Dalat’s environmental-friendly city goal

The Prime Minister has approved the Dalat City general planning zone adjustment towards 2030 and vision towards 2050, ordering local authorities to develop the city into a modern and environmental-friendly urban area.

Accordingly, the modern city in Lam Dong Province as envisioned will cover 3,308 square kilometers. These areas include the whole existing administrative boundary of Dalat City, Lac Duong, Don Duong, Duc Trong districts and Nam Ban Town in Lam Ha District.

Under the planning zone, Dalat City is Lam Dong Province’s center of politics and administration, economics and culture services. Dalat is also the hub of national and international tourism, resorts and as well as the center of nation-level science research, technology training and transferring.

Dalat’s current population is 515,000, with the urbanized ratio of 52%. It is forecast that the population will rise to about 620,000-650,000 by 2020 and 700,000-750,000 by 2030 with the urbanized rate reaching 55%-60% and 60%-65% respectively.

By 2020 and 2030, the city is expected to welcome around 5-6 million and 9-10 million tourists respectively.

Nonetheless, the project restricts the expansion of the existing city inner area and aims at improving living conditions of local residents while preserving the urban space and architectural works.

Notably, the plan requires the locality to set up a close connection between new urban areas and university complexes, tourist attractions, hi-tech industrial parks and airports. Also, the city’s authorities are requested to avoid developing urban areas along routes leading to the inner city.

At the request of the Prime Minister, Lam Dong Province has to draft and ratify the planning zone in the next 12 months.
 
VN and RoK firms sign agreements

The Quang Nam Province People's Committee announced last week that it had signed two agreements on investment and co-operation worth US$360 million with South Korean firms.

Under the agreement between the Committee and the Columbus Development Company, the two sides will co-operate in a $350 million project to construct an area of 1,000ha in the Chu Lai Open Economic Zone, which is expected to be put into operation by 2013. According to the agreement between the Dat Quang Chu Lai Minerals JSC and Hyundai Welding Co Ltd, which specialises in manufacturing welding products, the former will provide rutile and titanium cinder to the latter from 2012-2014 and sell a 20 per cent stake valued at $10 million to the latter.

Suzuki to build automobile plant

Suzuki Motor Corporation, one of Japan's leading automobile and motorbike manufacturers, said last week that it would build a new automobile factory in the southern province of Dong Nai.

It has a total investment of 1 billion Japanese Yen (US$13 million) and expects to meet the growing demand for autos in the Vietnamese market. The factory is scheduled to become operational by 2013 with an initial production capacity of 5,000 units per year, which will be increased gradually in the future.

Cargill purchases shrimp mill

The Cargill Viet Nam Co Ltd announced last week that it had completed the asset purchase of a shrimp feed mill located in the southern province of Tien Giang's Tan Huong Industrial Zone from the Japan-based Higashimaru Viet Nam Co Ltd.

Starting operations in 2008, the US$4 million mill has the capacity of 10,000-15,000 tonnes per year. Cargill expects to begin producing its own shrimp feed within two to three months after making additional investments to the mill.

Vistar signs management deal

Vistar Co Ltd, the investor of the Melia Da Nang Hotel and Resort project, on Friday signed a management agreement with Melia Hotels International.

The project, located on a 12.7ha beach, has a total of 500 rooms, conference rooms with a capacity of 700 people, three swimming pools, a shopping centre and watersports facilities. The first phase is projected to be completed next summer.

Banks bid to attract fresh gold deposits

Banks in HCM City are vying to increase interest rates on gold and deposits in unpopular foreign currencies, considering it as a solution to improve liquidity.

Sharp increases in the interest rate on gold deposits at local banks in recent days have ranged between 3 per cent and 3.5 per cent per annum, much higher than the level of 0.2 per cent or 1 per cent recorded in May.

The Viet Nam Tin Nghia Joint-Stock Commercial Bank is offering an interest rate of 3.2 per cent per annum for gold deposits with three and nine month terms, and the Sai Gon Joint-Stock Commercial Bank is paying a similar rate for gold deposits with terms from three to 11 months.

Many major commercial banks are also involved in the race. For instance, the highest interest rate on three-month gold deposits at the Viet Nam Export-Import Joint Stock Commercial Bank is 2.2 per cent, and the of rate on deposits with other terms average between 1.5 per cent and 2.1 per cent per year.

