Tuna exports to EU rockets

Vietnam’s tuna products shipped to the European market rose 31% in the first nine months of this year to US$106 million, while exports to other major markets showed a decline.  

According to statistics by the Vietnam Association of Seafood Exporters and Producers (VASEP), the total export value of Vietnam’s fresh/frozen tuna and tuna fillet products reached nearly US$54 million, showing slight growth of 0.24% year-on-year.

Exports of processed tuna products to the bloc also gained impetus. Between January and September 2013, Vietnam’s canned tuna exports to the market inched up 76% year-on-year while other processed tuna sales scored a staggering gain of 1,565%.

Top five largest importers of Vietnamese tuna in the EU reported positive growth with Germany up 61.8%, Italy 4.8%, Spain 17.8%, the Netherlands 85.9% and the UK 2.37%.

Portugal and Poland, listed in the top 10 EU importers of Vietnamese tuna, even recorded impressive growth of 243.5% and 491.8% respectively.

However, exports of fresh/frozen tuna and tuna fillet lost momentum in the third quarter, with turnover decreasing by 1% from those reported in the same period of 2012.

Experts said, in the context of the decline of tuna catch, the intensification of processed tuna product export to this market is a smart choice.

Vietnam will find it hard to compete with the Philippines, Thailand and Ecuador when they reach the taxation incentive agreements on tuna exports to the EU.

Besides, the decline in Vietnam’s two large importers (the US and Japan), and the EU’s stricter regulations will also strongly impact on Vietnam’s tuna exports.

Firms invest in information security

Information security awareness among Vietnamese enterprises has gradually increased and they have started to recognise the importance of investing in information security.

The information was provided by Vu Quoc Thanh, deputy chairman of the Vietnam Information Security Association (VNISA), at Vietnam Information Security Day in Hanoi November 21.

The conclusion is based on a survey carried out by the VNISA of 598 firms and organisations.

He said despite the improvement, information security in Vietnam is still lacking. VNISA revealled that only 37.5% of firms are protected in 2013, an increase of 11.5% compared with last year.

Thanh said that only 0.8% of organisations that are attacked reported and asked for help within one week, making hacking difficult to tackle.

Deputy Minister of Information and Communications Nguyen Minh Hong said that the Department of Information Security plans to release policies, regulations and measures to prevent hacking and lower the damage caused by cyber attacks.

He said the ministry is drafting a law on information security to meet management requirements.

Trade with Israel forecast to surge

Bilateral trade between Vietnam and Israel will likely reach some US$574.4 million by year-end, up 31% year-on-year, according to the Ministry of Industry and Trade (MoIT).

Of the sum, Vietnamese exports will contribute US$387.5 million, 39% higher than last year, said the Africa-West Asia, South Asia Markets Department under the MoIT

Further, the General Customs Department's statistics revealed that the two-way trade topped US$431 million over the past nine months, US$291 million of which came from Vietnamese exports, mainly mobile phones and components, as well as agricultural and consumer goods, up 34% year-on-year.

Vietnam also imported more than US$140 million of goods from the Israeli market, surging 36% against last year's corresponding period.

Despite the encouraging results, Vietnamese enterprises encounter several challenges in shipping goods to the Israeli market, including increasing transport costs, high taxes imposed on imported products like food stuffs, vegetables and fresh fruits, and milk.

The businesses, meanwhile, still lack updated information about Israeli technical standards, as well as legal procedures for imported goods, the department said.

In order to deal with these issues, the department will continue organising trips for local firms to explore the market in Israel, and provide the two countries' businesses with the latest information about each other’s markets.

Businesses are encouraged to boost trade promotion in Israel and join trade fairs and exhibitions to seek new partnerships.

Head of the department Ly Quoc Hung said that besides trade, there remains room for Vietnam and Israel to further co-operate, especially in food preservation, agricultural technology, telecommunications, health care and waste treatment.

PVN posts $29.85b in turnover

The Vietnam National Oil and Gas Group (PetroVietnam) has announced a turnover of VND627 trillion (US$29.85 billion) over the past 10 months, or 0.4% more than the same period last year.

Just last month, the total production of oil equivalent reached 2.11 million tonnes, equal to 101% of the month's target.

Total oil and gas production reached 21.91 million tonnes of oil equivalent (TOE), up 2.3% from last year and accounting for 87% of the year's target.

The group contributed VND145.8 trillion (US$6.94 billion) to the State budget during this period, posting a 1.4% year-on-year increase and meeting 98% of the year's goal.

Of note, PetroVietnam has brought six oil fields into operation in the January-October period, including Hai Su Trang, Hai Su Den, White Rabbit, West Desaru - Malaysia Block PM 304, Jupiter Well 1 and Su Tu Vang Northeast.

Also, production and supply to the national grid last month increased 1.18 billion kWh, equal to 93.4% of the target.

