Dong Nai receives $1bn FDI
 
The southern province of Đong Nai has attracted more than US$1 billion from foreign direct investment (FDI) despite the economic downturn, said Bo Ngoc Thu, director of the province's planning and investment department.

The figures places the southern province third nationally in attracting FDI after Binh Dương Province, also in the South, and the northern city of Hai Phong.

In the past eight months, Đong Nai has granted investment licences to 34 enterprises with registered capital of about $600 million.

Among the new projects, two are in high-tech – Belmont Manufacturing specialising in health-care equipment and Maspro Viet Nam producing satellite television receivers and transmitters and securities equipment.

The remaining projects focus on mechanics, electronic spare parts assembling and food processing.

In the eight months, the province also recorded 44 projects increasing their investment capital worth a total of more than $400 million.

Statistics reveal that there are more than 1,000 licensed projects in the province, of which 820 are operating.

FDI projects account for 62 per cent of Đong Nai's total industrial production and 95 per cent of its export turnover. They also help create 500,000 jobs.

The province's industrial-zone management board predicts FDI will reach $1.2 billion for the whole year.

According to Thu, the province is upgrading its infrastructure and training high skill labourers to attract more investors.

Promoting exports of auxiliary mechanical products to the US

The Ministry of Industry and Trade of Vietnam will organise trade promotion events in three cities of New York, Chicago and San Francisco from October 5, 2012.

The programme aims to survey development trends for the auxiliary mechanical product market in the US after the recession period, as well as create connections between businesses of the two countries.

As scheduled, in New York, the ministry will work with some businesses operating in the mechanical field. A session with the Association of Vietnamese Businesses in San Francisco will be arranged by the ministry. In Chicago, the ministry will attend MetalCon International Fair, one of the most important US mechanical fairs.

Also at the fair, the ministry will join a workshop to promote the mechanical field of Vietnam to foreign associations and businesses to enhance cooperation opportunities./.

The ASEAN Foundation and Microsoft expand partnership

The ASEAN Foundation today announced that it would implement a new ICT training programme for small and medium enterprises (SMEs), funded by a $300,000 grant from Microsoft.

The programme will target young entrepreneurs aged 16-25, and focus on the latest ICT applications for SME development. Over the next 24 months, the pilot project is expected to reach more than 20,000 people—youth, students, and women—and close to 1,000 SMEs from Indonesia, Thailand, the Philippines, and Vietnam.

Dr. Makarim Wibisono, ASEAN Foundation executive director remarked: “Our vision for this ICT programme is that it will not only help increase growth and competitiveness among micro-entrepreneurs in Indonesia, the Philippines, Thailand, and Vietnam, but that its success will also lead to the future implementation of similar projects in other ASEAN countries. Through our long-standing collaboration with Microsoft, The ASEAN Foundation stands ready to help people across the region realize greater opportunity through improved access to information technology.”

Tracey Fellows, president of Microsoft Asia Pacific, said: “I am delighted to launch this grant, a first for Microsoft in the region in its scope and breadth, and the next exciting step in our long-term partnership with The ASEAN Foundation. SMEs are the lifeblood of most countries in this region. Through this partnership we want to enable the next generation of young people to start their own business or create their own opportunities. This grant reflects our belief in the power of technology to help transform lives, and the social and economic development of every nation.”

The launch of the programme is a key milestone in tackling rising jobless rates among young people. According to a paper released in early September by the International Labour Organization titled “Global Employment Outlook: Bleak Labour Market Prospects for Youth”, youth unemployment rates in South East Asia and the Pacific are forecasted to rise from 13.1 per cent in 2012 to 14.2 per cent in 2017.

The new programme will see close collaboration between non-governmental organizations (NGOs), academia and organisations from the public and private sectors, working together to help young entrepreneurs realise their full potential through activities such as:

• Development and delivery of ICT curriculum tailored for the needs of micro-entrepreneurs, to help them understand how they can use technology most effectively to sustain and grow their businesses.

• A ‘Train the Trainer’ series to help communities extend the reach of this curriculum across the region.

• Selection of one entrepreneur for an E-Business Incubation program, which will provide mentorship and assistance as they implement ICT marketing tools into their business operations.

The project announced today expands upon The ASEAN Foundation’s partnership with Microsoft, which began in 2005 and has resulted in the development of ICT curriculum for farmers in rural areas, and delivery of ICT training to more than 50,000 people in Indonesia.

