Southern developers see stronger market

Many property developers in HCM City's neighbouring provinces of Binh Duong, Long An and Dong Nai plan to launch sales of properties in their projects next month in the hopes that the market will become more dynamic at the end of this year.

In Binh Duong, a series of projects will be launched in next month.

For instance, the An Cu Lac Nghiep Property Co will offer for sale properties in the IJC Commercial Town project in My Phuoc Urban Area. The project, covering an area of 43,923 square metres has a total investment capital of VND450 billion (US$21.6 million)

The company said that in Phase 1, the investor would offer 100 land lots for sale. However, customers had already registered to buy more than 90 per cent of these lots in August.

Early next month, the Becamex Infrastructure Development Joint Stock Co and Tac Dat Tac Vang Real Estate Co will put up for sale properties in Green River Market and Trade Centre project which is expected to become a trading hub in the southern province.

On August 25, the Kim Oanh Property Joint Stock Co and TDC Co launched their 55ha City Garden project in the My Phuoc 4 Urban Area, which includes apartments, villas and a trade centre. The price for land lots in the project begins at VND1.7 million ($81.7) per square metre.

In Dong Nai Province, Dat Xanh Group will officially offer properties in the Suoi Son Urban Area for sale next month.

The project is said to have much potential because it is located adjacent to the Giang Dien Waterfall Eco-tourism Park.

The project, covering an area of 117ha, has total investment capital of VND4,575 billion ($220 million).

Meanwhile, Pacific Property and Infrastructure Development Joint Stock Co. (PPI) and its partner, Thu Duc Housing Development Corporation, have said the joint venture would gauge market demand by presenting 100 land lots in the Long Hoi City project's Phase 1 for sale in early September.

The project is located in Long An Province.

The 100 lots cover a total area of more than 26ha and the price offered is VND2.95 million ($141.8) per square metre.

Dang Thi Kim Oanh, general director of Kim Oanh Co, said in general, the property market was still facing difficulties.

However, the market in provinces neighbouring HCM City attracted more attention from customers, she said.

The advantage in these localities is the cheap price, compared to HCM City. It only costs customers several hundred million dong to own a land lot while infrastructure is being developed quickly and comprehensive links established to HCM City.

Luong Tri Thin, chairman of Dat Xanh Group, said that at a time when the monetary market, including the stock market and foreign currency markets, had become quiet and gold was fluctuating strongly, investors should shift their attention to the property market as a safe investment channel.

Furthermore, property prices in Dong Nai, Binh Duong and Long An were considered to be fairly cheap, he said.

Province calls for investment in 31 projects
 
The Phu Yen People's Committee has announced a list of 31 projects that need a combined investment, either foreign or domestic, of US$4.1 billion.

They include developing infrastructure for the Nam Phu Yen economic zone at an estimated $1.3 billion, and for the Hoa Tam Oil Refinery Industrial Zone at $1 billion.

The Tuy Hoa-Tay Nguyen railway link is another big-ticket project requiring $625 million.

All the others require investment of $5-70 million.

They include agricultural projects such as a cattle farm and meat-processing factory in Phu Hoa and Song Hinh districts; a dairy farm and milk processing plant with a capacity of 100,000 litres per day; expansion of coconut-growing areas and construction of a coconut processing plant with a capacity of 50,000-80,000 tonnes per year in Song Cau Commune; and building infrastructure for 1,000ha of aquaculture farms in Dong Hoa District.

In the tourism sector, the province has called for developing five eco-tourism projects at $15-30 million each in three districts.

The south-central coastal province has so far attracted investment of $6.39 billion in 258 projects, including 37 from foreign businesses. Almost half of the foreign projects, involving more than $400 million, are operational.

The director of the provincial Department of Planning and Investment, Nguyen Chi Hien, said two giant projects, the Vung Ro oil refinery and a luxury tourism complex, were set to get under way.

Vung Ro will have a capacity of 4 million tonnes per year in the initial stage which will cost $1.7 billion. Work on it is expected to begin in the first quarter of next year.

The tourism complex, to be developed by Brunei's New City Company, will cover an area of 480ha and cost $4.19 billion.

