Vinashin continues to borrow to pay salaries

The Vietnam Shipbuilding Industry Corporation (Vinashin) still owes VND292.148 billion (USD14 million) in unpaid debts to the Vietnam Development Bank (VDB) as of January 31.

The loan has been used to cover salary arrears and employee insurance.

The Government Office said that on December 24, 2010, the Prime Minister had approved a proposal to allow Vinashin to borrow money to pay salaries, social insurance, health insurance, unemployment insurance, severance allowances, job creation and job training fees. Its loan was also approved by Minister of Labour, Invalids and Social Affairs and the Ministry of Finance.

According to the proposal, all the enterprises under Vinashin and Vinashin's enterprises transferred to Vietnam National Shipping Lines (Vinalines) can borrow money from the VDB at 0% interest and 12 months loan term to cover the unpaid salaries and insurances.

Currently, Vinashin are in debt to more than 40 credit organisations include a VND6.3 trillion (USD300 million) debt to the Bank for Investment and Development of Vietnam (BIDV).

Market rallies on long-term hopes

The VN-Index added another 1.3 per cent in value to end yesterday's session at 423.89 points. The value of trades on the HCM City Stock Exchange also rose by 30 per cent over Wednesday's level to VND960.8 billion (US$45.7 million), while volume reached 67.4 million shares.

Advancers outnumbered decliners by 198-50, while the VN30, which tracks the country's 30 best stocks, also edged up by 1.15 per cent to 476.40 points.

Of the 10 leading shares by capitalisation, real estate developer Hoang Anh Gia Lai (HAG) hit its ceiling price of VND27,600 per share, while Sacombank (STB) – beset by takeover rumours – was the only leading stock to lose value, retreating by 1.6 per cent.

Military Bank (MBB) was the most-active code on the southern bourse with nearly 5.8 million shares changing hands, but the most-active share nationwide was Habubank (HBB), with 13.3 million traded on the Ha Noi Stock Exchange. HBB has seen several sessions with volumes of over 10 million shares.

Total volume on the Ha Noi bourse yesterday reached 76.7 million shares, while the value of trades rose 12.5 per cent over the previous session to VND627.5 billion ($ 29.8 million). The HNX-Index closed up by 1.6 per cent to 66.78 points.

Standard Chartered Bank this week predicted that the nation's inflation would continue to decline this month and joined Dragon Capital and HSBC experts in projecting that the consumer price index (CPI) would return to single-digit levels in the second quarter.

Tran Thi Kim Cuong, head of the securities investment division of Canada's Manulife Financial Corporation's Viet Nam-based unit, told Bloomberg that Viet Nam's stock market, which has already gained 18 per cent since the beginning of this year, was considered the second-best performing in Asia and predicted that the VN-Index would climb as high as 516 points this year.

"The market this year is poised for more upside potential than downside," Cuong said.

However, Bao Viet Securities Co analyst Nguyen Xuan Binh gave a more cautious assessment. "As the market continues to heat up, we doubt its increasing momentum will be sustainable," Binh said.

Foreign investors yesterday picked up a combined net of around VND95.7 billion ($4.5 million) worth of shares on both stock exchanges.

Vietnam CPI keeps rising, up 1.37% in Feb

The consumer price index (CPI) of Vietnam rose 1.37 percent in February, up for the 4th month in a row, due to a seasonal factor – the Tet (Lunar New Year) holiday, according to the General Statistic Office (GSO).

The index rose 2.38 percent in the first 2 months of this year and 16.44 percent year on year.

This is the second smallest February CPI increase in the last decade after that in February 2009, said the GSO.

The CPI rises in February 2011 and 2010 were 2.09 percent and 1.96 percent respectively.
The money inflow was channeled into consumption with a 4 percent increase, but the aggregate demand seems to fall in the post-Tet period, said GSO.

Among the 11 groups of goods and commodities used for the CPI calculation, as usual, only the group of post and telecom, saw a decline – 0.16 percent – in prices month on month.

The group of housing and construction material, including rent, electricity, water, fuel and building material, saw the highest price hike -2.47 percent, mostly due to the rise of electricity prices in December 2011, and gas prices last month.

It is followed by the food, foodstuff and catering services group, with a 2.11 percent rise due to the Tet holiday, during which catering services and foodstuffs rose the highest amount, with 2.82 percent and 2.73 percent increases, while food edged down 0.41 percent in price.

The remaining rose 0.2-0.5 percent, representing stability in prices, said GSO.

