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BUSINESS IN BRIEF 29/10

 Pepper industry aims US$1 billion annual export target; HOSE, NYSE strengthen cooperation; HCM City welcomes Chinese businesses; Russia’s WTO membership impact on Vietnam

Construction of Vung Ang II Thermal Power Plant scheduled for 2014

Mitsubishi group and Vung Ang II Thermal Power JSC (VAPCO) will start building the Vung Ang II thermal power plant in 2014, announced the central Ha Tinh provincial People’s Committee.

VAPCO has already concluded a feasibility survey into the project, signed an agreement on land lease, and negotiated with the Ministry of Industry and Trade and the Electricity of Vietnam on the roadmap for investment.

The plant has two groups of power generators with a design capacity of 1.320MW. It covers an area of 42 hectares close to the Vung Ang I Power Thermal Plant in Hai Phong hamlet, Ky Loi commune, Ky Anh district, Ha Tinh Province.

VAPCO is the main investor of the project.

Promoting Mitsubishi elevator brand in Vietnam

Mitsubishi Elevator Vietnam Co., Ltd. (VMEC), a wholly foreign owned company funded by Mitsubishi Electric Group and Mitsubishi Corporation, was officially inaugurated in HCM City and Hanoi recently.

Demand for elevators and escalators installation in Vietnam has exceeded 4,000 units annually over the years, and the figure is expected to keep rising in the near future.

Mitsubishi Electric has supplied more than 6,000 sets of elevator and escalator to Vietnam since its first project at Cho Ray hospital in HCM City in 1973.

By changing VMEC into a subsidiary with 100% foreign owned capital, the group aims to further expand its business operations and assert its powerful brand in the Vietnamese market.  

The group is committed to enhance the safety and reliability by assigning VMEC as the sole maintenance service hub for all Mitsubishi elevators and escalators in Vietnam.  

VMEC will utilise Mitsubishi Electric’s global resources by importing spare parts from MELTEC Parts & Engineering (Thailand) or being supported and guided by senior Japanese management and technical experts in order to build a prestigious brand with top quality.

Vietnam forum in Singapore

Singapore’s Institute of Southeast Asian Studies (ISEAS) will hold the Vietnam-Singapore forum on October 30 to discuss Vietnam’s policy making and investment challenges.

The event is part of activities marking the 40th anniversary of diplomatic ties between the two nations.

Since Vietnam and Singapore established diplomatic ties in 1973, they have seen their friendship growing in tandem with trade and investment cooperation.

Singapore is now Vietnam’s second biggest foreign investor while Vietnam is a major destination for Singaporean firms.

Dr. Aekapol Chongvilaivan- a Regional Economic Studies Programme fellow at the Institute of Southeast Asian Studies (ISEAS) says Vietnam is still hitting snags in its development process such as a lack of highly qualified human resources and financial resources.

On future Vietnam-Singapore economic prospects, Dr. Chongvilaivan says the Singaporean and Vietnamese Prime Ministers consider the strategic partnership agreement as a springboard for both nations to strengthen links in politics, economics, education- training, investment and many other areas.

The two governments are focused on enhancing economic and political relations.

Vietnam’s entry to the World Trade Organization (WTO) is a turning point in its international integration into the global economy which has a strong impact on its foreign investment and trade cooperation.

Vietnam’s involvement in the Trans-Pacific Partnership Agreement (TPP) will benefit both Vietnam and Singapore, he notes.

“Also as a TPP member, Vietnam is required to be more practical than other ASEAN countries.  We hope that Vietnam will accelerate negotiations on intellectual property, investment and service protection and other areas beneficial to both nations and ASEAN as well.”  Dr Chongvilaivan says.   

Pepper industry aims US$1 billion annual export target

The pepper industry is hoping to attain an annual export value of US$1 billion within the next few years, buoyed by increasing global demand for the staple.

Based on market forecasts, the Vietnam Pepper Association (VPA) expects pepper exports to reach 130,000 tonnes this year with a market value of US$850 million, an increase of US$55 million over last year's figures and US$157 million more than 2011.

VPA chairman Do Ha Nam said pepper prices had continued to go up in recent years, encouraging farmers to expand their pepper growing to regions without arable conditions, including the northern and southern areas in Lam Dong province.

Statistics from the association showed that Vietnam cultivates around 2,000 additional hectares of new pepper plantations each year. The area was expected to reach 60,000 hectares next year while Government figures place predict around 50,000 hectares by 2020.

It is said the average price of black pepper last month reached US$6,471 per tonne, representing an US$81 increase in comparison with last year and US$834 per tonne higher than 2011.

He said Vietnam had not wanted to sell black pepper however conceded the price of the ingredient last week climbed to US$6,650 per tonne.

Vietnam has been the world's largest pepper producer, thus allowing farmers and exporters to be active in controlling selling quantity. This has helped pepper prices fluctuate around VND110,000-130,000 per kilo for the past three years.

Vietnamese pepper is exported to more than 80 countries and territories, with the EU, Asia and the US being the largest importers.

Pepper is grown primarily in the provinces of Binh Phuoc, Gia Lai, Dak Lak, Dak Nong, Dong Nai and Ba Ria-Vung Tau.

HOSE, NYSE strengthen cooperation

A delegation from HCM City’s Stock Exchange (HOSE) led by its President Tran DacSinh visited the New York Stock Exchange (NYSE) on October 25 to seek cooperative opportunities and share experience in the field.