The total power production in this period was 13.58 billion kWh, meeting 98.1% of the annual plan and representing a year-on-year rise of 11.7%.

Production of fertiliser in October reached 140,000 tonnes, while its total production reached 1.32 million tonnes in the period, posting a year-on-year rise of 13.4%, including the Phu My fertiliser plant with 672,000 tonnes and Ca Mau fertiliser plant with 643,000 tonnes.

The group also ensured continuing progress in implementing the national key projects in the oil and gas field. It also disbursed VND57 trillion (US$2.71 billion) in the 10 month period, accounting for 71% of the year's target.

Int’l conference seeks to boost urban development

Local and foreign representatives shared experience in building green and civilised urban areas, at a conference in Dong Nai on November 21 to.

The event highlighted the global cooperation in the field that has created a breakthrough in urban management and exploration of various metropolitan development models for each participating country.

General Secretary of the Association of Cities of Vietnam (ACVN) Vu Thi Vinh introduced major joint projects with Canadian cities in the local socio-economic development scheme that have reaped success in the Vietnamese localities of Thai Nguyen, Ha Tinh and Soc Trang.

While the northern province of Thai Nguyen focuses on community-based tourism development in line with building new style rural areas, the city of Soc Trang plans to increase the value of local farm produce and popularise small and medium-sized (SMEs) businesses, trade brands, and the central province of Ha Tinh aims to encourage female involvement in local socio-economic development.

Deputy Prime Minister Hoang Trung Hai has already approved a list of technical assistance projects with the aim of upgrading 20 Vietnamese small and medium-sized cities.

The country is also benefiting from a number of pilot projects on local administration and housing funded by foreign organisations, such as the European Union (EU) and the German Konrad Adenauer Stiftung (KAS) fund.

Participants agreed that urban areas should promote traditional, historical and cultural values to build and develop their trade names in order to attract investment and increase competitiveness.

Russian SMEs contemplate Vietnam expansions

Russia has organised four fact-finding tours of Vietnam for small and medium-sized technology enterprises (SMEs) since 2012, according to the Voice of Russia.

The latest drew to a close in November as part of a project working to translate the traditional friendship and cooperation between Vietnam and Russia into closer interactions on the SME level.

The number of Russian SMEs operating in Vietnam remains modest. Project Manager Liubov Strozhaeva said she hopes the ongoing initiative will address the shortcomings in market information and communications limiting the scale of investment.

She noted at workshops Russian businesses were fully updated on Vietnam’s latest market information, the state of domestic trading, and preferences.

Russian businesses had the chance to work with representatives of Vietnamese ministries, departments, trade offices, and high-tech parks, and met with their Vietnamese counterparts.

The Hanoi-based Russia Culture and Science Centre is an ideal place for Russian businesses to keep abreast of Vietnam’s information.

Eleven out of the 19 Russian SMEs entering Vietnam during 2012–2013 now have regular contact with Vietnamese partners.

Strozhaeva said interested Russian SMEs are preparing for another Vietnam fact-finding tour in April 2014.

The two sides have plans for energy-saving and biotechnology joint ventures in the near future.

Agriculture sector anticipates RoK opportunities

Vietnam Trade Promotion Agency (Vietrade) Director Do Thang Hai believes successfully negotiating a Free Trade Agreement (FTA) between Vietnam and the Republic of Korea will facilitate trade between the two nations.

Hai was speaking at a November 21 Korean market access seminar organised by Vietrade and the ASEAN-Korea Centre in Hanoi.

He said the RoK’s great demand for agricultural and food products presents a wealth of opportunity for Vietnamese exporters.

The seminar and trade exchange helps Vietnamese businesses gather information about RoK market preferences and regulations and introduces them to potential partners.

According to the Ministry of Industry and Trade (MoIT), trade turnover between the RoK and Vietnam has increased almost 40-fold from 1992’s US$500 million to nearly US$20 billion in 2012.

Vietnamese exports to the RoK totalled US$5.49 billion over the last ten years, 10% of which were classified as agricultural commodities. Vietnam primarily exports seafood, coffee, processed vegetables and fruits, confectionary, and cereal products.

Korean representatives briefed seminar attendees on consumer trends, effective trade fair marketing strategies, and the RoK’s leading importers.

Businesses still hindered by tax issues

Aside from adverse impacts caused by the recession, enterprises in HCMC are still facing many challenges related to tax issues during their business and production process.

Many enterprises during a dialogue with leaders of the HCMC Department of Tax last Friday raised voices to try to seek solutions for problems they have faced.

Nguyen Thi Kim Yen, deputy general director of Binh Minh Plastic Joint Stock Company which has been ordered to pay VND117 billion in corporate income tax in the 2009-2010 period, asked the agency to give final decisions for its case as soon as possible.

