Revealing real estate tricks of the trade

In what is a difficult time for the property market and real estate agents, some in the sector are still thriving, but what is their secret to success? While experts argue over what is the decisive factor for a successful transaction - position, price or construction speed, we reveal some of the tricks of the trade.

Hong Quynh Phuong, director of apartment sales at the real estate service provider Savills, said the stagnant market had made customers believe the sector was in crisis.

Customers are puzzled over whether they should buy property now or wait for prices to fall further, she said in a seminar recently. She went on further to say that some customers who had been determined to make purchases changed their minds after hearing the news that property prices had not fallen to the absolute bottom.

"Since customers hesitate to purchase we are not in a hurry to urge them to make any decision," Phuong said.

"Instead we help them understand more about the market and send them our quarterly report and analysis."

Phuong also revealed that she tried to learn about customers' need and the difficulties they face.

"If they have a limited budget we help them approach preferential bank loans," she added.

She also said that despite many preferential loan packages advertised it was not easy for customers to secure loans themselves.

While admitting that customers are smart buyers, Phuong said she could only persuade customers by ensuring them product quality and investors' written commitment of construction speed and services rather than merely using spin and beautiful words.

Regarding advertising banners which are hung on trees and lamp posts around the city to promote the sector, Phuong said this strategy not effective as advertisers had used it overwhelmingly.

Meanwhile Vu Cuong Quyet, general director of Dat Xanh Property Joint Stock Company shared the view that customers are the ones who have the real need for accommodation not the dealers as was the case a few years ago.

So his company choose to distribute apartments for prestigious investors and often focused on residents of the area where the project was located when hoping to promote sales.

For instance, Dat Xanh company is putting up for sale the Dang Xa project with prices of VND15-17million per square metre, so his targeted customers are middle income residents in Gia Lam District.

"People tend to buy houses near their work so traveling is convenient," he said.

"By targeting certain groups of customers it's easier to sell."

However, Phan Ngoc Anh, a marketing officer at the Newland Company, said her firm still applies traditional marketing measures such as TV, radio and newspaper advertisements and these methods still work.

"I think advertising can only be useful when your advertising content matches people's needs," Ngoc Anh said.

"There are always customers with real demand so it's more important that you offer them suitable products at reasonable prices. In other words, you sell property of real value not bubble value," she added.

She said NewLand had projects in the nearby city of Hai Duong, 60km from the capital, so her company was still seeing good business as real estate markets in small cities were seeing slow but steady growth.

Anh said that prices of property in Ha Noi has spiraled over the past years and the discount rate that some property companies are offering has properties approaching their real value.

Experienced property consultant Dang Hung Vo, who is also former Deputy Minister of Natural Resources and Environment, meanwhile said property prices must fall further to warm up the market.

He told VTC news that more apartments between VND7-11 million per square metre will bring the sector back to its heyday.     

Measures to help businesses through crunch time

Businesses regard value added tax (VAT) reductions as a practical measure to help them through a difficult time.

Despite the Government’s stimulus packages in 2012, many are not yet back on track in the wake of the global economic downturn. So they require further assistance from the Government’s incentive policies.

Phu Giang Packaging Company General Director Nguyen Nhan Phuong says his firm plans to upgrade technical facilities and is asking all businesses to improve the design and quality of their products in line with world market trends.

As Vietnam is in the process of global economic integration they need to have a leg to stand on home turf and promote trade exchange against all odds in the world.

Phuong says Vietnam’s consumer goods are increasingly sought after in both domestic and foreign markets.

Dr. Luu Bich Ho, a former Director of the Ministry of Planning and Investment’s Development Strategy Institute, says as a developing country Vietnam has allowed international businesses to operate and invest in the country. In the face of tough competition domestic businesses are urged to restructure themselves in line with the State’s guidelines for their own good in the long run.

Chamber of Commerce and Industry Chairman Vu Tien Loc says most businesses expect the Government to help ensure macroeconomic stability and gradually control inflation. They hope to receive more incentive loans with lower interest rates as soon as possible, he adds.

Loc calls for intensive efforts to push through institutional reform and create a healthy business climate for all economic sectors.

“Helping businesspeople in need is a virtue of necessity,” Loc says, adding that lowering VAT rates will assist many businesses to reduce their production costs, clear excess stock, and meet increasing customer demand.        

Spain supports Vietnam’s sustainable tourism

A Spanish-funded project on sustainable tourism development in Vietnam’s highland regions has been a great success, a conference was told in Hanoi on May 21.