Over VND100 bil allocated for agricultural encouragement in 2011-2015

The National Agricultural Encouragement Centre has announced that as much as VND102.1 billion will be invested in fish farming for the next five years.

This is part of agricultural encouragement projects applying the advanced methods to meet Global GAP (Good Agricultural Practice) standards.

The focus will be on equipping farmers with aquaculture skills and knowledge to ensure food safety and hygiene requirements.

FDI reaches over US$9.5 billion in eight months

Vietnam lured US$9.56 billion in foreign direct investment (FDI) in the first eight months of 2011, equivalent to 74 percent of the sum attracted in the same period last year.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, US$7.94 billion of the amount came from 582 FDI projects licensed in the period, representing year-on-year decreases of 30 percent in capital and 34 percent in the number of projects.

The remaining US$1.62 billion were increased investment from the existing 168 projects. FDI still headed into processing and manufacturing industries.

In contrary to the downward trend of the registered FDI capital, the eight-month FDI disbursement reached US$7.3 billion, an increase of 1 percent against the same period last year.

FDI projects (including crude oil) posted total export and import turnovers of US$32.64 billion and US$30.1 billion in the first eight months of the year, up 34 percent and 31 percent respectively.

HCM City promotes Vietnamese goods

A VND50 billion promotion programme is being put on by the Ho Chi Minh City Union of Trading Co-operatives, Saigon Co-op , from August 28-September 29 as part of the 2011 Promotion Months and “the Vietnamese People Use Vietnamese Goods campaign”.

1,500 essential products will be on sale for about 50 percent off in 50 Co.op Mart supermarkets and 10,000 discount vouchers will be given out to consumers who buy products made in Vietnam.

Saigon Co-op is also sponsoring 200 mobile shops with VND20 billion worth of goods to serve workers and people in industrial parks, processing zones and the surrounding districts of Ho Chi Minh City.

Kien Giang urged to focus on land planning, management

 
Party General Secretary Nguyen Phu Trong meets with local authorities and residents of Vinh Phu Village, Thoai Son District, during his visit to An Giang Province. — VNA/VNS Photo Trong Duc
 
The southern Kien Giang Province yesterday was asked to increase its supervision of land planning and management as well as implement social security policies for farmers whose land was acquired by the State.

Party General Secretary Nguyen Phu Trong made the request while working with provincial leaders on agricultural issues.

The province needed to improve the efficiency of new models of co-operative agriculture, boost the application of science and technology in agricultural production, as well as strengthen the links between the State, farmers, scientists and enterprises to save production costs and increase the added value of products, he said.

Applying science and technology in agricultural production would also contribute to protecting the environment, coping with sea level rise and mitigating negative effects caused by climate change, Trong added.

With a 200 km coastline, the province must also pay attention to promoting the marine economy and ensuring national security.

Trong said he appreciated the achievements that the province and local people had made over the past three years. Income per capita has increased to VND26 million (US$1,200) per year and the rate of poor households has continued to fall 1.5 per cent per year on average.

Provincial Party Committee Secretary Nguyen Thanh Son said that in the long term, agriculture, rural areas and farmers will play an important role in the stability and socio-economic development of the province.

However, Kien Giang Province still faced many difficulties, since the infrastructure supporting the agricultural sector still does not satisfy requirements for development, especially for transportation, irrigation and power systems.

Besides, farmers were still having difficulty accessing credit loans to invest in production due to obstacles related to borrowing procedures, Son said.

To continue boosting sustainable agricultural development, the province suggested that the Government set up central and local investment funds for agriculture and rural areas, implement policies to mobilise capital sources and create jobs for farmers and fishermen.

On Saturday, Party General Secretary Nguyen Phu Trong on his visit to the Cuu Long (Mekong) Delta province of An Giang said the province should address land issues properly, which would entail implementing policies for farmers without land, narrowing the gap between rich and poor, and providing jobs to rural residents.

The Party leader urged An Giang Province to continue promoting its achievements, surmounting weaknesses and shortcomings, and speeding up the implementation of the Party Central Committee's Resolution 26 on agriculture, farming and rural areas with stronger and more comprehensive measures.

Regarding new production models that should be multiplied in rural development, the province should strengthen the linkage between production, processing and sales to increase productivity, quality and efficiency.