Excluded from the CPI calculation, the gold index surged 3.27 percent month on month, while the dollar index inched down 0.41 percent month on month.

Among 61 provinces and cities nationwide, the Central Highlands province of Gia Lai saw the strongest provincial CPI increase with 1.62 percent, followed by Hanoi with 1.45 percent. The southern economic hub of Ho Chi Minh City, on the other hand, had the slightest CPI rise of 1.32 percent.

The CPI had been forecast to accelerate in February 2012 by 1.5 percent over the previous month based on Leontief-ARIMA models.

Gold price touches VND45.2 mln on world trend

Local gold price Thursday closed at VND45.2 million a teal, up VND500,000 day on day, after its world counterpart hit a 3-month high at around $1,780 an ounce.

The bid and ask price of gold offered by Saigon Jewelry Co (SJC), Vietnam’s biggest gold trading, were quoted at VND45 million and VND45.2 million respectively.

In the morning session, the price of SJC gold bullion rose VND250,000 a tael over Wednesday with bid and ask prices quoted at VND44.95 million and VND45.15 million a teal.

The price of SJC gold bullion at gold shops under the Hanoi-based Doji Group and Bao Tin Minh Chau were at VND44.95 million and VND45.17 million a tael for bid and ask respectively.

Today, the main trend of the domestic gold market continued to be selling, Sacombank Jewelry Co (SBJ) said.

Gold prices are likely to slightly reduce its volatility following profit taking demands on both international and local markets, it said.

According to SBJ, given the world unstable economic picture and the possible oil price hike due to the risk of a conflict in Iran, gold is more likely to rise.

The boundary between "risky assets" and "safe haven" of the precious metal becomes fragile, since only gold and US Treasury bond saw a bullish trading session yesterday, while most stock indices and most commodities returned to fall.

Once the liquidity needs have been resolved, the role of gold will continue to be an attractive investment channel. Gold prices will continue upwards in the medium and long term, SBJ said.

Gold prices on the world market soared by aggressive buying activities of hedge funds.

Spot gold yesterday ended at $1,777.98 an ounce, up $22 from the previous session, while gold for April delivery rose by $12.8 to $1,771.3 an ounce.

During the session, gold also hit its 3-month high at $1,781.4 an ounce.

World gold, oil and commodity markets are supported by inflation concerns as crude oil prices soared to a 9-month high and the increase of many grains.

The lowering of reserve requirement ratio for banks in China still had a positive impact on investor psychology.

Gold price started to pick up after passing its resistance at $1,765 an ounce, its highest in December 2011, promoting massive buying activities on expectation of a coming strong rally.

Rick Bensignor, chief market analyst at Merlin Securities, said, as gold rallied to the highest rate in the last three months, many investors had prompted to buy in order to reduce losses incurred in previous sessions.

He predicts gold will continue its upward trend and the next resistance level is $1,805 an ounce.

Local price today, plus taxes and fees, is higher than that of the world's only by VND200,000 a teal, the narrowest since early December last year. The gap was VND600,000 a tael on Wednesday.

Interbank forex rates announced by the State Bank of Vietnam continued to stabilize at VND20,828 a dollar.

However, commercial banks cut the price of the greenback by VND5-10 day on day, quoting at VND20,800 and 20,850 a dollar for bid and ask respectively.

Vietnam attends rural development summit

Deputy Finance Minister Truong Chi Trung is representing Vietnam at the 35th session of the International Fund for Agricultural Development (IFAD)’s Governing Council that opened in Rome on Feb. 22.

Italian Prime Minister Mario Monti, along with several heads of state plus the representatives of IFAD’s 167 members will take part in the two-day conference themed “Feeding the world, protecting the planet”. IFAD President Kanayo F. Nwanze said in his opening address that long-term rural development is the most efficient way to reduce poverty and eradicate hunger. As part of the focus on rural development he also pledged to enable 90 million people to escape from poverty.

He emphasised the important role played by small scale family producers in boosting economic growth and ensuring food security.

He also welcomed the US$1.5 billion provided by IFAD members to fund agricultural and rural development projects across the world.

PM Monti underlined how food security, global security and the future of the planet are all intrinsically linked and urged other nations to make food security their top political priority.

The IFAD is a specialist UN agency based in Rome. It is a unique partnership of 167 members from the Organisation of Petroleum Exporting Countries (OPEC), the Organisation for Economic Co-operation and Development (OECD) and developing countries around the world. Vietnam first became an IFAD member in 1997.