The project, sponsored by the Spanish Government’s Agency for International Development Cooperation (AECID), was implemented in Central Highland and northwestern mountain provinces, including Dien Bien, Ha Giang, and Lao Cai from November 2011 to February 2013.

Ha Van Sieu, head of the Institute for Tourism Development Research (ITDR), reported that despite the moderate EUR400,000 budget, the project has successfully fulfilled all of its targets.

A website on community tourism in northwestern provinces was launched, serving as a forum for localities to exchange experiences in developing and promoting the tourism sector’s image.

Domestic and foreign experts worked together to release a bio-tourism and marine tourism guidebook for managers and visitors as well as a separate green tourism publication advising shops, restaurants, and tourist destinations.

Spanish Ambassador Alfonso Tena said Vietnam is gradually improving the quality of its tourism services, aiming to welcome 7 million foreign visitors in 2013.

Vietnam National Administration of Tourism (VNAT) Head Nguyen Van Tuan noted tourism cooperation between Vietnam and Spain has grown considerably in recent years.

Vietnam received more than 31,000 Spanish visitors in 2012 and a further 7,243 in the first four months of 2013 alone.

Spain is currently providing Vietnam assistance for a number of tourism development projects including popularising tourism law, creating a national marketing strategy, planning Cat Ba Island and Hue City, and managing the country’s world heritage sites.

Malaysia Airlines provides attractive tours to Vietnam

Malaysia Airlines is providing package tours of three days and two nights from Kuala Lumpur to Ho Chi Minh City at a cost of US$292 from now until August 31.

Each tour covers a two-way economy class, airport tax and transfer, accommodation at Equatorial Hotel and daily breakfast.

It operates three flights a day to HCM City.

Economy class and business class tickets for its flights from HCM City to Kuala Lumpur cost US$136 and US$331, respectively, from now until May 31.

Passengers can book their package tours on line at website www.malaysiaairlines.com, or by phone (Number 1300883000), to agents of Malaysia Airlines.

France, Vietnam increase science cooperation

The President of the French Institute of Research for Development (IRD) Michel Laurent began a three-day working visit to Vietnam on May 22, as part of activities to intensify bilateral scientific cooperation.

Laurent will chair a signing ceremony of a framework agreement on collaborative research activities, mainly the study of Vietnam’s mangrove forests with the Ho Chi Minh City University of Natural Sciences.

He will also witness the signing of another cooperation agreement in the fields of science-information technology-communication between the Hanoi University of Science and Technology, the Information Technology under the Vietnam Academy of Science and Technology and La Rochel University of France.

The IRD president is also scheduled to meet leaders of the Vietnam Academy of Science and Technology, the Vietnam Academy of Social Sciences and the Vietnam Academy of Agricultural Science to discuss joint research programmes.

Improvement marked for labour export firms

There have been drastic changes in the implementation of the Code of Conduct (CoC-VN) for Vietnamese enterprises sending workers for employment overseas, shows a survey of 20 target businesses.

The survey results were announced at a meeting to review the first year of CoC-VN implementation in Vietnam jointly held by the Vietnam Labour Export Association and the International Labour Oganisation in Hanoi on May 21.

The survey shows that the 20 selected enterprises all comply with regulations on orientation training for future guest workers in terms of duration and curriculum.

Participating workers showed their satisfaction with the quality of training provided by the enterprises. They got a better understanding of the traditional culture and customs of target countries.

Apart from individual participating firms, the survey’s outcomes were partially based on the assessment of Departments of Labour, Invalids and Social Affairs in provinces and cities where many labour export enterprises are based, such as the northern provinces of Bac Ninh and Phu Tho, and central Thanh Hoa, Nghe An, Ha Tinh and Quang Ngai provinces.

The departments agreed that enterprises in their localities have conformed to rules in recruiting and maintaining information channels with local authorities to provide timely protection for workers in need of help when working abroad.

The association will install the CoC-VN into 30 more enterprises and sign cooperation agreements with eight other provincial departments on information supplying mechanisms relating to labour export enterprises.

Training 150,000 rural labourers in 2013

The Ministry of Agriculture and Rural Development (MARD) disbursed VND93 billion for 36 out of 63 provincial departments to train 91,000 rural labourers in 2012.

Many provinces claimed to have finished training courses on scheduled but others could fulfill 24–25 percent of their plans.

Vocational training certificate project was first conducted in Thanh Hoa and Ben Tre provinces, and then expanded to other localities.

In 2012, ThanhHoa had 80 courses held for 2,790 labourers, raising the total of trainees to 4,750. The focus of training was on sugar cane cultivation, food safety in fruit and vegetable cultivation, cattle, poultry and field crab husbandry, irrigation management, and environmental sanitation.

