US businesses eye long-term investment in Vietnam

US companies have voiced support for the Vietnamese government’s efforts to stabilize the macro-economy and pledged to do long-term business in the country.

At a dialogue with Ambassador Nguyen Quoc Cuong in Washington DC on January 28, representatives of the US Chamber of Commerce (USCC), the US-ASEAN Business Council (USABC) and major US companies valued Vietnam’s willingness to hold dialogues to ease difficulties for a healthy and transparent business environment.

They said the expected conclusion of Trans-Pacific Partnership agreement (TPP) negotiations in 2013 is of paramount importance to their investment and business expansion strategies in Vietnam and Southeast Asia in general.

The dialogue attracted the participation of USABC President Alex Feldman, USCC Director for Asia Catherine Mellor, and representatives of more than 30 US companies, such as Boeing, IBM, Microsoft, Google, DHL, Fedex, UPS, BakerMcKenzie, KPMG, Lockheed Martin, Westinghouse, John Deere and Caterpillar.

Ambassador Cuong briefed the participants on Vietnam’s initial results of the government’s efforts to stabilize the macroeconomy and contain inflation, as well as its policy in 2013.

He answered US businesses’ questions about the prospects of bilateral relations in 2013, in regard to TPP negotiations and the Lower Mekong Initiative (LMI), as well as US-ASEAN cooperation initiatives for 2013.

The dialogue is part of the Vietnam Dialogue Initiative launched by the Vietnamese Embassy aiming to create a channel of regular dialogues between the embassy and businesses, scholars, and experts of US agencies. It is expected to help promote economic and trade cooperation between Vietnam and the US.

This year, the initiative will be undertaken in the US, focusing on human resource training, improvements of the investment-business environment, high-tech attraction, trade cooperation promotion, development in the lower Mekong basin, the public-private partnership, as well as improving the role of the Vietnamese entrepreneurs community abroad.

Tet products displayed at Giang Vo Spring Fair

Spring Fair 2013 officially opened at Hanoi’s Giang Vo Exhibition Centre on January 28 in the presence of Deputy Prime Minister Nguyen Xuan Phuc.

The event was co-organised by the Ministry of Culture, Sports and Tourism, the Hanoi municipal People’s Committee and the local Department of Industry and Trade.

On display are different kinds of food, beverage, garment and textile, footwear, electronics, interior decoration, pottery, art and handicraft products.

Among the most favoured are Tay Ninh grapefruit, Ly Son garlic, Thai Nguyen tea, Thai Binh peanut candy and Ham Yen orange.

Art performances will be held during the fair which is open until February 7.

More Japanese investors keen on southern hub

A seminar took place in Tokyo on January 28 to attract Japanese investment into Vietnam’s southern Long An province.

Chairman of the provincial People’s Committee Do Huu Lam said Long An is located near Ho Chi Minh City – a major economic and trade hub of Vietnam. It has an abundance of human resources, and has to date secured 477 projects worth a total of US$3.7 billion.

Long An province is striving to improve administrative procedures and perfect policies and infrastructure, Lam added.

Masaichi Ichikawa, a representative from the Japan International Cooperation Agency (JICA), said Vietnam is emerging as an attractive destination for Japanese businesses. His agency is also actively assisting the province to implement projects so as to develop industries in an environmentally-friendly manner.

 Vietnamese Ambassador to Japan Doan Xuan Hung said apart from creating a better investment environment and implementing the fifth phase of the Vietnam–Japan Initiative, the Vietnamese Government is taking positive measures to curb inflation and stabilise the macro-economy to help the national economy grow.

Hung said the embassy will do its utmost to assist Vietnamese localities, including Long An, and help Japanese investors seek cooperation opportunities.

Long An’s investment environment, incentives for foreign investors, and businesses’ experience in production and trading were also introduced at the seminar.

Vietnam’s economy still difficult but shows positive signs

The General Statistics Office on January 29 announced that in the first month of the year the industrial production index fell 3.2 percent from the previous month, December 2012.

Moreover, the index also decreased in all industries of category I--in which the mining sector decreased by 4.7 percent; processing industry, manufacturing fell by 3.0 percent; production and distribution of electricity decreased by 1.0 percent; water supply, waste treatment, waste water treatment was down 0.4 percent.

These figures showed that industrial production is still in recession; and consumer products industry also low this year.

The national economy is burdened with many hidden risks and has not developed sustainably, according to economists.

