Industrial park properties show expansion potential

The property market in industrial parks (IPs) shows great potential for development with enterprises looking for better production and business opportunities once free trade agreements come into effect.

According to a VinaCapital report on the domestic property market, there was total foreign direct investment of about 7 billion USD in the industrial parks in the first ten months of this year, reported Kinh te do thi newspaper.

In the near future, the housing segment for workers in the IPs will attract large foreign investments due to the high demand. Property experts said enterprises should get the opportunity to invest in the potential segment.

If the Trans Pacific Partnership (TPP) agreement comes into effect, between 2.5 and 3 million people from the rural areas of Vietnam will come to cities for jobs, resulting in an increasing demand for housing in the IPs.

Economic expert Nguyen Minh Phong said real estate enterprises could invest in building medium-priced homes for lease or houses for workers with low incomes. Meanwhile, they could develop luxury homes and apartments or villas for local and foreign experts working at IPs. There will be a great demand in the market, so there is tremendous potential in it for property investors from 2016 to 2018.

However, investors should invent specific strategies for experts and workers because the experts need accommodation with convenient services such as supermarket, hospital and schools, while the workers have simple demands on housing such as quality and cheap prices.

Do Thu Hang, head of research and consultancy at Savills Vietnam's Hanoi branch, said property in industrial zones would directly benefit from the TPP. Companies from TPP countries would increase investment in Vietnam and move their production work here to benefit from the advantages in production and business from the TPP commitments. Therefore, the demand on housing in industrial zones had really great potential.

The TPP will spur more investments into Vietnam, especially from countries that are big importers of Vietnamese products like the United States (US) and Japan, CBRE Vietnam, a foreign property service provider, said.

The US investment in Vietnam remains modest compared to the Republic of Korea and Japan. American companies will increase manufacturing activities in Vietnam and reimport made-in-Vietnam products thanks to the country's tax exemption on major products such as garments and textiles.

They will likely target industrial land in Vietnam’s southern provinces, where a number of existing garment and textile factories are located. Similarly, manufacturers from other countries will certainly consider switching to Vietnam from non-TPP countries such as China, Thailand, Cambodia, and Indonesia, in addition to India, to enjoy extra-low tariffs.

This will lead to more demand for industrial land, warehouses and factories, not necessarily from the TPP countries but also from the non-TPP investors like mainland China, Hong Kong or Taiwan.-

Experts urge start-ups to develop plan

Young people should work three to five years at organisations to understand how a business run before starting their own company, delegates said at the Vietnam Young Leaders Forum 2015 held in HCM City on December 18.

Tran Vinh Du, CEO of TNK Capital Partner and Chairman of Vietnam-America Vocational Training College, said people at start-ups should be patient.

"Start-ups usually have limited capital, so you need to prepare detailed plans to call for investors as well as specific plans on what you will do if you receive money from investors," he said.

"I have seen start-ups in Vietnam that did absolutely nothing to prepare before trying to convince investors to fund them," he added.

Many young startups thought that their ideas were excellent and worthwhile, but as speakers at the forum said, ideas contributed only 1 percent to success, while execution represented more than 90 percent of success.

Nguyen Trung Tin, CEO of Trung Thuy Group and Dreamplex's founder, said: "The most important factor to help a start-up project succeed is market opportunities. If you have a good start-up idea but lack good market opportunities, it will be difficult to succeed."

He recommended that young people conduct market research before starting their own businesses.

Organised by the Business Start-up Support Centre in collaboration with the HCM City Young Businesspeople Association and Vietnam Youth Federation in HCM City, the forum attracted the participation of more than 600 young people and company executives.

At the forum, Le Thi Tuong Vy, representative of the Business Start-up Support Centre, encouraged young people to consult the centre about their ideas so they can seek opportunities to convert their projects into reality.

Lack of clarity stymies participation in PPPs

The lack of a public-private partnership project list from the Vietnamese government is among many obstacles discouraging private foreign investors from investing in these projects in Vietnam.

Pham Hoang Ngan, a senior economic expert working for an enterprise-supporting project at the Ministry of Planning and Investment (MPI), said that representatives of some major firms from the Republic of Korea and Japan had come to Vietnam, seeking opportunities in public-private partnership (PPP) projects in agriculture and development of roads, power, and water facilities.

In another example, a Qatari investor wants to cooperate with the Vietnamese government in projects worth several hundreds of millions of dollars to produce rice and build roads.

“Unfortunately, investors have encountered lots of PPP related obstructions in Vietnam. Notably, they would like the government to give them a specific list of credible PPP projects so that they can select the one most suited to them and implement it. However, such a list is unavailable right now,” Ngan said.

