Rice prices surge to one-year highs

Rice prices in the Mekong Delta have soared to one-year highs after spiking by around VND400 per kilo in recent days.

A trader in the region told the Daily that rice exporters in Dong Thap and An Giang provinces are buying IR50404 rice for VND7,500-7,600 a kilo and long-grain rice OM4218 and OM5451 for VND7,800-7,900, increasing VND400 against last week.  

Fresh paddy of the type IR50404 sold for VND5,000-5,100 a kilo over the weekend in An Giang Province and around VND4,950-5,000 elsewhere.

Nguyen Thanh Phong, director of Van Loi 2 Company in Tien Giang Province, said the increases in domestic rice prices had resulted from rising demand on global markets, especially China and the Philippines, amid an undersupply.

On the other hand, specialist Nguyen Dinh Bich said rice prices would inch up slowly in the coming time as Thailand would get back to the rice export market and the drought in India would ease.

However, local rice exporters have offered higher prices in the international market due to the rising demand of importers and the limited supply on the home market.

The export price of 5% broken rice ranges from US$450 to US$460 per ton and 25% broken rice is US$400-410 per ton, a rise of US$15-20 per ton against last week and a year-on-year increase of US$60 per ton.

Meanwhile, Vietnamese jasmine rice is offered at US$605-615 a ton, an increase of US$10 versus last week.

The Vietnam Food Association (VFA) said that in the first three weeks of July, its member enterprises delivered nearly 345,000 tons of rice to fetch US$150 million in revenue. In the year to July 22, the country had shipped 3.3 million tons of rice worth US$1.4 billion.

Vietnam is currently the third biggest rice exporter after Thailand and India.

Specifically, as of mid-July, Thailand topped the world’s rice export with 5.4 million tons, a surge of 57% year-on-year; while India shipped 4.8 million tons, a decline of 11.5% year-on-year and Vietnam 3.5 million tons, a drop of 11% against the same period.

Casino prizes may now be paid in foreign currencies

The Governor of the State Bank of Vietnam has issued a draft circular which allows prize-winners at casino to receive their payouts in foreign currencies.

Currently, casinos in Vietnam are only open to foreigners. When casinos were required to pay out all prizes in Vietnamese dong, it was very difficult for prize-winners to take their winnings back home.

Now lucky customers may have a few more options. In case players wish to receive their prize money in a foreign currency via transfer, it can be transferred either to the account of the player opened at a bank in Vietnam or to an overseas account.

Banks are required to keep careful records of all such transactions. The new regulation also stipulates that casinos keep bank accounts in foreign currencies to facilitate these transactions.

Contractors start work on underground part of Metro Line No. 1

A consortium of Shimizu-Meade contractors has begun work on a 1.8-kilometer underground track from the City Opera House to Ba Son Shipyard in District 1, HCMC as part of Metro Line No. 1.

This track belongs to package 1B, which Tuoi Tre newspaper said costs more than US$229 million. It is the second package of the 19.7-kilometer-long line to get off the ground.

The line connects Ben Thanh Market in downtown HCMC and Suoi Tien Theme Park in District 9.

In August 2012, work began on the elevated part of Metro Line No. 1 stretching 17.1 kilometers from Ba Son Shipyard to Suoi Tien Park.

Contractors commenced construction of the station in front of the City Opera House and are expected to complete it in March next year when Nguyen Hue Boulevard has already been upgraded, according to the HCMC Management Authority for Urban Railways.

The 190-meter-long, 26-meter-wide station comprises a waiting lounge, ticketing booths, automated ticket scanning gates, restrooms and information corners on the first floor; metro tracks on the second and fourth floors; offices for staff, a disaster control center, engine and electricity management rooms, ventilators and sewage pump systems on the third floor.

Escalators will be installed for passengers to move up and down the station while lifts will serve the disabled, the elderly and passengers with infants. There will be also a direction guidance system for the blind.

After the construction of the Opera House station, the contractors will build two pairs of underground tracks linking the station and Ba Son Shipyard.

As scheduled, the underground track will be completed within 56 months of construction.

Enterprise Law revisions discussed

A revised Enterprise Law will motivate enterprises and create a transparent business climate, policy-makers and economists have affirmed.

This was debated in Hanoi on July 29 during a workshop to forecast the impact of the amended Enterprise Law from the perspective of a global business index in 2013.

At the workshop, delegates focused on the shortcomings of the Enterprises Law 2005, and outlined proposals and petitions for its revision to make it more transparent and fair for businesses and people.

Lawyer Vu Xuan Tien said there is a need to revise and supplement some contents of the revised Enterprise Law to create conditions favourable to enterprises and people who are interested in doing business. Specifically, inspections should be conducted on businesses a year after getting the certificate of business registration.

