September CPI up 1.06%

Vietnam’s consumer price index (CPI) over the past nine months has increased by 6.83% year on year, announced the General Statistics Office (GSO).

The September index was up 1.06% on the previous month, or 6.3% higher than the same month or last year.

The rising CPI was attributed to the price increase of 9.38% in the education sector.

Only two of 11 items in the commodity basket – traffic and telecoms services – went down in price.

Meanwhile, the GSO reported that domestic gold prices in September increased by 1.97%, but the local currency (VND) dropped by 0.26 % against the US dollar

The September CPI was not the same in provinces and cities, as seen in Ho Chi Minh City (up 3.13%), in the central province of Thua Thien Hue (up 0.96%), and in the figures in the Mekong Delta provinces of Vinh Long and Can Tho (up 0.88% and 0.86%, respectively).

The GSO said price management in the remaining months of 2013 will play a decisive role in controlling the CPI at less than 7% by the year’s end.

According to the National Financial Supervision Commission (NFSC), stabilizing marcoeconomy is an urgent task to create a firm foundation for maintaining steady growth in the years to come and the inflation rate should be lowered.

Achieving the set target of 5.5% this year is a challenging task, the NFSC said.

The Commission predicted that the growth rate in 2013 would likely to stay at 5.3%, higher than last year’s figure of 4.3% and the inflation rate would hover around 5% if the prices of basic commodities remained unchanged.

Hanoi aims to lure more FDI from Japan

Hanoi is set to get in more direct investment from Japan through a project signed with Japan’s Forval Corporation on September 23.

Under the project that was outlined for 2013-2015, Hanoi will specify its targets, orientations, central sectors and fields, as well as projects that are likely to meet Japanese investors’ needs.

The city will also examine the situation and trends of Japanese investment in Vietnam and Hanoi in particular to tap plenty of potential and opportunity that remain unexploited and to overcome shortcomings in FDI attraction.

Measures to lure Japanese investment will also be included in the project, such as updating information streamlining administrative procedures and improving access to land resources, workforce, and infrastructure.

A Forval executive said his corporation will consider this project as a model to be multiplied nationwide to help tighten Vietnam – Japan relations.

At present, Japan is one of Hanoi’s strategically important investors as it has poured in 4.5 billion USD, accounting for 21.6 percent of total investments in the capital city.

Saigon Co.op listed among top 500 Asian retailers

Saigon Co.op has won the Fapra Award 2013 from the Federation of Asia-Pacific Retailers Associations (FAPRA).

The information was announced at the 16th Asia-Pacific Retailer Convention and Exhibition being held in Istanbul, Turkey from September 23-26, representative from HCM City’s Union of Trading Cooperatives was quoted as saying.

This is the third time the biennial award has been given by the Federation of Asia-Pacific Retailers Associations (FAPRA) to outstanding individuals, associations and businesses in the field of retailing business.

The Fapra Awards structure includes five prizes the Most Innovative Retail Concept Award, the Green Retailer Award, the Best Marketing Campaign Award, the Best Effort in Retail Employee Training, and Customer Service Excellence Award.  

Saigon Co-op is the first Vietnamese retailer to have received the Customer Service Excellence Award along with Turkey’s Migros Ticaret A.S and Hong Kong’s Sa Sa International Holding Limited – La Colline Shop.  

Made-in-Vietnam boiler exported to India

The second 800MW super-critical coal-fired boiler has been made for Kudgi super thermal power plant in India under a US$77 million contract signed on September 10, 2012.

The RoK-invested Doosan Heavy Industries Vietnam Co., Ltd. (Doosan Vina) announced on September 23 that its second shipment contains more than 2,000 tonnes of coil, panel, header and link.

Located in Dung Quat Economic Zone (Quang Ngai province), Doosan Vina has already provided more than 5,000 tonnes of components for the first 800MW boiler of the Kudgi thermal power plant.

The supercritical one is able to provide 2,550 tonnes of steam per hour under extreme temperatures and pressures of 569 degrees Celsius and 271 kilograms per square centimeter.

Doosan Vina is putting the finishing touches to two 600MW boilers for the Mong Duong 2 thermal power plant in northeastern Quang Ninh province. Other made-in-Vietnam boilers have been exported to Brazil, Saudi Arabia, and Egypt.

Since early this year, the company’s export turnover has reached US$250 million, up 60% from a year earlier, raising Quang Ngai’s total export value to US$375 million by mid-September.

