Market to extend gains from last week

Stock indices have advanced, accompanied by steady increases in liquidity, and this is what investors expect to continue in both exchanges this week.

At the HCM Stock Exchange, the benchmark VN-Index surpassed the five-year peak of 615 points recorded in October 2009 to close last week's trading at 620.14 points, a cumulative rise of 2.63 per cent during the week.

Blue chips gave the market a boost. PV Gas (GAS), the biggest stock in terms of market value, jumped 3.4 per cent while large-cap shares such as VinGroup (VIC) posted substantial gains, along with Masan Group (MSN), Hoa Phat Group (HPG), PetroVietnam Drilling and Well Services Corporation (PVD) and Saigon Securities Inc (SSI).

The VN30 Index, which tracks the top 30 shares by market value and liquidity, also rose 1.52 per cent to finish at 654.96 points.

Investors' confidence showed in the steady increases of money inflows into the market. Daily trading volume grew 40 per cent over the previous week, averaging more than 139 million shares, while market value climbed 35 per cent to reach nearly VND2.94 trillion (US$139.3 million) per day.

On the Ha Noi Stock Exchange, the HNX-Index also gained 1.35 per cent to end on Friday at 83.34 points.

Trading also improved here, with market volume growing by more than 16 per cent compared with the previous session, averaging nearly 62 million shares worth VND791 billion ($37.5 million) per session.

Analysts say profit-taking activity, particularly in oil and gas and securities shares, which saw impressive increases in the previous week, sparked the strong growth of liquidity on both exchanges last week.

They predict that the market rally will extend to this week, and investors could consider buying leading stocks in oil and gas, construction, real estate and securities groups.

One positive signal is that foreign investors ended their nearly two-week net selling streak on the HCM City market and returned as net buyers here in the last two sessions.

They were net buyers in term of volume (1.2 million shares) but were still net sellers in term of value, with a net sell value of nearly VND50 billion ($2.4 million). This was much smaller than their average net sales figures of VND400-640 billion ($19-30 million) in the last three weeks.

Dairy giant Vinamilk (VNM) topped foreign purchases last week, with 16.4 million shares worth VND1.872 trillion ($88.7 million) traded through negotiations. F&N Dairy Investment, Vinamilk's biggest foreign stakeholder, purchased more than 90 per cent, or 15 million, of these shares.

It is believed that F&N bought 11.4 million of these shares from Dragon Capital and 3.6 million shares from VinaCapital, as these two funds registered to sell the exact amount of shares that F&N bought.

In Ha Noi's market, the foreign sector was also responsible for a net sell value of VND10.4 billion ($500,000).

"Foreign investors' comeback as net buyers will have a great influence on the market sentiment, especially at a time when the VN-Index comes near the next strong resistance," said Nguyen Van Quy, a stock analyst at FPT Securities Company.

But Quy said that for the Index to break through the 633-point threshold, the market needed a strong boost from macro-economic support information.

Local gold consumption takes nosedive

Domestic consumption of gold bars and jewelry in the second quarter of the year plunged to 19.3 tons from the 33.4 tons recorded a year ago, according a report by the World Gold Council.

The report puts sales of gold jewelry at around 2.8 tons and those of gold bars at 16.5 tons in April-June.

The gold market is under absolute control by the State Bank of Vietnam, which supplies gold for the market through auctions. Since early this year the central bank has suspended gold auctions, making the local price of the yellow metal US$100-150 per tael higher than the world level. A tael is equivalent to 1.2 troy ounces.

The report however says gold imported into the country through informal channels has helped make up for the lack of official gold supply but is not sufficient.

A gold expert said gold is no longer a safe haven for Vietnamese people. This is evident in very low gold transactions.

Saigon Jewelry Holding Company, the country’s leading gold trader, reports daily trading volume of 1,000 to 1,500 taels.

The gold market experienced one of the most turbulent times in the second quarter when China illegally parked a giant oil rig inside Vietnam’s exclusive economic zone and continental shelf. Demand for gold edged up but not strongly.

In the coming time, there will be a low possibility of the central bank increasing gold supply for the market because the central bank once said it would intervene when the market turned too volatile.

In the year to August 15 gold had marked up by 5.67%, or VND1.97 million, year on year. SJC gold had sold at VND36.67 million per tael, VND2.5 million per tael higher than world prices, while prices of 99.99% gold rings had been VND34.15 million per tael, almost on par with global levels.

Metro Cash & Carry ownership change unnerves local suppliers

Berli Jucker Public Company Limited’s (BJC) acquisition of Metro Cash & Carry Vietnam has caused anxiety among Metro’s goods suppliers.

Speaking to the Daily, the director of a fast-moving consumer goods firm, said his firm and many other suppliers of Metro are worried about the new owner of Metro Cash & Carry Vietnam.

Multiple suppliers said they had actually made little profit from supplying goods for Metro as Metro often asked for high discounts.

Goods suppliers first signed contracts with Metro Cash & Carry but for the following contracts, Metro re-negotiated with suppliers on discount rates on an annual basis and discount rates often increased year after year, according to some enterprises.

