2016 to be a tough year for paper sector

The domestic paper industry is forecast to face a spectrum of difficulties in 2016, said Vu Thanh Binh, General Director of the Vietnam Paper Corporation at a conference in the northern midland province of Phu Tho on January 21.

He explained that a number of the corporation’s production lines are outdated, while the writing and printing paper market is likely to be affected by the economic downturn this year, and face fierce competition with imported products.

Given this, the corporation will focus on improving its products’ competitiveness, raising productivity, improving product quality, and caring for existing customers while expanding the market, Binh said.

It will also accelerate the development of its woodlands, pour investments in new projects and equitise the corporation in line with the Prime Minister’s instruction, the General Director noted.

According to Binh, the corporation aims to pocket more than 2.6 trillion VND (117 million USD) this year, produce 116,000 tonnes of paper, sell 115,000 tonnes and contribute 107 billion VND (4.8 million USD) to the State budget.

Last year, the corporation earned nearly 2.8 trillion VND (126 million USD), fulfilling only 94.2 percent of the set target.

Agribank continues securing Top 10 of VNR 500

The Vietnam Bank for Agriculture and Rural Development (Agribank) was named in the Top 10 of VNR500 in 2015 for the fifth consecutive year, making the unit the only commercial bank in the position, Vietnam Report Stock Company has announced recently.

Agribank is the largest commercial bank in Vietnam in terms of total assets, equity, human resources, operating network and client base.

The bank’s total assets were over 874 trillion VND (39.7 billion USD) as of 31 December 2015 and its total mobilised capital reached over 804 trillion VND (36.5 billion USD), up 16.5 percent compared to the same period in 2014.

The bank has lent out a total of over 673 trillion VND (31 billion USD), a rise of 16 percent against 2014. The bank also earned a before -tax profit of 3.7 trillion VND (168 million USD) in 2015.

Agribank is the first bank to have completed the World Banks’s funded project on the modernisation of Interbank Payment and Customer Accounting System (IPCAS). Especially, the bank introduced a smart payment card system in accordance with EMV standards in an attempt to strengthen security for customers.

The bank has carried out social welfare programmes and for these it has received numerous recognitions and awards from the State, Government, banking sector and international organisations.

The prestigious magazine The Banker has ranked Agribank 446th among the world’s top 1000 banks.

First introduced in 2007, the annual VNR 500 ranking is developed based on research results and independent evaluation in accordance with international standards of Vietnam, aiming to honor outstanding local enterprises in terms of operation scale and contribution to the State’s budget.

EuroCham works to boost Vietnam-EU business connection

The European Chamber of Commerce (EuroCham) in Vietnam has committed to intensifying its activities in 2016, in order to boost investment and trade links between Vietnamese businesses and those from the European Union (EU) member states.

According to Chairwoman of EuroCham in Vietnam Nicola Connolly, her agency will review its action programmes, making them more suited with key upgrades in Vietnam-EU economic relations, especially the signing of the EU-Vietnam Free Trade Agreement.

It will coordinate with the Vietnamese Ministry of Foreign Affairs to lay a foundation for a Vietnam-EU trade and investment partnership, focusing on communication campaigns and meetings between relevant agencies and businesses from the two sides, Nicola said.

Apart from publishing the White Book on Vietnam’s trade and investment, and arranging dialogues with Vietnamese authorised agencies, EuroCham will also enhance projects to support EU small and-medium-sized enterprises (SMEs) in enquiring about issues related to intellectual property rights in the Southeast Asian region, green business growth, and conducting a survey of the business climate index.

These aim to assist Vietnamese and EU firms to further bolster their production and business activities.

EuroCham, the representative for businesses from 28 EU member nations operating in Vietnam, serves as an important bridge connecting the Vietnamese business community with the union.

The EU is the sixth largest foreign investor in Vietnam. Over the past decade, bilateral trade increased by 200 percent, reaching to about 28 billion EUR in the end of 2015. Meanwhile, Vietnam is the fourth biggest trade partner of the union in the ASEAN.

Jetstar offers 20,000 cheap tickets

The low-cost airline Jetstar Pacific is offering 20,000 tickets priced from 49,000 VND (2.2 USD) one way, from 11 am on January 21 until midnight January 24.

The promotion is to mark Jetstar Pacific’s honour of being the best low-cost carrier with good services in 2015, as surveyed by Nielsen.

In the survey, Nielsen questioned a contingent of customers Hanoi, Hai Phong, Nghe An, Da Nang, Khanh Hoa, Dak Lak, Binh Duong, Dong Nai and Ho Chi Minh City who frequently use aviation services to learn about their assessment of local airlines.

Under the promotional campaign, tickets for domestic routes from Ho Chi Minh City to Da Lat, Tuy Hoa, Pleiku, Buon Ma Thuot, Nha Trang, Hue and Quy Nhon, and the Hanoi-Da Lat route will cost 49,000 VND.