Vietnamese business forums to be held in Paris, Milan

Vietnamese business forums will be held in Paris and Milan as from September 26, according to the Ministry of Industry and Trade.

The event will provide a chance for Vietnamese enterprises to meet retailers from the two countries and help them find a way to penetrate their markets.

France and Italy are two of Vietnam's largest trade partners.

Vietnam exported US$1.28 billion and US$1.53 billion worth of goods to France and Italy in the first eight months of this year, representing annual increases of 2% and 28%, respectively.

Nine-month ODA disbursement hits US$3.1 billion

More than US$3.1 billion out of nearly US$4.6 billion in official development assistance (ODA) have been disbursed over the past nine months.

According to the Ministry of Industry and Trade (MoIT), the disbursement of ODA and preferential loans has made significant progress, especially in the projects funded by Japan International Cooperation Agency (JICA) and World Bank (WB).

In general, however the disbursement of ODA has not yet made a breakthrough as the level is not the same in localities and sectors. Quick disbursement is mainly in transport, electric power, urban development, agricultural and rural development projects.

The MoIT reported that by September 20, Vietnam had 872 newly licensed projects with a total registered capitalisation of nearly US$9.3 billion, equal to 93% in number and 135% in capital compared to the same period last year.

MoIT emphasised that the foreign direct investment (FDI) sector has contributed significantly to the export growth of 24.8% to US$12.4 billion in the reviewed period.

Exports to Africa surge

South Africa is Vietnam’s No 1 export market with its turnover reaching US$476.7 million.

The Africa, West Asia and South Asia Department under the Ministry of Industry and Trade said Vietnam’s exports to most major African markets increased significantly in the first eight months.

Six major importers were South Africa, Algeria, Ghana, Nigeria, the Ivory Coast and Angola. Two shrinking markets were Egypt and Senegal. But all these eight markets accounted for 72% of Vietnam’s total exports to 55 African countries.

Major export items include rice, telephones, coffee, pepper, seafood, computers, electronics and components, means of transport, tools, machinery and equipment, garments and footwear.

Exports to South Africa are expected to surpass US$700 million this year.

In the reviewed period, exports to the Ivory Coast increased by 12% to US$184.54 million, of which rice earned US$171.53 million. By the end of August, this country became the second largest importer of Vietnamese products in Africa.

Exports to Ghana reached US$174.26 million, up 17%, of which rice accounted for US$135.59 million (up 33%).

Meanwhile, exports rose to US$120.37 million in Algeria (up 27%), to US$101.28 million in Nigeria (up 18%) and to US$88.82 million in Angola (up 9%).

French businesses hails Vietnam’s investment environment

Vietnam’s investment environment is on the improve with macroeconomic stablility and high qualified human resources.

The remark was made by French and overseas Vietnamese businesses at a ceremony in Paris on September 24 to present the “For the development of Vietnam’s industry and trade sector” insignia.

Jacques de Chateauvieux was credited for having spent EUR150 million on building the Cora supermarket – the first one in Vietnam and the predecessor of Big C today – and the Bourbon sugar production plant in Tay Ninh, as well as developing seaport services in Ho Chi Minh City.

He said French businesses are successful in adding value to Vietnamese trademarks with support from local authorities, labour forces, and legal infrastructure.

Vietnam’s investment environment has improved significantly over the past two decades thanks to legal documents specifying procedures for investors, development of infrastructure, and stable investment policy, he added.

Jacques also spoke highly of the quality of labour forces in implementing assigned tasks, managing businesses and proposing creative initiatives.

Minister of Industry and Trade Vu Huy Hoang presented the insignia to Tong Van Kiet, an overseas Vietnamese who has significantly contributed to boosting exports of Vietnamese food and frozen seafood, handicrafts, publications, and garments to France.

Another OV businessman honoured at the ceremony is Nguyen Hai Nam who has taken part in many investment and business development projects of the French Societe General banking and finance group in Vietnam over the past 14 years.

He has conducted market research and financial analysis and negotiated with many Vietnamese banks, and monitored the economic and legal environment to develop strategic investment initiatives for Societe General to invest in Vietnam. The group has so far poured US$160 million into Vietnam.

In 2010, he set up the Vietnamese Business Association in France (AB VietFrance) as a trade bridge between Vietnam and France.

Rice prices remain competitively low

Vietnamese rice can hardly fetch higher prices on the global markets as it has no trademarks.