Since 1978, IFAD has provided almost $13.7 billion in grants and low-interest loans to developing countries through projects that have enabled over 400 million people to break free of poverty.

Shares shed in HCM City

The VN-Index on the HCM City Stock Exchange suddenly lost 0.1 per cent during the final minutes of today's session.

After February inflation data was released, which listed an increased of 1.37 per cent over the previous month, the index finished at 423.43 points.

Gainers, therefore, outnumbered losers by 156-85.

The value of trades increased by 16 per cent over yesterday's level, totalling VND1.1 trillion (US$52.3 million) as trading volume reached 78.5 million shares.

The VN30, which tracks the exchange's 30 best stocks, bucked the VN-Index's trend to add 0.3 per cent to 477.77 points.

Blue chips pulled the VN-Index down, with seven of the 10 leading shares by capitalisation falling 0.5-2.6 per cent. Notably, Sacombank (STB) hit its ceiling price while it was the only major stock to retreat during yesterday's session. Following the central bank statement that Sacombank will continue operating normally after rumours of being acquired, it closed today's trading at VND19,600.

On the Ha Noi Stock Exchange, the HNX-Index marched 0.4 per cent higher to 67.07 points. Advancers overwhelmed decliners by 200-82.

The value of trades rose 17.4 per cent compared to the previous day to VND736.8 billion ($35 million) on a volume of 86.2 million shares.

Habubank (HBB) hit the daily increase limit, and was the most active code nation-wide with 14.2 million shares traded.

Ministries move toward eliminating substandard gasoline

The Ministries of Science and Technology, and Industry and Trade have agreed in principle that they will remove 83 octane gasoline (A83) from circulation because of safety concerns.

Tran Van Vinh, Deputy Director of the Ministry of Science and Technology’s Directorate for Standards, Metrology and Quality (STAMEQ), said that these ministries will send an official proposal on the issue to the Prime Minister soon.

Once their proposal is approved, they would work out a roadmap to gradually take out A83 from the Vietnamese market, Vinh noted.

Several scientists have pointed out that A83 has been banned in many countries for years, and that Vietnam should do the same because of its environmental impacts.

Dr. Hoang Manh Hung, Deputy Director of the Ministry of Public Security’s Institute of Criminal Science, said, “A83 contains a high amount of sulphur and other contaminants. Among other pollutants, this fuel emits a large amount of sulphur dioxide (SO2).”

Hung, because A83 is low-octane, it should not be used for modern vehicles, but only for those with old technology, such as military vehicles or the older gas-powered boats in the south.

“If A83 is mixed with 92 or 95 octane gasoline, it would actually lower octane of fuel, which would cause more heat and quickly erode engines,” Hung stated.

Le Canh Hoa, former Deputy Director of Additives & Petroleum Products Company, said petroleum traders often adulterate A83 with A92 and A95 in order to increase profits because A83 is cheaper.

A recent inspection by the Branch for Standards, Metrology and Quality under the HCM City municipal Department of Science and Technology showed that 11 out of 55 inspected petrol stores in the city had illegally mixed A83 with A92.

Currently, only two petroleum wholesalers in Vietnam, Saigon Petro Limited Company and PetroVietnam Oil Corp (PV Oil), are authorised to produce and trade in A83, for a combined output of over 400,000 cubic metres per year.

After a spate of unexplained vehicle fires across the country, petroleum quality has been under a shadow of suspicion.

IT, e-commerce ‘crucial for growth of businesses'

Information technology and e-commerce are indispensible aspects of business strategy and essential to helping enterprises reorient themselves towards profitability and growth, the director of the Ministry of Industry and Trade's IT and e-commerce department Tran Huu Linh has said.

Five years of implementation of the master plan to promote e-commerce during 2006-10 had demonstrated the key role it played in enhancing competitiveness, Linh said.

"Up-to-date e-commerce has also become popular with individuals, particularly young people," he said.

Immediately after the Prime Minister's decision on developing e-commerce during 2011-15 was issued in 2010, Linh's department collaborated with local industry and trade departments, universities, service providers and the business community to implement the given objectives, with 57 cities and provinces publishing local e-commerce development plans through 2015.

"This suggests a great interest in e-commerce, and the benefits that e-commerce offers for rural and remote areas become clearer," Linh said.

Over 60 training courses on e-commerce were held in nearly 40 locations around the country last year, demonstrating the allure of e-commerce to the business community, he added. "E-Commerce not only creates linkages within a company; it also enables the company to enjoy greater value."