The Asia Commercial Bank (ACB) has increased its interest rate for certificates of one-and three–month gold deposits, with the highest level of 1.6 per cent. Its interest rate for gold deposits of 10 taels or more will be 2.5 per cent per year.

While the highest gold interest rate at Dong A Joint Stock Commercial Bank stands at only 0.4 per cent on three month-term deposits, the bank is ready to pay dividends equal to 3 per cent per year to those who use the bank's gold-keeping service.

A similar situation is also seen with interest rates on deposits in less popular foreign currencies, according to independent market watchdogs.

Hongkong Shanghai Banking Corporation has increased its interest rate on Australian dollar deposits to 4 per cent per year.

The Viet Nam Tin Nghia Joint-Stock Commerial Bank offers the highest interest rate of 3.2 per cent per annum for euro deposits, with terms ranging from 12 to 24 months, and a 3.8 per cent rate for AUD deposits.

However, the highest rate for euro deposits is seen at the Saigon Joint Stock Commercial Bank, with 4 per cent paid for those with terms of between 12 and 24 months.

Explaining the recent changes, several bankers said the central bank had begun to exercise strict control over banks' application of interest rate caps on both Vietnamese dong and US dollar deposits.

Many banks had to increase deposit rates on gold and less foreign currencies to be able to raise more funds from the public and improve their liquidity.

An official of a commercial bank in the city, who declined to be named, said that many clients had withdrawn gold deposits before due date to sell and make a profit because market gold prices had gone up continuously.

This had resulted in a shortage of gold deposits. For the banks, gold deposits are important because they can use them as collateral security to get dong loans from other banks at lower interest rates.

So, the banks had had to raise their gold interest rates in hopes of mobilising more gold, he said.

At present, many commercial banks consider mobilisation of gold as a temporary measure to help them handle liquidity issues, according to senior financial expert Le Trong Nhi.

Nhi, however, said this measure would likely create risks for the banks when there were strong fluctuations in gold prices on the market.

He said it was expected to have an adverse impact on both the gold and foreign exchange markets.

According to analysts, when the interest rate of US-dollar deposits is capped, there would naturally be certain changes in the interest rate and exchange rate markets.

At this time, other strong foreign currencies like the euro, AUD and CAD would be chosen by many banks.

These moves would enable the banks to attract more foreign currency deposits from people's savings.

Then they could sell these mobilised foreign currencies to other banks or importing enterprises to receive dong or US dollars, they said.

Dak Lak Province needs to increase export of instant coffee  

Recent years have seen a high export turnover of raw coffee in the central highland province of Dak Lak, but businesses have not been able to increase export of ground or instant coffee.    

Coffee export turnover in the province increased by 29.4 percent to reach US$650 million, accounting for 26.32 percent of the country’s export turnover in 2010-2011.

However, financial difficulties have led some companies to stop export of coffee and switch to production or purchase of raw coffee for resale to larger companies. Currently only 11 businesses are exporting raw coffee. As a result, export output fell by nearly 13 percent to only 311,000 tons during this crop season.

Meanwhile, export of ground and instant coffee accounts for only 7-8 percent of the province coffee output, said Vo Thanh, Director of the Department of Industry and Trade.

During this crop season, there are only two companies exporting ground and instant coffee with a total output of about 3,000 tons, yielding a turnover of $3.5 million.

Mr Thanh hoped that export of ground and instant coffee will improve as many processing plants are about to become operational. This will raise the province output in this processed coffee to 14-15 percent by next year.

Dak Lak authorities have also called for more investments in the coffee processing industry. A total of eight projects have so far been initiated at a total cost of VND1.23 trillion (US$58 million).

Dak Lak Province in the Central Highlands is the main coffee producing area in Vietnam, exporting coffee to 50 countries and territories across the world.
 
Steelmakers feel heat

The slump in steel prices, coupled with the recession in the construction market earlier in 2011, has pushed many local steel manufacturers and businesses to the edge of bankruptcy. According to figures released by the Viet Nam Steel Association (VSA), steel consumption in the local market has continually dropped in the past few months, from 480,000 tonnes in August to 326,000 tonnes in October this year.

The slump in consumption means an increase in stockpiles. The volume of unsold steel currently stockpiled at plants is estimated at 500,000 tonnes.