At a recent MPI meeting with the Japan Bank for International Cooperation (JBIC), the bank’s representative Kazumori Ogawa said Japanese investors were waiting for Vietnam’s release of a list of PPP projects in power, water, and waste treatment, so that they could begin investing.

The Asian Development Bank’s (ADB) country director for Vietnam Eric Sidgwick said the largest bottleneck impeding PPP investments in Vietnam was the challenge of bringing viable projects to market.

“In addition to providing an enabling legal framework, another key success factor for Vietnam is to build a robust and transparent pipeline of bankable infrastructure projects,” he said.

According to a recently-released ADB report on financing Vietnam’s infrastructure investment for 2016-2020, despite Vietnam’s large infrastructure financing needs, a long term PPP reform agenda, and the country’s increasing openness to private investment in infrastructure  has been very limited major public investments involving foreign investors, and still fewer cases of PPPs with foreign investors.

Sidgwick said the private sector often perceived the government as “stop and go” when it came to PPP policies and actions. The private sector also reviewed PPP bidding and negotiation processes as “unpredictable and lengthy”, and there was a perception of uncertain enforcement of foreign arbitration.

Vietnam has had some PPP projects averaging US$1 billion per year during 2000-2014. Large-scale projects have been concentrated in the power sector, mostly in the form of build-operate-transfer projects. For instance, one of the first was the Phu My 3 project, completed with loans from ADB and JBIC. The revenue stream was provided by a 23-year off-take agreement with state-owned Electricity of Vietnam.

Still, despite Phu My 3 and some other successful projects, the legal framework for PPPs has yet to be fully developed.

“The complex and time-consuming approval process has prevented many projects from being completed successfully, constraining growth in provate investment in infrastructure,” Sidgwick said.

To improve the PPP framework, the Vietnamese government issued Decree No.15/2015/ND-CP on PPPs, effective in April 2015.

Still, Hogan Lovells, a global legal services firm, commented that this decree was still placing obstructions on foreign investors wishing to join PPP projects in Vietnam.

For example, under the decree, there is no clear commitment on 100% foreign currency convertibility. Also, no time limit exists for the negotiation and signing of project contracts, which poses the risk of lengthy negotiations.

“Until these issues are resolved more definitively, we expect that investors will continue to press the government to adopt more bankable policies to encourage the development of PPPs,” said Hogan Lovells Singapore/ Vietnam partner James Harris.

Japan restaurants facing tough competition in Vietnam

As many as 770 Japan restaurants are operating in Vietnam, including more than 400 in HCM City, creating fiercer completion in the highly lucrative market, according to the Japan External Trade Organization (JETRO).

Stiff competition among the restaurants has resulted in their closure or changed trade methods, reported JETRO.

More than 50% of restaurant owners in HCM City are Japanese while the figure in the EU is just 20%.

Japan restaurants targeting Vietnamese customers often maintain a high growth rate while smaller ones serving Japanese customers is showing a downtrend.

Japan’s traditional dishes like sushi, sashimi and miso soup are served at Vietnamese restaurants.

According to JETRO statistics in 2014, Vietnam ranked 7th among importers of Japanese agricultural products and food.

Vietnamese & Thai real estate associations come together

The Vietnam Real Estate Association (VNREA) and The Real Estate Sales and Market Association of Thailand (RESAM) recently signed an agreement on enhancing cooperation, knowledge, opportunities to exchange information, and improving the professionalism of organizations in the real estate sectors of the two countries.

Vietnam’s real estate market is at a new cycle of development, according to Mr. Nguyen Tran Nam, Chairman of VNREA. The training and risk management in organizations in the market, however, still lack professionalism. Thailand’s real estate market, meanwhile, has a history of development, passing through many changes, so it has an effective management mechanism.

As Vietnam is a member of the TPP and has concluded a range of free trade agreement (FTA) and introduced regulations on allowing foreigners to purchase housing in the country, this is a good opportunity for Thai investors to invest in Vietnam’s real estate market, Mr. Nam added.

Thai investors have already eyed Vietnam’s real estate market and conducted investment, said Mr. Somsak Chutisilp, Chairman of RESAM. The signing of the agreement represents a milestone for Thai investors to further approach Vietnam’s real estate market and expand their investment scale, not only in commercial real estate but also in residential real estate.

Vietnam’s real estate market still lacks an effective mechanism for evaluating the quality of real estate brokers, according to Mr. Tran Ngoc Quang, General Secretary of VNREA. “With this signing I hope that RESAM will provide experience on training brokers,” he was quoted as saying. “This will help Vietnam’s real estate market reach sustainable development.”

Foreign investment continues to grow strongly in Vietnam’s real estate sector. Total new and additional registered capital in the sector in the first eleven months of this year was $2.32 billion, ranking its third in foreign investment attraction and accounting for 11.5 per cent of all FDI into the country.