The Vietnamese stock market is going to renew its operations and the HOSE delegation expected to learn from NYSE’s development strategies.

The working trip also aimed to concritise a memorandum of understanding between HOSE and NYSE signed in 2007 during the then State President Nguyen Minh Triet’s visit to the US.

At a working session the same day, NYSE President Marshall N.Carter briefed Sinh on NYSE’s operations and affirmed NYSE’s close relationship with HOSE and other relevant Vietnamese ministries and agencies.

Both sides agreed to support Vietnamese businesses in mobilizing capital at NYSE and promote expertise exchange to share experience in developing new products, especially Exchange- Traded Fund (ETF) products.

HCM City welcomes Chinese businesses

Ho Chi Minh City wants to receive businesses from China’s Qinghai province for experience sharing and trade and investment promotions.

Nguyen Thi Thu Ha, Vice Secretary of the Municipal Party’s Committee, was speaking at a reception for a delegation from Qinghai province, led by LuoHuining, Secretary of the provincial Party Committee.

Ha also said HCM City wants to learn from Qinghai’s experience in developing Party organisations and the harmonious relationship between employers and employees in non-State businesses.

She welcomed Luo’s visit, which she said will help strengthen traditional solidarity and friendship between Vietnam and China in general and between HCM City and Qinghai in particular.

For his part, Luo expressed his admiration for HCM City’s recent rapid development and said his visit aims to boost cooperation between the two countries and between Qinghai and Vietnamese localities.

HCM City has experience in foreign investment attraction and socio-economic development, especially in services sector, therefore Qinghai wants to cooperate with the city in such areas as economics, trade, culture and tourism, said Luo.

Russia’s WTO membership impact on Vietnam

A seminar was held in in Moscow on October 26 to examine opportunities and challenges Vietnamese businesses face after Russia joins the World Trade Organization.

The Vietnamese embassy’s trade counselor Pham Quang Niem spoke of advantages and disadvantages of Russia’s WTO admission as well as its impact on Vietnam-Russia economic and trade cooperative relations and Vietnamese business operations in Russia.

He also briefed participants on the process of free trade agreement (FTA) negotiations between Vietnam and the Customs Union of Russia, Uzbekistan and Belarus.

He said Russia’s WTO membership and the FTA will offer Vietnamese businesses plenty of opportunity to penetrate a large, lucrative market of nearly 170 million consumers and with  an average income per capita of US$16,137.

Delegates also discussed issues relating to tax, quotas, Russia’s binding interests, trade protection, outlets for products, investment, source of goods and market trends.

Compared to WTO commitments, Vietnam-Customs Union FTA members will enjoy more preferences, including substantial tax, facilitating Vietnamese exports to Russia and other Customs Union members.

The FTA is expected to be signed in late 2014 or early 2015.

MK Smart recognised as first high-tech Vietnam firm

MK Smart Joint Stock Company under the MK Group has been recognised as Vietnam's first high-tech enterprise by the Ministry of Science and Technology (MOST).

The company has met all of the high technology regulations set out by MOST, to become a market leader in Vietnam's fledgling smart card sector.

The company's average revenue over its first three years made up 60% of the industry's total revenue each year, while this stretched to 70% in its fourth year.

At least 5% of workers possess graduate degrees, while the company also applies eco-friendly and energy-saving solutions in production and product quality management.

Vietnamese timber showcased at US furniture show

Eleven Vietnamese timber manufacturing companies have joined more than 2,000 participating businesses at the High Point Market—the world’s largest furniture industry trade show—in the US state of North Carolina.

The Vietnamese businesses used the biannual event to advertise timber products such as beds, cupboards, and handicrafts that included finely wrought models of ancient ships.

Scansia Pacific Executive Director Nguyen Chien Thang said timber furnishings are still incredibly popular despite their comparatively higher prices. Vietnam’s exporters can take advantage of this steady demand.

Thang credited workmanship and business dynamism with helping Vietnam become Southeast Asia’s leading timber product exporter. But diversifying designs would reap even greater rewards, he said.

American buyer Rich Kyle said the reasonable price and high quality of Vietnamese timber products have enticed him to explore future business opportunities.

After the market, Vietnamese businesses rented a pavilion there to consolidate the long-term presence of Vietnamese wood products in the US and international timber industry.

Vietnam is the world’s sixth largest timber exporter and the US’s second largest supplier, trailing only China.

Vietnamese wood exports to the US were valued at US$1.8 billion in 2012, a 25% improvement on the previous year. Vietnamese businesses are still overly dependent on foreign company orders, stifling innovation in design and distribution.

 Agricultural trade surplus hits US$7.48 bn in 10 months

The agro-forestry and fishery sector earned US$2.39 billion from exports in October, raising its 10-month export earnings US$22.73 billion, a year-on-year increase of 0.2%.

The export value of major agricultural commodities—US$10.94 billion—represents a 12.3% slide from 2012. Aquaculture’s US$4.57 billion and forestry’s US$5.37 billion amounted to 14.8% and 6% improvements, respectively.

The Ministry of Agriculture and Rural Development noted rice and coffee exports’ decline. Rubber exports increased 2% in volume but fell 15.1% in value compared to the same period last year.

