Banks fear having no borrowers, despite cut rates

Despite the recent cut imposed on lending interest rates, many banks still worry that there will not be many borrowers.

With credit accounting for a large proportion of their total revenue, many banks are on the verge of having lower annual profits than last year, Saigon Tiep Thi newspaper reported.

Vietcombank and Agribank are offering the lowest lending interest rate of only 14.5 percent a year, for borrowers operating in the agriculture and rural, and export sectors.

The two major banks have set a new trend for other commercial banks such as ACB, VIB, and HDBank to cut their rates.

However, despite the reduced interest rates, many bank executives still hold a negative outlook on the market.

For instance, Nguyen Phuoc thanh, CEO of Vietcombank, said this year his bank set a credit growth target of only 15 percent, while the figure assigned by the State Bank of Vietnam is 17 percent.

The main reason is that local businesses will continue to face challenges for their outlets this year, he said.

Last year, Vietcombank focused most of its credit to the export sector. But many of the borrowers fell into a tough spot by the end of last year, and it continued to be on the downward trend from the beginning of this year.

Rice, seafood, cashews, and peppers -- all of them have had their prices reduced on the global market, said Thanh.

“Businesses borrowing capital from Vietcomabnk are struggling to solve the problem of finding customers,” he said.

“Consequently, even when they can access bank loans with lower interest rates, if they have no customers, exporting businesses still cannot survive.”

Thanh admitted that Vietcombank may earn lower profits from credit activity than last year.

“We will try to increase revenues from other activities, but after all, the full-year profit is likely to be affected.”

The profit pressure has burdened many banks recently.

Many small banks have also had to join the race with major banks to cut lending interest rates, while they still have to mobilize deposits at high rates.

A CEO of a Ho Chi Minh City-based bank said his institution has been mobilizing deposits at exorbitant interest rates. As a result, it is not likely for the bank to meet its profit target.

“We have planned to adjust the target this March,” he said.

The chairman of the board of members of Agribank said it would also optimize expenses in administration and operation, to ensure revenues and profits at this hard economic time.

Coastal land uses to be inspected
 
The Ministry of Natural Resources and Environment will inspect land use allocation and leasing in coastal and alluvial areas in the nation's central region beginning next month, and will report findings to the Prime Minister.

Meanwhile, the ministry has asked cities and provinces in the region to review land-related documents to ensure compliance with the Land Law, as well as take drastic measures to punish violations.

The ministry's move is in response to the Prime Minister's directive earlier this month, following an unlawful land seizure in the northern city of Hai Phong's Tien Lang District.

Heavy profit-taking sends volumes soaring

The stock market stepped into a downward correction yesterday after sustaining last week's gains on Monday, as heavy profit-taking pushed up trading values and volumes dramatically.

"The correction was predictable and technically reasonable," an FPT Securities Co analyst wrote on the company's website. "Many investors decided to lock in profits because their shares had risen a great deal in value."

The slump could turn into a buying opportunity for many investors who believed the overall uptrend would continue, he noted

On the HCM City Stock Exchange yesterday, the value of trades climbed to a 14-month high of over VND1.7 trillion (US$82 million), while volume soared 86 per cent over Monday's session to 121.7 million shares.

Meanwhile, the VN-Index slid from its nearly five-month high on Monday to 422.22 points, a decine of 1.44 per cent. Decliners, led by blue chips, outnumbered advancers by three-to-one, with 10 of the 30 leading shares by capitalisation and liquidity dropped to their floor prices, sending the VN30 Index down by over 1 per cent to 480.89.

A few shares managed to buck the sell-off trend. Sacombank (STB) continued to hit the ceiling, generating a volume of 3.88 million shares, while Eximbank (EIB) – the major player in the hostile takeover rumours swirling around Sacombank – also rose by 0.6 per cent with over 4 million shares changing hands. Another 32.5 million EIB shares, worth up to VND579 billion ($27.6 million), were also traded through negotiation.

It was Military Bank (MBB), however, that locked in the pole position as the most-active share on the HCM City market, with 4.77 million shares traded. MBB rose 4.8 per cent to close at VND14,000 ($0.67) a share.

On the Ha Noi Stock Exchange yesterday, the HNX-Index declined by nearly 3 per cent to conclude the session at nearly 68 points, while heavy profit-taking lifted the value of trades to a record high of over VND1 trillion ($48.6 million). Volume rose by 81 per cent to 135.7 million shares.

