a loan.

In the first half of the year, fishermen nationwide have caught about 1.3 million tonnes of various kinds of fish, up 3.9 per cent against the same period last year, according to the Directorate of Fisheries.

Of the figure, 1.23 million tonnes were caught from the sea and 81,000 tonnes from rivers, canals and ponds.

Green Globe Certification for Movenpick’s Vietnam hotels

The Movenpick Hotel Hanoi and the Movenpick Hotel Saigon, owned by Movenpick Hotels and Resorts, have become the first hotels in Vietnam to receive Green Globe certification recognising their significant environmental, social, and cultural preservation efforts.

The two hotels were audited according to 337 criteria spanning customer satisfaction, water consumption, waste management, energy use, community commitment, and internal training.

“The hospitality industry is a large consumer of energy and other resources. The Movenpick Hanoi aims to reduce its consumption through the use of basic measures such as energy efficient lighting, water consumption reduction, and a better management of waste and chemicals,” said Movenpick Hotel Hanoi General Manager Philip Jones.

He promised the hotel’s management board will set specific objectives and monitor progress as part of its efforts to fulfill the “Green Globe” programme.

The Green Globe Certification is internationally renowned as an indicator of sustainable tourism. It affirms Movenpick Hotels and Resorts’ commitment to operating in an economically, environmentally, and socially responsible manner.

Movenpick Hotel Saigon General Manager Craig Smith stressed the chain’s initiatives are designed to foster a social conscience beyond its staff. It asks “our customers, partners, suppliers, and the community to join hands with us to make a better world”.  

Dubious agents give bad name to tourism industry

Several officials of large travel companies have pointed out various shortcomings in the industry and proposed ways to improve domestic tourism services.

According to the Vietnam Society of Travel Agents (VISTA), around 1,000 foreign and 10,000 domestic tourism firms are currently operating in Vietnam. However they estimate that only around half of them are reputable.

A number of companies have been established with names very similar to well-known travel firms so as to fool customers. "This can be very confusing for tourists, and make it difficult for them to distinguish which company can be trusted," said the director of Lua Viet Tours Company, Nguyen Van My.

Le Thi Nhu Ha, Deputy Director of Peace Tour Company said, "One day some customers came to file complaints about our services. After checking the information, we found that another company had taken a name very similar to ours and had copied our website."

The laws do not protect against this type of brand infringement, because the brand can technically be changed with just one slight change in the name.

"Our laws on business registration don't require any degree or experiences from representatives of travel agent. That's why so many companies have been established, even though they are weak in terms of finance and expertise. Authorities should appraise these companies before granting permits," said attorney Bui Quang Nghiem.

Most of discounted or cheap tours are accompanied by poor services.

Phan Duc Man, deputy head of VISTA said, "Transport expenses accounted for 40-50% of the tour cost. So if the agents provide discounted tours, they will have to resort to one or two stars hotels and second-rate destinations for customers."

Well-known travel agents are able to provide discount tours because they have built up relationships with transport companies, and can get discounted fares.

Recently, the HCM City-based company, Travel Life, was fined VND80 million (USD3,800) for abandoning 701 visitors in Thailand. This incident stirred public concern and shone a light on the tourism industry as well as the authorities' responsibility to improve it.

La Quoc Khanh, deputy head of HCMC Ministry of Culture, Sports and Tourism, said they might establish a police department for tourism to clean up the market.

Vietnamese businesses encouraged to invest in Myanmar

Businesses should invest in Myanmar right now instead of waiting for a couple of years when they may miss lucrative opportunities, said Tran Bac Ha, Chairman of Association of Vietnamese Business Investors in Myanmar on July 15 in Hanoi.

Speaking at a seminar on investment opportunities in Myanmar, Ha believes that businesses will prosper right now in the newly opened market in Myanmar.

Ha advised Vietnamese enterprises to conduct long-term and sustainable investments in Myanmar, from which they will see more chances to broaden invests in Bangladesh and southern India later.

The quick economic reforms process in Myanmar has lured the attention of several groups and corporations around the world, Ha said.