Tien said that State-owned enterprises should not be permitted to get directly involved in advising and making policies or in controlling and regulating the market, and performing other management tasks, so as to prevent monopoly. This is damaging the interests of other businesses, as is the case at present.

Luong Minh Huan, of the Institute for Business Development, attributed the dissolution or temporary halt in production of a large number of businesses to poor inspection after registration and limited support conditions.

Huan said, compared with regional countries, Vietnam's business conditions are lagging behind with regard to finance, support programmes from the government, and business support services.

He added that apart from simplifying the business procedures and making transparent business policies, relevant bodies needed to enhance inspections after registration and supervise business performances.

Pham Thi Thu Hang, VCCI General Secretary, said after eight years of implementation, the Enterprise Law 2005 still reveals deficiencies and limitations that needed revamping if the quality of business has to be improved.

In the last three years, the number of businesses that have shut down or dissolved remained high. As of the first quarter this year, of the 790,000 newly-registered businesses, more than 296,000 businesses were dissolved or had stopped production.

The problem mentioned above has forced relevant bodies to reconsider the existing business conditions to see whether the Enterprise Law facilitated business or not, Hang said.

HCM City to host livestock, feed expo in October

Vietnam's most important international feed, livestock, and meat industry exhibition, the VietStock Expo and Forum, will be held in HCM City in October.

At the three-day show at the Sai Gon Exhibition and Convention Centre in District 7, visitors will be able to establish contact with major industry players, get hands-on advice, and see the latest technologies and products.

They will also have the chance to learn about the livestock and feed business through conferences on urgent issues facing the sector.

Hoang Kim Giao, director general of the Department of Livestock Production, said his agency has been working with the expo since its inaugural year in 2004.

"Widely recorgnised as Vietnam's premier feed, livestock, and meat industry event, the 7th VietStock will be much more comprehensive and professional not only in terms of size and scale but also because of the latest technologies that will be introduced at the show and the gathering of big corporations, companies, experts, and farmers from across the region."

This year's theme is "restructuring the livestock industry for sustainable development."

VietStock is expected to attract 250 companies from over 30 countries and territories.

Truong Hai Auto posts huge profit

Truong Hai Auto Corporation reported a huge net profit of VND1.245 trillion (US$59 million) in the first half of this year. This is even higher than last year's profit of nearly VND1.140 trillion ($54 million).

In the second quarter alone, Truong Hai Auto earned a pre-tax profit of VND743 billion ($35.2 million).

After six months, the company has completed more than 67 per cent of its yearly profit target, according to a report on the Tri Thuc Tre website.

Recovery of the auto market helped boost sales. According to a report by the Vietnam Automobile Manufacturers' Association, sales by members reached 54,986 vehicles in the first six months of the year, an increase of 27 per cent year-on-year.

Truong Hai Auto led the market with sales of 17,851 vehicles, a year-on-year rise of 40 per cent, which accounted for 32.5 per cent of the market shares. It even outperformed Toyota (31.8 per cent), Ford (9 per cent) and Honda (4.7 per cent) thanks to strong sales of KIA and Mazda vehicles.

Despite huge profits, annual corporate income tax filed by the company is very low and has not exceeded VND40 billion ($2 million) a year since 2009.

Most of the company's production and assembly is performed at the Chu Lai Economic Zone where it enjoys preferential investment policies on corporate income tax, personal income tax and import tariffs.

Ending June this year, it paid VND807 billion ($38 million) in taxes payable to the State Budget.

The corporation, Viet Nam's biggest local auto firm with a charter capital of VND3.525 trillion ($167 million), is listing shares on the Over-The-Counter market under the code of THA. Total outstanding shares on the market are 250 million.

The corporation has a plan of debuting shares on the stock exchange, but it has been delayed for several years.

Pork prices rise to ensure farmers make a profit

The Department of Finance has allowed companies under the market stability programme 2014 to raise prices by 5 per cent for five pork products from July 23.

The action was taken due to an increase by 10 per cent in input prices. It complies with the price adjustment policy.

The prices will be kept stabilised until May 31 next year. They include VND96,000-kg for thigh and VND87,000-kg for shoulder.

Farmers should make profits with these prices and be motivated to improve their business after a long period of loss, said the chairman of Dong Nai Breeding Association, Nguyen Tri Cong.

HCM City calls for Korean investors

There are a number of business fields in HCMC where South Korean companies from Busan City can invest, HCMC vice chairman Tat Thanh Cang said at a meeting with Busan vice mayor Kim Jong-hae last week.

Busan investors can explore opportunities in supporting industries, public transportation, biotechnology, high-technology healthcare, metro development and other fields where the Korean city is strong.

Cang said the two cities have posted achievements in economic, cultural, voluntary healthcare and sport cooperation in the past 20 years of their relations.