Continued speculation surrounding Ha Noi Housing Bank (HBB) made it the most-active share nationwide, with volume reaching 40.3 million shares.

Investors were picking up HBB shares in the hopes that it would post gains similar to STB, which has risen by nearly 60 per cent over the past three months, said independent analyst Pham VIet Hung, who predicted that banking shares would likely continue to rise on speculative buys.

Foreign investors picked up a net of VND143.3 billion ($6.8 million) worth of shares on both exchanges yesterday.

Vietinbank plans to raise charter capital

VietinBank (CTG) will increase its charter capital this year from VND20.2 trillion (US$963 million) to VND30.8 trillion ($1.4 billion), an increase of over VND10 trillion, chairman Pham Huy Hung told the bank's annual shareholders meeting in Ha Noi yesterday.

Many shareholders wondered aloud whether such a substantial increase could be achieved, with the stock market in difficult circustances.

But Hung said the plan would call for charter capital to rise to VND26.2 trillion immediately from retained earnings on 2011 profits and the sale of shares representing a 9.6-per-cent interest.

Hung noted that Vietinbank expected to pay a 16-per-cent dividend on last year's profits, but the amount would be paid in shares, allowing an increase in treasury shares to be allocated towards charter capital.

Currently, the State holds 80 per cent of shares in Vietinbank, while domestic and foreign shareholders hold 10 per cent and the International Finance Corporation (IFC) the remainder.

Later this year, the bank would sell a 15-per-cent interest to a foreign strategic investor for an estimated VND4.6 trillion ($219 million), bringing charter capital to over VND30.8 trillion ($1.46 billion). By that time, the State would hold only 68 per cent and VietinBank would have two foreign strategic shareholders.

"To grow effectively will require raising capital to increase the scale of operations," Hung said.

Vietinbank's total assets at the end of 2011 were worth VND460 trillion ($21.9 billion), and the bank also planned to increase this figure to VND550 trillion ($27 billion) this year and $50 billion by 2015.

The bank has set a credit growth target in 2012 of only 17 per cent, down from 23 per cent in 2011, Hung said, and it has been in the process of restructuring its investment portfolios in key State projects, government bonds and construction bonds.

New car import values increase

The new car import volume reached only 2,300 units, down 500 against last month, according to the General Statistics Office.

Despite the drop in volume, the total value of auto imports was US$4 million higher than the previous month, reaching $46 million. The country spent about $88 million on importing 5,100 new cars in the first two months of the year.-

OceanBank wins accuracy award

The Ocean Joint-Stock Commercial Bank (OceanBank) was honoured to receive the Straight – Through – Processing Award (STP Award) granted by Wells Fargo, one of the US leading banks.

Wells Fargo awards the STP Award every year all over the world to the best banks in the settlement with nearly-100-per-cent accuracy.

Recently, the world's leading banking magazine The Asian Banker has named OceanBank in Asia Pacific's Strongest Balance Sheet Top 100 banks.-

Belgians to share port know-how

A seminar on "Belgian Know How in Port Development, Transport Infrastructure and Logistics" is set to kick off in Ha Noi next month.

The seminar co-organised by the Embassy of the Kingdom of Belgium and Viet Nam's Ministry of Transport will be an occasion for Belgium to share experience with Viet Nam in this field.

The event will be part of the activities of a trade mission presided over by Prince Philippe during his visit to Viet Nam next month.-

Global shipbuilding expo launches
 
The 6th International Exhibition on Shipbuilding, Marine Technology and Transportation (Vietship 2012) will be an opportunity for businesses to co-operate in the context of the global economic meltdown.

The three-day event, which kicked off at the National Convention Centre in Ha Noi yesterday, has attracted 300 stalls from more than 200 companies including those from leading marine industry nations such as Japan, South Korea, China, the Netherlands, Poland, Finland, Norway, France, Singapore, Russia and Spain.

In a speech delivered at the opening ceremony, Deputy Prime Minister Hoang Trung Hai said the Government had built a restructuring programme for the shipbuilding industry as well as a strategy to develop the maritime shipping sector.

The Government targeted to develop multi-ownership and technology strategies for Viet Nam's maritime industry, the deputy PM added.

He said the country's shipbuilding sector had had to cope with challenges such as its business and financial management ability, its technology and the global economic crisis.