Trong praised rural development efforts made by An Giang Province in recent years, which now possesses a total farming area of over 644,000 ha and an average rice yield of 6.33 tonnes per hectare in 2011.

Aquaculture, especially tra fish breeding, has strongly developed, becoming a key economic sector of the province.

Eighty out of 136 communes throughout the province have standardised their roads, all communes have gained access to the national power grid and 97 per cent of communes have universalised secondary education.

Jan-Aug farm produce exports soar to over $16 bln  

Vietnam saw export revenue from agricultural, forestry and aqua products between January and August increase by 34.2% on the year-earlier period to US$16.4 billion, according to agriculture ministry statistics.

The country has so far this year shipped about 5.4 million tons of rice, valued around US$2.7 billion. The performance reported a year-on-year increase of 9.4% percent in volume and 14.6 percent in value, the report said.

The Philippines is still the largest buyer of Vietnamese rice, followed by Indonesia, which has significantly increased its purchasing, according to the ministry. Other major buyers of Vietnamese rice include Bangladesh, Cuba, Ivory Coast and Malaysia, said the report.

An estimated 958,000 tons of coffee were exported between January and August to create US$2.1 billion in revenue, up 12% in volume and over 72.2% in value. The average export price is US$2,234 per ton, increasing by 57% on the same period last year.

Meanwhile, rubber shipments totaled 449,000 tons worth US$1.9 billion, up 4.1% in volume and 65% in value.

The world’s rubber demand is forecast to remain high till the end of the year, the report said.

In all, exports of agricultural goods have created US$9.3 billion over the past eight months, up about 44%. Aquatic products posted a rise of 24.4% to US$3.7 billion, and the forestry sector saw US$2.6 billion in export revenue, rising by 12.4%.

Among the forestry products, furniture and other wooden items made up to $2.4 billion.

Vietnam expects a total of US$23 billion from this year’s exports of all agricultural, aquatic and forestry products. Last year’s result was reported at $19.2 billion.
 
Housing cost still much higher than GDP per capita  

People struggle to buy houses since housing price remains much higher than the GDP (gross domestic product) per capita, financial experts warn.   

“Lending interest rate on loans to housing in Vietnam amounts to more than 20 percent per annum, which is too high compared to Taiwan’s 2.5 percent per annum,” says Bui Thanh Son, deputy general director of property firm Phu My Hung.

“Figures from the company show only about 30 percent of our customers have to borrow from banks, while the rest say they buy houses after saving enough money.”

Financial experts say investments flow into main asset classes, such as gold, stock and dollar, due to a surging gold price and stronger greenback, prompting to an increasing amount of venture investments and bubbles.

Property is the most favorite asset class of city people, with 34 percent of household having invested in, according to the National Financial Supervisory Commission.

The amount of investments in production sector remains low, amounting to 24 percent, the commission says in a report.

Analysts say policies on land management and monetary help curb speculation and enhance the market’s stable growth.

However, some of them hinder investments flowing into the market, leaving it getting bearish for years.

Under the Circular 13/2010/TT-NHNN, the state bank raises the risk ratio of credit to property investments to 250 percent from 150 percent, forcing commercial banks to restrict property loans.

The regulation also states that commercial banks are required to raise their capital adequacy ratio (CAR) to a minimum of 9 per cent – an increase of 1 percentage point.

CAR reflects the capacity of the bank to meet time liabilities and manage credit and operational risks.

It ensures that the bank has the capital to cushion potential losses, protecting depositors and creditors.

The State Bank of Vietnam in March ordered all lenders to restrict non-manufacturing credit at 16 percent by the end of the year. It targets annual credit growth of 20 percent for 2011.

Experts say shortage of fund is among the main obstacles to the property market, which requires big and long-term loans.

“The economy will be still turmoil, if we keep tightening the monetary policy,” says Le Xuan Nghia, vice chairman of the National Financial Supervisory Commission.

“Those who want to buy houses, meanwhile, are standing on the sideline to wait for the government’s further moves. As a result, the property market remains stagnant due to a severe shortage of capital.”
 
