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 HDBank acquires Société Générale VietFinance; HCM City prepares for sales promotion; Easing credit burdens on farmers; Banks recommit to credit risk management

HDBank acquires Société Générale VietFinance

The State Bank of Vietnam (SBV) has issued a document permitting the HCM City Development Joint Stock Commercial Bank (HDBank) to acquire the 100 percent equity of Société Générale VietFinance (SGVF), one of the largest foreign-owned finance companies in Vietnam.

Accordingly, SGVF will become a subsidiary of HDBank. This is the first transaction of its kind which will open up the possibility for other institutions in Vietnam to make acquisitions in order to establish a financial and banking group and contribute to reducing the number of financial institutions in line with the trend of restructuring commercial banks in Vietnam.

Le Thanh Trung, deputy general director of HDBank, said that with its stable growth, the bank will provide customers with modern, safe and convenient financial products and services.

He added that the bank maintains the whole system of human resources, customers and business partners.

SGVF is a wholly foreign-invested company that was licensed by the State Bank of Vietnam in 2007.  Currently, the company has a total staff of more than 1,100 working in 42 provinces and cities across the country.

HCM City prepares for sales promotion

Over 900 businesses have registered to participate in the annual sales promotion month in Ho Chi Minh City from August 30 to September 3, 10% more than last year.

The programme, jointly organised by the city’s Departments of Industry and Trade and Culture, Tourism and Sports, kicks off with a fair at the Phu Tho Indoor Stadium in District 11 selling garments, foodstuff, household appliances and consumer goods.

There will be 12 other fairs during the month to take goods to the doorsteps of workers in industrial parks and export processing zones and students living in dorms.

Businesses like supermarket chain Saigon Co-op and Saigon Trading Group (SATRA) will send trucks with goods, especially essential ones to remote areas, as part of the city's price stabilisation programme.

Under the month-long promotion programme, many retailers like Big C, Co.opmart, Maximart, Metro, and Thien Hoa Interior Furniture and Electronics Centre are set to offer big discounts.

Saigon Co.op will launch a US$7.1 million "Proud of Vietnamese goods" campaign, its biggest promotion of the year, involving more than 600 suppliers.

It will offer discounts of up to 50% on more than 2,000 products at its outlets as well as Co.opXtra Thu Duc and Co.op Food chain from August 28 to September 24.

Big C supermarket chain will first offer discounts of up to 50% on 1,500 products until September 2, National Day, and then on thousands of products for the promotion month.

Besides fresh and processed foods, dry foods, household appliances, fashion items, cosmetics, and electronic products, it has also slashed prices on hundreds of products like moon cakes, lanterns, and toys for the Mid-Autumn Festival.

Seychelles, Vietnam cultivate economic ties

Seychelles Chamber of Commerce and Industry (SCCI) Chairman Marco Francis has urged his country’s businesses to seize every future opportunity to expand economic cooperation with Vietnamese partners.

Francis issued his encouragement at an August 29 business forum in Hanoi, organised to coincide with Seychelles President James Alix Michel’s official visit to Vietnam.

Francis promised the Seychelles will create the best possible conditions for enterprises of both countries to broaden their cooperation and investment. He said Vietnam can use its Seychelles ties to access larger markets including the Common Market for Eastern and Southern Africa, the Southern African Development Community, and the Indian Ocean Commission.

The Vietnam-Seychelles Business Forum offered enterprise representatives a chance to brief each other on their countries’ respective policies and investment environments and lay the groundwork for possible future collaboration.

Vietnam Chamber of Commerce and Industry (VCCI) Chairman Vu Tien Loc noted two-way trade between Vietnam and the island nation totalled about US$2.2 million in 2012. The Seychelles’ eight projects worth US$33.6 million puts it at the forefront of the seven African countries currently investing in Vietnam. Its investments are focused on ready-mixed concrete and cement, plastics, industrial production springs, seafood processing and packaging, and agricultural produce.

Vietnam’s primary Seychelles export commodities are rice, chemicals, and fishing nets.

The VCCI and SCCI used the presidential visit to sign a cooperative agreement pledging support for trade links between the two nations’ business communities.

Indonesian businesses eye Vietnamese market

The Southeast Asian region in general and especially Vietnam and Myanmar are becoming key Indonesian business investment destinations, boasting surging growth rates and consumer demand.

In 2012, Indonesia’s National Cement Company spent US$157 million on 70 percent stake in Thang Long Cement Factory, transforming the Vietnamese firm Southeast Asia’s largest cement producer.  

The Indonesian National Coal Corporation confirmed it regards Vietnam as a market replete with potential and a promising customer base for coal exports.