Tea exports slipped 5.7% in volume but edged up 0.1% in value. About 212,000 tonnes of cashew nuts were shipped abroad for US$1.34 billion, up 15.5% in volume and 8.5% in value.

The agricultural sector imported goods worth an estimated US$15.25 billion over the reviewed period, a year-on-year increase of 10.4%. Key import commodities contributed US$12.05 billion to this total, 12.4% higher than in 2012.

Unprocessed cashew imports surged 98.4% in volume—to 579,000 tonnes—and 84.6% in value.

The agricultural sector’s 2013 trade surplus currently stands at approximately US$7.48 billion.

Vietnam to open another economic office in Italy

Vietnam intends to open another economic office in Lombardy in 2014, expanding its presence in the most developed economic and industrialised region in Italy.

The plan arose out of a meeting between Vietnamese Ambassador to Italy Nguyen Hoang Long and Lombardy regional President Roberto Maroni in Italy on October 25.

Ambassador Long was attending “Vietnamese Days in Milan” celebrations.

Lombardy is Italy’s dynamic economic centre, contributing 25% of the country’s GDP. It forms part of the European Union’s economic spearhead and is the future host of Expo Milano 2015.

Lombardy’s friendship with Vietnamese localities was formalised  in a 2010 cooperative agreement with the Vietnamese Government.

Maroni assured Ambassador Long of his desire to broaden the Lombardy region’s economic and educational cooperation with Vietnam, saying the Southeast Asian nation is an attractive destination for foreign investors, including those from Italy.

He emphasised Expo Milano 2015’s importance, voicing confidence in Vietnam’s future success at the event.

He also supported Vietnam’s plans to establish a Lombardy economic office in collaboration with local authorities, Assolombarda—the Italian Entrepreneurial Association—and Milan’s trade office.

Vietnam’s economic office will be based in Milan and aims to help businesses of both nations capitalise on the potential of their respective markets and promote cooperation and investment for mutual benefits.

Export turnover totals US$108bn after 10 months

The General Statistics Office expects Vietnam’s ten-month export turnover to total US$108 billion, a year-on-year increase of 15.2%.

The country earned US$11.7 billion from October’s exports alone, up 4.6% from a year ago.

The domestic economic sector earned US$35.9 billion from exports in 10 months, rising 3% from 2012, while the FDI sector’s exports (including crude oil) surged 23.3% from last year’s levels to US$72.1 billion.

The export commodities enjoying the highest turnover include phone handsets and components (US$11.7 billion, up 76.1%), textiles and garments (US$14.8 billion, up 18.7%), computers and spare parts (US$8.7 billion, up 41.5%), footwear (US$6.7 billion, up 14.5%), wood and timber products (US$4.4 billion, up 15.4%) and handbags, suitcases, and umbrellas (US$1.5 billion, up 25.6%).

 Vietnam’s October imports hit US$11.9 billion, 5.6% higher than last month and 17.6% higher than the corresponding periods in 2012.

The country spent US$108.2 billion on imports in the 10-month period, 15.2% higher than last year. The foreign investment sector’s import turnover stood at US$62 billion, equivalent to 25.7% of total spending.

Key import commodities include electronics, computers, and components (US$15 billion, up 40.2%), fabric (US$6.8 billion, up 18.2%), plastics (US$4.8 billion, up 19.8%), textiles, garments, and footwear (US$3.1 billion, up 17.7%), and livestock fodder and materials (US$2.7 billion, up 36.6%).

Vietnam’s ten-month trade deficit equalled US$187 million, 0.2% of total export value. The FDI sector posted a US$10.1 billion trade surplus in the reviewed period.

2013 Motor Show’s first day welcomes 25,000 visitors

Organisers CIS & Le Bros have reported the 9th Vietnam Motor Show attracted more than 25,000 visitors on its opening day in HCM City on October 24.

The fair already set new records with its 15 automobile brands and nearly one hundred service and accessory providers participating.

Demand forced the organising board to improvise extra ticket sale locations. Over 50,000 invitations have been sent to those who pre-registered for the event online.

Leading automobile industry names such as BMW, Audi, Mercedes-Benz, Ford, Land Rover, Toyota, Nissan, Suzuki and Vinastar are showcasing their latest models and innovative technology.

Audi is introducing nine new models at the show, including the Audi R8 Spyder 5.2 V10 Quattro and R8 Coupe 5.2 V10 Quattro. Mercedes-Benz is unveilling 18 new models, while Toyota is bringing six of its most popular including the 2014 versions of the Camry and Land Cruiser Prado.

Ministry of Industry and Trade officials say Vietnamese consumers’ interest in cars is burgeoning as living standards and incomes rise and infrastructure is improved.

Car makers should capitalise on the growing demand to expand their business and further the development of Vietnam’s domestic automobile industry.

In the first ninth months of this year, vehicle sales totalled 77,000, a year-on-year increase of 18%.

The 2013 Vietnam Motor Show, themed “Together to Success”, will last until October 27.

HCM City targets Swiss investors

Ho Chi Minh City is committed to creating favourable conditions for Swiss enterprises and businesses to take advantage of its investment opportunities.

HCM City People’s Committee Vice Chairman Hua Ngoc Thuan reiterated the pledge at an October 25 reception for Swiss Federal Economic Affairs, Education, and Research Department Chief Johann N. Schneider-Ammann.

Thuan said HCM City and its relevant agencies will support Swiss businesses interested in investing there. The municipal leaders are willing to consult with investors to address any difficulties encountered during the investment process.