To avoid further losses, steel enterprises have had to sell their products at lower prices.

The VSA said cost price of a tonne of construction steel was about VND15.7 million to VND16 million per tonne if a steel plant operated at full capacity. Steel is being sold for VND15 million per tonne but steel plants are operating at 40 per cent of their capacity, so the losses incurred by steel makers are much bigger.

The association also said that steel ingot prices had dropped in the world market, from $470 to $480 per tonne in September 2001 to $400-420 per tonne at present. Under such critical circumstances, enterprises that have large volumes of stockpiles will face even greater difficulties, and possibly go bankrupt.

"News about the sales of Van Loi and Dinh Vu steel plants in Hai Phong is "the tip of an iceberg," said the director of a steel enterprise in HCM City who declined to be named. He added 30 per cent of steel enterprises can no longer pay their debts, and could be recognised as "going bankrupt".

However, VSA Chairman Pham Chi Cuong said it was not easy at all for steel enterprises which incurred losses to sell their production lines and withdraw from the market under the current critical situation.

The use of outdated technologies is now the biggest difficulty facing many local steel enterprises. Their weak financial capacity was the major reason that forced them to buy cheap facilities for their steel production lines, said Do Duy Thai, director of the Viet Steel Co.

The weak financial capacity and high interest rates in the local market may also see local steel enterprises lose the local market to overseas steel manufacturers as well as plants with foreign direct investment (FDI).

Chairman Cuong affirmed that most steel producers currently facing big challenges were local enterprises.

He explained that FDI enterprises, with stronger financial capacity plus loans with much lower interest rates (provided by overseas banks) could easily overcome the current difficulties and wait for the situation to improve. This is a luxury that locally-invested plants do not have.

Hong Kong mission to boost tourism

A delegation of 27 Hong Kong travel companies visited HCM City yesterday to meet trade partners in HCM City and explore new collaboration opportunities.

The delegation comprises airlines, hotels, travel agents and tour operators.

According to the Hong Kong Tourism Board, which organised the delegation's Viet Nam visit that began on Thursday, visitors to Hong Kong reached more than 30.4 million in the first three quarters of this year, up 16.2 per cent year-on-year.

Arrivals from the Southeast Asian market grew steadily in the period with 2.26 million, an increase of 9.7 per cent over the same period last year.

In the first nine months of this year, there were 64,730 Vietnamese visitors to Hong Kong, a year-on-year decline of 22.5 per cent.

Steel mill complex loses licence

The Ninh Thuan Province People's Committee announced earlier this week that it would officially revoke the investment certificate of the Ca Na Steel Mill Complex Project, an investment by the Viet Nam Shipbuilding Industry Group (Vinashin) in a joint venture with Lion Group (Malaysia).

Ca Na Steel Mill Complex had an investment capital of US$9.8 billion and was granted an investment certificate in 2008. However, Lion Group's lack of financial capacity caused delays.

Nation participates in India trade fair

Four Vietnamese businesses are exhibiting their products at the 14-day India International Trade Fair 2011 that opened in New Delhi earlier this week.

Over 6,500 Indian and foreign companies from 30 countries and territories, including the US, Russia, the UK, France, China, Singapore, Thailand and Pakistan, are taking part in the fair.

Vietnamese trading companies Nhu Hoa, Thanh Thao, Hoai Phuoc and Machi are showcasing computer software, automobiles, electronics, telecoms, leather products, textiles, handicrafts, jewellery, interior decor and consumer goods. The India International Trade Fair is organised by the Trade Promotion Organisation under the Indian Ministry of Commerce and Industry, aiming to promote trade exchanges between India and countries worldwide.

Siemens demo truck heads northward

The first ever TIA demo truck road show - a mobile technology expo show organised by the Industry Sector of Siemens Limited, is on the road from the south to the north of Viet Nam this week.

It will stop at 10 big cities to present the German company's state-of-the art products, systems and solutions in the automation industry to current and potential customers as well as the public. TIA is the ideal integrated solution concept for all types of industries such as chemical, petrochemical, food and beverage.

Taxes on land use in urban areas to rise by up to 40%

The land-use rights tax could rise by as much as 40 per cent in urban areas such as Ha Noi and HCM City when the new non-agricultural land law comes into effect at the beginning of next year, the Ministry of Finance has said.

