CPI rises in Hanoi and HCMC

The November Consumer Price Index in Hanoi and Ho Chi Minh City rose against last month 0.29 percent and 0.28 percent, respectively.

As a result, HCMC’s CPI has increased by 15.02 percent since early this year, according to the municipal Statistics Office. The price of food went up by 18.14 percent and foodstuffs 20.15 percent for the year so far.

The November increase was attributed to a 4.56 percent surge in the price of food, which pushed the restaurant, beverages and food services up by 0.81 percent. Rice saw the highest rise of 5.72 percent. However, foodstuffs dropped slightly and the price of pork fell by nearly 3.15 percent.

** Meanwhile, Hanoi’s CPI in November edged up by 0.29 percent against October, 18.49 percent compared with the same period last year, and 16.36 percent since December 2010.

Nine out of 11 commodity groups saw slight price rises in November. Only transport and post and telecommunications decreased.

The highest increase (0.88 percent) was recorded in home equipment and appliances, followed by textiles, garments and footwear (0.75 percent).

Economic experts hold it that Hanoi’s CPI this month was mostly affected by food prices, particularly rice, which increased by VND500-1,000 per kilo.

Russian firm ready for gas exploitation

Integrated Russian oil company TNK-BP Group has received an investment licence for gas block 06.1 in Nam Con Son Basin after acquiring the entire stake from British oil giant BP in Vietnam and Venezuela.

Under the official amendment of the investment licence for Block 06.1 last month, TNK Vietnam has assumed operatorship of the Lan Tay platform.

BP last October agreed to sell its stakes in upstream, pipeline and electricity assets in Vietnam and Venezuela for US$1.8 billion. In Vietnam, the Russian company will operate as TNK Vietnam.

In the next step, TNK Vietnam will participate in the current licensing round for 9 offshore blocks being auctioned by the Vietnam National Oil and Gas Group (PetroVietnam). The bids will close on December 9 and winners will be announced in January.

TNK Vietnam will consider establishing a joint venture with PetroVietnam, said TNK Vietnam's general director Hugh McIntosh.

The company will start drilling two sub-sea wells next month in the Lan Do field development project and its first gas deal is scheduled to come on stream in the fourth quarter of 2012. Production from Lan Do is expected to bring 2 billion cubic metres of gas annually to sustain Block 06.1's current production of 5 billion cubic metres.

"We have a strategy for the next 10 years in which gas will account for at least 20 per cent of our portfolio of production. I think Vietnam and Brazil, where we see both opportunities for gas development, will help us achieve our target," said TNK-BP Vice President of International Projects and Upstream Christopher Einchcomb.

He said a number of opportunities have opened up for TNK Vietnam to join the company's only offshore project. He added that Vietnam would expand its investment from where it started in the Latin America markets.

"Russian production is so challenging that we have to look for more opportunities, so TNK Vietnam plans to double its production in Vietnam to around 34,000 barrels a day over a five-year term, said McIntosh.

He said his company is keen to bring TNK-BP's technology to Vietnam and gather as experience from its further offshore projects.

Einchcomb emphasized that the integration of business here will help improve the efficiency of company operation.

Steering Committee for Restructuring State-owned Enterprises established

Minister of Finance Vuong Dinh Hue will be the head of the Steering Committee for Restructuring State-Owned Enterprises.

Under a decision signed by Minister Hue on November 21, his deputies will be Vice Ministers of Finance Nguyen Cong Nghiep and Tran Van Hieu, while Vice Ministers Do Hoang Anh Tuan and Vu Thi Mai are permanent members.

The Steering Committee is assigned to assess the business and production situation of the enterprises, and create  a plan for restructuring State-owned enterprise to submit to the Prime Minister.

Once the project is approved, the committee will be responsible for implementing it to improve the effectiveness of those businesses.

The Ministry of Finance (MoF) website has also launched a new column called “Restructuring State-owned Enterprises” to collect ideas from scientists, managers, and businesses.