FDI acceleration forecast in real estate market next year

Foreign direct investment (FDI) capital in the real estate market is expected to approximate 30-40 percent of total registered capital in Vietnam next year, said former Vice Minister of Natural Resources and Environment professor Dang Hung Vo.

In a recent interview with Sai Gon Giai Phong’s Financial Investment, he said that FDI capital registered in the real estate reached US$2.32 billion for the last 11 months, double it in the same period last year and accounting for 11.5 percent of total.

Real estate was the third most attractive field after manufacturing and processing and electricity production and distribution with 29 new projects and 10 capital increase projects.

Notably were some huge projects with capital hitting billions of US dollar in Ho Chi Minh City.

Vietnam’s fast urbanization in recent years has made the real estate market more attractive to foreign investors. Urban by rural ratio nears 30/70 now and will be 70/30 when Vietnam becomes an industrial nation in the upcoming time.

Supply in the market has been able to meet 10 percent of targets in the current housing development strategy.

Foreign investors are forecast to continue this year momentum pumping more capital into the real estate market, which has positively recovered, next year.

Real estate FDI capital is likely to account for 30-40 percent of total, equal to the peak time in 2007 when it reached 40 percent. The market then fell in to a recession in 2008.

The new wave of FDI capital pouring into the real estate market will activate M & A activities between local and foreign businesses. Many projects will have chance to revive after a long idle period.

At present, there has no mechanism for foreign investors to bring their gains home from Vietnam.

Similarly some investors have left properties in Vietnam as security at oversea banks to get long term capital and failed to pay their loans. The banks so have had to conduct compulsory sale of collaterals but there has no mechanism for them to take money from this activity home.

In addition, it is necessary to make clear which foreign currency and how exchange rate for foreign investors to transfer profits to their counties to boost FDI capital into the real estate market.

Local soy industry faces insufficient soybean supply

Although soybeans and cashews have large consumption market; and the quality of domestically-grown variety is acknowledged much higher than that of other countries, the area of these two industrial plants has dropped drastically that processing plants have to import them to meet the demand.

Vietnam is the world’s third largest soy milk consumer after China and Thailand with 613 million liters per year and the world’s seventh largest per capita with 6.8 liter per capita per annum, according to AC Nelsen Vietnam.

According to the Ministry of Agriculture and Rural Development, soybean is among four key cultivars of the country’s agriculture. However, the area of soybeans has lessened gradually.

Mr. Ngo Van Tu, CEO of Vinasoy whose product accounted for 83 percent of market share, said that most of local-grown soybeans were made into various kinds of traditional and modern soybean foods. Because it does not take much time to transport domestically grown soybeans to processing plants, they are much fresher than imported ones. In processing, fresh soybeans produce best products. More importantly, thanks to prominent properties of Vietnamese soybeans, products made from them still keep the specific aroma of soybeans.

Besides Vinasoy, Vinamilk and Nutifood have also started to produce soy milk. The fact that more and more businesses invested in soy industry has caused the demand for soybeans to strongly jump. Soy milk processing capacity alone surged by 53 percent from 400 million liters per annum in 2010 to 613 million liters per annum in 2014. However, according to the Cultivation Department, soybean variety is the weakest link as Vietnamese soybean yield of a crop is merely at 1.4 tons per hectare while global soybean yield reaches 5 tons per hectare. Although local scientists created some soybean varieties that produce around 2 tons per hectare, when they were grown in large scale, they did not give results as expected.

Domestic cultivation of soybeans merely met 7 percent of local demand, mainly for producing soy milk and other soybean foods. Thus, companies have to import soybeans to fulfill the rest 93 percent of demand which is mostly for animal feed production. In the first nine months of this year, the country imported 1.2 million tons of soybeans, equal to the soybean imports in 2014.

Farmers neglect soybeans because of decreasing productivity, unstable consumption, and low price. The area of soybeans continuously drops nationwide. Figures show that the area of soybeans was 111,200 hectares in 2014, a decrease of 6,000 hectares compared to the previous year; productivity was 1.43 tons per hectare, down 0.1 tons per hectare; and production was 160,000 tons, down 4.6 percent.

Mrs. Vu Thi Hong Hanh, a soy farmer in Dak Nong Province’s Cu Jut District, said that she and other soy farmers all want to abandon soybeans to shift to other lucrative cultivars. In comparison to other industrial plants, such as coffee, pepper, cassava and corn, soybean has poor competitiveness while productivity is low yet decreasing.