PV Shipyard to build 2nd Vietnam-made rig soon  

PetroVietnam member PV Shipyard says it will build the second made-in-Vietnam oilrig in the next few months as the first one has been completed and is ready for delivery.

The parents company –Vietnam National Oil and Gas Group – has appointed PV Shipyard to build another 90-meter jack-up rig for Vietsovpetro and a new tender barge for PV Drilling, another member of the group.

PetroVietnam is set to inaugurate the first locally manufactured jack-up rig on September 9 in Ba Ria-Vung Tau Province, where PV Shipyard has built the mobile platform for 26 months. The structure includes blocks, cantilevers, living quarters, the pipe system and a helicopter deck.

A jack-up rig is a type of mobile platform that is able to stand still on the sea floor, resting on a number of supporting legs.

Vietsovpetro is the project owner of the second made-in-Vietnam rig. The Vietnamese-Russian joint venture and PV Shipyard are scheduled to sign the contract by the end of 2011, according to the platform builder.

Meanwhile the tender barge construction project is owned by PV Drilling. The barge is set for completion within 26 months and is later on used by Chevron for upstream oil and gas activities, PV Shipyard said.

Building oilrigs at home is part of Vietnam policy on shifting core mechanical engineering in oil and gas to Vietnamese companies.

Vietnamese Prime Minister Nguyen Tan Dung, during his working trip to Ba Ria-Vung Tau Province in July, came to visit PV Shipyard and examined the building of the first locally made rig.

Foreign investment disbursements rebound
 
After two months of a slump, disbursement of foreign direct investment (FDI) rebounded in August, reaching US$1 billion for the month, the Ministry of Planning and Investment's Foreign Investment Agency announced.

The latest disbursement was the highest monthly level of its kind so far this year. This brought FDI disbursement in the first eight months of this year to $7.3 billion, a year-on-year increase of 1 per cent, it said.

The eight months, however, saw a gloom in the area of newly registered investment capital.

During the period, 582 new foreign-invested projects, worth a combined $7.94 billion, were licensed, marking a yearly decrease of 34 per cent in the number of projects and 30 per cent in the level of investment capital.

Meanwhile, 168 existing projects were approved to raise their capital by $1.62 billion, representing a modest increase of 1 per cent. The new additions have brought the total FDI registered in the eight months to $9.57 billion, down by 26 per cent year-on-year, the agency said.

Over the January-August period, the processing and manufacturing sector remained attractive in the eyes of foreign investors. It has attracted $4.6 billion or 48 per cent of the total FDI registered to country in the period.

The electricity, gas and water production and distribution sector contributed to $2.5 billion, while the construction industry made up $671 million.

Hong Kong was still Viet Nam's largest source of foreign investment with 34 projects worth $2.89 billion. It was followed by Sing-apore with 67 projects capitalised at $1.45 billion, South Korea with 200 projects valued at $851 million and Japan with 136 projects worth $844 million.

Among the country's ideal destinations for foreign investors were the northern province of Hai Duong, $2.5 billion; the southern hub of HCM City, $1.65 billion; and southern Ba Ria-Vung Tau Province, $780 million.

The agency also reported foreign-invested firms earned $32.64 billion from exports in the eight months, surging 34 per cent against the same period last year.

The firms also spent $30.1 billion for imports during the period, up 31 per cent.

Industrial growth index drops 7.3%
 
Growth of the national index of industry product (IIP) continuously dropped for the second time with a year-on-year increase of 7.3 per cent in the first eight months.

This was about 2 per cent lower than in the same period last year,according to the General Statistics Office (GSO).

IIP growth, GSO said, started to decrease in July.

In the first six months of last year, the index increased by 9.7 per cent over. The figure was 8.8 per cent at seven months, it added.

The GSO informed that in August only, the IIP increased by only 4.3 per cent.

According to the GSO's report, during this period, nearly half of industrial products saw a downturn in IIP compared to the same period of last year.

In eight months, only 9.6 million tonnes of crude oil and natural gas were exploited, a year-on-year reduction of 2.3 per cent.

The vegetable and fruit procession industry declined by 9.8 per cent, while medicine production fell by 2.9 per cent.

Experts from the GSO had many reasons for the downturn.