Binh Minh Company has enjoyed tax incentives when going public and has followed the instructions of the tax department. However, it has still received a huge tax fine.

The enterprise has paid the tax sum as requested but it has asked the agency and the General Department of Taxation to explain what is going on.

Foreign investors hold a 49% stake in Binh Minh Company and they are not familiar with the ‘waiting’ culture in Vietnam. Therefore, the enterprise needs to know when the tax agency will reply to their queries so it can explain to foreign investors and finalize tax procedures at the end of the year, Yen said.

In addition, Yen said that it is impossible to complete tax rebate procedures in six days but the department has ordered the plastic firm to pay the tax in just 10 days. “How can we manage VND117 billion in just 10 days to pay tax? The sum is equivalent to our enterprise’s chartered capital,” she added.

Meanwhile, according to a representative of Vinacam Joint Stock Company, a firm in the fertilizer industry, since early July, it has to pay taxes right after importing goods given new regulations instead of enjoying a 90-day extension like previously.

Between July and September, Vinacam paid over VND48 billion in import taxes due to huge goods import volumes. The enterprise has sought approval for a tax rebate but the department has rejected its suggestion due to large stockpiles.

Before the situation, a representative of the tax department said that many enterprises have faced the same problem as Vinacam.

The reason is that the agency is implementing instructions of the Finance Ministry and the General Department of Tax to deal with some problems in the farm produce sector. Some enterprises have been found to abuse tax rebate policies to appropriate tax sums.

Concerning questions of Binh Minh Plastic Company, Nguyen Dinh Tan, head of the HCMC Department of Tax, said that the agency will soon look into the case.

Representatives of the enterprise will be invited to the agency for discussion this week. Hopefully, the General Department of Tax will give suggestions to the case soon, Tan said.

Grant Thornton: Positive sentiment among private equity investors is back

Positive sentiment is coming back as 43% of respondents in a survey had a positive outlook for Vietnam’s economy in the next 12 months, the highest in two years, according to a Private Equity report issued last Friday by Grant Thornton Vietnam.

The report is the 10th bi-annual report that Grant Thornton Vietnam has released, which looks at investment sentiment and outlook for the private equity sector in the nation. The results in this report are based upon survey responses provided by decision-makers working in the private equity space. Respondents are located in and outside Vietnam and are involved in Vietnam’s private equity sector.

The respondents with a negative outlook on the economy decreased significantly to 13% this time. Grant Thornton Vietnam said this indicates confidence is getting its way back to the private equity investors. As a result, 46% of the respondents agreed that they will increase their investment allocations to Vietnam whereas 44% of them will keep their proportions stable.

With the stabilization measures undertaken by the Vietnamese Government, GDP growth was 5.14% in the first nine months of 2013, with lower inflation and interest rates considered an achievement in the context of the global downturn.

Nevertheless, the report said the economy still faces many challenges and in particular the slow pace of State corporate sector reform and the challenges being faced by the banking sector. As a result there is still a large portion of the respondents who keep the neutral sentiment toward Vietnam’s economic outlook.

Corruption is continuously considered the most critical obstacle among private equity investors in Vietnam with 88% of the respondents. Ranked as the second biggest hindrance, government red tape/processes were selected by 76% of the respondents. Meanwhile, results from the survey show a decrease in the number of respondents who consider that monetary policy or currency controls and infrastructure as investment obstacles by 12% and 8% respectively.

Ken Atkinson, managing partner of Grant Thornton Vietnam, said in the report that in spite of the achievement in 2013, Vietnam is still facing many challenges for the economy while foreign capital is expected to continue to flow into the country through M&A activities in coming years, so it’s critical for Vietnam to capture and maximize the opportunity.

That is why only 36% of the respondents, a decrease from the 41% in the last survey, saw Vietnam as more attractive than other destinations. The majority of respondents (41%) ranked Vietnam as a neutral attractive destination, up from the 24% from the last survey.

Myanmar and Indonesia were equally selected by 32% of the respondents as alternative investment destinations. While those favoring Indonesia decreased from 48% in the last survey, the respondents for Myanmar increased from 23% in the second quarter 2013 survey.

Although this is the first time that Grant Thornton added food and beverage sector to the survey, it has already been chosen the most out of the given choices in terms of attractive industry to invest. This time the survey shows a significant increase in investors’ confidence in the financial services sector from the seventh ranking in the last survey to the second position. Together with financial services, education and real estate/property are equally ranked the second with 28% of respondents each.

Potential growth has been the first consideration of investors when investing in Vietnam that was chosen by 23% of respondents. Transparency in business activities is the second important factor for private equity investors while the third most important factor when investing in Vietnam is cash flow.

Rice inventories lower than volume contracted for delivery

The total rice inventories kept by companies of the Vietnam Food Association (VFA) as of early this month was still lower than the amount contracted for delivery in the rest of the year, but experts said the commercial volume remains ample.