As of May 2013, Indonesia had invested in 35 Vietnam-based projects capitalized at US$280 million, ranking it 27th among the country’s 100 foreign investors.

Eight state-owned Indonesian businesses are planning to enter the Vietnamese market in the very near future, focusing on processing, manufacturing, medicine and pharmacy mining, electricity, and information technology.

Easing credit burdens on farmers

Farmers are struggling to access credit despite a range of bank incentives specifically designed to iron out snags in the process.

Bank capital lending for agricultural and rural development has grown by 20 percent annually but is far from meeting customer demands.

In fact, the Government decree 41 on credit support for farmers has achieved certain results. After three years of implementation, the Bank for Agriculture and Rural Development claims to have allocated 70 percent of its total amount of around VND560 trillion on credit to the agriculture and rural development. Its bad debt percentage has dropped to below 3 percent.

Vietnam Farmers’ Association (VFA) Vice Chairman Lai Xuan Mon says borrowers are still vulnerable to natural disasters, and risks of epidemic spread in the country.

However, most credit organisations like to give loans to agricultural businesses rather than independent farmers while banks require certain deposits in advance.

The VFA’s total amount of credit has reached VND13 trillion over the past three years, but it is accessible to only four percent of rural households.

SBV Credit Department Head Nguyen Viet Manh says banks are focused on ironing out snags in preventing them from lending more capital to farmers.

From now until the end of 2013, the banking system will continue implementing credit policies for farmers for key agricultural and rural development areas and gradually help them settle bad debts.

Deputy Agriculture and Rural Development Minister Vu Van Tam says there is a plan afoot to launch new programs tailored to farmers’ production processes.

But the agricultural sector needs restructuring itself to raise the added values of its products, such as tra fish, rice, and coffee for sustainable development growth and exports.

Leveraged buyouts to create waves

Leveraged buyouts (LBO) are a common feature of many developed economies. LBOs can be a means to a friendly merger— or they can be hostile, as a controversial tactic employed by so-called “corporate raiders.” Is Vietnam ready for such a dynamic and sophisticated approach to mergers and acquisitions? VietCapital Securities (VCSC) senior manager Pham Hong Son offers some insights.

The VIR-organised Vietnam M&A Forum 2013 drew attention from many investors and economists,Photo: Le Toan

A “leveraged buyout,” or LBO, is a term to describe the acquisition of a target company for a majority or its entire stake and the purchase price is financed mainly by loans from financial institutions. These assets are provided as collateral either by the target company’s operating cashflow or its assets, or by issuing high-yield bonds which usually have more relaxed covenant terms compared to loans from financial institutions or by a mixture of loans and high-yield bonds.

To complete an LBO transaction, the investor usually sets up an entity and uses that entity to raise funds, in which the debt/equity structure is determined by the detailed plan for that LBO transaction. This entity will use the entire capital raised to acquire the target company’s shares or equity capital and make loans to the target company to repay its existing loans and debts. After the LBO transaction, the new entity will control the target company and use its operating cashflow - in some cases through dividends paid by the target company - to repay the loans and debts used for financing the LBO transaction. If the investor wants to exit the investment, it can sell the entity or make the entity public through an IPO. By setting up such a structure, the investor has indirectly changed the target company’s capital structure - usually increasing the loans and debts portion significantly. During the LBO transaction, financial advisors usually participate to assist the investor in analysing the appropriate LBO financing structure, valuing target companies and raising funds from the capital market.

LBO transactions create value in two specific ways.

The first way is that the cost of debt is usually lower than cost of equity. Therefore, using leverage can decrease the weighted average cost of capital of the company, increasing the intrinsic value of the target company.

The second way is for the investor, after the transaction, to perform operation and business restructuring for the target company, helping to boost growth and the target company’s value.

Because of the high risk involved with the high leverage capital structure used, the success of an LBO transaction depends on numerous factors.

The first factor is the target company usually has valuable and liquid assets which can be used as collateral for loans financing the LBO transaction. Its debt portion of capital is low, its operating cashflow is stable and has a high ratio over its revenue. Its business is less susceptible to business cycles, its working capital and future capital expenditure is minimal and there is sufficient cashflow for repaying loans and debts.

If the target company, after the LBO transaction, is managed and operated in the most efficient way by a capable management team that has experience with the company and industry it will achieve business targets estimated by the valuation performed during the LBO transaction.

Meanwhile, if the capital market as a whole is liquid, the cost of debts will remain stable at a low level.

Macro factors of the economy, business environment and a stable legal environment are also factors to support the company’s growth.