Hai said he hoped that the national shipbuilding and maritime transport industries would see high growth with the support and co-operation of countries in the sector.

He urged businesses to restructure and ensure their financial health ahead of seeking international investors.

General Director of the Viet Nam Shipbuilding Industry Group (VINASHIN) Truong Van Tuyen said that over 10 years of successful organisation, Vietship had become the focal point of the local and regional sector.

"The exhibition has done much for the prestige and brand development of Viet Nam's shipbuilding industry via the signing of contracts related to shipbuilding for export, investment cooperation, joint ventures and the supply of marine materials and equipment," Tuyen said.

He added that the exhibition would provide an introduction platform for advanced technologies, equipment, services, ship designs and the latest industrial processes in manufacturing.

Nguyen Quoc Anh, VINASHIN deputy general director, said the event had attracted domestic and international investors who are expected to sign deals worth up to US$100 million.

At the exhibition, organised by Vinashin Group and CIS Viet Nam, symposium were held with the theme "Future Market – Opportunities and Challenges" and "Supplier Forum" to discuss future opportunities and challenges related to the shipbuilding industry.

The organising board plans to review and award typical products, services and outstanding exhibition display areas.

VietJet Air set to fly new routes

VietJet Air will open two new routes and increase the number of flights between HCM City and Ha Noi to meet increasing demand from both Vietnamese and international tourists, according to the carrier.

The HCM City – Da Nang route will be inaugurated on April 27 and serviced with two flights per day while the Ha Noi – Nha Trang route, which includes one flight a day, will begin 22 days later.

Flight between HCM City and Ha Noi will be increased from six to eight flights a day. The company also plans to open international flights this year.

Joining the market late last year, the carrier has made 360 flights carrying over 40,000 passengers. VietJet Air is the country's first private carrier offering both domestic and international flights.

Cash pours into HCM City, indices up on both bourses

Money poured into the HCM City bourse this morning, boosting trade value to a record high on this market, while stocks gained on the Ha Noi bourse on lower trading.

On the HCM Stock Exchange, the trading volume rose slightly over yesterday to nearly 126 million shares but value soared to a record high of more than VND2.3 trillion (US$109.5 million), up 35 per cent from yesterday's level of VND1.7 trillion.

The benchmark VN-Index, after falling for most of the morning, managed to post a gain of 0.34 per cent before the closing bell, finishing today at 423.64 points.

Many shares included in the VN30 Index, which tracks the performance of the 30 leading shares by market value and liquidity, hit their ceiling prices, lifting the VN30 by 0.89 per cent to close at 485.18.

They included Eximbank (EIB), Sacombank (STB), food processor Masan Group (MSN), financial Ocean Group (OGC), Phu Nhuan Jewellery (PNJ), Sacombank Securities (SBS) and Vinh Son-Song Hinh Hydropower (VSH).

Gainers outnumbered advancers by 144-92 overall, with Military Bank (MBB), the most-active share in HCM City on a volume of over 6 million shares traded, increasing 2.1 per cent to close at VND14,300 ($0.68).

On the Ha Noi Stock Exchange, the HNX-Index recouped 2.37 per cent from yesterday's loss, concluding today's session at 68.68 points.

Market value decreased nearly 32 per cent from yesterday's record high of more than VND1 trillion to just VND691.5 billion ($32.9 million) today. Volume of trades also declined 38 per cent from yesterday to 84.4 million shares.

Advancers edged decliners by a margin of 154-119.

Ha Noi Housing Bank (HBB) remained at the top as the most-active stock nationwide with another 21 million shares changing hands. It closed unchanged for a second successive day at VND5,700.

Agro-forestry, fisheries exports hit US$3.6 bil

Vietnam earned US$3.6 billion from agro-forestry-seafood exports in the first two months of this year, approximately the same as last year’s figure.

The Ministry of Agriculture and Rural Development noted a remarkable decrease of 13.2 percent in the export value of key agricultural products with US$2 billion, as a result of dropping prices in the world market.

Except for pepper, cashew nuts and tea, most key agricultural products earned less than in the same period last year.

The country shipped 756,000 tonnes of rice overseas in the period for almost US$437 million, down 26.6 percent in volume and 16.1 percent in value.

Although Indonesia remains Vietnam’s leading rice importer, its purchase has dropped by one third in terms of both volume and value.