He highlighted HCM City’s need for support and investment in human resource development, infrastructure, and environmental protection—especially pressing amidst the threats posed by climate change and rising sea levels.

HCM City imported Swiss goods worth over US$1.2 billion during the first nine months of the year, mostly gold and gems stones. Its exports to Switzerland exceeded US$450 million in value.

The city now hosts 30 Swiss business representative offices and 47 Swiss-invested projects capitalised at over US$700 million.

Ammann acknowledged the city’s impressive development. The variety of Swiss businesses touring the city in 2013 proves Switzerland’s enthusiasm for strengthening cooperation and investment with Vietnam in general and HCM City in particular.

Representatives from Swiss pharmaceutical, banking, and education businesses confirmed their interest in HCM City during the October 25 reception.

Vietnam, China trade ministers meet in Beijing

Vietnamese Minister of Industry and Trade Vu Huy Hoang held bilateral talks with his Chinese counterpart Gao Hucheng on October 25 on the sidelines of the ASEAN Economic Ministers (AEM) Roadshow.

They discussed measures to boost Vietnam-China cooperation in trade and industries, and to implement agreements signed during Premier Li Keqiang’s recent visit to Hanoi.

They examined ways to speed up the establishment of Vietnam’s Trade Promotion Offices in a number of Chinese localities, realise memorandums of understanding on cross-border trade cooperation, and implement Chinese-invested industrial projects in Vietnam.

The talks took place in an open, friendly and frank atmosphere, and reaped productive results.

Remittances reach US$3billion in HCMC

The State Bank of Vietnam’s Ho Chi Minh City branch received US$3 billion in remittances as of September this year, ranking Vietnam in the top ten countries for remittances.

Ho Chi Minh City's remittances are expected to reach US$4.8 billion in 2013, an increase of US$700 million from last year. The majority of remittances come mainly from the US and Europe, but this year has seen an increase from China and the Republic of Korea.

The World Bank has forecast Vietnam will receive around US$11 billion in remittances this year to stand ninth in the world. Vietnam's overseas remittances reached US$10 billion last year, rising 10% over the previous year.

Remittances to Vietnam are often sent by overseas Vietnamese and Vietnamese guest workers. Notably, the workers’ remittances have gradually increased thanks to more competitive transfer services.

Higher interests for VND deposits and cheap real estates have also attracted further remittances. The increase of remittances will contribute to improving the country’s general balance of payment, a factor in stabilizing the macro-economy and enhancing investors’ trust.

Vietnam attracted a total of over US$73 billion in remittances between 1993 and 2012, accounting for an average GDP of 6.8%. Since 2004, the country has annually received US$3.65 billion.

UK businesses seek investment opportunities in Vietnam

Representatives from ten UK firms will arrive in Vietnam on October 28 to explore investment opportunities in the Vietnamese oil and gas sector.

During their stay, which will last until November 1, the representatives will meet with the Ministry of Industry and Trade, PetroVietnam, and private and foreign oil and gas businesses in Hanoi, HCM City, and Vung Tau.

UK Trade and Investment (UKTI) International Trade Advisor Carl Woolf said the UK delegation hopes to promote the country’s oil and gas expertise and introduce its products and services to Vietnamese partners.

He described UKTI as a governmental agency helping UK-based companies thrive in the global economic environment and promoting foreign companies to invest in the UK’s own highly lucrative industries.

Woolf said the UKTI has helped companies claim space for their technology and services in the international supply chain.

He added the agency boasts a rich history of successfully cultivating business relationships in a variety of fields, including the oil and gas sector.

Doosan Vina pours US$300 million into Dung Quat EZ

The Korean-owned Doosan Heavy Industries Vietnam Co. Ltd. (Doosan Vina) has invested US$300 million in Quang Ngai province’s Dung Quat Economic Zone (EZ).

Doosan Vina operates  five plants in Dung Quat EZ, manufacturing boilers, heat-recovery steam generators, seawater desalination evaporators, and material handling equipment.

Since first investing in the EZ, the firm has allocated nearly US$2 million to a diverse range of charity initiatives, helping improve  local living conditions.

Doosan Vina’s annual US$250,000 programme brings doctors from the Republic of Korea to Quang Ngai to provide free medical consultations for thousands of local residents.

The company has also sponsored surgeries for children born with hare lips and cleft palates, and for elderly cataract sufferers. Its medical equipment donations to Quag Ngai hospitals are valued at more than US$85,000.

Doosan Vina employs nearly 2,500 workers and participates in the “Made in Vietnam” trademark development programme. The firm is expected to generate additional 3,500 jobs in the near future.

Mexico, Vietnam share public debt management experiences

A Vietnamese delegation led by Deputy Minister of Finance Truong Chi Trung visited Mexico from October 19–24 to share its own and learn from different experiences in public debt management.

The visit was conducted under the framework of a World Bank (WB) agreement.

During the WB-funded trip, Vietnamese delegates held working sessions with representatives of Mexico’s financial and banking sectors and visited the central Mexican state Guanajuato’s Financial Department. Guanajuato is recognised as a leader in public debt management.

Hosts and guests exchanged perspectives on public debt and the debt management responsibilities of central banks. They discussed measures to expand institutional authority and improve forecasting accuracy.