One of most important economic achievements in 2012 : Son La Hydropower Plant inaugurated in December

Therefore, economic experts expressed concern about instability, citing risks carried over from 2012, such as production suspension or bankruptcy filings of many businesses, low 5.03 percent economic growth, high budget deficits, bad debt ratios and inventory excess.

The freezing of the property market also negatively impacted the national economy, reducing business competitive capacity. Economists argued that the sluggish recovery of the property market is the inevitable consequence of long-term intensive investment.

It is dangerous that the property market enticed all resources, eliminating business incentives. Almost all medium and large-sized enterprises and other investors scrambled for their share of the real estate action, creating the ‘market bubble’ phenomenon. When supply exceeded demand, property bubble deflated and the market lost liquidity and economy became stagnant.

They argued that at present businesses find it hard to self restructure as they need a relatively stable macro-economic environment, enabling their access to important resources such as capital, human resources, technology and markets.

Vietnam still lacks a stable macro-economic environment that can only be created by balancing payments, budget spending, and the saving-investment ratio.

Economists also pointed out that during the restructuring process, businesses cannot deal with difficulties independently, and the banking system needs restructuring as well, to supply sufficient capital for the national economy.

However, there also appear signs of macroeconomic stability, positive results as the trade surplus in January this year (estimated at US$200 million), that is considered a positive result and a positive signal when examined under different angles.

Vietnam has made a number of important achievements in the year of 2012 that exceeded consensus expectations.

The inflation rate was kept as low as 6.81 percent, a trade surplus was obtained for the first time since 1993, interest rates were lowered, and the stability of exchange rates was maintained.

Secondly, Vietnam gets more overseas remittances in the month of the Lunar New Year. This is an important source of capital for state banks and remains an important basis of stabilizing the national economy.

The banks can purchase a large sum of foreign currency to help businesses ease the thirst of US dollars, while increasing foreign exchange reserves yearly.

Besides, economic researchers and experts also proposed solutions for the government to complete the tasks of development in 2013 by re-establishing macro-economic balance.

Firstly, the government should ease difficulties confronting businesses, unfreeze capital for instance, so as to generate jobs and stimulate economic growth, they suggested.

Economists said that along with aggregate demand policies, the government should introduce aggregate supply policies to achieve sustainable economic growth.

They also proposed merging weaker banks to reduce total commercial bank numbers, many of which have zero equity.

Secondly, the businesses underlined the need to increase business governance capacity and both management and operational transparency.

Gladiolus, Lilies fetch good prices in Lam Dong Province

Farmers in the central highland province of Lam Dong are harvesting gladioli and lily flowers for sale to traders from Ho Chi Minh City and Hanoi who are paying high prices for these two flower varieties.

The price of gladiolus has gone up by 30 percent, said growers in Hiep An Commune in Duc Trong District.

Tens of growers were seen packing stems of gladioli to dispatch to Hanoi and some northern provinces on January 28. Some areas bloomed too early ahead of Tet this year, they say.

Lilies in Da Lat City also sold at good prices. Traders from Ho Chi Minh City and Hanoi had booked farms in Thai Phien flower village in advance. They pay well at VND30,000-40,000 a stem, which is VND5,000 higher than last Tet season.

Illegal ship-dismantling yard set up in Haiphong

Over 1,000 old ships are waiting to reduced to scrap iron in the port of Haiphong, posing a great environmental threat to the surrounding area.

Green Viship, built in 1986 in Japan and registered in Mongolia, changed ownership several times, including one company named Dai Huy, who began the dismantling process, finally ending up in the hands of Manh Thang Company, who continued to disassemble the vessel. This was in violation of a Vietnamese law stating that second-hand equipment and vehicles should not be imported for demolition.

On January 28, Manh Thang Company asked permission from authorities to continue breaking down the ship. "When we bought the ship we did not realise that the cargo was worthless, so we began to sell spare parts from the ship itself," the company stated.

The case has been referred to the Environmental Police Department, under the Ministry of Public Security.

Another used ship, the Hufa Star 01, has also been illegally dismantled.

These ships are actually considered industrial waste under the law, and dismantling them may pose threats to the environment. Most ports in the other countries have also banned such vessels from entering because of environmental and safety risks.

Nguyen Cong Dat, Head of Dai Huy Company who specialise in the ship demolition, said that all ships over 15 years-old are banned from import.

Currently, there are about 1,035 old ships that fall under this category, from countries such as Mongolia, Panama, that have been purchased by various Vietnamese companies, that are sitting in the port of Haiphong.

Dat said his company bought the ship for VND14 billion (USD671,000), incurring a monthly loss of VND300-500 million. Environmental laws of other nations would force them to take a loss if they resold the ship.