Meanwhile, customers can travel from HCM City to Phu Quoc, Da Nang, Dong Hoi and Chu Lai, and from Vinh to Buon Ma Thuot or from Buon Ma Thuot to Hai Phong for only 69,000 VND (3.1 USD).

Particularly, the cheap tickets will also be applied for several international routes – Da Nang-Singapore, Hanoi-Hong Kong, Hanoi-Bangkok, HCM City-Singapore and HCM City-Bangkok.

Jetstar Pacific – the first budget carrier in Vietnam – is currently operating 32 domestic and international routes.

The airline recently announced the addition of three more Airbus A320s to its fleet, as well as more flights on 12 routes to serve increasing demands during the Lunar New Year 2016.

Consumer prices to jump more this year

The consumer price index (CPI) this year would rise more than in 2015 due to a number of factors, statistics official have forecast.

Deputy Director of the Pricing Statistics Department under the General Statistics Office Do Thi Ngoc said some factors affected inflation this year including an increase in tuition fees, healthcare services and minimum wages.

Besides, Ngoc said, power supply is also set to improve this year as the rise in early 2015 was only 7.5 percent, the lowest level in a plan suggested by the Ministry of Industry and Trade.

She said that the exchange rate would also have an impact on inflation this year. The rate could be also adjusted upwards next time in wake of a rise in the United States (US) dollar as well as an increase in lending demands.

However, Ngoc said, there would be some other factors that could restrain the CPI rise this year.

The oil price in the global market is forecast to continue its decline this year due to a high supply source while the price of agricultural produce is also likely to reduce in wake of fiercer competition.

In the latest macro report released last week, Bao Viet Securities Company (BVSC) also forecast that inflation could accelerate this year due to a number of factors.

These include the possibility of global commodity prices bottoming out, adverse effects of the El Nino phenomenon, the delay in the State Bank of Vietnam (SBV)'s expansive monetary policy, and the higher consumer demand, the brokerage agency warned.

The BVSC forecast that the CPI would increase between 3 percent and 5 percent this year, compared to 0.6 percent last year.

The brokerage agency expected inflation to be revised gradually to between 5 percent and 7 percent for the 2016 to 2020 period and the SBV would maintain a gap between interest rates in the dong and the greenback to ease upward pressure on the dong.

According to the BVSC, the dong could weaken by 3 percent to 4 percent against the US dollar in 2016, based on presumptions that Vietnam's overall balance of payments would post a surplus of 5 billion USD, the US Fed could lift the interest rate by 1 percent and the Chinese yuan could continue to be devalued.

Interest rates on dong-denominated deposits are expected to rise 0.6 to 1 percentage point this year, driven by rapid credit growth in 2015.

The BIDV Securities Company this month also forecast that consumer prices could increase between 1.8 percent and 3.5 percent this year, while the USD/VND rate would likely weaken between 5 percent and 8 percent.

Dried fish, shrimp producers in Mekong fall short of Tet demand

People making dried fish and shrimp in the Cuu Long (Mekong) Delta are as usual unable to meet the massive demand that arises for Tet.

In Tra Vinh Province, dried shrimp producers in Cau Ngang District's Vinh Kim Commune have stopped accepting new orders for Tet because of the scarcity of shrimp.

Vinh Kim dried shrimp is made from tep bac dat, a finger-sized shrimp that lives in rivers and rice fields and has a natural pink colour, delicious meat and a unique favour.

Tran Thi Kham, who has produced dried shrimp for more than 30 years in Vinh Kim, said there is a lot of natural tep bac dat when a strong north-easterly wind blows.

But in the absence of the wind, the creatures do not appear in large quantities, she said.

Since supply is scarce this year, she estimated she would make 200 kilogrammes of dried shrimp for Tet, she said.

"The output is too small compared to the demand."

Vinh Kim now has only a few households making dried shrimp, with their combined daily output being 30-40kg.

The price of their product is VND800,000 to VND1 million (US$36-45) a kilogramme.

The prices of many Tet specialities in Tra Vinh, including dried dua catfish, have not risen since last Tet, according to the province Department of Industry and Trade.

The delta, the country's largest fish and shrimp farming area, has an abundance of fish varieties for making dried fish including broadhead catfish, spot pangasius, and snakehead fish.

Many households along the Tien and Hau, two tributaries of the Mekong River, are now busy making dried fish for Tet.

They each have their own family recipes, and so the products are delicious.

Ngo Van Luc, who makes dried snakehead fish in Dong Thap Province's Tam Nong District, said though the price of fresh fish has increased by VND5,000 a kilogramme since last year, the final product remains at VND100,000-120,000 ($4.5–5.4) a kilogramme.

This is because local producers have agreed not to increase the price of dried fish, he said.

Luc said he sells his dried snakehead fish to traders in HCM City.

Dong Thap and An Giang are major habitats of snakehead fish in the delta. Most of the dried fish here are produced traditionally by drying under the sun.

Besides snakehead fish, people in Tam Nong District have also begun to make dried fish from loach, catfish, and snakeskin gourami in recent years.