VFA members are bound to deliver about 1.37 million tons of rice in the rest of this year, as they have shipped 5.7 million tons out of the total contracted volume of 7.2 million tons. However, the total rice volume in stock at VFA’s members was only more than 1.2 million tons as of early this month, with 105,000 tons stockpiled at Vinafood 1, roughly 494,000 tons at Vinafood 2 and around 655,400 tons at other members.

That means VFA’s member enterprises are still short of 178,000 tons of rice to realize the export contracts.

However, several experts asserted that the commercial rice volume for exports in 2013 was still ensured and that this year’s export target of 7.2-7.3 million tons of rice was completely achievable.

Rice expert Nguyen Dinh Bich in a recent talk with local media noted a difference of the rice volume sold to China as stated by VFA chairman Truong Thanh Phong and the amount mentioned by Deputy Minister of Industry and Trade Tran Tuan Anh.

Phong of VFA said on Sai Gon Tiep Thi on October 24 that China this year had purchased three million tons of rice from Vietnam, including 1.8 million tons imported through official trade channels and 1.2 million tons via border trade.

Meanwhile, Anh of the industry and trade ministry on November 6 insisted on Vietnam News Agency that the rice volume exported to China through the country’s northern border lines was only over 330,000 tons as of October 15, a figure also confirmed by customs.

If Anh’s statement and customs’ information was right, it is obvious that the rice volume sold to China in the first months of the years would not be so huge as stated by Phong, meaning the rice volume for exports remain abundant at home.

As of early this month, rice exports by VFA’s members totaled over 5.7 million tons worth around US$2.5 billion in FOB value, dropping 11.37% in volume and 14.04% in value over the same period in 2012. The rice export price in the period averaged out at some US$430 a ton, falling US$13.38 a ton year-on-year.

Rice in the Mekong Delta on Monday inched up by between VND100 and VND200 per kilo compared to last week.

Urea prices rise as winter-spring rice crop starts

Prices of urea products have strongly bounced back in the Mekong Delta compared to about a month ago, which is ascribed to rising demand when the region enters the winter-spring rice crop 2013-2014.

According to many fertilizer trading companies in the delta, Phu My urea is being sold to farmers at VND8,400-8,600 a kilo while the factory is selling the product to agents at VND7,400-7,600 a kilo, growing an average of VND200 per kilo compared to a month ago.

Despite its selling price lower than the price of Phu My urea, PetroVietnam Ca Mau Fertilizer Company (PVCFC) said the prices of its urea in the delta also surged by VND200 per kilo on average from a month ago to VND7,800-7,900 a kilo.

Nguyen Minh Dang, director of Minh Dang company as the first grade agent in Can Tho City, attributed the price hike to an increase in local fertilizer demand when many areas in the delta have started to sow the paddy for the winter-spring crop.

State directly involved in five expressways

State money rather than ODA will be used to fund construction of five major expressways in the country.

According to the Prime Minister’s Decision 2071/QD-TTg, the State will directly invest in the five expressways by converting official development assistance loans for these projects into re-lent credits.

The move aims to restructure funding sources for Ben Luc-Long Thanh, HCMC-Dau Giay, Quang Ngai-Danang, Cau Gie-Ninh Binh and Hanoi-Lao Cai expressways.

The amount advanced from the State budget for Cau Gie-Ninh Binh and Noi Bai-Lao Cai expressways will become State capital invested directly in the projects.

The funds raised from the bonds sales at Cau Gie-Ninh Binh and Noi Bai-Lao Cai projects will be turned into direct State investments.

Vietnam Expressway Corporation (VEC) is in charge of mobilizing money from other legal sources to implement the projects and closely monitoring revenues to ensure sufficient payments for loans that fall due.

The Ministry of Transport will manage State budget invested in the five projects, supervise fee collections and spending at VEC, and propose a new organizational model for VEC after the financing of the projects is restructured.

HoREA says time for progressive land tax yet to come

Despite agreeing on the need to impose progressive land tax, the HCMC Real Estate Association (HoREA) says it is not time to discuss the tax as the market is still in difficulty.

Le Hoang Chau, chairman of HoREA, said that the progressive land tax should only be imposed in times of growth, when the property market is stable. “If the tax is introduced while the market is still sick, it cannot recover,” he said.

The progress tax has been discussed before but has yet to be imposed. If charged, according to Chau, the tax will leave a heavier impact on the people than on enterprises.

Foreign countries normally impose tax on both house and land based on the property value. For instance, an owner of a house in the U.S. state of California has to pay a tax rate of 1.2% of the total value of his house.

The current problem of the market is that both the people and enterprises have to pay the land-use fee one time and thus the amounts they pay is huge. Therefore, instead of collecting such a fee, the State should collect the property tax.