The Central Highlands of Vietnam, mainly Dak Nong and Dak Lak provinces, has perfect soil for growing soybeans which gives soybean yield up to 1.8 tons per hectare. However, the area and production of soybeans falls steeply. Although domestically grown soybeans are sold at around VND18,000-20,000 per kilogram, higher than imported ones that are sold at VND15,000 per kilogram, soy farmers do not earn much from growing soybeans as its cost price is fairly high, of above VND16,600 per kilogram.

This is similar to cashew trees. The Vietnam Cashew Association had to coordinate with the Ministry of Agriculture and Rural Development to select high-yield cashew variety for grafting in order to raise productivity to above 2 tons per hectare so as to maintain the area of cashew.

As for soybeans, after two years of research, Vinasoy and experts from the US National Center for Soybean Biotechnology have collected about 300 local soybean varieties, of which, Cu-Jut-white-flower soybean variety shows several strong points, such as disease resistance and high productivity. This soybean variety has been grown in an area of 20 hectares in Cu Jut and Dak Mil districts in Dak Nong Province. Moreover, Vinasoy also coordinates with the US scientists to tackle other shortcomings in order to lower cost price.

Falling coffee prices hit farmers

A sharp fall of coffee prices has caused many difficulties for local growers and if the situation does not improve, many of the farmers may turn to planting other crops instead.

According to the Vietnamese Coffee Exporters’ Club, Vietnam's coffee export price has fallen to USD1,800 a tonne compared to its peak of USD2,100 - 2,200 USD.

If coffee prices continue falling, farmers may turn to planting other crops instead.

The Vietnam Coffee and Cocoa Association (VICOFA) said that Vietnam's coffee exports for 2014-15 were estimated at around 1.25 million tonnes at USD2.62 billion, down 21.9% in volume and 20.1% in value compared to the last harvest.

Nguyen Hai Nam, Deputy Head of VICOFA said that coffee prices in the domestic market saw consecutive falls to VND35.4 million per tonne in September from VND36 million in July and VND38 million in March.

The problem was attributed to exchange rate changes in the global market as well as unfavourable weather conditions such as droughts caused by El Nino which seriously affected coffee productivity. Meanwhile, famers have also spent more on production costs.

Luong Van Tu, Chairman of VICOFA said that if the situation did not improve, famers may stop growing coffee to turn into other crops like pepper and macadamia nuts.

Vietnam is now home to around 600,000ha of coffee. To maintain coffee production in the coming time, the coffee sector will have to boost domestic consumption and co-operation between growers and enterprises as well as attract more investment.

Experts suggested there should be support policies for farmers as they have had to suffer losses over several years due to the decline in both coffee output and prices.

Crude oil contributes 6% of budget collection

Budget collection of crude oil valued VND 66 trillion (US$3.1 billion), lower than VND 76 trillion of tax debts, said Deputy Finance Minister Do Hoang Anh Tuan.

Mr. Tuan made the announcement yesterday at an interview with the Viet Nam Television.

According to the Deputy Minister, the budget collection from crude oil no longer contributed highly to budget collection in comparison with five and ten years ago.

Mr. Tuan said that oil price dropped to US$36 a barrel and would not affect budget collection in 2015.

The Ministry of Finance crafted concrete scenarios for oil prices at US$60, 50, and 45 a barrel or even US$40, 35, and 30.

In 2016, Viet Nam was projected to import around 12.5-13 million tons of petrol. Decreased oil price would lead to lower prices of input materials. Hence, business performance and people’s lives would be improved. Budget collection would increase, said Mr. Tuan./.

Work resumes on long-stalled Kien Luong 1 power plant

Tan Tao Energy Joint Stock Company (TEC) has resumed preparations for Kien Luong 1 thermal power plant project after more than six years of interruption.

TEC and the General Department of Energy under Ministry of Industry and Trade signed a memorandum of understanding (MOU) on developing the BOT (build-operate-transfer) project in Hanoi last Friday, paving the way for the long-stalled project to come back to life. The project is expected to be up and running in the next 10 years.

TEC said the MOU will create a legal framework for negotiations over related issues so that the plant would be put into operation to ensure national energy security.

The investor said Kien Luong 1 is scheduled to start generation in February in 2025 as envisaged in the agreement. The plant has two generators with a combined capacity of 1,200 megawatts and is located in Kien Luong District in the Mekong Delta province of Kien Giang.

The facility is part of Kien Luong power center and belongs to the country’s master zoning plan for power development in 2011-2020 with a vision towards 2030 as approved by the Prime Minister.

The plant, which was designed to be fired by coal, aims to ensure power supply for economic development and national energy security in the coming years, especially in the southern region.

The Government approved the project to be converted from the build-own-operate (BOO) format to BOT in 2014. Since then, TEC has worked with many foreign investors over the project.