Dried snakeskin gourami, which is produced between December and May, is in great demand during Tet.

In Ca Mau Province, more than 330 households together produce 10-15 tonnes of dried snakeskin gourami each year.

A kilogramme costs VND400,000 ($18) in the market.

Tran Gia Lam, who has been making dried snakeskin gourami in Ca Mau's Tran Van Thoi District for three years, said his family earns a profit of VND200 million ($9,000) every year during Tet.

Producers can make big profits, but they often face a shortage of fresh snakeskin gourami, he said.

The freshwater fish is found mostly in Ca Mau's U Minh Ha forest, he said.

A law for SMEs needed: Chamber of Commerce

All supporting policies for small-and medium-sized enterprises (SMEs), which account for more than 95 per cent of the total Vietnamese enterprises, should be included under one law.

Therefore, it will be easier for enterprises to access and benefit from these policies, Nguyen Hoa Cuong, deputy director of the Ministry of Planning and Investment's Enterprise Development Agency, said at a meeting in HCM City on Wednesday.

According to the deputy director, supporting policies for SMEs are scattered in many different documents, which makes it hard for enterprises to search for support policies.

Tran Ngoc Liem, deputy director of the Viet Nam Chamber of Commerce and Industry (VCCI) in HCM City said SMEs in Viet Nam had stated their role in the country's economy by contributing more than 40 per cent to the gross domestic product (GDP), while attracting more than 50 per cent of the total labourers.

"Therefore, supporting SMEs is regenerating development for the economy," he added.

ASEAN countries including Viet Nam have built and approved the ASEAN Strategic Action Plan for SME Development 2016-2020.

The Asia-Pacific Economic Co-operation (APEC) has also strived to eliminate trade barriers for SMEs in the Asia-Pacific region and help enterprises utilise new trade opportunities to integrate into the global value chain.

To support SMEs, Hoang Van Son, representative of the VNC Law office, said at the meeting that administrative procedure reforms should be prioritised as many enterprises faced complicated regulations.

SMEs need simpler accounting document sets, creating favourable conditions for investment bids, Son said, and added that fees and levies should be reduced to lessen burdens for businesses.

Surveys among some SMEs revealed that most of enterprises have just focussed on production, business, tax and customs, while paying less attention to market research, marketing, and building an enterprise culture.

Therefore, related agencies should provide more market information to the SME community and support them in trade promotion, so that enterprises could build a stable development strategy and enhance their competitive capacity, Nguyen Ngoc Tuan, vice chairman of the Dong Nai Import and Export Association, said.

He said SMEs had to face challenges in production and fixed asset investment.

In addition, SMEs mainly have weak financial sources and have not received investment incentives in industrial parks as well as in registration into specialised industrial complexes.

Productivity key for firms

Businesses need to focus on increasing Total Factor Productivity (TFP) as it is the key element for sustainable development, experts urged.

In economics, Total Factor Productivity (TFP), also called multi-factor productivity, is the portion of output not explained by the amount of inputs used in production. As such, its level is determined by how efficiently and intensely the inputs are utilised in production.

According to Thoi Bao Kinh Te Viet Nam (Vietnam Economic Times), TFP, a real driver of sustainable growth within an economy, will be increased due to the efficient ultilisation of investment capital power and labour capacity, through the application of advanced science and technology, innovation of production management techniques and improvement of labour force quality.

At a conference on "TFP and its application in corporate governance" held by the Foreign Trade University (FTU) on January 19 in Ha Noi, experts said TFP is the most crucial factor to transform the growth model of an economy from quantity to quality, from wide-scale growth to in-depth growth and sustainable growth.

According to former head of the Institute of Statistical Science under the General Statistics Office Tang Van Khien, the growth of TFP, in fact, is the growth in production output achieved by improving the efficiency in the utilisation of capital, fixed assets and labour, through technology renovation, production rationalisation and the improvement in management capacity and labour force quality.

Only TFP-based economic development remains stable and sustainable, Khien said, adding that it brings about surplus value to the society to create preconditions for expanding production scale and contribute to improving living conditions, Khien was quoted by Thoi Bao Kinh Te Viet Nam as saying.

He added that TFP growth reflect the advancement of science and technology, showing the results of technological innovation and labour quality improvement.

Nguyen Thuy Anh from FTU told Thoi Bao Kinh Te Viet Nam that enterprises need to formulate specific action plans, create effective mechanisms to encourage their employees, adjust wages and remuneration of employees according to their labour productivity.

Thuy Anh said productivity of a company depends on several factors such as capital power, labour capacity and other resources.

But for small and medium-sized enterprises, if they are unable to measure their productivity growth, they can consider the link between the above factors to discover how their businesses' productivity changes over times, then compare with their peers, to offer specific solutions to increase their productivity, she added.

According to Thoi Bao Kinh Te Viet Nam, promoting the application of science and technology is the decisive factor to sustainable economic development.