From January 29, Haiphong police and border guards will carry out an inspection of the old ships in Haiphong Port and deal with enterprises who are illegally dismantling them.

January’s trade surplus reaches US$200 million

Vietnam’s export this month is estimated to reach US$10.1 billion while the estimated import value is US$9.9 billion, resulting in a trade surplus of around US$200 million.

According to the Ministries of Finance and Industry and Trade, January’s export turnover drops by 2.5% from last month but rises by 43.2% from year on year. Among this month’s total export, foreign-invested enterprises accounted for US$6.6 billion, up 47.3% year-on-year.

Products having high export turnovers this month are cell-phones and components with US$1.5 billion. The export of computers, electronic products and metals doubles that of last year’s same period.

Meanwhile, the import turnover increases by 0.4% and 42.3% from last month and year-on-year respectively. The import increase may be a sign of recovery and growth of domestic production.

Unlike the dreary import activity in last year’s January, the import of completely-built-up cars of under nine seats this month increases by nearly 15% in volume but declines by 21.4% in value.

The higher export value is largely owing to higher export volume as prices of some products tended to drop much like the rice price falling by over 25% year-on-year.

Minister emphasizes ‘Gov’t cares about enterprises’

Minister of Finance Vuong Dinh Hue in a press meeting on Monday said that the Government has shown special interest in solving difficulties for enterprises in the current economic context.

The Government has issued Resolutions No. 1 and No. 2 early this year to help timely resolve difficulties for the business community. These policies are an urgent management method taken by the Government, Hue said.

These resolutions are also a big improvement compared to 2012, when the Government released the Resolution No. 13 to support businesses in April, three months later than this year.

Some economists said that Resolution No. 13 brought about little positive impact last year due to slow release while its measures were not strong and effective enough. As a result, there was an upsurge in the number of enterprises going bust with nearly 52,000 firms.

Last month alone, the number of bankrupt enterprises was higher than that of newly-established ones, said the Central Institute for Economic Management (CIEM).

Hue said the finance industry will continue to give tax exemptions and reduction on a large scale to rescue enterprises this year. He pledged to suggest more supportive solutions for businesses if production and business situation and budget collection improves while difficulties come down.

A report of the ministry showed State budget collection reached an estimated VND742 trillion last year, or 0.3% higher than the target.

Domestic revenue was estimated at nearly VND459.5 trillion, and crude oil revenue at over VND144 trillion. Revenues from export and import activities were estimated at VND131.5 trillion and contribution from foreign aid at VND7 trillion.

While crude oil and aid collection targets were fulfilled, the nation failed to meet the remaining targets. The reason was that a large number of enterprises were in great hardship given low economic growth, especially in the fields of construction and building materials.

In addition, some products that made large contributions to the State budget such as automobiles, motorbikes and electronic appliances saw slow consumption. Revenues from land use right slumped sharply compared to 2011 due to the sluggish property market.

State budget expenditure last year was estimated at VND905 trillion. Of which, spending on development investment was estimated at nearly VND192 trillion, debt payment and aid VND100 trillion and regular spending over VND613 trillion.

While budget collection rose a slight 0.3%, total spending on social security increased by over 20%, Hue said.

Deputy Minister of Finance Vu Thi Mai said that the finance ministry will continue tightening fiscal policies and practice thrift this year.

The National Assembly has approved this year’s State budget collection at VND816 trillion and spending at VND979 trillion. The budget deficit is projected at VND162 trillion, or 4.8% of GDP (gross domestic product).

Thailand wants to foster rice trade ties with Vietnam

Vietnam and Thailand should sit together to forge more specific cooperation in rice trade, especially to draft a strategy on rice standards, prices and products for export as this will benefit both nations as well as their farmers, Thai officials said.

Vijavat Isarabhakdi, Deputy Permanent Secretary of Thailand’s Ministry of Foreign Affairs, told the Daily in Bangkok last week that stronger cooperation in rice trade will help lift prices and protect their prestige.

The important thing is that both sides need to shake hands to keep rice prices, quality and volume, he remarked, explaining that rice growers of the countries and consumers will benefit from the bilateral cooperation.

Thailand over the past time has restricted rice export volume which creates favorable conditions for Vietnam to become the world’s biggest rice supplier. However, according to Vijavat, no matter what the leading position belongs to either Vietnam or Thailand, rice export always remains vital to farmers of the two countries.

“The prime ministers of Vietnam and Thailand have recently shared the same voice over the bilateral cooperation, and personally I think that is a big goal of both sides in the near future,” Vijavat noted.