Coffee export stood at 312,000 tonnes worth US$632 million, a year-on-year decrease of 13 percent in volume and 11.8 percent in value, as major markets such as Italy and Belgium saw consumption decline by half or two thirds from a year ago.

Rubber was also no exception, with only 80,000 tonnes of rubber shipped abroad for US$220 million, down 23.6 percent in value.

Meanwhile, tea export reached 19,000 tonnes, earning US$28 million, up 14.8 percent in volume and 19.2 percent in value.

The pepper industry brought in nearly US$42 million from selling 6,000 tonnes, a year-on-year surge of 40 percent in value.

Forestry product and wooden furniture brought home US$626 million, a rise of 18.7 percent. Meanwhile, seafood export value was US$763 million, up 12.7 percent against the same period last year.

Vietnam invests in Mozambique’s agriculture

More than 30,000 hectares of land in Nampula province will be handed over to Vietnam’s agricultural investors, according to Mozambique News Agency.

The Agency reported that a delegation of the Binh Phuoc provincial People’s Committee and some local businesses visited three districts in Nampula in mid-February and they were very impressed with the agricultural potential there.

Chairman of the provincial People’s Committee Truong Tan Thieu said that ecological conditions in the districts are suitable for growing cashew and cassava. In addition, Nampula has Nacala deep water port which helps facilitate exports.

Thieu also pointed out limitations in infrastructure, such as the poor transport system, shortages of electricity and water supply and lack of skilled workers.

Nampula Governor Felismino Tocoli acknowledged these shortcomings and emphasized that the government of Mozambique has also implemented some development policies to resolve those difficulties.

Several memoranda of understanding were signed to implement cooperative agreements between Nampula and Binh Phuoc reached during Tocoli’s visit to the Vietnamese locality in January 2011.

Under the latest agreement, Nampula authorities will provide Vietnamese investors with 10,000 hectares of land in Mogovolas district to grow cashew and another 30 hectares to build a cashew nut processing plant.

The investors will also be provided with 20,000 hectares to grow cassava in Ribaue district and authorized to exploit forests and build a wood processing factory in Meconta district.

The Vietnamese side will also supply cashew seedlings and disease resistant cassava and send its experienced specialists, engineers and scientists to help develop these crops in the African nation.

Japanese businesses explore investment opportunities in Haiphong

Haiphong will create the most favourable conditions for Japanese investors to operate in the city, said Chairman of the municipal People’s Committee Duong Anh Dien.

Dien made the commitment on February 25 while receiving a delegation of businesspeople from Japan’s Kansai region who are seeking investment opportunities in the field of the support industry.

At the meeting, Japanese businesses expressed concern about difficulties in investing in the city, including the investment environment, infrastructure, and living conditions for engineers.

In addition, they also worried about administrative procedures related to the granting of investment licenses, the building of an open legal corridor and the improvement of human resources for businesses.

If these concerns are effectively addressed, Japanese businesses will begin promoting investment in Haiphong, they said.

Currently, Haiphong has attracted 400 foreign-invested projects capitalized at US$5.8 billion, including 82 Japanese-funded projects totalling US$2.1 billion. This year, the city strives to boost investment promotion activities to attract over US$500 million in FDI capital.

In early February, the city granted an investment license to Japan’s Bridgestone Group to implement a US$500 million project to produce various kinds of automobile tyres.

Mr Dien emphasized that to lure more foreign investors, in September 2011, the Municipal People’s Committee released a decree on strengthening FDI attraction and further investing in infrastructure upgrade.

Apart from the current National Highway 5 connecting Hanoi to Hai Phong, the city is also getting down to work on the nation’s most modern highway with six lanes between the two cities, which is scheduled for completion in 2014.

Moreover, the city will begin construction on the first two wharves of Lach Huyen International Gateway Port designed to receive 100,000 DWT ships by 2014, build a new 3,000 metre runway at Cat Bi Airport, and upgrade infrastructure at its industrial parks to welcome foreign investors in the future.

Japanese company selects Vietnam as key production base

Japan’s Mitsui Engineering & Shipbuilding Company, Ltd. (MES) aims to make Vietnam a key production base for bridges and steel structures in order to expand its share in the Southeast Asian market.

Since 1998, MES and the Thang Long Construction Corporation established a joint venture factory in Hanoi to produce steel structures such as bridges, water gates, and frames for high-rise buildings.