As IT capacity keeps improving, businesses without a strong systems in place would face difficulties, Linh suggested. Therefore, he said his department was focused on drafting a new decree guiding e-commerce operations. It would also continue to popularise e-commerce in the media and organise training and support programmes for businesses.

Web portals serving export promotion would also be targeted for improvement, he said.

Property firm predicts brighter market
 
Property services firm CB Richard Ellis Viet Nam predicts that more investors will be able to capitalise on opportunities in Ha Noi's real estate market this year, as last year's tough market conditions ease.

"For some people, companies and individuals, 2012 will be a year when Viet Nam finally becomes a reality," said CBRE Viet Nam managing director Marc Townsend at the firm's fifth annual "Fearless Forecast" presentation in Ha Noi on Thursday.

"If you've been listening to me and CBRE's research, you know that certain sectors have seen prices declining," Townsend said. "Some sectors have seen prices declining for over three years. There has been pain in the market, with cash flows being challenged as restrictions on capital flows came into place and buyer appetite faded."

But he noted that rising auto sales suggested that Vietnamese consumers had money to spend.

"Mirroring the growth in sales of entry-level cars, we expect more affordably-priced residential sectors, targeted at the growing middle class, to perform strongest," he said. "While the rate of home sales in Ha Noi has been significantly lower than in previous years due to large new supply, the actual number of units sold was not below the historical average, suggesting demand potential."

Meanwhile, Townsend said, Ha Noi's infrastructure was on its way to the next level. In the next four years, different areas of the city would be conveniently connected by new elevated highways, metro lines, and additional bridges. By then, the psychological barrier of traveling to the other bank of the river, or to certain suburban districts, would be lifted, bringing people and buildings closer.

He predicted that price levels in the Ha Noi residential sector would start leveling off, following the trend in HCM City over the last few years.

"In regards to the property market, people are simply sitting on the sidelines. The price of gold is at an all-time high, and when that starts to fall, people will move out of gold and capitalise on their profit by going into real estate," he said.

As for the commercial property sector, Townsend noted that shopping centres outside of the central business district faced fierce competition. Further new supply in 2012 would mean more competition and more vacant retail space.

He also predicted that local hoteliers would continue to be active in the mergers and aquisations market, while international hoteliers maintained a long-term interest in the Ha Noi market.

"The past 12 months have seen the growth of the institutional investment deal in Viet Nam, with notable transactions occurring for foreign investors. We believe that these deals will pave the way for further activity in the years ahead, with 2012 being no exception."

With developers facing cash flow problems and many properties already viewed as distressed, he said the current market offered an opportunity for foreign investors.

Top gear for car-makers

Foreign car-makers remain positive with plans of investing in Vietnam despite a recent nosedive in sales and registration fee increases.

After deciding to pump an additional $10 million into expanding its production line last year Mercedes Benz Vietnam general director Udo Loersch said the German car-maker would continue to expand production in Vietnam this year rather than focusing on import and distribution operations.

It’s the same story at Vietnam Suzuki Corp, a subsidiary of Japan’s Suzuki Motor Corporation, and Nissan Vietnam - the joint venture between Japan’s Nissan Motor Corporation and Malaysia’s Tan Chong Holding Berhad also affirmed plans to continue investing in production lines in Vietnam, despite the ongoing gloomy market conditions.

While Suzuki is preparing the construction of a new 5,000-car manufacturing plant in southern Dong Nai province – announced last November, Nissan Vietnam general director Choo Hong Chow said Tan Chong Holding Berhad was also building an assembly plant in central Danang city which would start manufacturing Nissan cars in 2012.

These moves have dispelled concerns that foreign car-makers would stop investing into production in Vietnam in the wake of a slump in sales. Statistics from the Vietnam Automobile Manufacturers’ Association (VAMA), which represents 18 domestic and foreign car-makers in Vietnam, showed the total sales volume of its members in January 2012 was just 4,274 units, down 60 per cent on-year.

VAMA new chairman Laurent Charpentier said the drop was partly caused by recent registration fee increases in Hanoi and Ho Chi Minh City, where fees climbed to 20 and 15 per cent, respectively on January 1. “The new tax policy is indeed an unfavourable factor for the automotive industry. However, it is likely to have [only] a minor impact on the long run,” he said.

Charpentier, who is also the general director of Ford Vietnam, said the potential of Vietnam’s auto market had significantly improved in recent years. “Opportunities are still there for those investors who have strategic visions. And Ford Vietnam is no exception. I do believe the Vietnamese appetite for vehicles remains high,” said Charpentier.