Thai firm BJC as the new owner of the Metro wholesale center chain spent a hefty 655 million euro taking over this chain.

A couple of suppliers have expressed concern that BJC might choose to bring Thai goods to Vietnam via Metro.

The director of the above fast-moving consumer goods firm said he is waiting for moves by BJC and if BJC actually prioritizes Thai goods, his company would consider switching to a different distribution system.

However, he seems optimistic as he believes that even though BJC puts more Thai products on the shelves of Metro stores, the Vietnamese market would not be flooded by Thai goods.

Other distribution channels of his firm are traditional wet markets and sales agents.

The volume of goods his company provides for Metro accounts for several percents of output and profit is low, but if Metro opened more outlets, the volume would be bigger.

Meanwhile, the director of a company specializing in supplying kitchen utensils believed BIC would prefer distributing Thai goods in Vietnam. If that came true, many suppliers of Metro would suffer.

Nevertheless, he said if Vietnamese consumers still had high demand for local goods, BJC would have no choice but to continue supplying domestic products, instead of selling Thai products only.

According to this director, local products will have to compete with those from Thailand and other ASEAN countries when the ASEAN Economic Community is in place in 2015. Therefore, companies like his have made preparations for a tougher competition.

Currently, prices of Thai products are higher than those of Vietnam’s due to transport costs.

Metro Cash & Carry Vietnam earlier issued a statement saying that all of its operations with 19 distribution centers and properties worth 655 million euros would be taken over by BJC under a deal signed on August 7. The acquisition is expected to be finished in the first half of next year.

BJC is a major distribution, marketing and production firm of Thailand. It has six offices in the Southeast Asian region and earned 42 billion baht in revenue last year, equivalent to 975 million euro.

Banks report high bad debt in first half

Banks’ consolidated earnings results in the first half of the year show an increase of bad debts and high risk provisions.

Asia Commercial Bank (ACB) set aside VND354 billion for its risk provision fund, six times higher than last year’s same period.

ACB’s high risk provisions resulted from mounting bad debts. On June 30, 2014, its bad debt ratio went up from 3% in late 2013 to 3.6%, equivalent to VND4.037 trillion.

With such bad debt, potentially irrecoverable debts (group 5) totaled VND2.616 trillion, up over 23% against last year and accounting for 64.8% of total bad debts, while debts needing special attention (group 2) picked up 22%.

At Saigon Thuong Tin Bank (Sacombank), bad debts recorded on June 30 accounted for 1.5% of total outstanding loans, up a slight 1.48% from last year. However, its January-June risk provisions inched up nearly 25% year-on-year to VND308 billion.

Meanwhile, the Bank for Foreign Trade of Vietnam (Vietcombank) reported total bad debts of over VND9 trillion, equivalent to 3.09% of its total outstanding loans. Of this, potentially irrecoverable debts made up VND4.765 trillion, up 70.7% year-on-year and 2.73% against last year. With such bad debt ratio, Vietcombank would have to sell bad debts to Vietnam Asset Management Company (VAMC) in the coming time.

Bad debts at the Vietnam Bank for Industry and Trade (VietinBank) were put at VND9.575 trillion on June 30, 2.4 times higher than late last year. Besides, its risk provisions also climbed strongly by over 30%.

This surprised the market as a long period of time before 2014, VietinBank’s bad debts accounted for only 1% of outstanding loans and the bank’s leaders appeared to be confident about the quality of banking services.

Early this year, after VietinBank’s shareholders approved a leadership reshuffle, including the posts of board chairman and general director, statistics of the bank turned out to be less glossy, which demonstrated the new leadership wanted to make the actual health of the bank known.

Bad debts at Military Bank (MB) in June reached VND2.915 trillion, up nearly VND770 billion and accounting for 3.1% of total outstanding loans. Late last year, its bad debt ratio stayed at only 2.46%.

In addition, MB’s risk provision fund rose by nearly 18% in January-June, which means its bad debts would have to be sold to VAMC.

Statistics at Vietnam Export-Import Bank (Eximbank) were also not as good as expected as it had VND2.364 trillion bad debts. This bad debt amount represented 2.94% if its total outstanding loans, close to the level set by the central bank to force banks to sell bad debts. Banks with the bad debt ratio of 3% or above are compelled to sell debts to VAMC.

Eximbank’s risk provisions increased by a staggering 88% in the first half of the year. The bank saw its bad debt ratio at around 2% with VND1.652 trillion late last year.

According to analysts, banks’ revelations of their actual earnings results are a good sign. This indicates banks are more transparent to their shareholders.

In a broader perspective, the central bank has recently taken measures forcing banks to be more transparent. However, some said this is just part of a story.

Banks seem to have delayed releasing their earnings reports. It took them 45 days after quarter two to announce their reports but those reports have not been publicized. Just one-third of the banks have released their reports.

Binh Duong offers preferential loans to riot-hit firms

Enterprises affected by the mid-May rioting in Binh Duong Province can access bank loans in a VND1-trillion package with preferential interest rates to purchase machines, build workshops and expand production.