Border trade fair opens in Central Highlands

About 125 foreign and local enterprises are displaying their products on 320 stands at a border trade fair, which opened in the Central Highland province of Kon Tum on November 21.

The fair is part of the Kon Tum Investment Promotion Week, which includes a West-East Economic Corridor development conference, an investment promotion seminar, and a gong festival.

It provides a platform for businesses to advertise their products, exchange experience, seek investment opportunities, and expand domestic and foreign markets.

Vietnam welcomes Japanese investors: State President

Vietnam hopes that Japanese investors, particularly those in the Kansai region, will promote investment in the country’s support industry, education and training, as well as human resources management and infrastructure.

State President Truong Tan Sang emphasized this in Hanoi on November 21 while working with a delegation from the Kansai Economic Federation, lead by its chairman Susuka Mori.

He expressed his delight at the fine development of bilateral cooperation, especially after Prime Minister Nguyen Tan Dung’s recent Japan visit, during which both sides reached a consensus on cooperating to build the Ninh Thuan 2 nuclear power plant,  exploiting rare earth, and upgrading infrastructure.

The State leader also briefed his guest on Vietnam’s socio-economic situation and pledged to create favourable conditions for Japanese businesses to invest in Vietnam.

Chairman Mori thanked Vietnam for its assistance to Japanese earthquake and tsunami victims. He said his visit to Vietnam is aimed at strengthening cooperation with Vietnamese partners and seeking business opportunities for developing high-quality human resources to meet the demands of Vietnam’s support industry and infrastructure.

The chairman said the Kansai Economic Federation will offer Vietnamese students apprenticeship and internship opportunities at businesses in the Kansai region.

AusCham announces winners

The Australian Chamber of Commerce in Vietnam (AusCham) has rewarded organizations that are its members and have their business links to Australia for their great contributions to business development in this country.

In a review of its seventh Annual Business Awards obtained by the Daily on Thursday, AusCham named Midways Metals Ltd. Vietnam the winner of Overall Excellence Award because of its outstanding performance in this field in the past year. Vietnam is one of the markets of Midway Group, which includes stainless steel processing and distribution.

The Corporate Social Responsibility Award went to HSBC Vietnam because this bank excelled in supporting or initiating the projects which help address economic, social or environmental issues within Vietnam.

AusCham conferred the Professional Services Award on Odyssey Resources Vietnam Ltd., which provides accounting and business services. AusCham explained the company had assisted many international companies in setting up and maintaining their successful presence in Vietnam.

Boomarang Bistro & Bar scooped the Austrade Hospitality Award, as this all-day dining and entertainment outlet in HCMC’s District 7 had successfully catered quality Australian cuisine and promoted hospitality services in Vietnam.

AusCham announced the Innovation Award for Austfeed Vietnam Co. Ltd as this Australian-invested company had demonstrated a remarkable advancement in this industry.

The winner of the Australia Consulate General-sponsored Alumni Award was Vu Anh Tuan, who is deputy director of Minh Hai Sub-Institute for Fisheries Research in Ca Mau Province and head of Bac Lieu Experimental Station for Aquaculture. Tuan is leading several projects funded by Bac Lieu Province and the Ministry of Science and Technology.
 
Vietnam-Kansai forum to be held in Danang

The 5thh Vietnam-Kansai economic dialogue forum will take place next Tuesday in the five-star Furama Resort in the central city of Danang, according to the Investment Promotion Center for Central Vietnam.

The forum, part of the annual economic cooperation program between Vietnam and Japan’s Kansai Economic Federation (Kankeiren), is organized by Vietnam’s Ministry of Planning and Investment in cooperation with Kankeiren and the Japan External Trade Organization (Jetro).

That Danang City is picked as the hosting place for the forum aims to promote the economic connection between central Vietnam as well as the East-West Economic Corridor (WEC) and the Kansai region, especially in developing infrastructure in the central region. In addition, the organizers also expect to attract more investments from Kansai into manufacturing and supporting industries in central Vietnam.