Customers shift to mobile banking service

Mobile channels will be the top priority of several banks as customers are now turning to use mobile services, according to experts at a seminar on customer relationship management (CRM) held last week in HCMC.

According to Graham Costello from Oracle Group, the approach to banks has changed compared to a decade ago. Quite many customers now look for information on the internet, ask for advice on social networks, online forums and websites before directly finding out information at banks.

“Therefore, banks have to provide support for customers through all channels, and information needs to be consistent on these channels,” he said.

Regarding the technological system of banks in Vietnam, Costello said that technological systems of banks have yet to be integrated well, causing difficulties in online and mobile transactions. As a result, banks need to have a comprehensive evaluation to better develop their systems.

Sharing the same opinion, other experts said that the technology’s growth speed has led to changes in customer management of banks. Besides, the current top priority of banks when applying the technology in management is how to provide basic functions for the mobile banking service which are similar to functions of the online banking service.

According to experts, banks should deploy technological solutions synchronously soon so that they can easily manage and get access to potential customers.

U.S., EU agencies inspect local agro-aquatic products

Inspection teams of the European Union and the United States are in Vietnam to supervise the quality of agro-aquatic products of local companies with their shipments bound for these two markets.

The National Agro-Forestry- Fisheries Quality Assurance Department (Nafiqad) now is receiving the foreign inspectors.

Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Producers and Processors, said the inspections are carried out annually in order to evaluate the supervision and management system of Vietnamese relevant authorities as well as checking specific situations at aquatic farming areas and processors in the country.

“I think there is no need to worry about the inspection,” Hoe asserted.

From last Thursday to tomorrow, the Food and Veterinary Office (FVO) of the EU has been checking residues of toxic substances in animal and products of animal including aquatic products and bee’s honey. They have also inspected veterinary drugs of a number of enterprises and processors in Soc Trang, Dong Thap, Can Tho, Binh Thuan and HCMC.

Besides, FVO has also inspected the supervision system of State management agencies regarding the safety of seafood products in provinces and cities to be exported to the European market.

A Nafiqad official accompanying the EU inspectors during their job at two seafood processors on Monday said the inspection result will be announced in Hanoi this Friday.

From September 9, two inspection delegations of the U.S. Food and Drug Administration (FDA) have also been working in Vietnam for two weeks to inspect producers of cashew, sesame, peanuts, dried fruits or processed products in Dong Thap, Long An, Binh Duong and HCMC.

The U.S. delegation is also expected to release the inspection results late this week.

City Garden hands over the Avenue apartments

The developer of City Garden Apartments in HCMC’s Binh Thanh District on Monday announced that the Avenue Tower of the project was ready for handover to purchasers in line with the developer’s commitment.

The handover of the Avenue Tower, with 21 stories consisting of 113 apartments and four penthouses, is one of the six towers of the City Garden project, said the project owner City Garden Apartments Vietnam Ltd. The entire 117 apartments of the tower have been sold at US$1,800-2,700 per square meter.

In order to ensure the best quality for each apartment, the contractor, Coteccons, has cooperated with Mace, a construction management company, to deliver a quality assurance and evaluation process.

The developer said the project’s infrastructure and landscape is being finalized, with 74% of the project area covered with green space, children’s playgrounds, swimming pool, gym and jogging path.

City Garden is a high-grade condo project covering 23,000 square meters. The project comprises elliptical towers of 21-30 stories designed by the U.S.-based Belt Collins.

Internal audits are necessary: experts

A department for internal audits is necessary to probe financial statements and publish reports that are both objective and familiar with the activities of a company, said Ken Atkinson, managing partner of Grant Thornton Vietnam.

He was speaking at ‘Putting investors at the heart of the financial system’ workshop held by UK-based Association of Chartered Certified Accountants (ACCA) and Grant Thornton in HCMC on Monday.

Participants at the workshop shared the view that in the future, accounting and auditing standards should be revised, or financial information disclosure should focus more on what investors need.

Andy Ho, managing director of VinaCapital Investment Fund, said investors need clear and specific information, which should be disclosed on a monthly basis.

At present, financial statements are mostly publicized quarterly and annually, and not all of them are comprehensible. Therefore, Ho said the regulation on information disclosure should be improved.

Regarding internal audit, he insists it plays a role in corporate governance. When investing in a company, VinaCapital considers whether the firm can protect its assets, whether the assets are properly valuated, whether information about the assets is sufficient, and if the assets’ values for shareholders can be optimized in the long term.