The history of LBO transactions in the US showed that the number, the size and the success of such transactions are related to the level of interest rate as well as macro economic situation. In the 1980s, the US economy recovered and grew by several stimulus policies leading to an increased demand for investment. The Tax Reform Act of 1986 excluded some provision items excluding the interest expenses as tax-deductible, the normal income tax including interest income was at the same level with capital gains tax. These two factors led to a booming high-yield bond market, with new issues increasing significantly from $1.5 billion in 1982 to $15 billion in 1984, with demand from insurance companies, mutual funds and other financial investors. A recovering economy, optimistic sentiment, liquid bond market with many participants in this period fueled the boom in LBO transactions in the US during this period, which was initiated by many large private equity companies. The most well-know transaction was the leveraged buy-out of RJR Nabisco by KKR in 1988, with a $25 billion transaction size.

There are conflicting opinions regarding the pros and cons of the LBO transactions to the target company as well as the economy.

On the positive side, the investor will restructure the target company’s business, operations, finance and manage the company more efficiently to achieve the expected return on the investment. The LBO transactions, especially where the target company is a listed company, will add a lot of value to the existing shareholders because the offer price is usually much higher than the market price. The LBO transactions, however, also negatively affect the company as well as the economy. After an LBO transaction, the target company is usually highly leveraged, increasing credit risk and market risk. In some LBO transactions, the investor focuses only on reducing costs and repaying debts over a short period, not considering the company’s long-term growth, by laying off employees as well as breaking up and selling the target company’s assets piece by piece. The use of operating cashflows is mainly down to pay large amounts of debt and leaves the company with less capital to reinvest into the business.

As a result, it can lose its competitiveness compared to other companies. The over-heated booming of LBO transactions can also create asset price bubbles - especially when private equity funds chase few large target companies, boosting up the valuations - as well as credit bubbles with increased debt over GDP ratio.

This increases the risk of a collapse in the financial system, including those financial institutions and other investors who finance those LBO transactions.

In Vietnam, although not officially labelled LBOs, there are some M&A transactions in which the purchase price was financed by loans or in exchange for existing loans based on the target company’s assets acting as collateral. However, the details are usually not publicised. As an M&A advisor, VCSC advises its clients to restructure the target company’s debt capital structure by decreasing interest rates, revising repayment schedules, and adjusting the collateral’s value to ensure the success of the transaction. Although LBO transactions have certain positive values as discussed above, we believe that LBO transactions will take a while to gain traction in Vietnam, due to the small size of corporate bond market, the economic situation and the target to stabilise the financial system and reducing non-performing loans.

Firstly, the corporate bond market in Vietnam is still small in size, very low liquidity and not attractive to investors apart from some large commercial banks. According to some statistics, the corporate bond market size in Vietnam is only 1.4 per cent of GDP, while it is 15.5 per cent, 40.9 and 58.0 per cent in Thailand, Malaysia and the US, respectively. With a small sized corporate bond market which remains unattractive to many investors, raising capital through issuing corporate bonds for LBO transactions in Vietnam is difficult.

Secondly, although showing signs of improvement, the economy still has certain risks which can negatively affect the target company’s performance. Such risks can leave the target company unable to achieve the business plan used to evaluate the LBO transaction. This will lead to bad investment returns or, in the worst case, make the target company bankrupt due to the highly leveraged capital structure.

Thirdly, with LBO transactions, highly leveraged capital structures do not add much value to the banking system’s effort to restructure assets, decrease non-performing loans, increase capability to value and manage risks. Due to these reasons, investors should be careful during the due diligence period in setting a valuation of the target company, analysing an appropriate capital structure for the transaction and especially valuate the business plan of the target company with all the possible scenarios together with relevant business, industrial and legal risks, executed by a capable, experienced management team.

Banks recommit to credit risk management

Over the next 12 months banks will increase their investment into better credit risk management processes.

A KPMG Banking Survey released on August 21 supported this assertion with nearly all the banks surveyed reporting plans to increase investment into credit risk management.

The survey posed questions to the 20 largest banks in Vietnam, of which 13 responded. 67 per cent of those said they would at least minimally increase investment into this area over the next 12 months, and 27 per cent said they would make a significant increase.

40 per cent responded that they were not satisfied with the current internal credit ranking system.

“This statistic is very worrying,” said KPMG partner Tran Dinh Vinh, “Vietnamese banks need to seriously consider their credit rating systems to maintain credit quality.”

The root of credit risk is poorly designed credit models, and Vietnamese banks are using internal rating models that were developed four or five years ago. These models fail to keep up with the present situation and banks have lost confidence in their models because they approved many borrowers that have, in fact, defaulted on their loans and left the country’s financial sector with a very high rate of non-performing loans (NPL).