"Income costs have strongly increased while consumption has significantly come down. Moreover, the stockpile volume has been up, which has forced manufacturers to cut down their productions," experts said.

However, some industries continue growing.

The value of pottery and china production increased by 60.9 per cent, followed by sugar with a growth rate of 43.3 per cent.

In eight months, about 2.6 million motorbikes have been made, soaring by 16.9 per cent. Meanwhile, beer and beverage production is up by 14.9 per cent over the same period of 2010.

Regarding the inventory level, GSO reported that up to the beginning of this month, the inventory volume had increased by 17.8 per cent over the same time last year.

The inventory level of furniture increased by 87.5 per cent.

The home appliances inventory was up by 55.4 per cent, while volume of stockpiled footwear increased by 45.6 per cent.

FDI, a key to property growth
 
A fully completed legal framework with proper taxes and adequate foreign direct investment (FDI) attraction policies would help develop the domestic real estate market, experts said at a forum in Ha Noi yesterday.

The forum, entitled Viet Nam Investment in Construction and Real Estate – Reality & Perspectives, lured the participation of over 500 international and domestic investors, companies and experts.

It focused on challenges in the construction and real estate fields and organised a dialogue between enterprises and ministries about comprehensive solutions needed to help the domestic construction and real estate corporations deal with the current tough situation caused by a shortage of capital and an excessive apartment supply.

Participants also discussed several topics, such as the renewal of building planning and infrastructural investment in Viet Nam, mechanisms and policies on real estate market development, competitive advantages of domestic building construction, merger and acquisition (M&A) in construction and real estate, foreign investment in real estate, capital competition for land, and Holiday Inn and Resorts' potential and sustainable development solutions.

Recently, the Global Construction Perspectives and Oxford Economics (England) forecast that global construction value would rise from US$7.2 trillion last year to $12.7 trillion by 2020, with a growth of nearly 70 per cent. Of this, Vietnamese construction would reach the highest growth behind booming Indian and Chinese markets, the forum revealed.

Speaking at the forum, Pham Sy Liem, deputy chairman of the Federation of Construction Association of Viet Nam, said that infrastructure was considered a special real estate type of both public and private investments.

In the past 20 years, the country has invested significantly in infrastructure, with the aim of boosting socio-economic growth. However, the investment cost was expensive with the ICOR (Incremental Capital Output Ratio – a metric that assesses the marginal amount of investment capital necessary for an entity to generate the next unit of production) much bigger than that of other countries.

Therefore, he said, Viet Nam should establish annual and five-year plans regarding infrastructural investment preparation, while calculating a cost-benefit analysis for each project or programme. He added that the Public – Private Partnership policies should be completed in order to attract more investment in the infrastructural field.

Tran Kim Chung from the Viet Nam Central Institute for Economic Management said that the current real estate management policies contained many shortcomings which, in turn, adversely impacted the property market.

"A Law on Property Registration should be rolled out in order to create a higher derivative value, including capital sources. Besides, several monetary and financial policies involved in the real estate market should be considered," Chung suggested, adding that in particular, a Law on Property Tax was necessary soon.

At the forum, representative from VinaCapital Real Estate pointed out several impacts on domestic real estate. Commercial projects "under construction" stalled as developers were unable to take on high-interest loans, office market oversupply continued for 18-24 months, and condo oversupply with prices for condos declined as buyers were waiting for prices to drop further.

Merger and acquisition (M&A) in construction and real estate in Viet Nam were also mentioned at the forum.

Neil Mac Gregor, deputy managing director of Savills Viet Nam, said that the Vietnamese real estate market was critically short of capital and developers were therefore seeking new sources of finance.

He said that there were a number of options open to developers requiring capital to move their projects forward, none of which necessarily required financing from banks if the right partner could be found. These included an outright sale of the project to a third party, seeking a joint venture partner, en bloc sales of residential units, or strata sales of retail and office space.

"Many Vietnamese developers continue to hold large land banks and are able to sell development land to third parties in order to raise capital to finance the construction of other projects," he said.

Meanwhile, Dang Hung Voõ, former deputy minister of Natural Resources and Environment, said that foreign direct investment (FDI) should be viewed as an effective solution for the domestic housing developers, for whom there was a shortage of capital due to the central bank's tightened monetary policy.