In his view, since the price of cars is already high in Vietnam, customers who tend to buy cars would not easily change their purchasing decisions because of a tax increase. In fact, the high registration fees have only been imposed in Hanoi and Ho Chi Minh City to reduce the volume of individual cars on the streets and ease traffic congestion pressures. Therefore, there should be no change in demand in other areas, he said.

Hanoi and Ho Chi Minh City remain the two biggest market places for car-makers in Vietnam, but industry insiders also see rising demand in other cities and provinces where they can expand business operations.

Luong Hong Thanh, marketing director of Vietnam Suzuki Corp, cited Can Tho and Haiphong as promising market places for car-makers. Meanwhile, Charpentier said the demand in the central region was growing. He said he had seen two cities in this region “growing their vehicles at a much higher pace than both Hanoi and Ho Chi Minh areas”. “The potential is absolutely there,” he said.
According to Chow, the increase in registration tax may continue temporarily slowing vehicle sales to a certain extent, vehicle sales depend heavily on actual economic conditions where a slowdown is on the cards. Vietnam’s economy last year grew at 5.89 per cent on-year, compared with 6.78 per cent in 2010. The country is facing high inflation, which was 18.13 per cent in 2011 and that has forced the government to tighten fiscal and monetary policies.

But, the government has announced plans to restructure the economy. This along with the stability of the local currency and a low trade deficit level means car-makers expect a recovery in Vietnam’s automotive market.

“My forecast is that VAMA sales will be slightly up in 2012 against 2011,” said Charpentier, adding the biggest hindrance for automotive development in Vietnam was the country’s poor infrastructure, not government tax policy.

In further good news for this country, even though the import tax for cars from South East Asian countries will be zero by 2018 under Vietnam’s AFTA commitments, car-makers will still produce in Vietnam.

“The import tax exemption will be imposed on cars manufactured in ASEAN, reducing the price of imported cars from this region. But I believe car-makers still have to maintain production in Vietnam because the production lines in other ASEAN country like Thailand will not able to satisfy demand in both Vietnam and its own market,” said Luong.

Charpentier believed the two natural disasters last year in Japan and Thailand were a “unique opportunity” for Vietnam to become a credible alternative to its neighbours such as Thailand or China.

“There’s an imperative need to develop and attract more global suppliers in Vietnam to create a sustainable automotive supply base here. This is a major initiative to reduce the cost of building vehicles in the country,” he said.

Last year the Vietnamese government introduced a new strategy for the development of automotive industry until 2020 and started to develop a hub for automotive industry in central Quang Nam province. Some foreign automotive component suppliers also set up production facilities in Vietnam.

“In my opinion, this is definitely a very positive signal for the further sustainable development of Vietnam’s auto industry. This move, however, will have to be strengthened to become a true supply base that the current original equipment manufacturers assembling vehicles can rely on. As the result, customers will be able to enjoy better prices for vehicles,” said Charpentier.

Ministry requests public housing approval

The Ministry of Construction recently petitioned the Ha Noi People's Committee for approval to sell all apartments of the My Dinh - Me Tri new urban area's CT7 building to the Government. These apartments would be used as State-owned housing.

The ministry also requested the committee to sell all apartments built on 20 per cent of the land in the Yen Hoa new urban area, also for public housing.

The Prime Minister has authorised the purchase of 100 apartments to serve as State-owned housing in Ha Noi and HCM City. —

Work starts on village for Overseas Vietnamese

Work had begun on the 21ha Au-Viet Village for Overseas Vietnamese in the northern city of Hai Duong, the project's investor Au Viet Joint-Stock Co announced.

The village will cost VND347 billion (US$16.5 million) and consist of 130 villas, trade centres and offices for lease.-

Binh Duong eyes new low-cost housing project

Construction of a large-scale affordable housing project will begin in the southern province of Binh Duong at the end of the month, according to Investment and Industrial Development Corporation (Becamex IDC), the project's investor.

Capitalised at VND10.8 trillion (US$516 million), the housing project will span a total area of 130ha in Ben Cat District. It is expected to supply 64,700 low-cost apartments priced between VND90-140 million ($4,290-6,700).

Ha Noi approves plan for Gia Lam urban area

The municipal People's Committee has approved the detailed scheme of the Gia Lam urban area in the city.

The area will cover 377ha in Gia Lam District's Trau Quy Town and communes of Duong Xa, Kieu Ky and Da Ton. It is expected to house up to 25,000 residents.