NPLs have significantly increased since 2009 and officially stood at 4.67 per cent as of April 2013. However, independent rating agencies and economists believe the unreported real number to be much higher.

Vinh added that NPLs are primarily sourced to banks’ subsidiary securities companies, other lending institutions which extended credit to those who could not borrow from banks, and state-owned enterprises whose defaulted loans the government won’t allow to be classified as NPLs.

“The official NPL rate does not include debts which were sold and not included in banks’ balance sheets, over-due corporate bonds, and bad debts restructured by the State Bank’s Decision 780. As such, the current NPL rate is a poor reflection of the true state of the Vietnamese economy and of banks’ credit quality,” said Vinh.

The KPMG survey also showed that most banks replied “no” to the question “Do you think it is possible to have 15-17 domestic banks by 2015?” as per the government’s banking system restructuring plan.

The survey reflected that the restructuring plan had been slow and that there were still more than 40 Vietnamese banks at current.

“It is not easy to merge financial institutions. You have to combine people, processes, technology, branches, and brands. Moreover, the number of banks has risen so rapidly since 1992 that there is little to no local experience in terms of M&A between banks,” reported the survey.

Vinh speculated that banks would have more confidence in the government’s consolidation plan if the deadline was moved back to 2017 or 2020.

Unbaked brick makers buoyed by strong exports

Many unbaked brick makers in the country’s south have said they are still able to maintain production as strong exports have helped offset low domestic sales volume.

Phan Hoai Thanh, general director of Tan Ky Nguyen E-Block Joint Stock Company, said the factory of his firm in the Mekong Delta province of Long An was operating at some 60% capacity of 150,000 cubic meters in the first seven months of the year and that sales volume was better than in the same period in 2012.

However, 80-90% of the plant’s products were exported to other Asian nations because local demand has been low due to the protracted real estate market slump.

The new regulation requires projects with nine floors or higher to use light unbaked materials that account for 30% of the total needs, which will then be raised to 50% from 2015. But since the rule took effect from January 1 the unbaked bricks market has not improved much as it only applies to newly-licensed schemes. What is more, local home owners still prefer using traditional baked clay bricks.

Dam Thanh Tung, deputy director of Vuong Hai Joint Stock Company, noted building material suppliers normally refrained from selling to property projects on deferred payment terms since in many cases they hadn’t been paid by realty developers in the last two years. Like other industry players, Tung’s company sells about half of its total output of 60,000 cubic meters to Singapore, South Korea and Taiwan, among others.

In the three years after the unbaked construction material development program was approved, the capacity of local factories has risen to over five billion unbaked bricks, including around 1.9 million cubic meters of light concrete bricks. Local sales of this kind of material are low, at 40-50% capacity, forcing plenty of producers in the industry to turn to foreign buyers to maintain production, the Vietnam Construction Material Association reports.

Thanh of E-Block, meanwhile, noted local firms were also facing strong competition from other countries in exports. One cubic meter of light concrete bricks sells for roughly VND1.3 million, nearly doubling the price of traditional baked bricks, while export prices are some 20% lower than domestic ones.

Similarly, producers of other construction materials are also seeking to make their way to foreign markets due to a domestic oversupply. As production capacity is exceeding local demand by 20-30%, it is necessary to foster exports from now to 2018, said Tran Van Huynh, chairman of the Vietnam Construction Material Association.

Specifically, 10-15 million tons of cement, 120-130 million square meters of ceramic and granite paving bricks, three to four million units of ceramic bathing products and 40-50 million square meters of construction glass should be exported in the period, which is projected to increase total export value of the industry to more than US$2 billion.

Maersk Line positive about second quarter results

In the second quarter, Maersk Line Vietnam and Cambodia increased shipping volume but saw a drop in revenue compared to the same quarter last year.

Shipping volume grew by 9 per cent while revenue fell by 3 per cent, said the Danish-backed company.

“Although we saw a drop in revenue, we feel that our second quarter result is positive. We increased shipping volume and saw significant cost reductions, particularly in terms of fuel, which is one of our main outlays,” said Nguyen Thi Ngoc Bich, CEO of Maersk Vietnam and Cambodia.

“These improvements point to a very successful third quarter,” she added.

The company is part of Maersk Line, the largest operating unit of Copenhagen-based A.P. Moller-Maersk Group.

The company’s second quarter report stated that Vietnam was still an attractive sourcing destination that is highly competitive in terms of labour costs, location, its strong position in terms of agricultural exports, high GDP growth, long-term political stability, and a government committed to economic growth and development.

The report added that despite difficulties in the global economy, the company saw great opportunities in Vietnam.