Vietnamese enterprises have more advantage, thanks to good relations which the two countries have built over the years. Two-way trade has grown to 60 percent of market value since 2009 and Vietnam and Myanmar have coordinated to open trade fairs in the economic hub Yangon annually.

The Association of Vietnamese Business Investors in Myanmar (AVIM) has organized trips for nearly 1,800 enterprises to Myanmar over the last three years. At present, 23 companies have opened subsidiaries and representative offices in Myanmar.

Myanmar has also licensed five Vietnamese projects worth US$600 million. Among these are hotels, offices, and high-class apartment complexes of Hoang Anh Gia Lai Group with investment capital of $440 million.

Besides, Vietnamese companies are also planning to further invest in 18 other projects.

According to Tran Bac Ha, Myanmar now has 15.8 million hectares of unexploited agricultural land and several policies to attract investors.

For instance, Myanmar has amended their Credit Institution Law this year which will permit establishment of join-venture banks. The capital contribution rate will be decided by the two sides autonomously.

The Law will also permit openness of foreign invested banks in the next two years, Ha said. Myanmar also has potential seafood resources and can coordinate with Vietnam for the same.

Vu Van Chung, Deputy Head of the Foreign Investment Agency, said that Vietnam targets increase in investment capital in Myanmar to $1 billion by 2015 and $2-2.5 billion by 2020.

He said that Myanmar’s Government is encouraging investments in many fields including seafood farming and processing, household goods, garments, and oil and gas exploitation.

Cho Cho Wynn, representative from the Myanmar Investment Commission, said that Burmese Government will build a strong foundation for market economy and create an advantageous investment environment.

Although Vietnam is not the first country to invest in Myanmar, Vietnamese businesses have made significant contributions to the development of her country, Cho Cho Wynn said.

Myanmar is very rich in natural and human resources and has a lot of similarities with Vietnam in rice production, seafood, oil and gas and other fields. As a result, the two countries should work together to further develop the economy, she added.

Highway project gets priority

Contractors responsible for construction delays in the project to expand National Highway 1A should be replaced immediately.

Traffic flows on National Highway 1A in the Mekong Delta province of Vinh Long. Site clearance is considered a key issue in the highway's

At a conference in Da Nang yesterday, Deputy Prime Minister Nguyen Xuan Phuc urged the transport sector to take such drastic actions if any construction delays arouse. The conference focused on site clearance and safety issues related to the country's two major highway construction projects.

"Site clearance for the projects is a major issue and a key factor in meeting the completion schedule by 2016," Phuc said.

He also urged leaders from 23 provinces and cities, as well as contractors, investors and officials from the ministry of transport to find more effective methods for site clearance to ensure that the two projects are completed by 2016.

"Site clearance, compensation and resettlement in the provinces and cities will be crucial to helping ensure that the two projects are finished on time. These are complicated issues and require hard work from local authorities, contractors, investors and the ministry of transport," Phuc said.

"The deadline for the completion of the two projects is fixed. We have only three years to reach the target, so preparations for site clearance and the issues of resettlement and compensation must be completed first."

He also criticised some provinces and contractors for carrying out their projects too slowly, pointing to the case of Quang Tri Province, which had to spend five years to complete only five of the 13km section on National Highway 1A, while Ha Tinh Province completed a similar project much faster.

The deputy Prime Minister asked leaders from the provinces and cities to make every effort necessary to catch up to the proposed time schedule.

Minister of Transport Dinh La Thang said that involvement of local authorities would be crucial for creating the conditions necessary to complete the projects smoothly.

"Solving the delays in site clearance is the primary responsibility for local authorities. I ask the local authorities to create priorities for contractors, investors and bidders and to ensure that they carry out their projects on time," Thang said.

National Highway 1A runs from the north to the south of the country. An expansion of 672km of its 1,887-km length is expected to be completed by the end of this year. The 663-km Ho Chi Minh Highway Project through the Central Highland region has a budget of VND533 billion (US$25.1 million) and requires 220ha of land and the resettlement of 620 households.