Earlier, the Viet Nam Infrastructure Development and Finance Investment Joint Stock Company (VIDIFI) was appointed by the committee to formulate the plan.-

Construction of Ben Thanh Towers to begin in Q1

Bitexco Group has announced it will begin construction on the Ben Thanh Towers project, expected to cost US$400 million, in the first quarter of the year.

Covering a total area of 8,600 square meters in HCM City's District 1, the project is slated for completion by 2015.

More applications for mobile users available

MobiFone has provided an additional packages available to all its post-paid and pre-paid subscribers with unlimited access to the utilities of Zing.vn.

With Zing.vn, subscribers can listen to music, download music (Zing Mp3) or watch the news in Zing News as well as participate in social networks (Zing Me) at a monthly charge of VND15,000.

This is the first service pack marking the co-operation between MobiFone and Zing, one of the largest media carriers in Viet Nam.-

Casumina plans tire plant in southern Viet Nam

The Southern Rubber Industry JSC (Casumia) started construction on a car tire plant of US$160 million in southern Binh Duong Province on Thursday.

The plant will cover an area of 70,000sq.m, with a production capacity of 1 million tires per year. Construction will be divided into three phases. The first phase is scheduled to finish in the first quarter of 2013 with an annual capacity of 350,000 units.

VND100b in funds for building brand names

Quang Ninh Province authorities plan to invest VND100 billion (US$4.7 million) between 2012 to 2015 to develop brand names for 24 farm specialities such as Tien Yen chicken, Yen Tu apricot wine, and Duong Hoa tea.

The plan targets to raise individual and organisational awareness on intellectual property and brand name management and development in order to promote product quality, market expansion and business activities, contributing to provincial socio-economic development.

Investment capital includes 80 per cent from the State coffer and 20 per cent from local agencies.

Tougher rules for listing planned  

The State Securities Commission will impose higher standards for listing shares on the nation's stock exchanges, according to a comment from an anonymous official of the commission made to the publication Dau tu Chung khoan (Securities Investment).

The regulations, if enacted, would promote the listings of businesses with large capital and strong business performance, while eliminating shares with low potential for liquidity.

The HCM City Stock Exchange confirmed that, after lifting listing standards, it would co-ordinate with brokerages to disseminate the details to businesses that wished to list shares.

However, independent analyst Huy Nam commented that, while listed companies had successfully raised capital since debuting on the stock market, their overall business performance had not increased in proportion to the increase in capital and many stock values have declined.

"There should be more regulations to maintain effective operation of enterprises after listing instead of just reassessing the criteria applied before listing," Nam said.

The quantity of new listings declined significantly on both exchanges last year compared to previous years.

Tran Thi Anh Dao, director of the southern exchange's listing management division, said the exchange was considering giving nods to companies which filed for listings last year.

Hoang Huy Investment Services Co (HHS) became the first new listing this year when it debuted on Wednesday.

The exchange expected the number of new listings to at least reach last year's level of 30 companies, with the equitisation of the Bank for Investment and Development of Viet Nam (BIDV) to make a significant contribution to the value and volume of trades on the bourse.

On the Ha Noi Stock Exchange, no new listings were pending, but the exchange also said that companies would likely file to list after April, when their audited financial statements for last year would be published.

The situation also depended on economic conditions, the exchange noted. Pharmaceutical firm Mediplantex had planned to list its shares in 2010 but finally applied with the Ha Noi Stock Exchange late last year. If approved, the company with a charter capital of VND50 billion (US$2.4 million) would list this year. Along with Mediplantex, some other companies announcing plans to list back in 2012 that may debut this year include Tan Mai Paper Co and building contractor Song Hong.

Vincom to build resettlement area in Ha Noi

The Vincom Joint Stock Co recently received approval from the Ha Noi People's Committee to compile an investment plan for a resettlement area covering 38ha in La Phu Commune in the capital's Hoai Duc District.

The area will be built to serve the resettlement needs of key projects in the city only.

Ha Noi authorities requested the Vincom company to outline specific mechanisms of investment, capital mobilisation, management of the resettlement urban zone.-

Policies needed to boost growth of support industries

Experts have called for focusing tax breaks, financial backing and support policies on support industries that enjoy natural advantages to spur the sector's growth.

Speaking at a seminar held recently by the Financial Policies and Strategy Institute and the Institute for Industry Policy and Strategy, they said the Government offered favourable conditions for investment in support by both foreign and domestic investors.