But many Vietnamese enterprises are engaged in production with the severe lack of basic industry. Most of materials must be imported from foreign countries. In addition, transportation costs and import taxes are causing many difficulties for businesses, the newspaper said.

Treasury off-loads $116m of Government bonds

The State Treasury of Viet Nam off-loaded some VND2.6 trillion (US$115.7 million) in government bonds on January 20, the Ha Noi Stock Exchange (HNX) reported.

HNX said the treasury offered VND2 trillion ($89 million) in five-year bonds, VND1 trillion ($44.5 million) in three-year bonds and VND1 trillion ($44.5 million) in 20-year bonds.

The entire block of three-year bonds were sold at a coupon rate of 5.78 per cent per year, while some of the other bonds were picked up within the day.

Thus, VND1.1 trillion ($48.9 million) in five-year bonds were bought at a coupon rate of 6.58 per cent per year, while VND60 billion ($2.67 million) in bonds with a 20-year term were sold at a coupon rate of 7.75 per cent per year.

Since the beginning of 2016, the treasury has sold VND5.7 trillion ($253.8 million) worth of bonds.

HN exchange to list over 122 million MBS shares

Ha Noi Stock Exchange approved the listing of 122 million shares of Military Bank Securities Joint Stock Company on the exchange, under the code MBS.

The shares, equivalent to VND1.221 trillion (US$54.3 million) in par value, represented 100 per cent of the stake in MBS.

Currently, Military Commercial Joint Stock Bank (MBB) is the major shareholder of MBS, holding a 79.52 per cent stake in the company, while the remaining shares belong to individual board members of MBS. The entire stake held by MBB is restricted from transfer for six months from the listing date.

In the first nine months of 2015, the company earned a profit of VND30.7 billion ($1.36 million).

MBS has not yet announced its business results for 2015 and has not issued a financial report for the whole of 2015 so far.

SSI reports lower revenue, higher profit

Saigon Securities Inc (SSI) reported revenue of VND1.5 trillion (US$66.7 million) in 2015, a reduction of 6 per cent from 2014.

It also reported after-tax profit of VND967 billion ($430 million), a year-on-year increase of 30 per cent on January 21.

SSI said, except for the brokerage segment, which declined 22 per cent, the other segments, such as the self-service business and consultancy, still experienced significant growth over 2014.

During the period, the costs incurred were slashed significantly. In particular, operating expenses fell nearly VND150 billion ($6.7 million) due to a provision reversal; during the same period last year, the company had a provision of VND97 billion ($4.3 million).

Averting a stall

The latest figures from the Vietnam Automobile Manufacturer’s Association (VAMA) reveal that by the end of November its members had sold a total of 215,517 motor vehicles, 57 per cent higher year-on-year. Sales of Passenger Cars increased 45 per cent, Commercial Vehicles 73 per cent, and Special Purpose Vehicles 109 per cent, which not only sets a new record but exceeds the previous benchmark set in 2009 by an impressive 160,000 vehicles.

Economic recovery and stable policies are believed to be behind the automobile market’s growth in recent years, especially in 2015. Apart from a new record being established in the first eleven months, November also saw the highest sales ever, with 29,706 vehicles sold, 86 per cent higher than in November 2014 and the 32nd month in succession of year-on-year growth.

Growth among brands varied. The standout performers in 2015 were Thaco and Ford Vietnam. Strategic vision and huge investment contributed to the success of Thaco, which was even greater than anticipated. The ability to provide quality products that meet the diverse demand of customers helped Ford Vietnam remain in the Top 3 brands in terms of sales.

Two years ago Thaco had to compete with the strongest competitor in sales - Toyota Vietnam, the giant who had always led the market. By 2015, however, Thaco had made a giant leap forward and continually held first place in sales.

Having overcome Toyota in total sales the competition between the two is only in passenger cars. Though Thaco has led the market overall, in passenger cars only it has remained behind Toyota Vietnam. The tables turned in November, though, with Thaco for the first time seeing sales of more than 5,000 passenger cars and outpacing the 4,400 Toyota sales by some distance.

Ford also saw a record November, with sales of 2,369 vehicles, for a 53 per cent increase year-on-year and its highest sales since it entered Vietnam 20 years ago. With 1,333 sold in November, the Ford Ranger - the American pickup - was the best-seller in Vietnam during the month for the first time.

After a long period of fluctuating in the market, GM Vietnam is showing signs of getting back on track in terms of sales. In November it recorded impressive sales growth of 76 per cent year-on-year, with 739 vehicles sold. In the first eleven months of 2015 it sold 6,500 vehicles of different types, up 43 per cent compared to the same period of 2014 and remarkable when compared to its sales of just a few years ago.

In the luxury category, Mercedes-Benz and Lexus both recorded considerable growth, especially Lexus. Two years after arriving in Vietnam its sales stood at 385 vehicles by November 2014, which then grew to 880 by November 2015, for growth of 170 per cent.