Meanwhile, the tax on agricultural land will drop by 50 to 70 per cent.

According to the law, there will be three tax rates – 0.03 per cent, 0.07 per cent, and 0.15 per cent. The ministry said about 17 million households would be affected by the change.

Developer gets green light for urban development

Northern Hung Yen Province has approved a plan submitted by the Housing and Urban Development Group (HUD) to build the second phase of the Pho Noi New Urban Area. About 13,600 people are expected to live in the 140ha residential area. The project's first phase was funded by Hoa Phat Group with a total investment of VND4 trillion (US$190 million).

$14.7 million invested in beach tourism facilities

Northern Nam Dinh Province has invested VND310 billion (US$14.7 million) in a planned beach tourism area in Nghia Hung District.

The district has completed land clearance and built roads for the 2 million square metre tourism area, which lies 65 kilometres from Nam Dinh City. The project is expected to be completed in 2014.

Border trade with China ‘modest'
 
Border trade in northern areas needs both medium-term and long-term policies for specific action plans to develop the border relationship with China, especially in terms of exports, said a trade official in Ha Noi yesterday.

In his speech at a conference to review border trade activities in northern areas during the 2006-2011 period, Deputy Minister of Industry and Trade Nguyen Cam Tu said that border trade between Viet Nam and China in recent years remained modest.

Vietnamese enterprises often lacked action on exporting goods to this potential market despite flexible changes in the Chinese government's border trading policies, Tu said.

He asked for a synchronised management policy for border trading between the central Government and the People's Committees of border provinces, which would help boost exports to China.

According to Tran Bao Giam, head of the Mountainous Trade Department, the Viet Nam-China border trading area was considered the northern gateway of the key northern economic zone.

From 2006-2011, the Government and ministries issued timely mechanisms and policies which were suitable to the development situation, creating favourable conditions for import-export activities with China, Giam said.

He added that in the coming time, as the ASEAN-China Free Trade Area as well as other international and regional economic agreements came into effect and developed, border gates between the two countries would become not only gates for exchange but also for economic development and trade with other countries.

Viet Nam has seven mountainous provinces including Quang Ninh, Lang Son, Cao Bang, Ha Giang, Lao Cai, Dien Bien and Lai Chau sharing a border with China's Yunnan and Guangxi provinces. Statistics from the Ministry of Industry and Trade (MoIT) show that the total value of trade through all gates from 2006 had a year-on-year increase of 16.6 per cent. Total turnover was reported to reach over US$23.8 billion. However, trade imbalance is still a problem since Viet Nam continues to suffer a trade deficit while the value of export goods remains low.

Deputy Director of the Quang Ninh Department of Industry and Trade Bui Gia Tuan said that the reason was because Viet Nam primarily exported raw materials or preliminarily treated goods so they lacked competitiveness and it was easy for Chinese partners to offer only a modest amount.

Tuan also blamed the limited expansion of export and unsynchronised infrastructure for border trade on the Viet Nam side as two more reasons. He said that roads for trade in some areas were narrow and degraded, making it difficult for goods to flow through the border gates.

At the conference, the MoIT also asked the Government to boost border trade promotion activities and build a policy to develop infrastructure in border areas.

Economic stabilisation rests on SBV strategies

In a move to cut public spending and maintain economic stability, the State Bank of Viet Nam has been advised to contain inflation for at least six months and adopt aggressive macro-economic policies.

The strategy emerged at an international seminar titled Monetary policy co-ordination with other macro-economic policies in a challenging global economic environment hosted by the bank, the Asian Development Bank (ADB) and the Banking Academy in Ha Noi yesterday.

ADB director for Viet Nam Tomoyuki Kimura said despite the Government's firm commitment to stabilising the foreign-exchange market and replenishing foreign reserves, year-on-year inflation remained high at 21.6 per cent as of October.

"Closer co-ordination between the monetary policies of banks and other macro-economic policies is also critical to ensuring stability," said Kimura. "Restoring macro-economic stability is the immediate priority, but addressing the root causes of high inflation requires greater structural reforms."

To Ngoc Hung, director of the Banking Academy, said that there had to be co-ordination between the banking world's monetary policies and the Government's fiscal policies relating to income from taxes and bonds.