MES plans to invest hundreds of millions of Japanese yen to increase the factory’s annual capacity from 40,000 to 60,000 tonnes within the next two years and aims to win contracts to build and install railways and bridges in the north of Vietnam.

Earlier, Japanese joint contractors Taisei Construction Corporation and MES won two bidding packages for the Vietnam Railway Corporation’s project to improve the safety of railway bridges on the Hanoi-HCM City route. MES will produce all the steel dome structures for the bridges at its factory in Hanoi.

MES also plans to produce steel structures for other bridges in Vietnam and prepare for major large scale infrastructure projects such as power plants in Vietnam and the South East Asian region.

Italian businesses eye Vietnamese market

A number of Italian businesses attended a seminar in Rome on February 24 to learn about the tools for success in doing business in Vietnam.

The event was jointly organized by the Vietnamese embassy in Italy, the Association of Vietnamese businesspersons in Italy (ASSEOVI), and the Modena provincial chapter of the Italian employers’ federation, Confindustria.

At the seminar, Ambassador Dang Khanh Thoai highlighted Vietnam's high economic growth, political stability, and abundant, low-cost labour, as well as incentives for foreign investors and major advantages of the Vietnamese market.

However, investment cooperation ties between Italy and Vietnam have not been on a par with their potential, Thoai said, calling for more foreign investment in his country.

Trade Counsellor Tran Thanh Hai gave a presentation providing information and statistics about the political, economic, and social situation in Vietnam, emphasizing that conditions in Vietnam are favourable for Italian businesses, particularly those from Modena province.

ASSEOVI President Pham Van Hong said his association is willing to serve as a link for trade between the two countries.

Dr Sergio Sassi, Vice Head of Modena’s Confindustria, said the seminar was very useful for Italian investors.

He said he went to Vietnam two years ago and realized the country has great potential, in addition to a favourable investment climate. He also predicted more Italian businesses will invest in Vietnam, following the success of enterprises like Piaggio.

US$1 bln in FDI disbursed in two months

US$1 billion worth of foreign direct investment has been disbursed in the first two months of this year, equivalent to 91 percent of the same period last year, reported the Foreign Investment Agency.

Vietnam has also licensed 65 new FDI projects capitalised at US$910.9 million, and 25 existing projects with an additional US$320 million in the review period.

As a result, the country has attracted US$1.23 billion in FDI in two months, or 45 percent of the figure a year ago.

The processing and manufacturing sectors topped the project list, registering nearly US$12 billion in capital. The construction sector came second with just US$12.5 million.

Among the investment destinations, the northern port city of Haiphong took the lead, attracting US$605 million, followed by Khanh Hoa, Binh Duong and Dong Nai provinces.

As many as 23 countries and territories have invested in Vietnam in the past two months, and Japan became the largest foreign investor, luring nearly US$1.1 billion in capital, or 87.5 percent of the total.   

Instead of targeting capital amounts, Vietnam will improve the disbursement of FDI capital and the efficiency of investment projects in 2012, according to the Ministry of Planning and Investment.

Dung Quat EZ offers incentives to RoK businesses

The Dung Quat Economic Zone Authority (DEZA) will help businesses from the Republic of Korea’s Ulsan city to explore opportunities and invest in all areas in the zone.

Major potential investment areas are petrochemistry, shipbuilding, mechanical engineering, manufacturing of equipment for heavy industry, and automobile assembly.

A memorandum of understanding (MoU) on cooperation and development to this effect was signed by DEZA Management and representatives from the Korea Industrial Complex Corps. (KICOX) and Ulsan city, an industrial powerhouse, in Quang Ngai province on February 25.  

DEZA will create a ready-to-use land fund of approximately 50ha at the Pho Dong Industrial Park within the Dung Quat Economic Zone (DEZ) for heavy industry and mechanical engineering projects. It will also offer upmarket places and preferential land rentals to businesses introduced by KICOX.

In addition, it will organise training courses on technical affairs and the Korean language for local workers.  

In turn, KICOX will provide businesses from the RoK and the Ulsan region in particular with information about Dung Quat Economic Zone, its investment mechanism and preferences.

Both sides will jointly hold employment fairs for their businesses to explore and establish partnerships.

The MoU will be implemented over two years.