During their stay in Mexico, the Vietnamese delegation laid a tribute wreath at the Statue of President Ho Chi Minh in Mexico City’s Central Park and conducted exchanges with the Vietnamese Embassy.

They also toured a number of historical and cultural sites in Mexico City and Guanajuato state.

Pou Chen opens kindergarten inside factory

Pou Chen Vietnam under Taiwan’s Pou Chen Corporation last Friday opened Green World Kindergarten worth US$1 million at its plant in Dong Nai Province, following a similar kindergarten at its sister firm Pou Yuen Vietnam.

According to Pou Chen Vietnam’s press release, Green World Kindergarten is built for children of employees who are working at Pou Chen and meets standards of the Green Lotus system. The kindergarten consists of 18 classrooms and five functional rooms for 500 children aged 2-5.

Dong Nai Xanh Co., supplier of educational management services for Dong Nai Province, has been picked to operate the kindergarten together with Pou Chen Vietnam.

Peter Tsai, vice manager for sustainable development at Pou Chen Corporation, said that the kindergarten with qualified teachers would provide high-quality programs meeting requirements of the Ministry of Education and Training.

The tuition fee at Green World Kindergarten is VND700,000 per child per month.

Pou Chen Corporation based in Taiwan is one of the leading footwear firms producing products for brands like Nike, Adidas, Asics, Clarks, Reebok, Puma, New Balance, Crocs, Merrell, Timberland, Converse and Salamon. Pou Chen has been present in Vietnam for 20 years and hires around 140,000 laborers, with female laborers accounting for 85%.

ANZ opens savings fund in Hanoi

ANZ Vietnam on Monday opened a savings fund named Suncity Kiosk at 13 Hai Ba Trung Street in Hanoi City’s Hoan Kiem District, and at the same time closed its transaction point of Golden Westlake at 151 Thuy Khue Street in Tay Ho District.

The new opening is therefore the relocation of the Golden Westlake unit to the new venue.

Duong Duc Hung, Head of ANZ Vietnam Retail Banking, said in a statement that the opening of the Suncity Kiosk is aimed at increasing convenience for customers in need of banking services around the downtown area in Hanoi.

However, under Circular 21 of the State Bank of Vietnam which takes effective tomorrow, all savings funds of banks must be upgraded into transaction offices within two years or shut down the operation.

Banks raise chartered capital at snail’s pace

Given tough business conditions, many banks have failed to carry out their plans to spur chartered capital on schedule despite having these plans approved at shareholders’ meetings earlier this year.

VietinBank is considered the only bank succeeding in a chartered capital increase this year. After issuing shares to a foreign partner to raise its chartered capital to some VND32.6 trillion, the highest in the banking system, the bank continued issuing an extra 457.2 million shares totaling more than VND4.5 trillion to increase the capital to over VND37 trillion.

Others such as Sacombank and VPBank have just completed part of the plans to spur capital this year but most of them either choose share issuance to pay dividends to shareholders or issue shares to staff members from retained earnings and undistributed profits.

Issuing shares to attract more capital from investors is not favored now as the chance of achieving success in share issuance is much more difficult than in previous years in the context that the securities market is no longer attractive to investors like before.

Notably, multiple lenders have yet to map out specific plans to raise the capital subject to resolutions fixed at general meetings like Viet A Bank, OCB, Eximbank or Nam A Bank.

At the general meeting in April, Viet A Bank presented a plan to spur its capital to VND3.5 trillion only, which was expected to be completed in the third quarter after the bank failed to increase the capital to VND5 trillion in 2012 as scheduled. The bank’s resolution, however, also clarifies that such a plan could be delayed until next year.

Trinh Van Tuan, chairman of OCB, informed that his lender will increase chartered capital this year, with preparatory steps still underway. OCB’s capital increase will mainly be done by retaining last year’s profits to ensure its chartered capital at over VND3 trillion as the minimum charter capital regulated by the central bank.

In fact, with the current business difficulties, it is a tough job for small banks to raise capital by mobilizing shareholders’ capital as the market value of shares is often lower than the face value, Tuan said. Furthermore, operational efficiency of local banks is rather poor while they are struggling with high bad debt ratios, he added.

The fact that members in the banking industry have yet to issue shares to raise capital is somehow consistent with the content of a recent report by the State Securities Commission. Capital volume mobilized through share issuance fell sharply in this year’s first half, at around VND2.3 trillion, tumbling 58% against the same period in 2012, says the report.

Meanwhile, another report released by the central bank indicates that total chartered capital of the whole system was some VND404 trillion as of July 31, growing around VND10.5 trillion or 2.66% from the end of last year. The rate is seen as pretty low compared to a surge of nearly 9.6% in chartered capital in 2012.

VF1 open-ended certificates to debut next month

Vietnam Securities Investment Fund (VFMVF1) will restart operation as an open-ended fund on November 7 after being converted from a closed-end fund.

VFMVF1 under Vietnam Fund Management Company (VFM) had its final trading day on the Hochiminh Stock Exchange as a closed-end fund on September 24. As of October 9, the fund had net asset value (NAV) of nearly VND1.9 trillion.

An open-ended fund allows investors to buy and sell shares directly from the fund itself. It contrasts with a closed-end fund which typically issues all the shares at the outset, with such shares being tradable between investors only.