In a recent report on the property market, the HCMC government admits that the collection of land-use fee only one time when allocating land creates capital pressure on investors and stokes up the property prices.

According to the report, the amount of site compensation and the land-use fee account for 20-40% of the prices and the figure is on the rise.

The site compensation payment and the land-use fee are the two costs enterprises currently have to pay.

The point is that the costs enterprises pay to land users are not deducted when the land is approved by the State for development. Therefore, enterprises almost buy the land-use right twice, pushing up the property prices.

The city proposes to reduce the land-use fee and to collect it over a long period of time.

The concept of ‘land-use fee’ should be removed and there should be a certain tax rate, which can be 10-15% of the land prices, to replace the fee. If so, the property market will be transparent, according to Chau.

Discover, Diners Club cards accepted in Vietnam

Millions of Discover and Diners Club cardholders have been able to use their cards at more than 16,000 ATMs in Vietnam via a network of local commercial banks.

This is a result of long-term cooperation agreement signed between Discover Financial Services and Smartlink Card Service Joint Stock Company in Hanoi City last Thursday.

Joe Hurley, Vice President of Global Business Development Department at Discover, said that the alliance with Smartlink, a leading domestic payment network in Vietnam, is part of its global expansion strategy.

“Vietnam is an emerging payment market with impressive growth rate and potential, so we will continue opening comprehensive cooperation opportunities with Smartlink,” Hurley said.

He said that Asian nations have made strongest growth rates over the past years. Earlier, Discover has cooperated with Bccard in South Korea, UnionPay in China, JCB in Japan and NPCI in India.

In the coming time, aside from ATM network, Discover and Diners Club cards will be accepted at points of sale (POS) and e-payment system of banks in the country.

Dao Minh Tuan, chairman of Smartlink, said that the strategic alliance offers banks an effective international connection and the opportunity to use Discover’s payment products.

According to Smartlink general director Nguyen Tu Anh, Smartlink processed more than 70 million transactions valued at US$2.7 billion in the Jan-Sept period in 2013.

Smartlink operates an information processing system connected to 51 banks and financial institutions, hundreds of airlines, telcos, insurances and e-commerce enterprises in Vietnam. It is a leading network with more than 16,000 ATMs and 100,000 POS terminals, which supports payment activities for 55 million local debit cards in the market.

Discover Financial Services is one of the largest card issuers in the U.S. It operates the Discover network with millions of merchant and cash access locations, PULSE, one of leading ATM/debit networks and Diners Club International, a global payment network with acceptance in more than 185 countries and territories.

Maritime Bank, Prudential establishes long-term partnership

Vietnam Maritime Commercial Bank and life insurer Prudential Vietnam last Friday entered into an agreement to establish a 10-year strategic partnership to grow their bancassurance business together in the country.

The partnership will allow Prudential to distribute its life insurance products exclusively throughout Maritime Bank’s 220 branch offices and transaction offices countrywide, serving the insurance needs of the bank’s customers. The products will be sold by both Prudential’s insurance specialists and Maritime Bank’s staff at the branches and transaction offices.

Both organizations entered into a bancassurance agreement in 2012 and have reinforced their commitment and investments under the new 10-year strategic alliance.

Jack Howell, CEO of Prudential Vietnam, said in a statement released last Friday that an exclusive bancassurance partnership provides a platform to offer high-quality insurance products and banking solutions to customers, allowing both sides to better serve long-term insurance and financial needs.

Bao Viet launches open-ended fund

Bao Viet Fund Management Company last Friday launched Bao Viet Equity Dynamic Open Ended Fund (BVFED), the first such fund to be operated as an active index fund.

Bui Tuan Trung, general director of Bao Viet Fund Management Company, said the fund manager would manage the composition of these non-benchmark stocks to earn yields that exceed the benchmark index. It will actively adjust the proportion of the assets to capture opportunities in the stock markets and fixed interest rate market.

BVFED fund certificates will be offered to investors within one month starting from today. In the initial public offering (IPO) period, investors can buy a minimum of VND2 million worth of fund certificates.

BVFED manages its portfolios according to the VN30 index, which tracks leading stocks on the market. To minimize risks and secure safety for investors’ capital, the fund will also invest in bonds and bank deposits, Trung added.

BVFED fund certificates are distributed by Bao Viet Securities Joint Stock Company while HSBC Bank will be supervising bank and provider of transfer and management services.

Fund manager Bao Viet is managing six portfolios and one member fund. Its ratio of after-tax profit to total assets is over 20%. Between 2006 and 2012, the enterprise obtained average growth in total assets of 9% a year.

Port administration model to be piloted in Haiphong

The Ministry of Transport now is working on a research project on piloting a port administration model for Haiphong International Gateway Seaport, or Lach Huyen Port in Cat Hai District in the northern coastal city of Haiphong, to avoid the uncontrolled and ineffective seaport development as seen currently.