Kim expected both cities will organize many more investment, trade and tourism programs in the upcoming time.

VND30-trillion urban area to go up at Saigon Newport site

Tan Lien Phat Company under Vingroup Joint Stock Company (Vingroup) has broken ground for a multi-functional urban area called Vinhomes Tan Cang at a total cost of VND30 trillion at the Saigon Newport site in HCMC’s Binh Thanh District.

High-class villas, schools and a Vinmec international general hospital of the project covering nearly 43 hectares are expected to go into operation next year. The entire complex including the 81-storey Landmark tower will be inaugurated in 2017.

Vingroup boasted that the Landmark skyscraper comprising serviced apartments and offices for lease will be the highest building in Vietnam when it is put into service.

In February this year, the HCMC government approved a detailed scale-1/500 zoning plan for the project incorporating cultural and entertainment facilities and a multi-functional urban area able to accommodate 16,000 residents.

Saigon Newport Corporation has informed shipping lines and customers of a road map to halt a number of services to facilitate construction of the modern complex. The company has stopped taking empty containers at the terminal since the beginning of this month and will stop all the warehousing services from next May.

Vingroup was chosen by Saigon Newport Corporation as the developer of the urban complex overlooking Saigon River.

Vingroup said at the ground-breaking ceremony last Saturday that the Vinhomes Tan Cang multi-functional complex will have a construction ratio of 23% of the total area, 13.8 hectares for greenery, areas for luxury apartments and villas, offices for lease, serviced apartments, shops and other facilities.

Vingroup will also open a 40,000-square-meter Vincom center in the new urban complex to meet the needs of residents and visitors for shopping and entertainment. There will be department store, food court, supermarket, swimming pool, cinema, and an indoor skating rink, among others.

Vingroup said residents of Vinhomes Tan Cang will be given free management service for 10 years plus complementary services for swimming pool, repair and household services, and property lease.

For better implementation of ODA programs, projects

PM Nguyen Tan Dung has approved an Action Plan to improve the implementation of programs/projects using official development assistance and preferential capital between 2014 and 2015.

The Plan covers six main tasks: Composition of strategies and policies on the ODA and preferential capital, completion of the legal framework and mechanism on the ODA and preferential capital, improvement of the quality of programs/projects and progress of signing international treaties, enhancement of management capacity of organizations in charge of project implementation as well as responsibility of all levels in dealing with difficulties and obstacles, strengthening transparency and anti-corruption and supervision and evaluation, and acceleration of supervision and evaluation.

The Ministry of Planning and Investment is responsible for developing orientations for luring, managing and using ODA and preferential capital in the phase from 2016-2020.

The Ministry of Foreign Affairs will design the PM’s draft Decision on acceleration of signing and realizing international treaties on the ODA by the first quarter of 2015.

The Ministry of Natural Resources and Environment is in charged of regulations on site clearance, compensation, resettlement applicable to programs/projects using ODA and preferential loans.

HCM City targets higher budget revenue in 2015

The Ho Chi Minh City local government has mapped out a plan to boost budget collections for 2015, with domestic revenues targeted to rise 14 -16 percent and earnings from export and import to increase 6-8 percent, the Saigon Times Daily reported on July 30.

The target was pointed out in the city’s budget plan for 2015 issued by the HCM City government last weekend.

In 2014, the total revenue of HCM City is estimated at 226.3 trillion VND, or 0.53 percent lower than in 2013. Of the figure, domestic revenues are expected to contribute 124.2 trillion VND, while some 74.8 trillion VND will come from exports and imports, and 27.3 trillion VND from crude oil.

The total revenue this year to date has amounted to 148.5 trillion VND, or 14.3 percent higher than the same period last year. Domestic sources generated 81.89 trillion VND and export-import tax collections contributed 48.5 trillion VND, rising 17.2 percent and 15.8 percent compared to 2013, respectively.

According to the HCM City Department of Finance, the increasing amount of tax collections is attributed to greater efforts to attract foreign investment, high consumption of consumer goods, cars, and oil and gas revenues. Other sources such as personal income tax, registration charges and land use fees are also higher.

Besides, the recovery of many manufacturing firms had positive impacts on the city’s revenues.

Speaking at a conference in June on the city’s socio-economic performance in this year’s first half, Chairman of the HCM City People’s Committee Le Hoang Quan expected the local economic recovery since 2013 will continue to gain tempo in the coming years.

Fifth fishing union set up in Binh Thuan province

The Binh Tan Fishing Union, the fifth of its kind in the central coastal province of Binh Thuan, made debut in La Gi commune on July 29.

The union gathers 150 fishermen working on 15 vessels so that they can help one another in case of natural disasters and other problems arising at sea.

At the launching ceremony, representatives from businesses and organisations presented gifts in the form of ship and life insurance as well as equipment worth nearly 1.2 billion VND (57,142 USD) in total to members of the new union.