Regarding the reason why Thailand has lost the top rice export position to Vietnam in terms of volume, Vijavat said the change was due to objective reasons, not Thailand’s intention. This year seems promising to Thailand and we will strive to gain strong growth in rice export again, he said.

“Given unfavorable climate conditions and flooding, last year we were unable to achieve the target as expected. Besides, the Thai Government wants to focus on quality of rice, especially export products, and considers quality and prices as the nation’s leading goals,” he said.

Similarly, Nitivadee Manitkul, director of Thailand’s Division of Economic Relations and Cooperation, also insisted on the necessity for cooperation between Vietnam and Thailand in rice export.

Nitivadee said Vietnam, Cambodia and Thailand are holding over 50% of the world’s rice trade. Therefore, she noted, Vietnam and Thailand should carry out further cooperation to have prices and quality of rice stabilized.

Thailand and Vietnam have the same agricultural foundation and share similar rice varieties with increasingly-improved quality, she told the Daily. Both sides should have more specific cooperation to map out a strategy for the rice industry in the coming time, she added.

Like Vietnam, besides boosting industrial and tourism development, Thailand is seeking ways to develop its agriculture as the majority of Thai people have still lived on farming. Food is the most important issue of all nations in the near future, therefore besides rice Vietnam and Thailand can join hands to help farmers increase production of coffee, rubber and fruits, she said.

“We are proposing the Government make more cooperation with Vietnam for other farm produce. The hi-tech agricultural cooperation between the nations is still being discussed and there may be more proposals for cooperation,” she added.

Delta farmers in rice price dilemma

While rice farmers in the Mekong Delta are scraping by on low profits despite exports hitting a record high last year, the authorities are having a hard time seeking solutions to prevent domestic rice price drops in the 2012-2013 winter-spring crop.

Pham Van Du, deputy head of the Department of Crop Production under the Ministry of Agriculture and Rural Development, said the nation’s total rice farming area was over 7.7 million hectares in 2012, up 117,000 hectares over 2011.

The total rice output was nearly 44 million tons, a growth of 1.6 million tons year-on-year, said Du at a review conference for rice production held in Kien Giang last Friday.

However, rice growers earned significantly lower profits last year. According to rice farmers in Dong Thap’s Thap Muoi District, their profits dwindled by VND5-8 million per hectare against 2011.

Although the rice export volume hit a record high of 7.72 million tons in 2012, 630,000 tons higher than 2011, the export turnover dropped US$50 million year-on-year, standing at US$3.45 billion. The Vietnam Food Association (VFA) ascribed the decline in rice export turnover to poor export prices, which were US$50 per ton lower than in 2011.

Rice sales in the local market are forecast to be more difficult in 2013 as domestic prices have been falling since the year’s beginning.

In the Mekong Delta, rice prices ranged from VND4,400 to VND5,200 per kilo at the start of the month, but now they are VND4,100-4,800 a kilo.

In this context, it is necessary to find a way to prevent rice prices from dropping further when the 2012-2013 winter-spring crop is about to enter its peak harvest season. Still, the agricultural authorities are struggling to figure out an effective solution.

Du suggested the program for purchasing rice for temporary storage should be carried out quickly to remove difficulties for farmers. It is expected that some 1.5-2 million tons of rice will be bought in this winter-spring crop.

The agriculture ministry last year put up the draft regulation on temporary rice storage for comments, intending to pilot it in An Giang, Kien Giang, Dong Thap and Tra Vinh this year. However, as farming households still have many problems stockpiling rice, VFA members will continue to purchase rice for temporary storage.

Although the official decision has not been made, it is likely that VFA will be in charge of buying the winter-spring rice for temporary storage. The association has already drawn up a plan for this, said Du.

“So far, VFA has always been in charge of temporary rice storage and I think they have done it well,” he said.

“Currently, there is no better mechanism for rice stockpiling, so the old mechanism will continue to be applied and gradually perfected,” he told the Daily.

Dat Xanh acquires two more condo projects

Dat Xanh Group has finished buying an apartment project in HCMC’s Thu Duc District and is negotiating another deal in Go Vap District.

Luong Tri Thin, general director of Dat Xanh, said his firm had bought the entire apartment project covering 3.6 hectares in Thu Duc District developed by Saigon General Service Company (Savico).

Having an estimated cost of VND1.2 trillion, the project called Sunview 7 consists of five 20-floor blocks with around 2,000 apartments for low-income earners. Apartments of the project will be launched in the third quarter.