Ben Tre had 4,230 labourers trained in planting, husbandry, and fishery. Seventy percent of them have been employed. The rate of employment in some fields like fisheries, pork husbandry, and coconut planting was much higher up to 90 percent.

In 2012, the MARD spent VND10 billion on training workers for tea, rubber, fruit, and vegetable corporations, the southern food corporation, the northern food corporation, the husbandry corporation, and the fisheries corporation.

The National Agricultural Encouragement Centre worked with localities to arrange for 132 training courses for nearly 4,000 labourers involved in ten fields of production. Seventy two of them have been conducted to meet 55 percent of the plan.

Both authorities and rural workers are very pleased with the training project to raise local production capacity.

However, there are some snags to overcome such as low funding, lack of animals and plants for practice during the training courses, not to mention inappropriate subjects and complicated certificate granting procedures.

The local Departments of Agriculture and Rural Development plan to train 150,000–160,000 labourers in 2013 and the Ministry of Finance and the Ministry of Labour, Invalids, and Social Affairs have agreed to provide VND920 billion for them to carry out the program in three years until 2015.

MARD Deputy Minister Nguyen Thi Xuan Thu emphasised that those training centres failing to meet quality standards will be removed from the list of funding priorities. Both quality and efficiency are priorities. Vocational training must be based on the needs of local agricultural production plans, she added.

Foreign brands set bar high

Domestic retail businesses should increase connections with producers and distributors to provide professional services as they prepare to face fierce competition from foreign brand names.

Statistics from the Foreign Investment Agency show that in the first four months of the year, wholesale, retail and repair work were third in the list of foreign direct investments (FDI) in Viet Nam.

There were a total of 49 projects worth a total of US$127.62 million, an increase of 1.6 per cent over the same period last year.

By the end of last month, Viet Nam had attracted 336 FDI projects in food and accommodation services with investment of $10.1 billion.

There were another 951 projects in wholesale, retail and repairing sectors involving capital of more than $3 billion.

Another report from the General Statistics Office said that total turnover in the retail sector last year increased 16 per cent over 2011, despite economic difficulties.

In the first four months of the year, total turnover of retail and social services reached VND850 trillion ($40.5 billion), representing an 11.8 per cent increase over the same period last year.

Dinh Thi My Loan, general secretary of the Viet Nam Retailers Association, said the retail market had seen fierce competition as both domestic and foreign brand names had striven to search for expansion.

Loan said Viet Nam's retail market had 21 wholly foreign invested businesses which had rapidly expand their market share.

In addition, modern retail channels, including hypermarkets, supermarkets or small self-service stores, accounted for only 20 per cent of the market, leaving big opportunities for businesses.

Viet Nam has targeted to increase the percentage of modern retail channels to 45 per cent by 2020. By the end of last year, the country had 130 commercial centres, 700 supermarkets and more than 1,000 self-service stores.

Many famous foreign brand names now have a presence in the country such as Big C, Metro and Lotte.

Last week, Singapore NTUC Fair Price Co-operative Limited (FairPrice), which accounts for 57 per cent of the Singapore retail market, announced a joint venture with Sai Gon Co.op to create a new chain of hypermarkets named Co.opXtraplus with total investment of VND200 billion. It plans to expand nationwide.

Nguyen Thi Hanh, general director of Sai Gon Co.op told Vietnam Investment Review the current trend in Viet Nam was to develop hypermarkets, shopping malls together with traditional supermarkets.

In many countries, hypermarkets accounted for a big proportion. For example, the model accounted for more than a half of modern retail channels in Malaysia and Thailand.

Savills Viet Nam said competition in the food and beverage (F&B) sector had significantly increased.

It forecast that retail demand would increase as several F&B brand names prepared to jump into Viet Nam.

Vietnam unlikely to meet 5.5% GDP growth target

The government's report on May 20 has shown that it will be very difficult to achieve a 5.5% GDP growth rate in 2013 amid the current challenges.

The issue was discussed at the 5th session of the 18th National Assembly.

In 2012, Vietnam recorded GDP growth of 5.03%. The growth rate was lower than NA's goal of 6-6.5% because of difficulties besetting the global economy. The Vietnamese government also had to adopt deflationary measures to stabilise the macro-economy.

GDP growth during the first quarter of 2013 reached 4.89%, higher than the rate of 4.75% last year thanks to the services sector. The construction industry showed some improvements after major efforts by the government.

However, consumer spending power will not be able to improve since incomes and job opportunities have dwindled.