With this loan package to be launched next month, the interest rates will be cut by half, according to chairman of Binh Duong Province Le Thanh Cung at a review meeting held last week on insurance payouts and support for protest-hit enterprises.

Three months after the rioting occurred, Binh Duong has refunded taxes worth nearly VND524 billion for 143 affected enterprises. Besides, the province has offered tax extensions for 243 companies with a combined amount of nearly VND19 billion and is providing 2014 land rent exemptions and reductions for 594 others with an estimated VND155 billion.

In addition, there are 12 firms enjoying import tariff exemptions and zero value-added tax on machines imported to replace the damaged ones. Enterprises outsourcing and producing products for export also get tax exemptions and those importing materials for domestic consumption get tax refunds.

Besides, enterprises building or repairing their damaged facilities are not required to seek construction licenses.

However, Cung acknowledged insurers had been late in making insurance payouts for the affected enterprises and added the province would urge insurers to speed up the process.

Binh Duong has so far brought 28 people to court on charges of rioting and looting during the anti-China protests.

Mekong Delta companies report contracting revenues

More than 57% of companies in the Mekong Delta have reported lower-than-expected business performances in the first half due partly to last year’s poor results.

A review report on the corporate sector’s performance in the first six months released by the Vietnam Chamber of Commerce and Industry (VCCI) in Can Tho at a seminar Can Tho City last week said 55% of companies in the region met less than half of their profit targets for the year.

The report also showed that a mere 4.5% of businesses enjoyed positive growth against the year-earlier period while 37.5% reported flat business results.

Nguyen Thi Thuong Linh, general secretary of the Mekong Delta Business Association and deputy director of VCCI Can Tho, attributed the poor performance of local firms to the shrinking domestic demand and the negative impact of shrinking export markets as shown by the report.

“A number of hindrances such as unqualified labor, rising production cost, difficult access to bank loans, poor traffic infrastructure, lack of market information and outdated technology had impacted on businesses,” Linh added.

Most local firms projected the situation would worsen until the end of this year.

Given the economic situation in Vietnam this year, well-known economists Pham Chi Lan and Le Dang Doanh said at the meeting that businesses might run into more woes even though the Government has taken numerous pro-business measures including restructuring State-owned enterprises and banks, and offering preferential loans to businesses.

The two economists noted Vietnam’s economy is heavily dependent on the Chinese economy.

Danh said Vietnam imported over 50% of total fabric needs and 80% of apparel accessories from China while it exported 40% of its rice and 50% of its rubber to the northern neighbor.

Meanwhile, Lan mentioned the local agricultural industry also relies on China’s animal feed, fertilizer and other agricultural derivatives.

Importers and exporters shoulder multiple absurd charges

Importers and exporters in the country have been shouldering more than 10 types of charge and surcharge since 2010, with some of them described as unnecessary and absurd.

The reports which industry associations have sent to the Ministry of Transport say exporters are paying a wide range of charges including terminal handing charge, container imbalance charge, port congestion charge and container cleaning charge.

The authority of Cat Lai Port said cargo congestion had become history at the port but some shipping lines and agents have yet to abolish the port congestion charge while others have announced to collect it from August 15 or September 1.

In the past a number of shipping lines imposed a fuel surcharge when fuel prices rose.

The current charges and surcharges are 20-30% higher than last year, leading production and transport costs to swell and cutting into the competitiveness of local products on global markets, according to the reports.

According to the Vietnam Leather and Footwear Association (Lefaso), annual charges and surcharges levied on footwear export shipments amounted to nearly US$110 million.

Industry associations said certain types of charge could be collected when unexpected events happened, such as port congestion and imbalanced containers. However, shipping lines are inclined to keep them in place though problems have been resolved.

According to government agencies and industry associations at a meeting last week, collections of such charges and surcharges are incompliant with international regulations and practices.

Bui Thien Thu, deputy head of the Vietnam Maritime Administration (Vinamarine), said the Vietnamese ship fleet is not capable of transporting export and import goods, so goods owners have had to rely on foreign shipping lines.

To ensure healthy competition, Vinamarine proposed the Government authorize the administration to work with the Vietnam Competition Authority, Vietnam Export Import Authority, Vietnam Chamber of Commerce and Industry (VCCI) and other industry associations to conduct a thorough review of charges and surcharges.

The administration will report to the Ministry of Transport before requesting shipping lines and agents to stop collecting charges and surcharges deemed as absurd.

The administration also suggested collaborating with the Ministry of Industry and Trade, the Ministry of Finance and VCCI to establish a joint task force to monitor charge and surcharge collections and propose the Government issue an appropriate management mechanism.

Local firms fear losses in Philippines rice tender

Local rice exporters said the recent rises of domestic rice prices discourage them from joining a 500,000-ton rice tender which the Philippines will be organizing late this month even if they offer the highest bid.

The National Food Authority (NFA) of the Philippines said six enterprises are bidding for the contract to supply 25% broken rice for the Philippines, including two from Vietnam – Vietnam Northern Food Corporation (Vinafood 1) and Vietnam Southern Food Corporation (Vinafood 2).