According to Deputy Minister of Transport Nguyen Van Cong, Vietnam’s seaport system now is developing in an uncontrolled way, with large ports far outnumbered by smaller ones, causing their ineffective operation at home.

Companies wanting to exploit seaports are diversified, consisting of joint ventures, private firms, military units and foreign enterprises. Therefore, there should be a government-like administration tasked with managing local ports, Cong said.

Only Haiphong is able to apply the port authority model, Cong said, adding it is impossible for the Cai Mep-Thi Vai port complex in the southern coastal province of Ba Ria-Vung Tau to do so because there are so many ports scattered in the area, making it difficult to put all of them under management of one agency.

Under the port authority model in Haiphong, a large site will be set aside for the special government to build processing plants and warehouses and to provide services to industrial parks in the locality to form a deep water seaport complex with a vast array of functions.

According to the Vietnam Maritime Administration proposing the model, the port administration when in place will manage ports in its area consistently and avoid the rampant development of such facilities. The port authority will not replace the local government and it should have a representative in the local government.

The difference of the port authority compared to the local government is that it only runs businesses of the ports and other related activities. With the model, the port authority will be active as the port owner, meaning the State owns and invests in constructing ports and relevant works such as maritime passages while private companies join biddings to exploit and manage ports and make investments in other works, the administration explains.

The port authority is responsible for all requirements on traffic and technical infrastructure in the port area as well as all issues on environment.

Economic forum in delta shortened

The Mekong Delta Economic Cooperation 2013 (MDEC 2013) held in Vinh Long Province will be shortened to two days, November 25-26, instead of four days as planned as the organizer wants to save money at a time numerous people in the Central region are struggling with flooding.

According to Nguyen Phong Quang, deputy head of the Southwest Standing Steering Committee, although the forum length is shortened, there is no change in main contents of the forum.

Besides, 595 booths at the Mekong Delta economic-social fair will still last until November 28 as scheduled. Nearly 1,000 delegates are expected to attend main events and hundreds of thousands of visitors will visit the fair.

The main events of MDEC 2013 are the Mekong Delta investment promotion conference, the economic cooperation forum, the business forum of enterprises in the delta region, HCMC and Hanoi, the urban development conference and the conference on a green model of agricultural production.

MDEC 2013’s organizing board has received 138 projects in need of investments from 13 Mekong Delta provinces with the total amounts of over VND416 trillion and US$1.89 billion. Many enterprises and banks have pledged VND644 billion for the region’s social security program this year.

The Mekong Delta Economic Cooperation organized by the Southwest Steering Committee aims to enhance cooperation between the Mekong Delta, other localities and international organizations. This annual forum has been held six times in HCMC, Can Tho, An Giang, Kien Giang, Ca Mau and Tien Giang.

Converting commercial condo projects a rocky road

Converting a commercial condo project into a budget housing scheme is a real nightmare for housing developers, who have to undergo a labyrinth of complicated and time-consuming procedures before accessing soft loans.

When the Government introduced the VND30-trillion home loan package last year to ease mounting housing inventories by offering a lending rate of under 6% compared to the normal rate of 12%, such a move heaped praise. Now, both developers and homebuyers find the Government’s policy almost unfeasible.

To obtain the soft loans, housing developers must offer condo units priced less than VND12 million per square meter, while homebuyers must obtain certification from grassroots authorities that they own no home at the time of home purchase. But such requirements are just the least conditions.

Take for example the HQC Plaza project that has just been approved by authorities for conversion from a commercial project into a budget one.

Hoang Quan Real Estate Co. as the project owner has shown its “diary of hardship” in getting the project conversion approved.

On February 27, the company submitted an application to the Ministry of Construction to transform its commercial condo building project in HCMC into budget homes.

Nearly one month later, the ministry on March 22 sent a document to the HCMC government backing the transformation and suggesting city authorities support the project conversion.

Over two months later, the ministry issued a list of projects meeting conditions to take out loans from the VND30-trillion package, including the project by Hoang Quan. One week later, the city’s Department of Construction issued a document allowing Hoang Quan to change the project, revising up the number of condo units in the project to 1,735 from the initial 1,060.

One more week passed by, and Bank for Investment and Development of Vietnam clarified Hoang Quan would be able to take out a loan of VND540 billion for the project.

One month later, Hoang Quan signed a tripartite agreement with the bank and the Youth League of the Ministry of Public Security, agreeing to sell all the 1,735 condo units to staff of the ministry. But the construction ministry meddled in, suggesting that Hoang Quan should sell only half of the condos to the police, and the other half to other people in HCMC in need of a home.

At length, on October 26, the HCMC government gave its final say, allowing Hoang Quan to convert the project into a budget housing scheme.

The maze of procedures shows that Hoang Quan had to spend around eight months to get the conversion scheme approved. But more headaches may come, as the project owner will have to wait for the loan being disbursed by the bank.