Meanwhile, details about the project which Dat Xanh plans to buy in Go Vap District have not been announced except for the project’s area of 3.2 hectares.

According to Thin, Dat Xanh will continue to invest in apartment projects whose investors are facing financial distress this year.

Although 2012 was a challenging year for property enterprises, Dat Xanh’s business results were not much affected thanks to the restructuring of business models, investment portfolios, capital and debts.

Explaining for the purchase of many projects in the past time, Thin attributed it to the company’s advantage, which is the closed chain consisting of financial investment and construction companies as well as a firm supplying products for customers.

“We join those projects with not only capital but also with construction and sales, helping the project fare well even in tough times,” he said.

Dat Xanh last year signed a cooperation deal with Gia Phu Real Estate Co. to invest in the Gia Phu apartment project’s second phase in Thu Duc District.

Under the deal, Dat Xanh will set side some VND250 billion to buy this 182-apartment project and change its name into Sunview 5 Apartment.

Dat Xanh has spent around VND300 billion on the Thien Loc project in Go Vap District and launched 619 apartments of the Sunview 3 project. Besides, the firm has cooperated with Truong Thanh Loc Co. in the 4S Riverside Linh Dong, which is also in Thu Duc District.

LLD opens decorative lighting showroom in HCMC

Long Life Development Co. (LLD) on Monday opened a model decorative lighting showroom in HCMC, showcasing medium- and high-end products of Philips.

The new showroom at 107 Calmette Street in District 1 helps customers experience advanced lighting solutions and market trends in the light application industry.

The showroom has different sections for different lighting purposes, such as for the living room, bedroom, kitchen, bathroom, children’s room and garden.

It displays a variety of household light appliances of such brands as Ledino, EcoMoods, LivingColors, Aquafit, Kidsplace, Roomstylers, Outerstylers, Linea, Umbra, Accents, and KitchenMoods.

This is the second Philips decorative lighting showroom opened by LLD in the city.

Tran Xuan Linh, chairman of LLD, said that his company would open more showrooms under Philips standards in key areas of HCMC.

Online shopping turns busy before Tet

Online markets have become busy towards the Lunar New Year holiday with an increasing demand compared to normal days.

Dao Thuc Van, marketing deputy head of Peace Software Solution Company, owner of the e-commerce site chodientu.vn, said that there are currently over 10,000 online purchasing transactions made everyday, up 50% from last month.

According to Van, customers now tend to shop online due to low costs and convenience as they do not have to come to crowded supermarkets and traditional markets.

Meanwhile, vatgia.com, 123.vn and muachung.vn also see an increase in number of online transactions of 40-50%.

Among products offered on e-commerce websites, fashion products, cosmetics, consumer and technology products are purchased the most.

In addition, another popular product at this time is Tet gift baskets. At websites offering this kind of products such as quatetvanphong.vn, muasamquatet.com and thegioiquatet.com, gift baskets of imported confectioneries are widely available.

Other websites like muare.vn, rongbay.com, enbac.com and vatgia.com have offered a wide variety of Tet services such as beauty services, house cleaning and car renting with low fees for early bookings.

At chodientu.vn, customers can join many promotion programs with discounts of up to 70%. Meanwhile, several promotion programs with a 70% discount are seen at fashion websites like zalora.vn and yes24.vn.

A survey on consumers and e-commerce released last December by Visa showed that up to 98% of surveyed people in Vietnam did buy products and services online in the past 12 months.

Soybean farming area shrinking

The total soybean farming area in Vietnam dropped from 192,000 hectares in 2008 to 120,000 hectares in 2012 as local farmers find their products unable to compete with imported soybean.

At present, locally-produced soybean is sold at some VND15,000 per kilo, while prices of imported soybean are only VND12,000-13,000 a kilo. Therefore, domestic farmers are switching to other crops.

Local soybean supply now can meet only 10% of the demand. Therefore, the country still depends heavily on import, according to the Department of Crop Production under the Ministry of Agriculture and Rural Development.

In 2012, Vietnam imported nearly 1.28 million tons of soybean worth US$755 million, up 51.2% in volume and 57.8% in value against 2011. As such, soybean had the strongest import growth of all items.

To reduce dependence on import, the agriculture ministry has drawn up a plan for agricultural development, with an aim to increase the area of soybean farming to some 350,000 hectares, producing an annual output of 700,000 tons by 2020.

At a conference on rice-soybean rotational farming in the Mekong Delta held in Dong Thap last week, Pham Van Du, deputy head of the Department of Crop Production, said soybean farming still had much room for expansion.