NFA plans to spend US$235 million on the contract, meaning the highest price would be around US$470 per ton.

Huynh The Nang, general director of Vinafood 2, said this price is US$10 per ton lower than the current level on the domestic market.

Nang said domestic rice prices have increased in recent times due to an undersupply while demand has surged given the high volume of rice contracted. Local firms need about two million tons for delivery.

However, Duong Van Men, a rice trader in the Mekong Delta province of Dong Thap, said local exporters are buying 5% broken rice for export at VND9.2-9.3 million per ton, or US$438-443. Therefore, exporters can still make some profit if the Philippines pays US$470 a ton.

FrieslandCampina Vietnam funds cow bank project

FrieslandCampina Vietnam has given 60 cows worth VND600 million to the cow bank project founded by the Vietnam Red Cross Society to help poor farmers nationwide.

The project benefited farmers in the northern provinces of Son La and Thanh Hoa over the weekend, with each household given one cow worth VND10 million. If the cow gives birth to a calf, the family will raise that calf for about six to twelve months before returning the mother cow to the Red Cross Society to lend this cow to another household in need of help.

FrieslandCampina Vietnam also helps train underpriveledged farmers in cow breeding in order to maximize the results of the project.

After nearly four years of existence, the project has aided more than 7,000 poor households. The project is aimed to support at least 1,000 more families around the country.

Study for 3rd power plant in Hau Giang underway

Korea Electric Power Corporation (KEPCO) and VINAKONALT Co.Ltd are conducting a feasibility study and analysis for a third coal-fired power plant in Hau Giang province –Song Hau 3.

At a meeting with representatives from the two businesses on August 19, Tran Cong Chanh, Hau Giang provincial People’s Committee Chairman provided information on incentives the province would offer, should the project move forward, pledging the full support and backing of the Committee.

Spanning 107 hectares, the proposed coal-fired power plant has two turbine generators and a total design capacity of 2,000 MW.

Currently, Hau Giang has attracted a number of the country’s largest-scale thermal power plant projects including the 1,200 MW Song Hau 1 constructed at a total cost of US$1.5 billion, and the 2,000MW Song Hau 2 (US$3.5 billion).

The three projects are located in the Song Hau Power Complex situated in Phu Huu A industrial cluster of Hau Giang’s Chau Thanh district.

Bright future for Vietnam, Africa raw cotton trade

The Vietnamese textile and garment sector, with its rapid and sustainable growth over recent years, remains overly dependent on foreign raw materials, paying inordinately higher prices than necessary.

Do Huu Huy, deputy head of the Ministry of Industry and Trade's Africa and South West Asia Market Department, also divulged most of the raw materials for the sector originate in Africa and are sold to Vietnamese manufacturers through intermediary French, Swiss and Indian wholesalers.

The garment and textile sector would benefit tremendously by developing a direct international supply chain with African nations, Huy says, thus eliminating the extra cost of the middleman, resulting in increased price competitiveness in the global marketplace.

A spokesperson for the Ministry of Industry and Trade and Vietnam Cotton & Spinning Association, echoing Huy’s views, disclosed the agency has been endeavouring to strengthen trade promotion activities with African countries over the past with a view towards ameliorating the situation and enhancing the sector’s supply chain.

The spokesperson cites a recent meeting held at the International Trade Centre (ITC) for Vietnamese manufacturers and its partners from eastern and southern African countries as a specific example.  Numerous prospects for increased direct trade between the two sides were opened up at the meeting that will benefit the industry in the coming time.

Vietnam currently imports raw cotton from 19 out of 55 African markets, mainly Tanzania, Mozambique, Zimbabwe, Zambia, Uganda, and Malawi. African cotton is of fairly good quality, reasonably priced and suitable for yarn production.

Marco Charles Mtunga, acting Managing Director of Tanzanian Cotton Board in turn said that the association is working with ITC to implement better management measures related to cotton contamination. Along this line, the association will be offering training courses for farmers and cotton processing factories aiming to improve the quality of cotton in the future.

According to General Department of Customs, in the first seven months of this year, cotton imports surged 34% in volume and 36.3% in value on-year to a record 458,000 tonnes valued at US$919 million.

According to the Vietnam Cotton and Spinning Association (VCOSA), the industry currently has 5.1 million spindles with production capacity of about 700,000 tonnes of fibres per year.

VCOSA General Secretary Nguyen Hong Giang said that the Trans-Pacific Partnership Agreement (TPP)’s origin requirement for “yarn forward” would create favourable conditions for exponential growth in the global marketplace for Vietnamese manufacturers.

With the expansive prospects created by the TTP and the momentum for the development of a direct supply chain for raw materials with African partners, the prospects for continued rapid and sustainable growth in the garment and textile sector remain bright.

Firms urged to conduct overseas promotions

Vietnamese companies need to further promote their products, especially online, if they wish to sell in foreign markets, a conference heard in Ho Chi Minh City on August 19.