Maersk Line Vietnam and Cambodia grew by 7 per cent last year. For the rest of this year, the company stated that its goal was to maintain market position and increasing profitability. It reasserted its mission to ensure positive customer experiences, continue developing a stable and innovative workforce, and cut costs as opportunities arise.

SBV Governor makes two awards to Standard Chartered Bank (Vietnam)

Standard Chartered Bank (Vietnam) Limited (SCBVL) yesterday received two awards form Governor Nguyen Van Binh in recognition of its recent achievements.

The first award, to SCBVL, is the title of “Excellent Labour Collective in 2012”. The award is the result of SCBVL’s business achievements, management innovation initiatives, fulfilment of duties towards State budget and consistent effort to promote corporate social responsibility.

The second award is a personal Certificate of Merit for SCBVL’s general director Louis Taylor, for his contribution to the fulfilment of the banking sector’s targets and the development of SCBVL during 2011 and 2012. This is only the second time such an award has been made by the Governor to a foreigner.

Despite a challenging economic environment in 2011 and 2012, SCBVL delivered strong business performance. Its Consumer Bank launched many innovative and award-winning products and services. Awards included: a “Visa Leadership Award in Issuing Innovation”, a "Trust and Use Award for the Best Visa Platinum Debit Card” and, most recently, the “Best Consumer Internet Bank" award in 2012 and 2013.

Meanwhile, SCBVL’s Wholesale Bank offered an increasing range of solutions for corporate and financial institution clients. The bank was appointed the Sovereign Credit Ratings Advisor to the Government of Vietnam, and signed a technical assistance agreement with the Vietnam Securities Depository to build mutual fund structures in line with international practice. Throughout a difficult time, SCBVL maintained strong liquidity and excellent capital strength, creating strong business momentum and an excellent level of activity for 2013.

In parallel with its business activities, Standard Chartered Bank (Vietnam) also paid close attention to its communities in Vietnam through many meaningful programs such as Seeing is Believing, and Living with HIV, as well as activities promoting environmental awareness and Diversity & Inclusion. In 2012, SCBVL joined with colleagues from Standard Chartered Bank Korea to provide $1 million for their five-year “Comprehensive Eye Care Development Project” in Vietnam. And employees planted 5,000 trees in Ba Vi National Park and Can Gio Biosphere Reserve. These programmes continue to develop strongly in 2013.

“We are proud to receive these prestigious awards from Governor Binh. They recognise our efforts and achievements over the last few years, as well as providing encouragement for us to continue building our business in a responsible and sustainable way. As a leading international bank in Vietnam, we are committed to growing a strong and sustainable business that acts in a responsible way to better our communities. This is the meaning of our brand promise - to be “Here for good,” Louis Taylor, general director of SCBVL said.

Apart from his role as general director of SCBVL, Louis has been vice chairman of EuroCham and chairman of the Banking Working Group of the Vietnam Business Forum (VBF). He participated in a wide range of economic events, where he actively brought Standard Chartered’s expertise and recommendations to the local business community and the authorities. He also acted as lecturer in many banking training courses and played a significant role in the preparation of EuroCham’s White Book.

In one example of SCBVL’s community activities, Louis completed a 500 kilometre cycle ride from Dong Hoi to Danang, raising funds for Newborns Vietnam, a charity dedicated to reducing neonatal mortality in South East Asia, with a specific focus on Vietnam.

Mitsubishi authorises truck retailer

Goldbell Equipment Vietnam (GEVN), a spin-off company of Goldbell Vietnam which has been operating in the Vietnamese market since 2008, was recently appointed as authorised dealer for Mitsubishi Forklift Trucks in Vietnam.

In the past month, GEVN staged the Grendia-Grendia Premiere events at the Hilton Hanoi Hotel and Park Hyatt Ho Chi Minh City to announce the cooperation deal between the company and well-known Japanese group Mitsubishi Forklift Trucks.

GEVN will also act as authorised dealer in Vietnam for other equipment made by Mitsubishi Forklift Trucks.

Also at Grendia Premier event, GEVN had jumpstarted a supportive programme offering charge free checks and consultation services relevant to lifting equipment for individual and corporate customers.

Goldbell Equipment Vietnam is a member of Goldbell Group of companies, a Singaporean market leader in the leasing of industrial vehicles with business operations spanning across the Asian region with a presence in China, Malaysia, and Vietnam.

GEVN currently offers distribution and leasing services covering lifting equipment and equipment for use at golf courses.

SeABank unveils new credit cards

Southeast Asia Joint Stock Commercial Bank (SeABank) debuted new Visa international credit cards with EMV chip security and several other exciting features.