From a manufacturer’s perspective, Mr. Pham Van Dung, General Director of Ford Vietnam, believes the reason for the high growth is that the economy is developing stably and both incomes and the confidence of consumers are on the rise. A car is no longer considered just an asset but as a safe and convenient mode of transport for the family and one that can help a business. Improved infrastructure and lower petrol prices also make owning a car more attractive, and brands have been actively introducing new models that are suitable for local customers.

With fluctuations in the US dollar exchange rate and important changes in tax policies for the sector, experts believe the strong growth seen in 2015 is unlikely to continue into 2016. According to Mr. Nguyen Quang Minh, Deputy Head of the Sales Department at GM Vietnam, when the exchange rate increases manufacturers must increase their prices accordingly. The impact of exchange rates, he said, will push up the price of motor vehicles from the beginning of the new year.

The impact from exchange rates, however, is nothing compared to the impact of Decree No. 108 on special consumption tax (SCT), which was announced in early November 2015 and took effect on January 1. The SCT is to now be calculated on the wholesale price of importers rather than CIF (Cost, Insurance, Freight) and import tariffs, as previously.

Under this new method the SCT will be based on other costs such as transferring, marketing and the importer’s profit. Mr. Minh said the regulation has created myriad problems for manufacturers, with importers having little choice but to raise their prices in response. Motor vehicles with a large engine capacity are especially affected, with the Audi A8, for example, rising in price from VND4.2 billion ($186,312) to VND5.8 billion ($257,288).

Mr. Dirk Adelmann, Managing Director of Passenger Car Sales at Mercedes-Benz Vietnam, said the price of automobiles in Vietnam is now quite high compared to other countries. If prices continue upwards a motor vehicle will be unaffordable for most people.

He believes that enterprises and customers need stability in tax policies for the sector, applied on a detailed timeline and not immediately, because this negatively affects manufacturers, importers and customers. Policies - especially on taxes and fees - affect planning, pricing, and, most importantly, the purchasing decisions of customers.

Agreeing, Chairman of VAMA and General Director of Toyota Vietnam, Mr. Yoshihisa Maruta, said that adjusting the SCT will create difficulties for manufacturers in maintaining production. Manufacturers therefore hope that the government will consider this carefully and create a long-term, stable tax policy. If policies change it becomes difficult for manufacturers to determine business plans for the future. “Every change should be done gradually,” Mr. Maruta said. “The Ministry of Finance should consider this and adopt a road map to meet the interests of manufacturers, customers, and importers.

Though many challenges are waiting in 2016, automakers still expect to see growth in sales for the year. Mr. Maruta said that tax policies will be clearer and more stable this year, and along with economic recovery this should result in the motor vehicle market continuing to grow. Mr. Dung also expects that with the momentum provided by a stable economic recovery, sales in 2016 will rise slightly from the great results recorded in 2015.

ITC votes to move forward on probe of steel exports

The US Department of Commerce (DOC) will continue its investigation into whether Vietnam’s carbon-quality steel pipe (CWP) exports to the US are undercutting and significantly damaging the US steel industry.

The announcement was made by the Vietnam Competition Authority (VCA) on January 15, following a decision by the US International Trade Commission (ITC) that there was reasonable cause to believe Vietnam may be dumping steel in the US market.

Specifically, the ITC decision authorizes the investigation into whether CWP exports from Oman, the UAE, Pakistan, the Philippines and Vietnam to go forward with a preliminary decision due on or before April 5.

Construction sector devises tasks for 2016

An online meeting was held on January 15 to set this year's tasks for Vietnam’s construction sector.

A report presented at the meeting showed the sector’s socio-economic development targets saw significant growth with the highest record since 2010.

The sector has recorded positive results in improving its state management system and is speeding the implementation of projects on housing development.

In a speech, Deputy Prime Minister Vu Van Ninh asked the sector to focus on planning and management activities in 2016 with a long-term vision.

He called on the sector to enhance its management over construction orders and quality, and to offer more preferential policies to support low-income people to buy houses.

25,000 apartments in city offered for sale this year

The property market of HCMC will see another 25,000 apartments offered for sale this year with 30% of them in the high-end segment, according to Jones Lang LaSalle Vietnam.

Stephen Wyatt, chief executive officer of Jones Lang LaSalle Vietnam, said at a review meeting on the firm’s operation in 2015 in HCMC Monday that credit support for homebuyers will fuel housing transactions this year and that price hikes in all housing segments will continue in the coming time.

Wyatt said a number of luxury housing projects like Sunrise City - North Towers with 616 houses, Lexington Residence with 1,310 houses, Masteri Thao Dien with 3,827 houses and the Gold View with 1,759 houses will be completed in 2016-2018.

Earlier, the HCMC Real Estate Association (HoREA) said apart from HCMC’s southern part, its western part and the west bank of the Saigon River in districts 1, 2, 4, 9, Binh Thanh and Thu Duc will see many luxury apartments going up.