As of late 2012, 69% firms reported losses. In Hanoi, 46,000 of 90,000 firms reported total losses of VND47 trillion (USD2.3 billion).

Credit growth will also remain low if the problem of bad debt is not resolved. Banks have been asked to develop solutions to classify suitable borrowers instead of tightening lending activities in general which have had an adverse effect on the economy.

To deal with the problems, the government set plans to reduce the gap between deposits and lending rates, and domestic and world gold prices and ensured the value of VND.

The government will focus on preventing tax debts, a growing budget deficit, and intends to speed up the disbursement of FDI capital.

Banks warned about risks of lending to large-scale enterprises

While banks often hunt for or prioritise large-scale businesses for lending, one expert said they should be more careful to prevent possible risks.

Pham Thi Thu Hang, General Secretary of the Vietnam Chamber of Commerce and Industry (VCCI) said at a seminar on the issue on May 20 that the rates of equity on loans at many enterprises were rather high.

According to her, while the standard rate is a half of equity on a half of loans, equity often accounted for just a third of the value of loans for over the past decade. This figure underlies the heavy dependence on bank loans among some enterprises.

“Larger enterprises tend to more heavily depend on bank loans as they have more chance to get access to funding. Small and medium-sized enterprises (SMEs) find it harder to borrow from banks, so they have tried to mange by themselves,” she noted.

Dang Bao Khanh, General Director of SeABank, agreed, saying that several big enterprises have loans that are 10 times higher than their equity as they borrow from different banks.

Hang said that the rates of bad debts among such big enterprises was also higher.

“More attention should be paid to business size during the restructuring process. While business sizes have been becoming smaller, the scale of capital seems to have increased, which could be an uneven development trend,” she said.

She added that banks should pay more attention to SMEs for safe and sustainable operations.

Fruit, vegetable exports strive to increase turnover

The global economic crisis has greatly influenced export turnover of some of Vietnam’s key exports such as pangasius, frozen shrimp and rice. Nevertheless, since 2007 to date, export of vegetables has seen growth as the U.N. Food and Agriculture Organization (FAO) said that demand of vegetables in the world has increased by 3.6 percent per year while output has increased only 2.8 percent.

Turnover of some export items such as rice, cashew and seafoods was US$1 billion five years ago, when this situation began improving in 2007.

According to the Fruit and Vegetable Association (Vinafruit), exporters touched $305 million in revenues in 2007 and this figure is spiraling every year. The figures are $407 million, $628 million, $829 million in 2008, 2011 and 2012, respectively.

Vinafruit said fruit and vegetable exports this year are expected to increase to $1 billion.

This can totally be achieved as turnover of fruits and vegetables export in first four months increased by 17 percent against the same period last year.

The Ministry of Agriculture and Rural Development said the Plant Protection Department is working with countries to clear quarantine barriers  of blue dragons, rambutans and longan into the US, Japan, and Australian markets. From June 30, fresh fruits and vegetables will be export to EU countries.

The Ministry has said the figure of $1 billion is within reach if the country can grasp the opportunity to focus on key export items and meet GlobalGAP standards when the rising global demand for farm produce is benefiting Vietnam’s sector this year.

Professor Nguyen Quoc Vong, who used to work in the Ministry of Agriculture in New South Wales in Australia is currently working in Royal Melbourne Institute of Technology in Vietnam, said the country has been listed as one of the world’s five biggest farm produce exporters with revenues of around $10 billion a year.

Other farm produce like tea, cashew and pepper also yield $3 billion annually, while vegetables bring in $103 billion a year. Vietnamese fruits and vegetables export is much dependent on the Chinese market--an unstable and risky potential market.

The country has 1.4 hectares under fruit and vegetable cultivation, according to the Ministry of Agriculture and Rural Development. The area is seven million hectares less that paddy.

In addition, fruits and vegetables are planted in a smaller scale resulting in unstable quality and are consumed within the country only. In the future, farmers should cooperate with each other to create bigger farms for better production.

Seafood exports show signs of recovery

According to the Vietnam Association of Seafood Exporters and Producers, seafood exports have shown signs of recovery after a long period of slow down.

In April, seafood export turnover reached US$520 million, an increase of 11 percent over the same period last year. Exports of frozen shrimps, pangasius fish and tuna fish are on the rise.

The association said that importers have highly appreciated the quality of several seafood products from Vietnam.

Authorized organs from Europe, the US, Japan, South Korea and Russia have well assessed Vietnam’s efforts to control quality and food hygiene of export seafood products.

Seventy three percent of 415 seafood processing plants in Vietnam are able to meet requirements of the European markets. Authorized organs target an increase of 80 percent by 2020.