This meant monetary policies should maintain inflation targets and contribute to economic growth, while fiscal policies should maintain budget balance at a reasonable level and ensure sustainable growth.

However, experts at the seminar said co-ordination had not been smooth in recent years.

In 2011, the State budget deficit is projected to reduce to 4.9 per cent of GDP against the planned figure of 5.3 per cent. Meanwhile, the money supply is eyed to increase by 12.5 per cent, credit growth by 12 per cent in 2011 against the planned figures of 20 per cent and 16 per cent, respectively.

In the first half of 2008, when monetary policy tightened to contain inflation, both the money supply and total balance growth fell, yet Government expenditure exceeded estimates by 19 per cent, up 22 per cent against 2007 and accounting for 3.075 per cent of GDP.

"The degree of tightening fiscal policy was much less than for monetary policy," said Hung.

Hung suggested that strong commitments were required from the State Bank to curb inflation and maintain levels for at least six months.

Other experts said policy makers should stop making sudden changes to both monetary and fiscal policies, take into account catch-up effects to identify the appropriate time, dose and degree of changes, and avoid making excessive impacts to achieve short-term objectives. They said this could create future adverse effects.

Iskandar Simorangkir, head of the Economic Research Bureau at Bank Indonesia, suggested that to alleviate the volatility of capital flows, policy makers should apply prudential measures by minimising holding periods and requiring higher levels of foreign exchange reserves.

Vietnamese wood product enterprises need to develop local market  

Vietnam ranks amongst 10 biggest wood product exporters in the world with the country’s furniture export turnover having crossed US$4 billion this year.   

However, Vietnamese wood product enterprises are focused more on finding   new markets in the world and have forgotten and pay little attention to developing the domestic market which has an annual turnover of about US$1 billion.

According to the Handicraft & Wood Industry Association (HAWA) in Ho Chi Minh City, to develop the domestic market, enterprises need to survey and adopt a long-term strategy.

Years ago, some enterprises found potential in the home market. Hoang Anh Gia Lai, Hoa Phat Corporation and AA Corporation ( for Interiors and Furniture) have found their own direction in exploiting the market in the country.

Hoang Anh Gia Lai has built its own distribution system and outlets in the country, while Hoa Phat has its specific product line, that is difficult to replicate by other enterprises. AA Corporation returned to the home market after it received  orders to supply Vietnamese furniture to five-star hotels like Sofitel Old Cataract, Grand Geneva Resort and a palace in Kuwait.  It is now considering the home retail market as a long-term strategy with five brand names, said its chairman Nguyen Quoc Khanh.

Enterprises find it hard to sell products as exporters get used to   large orders and payment methods, while the domestic market is rather insecure. Although wooden furniture is selling along Ngo Gia Tu Street in District 10 and Cong Hoa in District Tan Binh in HCMC, the shops here are too small with no link between producer and seller.

HAWA said manufacturers should link with owners of these stores in order to increase the market, for which it will help provide information on product lines, telephone numbers and websites addresses of producers to more than  2,000 stores, showrooms, supermarkets and interior decorators.

The second Vietnam International Furniture and Home Accessory Fair 2011 in Ho Chi Minh City gave exhibitors a wide range of opportunities.  Through the event, distributors and manufacturers came to understand more about consumer needs.
 
Owner requests tax break to be applied to imported aircraft

The Ha Noi-based Hanh Tinh Xanh Company (Green Planet) has requested that an import tax of zero, alongside a special consumption tax break, be applied for four light private jets imported for educational, training and commercial purposes.

The private jets, which arrived in Hai Phong Port by sea at the end of last month, include two airplanes A600 Talon, Rotorway, from the USA and two other ATEC 321 and Faeta, from the Czech Republic.

According to the existing regulations, each jet would be levied a special consumption tax rate of 30 per cent and a value-added-tax (VAT) rate of 10 per cent.

In fact, two private jets imported by the groups Hoang Anh Gia Lai and Hoa Phat in 2008 and 2010, respectively, were given a special consumption tax rate of 30 per cent and a VAT rate at 10 per cent.

However, Cao Van Son, chairman of Hanh Tinh Xanh Company's board of directors, said that so far, all imported airplanes for commercial purposes by Vietnam Airlines or Air Mekong had been permitted to receive an import tax rate of zero.

At the moment, the four light private jets are still in Hai Phong Port's warehouse awaiting customs clearance.