Meanwhile, Do Huu Phuong, head of the livestock division under the Department of Livestock Husbandry, cited a report of the U.S. Department of Agriculture forecasting that the global soybean trade in the 2012-2013 crop will grow 9.3% to nearly 99 million tons.

The demand for soybean is rising sharply because of the strong growth in oil and animal feed production in recent years, said Phuong.

Giving explanation for the shrinking soybean farming area, Le Huy Ham, director of the Agricultural Genetics Institute, said that although soybean generates higher profits than rice, it is harder to grow. “Therefore, soybean remains unattractive to farmers,” he said.

With low productivity of only 1.5 tons per hectare, versus the global average of 2.5 tons a hectare, domestic soybean cannot compete with imported soybean, said Du.

Currently, soybean is grown in 28 out of 63 cities and provinces nationwide. The soybean farming area in the north accounts for 80% of the total area, but the productivity is only 1.45 tons per hectare, while the farming area in the Mekong Delta can produce nearly 2.2 tons per hectare.

At the conference last week, the agriculture department of Dong Thap signed a contract with Hung Ca Co. Ltd. on cultivating 10,000 hectares of soybean in the province.

HCM City’s customs says tax revenue target beyond reach

The HCMC Department of Customs has lamented the budget revenue target of VND80 trillion for 2013 as demanded by the Ministry of Finance to be beyond its reach, urging the ministry to revise down the figure.

In a review meeting on Friday, the customs bureau said the target should be around VND69 trillion compared to the tax revenue of VND68.081 billion it collected last year.

Nguyen Thi Thu Huong, head of the city’s customs bureau, said her agency collected roughly VND68 trillion for the State coffer in 2012, VND81 billion higher than the target assigned by the Ministry of Finance. As a breakdown, export and import tax and special consumption tax totaled VND22.66 trillion and value-added tax was VND45.41 trillion.

Huong said her agency had to make greater efforts to realize the 2012 target, including calling for enterprises to pay tax sums ahead of schedule or enhancing inspections after customs clearance to ensure full payment.

Huong noted that the Ministry of Finance last year had required her department to collect up to VND78.9 trillion for the State budget, jumping 15.9% from the real value recorded in 2011 or VND10.9 trillion. After many proposals from the city’s department, the finance ministry agreed to revise the plan down to a minimum VND68 trillion.

This year again, the ministry aims even higher, asking the city’s customs bureau to collect as much as VND80.05 trillion, rising by 17% year on year and accounting for 33% of the total tax sums collected by customs bureaus nationwide.

According to Huong, consulting agencies of the finance ministry had drawn up an unrealistic and unfair target for HCMC. She proposed the ministry repair the target allocation soon.

“It is not late to make the change now,” Huong told the meeting attended by Minister of Finance Vuong Dinh Hue, Deputy Minister Hoang Anh Tuan and other leaders of related agencies under the ministry.

Le Dinh Nam, director of export-import tax division of the customs department, said it was impossible to achieve the planned figure. The customs department in 2013 will be only able to collect VND69 trillion, he said.

Similarly, HCMC Vice Chairwoman Nguyen Thi Hong stated that this year’s target was too high. She said that it is impossible to turn the target into reality in the context of the current economic difficulties.

Lat year, the total trade value of commodities undergoing customs clearance procedures in the city was roughly US$66.68 billion, dipping 0.65% year-on-year, with import spending at some US$34 billion, a contraction of 5.07%, and export value US$32.61 billion.

Despite a fall in the flow of goods, the city’s customs bureau still managed a rise in tax revenue, proving stronger efforts by customs to realize the target, according to Huong.

Habeco set to say cheers to Carlsberg

Hanoi brewery Habeco and Denmark-backed brewery Carlsberg are in negotiations for a higher-level strategic cooperation deal.

Under the potential deal, Carlsberg will see its ownership in Habeco, one of the three biggest beer companies in Vietnam, increase to a 30 per cent stake.

Habeco is now preparing to hold an extraordinary shareholder meeting to vote on whether the company should sell an additional 13 per cent stake to its strategic investor Carlsberg Breweries A/S, a decision that should have been made on December 7, 2012.

The Ministry of Industry and Trade’s (MoIT) in a document sent to Habeco last November asked Habeco to sell the additional stake to Carlsberg at the price of VND50,015 or $2.4 at current exchange rate. This price is equal to the initial public offering (IPO) price of Habeco in 2008.