The new SeABank credit cards enable customers to easily manage their spending, have fixed monthly payments and reasonable interest rates, as well as comprehensive insurance systems (up to seven high-level insurance products for the Platinum card), making SeABank’s credit card platform a welcome trendsetter in the Vietnamese market.

SeABank is offering credit limits up to $23,800, 45 days interest-free, and payments and withdrawals at millions of points of sale and ATMs around the world.

The new system will make it safe and easy for customers to change their PIN numbers. Even more importantly, cardholders will be able to make payments in a number of ways including from their SeABank accounts, bank transfers, and via internet banking (

SeABank is also introducing a promotion to encourage people to apply for SeABank’s Visa cards. From now till October 29, the bank is offering 50 per cent cash back on a customer’s first three purchases within 45 days of receiving their card. Maximum cash back for the Platinum card is $47.6, and for Gold and Classic cards, $23.8.

Bitexco assigned giant urban project

Bitexco, a leading Vietnamese developer, has been assigned to be the investor of an estimated $3 billion urban project in Binh Quoi-Thanh Da peninsula, Binh Thanh district, Ho Chi Minh City.

Bitexco’s appointment is expected to end the almost 20-year log-jam in development in the area.

According to local authorities, residents in the project site have faced lengthy difficulties as their houses were not permitted to be repaired or sold because the site was earmarked for development into a new urban area.

The site covers more than 426 hectares and Ho Chi Minh City People’s Committee announced its plan to develop the area into a cultural sport and tourism centre as far back as in 1992.

By December 2000, the city had approved the detailed plan for the area. In 2004, the committee decided to hand over the land to Saigon Construction Corporation to develop the project. However, in 2007 the city decided to take the project away from this investor due to their lack of financial capacity.

Two years ago, Deputy Prime Minister Hoang Trung Hai permitted the committee to designate a developer for the gigantic project and the municipal authorities have decided on Bitexco as its developer.

According to Ho Chi Minh City Zoning and Architecture Department, the area would be dominated by green landscaping and an ecological tourism resort combined with housing. Out of the total of 426 hectares, around 100 hectares will be reserved for parks and public facilities with the remaining 48 hectares would be devoted to transport infrastructure.

The total development cost for the project, including the compensation claims of local residents, is estimated at $3 billion.

At the meeting held last week, chairman of the Ho Chi Minh City People’s Committee Le Hoang Quan requested the local Department of Finance to focus on a compensation assessment for approximately 3,000 households in the area that would be affected.

The local Department of Zoning and Architecture was assigned to work with the developer on completing the approved plan. This department would also be responsible for setting up a special team to guide the investor on implementing the 1/2000 scale plan. The department proposed to add a technology centre to the plan and increase the potential population size of 30,000 people, which was approved in 2007, to 41,000-50,000 people when the project is finished.

Bitexco has track records in developing and completing landmark property projects in Ho Chi Minh City, including The Manor condominium complexes and the 68-storey Bitexco Financial Tower. It is developing the One Ho Chi Minh City, a twin tower complex that will be home to the first Ritz-Carlton hotel in Vietnam when it opens in 2016. Its porfolio in Hanoi includes the Garden Shopping Mall, The Manor residential complex and soon-to-be-completed JW Marriott Hotel.

BR-VT seeks to woo investors into supporting industries

Ba Ria-Vung Tau Province has proposed an incentive mechanism applicable to investors committed to Da Bac Industrial Zone and Phu My 3 Industrial Park exclusively designed for supporting industries.

The southern province and Haiphong in the country’s north have been picked by the Government as machinery and electronics manufacturing areas to attract investors, especially those from Japan.

As the specialized industrial park in Haiphong’s Dinh Vu-Cat Hai Economic Zone has offered many incentives due to its unfavorable conditions, BR-VT is seeking similar incentives for its specialized industrial parks.

Investment projects involved in supporting industries in BR-VT would get the same incentives as those in socially and economically disadvantageous areas and in priority sectors. BR-VT also wants incentives for developers of infrastructure for industrial parks for supporting industries.

The province has also proposed not setting up an evaluation board which is tasked to weigh incentives for products of supporting industries as required by the Prime Minister’s Decision 12/2011/QD-TTg in development policies for some supporting industries.

Procedures for recognizing supporting industries enterprises should be simplified. The job of recognizing such businesses should be transferred to the provincial government and management boards of industrial parks.

It is not necessary to approve environmental impact assessments of supporting industries projects involving small and medium enterprises, except for painting, welding and plating ones, as most industrial parks have good infrastructure, including central wastewater treatment facilities. Therefore, a pledge of environmental protection would be enough.

According to the provincial government, since BR-VT was chosen to set up industrial zones for Japanese supporting industries, the province has conducted several investment promotion programs to get access to Japanese firms active in supporting industries as well as prepared infrastructure and human resources.