Firms expect to hire more staff

VietnamWorks released its latest online employment report just last week which revealed that labor demand at its corporate clients was on the rise, especially in a number of specific industries.

A key finding in the first Online Employment Report for 2013 of the largest online recruitment provider in Vietnam was that 62% of its clients were likely to increase hiring in 2013 over 2012, even though the country’s macroeconomic problems remain unaddressed this year.

VietnamWorks did not clarify the number of companies participating in the survey for the first quarter but its chief executive officer Carlton Pringle said the website was the preferred partner of over 10,000 employers in Vietnam in its 11 year history.

“When our team looked at our data, we saw very strong correlations between our numbers and those of government, economic and financial institutions. In many ways this is logical - when companies are investing and launching new projects, they need the team to make that happen,” Pringle said.

VietnamWorks reported stability in the total number of job postings that it experienced when compared to the first quarter to that of last year. “While this stability in total jobs may sound a little unexciting, we regard it as a great base for the rest of the year,” Pringle said.

“2012 kicked off in a period of high inflation and general growth, and high wage inflation resulted in more people changing jobs and so on, so our quarter one numbers reflected that. 2013 commenced with the hangover of late-2012, and general economic malaise, so to return an almost identical quarter YOY is quite a solid foundation for a strong 2013,” Pringle said.

The company’s online employment demand index rose significantly in January this year but declined in February when Lunar New Year took place before rebounding in March. The index reached 172 points in March, a year-on-year (YOY) increase of 9%.

“Further - and most encouragingly - we saw our best week in our history at the end of February 2013, followed by a strong month in March with YOY 9% growth in terms of job postings,” Pringle said.

Other important findings from the company’s research were the best industries for job seekers. The first quarter of this year saw electronics up 28% compared to the same period last year, consulting up 32%, textile and footwear up 38%, pharmaceuticals and bio-tech up 66%, and retail and wholesale up 105%.

On the contrary, various administrative/clerical sectors, marketing, and architecture/interior design, oil and gas and personnel management did not fare as well, reporting falls of 38%, 31%, 23%, 22% and 19% respectively year on year.

Pringle noted the legal profession, medical and healthcare industries and agriculture were all reporting skills shortages. “Employers have to work very hard to offer compelling packages and work environments to attract the best talent in those fields,” he said.

The research revealed Hanoi as currently the best city in the nation to find a job in the first quarter, ahead of HCMC and Danang based on a ratio that measures the number of listings to the working age population of the three major cities.

However, the research indicated the online labor demand in Hanoi and HCMC in the January-March period declined slightly year-on-year while demand grew 28%, 11% and 39% year-on-year respectively in Binh Duong, Bac Ninh and Danang.

PVFC, Western Bank merger plan approved

Shareholders of PetroVietnam Finance Corporation (PVFC) at its annual general meeting last Saturday approved plans to transform the firm into a commercial joint stock bank and merge with Western Bank.

The would-be bank will have a chartered capital of VND9 trillion and total assets of VND100 trillion.

The capital consolidation is based on capital and assets of PVFC and Western Bank. Each PVFC share and Western Bank share will be swapped for one share of the to-be-merged bank and shareholders’ all assets, rights, obligations and legal interest will be transferred to the new bank.

In a draft merger contract, PVFC and Western Bank pledged to maintain normal operations, organization, business opportunities, relationships and protect interests of customers, staff, partners and related parties from now to the contract signing date. After that, the new bank will take over all debts, rights and obligations of both PVFC and Western Bank.

According to PVFC, the merger deal will bring about opportunities for the new bank to carry out all banking services. The merged bank will also be able to reach out to big clients and key projects.

In 2012, PVFC obtained nearly VND7.4 trillion in revenues, or 32% higher than last year’s target, and VND54 billion in profits after deductions for reserve funds. The enterprise’s total outstanding loans stood at VND43.3 trillion while its total assets reached VND87.7 trillion.

Demand for government bonds to fall

Demand for government bonds will be on the downtrend as credit growth is changing for the better, while the annual coupon of this debt paper is no longer as lucrative as before, Bao Viet Securities Company (BVSC) forecasts.

“We suppose that demand for investment in government bonds will fall gradually as credit activities have been improved and interest rates might be lowered further in the near future. Besides, in the current context, coupons of government bonds are no longer so attractive that commercial banks and credit institutions should pour money into the channel,” according to a report of BVSC.

“As of now, investors have considerably ventured in government bonds, so we believe that the preliminary market will continue to move flat and show no considerable changes in the near future,” says the report.