Speaking at the conference to promote trade and business with Japan, an official from the Vietnam Chamber of Commerce and Industry (VCCI) in HCM City said: "Japan will remain an important partner for Vietnam in future. Expanding business with Japanese partners is necessary."

Yuji Yamauchi, president of Alaki Company Ltd, said working with many Vietnamese companies has shown that the internet was the best way to boost business.

Besides studying Japanese companies, Vietnamese companies should show how strong they are, and they have to do it online by uploading information about their products, quality, and service, he said.

If there are no advertisements, Japanese companies would know nothing about Vietnam, he said, adding Vietnamese businesses should be confident about their products and technologies.

Nishiyama Akira, director of BSO Investment Consultant Company, told the conference that Vietnamese companies should learn from the experience of Japanese companies and then add their own strengths.

He told Vietnam News that since his country lacks a young population it needs to cooperate with other countries including Vietnam.

"Creating trust and being in time are very important," he said.

He told the 100-odd Vietnamese business executives about the habits and needs of Japanese companies and the way they think and act.

Last year Vietnam's exports to Japan were worth 13.7 billion USD.

The conference was organised by VCCI and attended by over 100 of companies.

RoK group interested in Hau Giang’s thermal power plant

The Korea Electric Power Corporation (KEPCO) has showed its interests in procedures of investment in the Song Hau 3 thermal power plant, a major project in the Mekong Delta province of Hau Giang.

At a working session with KEPCO representatives on August 19, Chairman of the provincial People’s Committee Tran Cong Chanh pledged to provide the best possible conditions for the investors in the project.

The two-turbine plant, fueled by coal, will have a capacity of 1,200 MW. It is set to cover 57ha in the Phu Huu A concentrated industrial complex in Chau Thanh district.

Several major thermal power plants are under construction in Hau Giang province, including the 1,200 MW Song Hau 1 and the 2,000 MW Song Hau 2.

The three projects are part of the Song Hau Power Centre spreading over 360ha in Chau Thanh district, which was approved by the Government.

Vietnam firms urged to use licensed software

International organisations and the Vietnamese government have urged firms to comply with copyright laws to avoid risks of having data stolen and having their reputation destroyed if legal actions are taken against them.

Licensed software is highly beneficial to businesses, Dao Anh Tuan, representative of BSA | The Software Alliance in Vietnam, said. It relieves them of the risk of data theft, which is particularly important given the increasing development of hi-tech crimes and malware. Moreover, firms won’t have to worry about having their reputation destroyed and paying compensation.

As the cost of computer software only takes up 5-6 per cent of individual companies’ expenditures, Tuan believes that such cost is not that large compared to the cost incurred to deal with any problems or risks of using unlicensed software.

Despite having been profusely warned, many companies, including wholly foreign-owned enterprises, continue to ignore these risks, as shown by a recent series of audits and spot checks nationwide carried out by the Ministry of Culture, Sports and Tourism (MoCST).

Following the first software piracy lawsuit early this year, penalising computer software ownership violations has been more encouraged by the Vietnam government.

“Any intellectual property disputes should be solved at court as assets are involved,” Vu Xuan Thanh, the MoCST’s chief inspector said. Thanh personally encouraged companies to take legal proceedings, believing that this is the most effective and vigorous way to see to these problems, and it is also the way to be.

Vu Ngoc Hoan, acting head of the Copyright Office of Vietnam, agreed, saying that in parallel to law education, strong actions would be needed. Hoan encouraged copyright owners to refer any infringements of their products to the civil court to seek resolution and recovery of losses caused by the perpetrators.

Phu Yen Beer buy-out deepens Masan’s beverage influence

Masan, one of Vietnam’s largest companies, has officially ventured into the beverage sector with its $12 million acquisition of Phu Yen Beer.

According to an announcement issued by Masan, Orchid Consultant Company Limited, a subsidiary of Masan Group, has acquired 100 per cent of Lamka One Member Company Limited, which holds a 99.99 per cent stake in Phu Yen Beer and Beverage Joint Stock Company.

Orchid Consultant will be renamed Masan Brewery.

Phu Yen is a small beer company, but offers Masan a chance to spring into and pursue its goals in the beverage business.

In a previous move, Masan Consumer, another subsidiary of the group, acquired a 53.2 per cent stake in Vinacafe Bien Hoa and 63.5 per cent of Vinh Hao Mineral Water.

However, unlike Phu Yen Beer and Beverage Joint Stock Company, Vinh Hao had a more than 80-year history and was a dominant mineral water retailer in both south and central Vietnam with more than 40 distribution agencies and nearly 25,000 retailers.

Group chairman Nguyen Dang Quang announced on August 13 that Masan Group will increase its chartered capital from VND7.349 trillion to VND7.358 trillion ($349.95 million to $350.38 million), after it issued additional shares in July this year.

After more than 10 years operating, Masan is currently at the forefront of the market in some consumer goods segments, such as fish sauce (80 per cent), soy sauce (70 per cent), instant noodles (21 per cent), chili sauce (40 per cent), and coffee and nutrient food (30 per cent), reported an AC Nielsen survey dated December 2012.