HCMC to sanction projects running behind schedule

The People’s Committee of Ho Chi Minh City recently decided to cut investment capital on 86 projects funded by the State, which were running behind schedule by end of last year, and had disbursement ratio of less than 30 percent.

In addition, the committee also criticized 53 departments, committees, districts, and investors whose projects had lower disbursement ratio than planned. The City will now introduce stricter sanctions on governing units and investors of these projects.

Moreover, by the end of 2012, there were 34 projects with disbursement ratio below 50 percent. The City will consider giving further extension to these projects, and any project in future not being carried out will be terminated.

Earlier, the Department of Natural Resources and Environment had suggested terminating a housing project, whose site clearance compensation was below 50 percent, right at the beginning of the year. Other projects will only receive further extension till the end of this year.

Ways sought for homebuyers to access stimulus package

The HCMC branch of the State Bank of Vietnam (SBV) suggested that the housing status of individuals wanting to take out loans from the VND30-trillion preferential home credit package be confirmed by banks instead of grassroots authorities.

The proposal has been sent to SBV and the Ministry of Construction, said Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch.

As per the current regulation, only those without houses can access the preferential loan, and a housing status confirmation must be done before lenders appraise collateral for loans.

Multiple homebuyers have failed to get a housing status confirmation and thus they have been unable to borrow loans from the VND30-trillion package.

To benefit from the low-cost home credit package, homebuyers have to submit home purchase contracts and confirmations that they have not owned a house.

It is easy for State employees to meet this requirement as they simply need confirmations from the heads of the agencies where they are working. Meanwhile, those working in non-State sectors must seek confirmations from the authorities of the wards where they are residing, and many of them have failed to overcome this obstacle.

Nguyen Huu Nghia, deputy director of the Saigon West branch of Bank for Investment and Development of Vietnam (BIDV), said a lot of people had contacted the branch to ask about the VND30-trillion home loan package, but most of them had difficulty getting housing status confirmations from authorities.

BIDV Saigon West is offering a preferential credit package for the Khang Gia-Tan Huong project in Tan Phu District. Few homebuyers have taken out loans from this package.

In HCMC, so far only 18 loan applications have received the nod, with seven of them approved by BIDV and eleven by Vietcombank. Meanwhile other banks entrusted to provide such loans, namely VietinBank, Agribank and MHB, have not given out loans to any borrower, said Minh.

As for property developers, Hung Phu and Hoang Quan are the only two companies that have applied for low-interest loans, around VND1 trillion. BIDV is still considering their applications.

Le Hoang Chau, chairman of the HCMC Real Estate Association, said the preferential home loan package was aimed at stimulating housing demand and thus settling inventory and a part of bad debt in the property market. In addition, it offers a chance for low-income people to own a home.

However, loan disbursement will remain sluggish without a determination of lenders and solutions to break down the procedure barriers so that homebuyers can have easier access to the credit package.

Apart from Khang Gia-Tan Huong, BIDV Saigon West is working with the owners of two other projects over preferential loans, said Nghia.

As State-run banks are still cautious about disbursing the VND30-trillion credit package, a number of property developers are launching budget housing projects with low-interest loans provided by joint stock banks outside the stimulus package.

For example, Nam Long Investment Corporation said its low-cost condos at the Ehome 4 Saigon North project in Binh Duong’s Thuan An District would go on sale at an average price of VND450 million per unit.

Although this project is eligible for the VND30-trillion package, Nam Long still joins hands with VPBank to provide its customers with another choice when they need financial support, said Nguyen Vinh Tran, deputy general director of Nam Long.

VPBank pledges to offer customers of the Ehome 4 Saigon North project a fixed lending rate of 6-8% in the first two years. The first 322 Ehome 4 apartments will go on sale next month.

Processing, manufacturing sectors top the list for bad debt

The National Financial Supervisory Commission has announced a report listing six areas with the highest rates of bad debts in Vietnam.