Hoang Quan plans to start work on the project this month, and if all things go smoothly, the project can only be completed in 2015, when the frozen real estate market might have been thawed already.

Hoang Quan’s case is not a phenomenon though, as other project owners are also complaining about the hindrances.

Listed firms earn more on lending rate cuts

Falling lending rates in the third quarter of this year helped many listed enterprises reduce financial expenses and improve business results.

Just two-thirds of listed enterprises have submitted unchecked financial reports of the third quarter to the two local stock exchanges. Interim statistics of the Hochiminh Stock Exchange show that less than 20 out of 200 companies reported losses in the period.

Meanwhile, over 90 enterprises out of nearly 700 listed firms on both bourses incurred losses in the first half of this year.

This year, the central bank has cut the deposit rate ceiling twice, sending the rate down from 8% to 7% in late June. For the first cut at the end of the first quarter, listed enterprises had yet to benefit from the policy. But in the third quarter, banks strongly cut lending rates to speed up credit growth, helping enterprises reduce financial expenses.

Sao Vang Rubber Company lowered financial costs to VND4.9 billion from VND8.3 billion in the same period of 2012, of which loan interest dropped from VND8.2 billion to VND3.7 billion. According to its financial statement, lower lending rates helped it avoid a strong profit decline in the quarter.

In the Jan-Sept period, the firm obtained VND68.4 billion in after-tax profit versus the target of VND65 billion. Last year, it gained only VND46 billion.

Vietnam Petroleum Transport Company said that its parent company earned VND12 billion in the third quarter as revenue increased slightly while financial expenses tumbled to VND11 billion from VND26.4 billion. Between January and September, the parent company gained VND127 billion in after-tax profit, a strong surge compared to VND43 billion in the same period last year.

Other enterprises such as Southern Rubber Industry Group, Ninh Hoa Sugar Company and Traphaco Company also saw lending rates falling.

However, Thu Duc Housing Development Company reported that financial expenses rose to VND11.3 billion from VND8.6 billion last year. Its loan interest increased to VND12 billion compared to VND6.4 billion in 2012’s third quarter.

Petro Capital & Infrastructure Investment Company had to pay interest of over VND13.6 billion to banks while it paid only VND2.4 billion last year.

HCM City’s VND106-tril. debt rescheduled

Reports of HCMC-based commercial banks showed that around VND106 trillion worth of debts of nearly 6,300 borrowers had been rescheduled as of October 10, up by VND18.9 trillion, or 21.7% against late 2012.

This means that the loans still maintained normal status, although they should have been classified as bad debts.

According to the central bank’s HCMC branch, the number of clients benefiting from the policy increased by over 1,700 against late last year. The policy is made in accordance with Decision 780/QD-NHNN on classification of rescheduled loans with an aim to help enterprises deal with difficulties.

To judge solvency of customers objectively, credit institutions will reschedule their loans if production and business activities of customers are expected to turn better, the decision said.

As of the end of September, local banks had reported total outstanding loans of over VND894 trillion, of which rescheduled loans accounted for 11.9%.

Speaking at a meeting with bankers last month, Tran Du Lich, deputy head of HCMC’s National Assembly deputy delegation, expressed concerns over the loan rescheduling program, saying that this policy would only help prevent bad debts from increasing if the nature of the loans remains unchanged.

The policy actually just helps reduce expenses of enterprises and bad debts at banks, he said.

By late September, bad debts of local credit institutions had been reported at over VND54.4 trillion, or around 6% of total outstanding loans. Bad debts of commercial banks accounted for 46% of total bad debts in the city.

Compared to late 2012, total bad debts of local banks increased by 15.4%. Notably, debts in group 5 (potentially irrecoverable) made up 70.1% of total bad debt.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said that most debts in group 5 have been extended by financial and financial leasing companies. Of which, 90% of loans have run into the real estate market and consumer credits while a small ratio of the debts has been extended to small and medium-sized enterprises that have closed down.

However, commercial banks said that most potentially irrecoverable debts have been borrowed by enterprises, especially in the fields of seafood, cashew and coffee.

The report of the central bank’s HCMC branch shows that bad debts of financial companies and finance leasing companies made up respective figures of 17.4% and 44.1% of total outstanding loans of each group. Meanwhile, the bad debt ratio of joint stock banks is 5.2%, State-owned commercial banks 6.75%, joint venture banks 5.62% and foreign banks 2.9%.

Ton Dong A to build second steel sheet mill

Ton Dong A Corporation told reporters in HCMC on Tuesday it would develop a second steel sheet mill with an annual capacity of 800,000 tons in the southern province of Binh Duong.

Covering over 12 hectares at Dong An 2 Industrial Park, the US$150 million project will be developed in two phases and equipped with production lines imported from Europe and Japan.