Masan Group is based in Ho Chi Minh City and deals in consumer goods, mineral resources, and banking. It has over 735.8 million shares listed on the southern bourse.

Vietnam, US conceive nuclear family

Lightbridge has become the first American company to invest in Vietnam’s fledging civil nuclear power industry.

The company announced last week that it entered a memorandum of understanding (MoU) with the Vietnam Agency for Radiation and Nuclear Safety (VARANS) that calls for both parties to collaborate in the continued development of administrative, legal and regulatory infrastructure to support Vietnam’s civil nuclear energy programme.

Lightbridge is a leading innovator of next generation nuclear fuel designs and a provider of nuclear energy consulting services to commercial and governmental organisations.

The MoU came after the US Senate’s Foreign Relations Committee approved an agreement on civilian nuclear co-operation between the US and Vietnam, allowing American firms to expand business in Vietnam’s nuclear power market. The two countries signed a co-operation agreement last October which was approved by the US president in February.

“This understanding recognises Lightbridge’s global expertise in developing effective support infrastructure for non-proliferative, commercial nuclear energy programmes and is another important step in Vietnam’s drive to deliver clean, safe, affordable nuclear energy to support the nation’s economic growth,” said Seth Grae, Lightbridge president and CEO.

He added that the understanding provides a framework for Lightbridge’s advisory service team to support VARANS under specific tasks, as VARANS seeks to implement best practices in nuclear regulations, licensing, inspection, as well as education and training activities.

To ensure energy security, Vietnam had an ambitious plan to build 14 nuclear power reactors with the total capacity of around 15,000-16,000 megawatts by 2030, according to Decision 906/QD-TTg signed by Prime Minister Nguyen Tan Dung four years ago.

The Vietnamese government estimated nuclear power would eventually account for 10 per cent of the country’s total power generation capacity. Nuclear power plants will be built at eight locations in five central provinces in Vietnam - Ninh Thuan, Binh Dinh, Phu Yen, Quang Ngai and Ha Tinh.

The government is currently preparing for the construction of four reactors at two plants in Ninh Thuan that are expected to come on line later this decade. Russian and Japanese contractors will be  building the two plants under turnkey contracts.

However, with the plan to build 14 reactors over the next two decades, Vietnam still offers huge opportunities to foreign companies from other countries to involve in this market.

Atlantic retreats from $1b plan

An overly complicated and lengthy approval process has forced Australian mining company Atlantic Ltd to exit an aluminium supply chain project in the Central Highlands, after two years conducting studies and waiting for the government go-ahead.

In Atlantic’s quarterly report released two weeks ago, the company announced it had “completed the process of closing its Vietnam operations.”

The Australian mining company explained that since 2012, it had worked in close collaboration with Vietnam’s National Institute of Mining-Mettalurgy Science and Technology on a development study for an integrated mine-rail-port bauxite mining project in Vietnam’s Central Highlands.

Late last year Atlantic announced it had completed the study, which was submitted to the government in January last year with the hope that the company’s investment proposal would ultimately be approved.

But Atlantic has not yet received any approval that would have allowed its project to move beyond the initial planning phase.

“Given the lack of progress to date and the current financial position of the company, the board decided to cease further expenditure on its Vietnam projects,” the company stated in a report.

Terry Bourke, general counsel at Atlantic, did not respond to email from VIR last week asking for further comment.

In 2012 Atlantic signed a memorandum of understanding (MOU) with the state-owned Vietnam Natural Resources and Environment Corporation (T-MV) for the development of a major rail, mine, processing and port project in the Central Highlands.

Atlantic believed this was a strong business opportunity given Vietnam’s competitive advantages in the aluminium supply chain, including the highly-sought gibbsite ore typically found in the Central Highlands region, and the proximity of the project to major world demand centres, where there is an over capacity of refining and smelting capacity, but an undersupply of high-quality bauxite.

T-MV and Atlantic intended to complete a feasibility study encompassing all three elements of the project – mining, rail transportation, and port development – with a view to adding downstream alumina and aluminium processing in due course. The railway component related to the development of a new line from the Central Highlands provinces of Lam Dong and Dak Nong to port facilities on the southern coast of Vietnam.

Additionally, if the Vietnamese government approved Atlantic’s proposal, the company was ready to invest in two aluminium projects in Nhan Co and Tan Rai in the Central Highlands as well as build two processing plants in the region. The total investment capital was estimated to reach $1 billion.

Freight surcharges worry enterprises

Enterprises are seeking the cooperation of freight forwarders and the intervention of State management to bring down current freight surcharge rates, which they find to be too high.

Based on estimates of the Viet Nam Association of Seafood Exporters and Producers, Viet Nam Textile and Garment Association and Viet Nam Leather-Footwear-Handbag Association, additional freight fees on Vietnamese imports and exports were equivalent to 1 per cent of the country's total's export turnover, or around US$110 million to $150 million each year.

At least 10 kinds of surcharges were being applied to imports and exports, such as the terminal handling charge, container imbalance surcharge and port congestion surcharge.