"At the moment, only 3 per cent of registered FDI projects in real estate have been implemented, proving that foreign investors were not paying attention to the Vietnamese real estate market. Therefore, domestic investors should find ways to seek capital sources from FDI for their projects."

The forum was held by ministries of Planning and Investment, Transport, Natural Resources and Environment, Industry and Trade, and Construction.

Warning on share price manipulation

Securities regulators have issued a warning about a new form of share price manipulation involving falsification of documents issued by administrative agencies.

The warning arose after a member of the online forum f319.com posted a fake dispatch on July 27 bearing the signature of State Securities Commission vice chairwoman Vu Thi Kim Lien. The faked document said that the commission had asked the Ministry of Public Security to investigate manipulation claims against Sao Vang Rubber Co (SRC).

This forum member thereby warned other investors to sell all of SRC shares in order to avoid exposure to risk.

"Some small investors have recently falsified commission documents to distort information about enterprises," the commission warned yesterday. "Enterprises and investors should immediately report to the commission any doubts" about the verity of documents.

The commission noted that the posted document, if read closely, demonstrated marked dissimilarities to authentic documents issued by the commission in terms of presentation and language.

It nevertheless managed to fool a number of members of the investor forum who then sold the SRC shares they were holding. Since July 27, when the fake document was posted, SRC share prices have plunged by 20 per cent, compared to an average market decline during the period of only 3 per cent.

SRC closed yesterday's session at VND12,700 per share.

"The purpose of this falsification was to devalue the SRC share price," a source from SRC told Viet Nam News on condition of anonymity.

The fake document was devastating to the company and the person who made it should be strictly punished, the source said.

SRC general director Le Cong An also reaffirmed on Thursday that no members of its board had colluded with any investors to release incorrect information about its plans to relocate its headquarters pending its ability to find a partner to invest in a new real estate project.

Agricultural exports soar 34%
 
Exports of agricultural, forestry and seafood products in the first eight months of the year reached US$16.4 billion, up 34.2 per cent over the same period last year, according to the Ministry of Agriculture and Rural Development.

In the period, key agricultural products such as rice, coffee and rubber accounted for $9.3 billion, up 44 per cent; seafood hit $3.7 billion, up 24.4 per cent; and forestry products reached $2.6 billion, up 12.4 per cent.

In August alone, the country exported $2.2 billion worth of produce, up $200 million against the previous month.

Director of the ministry's Information and Statistics Centre Nguyen Viet Chien said a global price hike had helped lift turnover significantly as export volume of many key export items had risen only slightly during the period.

Thanks to a price rise of about 50 per cent, coffee exports earned $2.1 billion in the first eight months, up by more than 72 per cent over the same period last year, though shipments were up by only 12 per cent to 960,000 tonnes.

Rubber export turnover during the period also surged nearly 70 per cent to $1.9 billion, despite an export volume rise of only 4.1 per cent to nearly 450,000 tonnes. Average rubber export prices during the period reached $4,346 per tonne, up more than 58 per cent over the same period last year.

With a shipment of 5.4 million tonnes, up 9.4 per cent, rice was the largest export earner of agricultural products with $2.7 billion, up 14.6 per cent. Most Vietnamese rice was exported to the Philippines, Indonesia, Malaysia, Cuba, Senegal, Bangladesh and Ivory Coast.

With an export turnover of $2.4 billion in the first eight months, up 13.5 per cent over the same period last year, woodwork products were the main contributor to the high rise in the export of the country's forestry products during the first eight months, the ministry said, attributing the sector to the increasing demand in major import markets of China and Japan.

As demand for Viet Nam's agricultural, forestry and seafood products is showing positive signs, the ministry has forecast the industry will exceed the export target of $23 billion this year, up by nearly $3.8 billion over last year.

In addition to enhancing inspections to ensure the quality of export agricultural, forestry and seafood products, the ministry said it would also further invest in infrastructure and assist farmers to better classify their products to be able to meet strict quality regulations imposed by importing countries.

Trade promotions in both traditional and new markets would also be launched to help the industry meet export targets, the ministry said.