Therefore, the investment fund pays special attention to the role of internal audit in order to prevent losses on the assets it invests in.

David Do, managing director of Vietnam Investment Group, said internal auditors should have experience in both accounting and auditing to set specific controls on large investments, so as to avoid investment risks.

However, Bui Hoang Hai, deputy director of the Issuance Management Department under the State Securities Commission (SSC), warned that sometimes businesses collude with their internal auditors, or even independent auditors, to commit fraud.

He said SSC has regulations for control over this situation, but they need more input from business to ensure they are more effective.

Another issue, according to participants at the workshop, is public companies in Vietnam have yet to pay due attention to the departments in regards to relations with investors. As a result, investors often receive insufficient and inaccurate information.

Moreover, there are few companies with departments in charge of analyzing and offering forecasts about business performances. Even if they do, no companies are willing to take responsibility for inaccurate forecasts.

Dang Thai Hung, head of the Department of Accounting and Auditing Regulations under the Ministry of Finance, said the ministry would gradually perfect the system of standards for accounting and auditing in accordance with international norms.

Vertical M&A deals on the rise

Most acquisitions and mergers (M&A) in Vietnam have involved companies in same sectors, but the number of vertical M&A deals is rising, says a report on M&A in Vietnam.

The report by the Vietnam Competition Authority under the Ministry of Industry and Trade announced last week at the second ASEAN Competition Conference shows that M&A deals in the past were mainly done horizontally.

In particular, foreign companies often entered the Vietnamese market through M&A deals with local firms active in same fields. This is a new strategy for market penetration, rather than direct investment as before.

However, the number of vertical M&A transactions is picking up, especially among domestic enterprises. The main purpose is to take advantage of the input material supply to improve business efficiency, or to make use of available distribution systems to reduce costs.

Alan Phan, chairman of Viasa Investment Fund, said agriculture has always been the basic industry of Vietnam, and that markets like the U.S., Europe and China need supply of raw materials. Therefore, producers there said they want to acquire Vietnamese companies in this sector provided that prices are agreeable.

Tran Phuong Lan, head of the division for competition supervision and management under the Vietnam Competition Authority, said the Vietnam Competition Law had no control on vertical business concentration, while this form of economic concentration would emerge soon. Market share is currently the only criterion to determine whether a business has concentration of economic power or not.

Banking-finance and consumer goods are expected to record strong growth in M&A activity in near future, according to the report.

Specifically, under the scheme for restructuring the system of credit institutions in 2011-2015, the Government encourages and creates favorable conditions for credit institutions to carry out M&A deals on a voluntary basis to increase scale and competitiveness.

Therefore, the report predicts the market will witness more voluntary mergers among banks. This sector currently has the largest volume and value of M&A transactions.

According to Nexus Group, as of September 2011, the total value of M&A in the banking-finance sector had accounted for 55% of the total value of all M&A deals in 2011.

M&A activity in the consumer goods sector is also forecast to keep growing in 2012 and the following years. It is because Vietnam is a market with a young population and surging incomes, while local enterprises are facing financial distress, urging them to seek foreign investors.

The total value of M&A deals last year was put at US$6.2 billion, with the consumer goods industry accounting for over US$1.2 billion via 26 transactions.

HCM City nods tunnel toll collection trial

The HCMC government has allowed the Saigon River Tunnel Management Center to collect tolls on trial before the job is officially undertaken in near future.

The Department of Transport is tasked with deciding on the start date of the toll collection test.

Speaking to the Daily, Tran Quang Lam, director of the center, said when to test-run the toll booths has yet to be decided. In the pilot collection duration, staff members of the toll station will familiarize themselves with equipment to detect vehicles, check tickets, and open and close the barriers but they will not collect money, Lam stated.

Lam said the toll collection trial will run until the middle of November and then the transport department will send the city government a toll collection plan plus proposed rates. The trial is expected to help the department evaluate the traffic volume to seek solutions to cope with congestion, if any.

The tunnel, which is the most important component of the East-West Highway project and links districts 1 and 2, has four sections immersed in the Saigon River bed at a depth of 26 meters.

The Japanese-built tunnel, nearly 1.5 kilometers in length, was opened to traffic on November 20 last year.

Binh Phuoc needs tourism investment

The southern province of Binh Phuoc will organize an investment promotion conference on November 22-23 to call for investment in ecological and cultural tourism.