The Vietnam Food Association reports the country has exported 4.678 million tonnes of rice over the past eight months, down 15.7% in volume and 18.4% in value compared to a year earlier. Export prices averaged US$438.49 per tonne, a 3.2% lower than last year.

Export price dropped to a three-month record low two weeks ago. The 5% broken rice was sold at US$365 per tonne on September 6, 9% lower than in early August.

Against this backdrop, the purchasing price of rice tends to decline further and farmers will profit less or suffer more, says Deputy Director of the An Giang Provincial Agriculture and Rural Development Department Tran Ngoc Pha.

Pha explains that although Vietnam’s annual rice output continues to grow, the lack of brand names makes it difficult for its rice to fetch higher prices in competition with foreign varieties.

Nguyen Xuan Hong, vice director of the Long An Provincial Industry and Trade Department, says agricultural production is still focused on quantity rather than quality. For instance, annual rice output has risen from 2 million to 40 million tonnes, making it possible for the country to export more than 7 million tonnes of rice, but the quality of rice for export remains almost the same.

Another reason is farmers continue with their traditional production methods while the State has not invested enough in developing rice varieties of better quality.

Hong says Vietnam is not right on track. More attention should be paid to improving the quality of rice for export to push up the average price to 600-700 per tonne.

Every business and farmer should coordinate efforts with the State in the process of rice cultivation and processing, Hong suggests.

There are some traditional markets, which are not too strict on rice quality and have less demanding customers. Exporter would rather have a closer approach to them.

Hong says price differences are decided by processing methods and finished product quality. A foreign-invested business can export rice products to American, Japanese, and European supermarkets at a price of US$700 per tonne.

So, improving the quality of rice for export in an urgent matter that requires the State to adopt suitable investment policy for businesses and farmers and the latter to implement them to the letter, Hong concludes.

Exporters get support to enter EU market

The Ministry of Industry and Trade is introducing a programme specifically designed to support local businesses attempting to penetrate potential European Union market.

Vietnam’s traditional commodities such as rice, coffee, and pepper are already established in markets all over the world. But its food processing industry is still struggling to gain a foothold, with challenges particularly acute in the EU.

The Hanoi Asia-Europe Tea Company produces and exports black tea to the EU market. Its Business Department’s Deputy Head Phan Manh Linh reports the company has focused on Eastern European countries including Poland and Ukraine. Annual export turnover is currently around US$2.5 million.

The company wants to expand into Western Europe’s Germany and the UK but pesticide residues in Vietnamese tea are too high to meet these nations’ strict import requirements. Less lucrative markets such as those of the Middle East only examine quality and moisture.

Koos Van Eyk, an expert from the Centre for the Promotion of Imports from Developing Countries (CBI), notes the EU, as the world’s largest food and beverage market, is rich in potential for Vietnamese exporters. Yet exporters must recognise the importance of tailoring their products to the EU’s rigid import regulations.

Van Eyk revealed the CBI will work with the Ministry of Industry and Trade’s Trade Promotion Agency (TPA) to promote Vietnamese food processing in the EU market.

Van Eyk says this will offer unprecedented opportunities to exporters of products like coffee, cacao, tea, cashew nuts, peanuts, spices, and honey.

The programme includes expert support on production, quality improvement, marketing, and partnership negotiation. It aims to support at least 20 local exporters with EU market ambitions.

TPA Deputy Head Do Kim Lang says the EU’s regulations, while strict, are open and transparent.  The CBI will consult with eligible businesses and run training courses to help local businesses achieve EU standards of practice.

With State support and international guidance, the efforts of local exports to penetrate the increasingly important EU market are bound to deliver greater success.

Fruit and vegetable exports surge

Vietnam’s 2013 fruit and vegetable export value totalled US$724 million as of September 15, a 46.7% increase on last year’s benchmark.

Vietnam Customs reported the export earnings of these products hit US$35.6 million in the first half of September alone.

The high export growth is defying the general downward trend besetting other agricultural products.

Vietnam’s fruit and vegetables are sold in 40 international markets, with its largest customers including China, USA, Japan, the Republic of Korea, and the European Union.

At the 2013 Asia Fruit Logistica International Trade Fair in Hong Kong, Vietnam’s produce was introduced to distributors and supermarket representatives from Singapore, China, Middle East, the European Union, and the USA.

A Vietnamese Fruit and Vegetables Association (Vinafruit) representative said the country’s produce exports have huge potential, noting international demand for fruit and vegetables is predicted to increase by 3.5–5% every year.