Urbanisation can't come at expense of agriculture

Land use planning must ensure that urbanisation proceeds in line with the sustainable development of agricultural production, says Minister of Natural Resources and Environment, Nguyen Minh Quang.
The development of rice production alongside the industrialisation and modernisation of the country was vital for economic stability, Quang said.

"The conversion of agricultural land to non-agricultural use must leave at least 3.8 million hectares for rice cultivation by 2015, no matter what, to ensure national food security," he said.

Total land under rice cultivation was currently about 4.1 million hectares, according to a ministry report.

Under a proposal from localities around the country on conversion of agricultural land, this would be reduced to about 3.6 million hectares by 2020, a proposal that has met disapproval from State agencies.

Many localities were also found to have wasted land by withdrawing fertile agricultural land for industrial use and then allowing it to sit idle. Only about 60 per cent of the total area designated for industrial zones was currently being used, while many localities were still seeking to establish new industrial zones.

In addition, unreasonable allocation of land rights has been revealed in urban areas, with a low percentage of land designated for traffic infrastructure and public works, Quang said.

The exploitation of underground and vertical space was also needed for proper urban planning, aiming at land savings as well as more comprehensive planning, he said.

Land use planning needed to be the basis for implementing all Government land policies and make the most effective use and management of land, he added. Land use planning with simplified procedures should also encourage long-term investment from both domestic and foreign enterprises, he said.

Local firms urged to spur transparency

Lawyers at the Singapore-headquartered law firm Rajah & Tann LLP have suggested Vietnamese companies improve trust and transparency in accounting and business practices so as to attract foreign investors through either joint ventures or mergers and acquisitions (M&A).

One of the major issues that foreign investors faced in Vietnam was the lack of their trust in Vietnamese firms when it came to forming joint ventures, Brian Ng, associate director of Rajah & Tann Vietnam, responded to a relevant question at the business luncheon themed “Legal Pointers for M&A and Joint Ventures in Vietnam” in HCMC on Thursday.

Ng told the luncheon, organized by the Malaysia Business Chamber Vietnam (MBC), that Vietnamese companies used different sets of accounts that were not appropriate in the joint venture situation.

Major problems with Vietnamese firms involved the use of sophisticated financial instruments, lack of consistency in financial statements and dealings of local businesses, and absence of business and operational records, including contracts with third parties that meet internationally-acceptable standards, Ng told the Daily after the event that drew more than 50 representatives of local and foreign companies.

To win the confidence of foreign investors, Ng recommended local companies adopt a single set of accounts and maintain their business records relating to cash flow, customer and supplier lists, account payables and receivables among others.

“Local businesses have to be transparent when it comes to their numbers and dealings… I believe that small- and medium-sized enterprises should be educated so that they know the way to dress up their accounts to become more attractive to foreign investors,” Ng said.

In his presentation at the business luncheon, Rajah & Tann LLP’s partner Christopher A. Muessel pointed out import and distribution; infrastructure; real estate; and banking and finance as Vietnam’s hot investment sectors. Particularly in infrastructure, opportunities are waiting for foreign investors in port, road and bridge, railway, energy, mining and telecommunications.

Muessel quoted sources as saying that the energy infrastructure alone should grow at 15-20% per year to resume and back the country’s growth, but the Government did not have sufficient funds for developments in this area.

Despite the fact that Vietnam’s emerging market has been recognized as a haven for M&A deals for foreign companies, Muessel said many local firms were not big enough to catch the eyes of foreign investors, who usually target a private equity investment deal worth least US$5-US$10 million.

The other issue mentioned by Muessel was heavy paperwork and slow approvals for M&A and joint venture deals to go on. “It can be many months before we get a file signed off,” he said and attributed the slowness to involvement of many agencies, particularly big projects with signings worth from US$500 million.

However, Ng said the interest of foreign investors in M&As and joint ventures in Vietnam was on the rise. “When the market goes down, people start picking up bargains and that’s actually more interest. The regional areas beside Vietnam start to become more and more attractive, and that’s why Vietnam has to start to really brush up (law barriers) to make it some more attractive.”

Sources showed there were 345 successful M&A deals with a combined transaction value up to US$1.7 billion last year, a year-on-year increase of some 65%.

PV