The project’s first phase, which will need an investment of US$70 million, will be up and running in next year’s second quarter with total output of around 400,000 tons.

The capacity would be doubled to 800,000 tons in the second phase, which is scheduled for completion in 2016-2017.

After the new facility comes into operation, the firm’s revenues are expected to be around VND6-6.5 trillion next year with exports estimated at around US$100 million.

UK – key market of Southeast Asian airlines

Many Southeast Asian airlines have reported their positive business results in the United Kingdom (UK) market, in both the numbers of services and passengers, at the on-going World Travel Market (WTM) in London.

According to Heathrow Airport’s latest data, the airport received 7.8 million passengers from the Asia-Pacific region in the first nine months of this year, up by 5.5 percent year-on-year. The figure is expected to continue rising next year.

Philippine Airlines has re-opened its service from Heathrow to Manila after 15 years with five flights per week, using Boeing 777-300ER. The carrier considers the UK its important market as 60,000 British came to Manila during the first half of the year.

Two years ago, Vietnam Airlines launched a direct route from Gatwick to Hanoi and Ho Chi Minh City with four flights per week, while Thai Airways now operates two flights per day from London to Bangkok.

During the WTM, Indonesia ’s Garuda Airlines has organised a number of activities to introduce its four-flight-per-week service from Gatwick to Jakarta , using Boeing 747-300ER.

Shrimp exports see sea change

The export of white-legged shrimp has increased significantly this year and beaten shipments of the black tiger shrimp for the first time.

The export value of US$1.18 billion in the Jan-October period marks a massive 95 per cent year-on-year rise in shipment of the white-legged shrimp, according to the Viet Nam Association of Seafood Exporters and Producers (VASEP).

In October alone, the export revenues reached $199.3 million, up 168 per cent against the same period last year.

In January, white-legged shrimp accounted for 37.8 per cent of the country's total shrimp export value, while that of black tiger shrimp accounted for 51.3 per cent.

But by September, white-legged shrimp accounted for 47.4 per cent of the total shrimp export value and that of the black tiger shrimp fell to 45.7 per cent.

All major markets, including Japan, the US and EU have imported significantly higher quantities of white-legged shrimp this year.

With the supply of shrimp from other major exporters like India and Thailand decreasing because of disease attacks, demand for Vietnamese crustaceans has surged, and since much larger quantities of white-legged shrimp are cultivated here, export of these have risen considerably as well.

Another reason for the increase in exports is that the holiday season is approaching in the major importing markets, and demand for shrimp usually rises at this time of the year.

In Viet Nam, the breeding of large quantities of white-legged shrimp has been allowed in the central and northern regions since 2006 and in the Cuu Long (Mekong) Delta since 2008.

The area dedicated to white-legged shrimp cultivation has been expanded rapidly in the past few years.

As of September this year, the country had 47,300ha of farms cultivating the white-legged shrimp, according to the Directorate of Fisheries, and a total of 106,479 tonnes were harvested.

Meanwhile, the area under black tiger shrimp cultivation is much higher at 581,500ha for a total harvest of 152,313 tonnes.

In Cuu Long Delta provinces that have large shrimp cultivation areas like Tien Giang, Soc Trang and Tra Vinh, farmers prefer breeding white-legged shrimp as it has high yield and a shorter breeding period.

Farmer Nguyen Huu Vi, who owns three shrimp ponds with a total area of 8,000sq.m in Cau Ngang District's My Long Nam Commune in Tra Vinh, said that after many years of suffering losses from breeding black tiger shrimp because of disease outbreaks, he switched to white-legged shrimp in 2010.

"I have earned profit from every white-legged shrimp crop since 2010," he said.

It takes about 35-40 days to harvest a white-legged shrimp crop and about three months for a black tiger shrimp crop, he said.

Currently, the price of white-legged shrimp (40 shrimp per kg) in the Cuu Long Delta is VND170,000 a kilo while the price of black tiger shrimp (also 40 per kg) is just VND180,000 per kilo.

Nhu Van Can, deputy head of the Aquaculture Cultivation Department of the Directorate of Fisheries, said the area under white-legged shrimp cultivation had risen significantly because it has the advantage of shorter breeding periods, and this helps reduce exposure to disease outbreaks.

In addition, the production cost of white-legged shrimp is about half of the production cost of black tiger shrimp, he said.

However, when the area under white-legged shrimp cultivation expands at the current pace, there is the danger that it will lead to a shortage of shrimp fry, more disease outbreaks, and imbalances in supply and demand, he said.

Experts warn that the cultivation areas of white-legged shrimp should be separate from that of black tiger shrimp as the former can carry many disease germs.

If the area under white-legged shrimp cultivation continues expanding rapidly as is happening now, supply will exceed demand and price will fall, they said.

Competent agencies should step in and control the situation, they added.

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