Since its establishment 15 years ago, DEZ in the central province of Quang Ngai has attracted 111 registered investment projects with a total capitalisation of nearly US$8 billion. Of the total, 67 projects, valued at nearly US$5 billion, have been operational, making a significant contribution to the provincial economy.

The zone is luring investment in heavy industrial projects from RoK companies such as Doosan-Vina, Kumwoo, KIC, Yong Ho Vina and Uneed Electro.

Ulsan Eco-Industrial Zone was established in 1964, specialising in machinery manufacturing, equipment and components for heavy industry. Currently as many as 1,200 businesses are operating in the zone.

Vietnam Airlines discounts Hanoi-Guangzhou flights

National flag carrier Vietnam Airlines has announced that it will offer special promotional discounts on its Hanoi-Guangzhou air route.

Accordingly, passengers in Vietnam who buy Economy Class tickets for flights between the two cities from now until March 31 will get a free ticket on the same route.

According to the promotion, customers who purchase these tickets cannot change their flights or booked seats, extend their tickets or receive a refund. Those who wish to change their flights will have to pay US$20 for the ticket they have bought but, there is no charge for changing the free tickets.

A return ticket on the Hanoi-Guangzhou route is US$199 excluding taxes and other fees.

Locally made products encouraged nationwide

The national steering committee for the 'Vietnamese people use Vietnamese goods' campaign met on February 24 to evaluate the movement's results in 2011 and discuss accelerating the campaign in 2012.

This year, the committee will continue to popularize the Party Politburo’s campaign guidelines and advise provincial Party Committees on its implementation.

The Quang Ngai provincial Department of Industry and Trade has received 2,046 dossiers from businesses registering to participate in promotional activities.

It also allowed the organization of two fairs, which attracted 160 businesses to introduce their products.

One company has coordinated with the provincial farmers association to arrange 15 trips to bring Vietnamese goods to rural areas.

Also on February 24 and 25, the Ba Ria-Vung Tau province trade promotion centre and 28 local businesses brought Vietnamese goods to Long Tan commune in Dat Do district offering a 10-30 percent discount and other incentive for customers.

Quang Ninh grants license to foreign-invested projects

The northern province of Quang Ninh granted licenses to three foreign invested projects on February 24.

They include a US$47 million project to build a flour mill by VFM-Wilmar Flour Mills Co, Ltd, a US$182 million project to invest in building infrastructure of Hoanh Bo industrial park by Geleximco Group, and a US$43 million project to build Lam Ngoc villa complex by Tuan Chau Group.

In addition, the province also signed memorandums of understanding to cooperate with the Lao province Luong PraBang, Vietnam Airlines, FPT joint stock company, the military-run Viettel company, Bank for Foreign Trade of Vietnam (Vietcombank) and Vietnam Bank for Industry and Trade (Vietinbank).

The same day, the province introduced nearly 20 projects in such fields as tourism and entertainment, ports, border gates, infrastructure, training, and supply of high quality human resources.

Pham Minh Chinh, Secretary of the provincial Party Committee affirmed that the local authorities will help enterprises iron out snags by boosting administrative reforms, offering incentives, and creating favourable conditions for businesses to seek investment opportunities and effectively implement projects in the province.  

Function transfer for realty projects approved, concerns raised

The Ho Chi Minh City authorities have approved a proposal to transfer the functions of future real estate projects in the city.

Accordingly, office building and hotel projects can be transferred into residential projects for sale or lease, and serviced apartment projects can be sold.

The city government has urged the Department of Planning and Architecture to finish the detailed zoning map covering 930 hectares in District1, 3, 4 and Binh Thanh so that it can be submitted to the standing committee of the city Party’s Committee by March 15, 2012.

The zoning map’s slow progress (it was started 4 years ago) has slowed down the socioeconomic development processing of the area.

The HCMC People’s Committee has also asked the department to consider a balance in population distribution, road networks and the financing sources for the development of the zoning map.

This recent move of the city’s government aims at helping realty developers clear unsold stock, thus supporting the banking system recover bad debts they’ve lent to the developers.

But since a large number of such projects are located in HCMC the central business districts (CBDs), many experts have raised concerns that the approval may burden the traffic networks that are under high pressure in the city.

In the past, many high-rise buildings in CBDs have been limited from being residential projects for fear that they will lead to worsening traffic congestion in the city.

Tran Chi Dung, director of the Department of Planning and Architecture, told Tuoi Tre that many real estate developers have submitted the plan to the department, and then it has been sent to the city government for approval.