The frequency of trading of VFMVF1 open-ended certificates is planned to be twice a month on Thursday of the second and fourth week. Although VFMVF1 allows withdrawal of only 10% of NAV, the fund will pay a maximum 20% withdrawal of investors in the first two trading sessions.

Fund certificate transactions will be subject to fees. If investors sell fund certificates to VFMVF1, it will charge 2% of transaction values if the certificates have been held less than 12 months, 1% for those held from 12 to 24 months and 0.5% for those held over 24 months.

VFM said that the fees aim to encourage investors to hold certificates in long term. If investors withdraw capital, the enterprise will have to sell assets to pay for investors. Therefore, if withdrawal takes place regularly, cash flow will be always changeable, causing impacts on long-term investment strategy of the fund.

Pham Khanh Lynh, deputy general director of VFM, said that the open-ended fund expects to attract more individual investors as liquidity of the fund certificates will improve.

Despite the withdrawal of just 10% and transaction frequency of twice a month, this is just a first step of VFMVF1 as an open-ended fund. The enterprise will consider fixing these problems in the coming time.

Besides, to ensure the payment rate of 10% for investors, the enterprise will keep these assets in the form of cash, Lynh said.

A source told the Daily that the Government is considering a draft regulating that an open-ended fund will not be subject to the 49% foreign room rule. Therefore, foreign investors could buy fund certificates to raise ownership at will.

Nguyen Hoang Hai, general secretary of the Vietnam Association of Financial Investors (VAFI), said that foreigners will have more chances to participate in the local stock market if the draft is passed.

Lynh also said that the law will help foreign investors increase their holdings in major companies in which the room for foreign investment has been almost full, thus increasing stock prices and improving portfolio of the fund.

However, Lynh stressed that VFM’s strategy is to attract domestic individual investors.

Vietnam ships 13.7 bln USD worth of goods to ASEAN

Vietnam exported nearly 1.53 billion USD worth of goods to other countries in the Association of Southeast Asian Nations (ASEAN) in September.

The figure helps raise the country’s nine-month exports to these markets to 13.72 billion USD, representing a year-on-year increase of 11.1 percent.

Among ASEAN countries, Malaysia was the biggest trade partner of Vietnam , followed by Thailand , Singapore and Indonesia .

Last year, Vietnam’s exports to the regional markets topped 17.08 billion USD, surging 25.7 percent over the previous year.-

Over 3 trillion VND mobilised from Govt’s bonds

The State Treasury mobilised 3.2 trillion VND from its Government bonds at an auction organised by the Hanoi Stock Exchange (HNX) on October 22.

The mobilised money included 1.9 trillion VND in two-year bonds with an annual interest rate of 7.2 percent, 1 trillion VND in three-year bonds with an annual interest rate of 7.54 percent and 300 billion VND in five-year bonds with an annual interest rate of 8.45 percent.

The interest rates were 0.08 percent, 0.21 percent and 0.05 percent lower than the previous tender’s rates respectively.

The State Treasury has so far this year mobilised more than 118 trillion VND worth of Government bonds through tenders.-

Lam Dong attractive in foreign investors’ eyes

The Central Highlands province of Lam Dong has signed a Memorandum of Understanding (MoU) to boost cooperation with the Singapore-based Republic of Korean Chamber of Industry and Commerce.

The signing is part of the province’s activities aiming at promoting investment in Singapore .

Addressing the signing ceremony on October 22, Jung Young Soo, president of the chamber, affirmed Da Lat city and Lam Dong province in general show potential for agricultural products and tourism.

The launch of the Da Lat-Singapore route will help hasten tourism and trade activities between not only the two sides but also Da Lat and other countries, he said.

Young Soo affirmed his chamber is willing to call for businesses of the RoK and Singapore to invest in the locality, while supporting Lam Dong’s businesses in accessing capital sources so that they can expand investment in foreign markets.

For his part, Chairman of Lam Dong People’s Committee Nguyen Xuan Tien expressed his belief that the two sides will coordinate in realising agreed contents in the spirit of the MoU, saying the province will do all it can to lure investment.

RoK businesses expressed their hope to foster investment in Lam Dong, particularly in agriculture.

The RoK Chamber of Industry and Commerce will visit the province on November 15.-

ANZ: Brighter GDP growth in 2014 for Vietnam

Vietnam’s gross domestic product (GDP) will fall short of its potential this year but will improve in 2014, according to the Australia-New Zealand Banking Group (ANZ).

To return to its potential level of 7 percent, the bank recommended the country speed up the restructuring of commercial banks and State-owned enterprises.

Vietnam will register 5.1 percent GDP growth in 2013 and 5.25 percent next year, it said.

Inflation is expected to close between 6 and 8 percent this year while weak domestic demand will keep the consumer price index at a medium level.

The bank commented that the Vietnamese currency will exchange at 21,500 per USD by mid-2014, compared to the current rate of 21,150.

Dr Le Xuan Nghia, former chairman of the National Financial Supervision Committee, said that the country this year will obtain a growth rate of 5.3 percent and keep inflation at 7.6 percent while enjoying an increase of 15 percent in exports and an 11 percent credit growth.

He forecast that economic growth will climb up to 5.7 percent thanks to increasing investment, while inflation will be up 7 to percent, exports will soar 19 percent and credit growth will rise 14 percent.

VietGap standards, local producers’ cup of tea

Despite being a major tea producer, Vietnam has been urged to restructure its tea industry to enhance its competitiveness and foster sustainable development. Report by the Vietnam Economic News.