TEC has completed compensation, site clearance and technical infrastructure in preparation for the thermal plant to come on stream.

According to the MOU, the first generator of Kien Luong 1 power plant will come online in August 2024 and the whole plant will be in place in February 2025.

Earlier, Tan Tao Group planned to begin work on the facility in late 2009 and commission it in 2013 after the Prime Minister had approved in principle credit guarantees for the project. Several international financial institutions then agreed to finance the project.

Unfortunately, the project was put on hold and the province intended to withdraw the investment certificate of the project at the end of 2013.

At a regular media conference in September 2013, Deputy Minister of Industry and Trade Le Duong Quang said Tan Tao Group still had a second chance to proceed with the project as it had spent heavily on preparatory work.

VBA wants new special consumption tax delayed

The Vietnam Beer, Alcohol and Beverage Association (VBA) has written to the Government Office and relevant agencies proposing delaying the enforcement of a new government decree on special consumption tax.

Decree 108/2015/ND-CP guiding the implementation of the special consumption tax law is set to take effect early next year. Under the decree, the tax will be calculated based on selling prices, instead of import prices. VBA said this is against the current regulations on special consumption tax.

The association bemoaned that the decree will come into force on January 1, 2016, just two months after its introduction, so it will impact firms’ operations and finances.

Special consumption tax may rise strongly, causing selling prices of imported products to jump.

VBA said businesses have drawn up their short- and long-term business plans based on the existing regulations. Such unexpected legal changes will certainly spell big trouble for enterprises and in the worst-case scenarios, they may stop operations.  

As the National Assembly has yet to pass the revised law on taxes, which is the foundation for Decree 108, coupled with difficulties firms are coping with, the VBA proposed postponing Decree 108 until January 1, 2017 so that businesses will have time to adapt to the new tax calculation method and work with partners and distributors to solve any issues that arise from the new regulation.

According to VBA, higher special consumption tax will help bolster budget collections in the short term. However, in the long term, higher prices of imported products will prompt smuggling and trading of counterfeit goods on the domestic market.

The association noted that alcoholic beverages just account for a small proportion of Vietnam’s beverages market.

Panasonic shows off B2B products and solutions

Vietnam is viewed as a growth engine for Panasonic’s B2B business, Mr. Eiji Fukumori, General Director of Panasonic Vietnam, said at Panasonic ProDay 2015 in Hanoi on December 4.

The event showcased the company’s full suite of business-to-business products and solutions. Held for the second time, Panasonic ProDay was attended by almost 1,000 leading companies, broadcasters, government agencies, and other organizations.

The event provided end-users and partners with the opportunity to learn of Panasonic’s latest technology and solutions to help businesses drive change to improve productivity and cost efficiency. “Our commitment is to deliver end-to-end products and solutions to enhance the business performance of our customers,” Mr. Fukumori added.

Panasonic introduced a wide array of technology and solutions, with highlights including the latest 4K technology in broadcast equipment, bringing recording and display quality to the next level, cutting-edge security and surveillance technology to enhance home/business safety, and cost-saving retail security solutions and promotional display solutions.

According to Mr. Bui Quang Huy, a representative from the System Solution Division at Panasonic Vietnam, new technology such as 4K could help retailers save up to 30 per cent on the cost of beginning an investment and reduce the risk of loss and theft.  

The company also offers the latest business communication solutions to boost work group productivity and efficiency, including document imaging and HDVC systems, durable tablets and laptops for harsh outdoor environments, and state-of-the-art control room systems, as well as future cloud solutions and services for TV stations.

“With the TPP, Vietnam has its best chance ever to join the global market,” Mr. Fukumori said. “The business solutions that Panasonic provides will enable local businesses to reach potential partners all over the world while staying in the office, so they can seize unlimited chances for business expansion in the era of globalization.”

Panasonic ProDay provided businesses with opportunities to see and experience a wide range of products and solutions offerings through show floor presentation sessions and solution showcase. The event will also be held in Ho Chi Minh City on December 8.

Credit growth to fetch 17% in 2015

Credit growth was estimated at 14.5-15% in the first 11 months and was forecast at 17% for the whole year, according to the State Bank of Viet Nam (SBV).

The SBV reported that the norm on credit growth has been fundamentally fulfilled.

The credit flow contributed to spurring GDP growth rate to 6.5%.

From 2006-2010, credit growth surged 30% but GDP fluctuated at 7%. The pumping of banking capital halved but economic growth rate was maintained.

The capital flow served production and ensure practical and sustainable economic growth instead of going to vulnerable and bubble sectors such as real estate and securities.

Binh Duong grants license to US$1 billion project

The Southern province of Binh Duong on December 4 granted an investment license to a paper plant project of Taiwan-based Cheng Loong Corporation.

