Late, expensive projects canceled in central region  

Authoritits in central coastal province of Quang Ngai have canceld many delayed projects with large registered investments. The projects have been abandoned as investors were hit by the economic slowdown.

HCMC-listed property group Tan Tao received permit to conduct a construction project on a 2,600-hectare complex with the total investment of US$50 million in Duc Pho District in 2007.  

The complex named Vina UniverSal was set to include a world-standard studio, shopping mall and resorts.

Local authorities expected the complex would boost the economic and social growth of the district and the southern area of the coastal province.

However, after three years, Tan Tao Group eventually announced it had to cancel the project due to a capital shortage.

Quang Ngai Province’s authorities have also granted permits to another project on building the first international general hospital with the total investment of more than VND800 billion ($40 million).

The hospital was expected to have 500 beds with hi-tech equipments.

However, the Quang Ngai International General Joint Stock Company – the project’s investor – announced they had to abandon the project and issued a public apology just nine months after holding a big groundbreaking ceremony.

Statistics from the Quang Ngai Province Industrial Zone Management Authority show permits of 13 investment projects have been revoked since last year.

Analysts say the province’s policies on encouraging investment flows in previous years have resulted in many delayed projects.

“Delayed projects have impacted to the local business environment and weakened investments flowing into the province,” says Huynh Thi Phuong Hoa, deputy director of the Quang Ngai Province Investment Promotion Center.

Careless assessment of investment projects and investors’ financial base is among the main causes of delayed projects, Hoa says.

The province’s authorities announce they have checked on projects in progress and will revoke permissions for those which are being carried out at snail pace.

Investment flow has been stronger since the Dung Quat oil refinery and Doosan Heavy were built in the Dung Quat Economic Zone, says Le Van Dung, deputy head of the zone’s management authority.

However, some investment projects by both domestic and foreign investors that have received permits were canceled or halted due to economic meltdown, Dung says.

Customers should be cautious in dollar withdrawals
 
A deficit in rate on US dollar deposits have led depositors that are being paid at lower rates to withdraw all their savings to deposit in ones, which pay higher.  

Financial experts, however, warn that they will likely to suffer heavy losses if they are not cautious.

A woman, identified only as T, says her bank informed that the rate on the greenback deposits dropped to 2 percent per annum and offered her a rate on negotiable basis, which amounts to 2.5 percent per annum.

“As the rate is too low compared with other banks’, I determined to withdraw all of my saving worth US$8,000 to deposit to another lender in Ho Chi Minh City’s District 3, which offers me a rate of 3 percent per annum,” T recalls.

“A cash teller from the bank in District 3 showed me a $100 banknote, which she found a blur on it while counting the amount of money that I had withdrawn from the previous bank.

“I asked the teller to buy back the note at a lower price, but the teller said the bank have no policy on buying banknotes of foreign currencies that are worn, torn, damaged or no longer in circulation. She suggested that I should sell the note for retail gold shops.”

T then returned to the last bank to ask for an exchange, but cash tellers denied that they gave her the blurred note, according to the woman.

“Lenders have to send damaged banknotes of foreign currency to foreign banks to ask for an exchange, which costs time and money. Therefore, they hesitate to buy,” says a director of a HCMC-based bank, who asks not to be named.

Banks, meanwhile, are willing to change the dong banknotes that are worn, torn, damaged or no longer in circulation with an exchange fee, he adds.

Analysts say people will sell dollars to the unofficial currency market due to banks’ hesitation in buying back damaged banknotes of foreign currencies.

According to the HCMC branch of the central bank, dollar sales at banks surged after the authorities strengthened inspections of the so-called black market, forcing it to shrink.

Since early this year, Vietnam has cracked down hard on illegal dollar hoarding and trading in an effort to stabilize the currency market.

The State Bank of Vietnam lowered the ceiling on dollar deposit rates last month in its latest attempt to limit the circulation of the US currency in the economy, which is struggling with a widening trade deficit and stubbornly high inflation.

The central bank cut the dollar deposit rate on bank deposits by individuals to 2 percent from 3 percent offered widely previously.

That ceiling applies to deposits by individuals, while the rate cap for institutional deposits is 0.5 percent, the state bank said on its website (www.sbv.gov.vn), citing a circular issued on June 1.
 
HCM City leaders, businesses meet to resolve issues  

Le Thanh Hai, secretary of the City Party Committee and Le Hoang Quan, chairman of the City People’s Committee chaired a meeting in Ho Chi Minh City yesterday between leaders and businesses to address and resolve various issues.   

Chairman Quan expressed that it was very difficult to meet economic targets in the second half of the year if the city didn’t resolve the problems faced by the business people, matters such as taxation and capital concerns. He thus asked all the businesses present, to put forward their issues and concerns.

According to Huynh Van Minh, chairman of the City Business Association, about 35-40 percent of medium and small companies in the country have gone bankrupt.

Several garment and real estate companies have reduced production and trade and are on the verge of shutting down.  Minh proposed to the city authorities to find urgent measures to help affected businesses.

Huynh Van Hanh, deputy chairman of the Handicraft and Wood Industry Association said the association has about 360 members of which most face poor production and trade caused by tough competition by countries producing similar items.