Support industry manufacturing projects were advertised for free on the Ministry of Trade and Industry's website and received financial assistance, provided with opportunities to join supply networks, recruit labourers, and use facilities at industrial parks, they said.

Firms in support industries did not have to pay import duties on feedstock and other raw materials meant for production and scientific research, they said.

Dr Nguyen Thi Lan of the Institute of Finance said however that in spite of all this, Viet Nam's support industries remained weak.

The consequence was that around 80 per cent of parts and accessories used in manufacturing must be imported.

This was a drag on the economy and forced the country to spend billions of dollars on imports, Lan said.

Since Viet Nam's support industries were backward, many foreign companies were unable to easily source parts and accessories, and had moved out to other countries or planned to do so, she said.

Domestic assemblers were forced to import.

In 2010 the electronics industry exported products worth US$3.4 billion but its imports cost $4.6 billion.

The textile and garment industry's exports in the first half of 2011 were worth $6.16 billion, but its imports, mainly of raw materials and accessories, were worth $5.76 billion. Thus the industry's net exports were a mere $400 million.

Despite getting incentives related to land, taxation and financing from the Government for years, the automobile industry's domestic production rate is only 5-10 per cent. Even the items produced here are very basic – such as electric wires and chair frames.

Experts said though the Government offered the supporting industry many incentives, they did not focus on key industries.

Duong Thi Nhi of the Ministry of Finance said the focus should be on industries that enjoyed certain advantages – such as electronic and electrical parts, textile and garment, motorbike, and automobile.

Support industries should also be divided into different groups. The Government support would be given to them at different levels and different times so that they would receive adequate assistance for a comprehensive development, Nhi said.

The Government should have special financial policies to encourage newly-established firms, set up a fund for development of the support industry, and offer them more tax breaks,she said.

Lan called for Government encouragement to private investors in support industries.

For this, the Government should to create a fair, free and stable business environment and cut red tape to ensure that businesses could be set up easily and their products easily sold.

Vu Tien Loc, chairman of the Viet Nam Chamber of Commerce and Industry, said when support industries developed, they would help reduce the trade deficit, attract more international companies, and catch up with new business trends.

Many foreign manufacturers, especially Japanese, were looking for Vietnamese parts suppliers, he said.

This offered huge opportunities for local parts producers to participate in the global production chain, he said.

If Vietnamese parts manufacturers could supply foreign companies in the country, they could also supply others outside the country, he added.

Coconut growers switch crops
 
Coconut farmers in the Cuu Long (Mekong) Delta, especially in Ben Tre Province, are facing difficulties because the price of coconuts has declined sharply over the past four months.

In Ben Tre Province, the country's largest coconut producer, the price of dry coconuts fell from VND140,000-150,000 per dozen last October to VND34,000-40,000.

Farmer Vo Thi Hai in Giong Trom District's Phuoc Long Commune said the crop was the major source of income for most farmers.

Hai had tried to sell coconuts for VND38,000 per dozen, but she could not find a trader.

The country's coconut king, Vo Thanh Thuong of Giong Trom District, said that he wanted to sell 1,000 coconuts and his trader offered VND36,000 per dozen.

"But immediately after that the trader refused to buy my coconuts because he was afraid of further price declines," he said.

Domestic dried coconut-flesh processors said they must cut the price because of falling global prices.

Sales in the EU, North African and Middle Eastern markets, which are Viet Nam's major markets for dried coconut flesh, have been declining because of economic problems in those areas.

Because of the decline, the export price of dried coconut flesh has fallen from US$2,900 per tonne to $1,300-1,500.

Chinese traders in Ben Tre Province have also been buying the coconuts at lower prices.

Previously, there were about five to six Chinese ships docked at the Ham Luong River in Giong Trom District to buy dry coconuts, but the number is now only three to four ships.

Ho Vinh Sang, chairman of the Ben Tre Province Coconut Association, said Chinese traders bought about 35 per cent of the province's total dry coconuts.

With price drops of more than 70 per cent, 40,000 farming families have been hit hard.

Many coconut orchards have switched to selling fresh coconuts, which has caused an oversupply and lower prices.

Because of the price drop, many farmers in Ben Tre are planning to cut down their orchards to prepare to plant another crop.

Coconut farmers who live along the Ham Luong River have leased their orchards to enterprises to raise tra fish.

In Binh Dai District, many coconut farmers have also cut down their trees to dig ponds to farm shrimp.