Binh Thuan has one of the largest fishing fleets in the country with more than 7,000 high capacity vessels and over 50,000 fishermen, who catch some 180,000 tonnes of seafood every year.

Five fishing unions have been set up so far in the province with 69 ships and 750 members. Besides the newly-established Binh Tan union, the other four are operating in Phan Thiet, Tuy Phong and Phu Quy island district.

German businesses positive on VN’s economic outlook: survey

German businesses overall are positive on the economic outlook in Vietnam, according to the ASEAN Business Climate Survey 2014 conducted by the network of German Chambers of Industry and Commerce in ASEAN.

German companies have high expectations for sales, production, workforce demand and capital expenditures in 2015.

Around 50 percent of those in Vietnam said they have done better compared to last year and expect to continue this strong run, especially on the sales, where 56 percent of the respondents forecast an increase over the next 12 months.

Meanwhile, 60 percent of them intend to increase their workforce in 2015 and keep their capital expenditure high.

The survey was conducted amongst German companies in May 2014. The respondents in Vietnam mainly represented the industries (48 percent), services (35 percent), trading (9 percent), consultancy (6 percent) and testing certification (3 percent).

The questions focused on business confidence, growth expectations, investments, and company indicators comparing the current situation with the past year and forecasts for the year ahead. Respondents were also asked on their views of the current overall economy.

Dong Nai: footwear export fetches over 1.1 billion USD

The southern province of Dong Nai earned more than 1.1 billion USD from footwear export in the first seven months of this year, up 12.8 percent year-on-year.

According to Director of the provincial Department of Industry and Trade Le Van Danh, in July alone, the export of this product brought about 167 million USD to the province, up 16.4 percent over the previous month and 5.1 percent compared to a year earlier.

He said that growth was seen in almost all markets, led by the Republic of Korea with 323 million USD and the US with 309 million USD. They were followed by Belgium , 98 million USD, China , 50 million USD and the UK , 75 million USD, he said.

Local businesses attributed the growth to the Generalised System of Preferences (GSP) that the European Union has granted to Vietnam , coupled with the economic recovery in many markets, including the EU and the US .

In addition, abundant human resources and product quality also helped the locality attract orders from many giants such as Nike, Adidas and Puma.

Vietnamese encouraged to use internet banking services

Vietnam is a potential market for internet banking services, as there is only 22 percent of its population that possesses bank accounts, said the Vietnam Business Forum Magazine (VBF).

According to statistics released by the State Bank of Vietnam, over 20 banks in Vietnam are offering services like paying electricity bill, telecommunication bill, taxes on behalf of enterprises and individuals so that they can save time and costs.

According to Vietnam Banks Association (VNBA), by the end of 2013, the number of internet-banking users increased 45 percent compared to that of 3 years ago. About 90 percent of banks are offering internet banking services and half of them are providing mobile banking service.

The number of enterprises paying through internet has sharply increased for the last years. Ho Chi Minh city branch of Vietnam Electricity (EVN Ho Chi Minh) has cooperated with 24 banks to develop the service of collecting electricity bills, raising the rate of paying through banks in 2013 to 44.9 percent of total revenues, up 12.8 times over the pilot year of 2007.

EVN plans to discount electricity bills for any person paying bills electronically 5 days before due time to encourage individuals and enterprises using the service.

At the beginning of 2014, General Department of Taxation informed that there were 366,000 enterprises declaring taxes via internet. They have cooperated with banks to offer service of paying taxes electronically to 15,000 enterprises by the end of this year.

Besides electricity and tax payments, many enterprises in other fields accept transactions through internet banking. Remarkably, there are projects of collecting and managing tuition through “SSC school card” and E-Banking service of Ho Chi Minh City Education and Training Department.

Seeing great potentials of the market, many large banks like Vietcombank, Techcombank, VPBank, ACB, Tienphongbank, etc have diversified their services. VPBank has concentrated on developing internet banking since 2009 and chosen it as their major business. The bank has completed a range of functions for “VPBank online” service, coordinated with enterprises in fields of electricity, water, insurances, aviation, consumption, etc. At the same time, it has also developed high class facilities like giving deposits online to enjoy attractive interest rates, collecting iCash to obtain gifts.

VPBank has also participated into a system of the first 9 banks to provide inter-bank super-express money transferring of Smartlink, helping customers transfer money intermediately 24/7 with high limit and at low costs. For enterprises alone, VPBank has signed with Vietnam Customs, Vietnam Treasury, and General Department of Taxation to implement services of collecting money for the State Budget, guaranteeing taxes for import – export goods electronically.-

Measures discussed to develop tuna value chain

The Ministry of Agriculture and Rural Development (MARD) recenty held a workshop on how to develop tuna value chain in the central coast province of Khanh Hoa as the ministry said the whole chain of tuna production would increase added value of the products and improve the living standards of fishermen, according to the Communist Party of Vietnam (CPV) Online Newspaper.