The provincial government has signed memoranda of understanding with Japan’s Kawasaki City, the Kawasaki Chamber of Commerce and Industry and Forval Corporation to carry out promotion activities and introduce BR-VT to Japanese companies.

The conference themed ‘40 Years of Vietnam-Japan Cooperation and Development’ held in BR-VT last Friday attracted the participation of around 100 Japanese enterprises. With this conference, the province listened to expectations of Japanese investors who want to make investments here.

For Da Bac Industrial Zone and Phu My 3 Industrial Park where investors can get ready land in the fourth quarter, BR-VT has proposed many incentives for investors committed to supporting industries. The province expects a 10% tax rate in 15 years for sectors included in the list, a four-year tax exemption after projects have taxable income and a 50% tax reduction in the following nine years.

Regarding sectors belonging to supporting industries but staying outside the list, the province has proposed a 20% tax in ten years, a tax exemption of two years at the maximum and a 50% cut in four years after that.

BR-VT has also sought a zero import tax on imported goods used as fixed assets of supporting industries projects and a five-year tax exemption for those importing materials and components which are not produced locally.

Pacific Place tenants row over rights

A dispute between a group of residents and Pacific Place owner, Ever Fortune JSC sees no end in sight despite a pause in development work as both sides await an official response from authorities and avert further escalation of tensions.

Located at 83 Ly Thuong Kiet Street, Pacific Place is one of the most luxurious buildings in central Hanoi.

The operation of a medical clinic in the basement, a restaurant on the roof top and the addition of three more lifts in the office building next to the residential area were issues of contention between the residents and the property owner. Residents complained that waste from the clinic could harm the environment and that the restaurant was too noisy at night despite closing before midnight. The residents also complained the new lifts would spoil the architecture of the building.

According to Cheng Huan Chai, general director of Ever Fortune, Pacific Place’s management company, after the residents put forward their claims, Hanoi Department of Construction carried out an inspection.

“The clinic and the restaurant both operate under licensed permits and the purpose for the additional three lifts is to enhance the quality of the building. The installation of the lifts was also permitted by the Hanoi Department of Construction,” the Ever Fortune spokesman confirmed.

“We’re aware of the regulations related to the upkeep of the building and proper environment controls. These include proper and separate collection and disposal of discards from the clinic and minimising noise disturbances when installing the lifts. In fact, before the start of the work we met with residents in late May to inform them about the expected inconveniences and we were not made aware of any objections then,” he said.

He further explained that a dedicated 24-hour hot line and an email address had been set up for residents to provide their comments and feedback.

However, a group of residents was demanding more. They wanted the investor to remove the clinic and the restaurant from the building, and to stop construction while awaiting a final decision from authorities.

According to Nguyen Hong Minh, director of the PMC property management company, defining public and private areas between residents and property owners in high-rise buildings was one of the main conflicts.

The basic foundation to resolve the dispute however, according to Minh, was to define which kind of the contract was signed between residents and building owner.

Residents would have the right to use areas in the building as outlined in the civil code if a purchasing contract was signed between two sides. If they possessed a lease contract, then the two sides would be bound by the contract’s articles, Minh said.

“As an investor and manager for Pacific Place, our interests are very much aligned with both our residents and office tenants. By improving the quality of the building, we will be able to improve the overall environment as well as positioning for the building, and ultimately, increase value for all,” Chai said.

Apart from the issues of contention, residents also claimed that the company had used one basement for a clinic and there was no longer sufficient room for residents to park their cars.

Pacific Place has five basements. The second to fifth level basements are reserved for car parking leaving ample space for residents as well as office workers to park. In addition, the fifth level basement is not being used.

According to the original plans submitted for approval by the Hanoi Department for Zoning and Architecture in 2005, the first level basement, where the clinic is located, was marked for business use.

Completed in 2007, Pacific Place is now owned by Singapore’s Mapletree group. It consists of 144 long-term leasing units and 35 serviced apartments in one part of the building, while more than 60 companies, enterprises and embassies are occupying office space in another part of the building.

Malaysia wants 500 Vietnam businessmen to attend summit

Malaysia is looking to attract around 500 Vietnamese businessmen to the Global Entrepreneurship Summit 2013 scheduled for October 11-12 in Kuala Lumpur.

Malaysia External Trade Development Corporation and Malaysia Tourism Promotion Board in HCMC introduced the event at a press briefing last week. The initial cost to attend seminars and lectures is US$100 per person and there are special offers for big groups of attendees.

“Thirty businessmen registered at the press briefing to attend the summit. We will contact Malaysia travel firms and businesses to provide special offers for guests,” said Do Phan Vinh Hai, marketing manager of Malaysia Tourism Promotion Board in HCMC.