Vietnam’s fruit and vegetable exports could be valued at US$1 billion by the end of 2013 provided the sector focuses on specialties such as Binh Thuan dragon fruit, Bac Giang lychee, and Da Lat vegetables.

Exporters can also improve their competitiveness by maintaining excellent preservation practices after harvest and respecting quality and food safety standards.

AmCham sounds out business opportunities in Dong Nai

The American Chamber of Commerce in Vietnam (AmCham) held a working session with Dong Nai province to expand bilateral cooperation, especially in foreign investment attraction, exports and quality human resource training.

The Prime Minister has approved a master plan on developing a total of 34 industrial parks (IPs) in Dong Nai, of which 27 have been put into operation.

Dong Nai has so far licensed 1,402 investment projects totalling nearly US$24 billion from 40 countries and territories, with 32 US-invested projects still valid capitalised at US$186 million.

Bo Ngoc Thu, director of the provincial Department of Planning and Investment, said Dong Nai calls for foreign investment in high-tech industries, support industries, cultivation and livestock breeding, food processing, and transport infrastructure construction.

Foreign businesses will enjoy more preferences if they invest in prioritised areas, Thu said.

AmCham Vietnam Chairman Mark Gillin revealed AmCham Hong Kong plans to pour US$1 billion into Vietnam’s garment accessories manufacturing, and it is eyeing Dong Nai as a potential destination.

Several US businesses said they want to cooperate with Dong Nai in developing high-quality human resources for high-tech industries, waste water treatment, and infrastructure construction.

Dinh Quoc Thai, Chairman of the provincial People’s Committee, welcomed US proposals, saying Dong Nai attaches great importance to qualified human resource training.

The province has developed short- and long-term training programmes for its employees, especially in high-tech industries.

“We want to have long-term cooperation in the field with US businesses,” Thai told his guests.

Gillin and Thai agreed to organise a one-day forum for US and Dong Nai businesses to share information on import-export services to boost bilateral trade.

Vietnam looks for international support in economic integration

Vietnam is in need of support and technical assistance from international donors, said Deputy Minister of Industry and Trade Nguyen Cam Tu.

Addressing a September 23 talk in Hanoi on the Beyond WTO Programme (B-WTO Programme) - a post-WTO accession technical assistance programme, Tu said the international economic integration process has delivered positive results but posed challenges to socio-economic development.

Immediately after its entry to the WTO, Vietnam has called on donors to help Vietnam manage the international economic integration process and shift to the market economy.

The Australian Agency for International Development (AusAID) and UK Department for International Development.(DFID) have funded the B-WTO program aiming to help the Vietnamese Government manage the process as well as a shift to the market economy.

According to the Head of the Steering Board for the B-WTO program, phase 2 ( January 2007- March 2008) Trinh Minh Anh, the two organizations assisted Vietnam in building a Government Action Program and running a mechanism for multilateral trust funds thereby facilitating Government Action Program implementation.

Over the past four years, 48 projects have been carried out including 23 for fine-tuning market mechanisms, six for dealing with socio-economic challenges in the integration process on rural areas, 11 for improving management capacity and integration coordination and 8 for implementing local action plans.

Australian Ambassador to Vietnam, Hugh Borrowman, described the WTO admission as an important step in Vietnam’s integration process which, however, poses huge challenges to the country such as tougher competition and shifting to a higher level of the global value chain.

The six-year WTO membership is not a long path but vital for Vietnam to accelerate its deeper international integration and shift to the market economy, Ty noted. He also expressed his hope that the B-WTO program’s greater technical support will help the Vietnamese Government manage the country’s global economic integration effectively.

Int’l seminar on five-year development plan

Seven out of 15 socio-economic development targets, set for the 2011-2015 period, were not fulfilled as scheduled in 2013, told an international seminar in Hanoi on September 23.

The event, jointly held by the Central Party Committee’s Economic Commission, National Economics University, the World Bank (WB) and the National Assembly’s Committee for Economic Affairs, aimed to review the implementation of the 2011-2015 development plan and make strategic adjustments.

Addressing the seminar, Deputy Prime Minister Nguyen Xuan Phuc praised the joint efforts by the government, ministries and agencies in stabilising the socio-economic situation, despite numerous difficulties in the first half of the five-year plan.

As a result, remarkable progress was made in controlling the inflation rate, reducing trade deficit, stabilising interest rates and increasing export revenue, he noted

However, Phuc identified some shortcomings in dealing with bad debts, capital shortage and the economic restructuring process which may prevent all sectors from achieving the targets of the five-year plan.