These additional freight fees have soared by around 20 to 30 per cent over those charged last year and were imposed without warning, the associations' officials said. The fees have placed a heavy burden on import and export enterprises, the associations' officials added.

Shipping companies say the surcharges are being imposed in line with international practice, but enterprises find this explanation unacceptable.

At a meeting with the Viet Nam Competition Authority under the Ministry of Industry and Trade last week, the associations' officials said some surcharges were unreasonable and were increased without warning. Enterprises had no other choice but to pay the surcharges to ensure the delivery of their goods.

At a meeting with logistics companies two weeks ago, a representative of the Viet Nam Port Association said the State management of maritime transport remained weak. As a result, the market is mostly controlled by foreign shipping companies.

The Vietnam Economic Times quoted the Viet Nam Maritime Administration (VMA) as saying that currently, there was a lack of mechanisms for the State management of freight surcharges, though the problem had been previously reported to the Government.

The VMA urged concerned authorities, including the Ministries of Finance, Industry and Trade, and Transport, to jointly supervise the collection of freight surcharges to ensure compliance with Viet Nam's regulations and international practice.

The associations called on the State management to help maintain a healthy and competitive business enviroment by ensuring the imposition of transparent and reasonable ocean freight fees, which were essential to boosting the competitiveness of Vietnamese products.

More Japanese firms seek business opportunities in Vietnam

More Japanese enterprises have come to Ho Chi Minh City this year to sound out business prospects, a local newspaper quoted Vice Chairman of the HCM City People’ Committee Hua Ngoc Thuan as saying.

According to the Saigon Times Daily, Thuan said in the year to date, many delegations of senior Japanese officials have visited HCM City and these delegations have helped bring more Japanese investors to the city.

Japanese companies have invested in 668 projects in HCM City with combined registered capital of 25 billion USD.

“The numbers will increase as many big firms of Japan have expressed their keen interest in the city,” Thuan said at a meeting on August 19 with Japanese House of Representatives member Hase Hiroshi and representatives of Japanese enterprises.

The first Vietnam-Japan industrial park will come online in the city in late October this year and the city government wants to call for Japanese firms to invest in high-tech and supporting industries, Thuan said.

At the meeting, Hiroshi introduced some enterprises and university presidents accompanying him to Vietnam this time. He expected those firms will find partners in the city and achieve success as what Japan’s Mitani Sangyo Co. Ltd. has done when raising its staff to 1,500 after starting its business in HCM City with only one employee 20 years ago.

A survey announced by the Japan External Trade Organization (JETRO) earlier this year showed 70 percent of Japanese investors said they want to expand their operations in Vietnam despite concerns over the investment environment.

According to the Daily, Atsusuke Kawada, head of the JETRO office in Hanoi, predicted that Japanese firms will invest more in supporting industries in addition to other sectors. More Japanese firms will shift operations from China to Vietnam in the coming years to offset rising production costs in China.-

Vietnam to check all imported drugs

Dr. Truong Quoc Cuong, Head of Vietnam Drug Administration has ordered departments of health to keep close watch on drug quality after Sai Gon Giai Phong released an article “Difficulties on controlling medication quality" on August 18.

The Vietnam Drug Administration under of the Ministry of Health said that it has discovered some batches of medicine that fail to meet the quality standard.

In order to supply drugs to hospitals nationwide, the drug administration has asked drug importers to assess the suppliers and producers to ensure the quality of medication.

Drugs of these pharmaceutical companies which had failed to meet the quality will be completely rechecked. Any acts of not recalling or slow recalling substandard drugs would be considered as violations and this will be fined as per the country’s current regulation, said Dr Cuong.

Purchasing power drops in traditional markets

Economic crisis together with strong competitiveness from supermarkets, trade centers and flea markets have resulted in a drop in purchasing power of traditional markets in Ho Chi Minh City.

This time in previous years used to be peak trading time of An Dong Market in District 5. 10 a.m. on Tuesday morning, Saigon Giai Phong reporters found to have few customers there.

A clothe seller named Muoi said that purchasing power has kept dropping for the last several years. This year it has been down 20 percent over last year.

Stall owner Diem My who sells children clothes said earlier orders came from several provinces and cities nationwide. However the order number and value have drastically reduced for the last two years. The presence of retail customers has also tailed off.

Similar condition is found prevalent at other grade 1 markets like Binh Tay, Ben Thanh and Tan Dinh. It is even worse in grade 2 and 3 markets.

Shoppers used to stream to Pham Van Hai Market in Tan Binh District, where has been known for diversified goods with competitive prices especially clothes and pork for the last decade. At present, several stalls have to shut down.

The market has 815 business households with nearly 1,600 stalls. Tens of households have closed down since early this year, according to the market’s management board.

Most stalls in the new Van Thanh Market in Binh Thanh District have closed doors. Some  of the remaining ones are moderately operating.

Several traders at An Dong and Ben Thanh have tried to improve their customer services but still failed to push the purchasing power up.