At a press conference held in HCMC last week, Nguyen Quang Toan, director of the provincial Department of Culture, Sports and Tourism, said the province’s tourism resources with old forests, waterfalls, lakes, historical and cultural sites, festivals and cultures of ethnic minority groups can be developed into special tourism products.

Six major tourism projects will be introduced at the forthcoming conference, including Suoi Cam Lake in Dong Xoai Town and the Ba Ra-Thac Mo tourist site in Phuoc Long Town, the Mien Ta Thiet military base in Loc Ninh District, the project of preserving cultural villages in Bu Dang District, the ecological tourist site in Bu Gia Map National Park and the ecological tourist site at Hoa Lu Border Gate.

According to Toan, the government of Binh Phuoc Province has paid more attention to tourism. However, the provincial tourism has still had difficulties as projects are being implemented and have yet to come into operation.

Hai Phong sheds 3,500 jobs this year

Workers in Hai Phong City have become the latest victims of the global economic crisis, with data from the struggling city's Department of Labour, Invalids and Social Affairs revealing as many as 3,500 jobs have been lost in the last nine months.

Job losses in the textile-garment and leather shoes sector accounted for more than 1,400 workers, followed by the shipbuiding industry with almost 870. Employees in the steel industry, mechanical engineering, construction and services sectors also suffered the same fate.

Besides the city figures, an extra 3,180 people lost their jobs in Hai Phong's traditional trade villages.

The dismal statistics were attributed to the prolonged economic difficulties in the world and domestic markets since 2008, which have forced many businesses to scale down their operations due to declined order contracts and overdue loans.

It's thought roughly 450 companies in Hai Phong have declared bankruptcy in this period.

Job losses in the northern city are forecasted to continue until the end of this year. Despite that, many enterprises are still experiencing a labour shortage.

In the first half of this year, about 23,300 people sought jobs through labour exchanges but only 2,071 people (under 10 per cent of job seekers) were recruited.

Low recruitment was due to workers lacking skills, qualifications and experience. On the other hand, a large number of unskilled workers were still not confident to go to the labour exchange when recruitment needs were high.

According to Dang Van Tang, deputy director of the provincial Department of Labour, Invalids and Soccial Affairs, in order to tackle the labour shortage, the city should develop a network of high-quality vocational training and improve the labour exchanges process.

More effective investment policies urged

Policies should be revised to boost the quality and effectiveness of foreign investment, said Do Nhat Hoang, head of the Ministry of Planning and Investment's Foreign Investment Agency (FIA).

Investment incentives in the past have attempted to draw investors to high-tech industries or infrastructure but failed co-ordinate with planning for those sectors, Hoang said.

Under a draft assessment of FDI, with orientations to 2020, the Ministry of Planning and Investment has proposed to adjust incentives to bring investment to sectors targeted in development plans, he said, noting that incentives could also be targeted to environment-friendly projects and projects in industrial zones, export processing zones and high-tech parks.

Foreign direct investment (FDI) declined 33.9 per cent in the first eight months of the year to US$8.47 billion, driven down by the sluggish world economy and the greater competitiveness of neighbouring economies at attracting FDI, according to the ministry.

Disbursements of FDI have also slowed, with many provinces and cities revoking the investment licences of projects that have been slow to disburse capital, especially the southern province of Ba Ria-Vung Tau, which has set a target to attract US$500 million in newly registered FDI this year, while promoting disbursement of $27 billion in 298 projects approved in past years.

Some other provinces, such as Quang Ninh, Binh Dinh, Hung Yen, and Bac Ninh, as well as the city of Da Nang, are reviewing all licensed foreign-invested projects that have seen slow implementation, seeking ways to reasonably supports these projects or to revoke the licenses of those without the financial capacity to proceed.

Together with standard investment incentives, the nation needed a system of flexible investment incentives aimed at stratetic foreign investors, especially multinational corporations, Hoang said. These investors could spur the development of needed support industries Viet Nam, and the right incentives could encourage them to invest more heavily in technology here.

Deputy Minister of Science and Technology Nguyen Van Lang said technology should be the highest priority in targeting foreign investment, since technology would help the nation improve its competitive capacity, access regional distribution chains and achieve sustainable development.

Viet Nam Institute of Economics director Tran Dinh Thien said Viet Nam should ensure basic conditions for foreign investors, including a proper legal framework for business operatons, sound infrastructure, and a trained workforce with proper management and technological skills.