According to the board, Malaysia is focusing on developing MICE (meeting, incentive, convention and exhibition) tourism and incentives could be extended to big groups of participants such as express procedures at the airport. In addition, there will be free airport transfers and special prices for early birds.

Malaysia expects to attract 3,000 attendees worldwide who are policy makers, administrators and businessmen.

According to Hai, Vietnam is one of the 15 markets sending the highest numbers of tourists to Malaysia.

Some 211,000 Vietnamese visited Malaysia last year, up 21% from the previous year, and the figure in the year’s first half was 112,782 with a year-on-year rise 10.3%.

Malaysia expects to welcome 250,000 tourists from Vietnam this year.

HCM City tourism industry lacks skilled human resource

The Department of Education and Training and Tourism Schools in Ho Chi Minh City have agreed to form a general council of principals and set rules for trainees in the tourism industry, to improve quality and standards.

There are around 50 schools offering tourism courses in the City, however, the number of trained tourism students can meet only 60 percent of the demand.

Every year, the tourism industry needs to recruit around 45,000 people but these schools are able to provide only 15,000. Not to mention that travel companies have to re-train most of their employees as they fail to meet requirements in skills and foreign language knowledge.



Corporate bond market struggling with challenges

The size of the corporate bond market is estimated at some VND1,374 trillion, equivalent to 15% of GDP. The Government aims to raise this figure to 20% by 2025.

President requires greater efforts to promote value of Ngoc Linh ginseng

Ngoc Linh ginseng deserves the "National treasure" title, and it is necessary to strongly promote the role of this treasure in improving people's livelihoods, President Nguyen Xuan Phuc said .

EVFTA outpaces CPTPP in preference utilisation rate

The utilisation rate of tax incentives set out in the EU-Vietnam Free Trade Agreement (EVFTA) during Q1 soared by over 32%, representing a four-fold rise compared to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Refusal to issue visas to new VN passport causes problems for travel firms

The rejection of Vietnam’s new passport by some EU member countries is affecting HCM City tourism companies since their customers are unable to travel to those countries.

Vietnam set to scrap COVID quarantine for imported processed seafood

The Ministry of Agriculture and Rural Development has removed COVID-related quarantine requirements for frozen processed seafood products imported for the purpose of reprocessing for export.

HCM City seeks to boost technology transfer from universities

Huynh Kim Tuoc, managing director of Sai Gon Innovation Hub's (SiHub) Start-up Support Centre under the HCM City Department of Science and Technology, affirmed Vietnam holds tremendous potential for technology development

Vigilance urged against COVID-19 amid emergence of new epidemics

Prime Minister Pham Minh Chinh asked ministries, agencies and localities to maintain vigilance against COVID-19 while addressing a meeting in Hanoi on Saturday.

Vietnamese, British agencies coordinate in identifying fire victims

The Consular Department under the Ministry of Foreign Affairs and the Vietnamese Embassy in the UK will continue to coordinate with Vietnamese and British agencies to identify victims in a blaze in Greater Manchester on May 7.

Photo contest highlighting beauty of Vietnamese islands kicks off

Professional and amateur photographers across Vietnam are encouraged to compete in a photo contest highlighting the beauty of Vietnamese Hoang Sa and Truong Sa islands.

Enjoying Quang-style noodle soup in the place where it was born

Phu Chiem Village in Dien Phuong Commune, Dien Ban District, Quang Nam Province, is where the popular Quang-style noodle soup was first created. And where better to taste this specialty than the place where it was born.

Exploring hidden spots on Co To Island

Aside from white sand, the blue sea and fresh air, Co To Island in Quang Ninh Province has several other beautiful spots that are worth a visit.

Vietnamese leaders extend sympathy to Cuba over oil tank explosion

Top Vietnamese leaders have sent messages of sympathy to their Cuban counterparts over severe losses caused by a massive blaze in an oil storage facility in Cuba’s province of Matanzas on August 5.

CNN reporter loves Vietnamese fish sauce

Chris Dwyer, a reporter for CNN, says he has loved Vietnamese fish sauce made in Phu Quoc (South Vietnam), though it was not easy to taste at the beginning.

Apple CEO Tim Cook appreciates Vietnam market potential

Vietnam, together with Brazil, Indonesia and India that are emerging markets, have made practical contributions to Apple’s group’s outstanding performance in the second quarter of this year, said CEO Tim Cook.

Electronics manufacturers ‘forget’ to recall or recycle used products

Large electronics manufacturers are still not willing to participate in the collecting and recycling of electronic waste to ensure a good living environment for people.