Similarly, credit institutions also predict the moves in the bond market will change if lending activities show improvement in the coming time. The latest data announced by the State Bank of Vietnam shows that credit growth is put at 2.11% as of the end of April.

Liquidity of the banking industry has still remained abundant, while credit demand has yet to rise strongly and capital mobilization is still seen as positive. The low base rate in the inter-bank market has created an attractive gap for bond investors.

In the meantime, the foreign exchange market stays stable while the consumer price index posts low growth and shows no signs of a strong rise in the months to come. These elements have prompted local banks to predict government bond rates to tumble by an additional 5-10 basis points this week.

VAMC to come online in Q2

The decree and project on establishment of the Vietnam Asset Management Company (VAMC) will be adopted quickly to ensure the enterprise starts operating in this quarter.

According to the State Bank of Vietnam (SBV), while VAMC is handling bad debts and mortgaged assets bought from banks, investors are allowed to join this process through auctions following market rules. If the plan goes smoothly, a debt trading market will be created.

VAMC, the 100% State-owned firm established by the Government to handle bad debts of credit institutions in Vietnam, will be put under management and supervision of the central bank. This agency will also fund charter capital of the company.

To tackle bad debts, VAMC will issue bonds to buy debts of banks and the lenders will use these special bonds to take out refinancing loans from the central bank.

VAMC will provide solutions to support enterprises whose bad debts have been sold to it. The enterprise will reschedule these loans, give overdue interest rate exemptions or reductions and provide financial assistance to help the enterprises overcome their hardship.

Notably, these enterprises will be eligible to continue taking out loans from credit institutions following current regulations.

Besides, VAMC with its specific operations and cooperation with other relevant agencies will help enterprises solve difficulties in legal procedures and tax policies. VAMC will speed up handling of mortgaged assets and bad debts and investors are able to join this process through auctions.

SBV said that establishment of VAMC will speed up the bad debt handling process, improve credit supply capability for the economy and help boost State-owned enterprise (SOE) restructuring. VAMC will also help SOEs divest capital from credit institutions.

Saigon Co.op, FairPrice open first hypermarket in Thu Duc

The venture between Vietnam’s Saigon Co.op and Singaporean retailer NTUC FairPrice last Friday opened the first hypermarket Co.opXtra Plus which is located on National Highway 1A in HCMC’s Thu Duc District.

Co.opXtra Plus Thu Duc, which requires an estimated cost of some VND200 billion and occupies 15,000 square meters on a total area of 2.1 hectares, features some 50,000 items.

Besides essential items such as foodstuff, cosmetics and textile, the mega-supermarket also sells electronic products, computers, sport equipment, stationery items and vehicles. The hypermarket is expected to meet diversified demand from both individuals and entities like companies, factories, schools, restaurants and hotels. Corporate customers will be subject to special sale policies offered by the shopping facility.

Besides the mega-supermarket, the venture Saigon Co.op-FairPrice also plans to open the hypermarket Co.opXtra targeting end-users. This is the model to be jointly developed by Saigon Co.op and NTUC Fair Price, two leading retail enterprises in Vietnam and Singapore.

According to the venture, incentives for loyal customers deployed at Co.opMart and Co.op Food are also offered at Co.opXtra and Co.opXtra Plus, while promotional programs at Co.opMart and Co.op Food also apply periodically at the new facilities.

Nguyen Ngoc Hoa, chairman of Saigon Co.op, said he expected the venture to open one to two hypermarkets bearing this brand in big cities annually.

To mark its inauguration, Co.opXtra Plus launches five big promotional programs, with discounts of up to 50% on thousands of products there.

PPI seeks partners for projects in Thu Duc

Pacific Property and Infrastructure Development Joint Stock Company (PPI) is calling for investments into its two property projects in HCMC’s Thu Duc District.

The two projects are the riverside complex Water Garden covering over two hectares and the 2,400-square-meter apartment project PPI Tower which was planned to have 80 apartments and 8,000 square meters for office space.

Pham Duc Tan, chairman of PPI, said the two projects have had land sites cleared and investment procedures finished. However, due to difficulties of the property market and difficult access to capital sources, the firm is incapable of carrying out those projects on its own.

Therefore, PPI has called for investors who have financial capabilities and want to cooperate with PPI to develop the projects. Partners can choose suitable cooperation models, but the prior solution is to set up a joint venture, Tan said.

PPI has also registered to adjust the average area of apartments to 50-75 square meters with an average price of less than VND15 million per square meter so that the project can be more commercially viable.