In addition, businesses have borrowed at high interest rates of up to 25 percent compared to a mere 2-4 percent in other countries.  The prices of raw materials have also increased by 16-30 percent.

Ly Kim Chi, deputy chairwoman of the city Food and Foodstuff Association said that medium and small businesses face obstacles in accessing bank loans. The city should thus build a sponsorship mechanism suitably to product and industry.

The price stabilization program has yielded positive effects but however, prices should be more flexible to fluctuating costs, she said.

Other businesses proposed that ministries and departments must reduce business income tax and extend the pay back time-limit of valued added tax without interest.

Chairman Quan pledged that the city authorities would do their best to resolve the issues stated by the businesses.

Mr. Le Thanh Hai said that all petitions would be gathered and appropriately transferred to the right authorities for further action.

Banks post H2 positive earning despite high-cost loans
 
Many commercial banks announce to earn positive profits, while many businesses have to reduce operation and lay off staffs in an attempt to survive the economy meltdown.  

Statistics show many lenders achieved booming earning results in the first six months of the year, making 40-50 percent of this year’s target.

Sacombank, Vietnam’s fifth largest partly private lender by assets, announces in a financial report that it earned a pretax profit of VND1.5 trillion (US$75 million) in the first half, an equivalent of 55 percent of its goal this year.

Ho Chi Minh City-based DongA Bank made a pretax profit of VND676 billion in the first two quarters, equal to 52 percent of 2011’s target.

Vietcombank, the country’s third biggest bank by asset, earned around VND3 trillion in the first half.

Small-cap banks including ABBank and Western Bank are also among the gainers, making a pretax profit of VND308 billion and VND168 billion respectively.

Lender directors admit that it is inappropriate to announce positive financial results during the current difficult time, when enterprises are struggling to weather an economic turmoil.

Financial experts say lenders always earn a 3-3.5 percent profit margin after expenses no matter what interest rate cap the government sets.

Many banks remain eager to offer high depositing rates, while complaining they grapple to cool lending rates due to high-cost deposits, as they still have clients willing to borrow high-cost mandatory and interbank loans.

“Therefore, despite high lending rate, lenders still made healthy earning, while enterprises incurred losses,” a director of a HCMC-based bank told Dau Tu Tai Chinh Newspaper.

The State Bank of Vietnam last month asked commercial banks to cut expenses to gradually reduce interest rates and set a preferential lending rate for small- and medium-size enterprises in agriculture and auxiliary sectors.

However, many enterprises say they have struggle with capital shortage due to expensive loans.

Figures show credit growth rate amounted to 7 percent only in the first six months of the year.

Economist Huynh Buu Son warns that lending growth in the first half mainly came from banks’ debt rollovers, which convert non-production credit to production one.

Son says the government should set up preferential policies encouraging enterprises in production sector to curb the issue.

The State Bank of Vietnam in March 1 ordered all lenders to restrict non-manufacturing credit at 16 percent by the end of the year. It targets annual credit growth of 20 percent for 2011.
 
Ca Mau connected with Mekong Delta Economic Cooperation Forum  

The Mekong Delta Economic Cooperation-Ca Mau 2011 Forum was launched in Ho Chi Minh City Tuesday, aiming to further enhance the development of the delta region that includes Ca Mau Province.

The program, shortly called MDEC-Ca Mau 2011, is designed to bring together business people, economists, scientists, administrators and organisations to figure out ways to effectively support the whole region’s sustainable development, said provincial People’s Committee Chairman Pham Thanh Tuoi.

Mr. Tuoi, chief of the program organizing panel, was speaking at a press conference launching MDEC-Ca Mau 2011.  

It is themed "The Mekong Delta – Links for Sustainable Development", he said.

The program is expected to promote the strength of the whole region and each of the 13 individual provinces.

Regional cooperation includes all fields, such as transportation, trade, tourism, investment, agriculture, fisheries and forestry, according to the chief of the organizing panel.

Mr. Nguyen Cam Tu, Deputy Minister of Industry and Trade, general secretary of the National Committee on International Economic Cooperation, mentioned the significance of the Mekong Delta Economic Cooperation, or MDEC, which Vietnam’s Prime Minister Nguyen Tan Dung finalized on in March 2010 to support the delta’s development.

Mr. Tu spoke of the significance as deputy chief of the Steering Committee for MDEC.

He said the Steering Committee includes senior officials of the Steering Committee for the Southwestern Region, National Committee on International Economic Cooperation, and various ministries  

The delta region contributes over half of the country’s rice output, 90 per cent of rice export, 65 per cent of fisheries production and 70 per cent of fruit, according to the program organizers.

Mr. Tu said MDEC-Ca Mau 2011 included a series of events and workshops in Ho Chi Minh City and Ca Mau Province.

A cooperation conference between HCMC and the delta will take in the city on July 25, followed by another on agricultural investment promotion the next day also in the metropolitan.

A workshop on policies for regional links will be held in Ca Mau in October, followed by a MDEC-Ca Mau CEO Conference also that month in the province.

October will also see a conference on promoting the delta’s development and an International Economic Cooperation for the Mekong Delta, both in Ca Mau.