Major realty developers in the luxury segment include Dai Quang Minh, Vingroup, Novaland, Nam Long, Hung Thinh, Him Lam and Phu My Hung.

JLL forecast 1,000-1,200 villas and townhouses in Park Riverside, Saroma Villas and Saigon Pearl Villas projects will be built in the city this year.

The firm said sales of villas and townhouses will be the same as last year, mainly from medium and big projects, while their prices will climb by 4-6%.

Property service provider CBRE Vietnam said in a recent report that there have been fewer land lots for villas and townhouses in HCMC’s central areas while demand has risen. The villa-townhouse market turned busy in the final quarter of 2015, with a focus on outlying districts like 9, 2 and Nha Be. This trend is expected to continue in the years to come thanks to Vietnam’s economic growth and infrastructure development.

Khang Dien House Trading and Investment JSC is the leader in this segment at the moment, with a number of projects in District 9.

Similarly, products of the Nine South Estate project in Nha Be District and the Pho Dong Village project in District 2 are mainly townhouses and villas.

80% of VND30-trillion home loan package pledged

Banks had pledged to lend VND24.11 trillion (US$1.07 billion) to eligible beneficiaries of the Government’s VND30-trillion home loan program by end-November last year, 80% of the total.

Of the total loans, banks had disbursed some VND15.46 trillion, said the Housing and Real Estate Market Management Department under the Ministry of Construction.

Banks had lent VND10.07 trillion to households and VND3.84 trillion to corporate clients to develop 53 housing projects.

Under Decision 2645/QD-NHNN issued by the State Bank of Vietnam (SBV), banks will offer an annual lending rate of 5% in 2016 to customers of the program in line with the SBV’s Circular 11/2013/TT-NHNN, Circular 32/2014/TT-NHNN and the Government’s Resolution 02/NQ-CP dated January 7, 2013.

Figures of the HCMC Real Estate Association (HoREA) indicated that disbursements of the VND30-trillion home loan package reached VND3.43 trillion for 6,340 clients between June 1, 2013 and November 2015.

Le Hoang Chau, chairman of HoREA, said the home loan package has positive impact on the property market since the end of 2013. He said the credit package has helped drive property inventories down and support low-income earners to acquire homes.

However, disbursements by banks have remained lower than targeted while Circular 11/2013/TT-NHNN will expire on May 31, 2016.  Chau said the central bank should extend the home loan package.

VRG plans to open rubber exchange in end-2016

Vietnam Rubber Group (VRG) intends to establish a rubber exchange at the end of this year to offer businesses and farmers a new rubber trading channel.

Le Xuan Hoe, deputy general director of VRG, told the Daily that the group would operate the rubber exchange in partnership with the Vietnam Commodity Exchange (VNX) and Singapore Straits Pte Ltd (SSPL).

Hoe said VNX is involved in agricultural produce transactions, so it will be responsible for facilities and data, while SSPL will be in charge of trading, transport, delivery, and information collection.

Initially, the rubber exchange will focus on natural rubber products, Hoe said.

According to VGR, rubber firms and farmers have for years set their rubber prices based on prices offered on regional commodity exchanges such as TOCOM in Japan, SHFE in China, AFET in Thailand, and SGX in Singapore. Vietnam now has VNX but only RSS3 rubber is traded on the exchange.

SVR3L rubber was sold at VND23,200 a kilo on January 12 in the central and southeastern regions, declining VND1,000 compared to the previous day, while SVR10 rubber cost VND22,800 per kilo, down VND800.

According to the Ministry of Agriculture and Rural Development, Vietnam exported over 1.1 million tons of rubber worth US$1.5 billion last year, up 6% in volume but down nearly 14.5% in value.

The average rubber export price was US$1,377 per ton in the first eleven months of 2015, down by nearly 19% year-on-year. China remained the biggest importer of Vietnamese rubber, followed by Malaysia and India.

Experts: FDI drives growth

Growth in pledged and realized foreign direct investment (FDI) capital in 2015 will serve as a catalyst for Vietnam to achieve higher economic growth in the coming years, experts said.

Do Nhat Hoang, director general of the Foreign Investment Agency (FIA), was quoted by the Vietnam News Agency as saying that the FDI sector has continued contributing greatly to the country in terms of capital, gross domestic product (GDP) and export.

Last year, foreign investors disbursed US$14.5 billion for their projects in Vietnam, increasing 17.4% year-on-year, according to the FIA under the Ministry of Planning and Investment.

Data of the FIA showed 2,013 new projects were approved last year with total registered capital of nearly US$15.58 billion. Besides, foreign investors registered to increase investment capital of 814 projects by US$7.18 billion, up 56.5% over 2014.

In all, fresh and additional FDI approvals in 2015 totaled more than US$22.7 billion, a 12.5% year-on-year rise.

A number of big FDI projects approved last year were Samsung Display Vietnam with additional capital of US$3 billion in the north, Duyen Hai 2 thermal power plant with an investment of US$2.4 billion in the Mekong Delta and the Empire City property complex worth US$1.2 billion in HCMC.