A reliable source familiar with the potential deal told VIR that “Habeco delayed last month’s scheduled meeting because the MoIT asked the two firms to negotiate a strategic cooperation agreement before the shareholder meeting to institutionalise the next steps following the transaction. In addition, the ministry also required Habeco to submit a review on cooperation over the past five years and plans for subsequent Carlsberg raising its stake to 30 per cent.

“It is not true that Habeco delayed selling additional stakes to Carlsberg as many rumors claimed after its extraordinary shareholder meeting was postponed. The story now is that two firms are carrying out legal regulations to avoid complications later,” said the source.

Carlsberg officially became Habeco’s strategic partner in 2008. The brewery is holding a 16.07 per cent stake of Habeco. In 2011, Carlsberg signed a memorandum of understanding with Habeco at Carlsberg’s headquarters in Copenhagen to acquire an additional 13 per cent stake at the Hanoi-based brewery. Habeco chairman Tran Tuan Phong said the company was in the process of obeying the MoIT’s guidance.

Habeco already submitted a report to the MoIT on the progress of cooperation over the last five years. However, the report stated that the efficiency of cooperation during the past five years was not as good as expected. This was attributed to the fact that Carlsberg only held a 16.07 per cent stake of Habeco, while under the Carlsberg Group regulations, only companies of which Carlsberg holds more than a 30 per cent stake will be considered a member of the Carlsberg Group, and are eligible to specific preference policies from the group.

Vietnam Airlines’ IPO is all set to take to the air this year

Vietnam Airlines is set to take to the air with its initial public offering by the end of 2013.

The government last week approved Vietnam Airlines’ restructuring plan for 2012-2015.

Accordingly, the state will decrease its stake in the airline to 65-75 per cent after its initial public offering (IPO) this year.

In the initial draft restructuring plan Vietnam Airlines submitted to the Ministry of Transport (MoT) last April, the airline proposed a 70-80 per cent stake to be held by the state.

Based on the capital demand, the airline will issue shares to mobilise capital to ensure the state ratio stays at 65-75 per cent of its charter capital now at VND8.94 trillion ($429.8 million).

According to the MoT, the change will bring the airline in line with the country’s state-owned enterprises (SOEs), as other transport sector businesses are undergoing similar restructuring.

This month, Vietnam Airlines submitted a list of selected advisers for its IPO to the MoT for approval which included Citigroup, Morgan Stanley and some other Vietnamese sub-contractors.

It expects to raise $200 million via this IPO, as the state giant evaluates its equity to reach VND14 trillion ($673.1 million) in 2013 and reach VND21 trillion ($1 billion) in 2015. Under the plan, apart from the mother corporation, which includes nine member companies, the restructured Vietnam Airlines will consist of 26 independently audited companies.

The mother corporation will hold a 100 per cent stake in Vietnam Airlines Engineering Company (VAECO) only, while owning half of the registered capital of 14 companies and less than 50 per cent of registered capital in the 11 remaining companies.

As expected after completing restructuring, Vietnam Airlines will comprise four airlines namely the mother corporation, VASCO, Jetstar Pacific and Cambodia Angkor Air.

By late 2015, Vietnam Airlines is expected to completely divest its capital from non-core businesses with a view to improving its business performance. Specifically, 10 names the airline will withdraw capital from include Techcombank, Bao Minh Corporation, France Telecom, Saigon Post and Telecommunications Service Company.

Vietnam Airlines’ total annual revenue reached VND50.89 trillion ($2.4 billion) in 2012, surging 6.3 per cent on-year. The airline also saw profits of VND69.8 billion ($3.3 million), up 239 per cent.

In the next eight years, the airline, which now controls 69.7 per cent of the domestic aviation market, plans to reach revenue from air transport of $43.8 billion with a pre-tax profit of more than $1 billion.

Gold traders call for tariff relief
 
The Viet Nam Gold Traders Association has called for the removal of the 10 per cent tariff on gold jewelry products which have more than 80 per cent gold content.

In a letter to the Ministry of Finance and the State Bank of Viet Nam, the association said exports of Vietnamese gold jewellery products had come to a deadlock since the tax rate came into effect in 2011.

The challenging domestic economy environment which had resulted in poor demand for gold jewellery had caused gold traders extreme difficulties, forcing them to cut jobs, the association said.

Business opportunities for gold traders were increasingly narrow, especially since the government had tightened gold production and trading activities under Decree 24, it said.

Many businesses who were not eligible to produce and trade gold bars wanted to promote gold jewellery exports but they faced high tariffs.