Vietnam's tea export ranks fifth in the world in terms of production but only 10th in terms of sale prices. It is estimated that Vietnam's tea exports in 2013 will see a significant decline, up to 20 percent due to the poor quality of its tea products.

According to the Ministry of Agriculture and Rural Development, the tea export in September reached 13,000 tonnes, worth nearly 21 million USD. In the first nine months of the year, Vietnam exported 101,000 tonnes, earning 161 million USD and representing a 4.2 percent decrease compared with the same period last year. It is estimated that tea production and exports in 2013 will reduce by 20 percent year-on-year.

Chairman of the Vietnam Tea Association Doan Anh Tuan said although Vietnamese tea is still exported to a number of markets such as the US, Belarus and Indonesia, exports to traditional market like the EU are facing many difficulties such as technical and quality barriers.

There are many reasons for the Vietnamese tea export decline. However, the basic factor is the quality. Therefore, despite Vietnam’s fifth position among the global tea producers, its export revenue ranks only 10th. While Vietnam exports tea at 1.45 USD per kg, many European countries import the products and re-export them at a price of nearly 10 USD per kg.

Dr Nguyen Quoc Vong from the Management Board of agricultural projects, Ministry of Agriculture and Rural Development, said Vietnam’s tea export value per hectare is low, only over 1,200 USD per hectare, much lower than Sri Lanka (5,700 USD per ha) and Kenya (6,000 USD per ha).

According to Nguyen Xuan Hoa, deputy head of the Agro-forestry Processing and Salt Industry Department under the Ministry of Agriculture and Rural Development, to achieve a sustainable tea industry, Vietnam needs to promote coordination in tea production between farmers and farmers, farmers and enterprises.

In addition, it needs to pay attention to the planning of tea growing regions to increase productivity, quality and safety of the tea materials; rearrange the tea processing plants and ensure that they have a coordination with tea material regions and apply the Good Manufacturing Practice (GMP).

In reality, the number of tea processing plants is growing rapidly, resulting in lack of high quality materials as the plants are willing to buy the materials at all levels of quality. This will discourage the growers to produce high-quality tea and therefore result in lower quality of Vietnamese tea products.

Apart from launching trade promotion and trademark advertising programmes, tea enterprises should also promote domestic consumption as this is a large and potential market. On the other hand, the tea growing areas meeting VietGap standards remain low, therefore, in order to improve the quality of material sources, the State should adopt policies to encourage growers and enterprises to produce tea following Good Agricultural Practices (GAP) models.-

Dutch enterprises work with An Giang to boost trade

A delegation of Dutch enterprises on October 22 conducted a survey and worked with the Mekong Delta province of An Giang in order to further promote the locality’s goods in the Netherlands and Europe at large.

As distributors of An Giang’s goods in these Western markets, the enterprises’ representatives inspected factories processing vegetables, tra fish and rice, and learnt about the province’s capacity and conditions for goods promotion.

They also discussed how to realise cooperation between An Giang and the Netherlands ’ Oss city to export local products to European markets, carry out a potato cultivation cooperation project, and develop the logistics sector.

Meeting with the delegation, Chairman of the An Giang People’s Committee Vuong Binh Thanh said that the province has a large number of products like tra fish, rice and other farm produce for the Dutch market.

He asked the enterprises to support An Giang with technology to pilot the potato cultivation project, thus helping the locality develop a new export product for the Netherlands and the whole Europe.-

Kien Giang province harvests bumper crops in 2013

The Mekong Delta province of Kien Giang harvested 4.49 million tonnes of paddy rice this year, 203,000 tonnes more than the output of 2012 and surpassing the yearly plan by 2 percent.

According to statistics of the provincial Department of Agriculture and Rural Development, the winter-spring, spring-summer and summer crops yielded a total of 2.44 million tonnes of paddy rice. Harvest of the summer-autumn rice crop is underway, with average productivity estimated at 5.4 tonnes per ha, bringing output to about 1.59 million tonnes. At the same time, the short-term autumn-winter rice has also ripened, yielding an average 5.2 tonnes per ha, with output to achieve 480,000 tonnes.

Local farmers this year expanded the area under summer-autumn rice by nearly 4,650 ha, contributing to the increase in output. At the same time, agricultural scientists have been working hard to guide farmers in adopting intensive farming techniques, mechanization of farming work and advanced post-harvest technology.

However, as rice export faced many difficulties in the first months of this year, farmers still stockpiled a large quantity of rice.

Non-cash transactions on sharp rise

The proportion of cash transactions in total means of payment declined from 20.3% in 2004 to 14% in 2010 and to around 12% at present, according to the State Bank of Viet Nam.  

Non-cash transaction services have developed vigorously over the last three years with the boom of banking cards, Internet banking, mobile banking and digital wallets.

Non-cash payments have increasingly been popular public servants, state employees, students and workers.  

The card-based salary payment has generated huge profits for the State, banks and users. As of Q1, 2013, 1.83 million public employees, or 66% of the total received salary through bank accounts.

Commercial banks have heavily invested in ATM or Point of Sale (POS) locations. So far, 14,400 ATM machines and 116,700 POS locations have been installed. Around 62 million cards were issued.

VNACCC to operate in mid-November

The Viet Nam Automated Cargo and Port Consolidated System (VNACCS/VCIS) will test-run from November 15, 2013 in a bid to speed up the customs sector's modernization process.