Around ten projects have obtained construction licenses but have yet to break ground, he said.

Regarding the concerns over traffic pressure, Dung said the department would take them into consideration.

According to department’s calculation, there is likely to be no burden for the CBDs’ traffic networks since people may not move much when living right there.

Regarding new public buildings to serve new residential projects, Dung said they are still in the general mapping process.

“Each of the projects proposed for function transference will be scanned thoroughly, so that only those meeting our standards will get the green light, not all of them,” Dung said.

Architect Luu Trong Hai of HCMC Architect Association said the function transference should not be approved because it will increase the population in the CBDs, thus overloading the CBDs’ infrastructure.

Hai suggested the city government should only give nods for the transference into residential projects for lease only.

Once the economy recovers, those projects can become office buildings as they used to.

The approval should be given for each project with great care so that there will be no surplus in serviced apartments, which may trigger a new wave of function transference.

If office buildings and hotels are transferred into residential projects, other urban residential standards, like the road systems, surrounding plants, and utility networks must also be updated and changed accordingly to fit into the new ecology, said a state official of Urban Development Department under the Ministry of Construction.

The city government should consider a new zoning map for the function transference, and it should take a cautious approach in order not to put more pressure on CBDs’ infrastructure.

There are around 100 such projects planned to be built around HCMC’s CBDs.

As soon as the liquidity constraint of the banking system is eased, which will bring down lending rates, the realty sector may see light at the end of the tunnel, said state officials at a recent meeting.

Both Le Xuan Nghia, deputy head of the National Financial Supervisory Committee, and Dang Hung Vo, former deputy minister of Natural Resources and Environment, had the same thought.

Liquidity constraint is the key problem for the local banking system, Nghia said.

We should not expect the inflow of foreign direct investment into the sector, since many foreigners are expecting the price to slip further, Vo said.

But there will be no sudden price drop and selloffs here in Vietnam, Vo said, adding that many that have lowered the prices are situated at unfavorable locations.

The market cannot recover until the 3rd quarter of this year when the liquidity problem is finally addressed, Vo said.

Once the money from the banking system returns to the market, the inflow of money from other segments will then pour in, he added.

Wood exporters forge ahead despite challenges

Local wood firms are trying to maintain their major export markets and expand to potential ones in the midst of economic difficulties this year.

Nguyen Chien Thang, chairman of the HCMC Handicraft and Wood Industry Association (Hawa), said in a press conference introducing the Vietnam International Furniture & Home Accessories Fair 2012 (Vifa) that orders from importers were not a big headache for local wood firms as most of them have got orders until the second quarter.

However, the biggest problem of the association’s member firms is increasing production costs. Most raw material and production costs have increased by around 11 percent from the same period last year while the selling price has only risen by 5 percent - 7 percent.

“Firms will have to cut production costs, create added value for products through designing, changing product models and marketing strategies to keep their major markets and expand to potential ones,” said Thang.

Huynh Van Hanh, vice chairman of Hawa, said that export turnover to Japan increased by 27 percent in the second half of last year and would continue to rise this year as Japan had to reconstruct after the serious tsunami disaster last March.

Meanwhile, consumption did not increase much in the U.S. and even declined by 12 percent in Europe.

However, China, South Africa and India will be potential markets for local wood firms due to large populations and strong economic growths, according to Hawa.

Wood export turnover reached US$3.9 billion last year, up 14.4 percent against 2010 and equivalent to 98 percent of the year’s target. The wood sector only targets to obtain US$4 billion in export turnover this year.

This year the woodwork industry should continue to consider the US as a key export market. Exports to this country have increased sharply in recent years. Last year the US accounted for nearly half of Vietnam's total wood product exports.

As for the EU market, despite its public debt problems and other difficulties, it remains a good market for Vietnamese wood products.

Besides, enterprises should take advantage of the Viet Nam-Japan Economic Partnership Agreement to expand exports to that country.

They should focus more on emerging markets such as ASEAN members, China, South America, India and the Middle East, especially ASEAN countries due to the preferential tariffs there.

The Vifa 2012 will still take place next month though several economies, especially in Europe, are being affected by the debt crisis and wood products are not basic commodities.

The organizers thus hope for the same number of participating companies and visitors as last year’s event.