The forum has the participation of Deputy Prime Minister Hoang Trung Hai, senior government officials, and some 300 representatives of relevant agencies from both sides.
 
U.S. investors look at Danang Airport

U.S.-based firms are exploring investment opportunities for infrastructure development at Danang Airport, the third biggest international airport in Vietnam, according to Danang authorities.

Giao Thong Van Tai newspaper, under the Ministry of Transport, said Cedona and U.S. group ADC & HAS are looking to engage airport projects in central Vietnam, including Danang International Airport. Danang authorities have pledged favorable conditions for investors.

The ministry, the Ministry of Planning and Investment and the Civil Aviation Administration of Vietnam (CAAV) have thrown support behind Cedona’s plan to survey the need for improving infrastructure development at airports in central Vietnam in the hope that first-class facilities will help boost fast growth in tourism and other sectors in the region.

At a recent meeting with Danang authorities, Cedona spoke of the possibility of future flights from the U.S. to Danang Airport, which is Vietnam’s third busiest international airport after Tan Son Nhat in HCMC and Noi Bai in Hanoi.

Middle Airports Corp. looks set to put into use a new modern terminal at Danang International Airport by the year-end, which should increase the number of international flights in addition to domestic services currently offered by Vietnam Airlines and Jetstar Pacific.

The new US$74 million terminal was designed to handle six million passengers and 400,000-1,000,000 tons of cargo every year. SilkAir now services weekly flights between Danang and Singapore, and Asia’s leading low-cost carrier AirAsia is flying directly between Kuala Lumpur and the central coastal city from mid-December four days a week.

Growing tourism in central Vietnam is capturing the attention of not only international airlines but also foreign companies keen to invest in airport infrastructure development. Earlier, CAAV confirmed to the Daily that a number of foreign investors wanted to develop certain airports in central Vietnam.

In mid-2011, a venture involving Airis International suggested a plan to build a terminal for low-cost carriers and auxiliary facilities in Cam Ranh Airport, which is over 30 kilometers from Nha Trang City. The plan, supported by Khanh Hoa Province and the CAAV, envisages a wind or solar energy plant to power operations of the terminal and nearby facilities in the international airport of Khanh Hoa.

Cam Ranh is the second busiest airport in central Vietnam after Danang Airport and Middle Airports Corp. said the airport had recorded annual double-digit growth over the past few years. In late 2009, a new two-storey, VND200 billion terminal was put into operation at Cam Ranh Airport to enhance its handling capacity to 800 passengers at peak hours.

Cam Ranh Airport will handle 5.5 million passengers and 100,000 tons of cargo a year by 2020, according to a master development plan. The airport is expected to receive eight million passengers and 200,000 tons of cargo a year by 2030, with over VND10.5 trillion investment capital planned for expansion.
 
New credit policy not a buoy for property market

The latest move by the central bank not to completely squeeze out credits for non-productive sectors has sparked hopes among property developers and investors, but experts said the policy did little to help the market.

In its new decision this week, the central bank said certain types of credit for the property market would no longer be classified as loans for non-productive sectors, and as such are not affected by an earlier decision forcing banks to lower non-productive sector credits to 16% of total outstanding loans by end-2011.

The few credits excluded from the “red list” include loans for buying or repairing homes and investment loans for building houses for lease to low-income earners or completing housing development projects to put into service next year. These property loans were previously classified as non-productive sector ones.

Several real estate firms said this policy offered good news for the market after a lot of bad information. Still, its impact would depend on the banks’ capability to give out loans at present.

Commenting on the issue, Trinh Van Tuan, director of Orient Commercial Bank (OCB), said this move of the State Bank of Vietnam was appropriate because of the low risk of such loans.

However, only big banks can disburse more of these credits as they are still more financially capable and have more room to exercise.

Market observers said the central bank’s document was not exciting to many people due to its limitation in beneficiaries.

A banking executive admitted this news only had left little positive impact on the property market.

He informed the customer’s capital demand often surges in the year’s end, but many people might not afford the high interest rate now. Furthermore, many local and foreign banks had stopped lending to the property sector.