To improve the efficiency of foreign investment and increase disbursements, Pham Thai Son, head of Hung Yen Province's industrial zone management board, also suggested that investment licences should only be granted once an investor has disbursed investment capital in accordance with a project's investment registration.

Shrewd trades buoy VN foreign reserves

Viet Nam's foreign reserves have surged to US$23 billion, equivalent to 11.5 weeks of imports, according to a member of a research team from the Bank for Investment and Develop-ment of Viet Nam (BIDV).

The State Bank of Viet Nam has been buying up foreign currency each month since the beginning of the year, even soaking up over $600 million last month after the arrests of two leading figures in the banking industry sent shockwaves through local markets. On August 23, the State Bank lifted nearly all remaining policy barriers to encourage the selling of foreign currencies to banks.

A shrinking trade deficit has also helped strengthen reserves and stabilise exchange rates. Imports in the first half of the year totalled $53.7 billion while exports were $52.9 billion.

Weakening imports therefore resulted in a trade deficit of just $800 million during the period, far below last year's $9.84 billion level. Disbursements of foreign investment have also contributed $5.4 billion in foreign currency to the local economy, while remittances from abroad brought in another $4 billion and disbursements of official development assistance (ODA) another $600 million.

The slowed pace of imports also reflects diminished economic activity. Government policies to curb inflation and tight credit have restrained growth.

The State Bank is aware of the dangers of higher inflation in the closing months of the year, as well as higher imports and a wider trade deficit, as construction and consumer spending increases before the Tet (Lunar New Year) holiday.

Together with the narrowing gap between interest rates paid by banks on deposits in domestic and foreign currencies, higher inflation could encourage more people to hold onto foreign currency.

Mergers boost efficiency but monopolies a threat

Mergers and Acquisitions are becoming increasingly important tools for firms to restructure and improve their efficiency in the context of the global recession, but ensuring they do not cause monopolies is a hard task, experts told a conference in HCM City.

Speaking at the two-day "Mergers and Acquisitions impacts on ASEAN" conference, which closed yesterday, delegates said M&A interest in ASEAN member nations from outside remains strong.

Financials, industrials, and energy and power have been the three key industries involved in M&A.

But Prof Christopher Kummer, head of the Switzerland-based Institute for Mergers, Acquisitions and Alliances (IMAA), said that M&A activities would significantly decline in ASEAN this year, falling by 29 per cent in number of deals and 37 per cent in value.

"However, M&A transactions among [Southeast Asian] firms has increased by 176 per cent in value despite a 22 per cent drop in number of deals this year. Is it the beginning of a wider alliance among ASEAN's companies?"

Dr Alan Phan of Viasa Fund said there had been a trend of companies in the region buying assets in the US and EU.

He also pointed out the challenges faced by ASEAN members in entering the international M&A market: different political and legal frameworks, diverse cultures and religions; unequal incomes and development levels; and a deep-rooted bureaucratic political system.

"M&A will continue to grow strongly and ASEAN will have a legal framework by 2025.

"By the time most M&A will happen between domestic companies."

Maureen K. Ohlausen of the US Federal Trade Commission warned that M&A could possibly limit competition since one big company would like to buy all its competitors.

The laws should help achieve the two important goals of promoting foreign direct investment and improving market efficiency, but prevent a change from state to private monopoly.

In Viet Nam, the value of M&A deals has been steadily increasing, going up from $1.14 billion in 2009 to $6.25 billion last year and nearly $2 billion in the first quarter of this year.

Around 65 per cent of the deals involved a foreign investor.

Tran Phuong Lan, head of the Viet Nam Competition Authority's Supervision and Competition Management Department, said: "M&A deals have become complicated with vertical mergers to gain control of input sources and supply, conglomerate mergers to expand business, mergers to restructure business in a more efficient manner, and indirect takeovers."

She stressed the role played by private equity firms, which accounted for a large portion of the M&A deals, both as buyers and sellers.

Deals done in the past few years fall in two main categories: foreign companies buying Vietnamese ones (40 per cent) and local firms buying other local ones (40 per cent).

"Recently more and more Vietnamese companies have been buying foreign companies operating in Viet Nam," she said.

The banking and financial services industry accounts for the largest number of deals – 55 per cent in 2011 – followed by the consumer goods sector.