Tuna was sold to freezer factories at 73,000 VND per kilogramme in the Phu Yen province while tuna processed as Sashimi had been exported to Japan at 195,000 VND per kilogramme, conference participants said.

Fishermen often do not pay attention to investing in processing technology because they can easily sell their tuna by total weight to local buyers without strict regulations related to quality control, health/sanitary guarantees as required in the overseas markets.

Creating whole chain of fish production is a matter of concern in Vietnam . It is said that while there are many drawbacks in exploiting tuna such as planning, exploitation technology, preservation and marketing, there can develop effective whole chain of tuna production.

"The value chain can’t be cut off. It must be managed by the MARD and provincial people’s committees so that it can operate smoothly,” said Vu Dinh Dap, Chairman of Vietnam Tuna Association.

The country now has more than 3,500 tuna fishing ships with 35,000 labourers. According to Minister of MARD Cao Duc Phat, in order to benefit from the value chain, Vietnam has to clarify matters like what kind of ship would be good for catching tuna or what fishing techniques need to be used. And tuna business needs to take fishermen’s interests as their core goal.

Minister Phat said by providing fishermen with better equipment and technology would help them improve their living standards.

To produce tuna in the value chain, the development of a modern fishing fleet, combined with marketing strategy and the construction of logistic fisheries services should be implemented altogether, added Phat.

Central Highlands to accelerate transport project progress

The Steering Committee for the Central Highlands will closely supervise the construction of transport infrastructure across the region to keep up the progress of those projects in the second half of the year, the committee said at its quarterly meeting with the press on July 29.

The Central Highlands region groups Kon Tum, Gia Lai, Dak Lak, Dak Nong, and Lam Dong provinces.

The committee will particularly focus on the construction of Ho Chi Minh Highway and the Truong Son Dong Road and the upgrade of Pleiku Airport in Gia Lai.

At the same time, the board will work with central and local authorities to realise annual socio-economic targets, raise the quality of poverty alleviation, and ensure defence and security.

Coordination will also be improved in promoting education and vocational training and executing policies designed for ethnic minority groups, the meeting heard.

During the first half of 2014, the region’s gross domestic product grew by 10.3 percent while increases were recorded in export turnover and collection for the State budget.

Thirteen projects using Government bonds to build sections of Ho Chi Minh Highway running through the region have been basically finished.

Meanwhile, five traffic projects under the build-operate-transfer model are expected to be completed in 2015 and 2016. Six other projects funded by Government bonds will also become operational from now to 2016.

Covering some 54,474 square kilometres, the Central Highlands has a population of nearly 5.3 million from 47 ethnic groups. About 1.6 million people are of ethnic minorities.

Vietnam Report shows enterprise optimism

A new report has shown that many enterprises are optimistic about Vietnam and see big prospects in the country, the Vietnam Investment Review (VIR) reported on July 29.

Locally-owned Vietnam Report has conducted a survey of over 300 of Vietnam’s biggest enterprises, including foreign invested firms. Results showed that 95 percent of respondents are bullish on their revenue outlook for this year, while 84 percent said their 2014 revenue would exceed that of last year. Only 11 percent said they expected unchanged revenue.

“The figures show that most enterprises are confident in their performance and economic outlook. They are also expecting significant business recovery this year,” noted the survey.

According to the results, priorities for this year included customer care (65.6 percent), human resources development (60.7 percent), upgrading technology (50.8 percent), local and overseas market expansion (45.9 percent), and research and development (41 percent).

In late January, US-backed global management consulting firm Boston Consulting Group reported that the middle and affluent class in Vietnam would double between 2014-2020, from 12 to 33 million. It also said that the number of consumers with a monthly income of 15 million VND (714 USD) was growing fast.

Tibor Novakm, country manager and chief representative of Hungarian-backed pharmaceutical firm Gedeon Richter’s representative office in Vietnam, told VIR that the firm was looking for opportunities to produce pharmaceuticals in the country.

“Vietnamese people are spending more on medicine and we are researching the market. If it meets our conditions, we might consider building a factory here,” he said.

The Vietnamese pharmaceutical market was valued at 3.34 billion USD this year, up from 2.94 billion USD in 2012.

Anuvat Chalermchai, brand director of Thai-backed SCG Cement Building Materials, told VIR that Vietnamese consumers’ spending on eco-friendly building materials was growing strongly. “That’s a very favourable factor for us in Vietnam.”

In this year’s first quarter, SCG Vietnam earned revenue of 133 million USD, impressively up 76 percent on-year. This year SCG will market several new products and technologies in Vietnam, such as concrete roof tiles and fibre cement board, COTTO bathroom products, and COTTO Italian ceramics.