Le Tham Duong, head of the business management faculty of the HCMC Banking University, shared the view that the move helped relieve the burden for the credit institutions and making room for them to offer loans, thus easing pressure in the market.

However, given the high lending rate and the trend of buyers waiting for further discounts, the market would fail to warm up.

Property analysts at the HCMC Securities Joint Stock Corporation agreed that the actual effect of the central bank move was limited. Meanwhile, Ban Viet Securities Company said the credit loosening policy only become effective when lower lending rates were offered.

Ninh Thuan on road to big success

Positioned at the meeting point of three strategic transport axes – the north-south railway, national highway 1A and road 27 into the Central Highlands’ region – Ninh Thuan has huge potential for economic development.

But the south-central coastal province has struggled to lure investors in recent years with lower-than-expected growth pace compared to other locations in the region. The province’s management authorities realised long-term development plans and strategies would help the province manage development breakthroughs.

In August 2009, Ninh Thuan was the first locality in the country to get the prime minister’s go-ahead to raise funds from donors and domestic and foreign enterprises as well as use part of its budget to hire two leading global consultants to develop three master plans for the province.

US-based Monitor Corporation and the UK’s Arup Corporation drew up a master plan for the province’s overall socio-economic development during 2010-2020, a master plan for Phan Rang - Thap Cham city’s development and a master plan for the coastal strip of the province.

The provincial socio-economic development master plan toward 2020 with a vision unitl 2030, developed by these two prestigious consultants, was rubber stamped by the prime minister on July 22, 2011 and is expected to bring all-round development to the province in diverse investment fields.

To promote the master plan to the public and the investor community Ninh Thuan People’s Committee teamed up with the Ministry of Planning and Investment to host a national conference entitled ‘New planning-New development scenario–New investment opportunities’. The conference, with the patronage of BIDV will be held on December 12, 2011 in the province’s Phan Rang-Thap Cham city.

The event is forecast to attract 500-600 local and foreign participants including Party and state leaders, ministerial agencies as well as business representatives and investors.

Keynote speeches will be delivered by Monitor and Arup senior experts, and leading economists at home and abroad.

A list of 50 possible investment projects will be unveiled on the occasion. These projects are in key areas which will underpin the province’s future development. These are clean energy projects including two nuclear power projects, solar and wind energy projects. Clean agriculture will also be promoted as will the application of science and technology achievements.

Promoting supporting industry growth relevant to wind and solar energy will be another focus. Then there are industrial development projects, projects promoting tourism sector, education, training and real estate development, according to Ninh Thuan Planning and Investment Department director Pham Dong.

“Getting the world’s prestigious groups engaged in provincial master planning will help Ninh Thuan get exposure among international investors,” said Dong, adding that in the year to September the province had welcomed 190 investor groups to seek investment opportunities in the province.

Social media yet to be embraced

ust 28 per cent of businesses surveyed in Vietnam use social media.

According to Grant Thornton’s International Business Report released on November 18, 20 per cent of Vietnamese businesses use social media for advertising, 10 per cent for recruitment, 8 per cent for communication with suppliers, 16 per cent for communication with customers and only 4 per cent for communication with their staff.

These figures are quite low compared with 31 per cent of Vietnam’s population using internet.

“Whilst these people access news information, search, instant messenger, and social networks, they are mainly of the younger generation and social media is mainly used for personal sharing but not business,” said Vinh Ha Thi Nguyen, partner at Grant Thornton Vietnam.

The research revealed that 43 per cent of businesses globally use social media in some capacity.

The results are a wake-up call to business leaders reluctant to embrace digital opportunities, who could lose out in an e-commerce market expected to be worth $1.4 trillion by 2015.

Mark Henshaw, head of Grant Thornton UK media and entertainment, said: “The results are fascinating to note. They show businesses in emerging markets embracing social media much faster than their peers in mature markets.”

The report also indicate that globally, advertising is the most common reason companies use social media (53 per cent), followed by communicating with customers (51 per cent) and recruitment (43 per cent).