The association said that for many years other countries in the region had slashed tariffs on gold jewellery and fine arts to zero to exploit potential in the sector. In Thailand, for example, exports of gold jewellery hit an average of about US$3 billion each year.

Viet Nam had a lot of potential and competitive advantages in producing gold jewellery for exports. However, the new tax rate made such exports less competitive compared with products from other countries which had a zero tax rate, it noted.

The association asked that the zero tax rate on gold jewellery which had a gold content of less than 80 per cent be left unchanged.

Slow reforms render bank outlook ‘mixed'
 
The 2013 outlook for Viet Nam's banking and finance sector remains "mixed" since the pace of planned reforms remains slow, according to a new report.

The report, released by real estate services firm Cushman & Wakefield, says Viet Nam's banking and finance sector has been focused on "the growing problem of non-performing loans and the need to buy back bad debts. "

In the last quarter, commercial banks have cut deposit rates to around 11-12 per cent for terms of one to two years, and in turn, have gained better capital ratios.

The report notes that the banking sector is the main source of Viet Nam's bad debt structure and that the government is moving to restructure and address banks' bad debt exposure.

It says credit growth has been subdued as relevant government policies bite into the property market which has been frozen for some time now.

Credit growth was estimated at 8.61 per cent as of October and at less than 12 per cent at the year-end.

"The government's main focus at this time is to restructure non-profitable banks and control bad debt by assisting credit agencies and enterprises in identifying and re-classifying such debt," the report says.

It emphasises the need for these institutions to tidy up non-performing loans and remarks that "there is still much debate on the most effective methods."

Overall, while some of Viet Nam's economic indicators have been positive, the outlook remains tenuous, the report says.

Credit restrictions have kept inflation under control and the government is still hoping to achieve a rate near 12 per cent, much lower than around 20 per cent that was recorded at this time in 2011.

Another effect is that a heated property market has cooled down drastically, with apartment pricing down by some 30 per cent on average.

In both the major cities of Ha Noi and HCM City, project construction has come to a standstill, the report notes.

Raising capital is still the main concern, and banks are unable or unwilling to extend large amounts of credit.

The banking sector in Viet Nam is structured in various groups, including wholly-owned foreign banks, state-owned commercial banks, joint stock commercial banks and joint venture banks.

There has been little movement by foreign banks in the second half of 2012. They are considering cost-saving exercises while "local banks are reporting some expansion, with transaction offices being the main focus," the report says.

It says the outlook for the banking and finance sector is mixed as the government implements its restructuring plan.

Broadly, the plan introduces a framework for comprehensive reform of the financial sector, including strengthening internal controls and management, and limiting control of dominant shareholders.

"However, the market sees a real lack of details and willingness to implement," the report remarks.

It says the banking sector is not expected to see any real changes in early 2013 because reform implementation is slow.

Jonathan Sullivan, Asia Pacific Assistant Manager for Research says that the "streamlining of operations within the banking and financial services sector is likely to continue in 2013, but growth opportunities remain ever present in Asia Pacific."

Overall, the decreased regulation and opening-up of these growth markets will continue to be the focus of the industry's expansion efforts in the near to medium-term as developed markets face weaker growth, tightening regulations and operational streamlining.

S Korea free trade pact nears
 
Vietnamese enterprises have been urged to increase their competitiveness to take advantage of the Viet Nam – S Korea free trade agreement (FTA) which is currently under negotiation.

According to the Deputy Director of the Asia-Pacific Market Department under the Ministry of Industry and Trade Vo Thanh Ha, the competitiveness of Vietnamese enterprises remained limited.

"That's why many enterprises would still fail to benefit from the FTA," Ha said, adding that Korean enterprises were more competitive in the fields of insurance, banking, air transport and logistics in the Vietnamese and ASEAN markets.

Nguyen Van Son from the Office of the National Committee for International Economic Corporation said the FTA would create many opportunities.

About 90 per cent of tariff lines would be slashed to zero within three years once the FTA was put into force, and the export of Vietnamese labourers to S Korea would be loosened, Son added.

According to Le Van Dao from the Viet Nam Textile and Apparel Association, the garment and textile industry would benefit from import tax cuts which would help to increase its competitiveness in the S Korean market.

He forecast a strong increase in exports of garments and textiles to S Korea when the FTA came into effect, citing that last year's export turnover to S Korea reached US$1.3 billion, making up 12 per cent of the country's total garment and textile imports.

South Korea is Viet Nam's fourth largest trade partner and ranks third in terms of foreign direct investment.

At a recent workshop, Ha said that the second round of FTA negotiations would begin this quarter.

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