In addition, the province will host the Leaders Conference on MDEC Ca Mau 2011 in the same month.

The province is home to the Ca Mau gas-power-fertilizer industrial zone, a key growth driver for provincial and delta development.

Ca Mau leads the country in fisheries exports with an annual export turnover of over US$800 million. It reports food production of more than 450,000 tons of different kinds annually.

Seafood firms cornered as inputs flow to China

With Chinese traders snapping up many seafood and rubber products in large quantities, many domestic manufacturers are pushed to the verge of shutting down production due to severe lacks of input materials, Nguoi Lao Dong newspaper reported.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), more than 50 percent of the seafood manufacturers have to reduce or even temporarily halt production since most raw materials have been purchased by Chinese traders.

Nguyen Thu Sac, VASEP’s deputy head, said the Chinese businessmen have even approached Vietnamese fishermen amidst the sea besides offering to buy up inputs at ports and on land.

She said these foreign traders offer very competitive prices and have so far ‘ousted’ 150 domestic firms.

Nguyen Dien, director of Da Nang-based Procimex Corporation, said his company fails to compete with Chinese traders though it is willing to buy at high prices.

Some seafood processing companies said the Chinese traders will buy seafood directly from domestic fishermen and then illegally export it to China to evade taxes.

To cope, Sac called for imposing a ban on seafood exports like Indonesia.

According to the Vietnam Rubber Association (VRA), domestic rubber raw materials can be exported both legally and illegally to China.

But Chinese traders prefer the illegal path since this will help them evade both export taxes in Vietnam and import duties in their home country, lamented Nguyen Thanh Minh, director of the Long Binh Rubber Company.

Many Vietnamese rubber manufacturers have complained they could not buy raw rubber from the domestic market but have to import at high prices instead.

Dinh Ngoc Dam, director of Da Nang Rubber Company, said domestic firms could hardly get the materials from VRA’s members since companies belonging to this association prefer exports.

“Rubber for export is tax-free, while rubber serving the domestic market is taxed at 5 percent, which will discourage the domestic rubber consumption,” Le Quang Thung, VRA’s head explained.

According to Tran Thi Thuy Hoa, VRA’s general secretary, rubber exports to China accounts for 60 percent of Vietnam’s total production capacity of 780,000 tons this year.

Analysts thus warn the domestic rubber industry against a too heavy reliance on Chinese traders.

The Vietnam Rubber Association has also instructed its members to search for other alternative markets.

Vietnamese enterprises would be heavily damaged if Chinese traders abruptly end purchasing or change their tax policy when export prices rise, experts warn.

Hard to keep July CPI below 1pct: ministry

It is a daunting task to keep July consumer price index (CPI) under 1 percent since domestic market is under great pressure from surging food and vegetable prices, said Nguyen Loc An, deputy director of Domestic Market Department under the Ministry of Industry and Trade.

By the same time, Price Management Department under the Ministry of Finance, told the media that the global spiraling trend in prices of raw materials and commodities, such as sugar, urea, rice, oil, in the first half of this month makes it hard to curb domestic CPI.

Prices of fresh food items like meat and vegetables rose sharply month on month. The price of pork in the northern region has peaked to VND110,000-115,000 a kg, up VND20,000-25,000 compared to the same period in June.

Food items account for 40 percent of Vietnam’s CPI calculation.

But “up to 60 percent of households in Vietnam spend up to 60 percent of their income on foods,” Thoi Bao Kinh Te Sai Gon newspaper quoted Vu Vinh Phu, chairman of the Hanoi Supermarket Association, citing data from the General Statistics Office.

This means that the majority of our population is still poor and affected by inflation, he added.

Although the prices of food, food, fruits and vegetables have risen very sharply within the recent month, they seem to go up in the future.

Nguyen Thi Thuy Nga, Deputy Director of Price Management Department, said the rise was caused by price increases of animal feed, which shot up 30-40 percent over the same period in 2010 in H1/2011.

Moreover, capitals for livestock raisers were limited because of sky-high interest rates, she said.

July CPI in Hanoi has just been posted at 1.32 percent, the highest month-on-month increase of July in the last three years, according to the municipal Statistic Office.

The rise drove the capital city’s CPI this year to 21.52 percent.

Although the price of food has retreated by 1.96 percent month on month, the hike of foodstuff and catering services, 3.74 and 2.73 percent, has lifted up the whole group.

Ho Chi Minh City’s CPI in July rose by 1.07 percent against June, bringing the country’s CPI to 13.36 percent this year - a 17.89 percent rise year on year, according to the city’s Statistics Department.

Of the 11 commodity groups, only the price of posts and telecommunications services saw a month-on-month decline of 0.01 percent.

Japan's JX to acquire 4th Vietnam exploration block

Japan's second-biggest oil and gas explorer JX Nippon Oil & Gas Exploration Co said on Wednesday it has signed a contract to acquire a 20 percent stake in offshore Vietnam block 101-100/04 from Salamander Energy.

The deal marks the fourth Vietnamese exploration block for the Japanese firm, which is a unit of JX Holdings. The deal would have little immediate impact on the JX group's earnings, the company said in a statement.