As many as 19 sectors in Vietnam got foreign investments. Of these, the processing-manufacturing industry attracted more FDI with 955 new projects and 517 adjusted ones with US$15.23 billion in total (66.9%).

Vietnam attracted investments from 62 countries and territories last year. South Korea was the leader with fresh and extra capital totaling US$6.72 billion (29.6% of the total). The second, third and fourth positions went to Malaysia with US$2.47 billion (10.9%), Japan with US$1.84 billion (8.1%) and Taiwan with US$1.39 billion (6.1%).

Last year’s exports of the FDI sector, inclusive of crude oil, reached US$115.1 billion, up 13.8% and accounting for 70.9% of the country’s total export turnover.

In addition, the sector employed around three million laborers and made up over 20% of the economy’s total capital.

Vietnam has favorable conditions to become the strategic investment destination for multinational companies as well as small and medium enterprises, as more than 90% of tariff lines are being cut to zero.

Economic experts said the FDI sector has become an important driver for economic growth.

“Only two projects of Samsung in Bac Ninh and Thai Nguyen provinces have fueled growth of northern localities,” said Nguyen Mai, chairman of the Vietnam Association of Foreign-Invested Enterprises.

According to Minister of Planning and Investment Bui Quang Vinh, FDI is a crucial part of Vietnam’s economy and it is important to select quality foreign-invested projects to help improve growth quality.

A multi-million-dollar apparel project of Maple Co Ltd is the first foreign direct investment (FDI) approval in the northern province of Bac Ninh this year, according to the Bac Ninh Industrial Zone Management Board.

The Singapore-based firm has got an investment certificate to develop a US$110-million apparel factory on 11.1 hectares at the Vietnam-Singapore Industrial Park.

The facility will produce 22 million products per year for export when it is put into operation in January 2018.

Bac Ninh Province took the lead in FDI attraction last year when foreign companies pledged a combined US$3.65 billion for 133 new and 103 operational projects, according to the FIA.

Bac Ninh Province has attracted nearly 720 FDI projects capitalized at US$11.5 billion. Samsung, Canon, Microsoft, and Sumitomo are among the major investors in the province.

Farmers lose in floating rice production scheme

Farmers have incurred big losses from a floating rice growing scheme in An Giang Province as floodwater has not come in the Mekong Delta province strong in such rice production.

Nguyen Van Van, chairman of Vinh Phuoc Commune in An Giang Province’s Tri Ton District, said almost all floating rice fields covering nearly 100 hectares in Luong An Tra and Vinh Phuoc communes have been damaged by rats due to a lack of floodwater.

Planted in the flooding season and mature within six months, this rice variety always rises above water, so no matter how severe flooding is, it can grow well. Local farmers earned big profit from this rice in 2014 but the crop turned sour last year.

Van said based on the buying price of VND12,000 per kilogram set by Farm Ecology Joint Stock Company (ECOFARM), total losses in the communes alone are estimated at VND1.8 billion (US$80,262) as floating rice productivity is low, at about 1.5 tons per hectare.

Early last year, at the festival of floating rice harvest, Huynh The Nang, general director of Southern Food Corporation (Vinafood 2), announced that HCMC Food Co Ltd and An Giang Food and Foodstuff Co would collaborate with ECOFARM to consume the entire floating rice output of farmers at VND12,000 per kilogram.

The Center for Agriculture and Rural Development Research under An Giang University and the German Agency for International Cooperation (GIZ) chose floating rice fields in Luong An Tra and Vinh Phuoc communes for a project for restoring floating rice cultivation. The objective is to expand the floating rice area to 200 hectares in 2016 and 500 hectares in 2020.

Floating rice varieties grow naturally and fast and do not need plant protection drugs and fertilizer, so the rice is seen as an organic product.

Urea imports rise three-fold last year

Although fertilizer plants in the country are able to meet domestic demand for urea fertilizer, Vietnam imported 652,000 tons of urea last year, three times higher than in 2014.

Nguyen Hac Thuy, vice chairman and general secretary of the Vietnam Fertilizer Association, said a number of local firms imported urea in 2015 for re-export, instead of selling it on the home market.

According to the Ministry of Agriculture and Rural Development, Vietnam spent US$1.43 billion importing 4.56 million tons of fertilizer products last year, up 15% and 20% against 2014 respectively. Of them, urea and SA fertilizer imports rose sharply.

Urea imports soared by three times while SA fertilizer imports climbed 13% to 1.05 million tons, the ministry said. Fertilizer shipments from China accounted for nearly 47% of the total fertilizer import bill, and the remainder was from Indonesia, Malaysia, South Korea and Belgium.

According to the Ministry of Finance’s Price Management Department, Vietnam needed around 10.83 million tons of fertilizer including 2.1 million tons of urea last year. Locally-produced fertilizer output totaled 8.3 million tons with urea fertilizer making up 2.27 million tons, so fertilizer imports for domestic needs should be around 2.53 million tons.