Because the importation of these four private airplanes was the first case of its kind, the General Department of Customs consulted the Civil Aviation Administration of Viet Nam to impose the right taxes.

Phung Quoc Hien, chairman of the National Assembly Committee on Economy and Budget, told Dan Tri online newspapers that a special consumption tax rate of 30 per cent was levied on luxury items, such as private airplanes and yachts, in order to discourage individual possession of those high-end commodities.

However, he said several cases would be allowed a tax break if the import of such items served commercial purposes, including passenger transportation, tourism, services or production.

Policy unlikely to boost market
 
Although looser credit policies to assist developers of low-cost housing to access bank loans were greeted enthusiastically this week by the real estate industry, experts doubted the looser policy would give much of a boost to the frozen real estate market.

The State Bank of Viet Nam issued Document No 8844/NHNN-CSTT last Monday, easing credit restrictions on non-productive industries to allow commercial banks to grant financing for social housing projects.

Under the document, projects to build apartments for low-income workers at industrial parks and economic and processing zones, as well as housing projects that would be completed and available for occupancy before the beginning of next year, would be eligible for credit. Mortgage loans for home buyers would also be excluded from the credit restriction.

This was a correct decision, said the former director of the HCM City Economic Research Institute, Tran Du Lich, noting that the real estate market was interrelated with a number of production sectors, including building materials manufacturers. Looser credit for housing construction would help boost these industries, Lich said.

The new policy would have a positive, short-term impact on demand for housing, helping low-income buyers get into new properties more quickly, said Viet Nam Real Estate Association general secretary Phan Thanh Mai.

However, Mai said the market would continue to need more capital for medium- and long-term development, and urged the introduction of new tools to finance development, including house savings funds and real estate investment trusts.

Navigat Real Estate Consulting Co director Dang Van Quang also said the new policy was just "spirit medicine" for the local property market, a small boost for the optimism of investors that was unlikely to have a significant impact on the market.

Quang told the online newspaper Vnexpress that the new policy would benefit few actual construction projects, nor would it help low-income workers obtain loans to finance home purchases since commercial banks still decided whether to grant loans based on the earnings of the borrower.

Workers with wages of just VND4-8 million per month would be unlikely to qualify for loans of hundreds of millions of dong for apartments with prices of VND10-12 million per square metre, Quang said.

High interest rates of 20-25 per cent would also keep investors and home buyers from borrowing to buy property or finance construction of projects, he said.

Dat Lanh Real Estate Co deputy director Nguyen Van Duc also noted that housing projects to be completed and available for occupancy before the beginning of next year were not in need of capital, as projects generally needed to arrange financing by the time they were 50-70 per cent completed.

Watchdog eyes ways to spur market

The State Securities Commission is outlining measures to help form a more substantial stock market, focusing on the legal framework for securities trading.

"A strategy to develop securities market during 2011-20 is under the assessment by the Ministry of Justice, and we expect to submit it to the Government this year," commission chairman Vu Bang said on Wednesday, adding a new decree guiding enforcement of the amended Law on Securities would be issued before the end of the year.

In addition, circulars giving detailed guidance on public offers, redemption of shares, additional issues and listing of securities would be issued in the first quarter of next year, he said.

The commission was also rushing to complete an inter-ministerial circular between the Ministry of Finance and the State Bank of Viet Nam on public offering procedures for credit institutions. It was also working with the Ministry of Planning and Investment to give instructions to foreign-invested enterprises seeking to convert themselves into joint stock companies and list shares on the stock exchange.

In the future, he said, the commission would collaborate with the central bank on measures for the stock market in terms of securities settlement systems and restructuring securities companies affiliated with banks.

Bang said that the commission would submit its restructuring plan for the stock market during the 2012-13 period in the second quarter of next year.

"The Government bond market will be strengthened and a pilot programme on bond swaps and large-scale issues will be implemented, aiming at attracting foreign investors," he noted.

"We will establish a set of CAMELS criteria next year to classify securities firms, offering more services on the market such as open funds, real estate investment funds and voluntary pension funds to create demand for the stock market."

The CAMELS rating system is used by international financial supervisory authorities to rate institutions according to six factors, including capital adequacy, asset quality, management quality, earnings, liquidity and sensitivity to market risk.