Rice farmers pin hopes on regional cartel

Vietnamese farmers are looking forward to the establishment of a rice cartel by five ASEAN member countries, which could lead to a 10 per cent annual rise in the prices of the grain.

News about the ASEAN rice alliance began to spread in late August after Yanyong Phuangrach, Thailand's permanent commerce secretary, told a press briefing in Bangkok that trade ministers from Cambodia, Laos, Myanmar, Thailand and Viet Nam are scheduled to sign an agreement later this year to establish the ASEAN Rice Federation.

The five currently sold 20 million tonnes of rice a year, or two-thirds of the total global volume, he said.

Yanyong was quoted by the Thai English-language newspaper Bangkok Post on August 23 as saying co-operation would lift rice prices and that the five agreed that rice is not only a staple but also a major source of income for them.

He said a 10 per cent rise per year was acceptable and would not have a significant effect on consumers.

But Korbsook Iamsuri, president of the Thai Rice Exporters Association, questioned the wisdom of raising prices by 10 per cent, fearing a conflict of interest with ASEAN members such as Indonesia and the Philippines that are major customers.

"In her view, the federation would be better off focusing on production standards and environmentally friendly cultivation," the Bangkok Post said.

Dr Vo Tong Xuan, a well-known Vietnamese agriculturist and rector of Tan Tao University, who backed the establishment of an ASEAN rice cartel, said the 10 per cent increase was "reasonable".

"Prices of fuels, consumer goods and house rentals are on the rise. Therefore, without rice price hikes, farmers will be at a big disadvantage," Xuan said.

The proposed alliance would also enable paddy prices to be clearly and transparently, he said.

"Such transparency will help prevent rice traders from forcing paddy prices down."

The five would-be members included the world's two biggest rice exporters, Thailand and Viet Nam. But Laos had to import rice to feed its people while Cambodia and Myanmar had a little rice for export, he said.

Thailand is expected to ship 6.5 million tonnes this year, and Viet Nam, 7.2 million tonnes, according to the Viet Nam Food Association.

"It will be best if the governments of Thailand and Viet Nam can establish an alliance that can help their farmers get the best prices," Xuan said.

Adriano Lourdes, an economist at the Manila-based Asian Development Bank, said the ASEAN Rice Cartel would be unfeasible in the long term because of competition between member countries, the Oryza News reported on September 6.

She opined that a rice cartel based on the lines of OPEC might be suitable for rice exporters in the short term, but the model was unworkable in the long term because each member would want to export more than the other.

Attempts to form a rice cartel in the past had failed, she said.

The Thai Rice Exporters Association said it was impossible to set up a cartel for rice exports in the region due to differences in logistics and storage capacities among the members.

Can Tho exports 615,000 tonnes of rice

Since early this year, the southern city of Can Tho has exported 615,000 tonnes of rice worth US$261 million, an increase of four percent over the same period last year.

Local exporters have received many new orders while export prices have risen by US$15 per tonne for 5 percent broken rice and US$25-30 per tonne for 25 percent broken rice.

This is mainly due to co-ordinated efforts to promote their products, seek new markets in Asia and Africa and invest in the production chain to improve the quality of rice.

They now have direct transactions with foreign partners to meet their large orders without paying any intermediate cost.

Northern agricultural products fair in Lao Cai

The northern agricultural products fair opened at the Kim Thanh Industry-Trade Zone in Lao Cai province on September 19.  

It has attracted nearly 200 businesses from Vietnam and 13 others from Yunnan province, China, with a total of 360 stands, displaying different kinds of products.

The fair provides a good chance for northern provinces to introduce their trade potential and find investors in agriculture, forestry, and eco-tourism.

It also aims to help domestic businesses promote their trademarks, share experience in applying new technologies and approaching the south-western market of China through the Lao Cai-Hekou border gate.

Vietnam an attractive destination for German investors

Vietnam is an attractive and reliable investment destination for German businesses, Foreign Minister Pham Binh Minh has said.

The minister made the statement at the Vietnam-Germany Trade-Investment Forum opened in Frankfurt/Main, Germany’s State of Hessen, on Sept. 19.

The one-day forum, jointly held by the Vietnamese Foreign Ministry and the Hessen State’s authorities, the Frankfurt Chamber of Commerce and Industry, the East Asia Association, Deutch Bank and the World University Service, focused on the potentials and chances for the development of infrastructure, finance and industry in Vietnam.