Japan eyes relocating plants to Vietnam

Many Japanese firms are considering moving their plants to Vietnam, after devastating floods have damaged much of Thailand’s industrial infrastructure.

The high risk of natural disaster and high labor cost in Japan itself, and in China, have also urged the businesses to revise their investment strategies, with relocating their manufacturing plants being the top priority, Sai Gon Tiep Thi newspaper reported.

Than Thanh Vu, chairman of investment consultancy Sao Khue, said the number of Japanese firms visiting the industrial parks and building plants in Vietnam has recently risen.

“Many Japanese business delegations have visited Ho Chi Minh City or contacted the Japan External Trade Organization to ask for locations to build their facilities,” he said.

“Their top priority when consulting about a particular location is whether that place will be affected by floods.”

According to a recent report by Bloomberg, a number of Japanese plants in Thailand, including those of Honda, Canon, Nissan, Hitachi and Toshiba, among others, have had to halt operation due to the unprecedented floods, Thailand’s worst in 70 years.

Japan is Thailand’s largest investor, but now many businesses have declared that they will move to other countries should infrastructure there Thailand remain unimproved.

Vu, of Sao Khue Co, said that besides the lower labor cost, another appealing factor of Vietnam to Japanese investors is presence of cultural similarities between the two countries.

Meanwhile, with an early anticipation of an investment flow from their country, many Japanese businesses such as Sojitz, Daiwa House and Kobelco Eco-Solutions have invested a total of US$100 million in the Dong Nai-based Long Duc Industrial Park, expecting to receive around 150 [Japanese] businesses.

Japan’s Jesco Holding Inc, which specializes in engineering and infrastructure construction, last week also announced that it would join hands with Hoa Binh Construction & Real Estate Corporation to develop infrastructure for Long Hau 4 Industrial Park in the southern province of Long An.

Itochu, Sumimoto, and Fujitsu, for their parts, have also chosen Ba Ria – Vung Tau as their destination for investment, while some others chosen Da Nang city, Quang Ninh, and Binh Duong provinces.

The Japan International Cooperation Agency is offering funds to help Vietnamese industrial parks to upgrade infrastructure to meet the requirements of Japanese investors, especially those operating in the supporting industries, to build their plants there.

Tran Thi Huong, director of the Ba Ria – Vung Tau Department of Industry and Trade, said many businesses from Kawasaki city have recently shown interest in Vietnam’s investment promoting policies aimed at the supporting industries.

Many investment consultancies said that, although Japanese investors have been increasingly interested in entering Vietnam, it is unclear whether the country’s infrastructure can meet all requirements for the former to actually open their pockets.

Economic expert Le Dang Doanh said the problem is whether Vietnam could solve the problems of workforce and infrastructure to welcome the investment flow from Japan.

Nguyen Thi Xuan Thuy, a specialist in attracting FDI for the industrial parks from the Vietnam Development Forum, said the industrial parks should improve both infrastructure and marketing strategies to attract investors.

Foreign currency trading with gold shops banned

The public should not sell US dollars to gold shops, since they will receive a hefty fine and have their currency confiscated, Nguyen Hoang Minh, a State Bank of Vietnam official said.

Minh, deputy director of the central bank’s branch in Ho Chi Minh City, said under decree No 95, which took effect in November, if one is caught selling dollars to a gold shop which is not licensed to trade foreign currencies, he or she will be fined VND50 million to VND100 million (US$2,400 - $4,800) and the money will be confiscated.

He said the public is only allowed to sell foreign currencies at the commercial banks’ branches and transaction offices or at the money exchangers licensed by the central bank.

“In HCMC, the money exchangers are located at the supermarkets, air ticket offices, airports, shopping centers, and three-star and above hotels,” Minh said.

However, he said, some people still prefer selling the greenback to gold shops, which offer higher buying prices.

“But this also poses many risks,” Minh warned.

Most of the gold shops are currently not licensed to trade foreign currencies and they regularly face inspections from the authorities, he said.