The US$1 billion plant, covering an area of 80ha, will be located at Ascendas-Protrade Singapore Tech Park in Ben Cat district.

It is designed to generate one million tons of industrial paper and 50,000 tons of household paper annually.

The first phase of the project is scheduled to begin in December and is expected to be operational by January 2018.

Work starts on major ring road

Work has begun on a Ring Road No.2 section stretching 2.7 kilometers from Pham Van Dong Street to Go Dua Intersection on Highway 1A in HCMC.

The project costs an estimated VND1.14 trillion (US$50.5 million) for the first of two phases. Scheduled for completion within two years, this phase is being implemented by a consortium of HNS Development JSC, Van Phu Invest JSC, and Bac Ai Building and Construction Advisory JSC under the build-transfer format.

Phase one has two new roads built in parallel to the main road with each having 10.5 meters in width and three lanes, and builds three bridges with each being 79.67 meters long. An eight-lane main road section will get off the ground in phase two of the project.

The ring road is designed to run through three wards in Thu Duc District.

HCMC vice chairman Nguyen Huu Tin told the groundbreaking ceremony last week that the road is important to the city’s economic growth, so relevant agencies should streamline administrative procedures and help the investor speed up construction work.

Tin suggested the authorities of Thu Duc District should comply with the existing regulations when compensating affected households. He noted many projects had been delayed due to people’s complaints about inadequate compensation.

Ring Road No.2 is about 70 kilometers long, running from Nguyen Van Linh Parkway in District 7 to Go Dua Intersection which connects to Highway No.1. But some sections of the road have not been built.

Once in place, the road will help ease traffic congestion in the downtown as container trucks will no longer have to run through inner-city areas to other provinces.

HCM City sets up urban railway firm

The government of HCMC has established a company in charge of operating the city’s first metro line between the landmark Ben Thanh Market in District 1 and Suoi Tien Park in District 9.

HCMC Urban Railway Company No.1 (HURC1) is a wholly State-owned enterprise with total chartered capital of VND14 billion and a licensed period of 99 years.

The company will be responsible for Metro Line No.1 at first and other metro routes thereafter.

Quan said at a ceremony held late last week to announce the city’s decision on HURC1 establishment that construction work on the first metro line is being sped up and that the elevated track of the line would be up and running in 2019.

Therefore, HURC1 will have to complete human resource preparations before 2018 so that the company could take charge of operating this mass rapid transit rail line.

Quan told the HCMC Department of Transport to work with the Management Authority for Urban Railways to draft regulations on organizing, management and operation of urban railways for submission to the city government to get approval.

E-commerce remains tough business

Online food website foodpanda.vn has stopped business due to financial constraints following the closing of e-commerce website beyeu.com for the same reason, which is an indication that e-commerce is not an easy bet in Vietnam.

A public relations representative of Food Panda Company said that its website foodpanda.vn had terminated operations in Vietnam because of tough financial conditions.

Food Panda Co. Ltd., the operator of foodpanda.vn, had sent a notice on its termination of business in Vietnam to its partners. The company will liquidate contracts and recover tablets and printers which have been supplied to its partners.

The company is scheduled to deactivate the website next week or within five days after the December 2 notice.

At present, the website is still operational, so users can still search for restaurants and dishes there. According to a customer service staff, when users order food on the website, some restaurants can still directly deliver food to customers.

Food Panda received hundreds of millions of dollars from investors early this year. Particularly, some investors including Rocket Internet AG in March this year pledged to invest US$110 million into the site. In May, the site got another US$100 million from Goldman Sachs and a group of investors.

Food Panda operates in 40 countries including Vietnam, Thailand, Singapore, Malaysia, the Philippines, and Indonesia with 60,000 restaurants.

E-commerce experts said e-commerce needs a huge investment.

Export growth forecast at 9.5%

Vietnam is projected to obtain total export revenue of US$164 billion this year, up 9.3-9.5% year-on-year, according to a Ministry of Industry and Trade report.

The import bill is forecast to amount to US$168 billion, up around 13.5% against 2014, leaving a trade deficit of around US$4 billion, equivalent to 2.4% of export turnover, which is below the target of 5%.

The ministry said tough the global economy is not yet out of the woods, Vietnam’s shipments to some foreign markets grew in the first 10 months this year.

January-October exports to Asian markets picked up 8% from the year-earlier period to US$65 billion. Shipments to ASEAN countries inched down 1.8% to US$15.4 billion, and those to Japan edged down 5.8% US$11.6 billion. Meanwhile, exports to China nudged up nearly 14% to US$14 billion.

Europe imported US$28.2 billion worth of goods from Vietnam, up over 9% year-on-year, with the EU accounting for US$25.4 billion, up over 12%.