Minister Minh also called on the two countries to further strengthen cooperation, pledging that the Vietnamese Government will improve investment environment to create favourable conditions for foreign investors, including German ones, to do long-term, effective and sustainable business in Vietnam.

He stressed that the establishment of the Vietnam-Germany strategic partnership is creating a new impulse for the two countries’ economic cooperation.

Other delegates expressed hopes that the forum will have a positive impact on cooperation fields in the future, thus helping bring the Vietnam – Germany ties to a new height.

At his talks with Minister Minh, Hessen State Governor Bouffier pledged to encourage local businesses to invest in Vietnam. He said he hopes the Vietnamese businesses will choose Frankfurt as a destination for investment.

Regarding recent complications in the East Sea between China and neighboring countries, he urged all concerned parties to solve the issues peacefully and create favourable conditions for long-term and effective investment.

Minister Minh affirmed Vietnam’s policy of solving disputes by peaceful measures, on the basis of respecting international law.

HCM City hosts three leading industrial trade shows

Nearly 200 businesses from 22 nations and territories are attending international trade show Elenex Vietnam 2012, which opened in HCM City on September 19.

On display are the latest technologies on power generation, transmission and distribution, power source control systems and asset management software, automation products.

Coinciding with the event is the 4th International Architectural, Building, Maintenance & Engineering Technologies exhibition and also the 4th International Exhibition on Industrial Automation, Manufacturing Process, Control and Measurement Equipment Exhibition.

The events, which will last through to September 21, have attracted the participation of leading brand names such as AKSA Power Generation, Genpower Asia, ABB, Rital, and Mekong Machinery.

Bui Thuc Anh, director of the Vietnam Chamber of Commerce and Industry (VCCI) Exhibition Service Co, Ltd, said the exhibitions create a forum for participating companies to promote business and investment activities, and help enhance their management and maintenance skills.

The organisers said that growth in Vietnam’s demand for energy is estimated to surpass 14 percent within the next three years. Local companies should apply new technologies to improve their efficiency and international competitiveness.

Two seminars on energy and property management will also be held during the events.

Financial leasing firms struggle to reclaim debts   

Despite facing the highest rates of bad debts among credit institutions, it is by no mean easy for financial leasing firms to reclaim debts. Vietnam Financial Leasing Association general secretary Dam Duc Long sheds some light on the issue.

National Financial Supervisory Commission figures show bad debts are very high at financial leasing companies. How will these firms tackle bad debts in the coming time?

We will continue taking back assets for leasing purpose or utilising risk hedge funds to make up for shortfall. The largest challenge to financial leasing firms is to reclaim assets they leased to other firms as current relevant legal framework remains incomplete.

Inter-ministries Public Security, Justice and the State Bank enacted inter-ministerial Circular 08/2007/TTLT-NHNN-BCA-BTP guiding ways to deal with assets offered for lease of financial leasing firms. Why it was hard to take back these assets?

That was because many firms deliberately did not give back leased assets to the real owners being financial leasing firms. In some cases, firms accepted to give back leased assets which faced serious quality deterioration. In respect to all these cases financial leasing firms may bring violators to the court. However, making violators to follow court decisions is another challenge.

So what to do to facilitate financial leasing business then?

The State Bank of Vietnam (SBV) is penning a draft decree on the financial leasing business and financial leasing firms’ operation. After the decree and then guiding decree are in place, in my view they should be added with two following contents to help facilitate financial leasing firms’ business.

First, when financial leasing firms take back their assets but their customers insist on holding these assets, the latter’s activities should be considered as illegal appropriation and violators shall bear the penal liabilities.

Second, police bodies and local governments need to cooperate with financial leasing firms in taking back the assets being leased.

Financial leasing is a sort of non-banking medium and long-term credit service that is commonplace worldwide. Why it was hard to apply that model in Vietnam?

Apart from aforesaid difficulties, financial leasing firms often starved of capital. As per existing regulations it is hard for such companies to raise fund as they mainly source capital from ‘parent’ banks.

The State Bank has enacted strict regulations on lending to subsidiaries. Hence, it now delves into special features of financial leasing business to be able to enact suitable regulations to support it.

Under Circular 21/2012/TT-NHNN credit institutions are liable to lend and borrow among each other to make up for temporary shortfall below one year maximally. How has it affected financial leasing firms’ business?

In fact, financial leasing firms have poor capital sources; meanwhile these firms render medium and long-term credit activities (at least one year). This regulation hinders ‘parent’ banks from pumping money into financial leasing firms which are their subsidiaries to perform the service.