Investor found for pedestrian bridge to Thu Thiem

HCMC authorities have approved Dai Quang Minh Real Estate Investment Joint Stock Company as the project owner of the pedestrian bridge project connecting District 1 with Thu Thiem new urban area under the build-transfer (BT) format.

Trang Bao Son, deputy head of Thu Thiem Investment and Construction Authority (Thu Thiem ICA), told the Daily on Sunday that the pedestrian bridge found the investor after it had been separated from a mammoth project that also included the central square and the riverbank park schemes in Thu Thiem.

The bridge as a component of the huge project had been separated since it was difficult to find a financially-capable investor for developing such facilities, he explained.

Some investors earlier had presented to the city’s government designs of the bridge across the Saigon River but no plans as well as no investors have been selected so far, Son said.

Tran Ba Duong, general director of Dai Quang Minh, said his firm is seeking ideas for the bridge’s design through a contest, adding detailed information on the estimated capital and scale of the work is not yet available now.

According to Son, the bridge will run from Bach Dang Wharf across the Saigon River to the square in District 2 instead of stretching from Dong Khoi Street as planned earlier.

Under progress in Thu Thiem urban area now are four main routes and a number of low-storey residential areas, with Dai Quang Minh active as the developer of some.

Russian investors eye resort projects in Khanh Hoa

Some Russian enterprises are seeking to invest in tourist facilities in the coastal province of Khanh Hoa given a strong growth of Russian tourists coming to the province, especially its capital city of Nha Trang, a local official said.

Truong Dang Tuyen, director of the provincial Department of Culture, Sports and Tourism, said Russia’s Focus Travel Co. and another firm are conducting procedures to develop two resorts along Long Beach, which is the section between Cam Ranh International Airport and Nha Trang City.

“The two enterprises are performing investment procedures. Focus Travel will build a resort consisting of over 200 rooms while the other resort will have some 400 rooms, mainly to cater to Russian tourists. Other investors are exploring investment opportunities here,” Tuyen told the Daily last week on the sidelines of the meeting introducing Nha Trang Sea Festival 2013 held in HCMC.

The number of Russian tourists has increased strongly in recent years. Khanh Hoa Province expects to welcome around 100,000 tourists this year, up 20,000 from last year.

Currently, in addition to charter flights taking Russian tourists to the province, Vietnam Airlines has opened the direct Cam Ranh-Moscow air service with a frequency of a weekly flight which will be increased to two flights from October.

Tuyen said that Russian tourists account for one-fifth of the total number of international tourists to Khanh Hoa, and hence the province has made investments to offer better services. The province has coordinated with the Ministry of Culture, Sports and Tourism to offer trainings on the Russian language for tourism staff as well as prepare cultural programs for Russian tourists.

Another steel item faces dumping accusation

After welded carbon-quality steel pipe and steel hanger, now stainless steel pipe from Vietnam faces an anti-dumping case petitioned by U.S. steelmakers, said the Vietnam Competition Authority under Ministry of Industry and Trade.

Three U.S. steel producers last Thursday sent to the U.S. Department of Commerce (DOC) and the International Trade Commission (ITC) an anti-dumping petition against stainless steel pressure pipe imported from Vietnam, Thailand, and Malaysia.

According to the data provided in the petition, Vietnam in 2012 exported over 4,600 tons of stainless steel pipes worth US$16.3 million to the U.S. market, accounting for 6.61% of the U.S. imports of this product.

This has been the third lawsuit against steel products imported from Vietnam filed by the U.S. since 2011. In 2011 and 2012, the local steel industry struggled with five anti-dumping proceedings and two anti-subsidy cases initiated by the U.S., Brazil, Thailand and Indonesia, making up almost half of the total cases in the past few years.

Welded carbon-quality steel pipe and steel hanger faced dual lawsuits (both anti-dumping and anti-subsidy) brought by the U.S.

It requires double time, effort and money to deal with such cases, according to the Trade Remedies Council (TRC). For an industry inexperienced in anti-dumping and anti-subsidy cases like the steel industry, it is extremely difficult to cope with consecutive lawsuits in a short time.

Early this year, Tran Tuan Nghiep, general director of Huu Lien Asia (HLAC), a voluntary respondent in the anti-dumping and anti-subsidy investigation into carbon-quality steel pipes, said the U.S. was the main market of the company in its long-term strategy. HLAC’s new products are aimed for this market, he said.

The price competition in the steel market is quite fierce, so an extra duty deals a really hard blow to steelmakers. If imposed high tariffs, local steel firms could no longer export their products to the U.S. market, said Nghiep.

As per the U.S. investigation results published in late 2012, Vietnam’s welded carbon-quality steel pipe is not subject to anti-dumping and anti-subsidy duties stateside.