Ben Tre has about 52,500ha devoted to coconuts, with annual output of 424 million. Ten to 15 per cent of that figure represents fresh coconuts, and the rest are dry coconuts.

The province has 70 enterprises and 1,400 family-based production units that produce coconut products, providing jobs for 50,000 people.

Ben Tre exports coconuts and coconut products to 80 countries and territories.

HCM City urged to change export structure

Authorities in HCM City are targeting an annual export growth rate of 17 per cent under a programme that also aims to shift the structure of the city's exports.

The programme also targets raising the city's export turnover (excluding crude oil) to US$100 billion a year by 2015, the Thoi bao Tai chinh Viet Nam (Viet Nam FinancialTimes) reports.

A focus on service sector exports under the programme aims to have turnover from export services accounting for 60 per cent of the city's total export value, and competitive products such as garments and textiles, footwear and processed seafood are expected to make up 35 per cent of all exports by 2015.

The programme is also set to help accelerate human resource training and to make products with advanced technology contents become key exports of the city by 2020.

Huynh Khanh Hiep, deputy director of the municipal Department of Industry and Trade, said local exporters had been hit during the past years by the global economic downturn and domestic inflationary pressure.

Material import price hikes, tighter monetary policies and high lending interest rates significantly affected the city's current export growth, said Hiep.

Vo Thanh Thu from the Viet Nam Chamber of Commerce and Industry's international commerce policies consulting board said the city's export value represented as much as 40 per cent of the nation's total figure five years ago, but had tended to decline during recent years.

Thu said the city also needed to focus on high-value exports. She said exports from the city and from Viet Nam in general were largely based on the exploitation of labour and natural resources, such as garments and textiles, rice, rubber and coffee. Meanwhile, exports such as milk and electronic devices relied too heavily on imported materials.

Many key industries were focusing on the processing of products, a weakness reflected in 90 per cent of the footwear industry's production activities being outwork, said Thu.

Many industries had achieved large export revenues but failed to build their own brand names.

Meanwhile, Thu said, technical barriers and sanitary and safety standards imposed by importing countries were becoming increasingly complicated.

"If the city doesn't pay proper attention [to the problems] and make some changes, the ratio will continue to fall and export efficiency will remain low," she warned, adding that the matter was especially important in the context that the domestic economy depended largely on exports.

"In order for the city to reach the goal of high and sustainable export development in the coming months, it's necessary that it has appropriate direction for development and practical measures to rapidly shift the export structure in line with its advantages," Hiep said.

HCM City Hi-tech Park Development Centre director Le Phan Hoang Chau said the park would focus on production of semi-conductors and machinery.

He said 60 per cent of the value of hi-tech products were now made up by foreign suppliers, while domestic providers were able to contribute only about 5 per cent to the value with packing, maintenance and installation work for these products.

Chau urged authorities to speed up localisation of hi-tech products while developing more support industries.

He suggested measures such as developing support industry markets, building databases of domestic support products and facilitating solutions which help innovate technology, develop human resources and manage quality with preferential infrastructure and financing policies.

"The value of export products can't be raised with undeveloped support industries," said Tran Du Lich, a member of the National Assembly.

He urged the city to attach special importance to developing these industries while ensuring clear export strategies to serve the national economy and the country's key southern economic region.

Airport services firm debuts

The Airports Corporation of Viet Nam has come into existence following an inauguration ceremony at HCM City's Tan Son Nhat International Airport on Saturday.

The Ministry of Transport has mandated that the agency, formed by merging the Northern, Central and Southern Airports Corporations, would operate as a one-member State-owned limited company.

The VND14.7 trillion (US$705 million) corporation will perform a variety of tasks, including ensuring safety and security, and importing and exporting aviation equipment.

Nguyen Nguyen Hung, former general director of the Southern Airports Corp, is its first chairman of the board of members, while Le Manh Hung, former general director of the Northern Airports Corp, is its general director.

Speaking at the inauguration ceremony, Minister of Transport Dinh La Thang said the merger of the three corporations was "indispensable" for the development of the country's aviation industry and as preparation for establishing a national aviation group.

Setting up of the new corporation should not affect the operation of airports around the country, but improve their staff's living standards, he said.

It would soon focus on the completion of T2 Terminal at Ha Noi's Noi Bai Airport and terminals at Cam Ranh and Phu Quoc airports, he said.

In the long term, the ACV would equitise its subsidiaries and get investment from local and overseas sources into civil aviation infrastructure, he added.