András Somos, CEO of Hungary’s consulting firm SKC-Consulting also told VIR he was quite upbeat about business opportunities for SKC in Vietnam thanks to rising consumption. “We’re providing consultancy for many Hungarian firms wishing to do business in Vietnam, like Prigram operating in automatisation, General Com operating in water treatment and medical equipment maker Meditech.

State budget and treasury misused and misallocated

The Government Inspectorate has discovered several cases of malfeasance related to accounting and dispersal of the state budget and treasury.

The agency has reached the conclusion after conducting an audit of the treasuries of many cities and provinces and transaction offices.

A total of VND130.16 billion (USD6.12 million) was misappropriated from the state budget.

The agency also found that in some cases the state treasury’s accounting showed large differences from the of expenses provable by receipts. Such discrepancies sometimes reached hundreds of billions of VND.

Inspections also showed that a number of localities misallocated a total of an estimated VND78.6 billion (USD3.7 million) from the state treasure between 2010 and June 2012.

Several cities and provinces have advanced funding for investment projects but have yet to allocate the funding.

A total of 468 projects in 17 cities and provinces were not approved for advances by the Ministry of Finance but still received a combined VND1.176 trillion (USD55.36 million) from municipal and provincial governments.

While 148 projects in 14 cities and provinces received advances totaling a combined VND328.1 billion (USD15.44 million) more than what the ministry had approved.

Twelve cities and provinces got advances totaling VND2.46 trillion (USD115.81 million) and did not disburse the funds to the approved projects, but added it to their budgets.

Yen Bai Province received VND 20 billion in 2010 and VND 100 billion in 2011 but instead of investing into the approved projects in the area, the local People's Committee sent all to their budgets. The number was VND 122.8 billion in Thai Nguyen Province (in 2009), and VND 2 trillion in HCM City (in 2012).

More investors to Phu Quoc island

The Southern province of Kien Giang is now considering granting of investment certificates to 22 projects worth VND33,409 billion into Phu Quoc island.

The island is now home to 194 projects covering an area of 8,530 ha, said Head of Office for Southwest Steering Committee Nguyen Thanh Hai.

Phu Quoc is striving to create a favorable environment for investors by upgrading infrastructure, especially road system and water supply and disseminating its preferential investment policies.

The island’s business environment has been given a big boost after it was connected to the national power grid earlier this year.

Especially, after PM Nguyen Tan Dung agreed on the establishment of the Viet Nam-Singapore Industrial Park on the island, Kien Giang province has set up a advisory investment and development team for projects on the island.

The locality said it will encourage Singaporean investors to invest in ecological tourism and high-tech industrial parks on the island.

As early as in 2004, the PM already approved an overall plan for development of Phu Quoc Island until 2020. The island will be built into an international trade center as well as a national and international high-end ecotourism and entertainment centre, fostering Viet Nam’s integration in the regional economy.

Raft of mega projects lay idle

Many billion-dollar foreign-invested projects in Vietnam that have leased large swaths of land are progressing at a snail’s pace, which has roused public concern.

In the north, the $2.25 billion Hai Duong 1,200MW thermal power plant project, invested in by Malaysia’s JAKS Resources Bhd, has seen little progress after three years of so-called construction. The Hai Duong People’s Committee spent nearly VND202.99 billion ($9.7 million) helping JAKS with site clearance and after numerous requests by the committee, the firm still owes VND9.2 billion ($430,000) which it has refused to pay.

In the central coastal province of Quang Ngai, $4.5 billion Gaung Lian steel project invested in by Japan’s JFE Steel Corporation is also stuck in the mud, explained a report sent to the Ministry of Planning and Investment by the local people’s committee. The project has only disbursed $73 million of total pledged capital and stopped construction in 2010 after the investor became unsure about continuing.

Meanwhile, the people’s committee of the southern province of Ken Giang is about to revoke the licence of Millennium Group’s (Hong Kong) $1.6 billion 520 hectare Bai Dai Resort project on Phu Quoc island due to very little progress after more than six years.

Many projects by Malaysia’s Berjaya Corporation Bhd in Dong Nai province and Ho Chi Minh City are also progressing slowly, leaving huge areas of land now only occupied by wildly growing grass and weeds.

These are just a few examples of numerous large-scale FDI projects in Vietnam that have seen little progress since being licensed. In the context of economic difficulties, local authorities have made efforts to help investors carry out their projects, but one expert said officials should be stricter towards these projects to prevent wasted land and to open up new opportunities to capable investors.

Report awards promote transparency

Vietnam’s Annual Report Awards have continually improved the transparency and professionalism in reporting of companies listed on the Vietnamese stock market.