The Viet Nam Customs encouraged businesses to join the trial program between November 15, 2013 and February 15, 2014 (for more information please visit website http://www.customs.gov.vn).

Funded by the Japanese Government, the new software solution will officially be rolled out nationwide in Q1, 2014, targeting to improve management efficiency and facilitate customs procedure clearance made by both citizens and businesses.

The Viet Nam Custom has trained its inferiors and business community how to use VNACCS/VCIS applications. Around 40,000 enterprises have registered for e-customs processing.

Once officially operating, VNACCS will help reduce the processing time of customs procedures from 5-15 minutes to only some seconds.

Housing loans prove difficult to unlock

The HCM City People's Committee has directed district, commune and ward administrations to simplify formalities for home buyers in their respective localities.

The directive comes following residents' complaint about cumbersome procedures that are preventing them from accessing preferential loans designed to help low-income people buy their own homes, thereby enabling a real estate market revival.

To apply for an apartment under low-income housing projects, the applicant needs a housing-status paper certified by authorities in her/his locality.

However, many district and commune officials in HCM City and other localities have refused to provide the house-status certificate to prospective home-buyers, saying they are not aware if the applicant has any other housing property in other localities.

This has become a major hindrance in the disbursement of loans from the VND30 trillion (US$1.42 billion) package announced by the government.

Nguyen Hoang Minh, deputy director of the State Bank of Viet Nam's HCM City branch, said that as of September 2013, just 137 individual clients had signed contracts for loans of VND78.46 billion.

Of this, VND22.6 billion has been disbursed to 58 applicants, he said.

No business has signed a contract for loans from the VND30 trillion package, Minh added.

Many applicants are unable to access loans from the package because they do not have assets to mortgage, thereby defeating the purpose of the loan package, local reports have said.

Although commercial banks have agreed to accept houses built under the VND30 trillion package as mortgage, notary public offices are not notarising the relevant papers.

Commercial banks also want applicants to show their capacity to repay their loans, but for most prospective buyers, the short 10-year term offered for the loans would exert considerable strain on limited financial resources.

$2.2 billion needed to avert further rail crossing tragedies

Over VND46.7 trillion (US$2.2 billion) is needed to build and upgrade facilities at crossings between railway track and roads on nine major routes across Viet Nam by 2020.

This is part of a plan over railroad crossings approved by the Ministry of Transport, aiming to improve road safety and ease traffic at accident-prone crossings.

Under the plan, nine main routes include Ha Noi- HCM City, Yen Vien Town in Ha Noi-Lao Cai Province, Ha Noi-Lang Son Province's Dong Dang Town, Ha Noi's Dong Anh-Thai Nguyen Province's Quan Trieu, Ha Noi's Gia Lam-Hai Phong, Bac Giang Province's Kep Town-Quang Ning Province's Ha Long City, Kep Town-Ha Noi's Luu Xa, Ha Noi's Bac Hong Commune-Ha Noi's Van Dien and Yen Vien-Cai Lan.

The plan targets building 57 viaducts, nearly 400 railroad crossings, upgrading over 560 crossings, erecting over 500 kilometres of barriers to separate railway tracks from roads or residential areas.

Vice chairman of National Committee for Traffic Safety Nguyen Hoang Hiep told Viet Nam News that the implementation of the plan from now until 2020 was necessary in joint efforts to improve traffic safety in Viet Nam.

Each year, the number of people dying in railway accidents accounts for about 2 per cent of all deaths in Viet Nam, and a majority of railway accidents reportedly happen at crossings, especially at illegally-built crossings, he said.

At present, Viet Nam has nearly 3,200 kilometres of railway with about 6,000 railroad crossings. However, just 1,000 were built legally while the rest were built illegally as shortcuts by households who live along railways, he said.

Moreover, proper barriers separating railway track and roads were erected at only one third of the 1,000 legal crossings, and only one third are equipped with warning signals, the other locations have neither barriers or warning signals, he said, adding that poor rail facilities posed high traffic risks.

Hiep said that under the plan, more roads running parallel to the railway would be opened to reduce the number of illegal crossings.

At crowded traffic points, viaducts or vaults could be built, he said, adding that last month, the construction of the project's first three viaducts were kicked off in northern Ninh Binh Province, central Nghe An Province and southern Dong Nai Province.

Hiep urged localities to take more drastic measures to control safety at crossings, as it was likely that they failed to oversee the construction of the illegal crossings. The number of illegal crossing increased from 5,300 in 2011 to 6,000 last year.

Head of Viet Nam Railway Corporation's Railway Safety Management Board Pham Van Binh said that each year, it spends over VND10 billion ($474,000) to correct the problems related to traffic and railways.

Moreover, he said that some accidents damaged trains, causing them to change schedules or arrange other trains to carry passengers or goods.

"Too many railroad crossings lack automatic warning systems and commuters lack proper awareness, which is a threat to traffic safety," he said.

In July, a train from Ha Noi to Hai Phong derailed after a collision with a container truck in northern Hai Duong Province. It was reported that the driver crossed the railway without noticing the approaching train, causing an accident which claimed no loss of life but blocked traffic on the route.

Residents living near the scene in the province's Hong Lac commune said that they saw many fatal accidents involving trains and other vehicles due to the lack of any separating barriers there.

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

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