Thereby, in this present context of economic uncertainties financial leasing firms wish to stay immune from the regulation.

Some finance firms (like PetroVietnam Finance Corporation) wanted to be turned into commercial banks. What conversions are suitable for financial leasing companies to get rid of current woes in your view?

In light of the Law on Credit Institutions finance companies can operate financial leasing services with central bank approval. Hence, it would be a smart option if financial leasing firms could be restructured into finance companies.

Construction Ministry moves to save materials companies    

The Ministry of Construction is seeking support from the Government to ease difficulties for companies operating in the construction materials sector.

Due to high inventory, a number of them have had to slow down or halt their operations entirely

The ministry sent a detailed report to the National Assembly Economic Committee. The report prioritised certain areas of the construction materials sector.

In the report, the Ministry of Construction said, in 2011 and the first five months of 2012, constructions materials companies faced many challenges in production, sales and capital.

Due to high inventory, a number of them have had to slow down or halt their operations entirely, the ministry said, citing inventory figures of Vietnam Glass Association, Vietnam Building Ceramic Association and Vietnam Steel Association.

The country has seven companies that produce large glass plates with a combined capacity of 150 million square metres per year, but by late August their total inventory was estimated at 60 million square metres, equal to four-months output. Of the total, floating glass inventory accounted for 57 million square metres.

From last year to late August 2012, three out of four rolled and laminated glass firms halted operations, reducing output by 85% in these areas.

VIGLACERA, which has three glass production lines with a total capacity of 33 million square metres, was holding an inventory of 15.7 million square metres by August 30.

Ashlar facing stone inventory was around 60 million square metres, and around 40 production lines have been closed down.

Cement firms, which have been facing big losses include Tam Diep, Haiphong, Quang Son, Cam Pha, Ha Long, Song Gianh, Song Thao, Thang Long and Dong Banh.

In a report, the Ministry of Construction recommended eight measures to save the construction materials industry, including restructuring of State-owned companies by selling their State-owned assets or buying their debts.

According to the ministry, cement, ceramics and adobe brick procurers should be included in the list to receive the Government’s support under Decree 13/NQ-CP, issued on May 10, 2012.

Banks have been asked to extend debt repayment for construction material firms as well as investors in housing projects for works that are still under construction.

The ministry added that the lending interest rate cut should stay in place to make credit available for businesses.

Other measures recommended were increased support from the State Bank of Vietnam and commercial banks to help businesses arrange payments in foreign currencies.

The ministry has also asked for a reduction of 50% in the VAT for households and individuals who are first-time home buyers and are buying low-income apartments smaller than 90 square metres, and which cost less than VND20 million (USD952.38). It is hoped that this will help increase the demand for construction materials.

Phu Huu Seaport deserted for want of access road

Phu Huu Seaport in Ho Chi Minh City was built two years back but as yet not been made fully operational as the only access road leading to the port is run down, full of potholes and overgrown weeds.

Nguyen Trong Cuu, director general of the Ben Nghe Port Company, investor of Phu Huu Port, said that the first phase of the port has been completed at a cost of VND327 billion(US$15.7 million). The Port can now receive 30,000DWT vessels with cargo capacity of three million tons a year.

Since 2010, the 24 hectare Phu Huu Port has been recognized as an international seaport by the Vietnam Maritime Administration under the Ministry of Transport and was opened for use at the end of July of the same year.

However, the port today lies deserted as there is no access road leading to it. The warehouse, quay, freight yard and cargo are all out in the open, under direct sun.

The port investor has to spend VND40 billion ($1.92 million) a year for port maintenance.

HCMC authorities have signed a BOT (Build-Operate-Transfer) contract with Ha Tien 1 Cement Company to build a 2.6km road linking Phu Huu Port to Nguyen Duy Trinh Street.

However the task has been stuck with 14 households adamantly refusing to evacuate and hand over the land site.

Even after the access road is complete, the very narrow Nguyen Duy Trinh Street will face traffic congestion, as it is located between densely populated residential areas on both sides.

Broadening Nguyen Duy Trinh Street will require another VND860 billion ($41.31 million) including site clearance costs.

Nguyen Van Lam, deputy head of the Economy and Budget Committee of the HCMC People’s Council, said that investing in Phu Huu Port will be ineffective unless synchronized with other traffic projects.