Besides, the organizers will open Factory Visit Tour to help customers visit factories and showrooms of wood producers in Binh Duong, Dong Nai and Long An provinces.

The 5th Vifa 2012 will take place from March 11-14 in HCMC’s District 7 featuring 600 booths of 125 firms.

The fair is part of the many furniture fairs of the ASEAN Furniture Industry Council (AFIC) organized in Singapore, Thailand, Malaysia, Indonesia, the Philippines and Myanmar.

Steel association remain confident about growth

The Vietnam Steel Association (VSA) and major industry players insisted on the growth target of 3 percent – 4 percent this year despite the suggestion from several steelmakers to lower the figure.

At a meeting of 6 big steel producers and VSA in Hanoi on Wednesday, some said the growth target of 3 percent - 4 percent would be difficult to achieve.

Steel consumption has plunged for the past 3 years, from 11.7 million tons in 2009 to 11 million tons in 2010 and 9.9 million tons last year.

However, leading steel firms said steel consumption would grow again in the later half of 2012.

According to chairman Pham Chi Cuong of VSA, steelmakers expected the gross domestic product (GDP) growth target of 6 percent set by the Government would create opportunities for efficient investment projects, which would lead rising demands for essentials goods, including steel.

Moreover, the association’s analysis showed that though steel consumption volume dropped by 10 percent in 2011, the total output of the industry only dwindled by 1 percent, meaning enterprises still maintained stable production.

The decline was mostly seen in import steel products.

To make it easier for steel makers, management agencies must ensure fair conditions for local steel producers to develop with foreign-invested ones, said Do Duy Thai, general director of Viet Steel Co.

He said the current problem of the steel industry wasn’t caused by locally -invested projects but the foot-dragging foreign direct investment (FDI) projects that occupy a large portion of land sites and seaports.

Meanwhile, local enterprises with huge demands for expansion are left with few development opportunities.

Promoting steel exports should be another significant outlet for the local industry.

Tran Tuan Duong, general director of Hoa Phat Group, said local exporters should pursue international lawsuits regarding antidumping petitions and should not abandon export markets because of such obstacles.

Given tougher competition in the domestic market, promoting consumption in other markets is necessary, Duong said.

In 2011, the association of the U.S. steel pipe manufacturers initiated an anti-dumping and anti-subsidy lawsuit against steel pipe products imported from Vietnam.

Several local steel enterprises are still dealing with this lawsuit.

Local partner moves to make a spectacular slap on BigC

The French-invested retailer BigC last week received a heavy slap from one of its Vietnamese partners.

Tasco Thien Truong Joint Stock Company, based in Nam Dinh province, forced BigC to close its 4,300-square metre supermarket in Nam Dinh city for one day by placing a 35-metre long crane at the shopping centre’s main gate and a excavator at the auxiliary gate.

EB Nam Dinh Company Limited, on behalf of BigC, and Tasco opened this $4 million supermarket in early January, 2011. This BigC’s 14th supermarket in Vietnam sits on land owned by Tasco.

A source from BigC Thang Long in Hanoi said that although the supermarket had been functioning since January 2011, some of the procedures for the BigC-Tasco cooperative effort have not been completed and some matters required additional negotiations.

“However, instead of negotiating, Tasco decided to park large pieces of construction equipment at the entrances of BigC. This was an illegal action and one that was unhealthy in terms of business. It must be said that the provincial authorities welcome BigC’s business presence in Nam Dinh,” the source said.

“BigC is not in the wrong and we have and will continue to abide by all Vietnamese laws,” the source stated. The source did not comment on when the remaining procedures would be completed. But it said that BigC would not be intimidated by such extreme and untoward action by Tasco because BigC is a “large business enterprise with extensive business experience.”

“This is the second time that Tasco has attempted to do a nasty trick to BigC. The first time Tasco attempted to do the same thing but we stopped them,” the source said.

Local media quoted a Tasco representative as saying that EB Nam Dinh had intentionally delayed completing necessary procedures which would result in the supermarket site being transferred to EB Nam Dinh. In addition, it was charged that EB Nam Dinh interjected a number of items that were not in the original agreement between the two sides even though the supermarket had been operating on EB Nam Dinh’s land for more than one year.

The BigC Thang Long source argued: “Tasco should think about why the final procedures have been delayed. It must bear responsibility for this uncomfortable situation.” Further negotiations between the parties would take place.