Qantas sees globalization key to survival, eyes partnerships

Globalization is crucial for the survival of Qantas Airways , its CEO said, pointing to further partnerships with global airlines and expansion in Asia as part of a planned overhaul of its loss-making international operations.

Chief Executive Alan Joyce also warned of some "tough" changes for the airline as it sought to tackle inefficient maintenance operations and noted Qantas employed more staff in its home country than rivals, suggesting jobs may move offshore.

"Globalization requires change. We can't just change a few parts of our business, we have to make every part of our business efficient and in touch with the new realities," Joyce told an aviation conference on Wednesday.

"Our survival and success is far from guaranteed."

Qantas warned last month it was looking at cuts to its international operations amid reports it is eyeing setting up a new premium carrier based in Singapore. The new strategy will be announced on Aug. 24.

Joyce said the airline should grab new opportunities in Asia which was central to its future, and Qantas was looking at new partnerships and further joint ventures.

He noted branding opportunities in China and the success of the carrier's low-cost subsidiary Jetstar in Asia.

"I'm sure they would love to do something with one of the Chinese airlines if they could but that is obviously quite difficult as Singapore Airlines found out few years back," said Andrew Orchard, a Hong Kong-based analyst for RBS.

"Most airlines would be looking at China if possible, I think that is the most ideal situation, as it is one of the fastest growing air travel markets out there," Orchard said.

Singapore Airlines' efforts to gain a foothold in the Chinese market failed in 2008 when shareholders in China Eastern Airlines rejected a proposed sale of a 24 percent stake in the airline.

Joyce said Qantas's maintenance and repair costs were the "least efficient and most expensive" in the world, comments that are likely to anger unions.

The Irish-born chief executive said only 10 percent of the airline's 35,000 staff were based outside Australia.

Qantas also faces threatened industrial unrest from aircraft engineers and pilots.

"I think all options are on the table, I think he is not ruling out any possibilities, so that is why we are seeing the difficulties they are facing not just with the cockpit crew but also with other union members. He is looking at everything and there's no sacred ground at the moment," said Shukor Yusof, a Singapore-based analyst for Standard & Poor's.

Joyce described the unions as being "out of touch."

"We all know that change is always tough but the competitive challenges we face make major change essential," he said.

Qantas staff have been demanding increased job security amid talk the airline may axe some routes and move some operations overseas as part of a restructuring.

Joyce has previously warned the airline could face extinction unless dramatic changes were made to its operations. The international business is expected to make a A$200 million (US$214 million) loss this year.

He said on Wednesday he remained confident the airline's joint venture in Vietnam would eventually become profitable.

Qantas shares were trading 1.1 percent firmer at A$1.845, compared with a 1.6 percent gain in the broader market. (US$1 = 0.934 Australian Dollars).

Ho Chi Minh City office building market slumps

The Ho Chi Minh City office building market has slumped with landlords struggling to find tenants due to falling demand and huge supply coming into the market.

Even buildings that used to have a long waiting list are now struggling to find tenants.

Me Linh Point Tower, for instance, is posting on the real-estate websites. It has for long been one of the very rare office buildings in the city with a zero vacancy rate.

The low occupancy rates are also worrying owners of existing office buildings since tenants tend to leave after their lease ends to new places with lower rents.

New buildings such as Vincom Center, Bitexco Financial Tower, Green Power, and Maritime Bank Tower find it even harder to attract tenants.

A survey by real estate consultancy CB Richard Ellis (CBRE) found that grade A buildings had the highest vacancy rates of 34.2 percent in the last quarter.

Adam Bury, senior manager at CBRE, said the demand for office space was in decline.

He said only 67,000 sq.m of office space was leased in the first half, down by half year on year.

Analysts blame it on the continuing economic woes.

But despite the falling demand, supply of office space for rent surged in the second quarter and is forecast to continue rising.

Six new office buildings with around 38,000 sq.m entered the market in the period, taking supply to 23 percent higher than a year earlier.

More are under construction, with Times Square, Saigon M&C, Vietcombank, and SJC Tower coming up in just the downtown area.

The analysts warned this would cause a surplus and put even more pressure on landlords to cut rents and offer incentives to get tenants.

Minh, a property agent, said office rents had plunged in recent years.

“The rent for a grade A building in the downtown area is only US$34 per square meter per month, and this price can be lowered if you lease a large space,” he said.

Tuoi Tre discovered that grade A office rents could slip to just $30.

Some office buildings, including grade B and C ones, are offering incentives to tenants like deferring or waiving advances and parking fees and accepting late payments.

“Some even waive several months of rent to cover [tenant’s] internal decoration expenses,” Dong, employee of a company that has just moved to a new office building, said.

Land price in poor Vietnam among world’s highest

The media reported last week about the record price that a company paid for land at a prime site in Hanoi.

Times T&T Joint Stock Co agreed to pay VND47 billion (US$2.3 million) to five families jointly owning a 52-square-meter site at 22-24 Hang Bai Street.

Depending on their location in the building, each will get from VND200 million to VND500 million ($24,300) for every square meter.

Hanoi authorities approved the project in 2004 but the company was unable to get the land since the families asked for exorbitant prices of almost VND1 billion (US$48,780) per square meter.