Most of listed companies in Vietnam had recognised the significance of an annual report as a principal blueprint and a key way to communicate with the public, helping draw more attention from potential partners and investors, said Phan Thi Tuong Tam, CEO of the Ho Chi Minh Stock Exchange (HOSE) and chief of the Annual Report Awards organising committee.

The most outstanding result over the past seven years of the annual contest had been the improved awareness of the need for transparency and determination to deliver credible reports among listed companies, Tam told this year’s awards ceremony last Saturday.

The event honoured the best 50 annual reports out of nearly 700 entries from companies listed on HOSE and Hanoi Stock Exchange (HNX). Among the winners, 38 companies are listed on HOSE and 12 on HNX.

Vinamilk, the country’s biggest dairy company, came first with the highest score. It also secured the Best Corporate Governance prize, which was introduced this year for the first time. Bao Viet Holdings came second after securing the top prize in 2012 and 2013.

The Sustainability Reporting Awards, also part of the competition, comprised of one first prize, one second prize and three consolation prizes. Bao Viet Holdings took the first, Vinamilk the second, while the three consolation prizes went to Hau Giang Pharmaceuticals (for completeness), Sacombank (for reliability) and Imexpharm Drugs Co. (for layout).

The World Bank’s International Finance Corporation (IFC) and the British-based Association of Chartered Certified Accountants joined the judging of the sustainability reporting, selecting five of the 58 annual reports that included sustainable development issues.

Tam, head of the organising committee and the selection board, said this year saw a narrowing in the quality between the top 50. “The weaknesses often seen in previous years have been clearly addressed. For example, business activities received deeper analysis, with reasons and solutions included. The contents included risk issues, with typical risks analysed in detail. Development strategies and plans and objectives were outlined,” she remarked.

Dominic Scriven, CEO of Dragon Capital said “There’s still a long way to go before the annual reports reach international standards, but the programme and its communication campaigns and the winning entries will continue to create more milestones for the improvements in reporting quality, helping promote market transparency.”

However, he claimed the annual reports by large provided Dragon Capital with roughly a third of the information the firm needed for its investment analyses. Therefore, in order to know more about the companies, the firm has to use other channels such as the media, partners and direct dialogue with the companies.

ACCA member Nguyen Viet Thinh, consulting partner at PwC Vietnam and team leader for judging sustainable development reporting, said there had been greater attention to detail this year, and more information was provided on the parties involved, including employees, local communities and suppliers, marking a wider focus than seen in last year’s reports that only highlighted charitable and social activities.

He added the competing companies used IFC reporting guidelines on sustainable development, and the Global Reporting Initiative’s guidelines on sustainable development reporting. Many reports mentioned the IFC and GRI criteria. “Some companies used G4 standards as references for the first time,” Thinh said.

The Vietnam Annual Report Awards competition has been organised seven times by HOSE, VIR’s sister publication Dau Tu Chung Khoan and HNX, with Dragon Capital as the sole sponsor. The programme is technically supported by IFC, ACCA and independent experts. The eighth competition will kick off in early 2015.

Tam, chief of the organising board, said integrity, transparency, professionalism and creativity would continue to be key benchmarks, while corporate governance and sustainable development would carry on their significance.

Vietnam’s stock market capitalization tops $52bn: minister

The capitalization of Vietnam’s stock market has amounted to some $52 billion, equal to about 32 percent of the national gross domestic product, a senior state official said at a recent ceremony organized in Ho Chi Minh City.

The stock market is expected to become a major capital mobilization channel of the economy by 2020, Minister of Finance Dinh Tien Dung said at the ceremony held on Saturday to mark the 14th anniversary of the establishment of the Vietnamese stock market.

The market is among the 10 best-performing markets in the world, Dung added. Meanwhile, the size of the local bond market is about 17 percent of the country’s GDP, he said.

In the first six months of this year, there were more and more positive signals from the market as the average transaction value increased by 58 percent over the same period last year, he said.

The finance minister also emphasized the need for further efforts from market participants so that the market will become a major capital mobilization channel for the economy in the next six years.

This is not a simple task in the complex context of immediate and long-term prospects of the local economy, Dung stressed.

On the occasion, Vu Bang, chairman of the State Securities Commission (SSC), said one of the most outstanding marks of the Vietnamese stock market’s development over the past 14 years is its increasing transparency which has enabled more local firms to meet international standards in doing business and publishing their financial status regularly.

"The publishing of the financial statements of enterprises has become increasingly more professional. Especially, in the last two years, many businesses have paid more attention to building sustainable value chains besides their normal business activities,” Bang added.

At the ceremony, 50 listed companies with the best annual reports were also honored, with Vietnam Dairy Products Joint Stock Co (Vinamilk) winning the first prize in the category.