The Deputy PM affirmed the party and government’s strong determination to take effective measures for economic stabilisation, business reform and stronger competition capacity.

Professor Doctor Tran Tho Dat, National Economics University Vice Rector, said Vietnam’s current corporate income tax of 22% should be lowered to less than 20%.

He also proposed reducing budgetary overspending and speeding up State-owned enterprises (SOEs) equitization.

Many economic experts raised concerns regarding the ineffectiveness of overall development plans in the long run.

They attributed current macro-economic instabilities to unsuitable growth models, inefficient management mechanisms and shortcomings in public spending.

They stressed the need to make adjustments to development strategies in a more practical and effective manner.

Japan cooperates with Vietnam on major developments

Vietnam-Japan investment cooperation was discussed at a September 23 conference in Hanoi hosted by the Ministry of Construction, the Japanese embassy in Vietnam and the Japan International Cooperation Agency (JICA).

At the conference, delegates affirmed that friendly relationship between the two nations has seen constant developments especially in the fields of investment and trade over the years.

Japan is now Vietnam’s largest ODA provider, making up over 30% of total international donors’ commitments.

Japan has the largest FDI capital amount in Vietnam. As from August 2013, Japan has runaround 2,014 valid investment projects capitalised at over US$32 billion.

Seminar participants expressed their wish to expand future cooperation in housing and urban development and management as well as in ecological urban development projects.

Addressing the seminar, Japanese Envoy to Vietnam Hideo Suzuki Hideo Suzuki, emphasized the difficulties that Vietnam’s real estate and construction sectors have encountered over recent times. Despite this, the Vietnamese economy has developed rapidly and the demand for housing has consequently not been met across the country.

Hideo also highlighted the future prospects for Vietnam’s construction and real estate market and expressed his hope that Japanese businesses will invest in these fields.

Vietnam’s milk imports worth over US$661 mil

Vietnam imported milk and dairy products worth of US$661.9 million in the first eight months of the year, up 10.29% against the same period last year, according to the Vietnam Customs and the Ministry of Industry and Trade (MoIT).

Import turnover of dairy products hit US$80.6 million in August alone, down 6.5 % from a month earlier.

Vietnam imported milk and dairy products primarily from New Zealand, the US, Thailand, Malaysia and Denmark in the reviewed period. Of these markets, New Zealand made up the largest market share of 27% or US$178.8 million, up 12.81% on last year’s period, followed by the US with US$133.3 million, up 45.77%.

Notably, milk import turnover from the Spanish market was US$5.2 million. In August, Australia’s major dairy producer Devondale, entered the local market.

Since the beginning of August, many foreign milk companies have increased their price from five to ten percent, according to MoIT Industrial and Trade Information Centre.

The increase is attributed to price hikes for oil and gas material inputs, higher costs for design changes and pay rise,

At present, the price of Vietnamese milk is at just 50-70% of imported milk.

China energy giant in BOT landmark

China Southern Power Grid’s long-awaited project to build the Vinh Tan 1 power plant in Binh Thuan province could become only the fifth foreign-invested build-operate-transfer power project licensed in Vietnam, amid the country’s power woes and strong interest from foreign developers.

A high-ranking official from the Ministry of Planning and Investment (MPI) said the company’s project to build the coal-fired plant Vinh Tan 1 in the southern central province could be licensed by late September. The official granting ceremony is expected to take place in mid October.

If Vinh Tan 1 is licensed, the project will become the fifth foreign-backed build-operate-transfer (BOT) project licensed by the government in the 27 years since the country opened its door to foreign direct investment. The first four licensed projects include Phu My 2.2, Phu My 3, Hai Duong and Mong Duong.

A memorandum of understanding (MoU) to build the Vinh Tan 1 BOT project was inked in 2006, and long negotiations for its implementation have been conducted since. Areas of discussion included capital adjustment, investment details and locations, as well as the participation of relevant ministries.

In late May 2013, Chinese company CSG submitted a dossier to the MPI asking it to officially grant an investment certificate to the project.

“The MPI has carefully considered our dossier and provided us with feedback and the project has finally completed the necessary procedures. The licensing of the project will reflect the continued efforts of all the parties involved,” CSG deputy general director Zhang Tan Zhi told VIR.