The rate at which the deal was finally clinched is over 33 percent of the world’s priciest property now as ranked by Finance News magazine -- $78,200 a square meter on Hong Kong’s Severn Road.

However, the maximum official price for land in Hanoi, set by the city government at the beginning of this year, is VND81 million on Hang Ngang and Hang Dao Streets.

In Ho Chi Minh City, the 2011 price frame has around the same peak rate -- VND81 million in Dong Khoi, Le Loi, and Nguyen Hue in District 1.

Vietnam’s GDP topped $100 billion for the first time last year, and per capita income was $1,168.

The International Monetary Fund ranked Vietnam 142nd out of 183 nations based on nominal GDP while the World Bank ranked it at 139th.

But in terms of purchasing power parity (PPP), the IMF ranked Vietnam 41st out of 184 nations with a GDP of $276.57 billion, and the bank, 43rd out of 178 nations.

But Vietnam’s income and housing price index is by far the highest in the world.

This is a major reason why most workers and civil servants find it difficult to own a house, the Department of Housing and Real Estate Management said.

Vietnam’s index is between 24.5 and 26.6 against 4.14 for East Asia, 2.21 for Africa, 6.25 for South Asia, Europe, the Middle East, and North America, and 2.38 for Latin America and the Caribbean.

The United Nations says an index of 3 to 4 is reasonable for a country’s residents.

Tong Van Nga, chairperson of the Vietnam Real Estate Association, told newswire Vietnamnet that many big investors and people with idle money had been flocking to Hanoi to buy land.

The head of a Hanoi-based real estate group told the newswire that prices in Hanoi were sky high because developers have to pay very high additional expenses.

Under current regulations, the cost of turning one square meter of agricultural land into urban land is VND14-16 million. Thus, real-estate firms have to sell at not less than VND20 million to earn a profit.

However, they sole at VND35-40 million, the executive said.

“If developers do not have to make under-the-table payoffs, prices in Hanoi will be 30-50 percent cheaper.”

Deputy Minister of Construction Nguyen Tran Nam said land prices in Hanoi, and in Vietnam in general, were unreasonably high.

Vietnam is a country whose income ranked 120th in the world while its real estate price ranked 20th, he said.

Vietnam to collect back taxes on ‘diplomat’ cars

The Ministry of Finance has ruled that cars bearing diplomatic plates owned by non-diplomats has to pay back overdue taxes in arrears, Nguoi Lao Dong reported.

According to the new regulation, a tax of 5%-90% will be imposed on around 1,200 bogus diplomatic cars that are in use throughout Vietnam.

Besides, such vehicles will also be imposed a Special Consumption Tax and Value Added Tax.
The government can confiscate or ban such cars in some circumstances.

The bogus ‘diplomatic’ cars were once owned by authentic foreign diplomats who later sold them to non-diplomats after their tenure ended in Vietnam.

In such cases, the diplomatic cars will be turned into normal cars but they have not been taxed yet.

According to VietnamNet, customs agencies have found that from 1998 to the end of August 2009, 4,366 cars which belonged to diplomatic agencies were imported. Of these, 230 cars have been re-exported, and 1,758 cars have been transferred or ruined.

Of the other 2,378 cars, 1,158 cars have mysteriously disappeared, reported VietnamNet.

Turkish Airlines to fly daily to Ho Chi Minh City

Turkish Airlines has increased the number of flights between Ho Chi Minh City and Bangkok from four to seven six months after it began flying on this route, according to Thoi Bao Kinh Te Sai Gon newspaper.

People wishing to travel to Turkey from Vietnam can book direct, transiting at Bangkok and flying aboard Vietnam Airlines to Istanbul.

The expansion comes in response to increasing demand for travel between HCMC and Turkey, especially with the two countries hoping to increase their bilateral trade to US$1 billion this year.

Turkish Airlines, which was flying from Tan Son Nhat Airport on Tuesdays, Thursdays, Saturdays, and Sundays, will now offer a daily service.

It flies a 270-seat Airbus 340 aircraft on the sector.

Insurance market up more than 20 pct in H1

Despite economic difficulties, the insurance market still surged 20.34 percent in the first half of the year against the same period in 2010, said the Ministry of Finance's Insurance Supervisory Authority.

The authority said that the total insurance premiums in H1 reached nearly VND17.4 trillion (US$826.8 million), of which more than VND10.1 trillion ($482 million) were from non-life insurance, up 22 percent from the same period last year. However, the 22 percent growth rate of non-life insurance premiums in H1 this year was still lower than the surging rate of 25 percent of H1 last year.

Though contributing less to the industry's total premiums, the 15.93 percent growth rate of life insurance in H1 this year was higher than the rate of 14.39 percent in the same period last year.

The authority attributed the better growth rate of life insurance to the development of new products including joint insurance, which met domestic demands. Though not detailing the total number of joint insurance policies in H1, the authority said that the ratio of policy holders who cancel their joint insurance policies was much lower than other kinds.

Industry insiders also said that in the first six months of the year, the insurance market was also becoming increasingly professional because of the participation of more brokerage companies, especially foreign ones. The authority reported that total premiums brought in by brokers surged sharply by 81.8 percent in H1 to VND1.8 trillion ($86 million).