Exports to the Americas rose 19% to US$33.8 billion. Of the amount, the United States made up US$27.7 billion, up nearly 18%.

The report says Vietnam’s exports to major markets remained good though its imports tended to fall. For example, the first nine months of the year saw Vietnam’s imports from the U.S decline 3.9% year-on-year. Similarly, China’s imports from Vietnam fell over 15%.

IMF calls for flexible forex policy

Jonathan Dunn, resident representative of the International Monetary Fund (IMF) in Vietnam, has urged the country to adopt a more flexible foreign exchange policy and boost fiscal consolidation.

An IMF report delivered at the Vietnam Development Partnership Forum 2015 (VDPF) in Hanoi last Saturday says low inflation is a good chance for Vietnam to establish a nominal anchor and enable the exchange rate to move flexibly to protect the economy from external shocks.

This will contribute to macroeconomic stability, Dunn said, adding a more flexible exchange policy would help increase foreign reserves and facilitate growth via improving competitiveness or adjusting the macro economy in terms of capital inflows.

The IMF report as one of the important policy recommendations for Vietnam at VDPF says monetary policy could be loosened in short term owing to low inflation but it should be tightened when inflationary pressure builds up.

High credit growth, if maintained for a long period of time, could lead to financial instability, so it could be controlled by implementing macroeconomic stability policy.

Regarding fiscal policy, the IMF recommended Vietnam ensure fiscal consolidation by promoting growth and maintaining budget allocations for vital investments, which can be achieved by ensuring budget revenues, and rationalizing wage payments in the public sector by improving the quality of public services and public spending.

Fiscal consolidation will make it possible to guarantee the sustainability of public debt and have more scope to deal with external shocks.

According to Dunn, budget deficit remains huge as budget collections are down while regular expenditures are climbing. Ballooning budget deficit, public debt and government-guaranteed debt are cause for concern.

IMF told Vietnam to focus on structural reforms which are progressing slowly. Bolder reforms will help strengthen confidence, reduce risk in the banking sector and at State-owned enterprises (SOEs), fuel growth and step up exports of domestic enterprises, thus generating new jobs for the expanding labor force.

The restructuring of the banking sector is important since a sound banking system would help channel financial resources into the economy efficiently. In addition, legal reforms should be boosted to facilitate the handling of ailing banks.

It is also necessary to let State-run commercial banks go public and refinance banks through contributions by new and existing shareholders.

Vietnam Asset Management Company (VAMC), a debt trading arm of the Government, should have more resources and legal assistance to promptly deal with the bad debt it has bought from banks and sell the properties used as collateral.

The SOE restructuring plan in the 2016-2020 period is an opportunity to set out specific reform targets. Besides equitization, due attention should be paid to transparency, governance and management in the reform process to increase productivity and enhance coordination among relevant ministries and agencies.

The country’s signing of a couple of free trade agreements will pave the way for bettering the business environment and creating a level playing field for small and medium enterprises as well as SOEs, helping them equally access markets and resources.

Bitexco joins consortium to develop new urban area

The government of HCMC has chosen a consortium comprising local firm Bitexco and Dubai-based Emaar Properties PJSC to develop a new urban area worth VND30.7 trillion (US$1.36 billion) in Binh Quoi-Thanh Da in Binh Thanh District.

The project covers about 427 hectares in the entire Ward 28 of the district and excludes the Saigon River water surface.

The investor will have to arrange finances for the project. The VND30.7 trillion sum will be used for infrastructure development and compensation for affected households who will leave to make room for the project.

Phase one of the project will be carried out from 2016 to 2020 with a focus on compensation for site clearance and construction of major technical facilities.

In phase two in 2021-2025, the consortium will invest in technical infrastructure and functional areas. The remaining components of the project will be completed in phase three from 2026 to 2030.

Emaar Properties PJSC is one of the leading real estate development companies based Dubai, United Arab Emirates. Meanwhile, Bitexco is a developer of major property projects in Vietnam, including the 68-storey Bitexco Financial Tower and The One project under construction near Ben Thanh Market in downtown HCMC.

Bitexco has proposed constructing two bridges spanning the Saigon River and linking the Thanh Da peninsula in Binh Thanh District with nearby residential areas in the city.

Three-year bonds lift bond market

The resumption of three-year bond sales in late October has breathed new life into the primary Government bond market and made it attractive to investors.  

The Hanoi Stock Exchange (HNX) on Wednesday held an auction of three-year bonds worth VND7 trillion (US$312.5 million). Twenty investors registered to buy G-bonds valued at VND20.1 trillion, nearly three times higher than the value of bonds put up for sale.