The 1,200 megawatt project, which includes two 600MW capacity turbines, has total registered capital of nearly $1.76 billion. However, CSG has now proposed that the capital in the investment certificate be increased to over $2 billion, which includes a $263.26 million emergency fund.

The project's chartered capital totaled more than $351 million, with CSG holding a 55 per cent stake, while China Power International Holding Limited has a 40 per cent stake and Vinacomin holds 5 per cent. More than $1.4 billion of the project's total capital will be loans. Its financial contract will be inked in the first quarter of 2014.

“This is an important project for Vietnam and it has interested the government and ministries because of its large scale,” said MPI Deputy Minister Nguyen Van Trung.

CSG has established Vinh Tan 1 Power Company Ltd (VCPC-1), with Zhi as its legal representative, as the project’s operator, which Zhi described as “a win-win scenario for both Vietnam and China”. Output from the project will be connected to Vietnam's north-south 500 kilovolt power transmission line.

The project, located in Tuy Phong district’s Vinh Tan commune, will be built between 2014-2018. VCPC-1 will run it for 25 years before transferring it to Vinacomin.

According to the MPI’s Department of Investment Supervision and Appraisal, the project will use Chinese engineers and Vietnamese manual labourers during construction.

CSG, one of China’s two biggest power grid companies, reported total assets of around $900 billion by late last year, including more than $70 billion in power sales. In China, it currently provides power to more than 230 million people.

CSG is currently negotiating with Vietnam's state-owned giant Electricity of Vietnam on a project to connect power with the north-south 500 kilovolt power transmission line, and to link Vietnam’s power supply with the southern region of China.

There is presently great interest from a host of countries in helping to develop power plants in Vietnam

The Electricity Generating Authority of Thailand, also known as EGAT, has secured an in-principle approval from Vietnam's government to invest in a 1,200MW, $2.26 billion power plant in the central province of Quang Tri.

The project is located in Hai Lang district and is intended to reinforce the country’s energy security from 2011-2020.

In July this year, Malaysia-based Toyo Ink Group signed an MoU with Ministry of Industry and Trade to invest in the 2,000MW Song Hau 2 coal-fired power plant in the southern province of Hau Giang. According to the Malaysian firm, the power plant will cost around $3.5 billion.

In the central province of Quang Ngai, Singaporean Sembcorp Utilities is conducting a feasibility study for the construction of a 1,200MW power plant. The investor gained in-principle approval from the Vietnamese government in April.

US-based PHI Group Inc, a company focused on energy and natural resources, recently announced it was planning to build two giant coal-fired power plants in Vietnam. A 2,000MW coal-fired power plant in the southern province of An Giang province, and a 3,600MW coal-fired power plant in the central province of Quang Tri were in the company’s plans.

Tata Power, India's largest integrated power company and a subsidiary of Tata Group, is now preparing to conduct a feasibility study for their proposed Long Phu 2 in southern Soc Trang province.

However, despite considerable interest, to date the country has only licensed four foreign-invested BOT power projects.

The low selling price of electricity as regulated by the government is a major barrier that has discouraged foreign investors from entering Vietnam’s power generation market.

Investors sow the seeds for carbon credits

Vietnam may yet prove to be perfectly placed to help satisfy the world’s growing demand for green development.

In June 2013, Japanese giant Honda started work on an over $800,000 carbon-absorbing forest, or carbon sink, project. The project will run through 2018 and spans 490 hectares with planting to proceed in annual phases through 2016. The company should start receiving carbon credits around 2020.

The project follows a similar framework to that of Honda’s 309ha forest in the northern province of Hoa Binh, running since 2008. It is expected to absorb 41,000 tonnes of CO2 each year.

Australian Voluntary Credits Company also wants to have similar plans in mind for Vietnam, and will bring its extensive experience in Indonesia and Papua New Guinea to bear.

Investors will build the forest as a gateway to receiving carbon credits known as certified emission reductions (CERs) against their CO2 emissions worldwide. The credits are granted by the International Executive Board on Clean Development. The company may use the credits, but the credits are often a transacted commodity between businesses.

They are also a form of corporate social responsibility (CSR). For example in Australia, companies not obligated to reduce their emissions still buy credits, as a move toward future business.

Germany’s ForestFinance Group - specialising in forestry carbon solutions - is already working with a local company to build a 50 year/ 1,500ha sink, with the capacity to absorb 400,000 tonnes of CO2 in the Central Highlands’ Kon Tum province. After 50 years, ForestFinance will stop selling CERs from this project, which will be then transferred to the local company.