The authority's director Trinh Thanh Hoan said that the insurance industry will try to maintain the high growth rate in the second half of the year to gain a total insurance premium of roughly VND35.3 trillion ($1.68 billion) for the whole year, up 19 percent over last year, of which non-life insurance would make up roughly VND20 trillion ($952.4 million), up 23-25 percent.

However, Hoan also urged insurance companies to improve their capacity to meet financial solvency requirements, foster research and development of new products, restructure in order to retain investors, and enhance their ability to transfer technology.

The country currently has 54 insurance providers, of which 29 are non-life insurers, 13 life insurers, 11 brokers and a reinsurer. Only Generali Vietnam life insurance was licensed in H1 this year.

VN, Lao localities step up tourism cooperation

Champassak province of Laos welcomed over 300,000 foreign tourists in 2010, of which the number of Vietnamese visitors sharply increased compared to the previous percentage.

This was a good translation of the cooperative agreement signed in 2009 by the Champassak Tourism Association (CTA) and the Ho Chi Minh City Tourism Association, CTA Chairman Somleth Phosalath said on July 18.

The rise is mostly attributed to the introduction of package tours, the improvement in transport routes, capacity and quality of the tourism sectors of both sides, she said.

She expressed her hope that the resumption of the Vientiane – Pakse - Ho Chi Minh City flight in January, 2011 would help to increase the number of Vietnamese arrivals, including those from Ho Chi Minh City, to Champassak province.

Hanoi housing prices in decline

The balance on the property market in Hanoi is ticking in favor of home buyers as prices have been dropping.

Like HCMC, the residential market in Hanoi saw a downward trend in the second quarter of this year when many secondary investors who tried to run away from the market agreed to resell their properties even at a loss to redeem capital given the increasing pressure in the market.

Meanwhile buyers have shown prudence in purchasing homes, waiting for housing prices as well as banking interest rates to drop further.

In its quarterly report, Savills Vietnam says the average secondary asking price in the residential market in Hanoi decreased by 1 percent against the previous quarter.

Except for areas such as Gia Lam, Cau Giay, Thanh Xuan and Long Bien where the asking price remained stable or slightly increased, the asking prices in the remaining districts decreased by 2 percent to 8 percent in the second quarter.

The primary market saw 17 active projects with some 3,400 units, with prices ranging from US$800 to $3,200 per square meter.

However, the primary stock was 50 percent less than in the previous quarter, and the overall apartment market had a low absorption rate of 16% in the second quarter.

Apartments with the lowest asking price had the highest absorption rate. Grade C recorded the highest absorption rate at 26 percent, followed by Grade B at 11 percent and Grade A at 5 percent, according to the report.

Commenting on the market, Savills said with more than 50 percent of the population aged under 30, the apartment market in Hanoi still had potential in the long-term.

However, the current tighter monetary policy had made it more difficult to acquire bank financing, which is limiting demand.

With the same view, Knight Frank Vietnam said except for the retail market, the Hanoi property market experienced a general slowdown in activity for most asset classes in the second quarter as the government’s restrictions on bank loans to non-manufacturing sectors continued to strangle credit to the property market, with developers and home buyers alike having difficulties raising finance.

The property services provider said the second quarter saw less activity in the apartment market than in the previous quarter, and a lower number of successful transactions of units. In general, the market performance on the demand side remained relatively flat during the first half of this year in all segments.

Mid-end and affordable projects continued to dominate the market as developers target the stronger demand from owner occupiers in these segments. Apartments with prices from VND1 billion to VND2 billion per unit have been growing due to urbanization, population growth and modest income levels.

Knight Frank said although prices had become more affordable, sales for many developers were expected to be difficult. This was due to the large amount of choice availability in the market.

In addition, there was likely to be more end users in the market than investors, as the apartment for sale market is considered to be not as lucrative as before.

According to the company, new supply will continue to come onto the market in the coming quarters, although completion dates of projects are not always fixed and can vary from initial estimates.

Specifically, the market is expected to welcome about 2,000 units from mid-end projects such as Green Park Tower, Golden Land and Hoa Binh Green City in the next quarter. Prices of these projects are expected to be in the range of US$1,500 to US$1,800 per square meter.

Commenting on the market trend, Knight Frank said as current supply remained high, buyers would have more choices and were becoming more aware of the available options. Therefore, differentiation and customer centered orientation would be a number one tactic for smart developers.

The performance of the apartment market would be directly linked to inflation, and once inflation comes under control and the monetary policy is relaxed, the apartment sector will pick up in activity.

However, some projects are on hold as developers are waiting for confidence to come back to the market before launching their projects.

Meanwhile, some developers who have launched their projects are looking for ways to clear stocks, including leasing their apartments.

Some experts projected that sluggish sale and increasing stock would continue to put more pressure on the apartment market, and apartment selling prices in both HCMC and Hanoi would keep softening toward the year-end.

According to Savills, the residential market in Hanoi will see 31,000 new units contributed by 60 condo projects across the city in the next three years.