Closing the auction, all the bonds found buyers with an annual winning coupon of 5.87%, 0.01 percentage point lower than the bond yield in the previous auction in late November.

Additional three-year bonds worth VND2.1 trillion offered for sale on the same day were acquired by 10 investors with an annual coupon of 5.87%.

The HNX also organized another auction to sell bonds with a five-year tenor worth VND2 trillion on December 2. Eight investors registered to buy over VND2.9 trillion worth of bonds with annual coupons of 6.5-7.2%.

The State raised over VND1.99 trillion from bond sales with a coupon of 6.6% per annum, equal to the coupon in the November 11 auction.

According to statistics of the HNX, the G-bond market turned bustling in October and November thanks to the re-issue of thee-year bonds.

Last month, 35 auctions held by the HNX for G-bonds raised around VND44.9 trillion, up 80% against October. The State Treasury raised nearly VND26.64 trillion of the amount, Vietnam Development Bank VND11.84 trillion, Vietnam Bank for Social Policies VND4.43 trillion and Hanoi City VND2 trillion.

In the year to end-November, the State Treasury had raised nearly VND147.45 trillion from G-bond sales. The winning coupon for the three-year tenor hovered in a range of 5.88% and 6.52% per annum while that for the five-year tenor stood at 6.53-7.45% per annum, the ten-year tenor at around 6.95% per year and the 15-year tenor at 7.65-8.1% per year.

Overall, the coupon for three-year bonds dropped by 0.16% against October, for five-year bonds by 0.1%, ten-year bonds by 0.05% and for 15-year bonds unchanged.

The State had mobilized nearly VND190.93 trillion from G-bond sales in the year to November 27, meeting 76.4% of the full-year target. This result is positive given sluggish G-bond sales in this year’s first half and a delayed issue of US$3-billion sovereign bonds on international capital markets.  

The Ministry of Finance is weighing the US$3-billion bond plan and may execute it early next year if market conditions are favorable.

SOEs banned from investing in property, stock markets

State-owned enterprises (SOEs) are prohibited from investing in real estate, banking, securities, insurance and investment fund sectors from this month, unless otherwise instructed by the Prime Minister.  

The Government’s Decree 91/2015, which came into force on December 1, bans SOEs from investing in real estate projects; and buying shares of banks, stock brokerages, insurance companies, and venture and investment funds.

Experts said the new decree aims to force SOEs to step up divestments from non-core business operations. SOEs should be responsible for maintaining and generating profit from State capital in non-core businesses, and any fluctuation of the State capital must be reported to competent agencies.

The Government issued a resolution forbidding SOEs from injecting money into non-core business sectors around four years ago. In case they already made such investments, they must divest before 2015.

Many SOEs have incurred losses from their investments in non-core businesses, thus affecting their core operations.

By the end of 2011, SOEs had invested over VND23.7 trillion in non-core business areas, including VND11.4 trillion in the banking sector, nearly VND9.3 trillion in the property market, around VND1.68 trillion in the insurance sector, VND696 billion in the stock market and VND677 billion in investment funds.   

SOEs have boosted divestments from the five sectors but the results are lower than expected. SOEs had withdrawn over VND17.7 trillion by the end of August.

According to securities companies, it is unlikely that SOEs could complete the divestment process by the year-end as required by the Government.   

The decree also clarifies that the Government will acquire the entire stake of a business to implement plans for economic restructuring, defense and security, provision of essential goods and services for society.

Vietnam rice in world’s top three

A rice variety of Loc Troi Group has been put on the top-three list of the World’s Best Rice 2015 by The Rice Trader, the world’s leading trade publication dedicated to in-depth analyses of the global rice industry.

The rice contest was held as part of the seventh annual World Rice Conference organized from October 28 to 30 in Kuala Lumpur, Malaysia. The annual contest was for rice producing and exporting countries, Pham Thanh Tho, deputy director of Loc Troi’s food department, told the Daily on December 3.

“In the previous six contests, Vietnamese enterprises did not attend because none of them had their own rice variety,” he said.

This year, Loc Troi Group decided to bring its two fragrant rice varieties, AGPPS 140 and AGPPS 103, to compete with 24 entries from other countries that produce rice for domestic consumption and export such as the U.S., Thailand and Cambodia.

A fragrant rice variety developed and grown in California, the U.S. won the World's Best Rice Award while the AGPPS 103 variety of Loc Troi made it to the top three along with a jasmine rice variety of Cambodia.

To join the competition, Loc Troi proved its ownership of AGPPS 140 and AGPPS 103 varieties. The group had to submit all information related to the quality of its rice products and their origins and guarantee that these are homegrown products.

The group is expected to join the contest next year with another jasmine rice variety.

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