Cash-strapped furniture makers cut wood imports

Many companies in the local woodwork industry have halved the volumes of imported wood materials to minimize their inventories and ease pressure of bank loans.

Speaking with the Daily on Monday, Huynh Quang Thanh, general director of Hiep Long Woodwork Company, said due to economic woes, woodwork processors are importing input materials every quarter or small batches in line with each order instead of importing huge volumes enough for the whole year’s production.

Multiple enterprises have failed to take out bank loans while others successfully gaining access to the loans are charged with high lending rates. This means members in the industry have had to scale down imports of input materials to avoid paying huge interest sums in the current tough business conditions, said Thanh, who is also chairman of the Binh Duong Wood Processing Association.

Thanh noticed numerous members in the association in the year to date have slashed input material import by over 50% against the same period last year.

According to the director of a woodwork exporting company in HCMC, interest sums for bank loans alone make up more than 30% of total production costs at his firm.

“Our firm has calculated demand and volumes of necessary input materials and as of now only imported enough materials for production in the first quarter,” the director said. With the new material import method, his company has removed the pressure of high lending rates and enjoyed a fast capital rotation in production as well.

In fact, owing to difficult business, input material imports of the whole industry have slumped in recent years as processors seek to buy more materials locally, the Vietnam Timber and Forest Product Association (Vietforest) reports. For instance, imported processed materials for the woodwork industry from 2005 to 2010 accounted for up to 80-90% of the total, which fell to only 66% in 2012.

Latest data of the Ministry of Industry and Trade in the first three months of the year shows that Vietnam imported over US$314 million worth of input wood materials and products, a decrease of 5.22% year-on-year. In March alone, import value of this kind of products only reached US$113.2 million, tumbling 14.43% from March in 2012.

Export of woodwork and forestry products brought home US$4.67 billion last year, up 15.3% year-on-year and up to nearly 200% from 2007, and is among the industries with high trade surplus compared to the whole country.

Woodwork export is forecast to grow around 10% to an estimated US$5.5 billion this year.

Credit flow to remain poor despite VAMC: official

Credit flow will remain stagnant because the upcoming Vietnam Asset Management Company (VAMC) will not be able to quickly resolve the problem of bad debt, said Chairman Vu Viet Ngoan of the National Financial Supervisory Commission.

Talking to the media on the sidelines of a seminar on financial supervision held in Hanoi last Thursday, he said: “Credits would hardly grow due to the huge bad debt. So, VAMC is not a magic wand to solve the problem.”

In the draft scheme for VAMC establishment, the State Bank of Vietnam (SBV) admits bad debt is blocking the cash flow in the economy, and hopes VAMC will handle some VND100 trillion worth of bad debt. VAMC is scheduled for establishment this month.

Ngoan said: “Although VAMC is expected to handle approximately VND100 trillion, it will only partially address the problem. Bad debt settlement will take a couple of years.”

A report by SBV published in late February informed the bad debt ratio of the banking system had fallen to 6% from 8% in mid-2012 because many banks had made risk provisions.

The National Financial Supervisory Commission estimated banks had set aside about VND60 trillion as risk provisions.

Such an amount does not meet the scale of bad debt, Ngoan remarked. Several banks make little provision even though bad debt is surging, he explained.

In this regard, economist Le Dang Doanh also has deep concerns. “I know a bank which gives most of its loans to just one client, who spends the fund on only one property project,” he said, declining to reveal the name of the bank.

“That indicates how terrible the risks to the banking system are,” he stressed.

Credit growth in the first months of 2013 was significantly lower than the capital needs of the economy, says a report that the financial supervisory commission sent to the Government earlier this month.

In the first quarter, credits should have risen 1.5% over the end of 2012, equivalent to an increase of around VND50 trillion, to meet the target for total investment. However, as of mid-April, credit growth had only been 1.44%.

The poor credit growth is also mentioned in a report that the Government submitted to the Standing Committee of the National Assembly (NA). As per the report, total deposits had increased 5.04% against end-2012 as of April 18, while credits had inched up a mere 1.44%.

Meanwhile, the latest data of the central bank released last Wednesday show that credits after falling in January have rebounded since February and grown 2.11% against late last year by the end of April.

Outstanding loans in dong had risen 4.15% and deposits had picked up 5.2% compared to end-2012 as of late April.

Limited access to bank loans is exhausting enterprises, reflected in the surging number of inactive and bankrupt firms. In the first four months, some 16,600 businesses disbanded or suspended operations, up 17% year-on-year.

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