Woodwork exports increase, future uncertain

Though Vietnam’s woodwork and handicraft exports in the first 6 months of 2011 reached US$1.7 billion, up by $200 million year-on-year, rising input costs bode ill for exporters.

The Handicraft and Wood Industry Association of HCMC (Hawa) said local enterprises would be hesitant to sign big contracts in the second half of 2011 due to input cost hikes.

Speaking at a seminar on woodwork and handicraft export market expansion in HCMC last Thursday, Hawa’s chairman Nguyen Chien Thang said prices of input woodwork materials surged by 15 percent  to 20 percent while output prices rose only 3 percent.

As local firms do not want to sign big contracts for fear of losses, many importers have shifted to Malaysian exporters, Thang said.

Chinese traders recently acquired large volumes of wood, pushing input prices up by 30% to 50% compared to the average level.

Tran Van Thanh, director of Dong Nai Province-based Kien Phuc Co., said his company had to buy wood at prices 30 percent higher than usual this year to secure existing contracts.

The nation now has over 2,500 enterprises in the woodwork and handicraft export sector 75 percent of which have less than 10 laborers. As many small firms will have to close down due to high input costs, the sector may fail to reach the export revenue of $4 billion as predicted earlier this year.

Feed producers keep prices high despite lower costs

Although input costs have dropped, many feed manufacturers are still keeping their prices high, preventing many pig farmers from expanding and forcing some to give up breeding.

Tran Quang Trung, who runs a large pig breeding farm in the southern province of Dong Nai, said pig farmers are reaping big with the current pork price of VND62,000 (US$30) per kg.

Yet, when asked if he would enlarge his pig herd, Trung said he would not, because of rising feed prices.

Since last July, pig farmers have seen feed prices climbing by as much as 17 times.

Many feed manufacturers have been blaming the hike on rising input costs as well as fluctuating exchange rates.

Yet, some, like Pham Duc Binh, director of Dong Nai-based Thanh Binh Co. Ltd, said prices of inputs such as wheat, rice bran and soybean meals have dropped by 5 percent.

Another executive of a feed business in the southern province of Binh Duong also admitted input costs are falling, explaining that feed manufacturers are keeping prices high to make up for their losses last year.

For their parts, analysts believe feed manufacturers are joining hands to keep prices high to make the most profits of the current situation of falling input costs.

Ly Anh Dung, chairman of HCMC-based Quang Dung Co. Ltd, pointed out another benefit that the domestic feed manufacturing sector is enjoying: government incentives.

He said most of the ingredients imported to make animal feed aren’t taxed.

“The profit rate of the Vietnamese feed manufacturing sector is between 5 and 7 percent, which is the highest in Southeast Asia,” Dung said.

Can Tho government gets approval for new building

Prime Minister Nguyen Tan Dung Monday has given Can Tho the go-ahead to build a 25-storey building for housing its administrative headquarters.

The building, to come up on a 9,200-square-meter site in Ninh Kieu District, will house 17 administrative agencies employing around 900 officials.

The PM has ordered the city people’s committee to ensure that the construction follows recent regulations for construction of administrative offices.

The work is expected to take four years.

1 more TV shopping channel comes under scanner

Authorities have hauled up one more TV shopping company based in Ho Chi Minh City for broadcasting without the requisite clearances and ordered it to stop airing, the third to be busted this year.

The southern branch of the Administration of Broadcasting and Electronic Information found Best Buy, a shopping program broadcast by Lua Chon Hoan Hao Co Ltd on Ho Chi Minh City Television (HTV), had failed to furnish certain documents for getting a broadcast license.

It did not have customs declarations for 10 cosmetic products or clearances by the Vietnam Drug Administration, it said.

The city Department of Health had not approved the contents of its ads either, it said.
HTV has been ordered to stop airing the ads.

Two other shopping channels were forced to stop airing earlier this year.

In March the HCMC market management unit found Happy Shopping selling copycats and products of unknown origin, and showing false and misleading infomercials.

In July authorities busted Viet An Trade Company for selling copycats of copyrighted brands.

Viet An produced Viet Home Shopping which was aired on several channels since November 2008.

Swiss shoe firm to build 2nd plant in Vietnam

Quang Ngai Province authorities Monday licensed Rieker Vietnam’s proposed US$14-million shoe factory in the Tinh Phong Economic Zone.

Work on the plant would begin next September, Walter Bauer, director of the Swiss-owned firm, said.

It would begin operations early next year at the end of a first phase with a capacity of 7 to 8 million pairs a year.

The second and final stage would be finished at the end of 2014.

Rieker, based in Quang Nam Province, already has a factory in Vietnam in the Dien Nam – Dien Ngoc Economic Zone and produces 15 million pairs a year.

VN seeks energy, agriculture links with UAE

Vietnam wanted to boost bilateral cooperation with the United Arab Emirates (UAE) to ensure energy and food security, based on the countries’ combined strengths in finance, oil and gas agriculture and abundant human resources.

State President Nguyen Minh Triet made this statement at the reception for Saeed Al Ghurair, General Director of Al Ghurair Commodities LLC company, in Hanoi on July 18.

Triet said Vietnam always welcomed foreign investment in all economic fields, adding that that the two sides could expand cooperation through foreign direct investment or joint ventures in the fields of finance, banking, urban infrastructure, healthcare, education and culture.