The municipal authorities have so far detected 54 cases of illegal foreign currency trading this year, he added.

So, it is risky for the public to sell dollars to gold shops, since they are likely to be caught red-handed and will thus be faced with the aforementioned strict penalties.

“The public should carefully consider before selling the greenback to gold shops since the benefits are far smaller than the losses they are likely to incur when they are detected,” Minh advised.

“Moreover, the public may also receive fake banknotes or money of dubious origins when selling dollars to gold shops.”

VietinBank to issue new shares for boosting capital

VietinBank, Vietnam's top partly private lender by assets, has secured central bank permission to raise its registered capital by a fifth to 20.23 trillion dong ($963 million) via a share issue, the central bank said on Monday.

Hanoi-based VietinBank, or the Vietnam Bank for Industry and Trade -- 10 percent owned by the International Finance Corporation -- would issue the new shares to existing shareholders over the next 12 months, the State Bank of Vietnam said in a statement.

The state would contribute nearly 2.1 trillion dong to the capital boost, the statement said.

Registered capital determines the level of deposits and loans by a bank.

Shares of VietinBank were trading down 200 dong at 22,300 dong ($1.06) each on Monday.

TNK-BP seeks to bid for more Vietnam oil/gas blocks

TNK Vietnam, a subsidiary of Russia's No.3 oil producer TNK-BP, will bid for blocks in state oil and gas group Petrovietnam's licensing round offshore the Southeast Asian country after acquiring BP Plc's assets, it said on Monday.

The firm will also drill two sub-sea wells in Lan Do field next month and plans to bring the first gas on stream in the fourth quarter next year for an annual capacity of 2 billion cubic metres, it said in a statement after the opening of TNK Vietnam's office.

"TNK-BP is here for the long term. As we focus on integrating these assets into the TNK-BP portfolio, we are also seeking new opportunities to deepen our presence in the country," said Chris Einchcomb, Vice President of International Projects and Upstream of TNK-BP.

In August, state oil and gas group Petrovietnam launched the 2011 licensing round for nine offshore oil and gas blocks, including blocks 43, 03, 10/11, 41, 11-2/11, 05-3/11, 50, 22/03 and 12/11 in Nam Con Son, Phu Quoc and Malay-Thochu basins.

The licensing round, which lasts between Aug. 1 and Jan. 5, 2012, is the Hanoi-based group's first since 2007 and the most in recent years. Bids will close on Dec. 9 and winners will be announced in January.

A senior Petrovietnam official said last month that Russian oil and gas firms are expanding their presence in Vietnam with three operating firms -- Gazprom, Zarubezhneft and LUKOIL -- while TNK-BP was in the process of taking over assets newly acquired from its shareholder BP Plc.

Russia's second largest oil producer LUKOIL has also said it is participating in the biddings for exploration in more oil and gas blocks off Vietnam after acquiring 50 percent of the Hanoi Trough 02 block offshore the northern city of Haiphong from Quad Energy.

An industry source confirmed LUKOIL has taken steps to participate in the bidding, but said the Russian firm has yet to send an official bid.

Kon Tum calls for investment

The Central Highland province of Kon Tum has introduced a number of preferential policies for investors in 35 projects, with a focus on industries, tourism, construction and agriculture.

The appeal was made at an investment promotion conference taking place in Kon Tum on November 22.

At the event, representatives of about 50 businesses from within and outside Kon Tum highlighted the local potential. However, they also pointed out many difficulties they face while operating in the province.

Businesses want clearer and opener policies as well as more favourable conditions regarding administrative procedures and site clearance.

The Vice Chairman of the provincial People’s Committee, Pham Thanh Ha, pledged that local authorities will take measures to remove barriers against investors in line with government guidelines, Ha said.

Kon Tum holds an important position in the Vietnam- Laos-Cambodia triangle. It is endowed by nature with more than 210 mines, nearly 750 hectares of forest, more than 13,000 hectares of lake surface, nine hot springs, and great potential for hydroelectric power.

The central highland province also has great potential for tourism development.