According to a market analyzer, traditional markets' competitiveness has been weaker because of the expansion of modern trading modals. Customers have paid more attention to food hygiene and safety, which is not well controlled at markets. Part of traders still keeps their habit of overcharging and selling low-quality products.

A number of markets have downgraded without measures to repair and upgrade.  Flea markets and vendors are popular and convenient for several customers who don’t want take time at parking lots.

According to HCMC plan, the city will not build new markets any more but upgrade current ones' infrastructures, improve food hygiene and safety there, and set up the markets’ managers.

The Industry and Trade Department has completed a project on implementation of a new market modal this year, in which food hygiene and safety will be ensured.

Ben Thanh Market and Hoc Mon Wholesale Market have been chosen for pilot implementation of the project, said the department deputy head Le Thi Ngoc Dao.

Food safety will be monitored and managed from the input to stalls, where products meeting VietGap quality certificate will be available.

It is a difficult project comprising several matters, especially traders’ habit change, said Ms. Dao. However if relevant sides work together synchronously, it will be useful for the markets to develop in a civilized and modern manner in accordance with the economy’s common trend.

The city has also worked in another project of building brand names for markets and their traders. Three wholesale markets Thu Duc, Hoc Mon and Binh Dien have had certificated brand names.

Vendors told to leave Saigon Tax Trade Center next month

Saigon Trading Group (Satra), the owner of Saigon Tax Trade Center in downtown HCMC, has decided to close the shopping plaza on October 1 to build a skyscraper at the premises, and has asked over 230 vendors there to move out no later than the end of next month.

Meanwhile, shop owners at 39 Le Loi Boulevard next to the shopping center have to leave the site before September 15 to make room for construction of the ventilation system for the Metro Line No. 1 project.

When the building at 39 Le Loi Boulevard is demolished, Saigon Tax Trade Center’s vendors could not continue business there as fencing erected around the metro construction site will be close to the façade of the shopping center, meaning business is impossible as customers cannot approach it.

Tran Sy Quy, head of sales at the center, said the plan to rebuild the trade center was approved by the city government a long time ago and now comes the execution period.

As Metro Line No. 1 construction is underway, some 500 square meters of the Saigon Tax Trade Center will be utilized on a temporary basis to facilitate the construction of a ventilation tower.

Earlier, Satra had signed contracts to lease out space at Saigon Tax Trade Center with vendors effective until the end of this year. Therefore, vendors are now exempted from rent in the last two months at the shopping center, and will be assisted to move to a shopping mall on Pham Hung Street in District 8 or to Saigon Supermarket (Satramart) in District 10.

In addition, they will be given priority to lease business space once the new building is completed.

Until now, many vendors in Saigon Tax Trade Center have yet to find new locations to open new shops. Some said they will move to other commercial centers such as Lucky Plaza and Saigon Square while others said they will continue retail business at their own venues.

At present, many vendors at Saigon Tax Trade Center are offering discounts of 10 to 70% to quickly clear stock.

Liberal business environment yet to be established

Although Vietnam has finished legal documents regulating business freedom since last year, such a spirit has not been guaranteed in reality, experts said at a seminar in Hanoi on August 20, as the Government is seeking to establish a liberal business environment.

Nguyen Dinh Luc, former head of the legislation department of the Party Central Committee Office, commented that Vietnam had spent a long time from 1945 to 1992 only to clarify freedom of business, and 69 years until on August 21 to perfect the spirit. He was speaking at the seminar on business freedom held yesterday in Hanoi by the Ministry of Justice.

It was provided for in the first constitution in 1946 that Vietnamese citizens are guaranteed the right to own assets they have from all sources, including from doing business. The right was made clearer in the 2013 Constitution, which says all Vietnamese citizens are allowed to do business in all sectors that are not banned by law, he said.

However, the regulations on business freedom themselves create difficulties for individuals and enterprises in different ways.

Lawyer Truong Thanh Duc said he cannot understand the real ‘substance’ of the legal system as there are areas not banned by law but by sub-law documents.

He raised his question as the Ministry of Planning and Investment these days has suggested putting hundreds of business sectors in the list termed as conditional and eight areas off-limits to businesses.

Dinh Xuan Thao, head of the Institute for Legislation Study under the National Assembly Standing Committee, noted that as regulated in the Constitution, only laws can limit or ban enterprises from doing some business, while bylaws cannot do that.

But in reality, it is very difficult to meet all conditions to operate businesses that are not prohibited. Among business sectors on the market, 110 sectors require enterprises to get business licenses while 345 others require them to seek the nod of authorities.

Vu Thi Hoa, director of Hanoi-based Vinablock Co., Ltd, said the mechanism of registering for business gets in the way of obtaining the right to do business of enterprises.

The business registration will create advantages for individuals and enterprises to enjoy their right to do business in a free way if it is built with the aim to boost economic growth.

But because it is built to help State authorities easily manage enterprises, it contains many different conditions and procedures so that enterprises have to depend much on the authorities, she said.

On Tuesday, in reviewing the Government’s regular meeting, Prime Minister Nguyen Tan Dung required relevant ministries and departments to continue removing unnescessary requirements from business registration procedures.

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