The stock exchanges of Hanoi and Ho Chi Minh City have hosted about 1.3 million accounts of foreign investors with total portfolio values reaching $13 billion, Dung said.

Recently, the SSC clinched deals on collaboration with securities and exchange commissions of 20 European countries to open the door for funds from the region participating in the market.

Given that fact, foreign investors may head to Vietnam to seek for business opportunities in the future, he added.

Vietnam’s stock market saw the strongest growth in Southeast Asia last year with a rise of over 20 percent while the majority of regional markets declined or increased only by three to 10 percent. It was followed by the Malaysian EMAS Index with a hike of 11.44 percent.

In the meantime, the stock markets of Singapore, Thailand, and Indonesia witnessed a decline of 1.07 percent, 7.73 percent, and 1.74 percent from a year earlier.

According to Bloomberg data, the Vietnamese stock market took the lead in net foreign purchases worth over $50 million in December alone. The Thai and Indonesian markets were worth $1.3 billion and 476.32 million in net sales.

For the whole 2013, foreign capital flows into Vietnam's stock market topped $250 million net, the second largest in Southeast Asia.

Most of the stock markets in the region are classified as Emerging Market on the global financial map.

New regulations allow cheaper strategic investor entry

New regulations allowing state-owned enterprises (SOEs) to sell shares to strategic investors before or at the same time as their IPOs are expected to streamline their equitisation.

Decree 59/2011 effective on September 5, 2011 and Decree 189/2013 effective on January 15, 2014 as well as documents issued by the Ministry of Finance (MoF) allow SOEs to sell shares to strategic investors before or at the same time as their IPOs.

The price of shares is either negotiated or determined by an auction among strategic investors, but has to be equal to or higher than the initial price approved by authorities.

The new regulations replaced Decree 109/2007/ND-CP on the equitisation of SEOs, which stipulated that strategic investors cannot pay below the average successful bidding price of the IPO for an SOE stake.

SOEs hope the change will make it easier for them to find strategic investors that can help them increase their competitiveness.

In its IPO scheduled for September 22, 2014, Vietnam National Textile and Garment Group is going to sell 120 million shares, or a 24 per cent stake, to strategic investors, deputy director Le Tien Truong said, adding that the firm will have at most three strategic investors, including one in finance and two in production and distribution.

Meanwhile, flag carrier Vietnam Airlines hopes to sell a 20 per cent stake to strategic investors in its IPO scheduled for the end of 2014.

The Vietnamese government has set a goal of equitising 432 SOEs in 2014 and 2015 as part of its economic reform for sustainable growth. Progress was poor in the first half of this year, reported the MoF.

100-storey hotel plot remains ground zero

Kinh Bac Corporation’s $1 billion Diamond Rice Flower complex remains a dream as the land plot still lies empty years after receiving a licence.

According to Kinh Bac’s report for second quarter this year, the company had poured VND119 billion ($5.6 million) investment into the site, the result unchanged since 2012.

Located right next to the National Convention Centre, the site is considered one of the most lucrative land plots in new business district of Hanoi.

Ten years ago, the area was mainly known for The Manor residential development, the National Convention Centre and the Big C supermarket.

There was a race between Japanese and Korean investors to win a license for the land plot.

Finally, a consortium comprised of the Japanese Riviera Corporation and CSK Finance won the site for a five-star hotel development.

In order to secure the site, Japanese developers had to make a non-refundable deposit of $5.5 million with the city.

The loser in the race for the site was Korean developers Keangnam Enterprise. As a consolation they received the site of their current 72-storey Keangnam Landmark Tower.

Meanwhile the Japanese after gaining the licence announced that they were not able to continue with the project only a year later and returned the site to the Hanoi People’s Committee.

The withdrawal of Japanese developers opened up new competition among local developers.

The winning bid would have to cover the Japanese firm’s deposit and provide $25 million to the city [equivalent to 10 per cent of the minimum investment capital], as proof of financial capacity. The new developer was also required to submit 100 per cent of the land leasing fee in one payment.

Kinh Bac Corporation secured the land in 2010 and received the dossiers from Japanese developers. Kinh Bac hired famous London-based international architectural firm Foster and Partners to design the complex, and Diamond Rice Flower Hotel was born. The new complex would consist of a 100-storey building, an 80 storey building and another 15 storey building. However there has been no movement since Kinh Bac took over the site.

CBRE’s most recent reports have also added to gloom. The leading commercial property and real estate services adviser reports that due to massive over-supply of office property, 23 per cent of Grade A and 34 per cent of Grade B buildings remain vacant.

CBRE expects that projects in the west of Hanoi, where the site is located will continue to be burdened by oversupply and price reductions and the area now is home to many large scale projects such as the Grand Plaza, Crowne Plaza, JW Marriott and Keangnam, which offer stiff competition to any new development.

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