Projects, such as these, fall under the Kyoto Protocol’s Clean Development Mechanism (CDM) where businesses in countries that limit or are working to reduce emissions can implement emission-reducing projects outside their home country. Carbon credits produced by these projects follow the standard one credit/one tonne of CO2 exchange.

According to the Ministry of Agriculture and Rural Development, Vietnam’s fertile forest land can help reduce green house gas emissions and climate change. It noted that Vietnam’s forest ecology was particularly good at absorbing CO2. The country’s forest land totals 13.1 million ha, most of it are natural but with about 2.8 million ha of reforestation.

Vietnam is beginning to make a name for itself in the carbon credit market. While it is very new to the country, several local and foreign enterprises already have plans in the works.

While forests are a popular method of earning credits, other projects in renewable energy, waste management, and agriculture are also underway.

Hanoi, back in 2009, built a gas-to-energy system at Nam Son waste treatment complex, earning carbon credits and invested in by a Malaysian-Canadian joint venture.

The $7.5 million project, which uses discharged gas and converts it to electricity will run through 2016 and is expected to reduce emissions by 2.3 million tonnes. Hanoi Municipal People’s Committee receives 10 per cent of the total revenues from the project’s carbon credit trade.

Vietnam does not yet fall under obligations of the Kyoto Protocol and therefore, companies that save on energy and reduce emissions can earn carbon credits. This may be a boon to local businesses that invest in the technology and sell their earned credits to foreign companies burdened by emissions limits.

According to the Ministry of Natural Resources and the Environment’s Agency for Meteorology, Hydrology, and Climate Change (AMHCC), Vietnam has several carbon credit projects in play, including gas-to-energy, afforestation and reforestation, wind power, and hydroelectricity.

Between 2004, the birth of the carbon credit era, and 2012, Vietnam has approved 135 carbon credit project frameworks and two action programmes. 37 projects have already been registered as accredited and 4.5 million credits have already been granted to two projects.

PetroVietnam Finance Joint Stock Corporation launched a gas-to-energy project exploiting the offshore Rang Dong oil field in 2008 which has already earned more than 4.4 million credits, the vast majority, while the other is a locally-owned small-scale hydroelectric project, responsible for the remainder.

The Rang Dong project uses gas released from the oil field to produce power and liquefied gas, and was calculated to help Vietnam reduce nearly seven million tonnes of CO2 by 2011. The project kicked off in 2001 and its returns amounted to nearly $200 million.

AMHCC deputy director general Nguyen Khac Hieu stressed that Vietnam ranked 11th in the world in terms of registered carbon credit projects, and 8th in total carbon credits. He put it simply, “Carbon credits have great potential in Vietnam.”

Companies from all over the world, particularly western Europe, have come to Vietnam in search of projects and opportunities, he added.

According to the Vietnam Energy and Environment Consultancy Joint Stock Company, Vietnam annually earns around $24 million from trading in carbon credits, and prices fluctuated, with $18 in 2008 quickly rising to $31 in 2010.

Diversification in downturn

Foreign consultancies are changing their portfolios and gradually moving into other fields in response to the deteriorating real estate market.

Troy Griffiths, deputy managing director of Savills Vietnam, told VIR that the company’s traditional business lines, leasing and project sales, had come under duress and led to layoffs in under-performing areas of the business.

“However Savills total headcount has increased to 940 as we have added new business lines and expanded our property management services offering,” he explained.

“We are fortunate that our recurring income streams of property management and advisory services have delivered continuous cash flows, albeit at very low margins. Savills manages 70 buildings throughout Vietnam that delivers steady cash flow over challenging economic periods,” he added.

Griffiths said Savills would continue to diversify their business to cater to broader client needs.

Following its success and achievement in sales of high-end residential products and holiday home, Savills Vietnam has set out a new business strategy to diversify the stocks and to be more adaptive to market demand. Specifically, in late June, Savills Vietnam Real Estate Trading Floor launched this extended new business service for sales and marketing of affordable housing products.

The company has established a strategic partner with one of the local real estate company to exclusively distribute the Dream Home apartments developed by Dream Home Ltd. in Go Vap district, Ho Chi Minh City.

“Importantly the affordable housing sector represents over 70 per cent of the primary market; as such it would simply be bad business to ignore this potential,” said Griffiths.

Savills has recently expanded its consulting capacity with products such as Geographic Information Systems and its agency platform in Indochina and Myanmar.