The processing and manufacturing sector topped the list, with an estimated bad debt rate of 21.15%, followed by the wholesale and retail, with 16.93%; other portions of the service sector clocked in at 12.51%. After these came real estate at 11.37%, construction at 10.13% and transport and depot service area with 9.43%.

The rate of bad debt within these sectors is between two and five times more than average in other areas.

In the first half of this year, only the transport and depot service sectors saw any considerable decrease in bad debt, down to 9.34% at the end of April from 13.4% by late 2011. Meanwhile, for the rest of the areas mentioned, bad debt has only slightly decreased or even gone up.

The report indicated that state-owned enterprises account for 11.82% of credit organisations’ total bad debt. In addition, this figure excludes Vinashin’s debts, which have been restructured under government decision.

The National Financial Supervisory Commission said that bad debt from state-owned enterprises poses an especially large challenge because they generally have low liquidity.

Nguyen Van Binh, Governor of the State Bank of Vietnam, recently said that Vietnam Asset Management Company (VAMC) could help to solve between VND40,000 (USD1.9 billion) and VND70,000 trillion (USD3.33 billion) in bad debts this year. However, some local economists remain skeptical.

Economist Le Xuan Nghia, head of the Business Development Institute, said the company started operations on July 9, but its two most important regulations, Internal Operation Regulation and Special Bond Issue Regulation, have not yet been signed.

He added that even ideally, VAMC will only deal with one third of bad debt, leaving private banks responsible another third and the Ministry of Finance for the remainder.

Banks lower deposit rates, keep lending rates intact

Four State-run banks earlier this week began bringing down their deposit rates after Vietcombank had cut its interest rate for one-month deposits in the dong to 5% last Thursday. However, the lending rate remains unchanged.

BIDV on Monday lowered the interest rate for one-month dong deposits from 6% to 5%, which is also similar at Agribank.

Meanwhile, the interest rate for one-month deposits is currently 6% at VietinBank, down from 6.5% in the week earlier. The rate for two-month deposits set by VietinBank is 6%, lower than 6.5% quoted by Agribank and Vietcombank.

Joint stock banks like ACB, Eximbank and DongA Bank have not revised down their interest rates for dong deposits with terms of one to three months.

This can be seen as a positive signal as deposit rates now vary among banks and each bank sets different rates for deposits with different terms. However, for those deposits with terms of six months or longer the interest rates are largely the same, around 7-8% per year.

This long-term rate is considered as reasonable, ensuring positive real interest rates as inflation this year is expected to range from 6% to 7%.

Earlier, a banker said the ceiling deposit rate reduction to 7% in late June might be the final cut this year. If the ceiling rate was slashed further, deposits in banks might be drained out into other investment channels like gold and foreign currency, especially when the liquidity of these types of asset is quite good in Vietnam.

In a recent report on Asian economies, HSBC predicts the deposit rate cap will hardly be reduced further this year as inflationary pressure persists.

A senior executive from Vietcombank said the recent deposit rate cut of his bank was simply a move to gauge the market response, not a signal for lower interest rates across the board.

The lending rate, however, remains unchanged now.

“The deposit rate reduction has its lag and thus it is impossible to bring down lending rates right after the deposit rate cut,” said the Vietcombank executive.

Phan Huy Khang, general director of Sacombank, said his bank had no plan for dong deposit rate adjustments yet because it could affect capital mobilization of the bank. Thus, lending rates have not been revised either.

He informed his bank was providing various loan packages with different interest rates. The lowest level is 9% per annum.

At present, corporate clients are given lending rates of around 9-10% a year, which can be lowered if enterprises have good performances and debt repayment records.

As per a report by the central bank, State-run banks earlier this month set lending rates at 7-9% for the priority sectors, namely agriculture, export, small and medium enterprises, supporting industries and enterprises with high-tech applications. For other sectors, they quoted the rates at 9-10.5% for short-term loans and 11.5-12.8% for medium- and long-term loans.

Meanwhile, at joint stock banks, the common lending rates for the preferred sectors were 8-9% per annum. For other sectors, the rates ranged from 9.5% to 11.5% for short-term loans and 12-13% for medium- and long-term loans.

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

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