He also called on UAE and Vietnamese businesses to maximise their strengths to bring benefits for the two peoples.

Saeed Al Ghurair affirmed that Al Ghurair Commodities LLC company would do its utmost to contribute to joint efforts in encouraging more UAE investors to come to Vietnam .

He said that energy and agriculture were extremely important fields to all countries worldwide, and that they were fields in which UAE businesses wished to cooperate with Vietnam , since the UAE considered Vietnam to have potential to play an increasingly important role in global energy markets.

In the short term, Al Ghurair Commodities LLC company planned to open a representative company in Vietnam and build a petroleum and gas base depot capable of storing 1.5-2 million tonnes, to serve as reserves for Vietnam and to supply neighbouring countries.

Price of meat, vegetables to rise
 
The price of meat and vegetables in the domestic market will not stabilise in the near future, according to experts.

During a meeting in Ha Noi on Monday, ministries discussed strategies to reduce the cost of produce.

Deputy director of the Cultivation Department Pham Dong Quang said that in recent weeks, the prices of vegetables and meat had increased by 20-30 per cent in Ha Noi and Hai Phong and by 10-20 per cent in southern cities and provinces.

It was due to a low yield of vegetables at the end of summer-autumn crop in the northern region, Quang said. Storms also reduced output by 20-30 per cent, but he added that prices might fall slightly in October.

Vegetables grown in south Viet Nam and transported to the north were shown to be expensive even though imported produce from China fell by 10 per cent in the second quarter, he said.

The reduction of Chinese imports was due more to demand from domestic markets than to state policies restricting imports, Quang said.

Meanwhile, prices of pork, beef and poultry surged due to a lack of supply, head of the Animal Husbandry Department Hoang Kim Giao said. At present, pork prices have climbed by 70 per cent due to high demand.

Pham Van Dong, deputy head of the Veterinary Department, said Viet Nam's imports in the first half this year reached 53,000 tonnes of all kinds of meat while the imports were 83,000 tonnes for all of last year.

Even this large quantity did not meet domestic demand, Giao said and expected prices to drop 10-15 per cent in August.

Farmers disagreed with the expectation. Le Van Me, director of Phu Son Veterinary Joint Stock Company in southern Dong Nai Province, said prices of meat could adjust in August but it was impossible to know whether the new rate would be lower or higher.

The Government should attempt to control the prices of meat and feed to avoid a further increase, said Tran Thi Mieng, deputy head of the Farming, Forest and Seafood Processing and Trade Department.

The Ministry of Industry and Trade and the State Bank must support preferential interest rates and loans for veterinary projects, she said.

Cao Duc Phat, Minister of Agriculture and Rural Development, said the ministry would closely follow the supply and demand of meat and vegetable markets to find the solution.

CPI in Hanoi increases 1.32 percent in July

The Consumer Price Index (CPI) increased by 1.32 percent from the previous month, and up 21.55 percent against the same period last year, according to the Hanoi Statistics Office.

Restaurant and catering services saw a sharp rise of 2.67 percent while the CPI of remaining goods increased by less than 0.58 percent, except for post and telecommunications services.

Meanwhile, fresh foodstuffs continued to increase and the prices of seafood products also rose.

The CPI of other industries such as housing, water, gasoline and construction materials remained stable due to a decrease in the price of gas worldwide.

Techmart Quang Nam 2011 opens

The Technology and Equipment Fair for the South-Central and Central Highland region (Techmart Quang Nam) opened in Tam Ky City, Quang Nam province on July 19.

The fair, organised by the Ministry of Science and Technology, the Ho Chi Minh City People’s Committee and Quang Nam provincal People’s Committee, drew the participation of 250 institutes, centres, universities, businesses and organizations across the country as well as partners from the Republic of Korea and Israel.

More than 1,000 technologies, software solutions and different kinds of equipment, products and services in the fields of information technology, mechanics, manufacturing, electronics, automatics, materials, environment and healthcare are on sale at the fair.

On the theme of “linkage for development”, Techmart Quang Nam 2011 aims to strengthen cooperation among scientific and technological organizations and businesses at home and abroad, accelerate technology transfer and application and development of technologies in the south-central and central highland regions.

Deputy Minister of Science and Technology Tran Viet Thanh said the fair introduces scientific and technological advances, forms of partnership, scientific and technological research projects, business investment opportunities as well as creating favourable conditions for technology transfer and improving productivity and competitiveness.

Quang Binh launches Quang Trach Thermal Power Plant 1

The Quang Trach Thermal Power Plant 1 was launched by the Vietnam National Oil and Gas Group (VPN) and the Quang Binh provincial People’s Committee on July 19.

The thermal power plant will be built over 4 years with a total invested capital of more than VND33 trillion

It will have a capacity of 1,200 MW, capable of generating 8.4 billion KW/hours per year.

The plant’s first generator will be put into operation in June 2015.

Addressing the launching ceremony, Deputy Prime Minister Hoang Trung Hai said the Ministry of Industry and Trade (MoIT) should coordinate closely with the major investor and contractor to ensure the efficient progress of the project.