Along the same line, CBRE Vietnam recently held a conference that focused on identifying more lucrative potential projects in Myanmar.

Marc Townsend, managing director of CBRE Vietnam, said the company had been affected by the real estate market’s downturn over the last few years, forcing its to reduce the working space of its Hanoi office by half.

The company’s property transaction centre in Hanoi has been narrowed and residential sales team has been most affected due to the housing market downturn.

“CBRE is serving fewer customers than before, but that has given us the opportunity to focus more on quality service. While there are fewer foreign investors, there are increasing numbers of local companies who are potential clients in the fields of banking, retail, and property development,” he added.

CBRE’s staff working in project management has increased from 2 last year to 12 at current.

“We are currently helping a large foreign company in Hanoi with more than 2,000 staff move its office. We supported them in leasing the space and fitting it out, as well as provided logistics for the move, on time and on budget,” Townsend said.

CBRE has expanded property management, with the floor area under management now doubling from last year’s figure and expected to double again by the end of this year.

Chris Brown, general manager of Cushman & Wakefield Vietnam said the slumping property market was affecting firms’ operations in several areas.

According to Brown, the company’s most heavily affected team was residential sales which spiked in 2007-2008 but had since been heavily impacted by falling demand nationwide. The company continued to be cautious in this area and was limiting the growth of the team until future conditions make expansion feasible.

“Cushman & Wakefield Vietnam has always been careful to avoid overly rapid expansion preferring to pace our growth strategically. We have seen softening in areas such as residential sales and leasing, but these business lines are inherently cyclic and we expect improvement in the next 12 months,” he said.

“We are using the slowdown as an opportunity to relocate to Vincom Center B this year, and expanding our workspace by more than 100 square metres, with room for future expansion,” he added.

“There are areas of our business which are growing and we now have 10 employees working in office leasing in Ho Chi Minh City. We also have developed a fully dedicated national retail services platform and investment agency services,” he said.

Cushman & Wakefield has this year concluded some of the larger transactions in Ho Chi Minh City such as Abbott Laboratories’ lease renewal at Me Linh Point Tower (2,600sqm), Nestle’s relocation to Empress Tower (3,200sqm), Microsoft’s relocation to President Place (744sqm), and JWT relocation to President Place (510sqm). In Hanoi, some of its larger transaction include the IBM’s renewal at Pacific Place (1,500sqm) and the Prudential’s relocation to Keangnam (1,700sqm).

Coffee makers seek to scrap VAT

Members of the Viet Nam Coffee and Cocoa Association (Vicofa) have agreed to petition the Government to scrap the 5 per cent value-added tax imposed on coffee exporters for a year starting in November.

It is aimed at plugging a loophole, which has caused a loss of revenue for the Government and created unhealthy competition among enterprises, Do Ha Nam, Vicofa deputy chairman, told a meeting in HCM City yesterday.

Many traders evade the tax and so are willing to pay higher prices to farmers, pricing real export firms out of the market.

The traders do not export themselves but resell to exporters.

If the problem is not resolved, the country's coffee exports would be affected since no one would dare export, Nguyen Thi Ngoc Mai, general director of coffee exporter Packsimex Company, said.

Conference participants also agreed to petition the Ministry of Finance to hold a dialogue with them on tax policy.

Luong Van Tu, Vicofa chairman, said besides resolving the VAT issue, "the Government should consider allowing the sector to stockpile 200,000-300,000 tonnes of seeds to sustain coffee prices in the domestic market."

To ensure sustainable development of the coffee industry, he said "the industry must replant old and stunted coffee trees, which currently account for 30 per cent of all trees."

Coffee firms should focus more on improving processing technology to add value to their products, he said.

Nam called on the Ministry of Agriculture and Rural Development and the association to establish close ties with their counterparts in other major coffee producing countries to share information.

Association members should work together to boost development of the industry, he added.

Viet Nam's coffee exports from the 2012-13 crop — from October last year to the end of this month – have fallen in terms of both volume and value, with 1.4 million tonnes being exported for US$2.8 billion.

Domestic prices have fluctuated violently during the period, going down from VND39,500-40,000 a kilo last October to VND36,000 (US$1.7) now, the lowest in the last two or three years, according to Vicofa.

In the world market, Arabica and Robusta coffee prices also fell down to a four-year low and three-year low in the New York market and London market, respectively, Tu said.

The association asked the Government to help solve difficulties faced by coffee firms to facilitate their export before the new crop starting.