Therefore, the fertilizer volume imported for re-export should have accounted for more than two million tons of the 4.56 million tons imported in 2015 in accordance with what Hac explained.

However, data of the General Department of Customs showed fertilizer exports had neared 647,500 million tons worth roughly US$233 million as of November 15.

Low-cost gas supply in decline

PetroVietnam Gas Corporation (PV Gas) has forecast that local low-cost gas supply could grow scarce in the next two or three years as reserves in near-shore gas fields are being depleted.

PV Gas said in a recent report that Vietnam’s gas industry is facing challenges over gas exploitation, distribution and pricing. Reserves at gas fields with exploitation cost of below US$5 per cubic meter are on the wane. Meanwhile, gas fields to be put into operation in the coming time are offshore, so their production costs will be high, close to US$10 per cubic meter.

In addition to domestic gas supply, Vietnam has to import liquefied natural gas (LNG) and considers buying gas via the trans-ASEAN gas pipeline from regional countries like Indonesia, Thailand and Malaysia as well as tap into other gas sources like coal gas.

Under the master development plan for the gas industry until 2015 with a vision towards 2025 approved in 2011, the country’s total gas supply in 2015 would reach 15 billion cubic meters.

Some operational offshore gas projects are blocks B-52, Hai Thach-Moc Tinh, Thien Ung-Mang Cay, Block B-O Mon and Nam Con Son 2 pipelines.

Experts said in order to realize targets in the plan, the gas sector needs to work out schemes to build gas pipelines and gas processing plants for each region and set prices for each field and region. Besides, the country should import LNG given the current low oil price.

According to Vietnam Electricity Group (EVN), hydropower plants will generate around 3.2 billion kWh less this year than last year due to drought triggered by the El Nino weather phenomenon. Therefore, EVN will have to seek more electricity from gas- and coal-fueled power facilities, or import it from China.

Regarding power supply of the 2016 dry season, EVN said commercial electricity will pick up 11.4% against last year with nearly 160 billion kWh. Of the total volume, hydropower plants will make up almost 30%, coal-fueled plants 41% and gas-fueled plants 28% while imports from China will be some 950 million kWh (down 733 million kWh).

If power demand shoots up, the group will consider using oil for electricity generation.

Spate of multi-million real estate projects left unfinished in Dong Nai

According to Dong Nai Department of Planning and Investment, the southern province is currently home to nearly 10 capital-intensive real estate projects, such as Waterfront City and Aqua City in Long Hung commune (Bien Hoa city), and Dai Phuoc Lotus in Nhon Trach district’s Dai Phuoc commune.

Many of these major projects, however, saw little progress since their deployment.

Topping the list of Dong Nai’s capital-intensive real estate projects is $750 million Vietnamese-Singaporean joint venture project Waterfront City occupying nearly 367 hectares.  

Despite being licensed in April 2008, the project is still at the ground levelling and infrastructure development stage.

Next to Waterfront City is the $519 million Aqua City project covering a 305 hectare (ha) area. Similarly to Waterfront, Aqua City is also a joint venture project, between Vietnamese and UK partners.

This project, although getting its investment certificate in 2008, is in a similar state to Waterfront City. Both projects are part of the 1,500ha Long Hung new urban area’s master plan.

According to Bui Thanh Truc, chairman and general director of Dong Nai Agriculture Services Cooperative Union (DonaCoop), Waterfront and Aqua City are two of five component projects belonging to Long Hung’s new urban area. Once completed, the projects will form a complete urban development with a full set of top-ranking facilities and services, offering about 3,000 land plots and 500 apartments especially catering to offer foreign experts expected to enter the market in 2016.

DonaCoop is one of the developers of Long Hung new urban area development project.

In actuality, more than seven years since being licensed, the developers of Waterfront and Aqua City have only managed to complete some roads at the project sites and are still occupied with ground levelling—making the big 2016 sales promises rather unlikely.

Similarly, the $400 million Dai Phuoc Lotus project still stands at infrastructure development phase after receiving its investment certificate more than eight years ago.

The project was to form part of the 465ha Dai Phuoc eco-resort project developed by Singapore-backed VinaCapital and local partner DIC.

From 2012 until present, Dong Nai has revoked the investment certificates of about 20 real estate projects due to the developers’ failure to carry out the proper project implementation, reported newswire dddn.com.vn.  

Nguyen Van Long, an investor living in Bien Hoa city, shared that during 2008-2009, provincial land prices jumped three to four-fold following the construction of the major Ho Chi Minh City-Long Thanh-Dau Giay expressway, which crosses the province, and the National Assembly approval to build Long Thanh International Airport in the province.

Property developers have launched a string of major projects in anticipation of a new investment wave. Speculative investors also flocked to Dong Nai for land plot purchases, waiting for making profits on the long run.  

“When the real estate bubbles burst, ‘runaway’ investors like me incurred remarkable losses. Secondary investors are now extremely wary of residential projects in the province,” Long said.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR