Measures for GDP growth in Q4

The Ministry of Industry and Trade (MoIT) has insisted on practical measures to boost GDP growth in the last three months of this year, with priority given to industrial production, export value, and market stabilization.

The MoIT expected to see higher industrial production increasing in the fourth quarter at a year-on-year rate of 5.7%.

It asked the industrial sector to strictly inspect its production activities and closely cooperate with associations in helping local businesses iron out their snags.

In addition, it is essential to lower inventory level on the domestic market and launch promotion programmes in both Vietnam and abroad to promote consumption and facilitate production, the Ministry said.

It also asked the industrial sector to speed up the implementation of key projects in the support industry.

The MoIT forecast that Vietnam’s exports will hit US$131 billion, up 14% from a year earlier, and its imports achieve a year-on-year increase of 15.6% to US$131.5 billion by the end of this year. As a result, the 2013 trade deficit will stay at US$500 million.

The Ministry said it is currently engaged in bilateral and multilateral negotiations to expand market share and promote export activity. The focus will be on implementing the already signed free trade agreements (FTAs), exploring traditional markets, and penetrating new markets in the Middle East, West Asia, South Asia, Africa, and Latin America, it said.

Regarding the domestic retail market, the MoIT proposed balancing supply and demand and stabilizing market prices. Retail sales and services in 2013 are expected to rise 13% compared to last year’s figure.

The Ministry stressed the need to implement promotion programmes in rural, border and remote areas and encourage local consumers to buy made-in-Vietnam products.

It also requested relevant agencies to pay due attention to combating counterfeit and low-quality products and protecting consumer rights.

Vietnam’s economy looks bright in 2014: Economist

In 2013,  Vietnam’s economy faced many challenges, due to last six years of instability; however,  recent sequence of events shows that the economy seems to be recovering with a stable index of growth in inflation, export and import.

In general, Vietnam’s economy this year is not different to predictions made in early 2013, said economist Tran Du Lich, member of the National Assembly Economic Committee.

Based on improvements in inflation and CPI, Dr. Tran Du Lich forecasts in 2014 the economy will be quite stable.

Emphasizing the important solutions for economic development in 2014-2015, Dr Tran Du Lich added that for short term strategy, the government should focus on cutting the level of bad debts and accordingly help enterprises absorb capital and resolve payment  arrears to construction companies. The massive piled debts have crippled many construction companies.

There also needs to be a change in Government Resolution 02 over the VND30 trillion (US$1.4 billion) lending package to shore up the real estate sector.

For a long term strategy, firstly, the government needs an economy recovery program until 2015. The program must strive for CPI yearly growth of 7 percent for the period 2013-2015 and below 5 percent in following years.

There should be a combination of better monetary policies, fiscal policies, foreign trade policies and market policies to privatize some public services.

The economy recovery program should be designed for medium term to eliminate careless measures adopted before and switch from passive inflation constraints to active. Inflation targeting must create surplus for monetary and fiscal policies but not push up inflation.

Secondly, the above inflation targeting, monetary and fiscal policies have to mobilize social investment at 30-32 percent GDP for next three years. These should have close coordination to balance social investment.

Thirdly, for 2013 and 2014, the government should increase public spending such as issuing government bonds exceeding the rate approved by the National Assembly for construction debts and unfinished construction to stimulate the whole country’s spending.

Fourthly, these above measures should be inserted with breakthrough for restructuring of state enterprises.

Exports set to surpass target

The country is expected to see an export turnover of US$131 billion this year, representing a 14 per cent increase from 2012.

According to a Ministry of Industry and Trade (MoIT) forecast, turnover would be 4 per cent higher than the target set by the National Assembly earlier this year.

Its figures revealed that in the first nine months of the year, Viet Nam's export turnover was $96.46 billion, a 17.5 per cent rise over the same period last year.

The processing industry accounted for 69.7 per cent of the total, with turnover of $67.24 billion, representing 26.4 per cent year-on-year increase.

Head of the ministry's Planning Department Nguyen Tien Vy said the industry was the standout performer in the total import-export turnover.

Mobile phone and landline export turnover rose 75.5 per cent, while computers and spare parts saw a 45.3 per cent surge.

Vy said exports to the EU market in the nine-month period saw the highest growth rate at 22 per cent, following by America (14 per cent) and Asia (13 per cent) against the corresponding period last year.

The foreign direct investment sector retained its leading position in exports, accounting for 60.5 per cent of the total during the period.

Garments and textiles, shoes, computer, electronic products and spare parts from the sector made up 44 per cent of the total.

Head of the Import-Export Department Phan Van Chinh added that businesses had taken advantage of commercial trade agreements to accelerate exports.

Specifically, items which enjoyed advantages from Certificates of Origin (C/O) last month reached 60 per cent. In the South Korean market, the rate was up to 90 per cent, while that in ASEAN and Japan, 55 per cent.

Chinh said export turnover had been on an upward trend, as the country's exports traditionally surge in the last months of the year.

However, he suggested that enterprises should further make use of preferential treatment gained from signed commercial trade pacts.

In addition, management agencies should further reform administrative procedures to help grant businesses C/O.

He also called for tax payment difficulties to be resolved and guarantees to be given to exporters.

Cooking gas prices finally subside in HCM City

The retail price for a 12kg gas canister in HCM City dropped yesterday by VND8,000 (US$0.38) to VND 390,000 ($18.6) following extended price hikes.

The slump came after the world gas price this month decreased by $27.5 to $835 a tonne over the previous month, Do Trung Thanh from Sai Gon Petro Gas, one of the largest gas distributors in Viet Nam, said.

Viet Nam to open $450m Lao salt mine

Construction of a joint US$450 million Viet Nam–Laos project to process salt in Khammouan Province in Laos will start next month, according to the Viet Nam Chemical Group (Vinachem).

The Vinachem-backed project, signed in February last year with the Lao Planning and Investment Ministry, is its first in the field.

Vinachem will exploit salt across an area of 10sq.km for 20 years and also build a factory to process 320,000 tonnes a year.

The Lao Government granted the group 196.5sq.km of land to survey for possible salt mines.

On completion, the project will be able to supply the Lao market, reducing salt imports and boosting economic development in Khammouan province.

According to the International Council on Mining and Metals (ICMM), mining industry represents 80 per cent of foreign direct investment in Laos, accounts for 45 per cent of its total exports, and is responsible for 12 per cent of government revenues and 10 per cent of national income.

Binh Duong firms restructure to post trade surplus

The southern province of Binh Duong saw a US$2.2 billion trade surplus in the first nine months of this year, up 15.6 per cent year-on-year, and the figure is expected to rise further.

According to Vo Van Cu, director of the provincial Department of Industry and Trade, recent harsh years have pushed forward businesses' production restructuring, leading to increasing export value and an inevitable export surplus.

Local businesses have taken steps towards more stable and sustainable development thanks to a steady exchange rate and inflation, declining interest rates and falling costs for imported materials, the department said.

Cu said businesses and craft associations in the province have taken the initiative in having their export contracts and maintaining their production. It was positive signal for the province's economic development this year.

The recovery of major importers such as the US, EU, Japan, Australia, Brazil, Argentina and the Middle East, along with the positive impacts from the Trans-Pacific Partnership Agreement (TPP) negotiations, have raised their export orders by 10-15 per cent compared with the same period last year.

However, the decisive factor behind the surplus is the efforts of businesses to reduce expenditure, said Phan Van Xo, President of the Binh Duong Association for Exporters.

Le Thanh Cung, chairman of the People's Committee of Binh Duong Province said local and foreign businesses contributed to his province's economic growth.

Despite the economic difficulty, Binh Duong's economic development remains high. Its industrial value exceeded VND108 trillion ($5.1 million ), an increase of 12.8 per cent this year, he said.

Sugar industry to increase exports

The Viet Nam Sugar and Sugarcane Association has asked the Government to strengthen measures to prevent sugar smuggling and allow the export of locally produced product.

Nguyen Hai, the association's general secretary, said sugar output had reached 1.53 million tonnes in the 2012-13 crop.

With 178,000 tonnes in stock since the beginning crop and 70,000 tonnes imported under Viet Nam's World Trade Organisation commitments, the country has a total supply of 1.78 million tonnes.

However, he said, locally produced sugar cannot compete with the prices of smuggled one.

Speaking at a recent conference in HCM City, Hai said a large volume of sugar smuggled in the country via the southwest border in An Giang Province, which has put even more pressure on the industry.

Do Thanh Liem, the association's deputy chairman and general director of the Khnh Hia Sugar Company, said that smuggled sugar from Thailand was priced at only VND12,700 a kilo.

Although domestic sugar producers have slashed prices, they are still high compared to smuggled sugar.

"If domestic sugar producers cut prices further to compete with smuggled sugar, sugarcane prices will be cut back too. As a result, farmers will suffer losses and may stop sugarcane cultivation," he said.

The association has submitted a proposal to the Ministry of Industry and Trade (MoIT) to seek approval for export of 300,000 tonnes of sugar via border trade.

The ministry has allowed enterprises to export 200,000 tonnes of sugar but only for residual sugar, not refined sugar, because of a possible imbalance of supply of locally refined sugar.

Nguyen Thanh Long, the association's chairman, proposed that the Government strictly inspect the temporary import and re-export of sugar and adopt more effective measures to prevent sugar from being smuggled in the country.

In the long term, he said the Government should develop policies for the sugar industry with consistent regulations on import and export to support and protect local farmers and the sugar industry.

He also urged local producers to focus more on reducing production costs to raise their competitiveness.

Sales and service revenues rise on recent price hikes

The country's total retail sales and service revenues in the first nine months of this year reached VND1,932 trillion (US$92 billion), data from the General Statistics Office (GSO) showed.

The figure represents a 12.5 per cent year-on-year rise, GSO said, adding that the rise would be only 5.3 per cent if price hikes were excluded.

However, it was still higher than the 5.1 per cent rise of the first eight months this year, it noted.

Among the total, the trade sector, which accounts for 77 per cent of the total revenue, rose 11.9 per cent, while the hotel-restaurant service was up 15 per cent.

The foreign invested sector posted the highest growth rate with 35.43 per cent in the first nine months. The private sector was also up 16.7 per cent, while the State-owned sector posted a decline of 7.22 per cent.

GSO expert Vu Manh Ha said that the slight rise was mainly not due to rising consumption demand but because of price hikes for several goods and services in September.

The rise was mainly due to the 10.66 per cent increase in school tuition in 46 cities and provinces nationwide from September. A hike of power and gas prices also contributed to the increase of the retail revenues, Ha said.

The Ministry of Industry and Trade also said that supply sources in the domestic market were profuse, however, local consumption rose insignificantly due to the slow economic rebound.

The ministry expected that retail revenue this year would increase roughly 13-14 per cent against last year.

VN, RoK firms explore economic potential

Businesses from Viet Nam and South Korea were brought together at a conference in Ha Noi on Monday to seek ways to develop bilateral economic co-operation in the future.

Speaking at the event, Deputy Minister of Planning and Investment Dao Quang Thu said the Vietnamese Government highly valued the experience and economic assistance from partner countries, especially South Korea.

He said Viet Nam hopes that more South Korean businesses would invest in the country in the time ahead, especially in the processing and manufacturing industries, infrastructure, energy and services.

Highlighting the similarities shared by the two countries in economic development, as well as cultural and spiritual life, South Korean Ambassador to Viet Nam Jun Dae-joo said that his country would always support Viet Nam and remain a key partner to the country.

South Korea has nearly 3,400 foreign direct investment (FDI) projects in Viet Nam with registered capital totalling $25.7 billion, ranking fourth among 100 nations and territories investing in the country.

It is also Viet Nam's second largest official development assistance (ODA) sponsor, committing preferential loans worth around $1.2 billion for the country in the 2012-2015 period.

Bilateral trade between the two nations rose to $20 billion in 2012 from $500 million 20 years ago.

Both sides started Foreign Trade Agreement (FTA) negotiations with the aim of developing their trade ties and balancing two-way import-export.

Gold auctions were handled legally: SBV

Management, revenues and expenditures from gold auctions were precisely handled pursuant to laws, announced the State Bank of Viet Nam in an attempt to counter the public's doubts about the transparency of the activities.

From March 28 to the end of last week, the central bank already sold 1.611 million taels of gold (59,87 tonnes) to the market through 61 auctions, generating VND6.834 trillion (US$323.28 million).

Without releasing the percentage of total revenue going to the State's budget, the central bank affirmed that they fully complied with their legal obligations and responsibilities.

"The State Bank doesn't subsidise or compensate for the losses of attendees. The auctions are bound to the law so as to secure the State's interest in this measure," Nguyen Quang Huy, head of the foreign exchange management said.

The central bank has established a team to carry out gold auctions with members from various departments and offices under the agency to ensure proper implementation and objectiveness.

In order to prevent speculation and price manipulation, the SBV reviews the daily reports from credit institutions and enterprises on their activities related to gold auctions.

The latest updated reports showed that 18 credit institutions were able to settle gold deposits with the first 30 tonnes (equivalent to 50.1 per cent of total auctioned gold bars).

The remaining supply of gold, around 29 tonnes, far below the range of 50-100 tonnes imported each year, was sold on the market by the winning bidders.

The department has conducted regular inspections of the 2,500 licensed retail points in the country to ensure prices are transparent and in compliance with regulations.

The SBV also said banks must keep a record of ID for clients who carry out gold transactions worth more than VND300 million ($14,285) under Government Decision 20/2013/QD-TTg, to prevent money laundering.

Responding to concerns that the pressure of gold auctions might add to exchange rates and inflation, Huy said that the central bank's market management prevented such impacts and helped stabilise the macro economy.

Big companies continue to seek tax benefits

State agencies are worried about the budget deficit while many big companies from various sectors ask for tax incentives and other support from the government.

According to Bui Ngoc Huyen, chairman of Xuan Kien Auto JSC (Vinaxuki), they are able to produce and assemble 40% of a car with five to seven seats domestically. They want a 70% reduction of excise tax from January 2014. They say this will help them to increase the production scale of car brands for rural areas and transport companies.

At the same time, Vinaxuki asked for a tax delay of VND750 billion (USD36 million) so the company can pay for design work and technology transfer from the German DMG and Japanese Moriseiki companies. They also want to borrow VND250 billion to develop metallurgy factories.

Previously, several domestic car manufacturers sent their calls for help to the Ministry of Finance, asking for tax delays worth thousands of billions of VND so they can "improve and develop the domestic car industry."

Not only do the car manufacturers want a tax delay, other big players also seek tax incentives. Viettel Group, one of Vietnam's largest mobile network operators, wants a tax exemption for five years, reasoning that government should grant them some incentives since foreign firms are offered many incentives.

An official from the Ministry of Industry and Trade said car manufacturers asking for tax incentives is nothing new. The draft plan to develop the Vietnamese car industry to 2020, with a view towards 2030, said that excise tax for cars with less than nine seats and over 40% localisation rate will be reduced by 70%. However, he said, the plan is still just a draft.

According to the General Department of Taxation, the state budget will be greatly affected if so many firms delay taxes for five years. During such a long period, they may try to avoid their duties completely.

Vietnam financial market awaits U.S. investors

Prime Minister Nguyen Tan Dung during a talk with representatives of 50 U.S. businesses late last week said that Vietnam will open the financial market to foreign investors in no way inferior to any countries in the region.

Dung said the Government encouraged foreign investors to join Vietnam’s financial market. Foreign indirect investment in the market has hit nearly US$8 billion and the nation is going to lift foreign ownership limit in listed enterprises and banks in the coming time.

Despite adverse impacts of the global economic turmoil, the Government has managed to maintain macro economic stability and obtain the average gross domestic product (GDP) growth rate of around 5.6% over the past three years, Dung said.

Two-way trade between the two nations hit US$25 billion in 2012 and US$17 billion in the Jan-Jul period of 2013. The figure is expected at US$30 billion by the end of this year.

Currently, the U.S. ranks seventh among 100 countries and territories with direct investment in Vietnam.

Concerning the real estate market, Dung said that the global economic crisis has affected this sector. The Government has designed a series of measures, including the restructuring of housing products, administrative reform, provision of preferential credits for homebuyers, and permission for foreigners to own houses in the country, to revive the realty market.

During meetings with the U.S. Secretary of Commerce Penny Pritzker and the U.S. Trade Representative Michael Froman, Dung also pinned high hope on the Trans-Pacific Partnership (TPP) Agreement and its benefits for TTP countries, saying that the pact will develop comprehensive relations between Vietnam and the U.S.

Dung affirmed Vietnam’s determination to promote negotiations in accordance with the agreement reached between the two sides’ high-ranking officials in 2012, saying that the country is willing to work with the U.S. and other negotiators to hasten the signing of the TPP.

On the sidelines of the General Debate of the 68th session of the UN General Assembly on Saturday, the Prime Minister also met Haitian counterpart Laurent Salvador Lamothe and Moldovan Prime Minister Yuri Lianke. Earlier, he also had a meeting with U.N. Secretary General Ban Ki-moon.

Vietcombank lends VND1 tril. to seaport project

Bank for Foreign Trade of Vietnam (Vietcombank) last Thursday signed a credit contract to provide VND1 trillion for the Coastal Power Center Seaport developed by Power Generation Corporation 1 under Vietnam Electricity Group (EVN).

EVN will construct a deepwater seaport as an auxiliary work for the Coastal Power Center. The facility includes a wharf capable of handling coal ships of up to 30,000 DWT and another wharf for handling oil tankers of 1,000 DWT. It costs an estimated VND4.4 trillion including VND1 trillion funded by Vietcombank.

Located in Dan Thanh Commune, Duyen Hai District in the Mekong Delta province of Tra Vinh, the project when in place will provide coal and oil for the power center, which in turn will supply power for the Long Phu and Hau Giang complexes of PetroVietnam.

Holcim offers US$2 million in prizes for green design

Students and professional architects will have a chance to win prizes worth US$2 million at the Holcim Awards this year.

Holcim Group via its Holcim Foundation has launched the fourth edition of the international competition to seek sustainable construction projects and ideas. The event also includes seminars on green buildings constructed before the need to adhere to climate change around the world.

Holcim Awards welcomes projects in the fields of architecture, construction, civil construction, landscape design, materials and technology. The organizer will offer a host of prizes with the top prize valued at US$200,000. The deadline for applications is March 24.

Speaking at the seminar on green construction in HCMC last Friday, Yannick Millet, senior consultant of the Vietnam Green Building Council, said that this is a chance for green works in Vietnam to compete in an international playground and contribute to sustainable construction in the country.

Hoang Manh Nguyen, director of the Institute of Tropical Architecture, said that green construction is an inevitable trend of Vietnam with the fast pace of urbanization. Therefore, much effort from relevant agencies is needed to develop this sector.

The other side of the property market

The frozen property market is largely characterized by the cash flow into projects being choked off, prompting developers to leave their projects idle or half-done, causing outcries among customers who have contributed funds to investors. Numerous lawsuits have been filed against investors who failed to deliver apartments to buyers on schedule or fail to execute projects at all.

On the other side of the market, there are also developers who have managed to complete their project earlier or on schedule, but such developers are also sitting on fire as buyers refuse to fulfill payments and take over the properties. This situation sheds light on how the property market has ground to a halt.

The images of customers surrounding property projects to object or suing project investors due to slow implementation are no longer strange. But that customers sue investors just because projects are implemented too fast is rare.

Such is the case that happens to Dai Thanh apartment project invested by Lai Chau Construction Company No. 1 in Hanoi.

According to an executive of Lai Chau Construction, to share difficulties with customers who have not owned houses, the company has tried to accelerate the progress of the project. Though many announcements of payments have been sent, customers do not make payments and some others even sue the company for working ahead of schedule.

In fact, the reason behind this paradoxical situation is that buyers cannot manage to make payments in accordance with the project’s progress.

Dai Thanh apartment project sparked a fever early last year although the market was in difficulty as its location is convenient and the developer offered a reasonable price of VND10-12 million per square meter for apartments of 38-70 square meters. With the current progress, apartments of the project will be handed over to customers one year ahead of the schedule instead of late next year as planned at first.

Meanwhile, customers of An Hung new urban area in Hanoi’s Ha Dong District invested by An Hung Urban Investment Joint Stock Company refuse to receive their houses.

The urban area has been constructed right on schedule since last year, but hundreds of villas and houses are empty with no residents. According to the investor, many of the customers are speculators and were stuck on the frozen market.

Late last year, FLC Group, investor of FLC Landmark Tower in Hanoi’s Tu Liem District, announced that it would sell out apartments of those customers who did not make payments and would even sue them after sending three payment notices.

Tran The Anh at FLC Group confirmed that FLC had finished construction.

“Therefore, we will persuade customers to receive apartments and pay the balance of 30% as committed. If customers do not come for the handover, we will sell out those apartments,” Anh said.

Similarly, only around 200 among 600 customers have received villas and adjoining houses in Lideco urban area invested by Tu Liem Urban Development Joint Stock Company in Hanoi’s Hoai Duc District although such properties had been ready since last year. “The total amount customers have not paid amounted to VND200 billion,” said Nguyen Van Kha, chairman of the company.

Houses which are not received and paid for have caused huge trouble to project developers. For instance, the investor of Lideco urban area has had to pay interest sums totaling VND200 for over 400 customers who have not fulfilled their payment obligations over the past six years and this situation may be prolonged.

The investor of Geleximco new urban area, Hanoi General Export Import Joint Stock Company (Geleximco), has to incur a debt of up to VND200 billion as its customers do not make payments. Besides, hundreds of villas of the project have begun degrading as they are unused.

However, many enterprises still have to persuade customers or offer preferential interest rates.

“The market remains difficult and home buyers are also in difficulty, and thus we do not want to take strong measures forcing them to make payments,” said Vu Van Hau, deputy general director of Geleximco.

According to Pham Si Lien, vice chairman of the Vietnam Federation of Civil Engineering Association, that project developers accelerate the implementation progress and transfer houses early amid current difficulties of the market should be encouraged.

“However, it is not easy for customers with a real demand of accommodation to have enough money to pay as most of them are low- and medium-income earners. Meanwhile, for speculators, the frozen property market has pushed them to the corner, let alone the pressure of bank interests,” Lien said.

This situation is the consequence of the too rapid development of the property market in the past time, he added.

HDBank shareholders approve merger plan

Shareholders of HCMC Development Commercial Bank (HDBank) during the extraordinary shareholder meeting last Saturday approved the plan to merge with Dai A Commercial Bank (DaiABank) at the share swap ratio of 1:1.

The approval came after the bank’s management persuaded investors of long-term benefits. Earlier in the shareholders meeting, many investors protested the swap ratio, saying the HDBank share should be priced higher than that of DaiABank.

Addressing concerns over disadvantages the ratio may bring to shareholders, Le Thi Bang Tam, chairwoman of HDBank, said that medium and long-term benefits are the key factor of the merge deal. By merging with DaiABank, HDBank will take advantage of transaction and customer network of DaiABank to facilitate its development strategy.

With the network of DaiABank merged into HDBank’s system, the consolidated bank will become one of 10 biggest banks in the country. Meanwhile, it is difficult to obtain a license to open a branch now, Tam said.

To expand operation scale, there are only two ways, merging with another bank and issuing additional shares. The latter way seems to be challenging given the sluggish situation of the stock market, Tam added.

DaiABank has 65 transaction points in Vietnam while it is operating strongly in the southeastern region. Therefore, the consolidated bank will have a network of 52 branches, 135 transaction offices and 23 saving funds.

Nguyen Van Dung, deputy director of the central bank’s HCMC branch, also asserted that the new HDBank will be one of the 10 biggest banks in the country.

Nguyen Ngoc Dang, general director of HDBank, said that HDBank has set up plans to deal with bad debts of DaiABank, which accounts for 6.8% of total outstanding loans of the bank. Specifically, HDBank has considered four solutions, including establishment of a steering committee for mortgaged asset handling, selling a part of bad debts to Vietnam Asset Management Company (VAMC), or converting debts into capital contributions.

The new bank will bear the HDBank brand with a chartered capital of VND8.1 trillion. All DaiABank employees and their wages will be maintained after the merger deal.

All merging procedures between the two banks will be finished in December.

Earlier, HDBank has acquired 100% equity of Socíeté Générale Viet Finance. After getting approval from the central bank in October, the financial firm will become a subsidiary of HDBank.

Japanese breathe life into eco-city projects

The Vietnamese government is seeking investment from Japanese investors for a string of urban development projects.

Deputy minister of construction Nguyen Tran Nam, speaking at the Vietnam-Japan Investment Co-operation conference last week in Hanoi, stated that the two sides had the potential for greater co-operation on the issue.

“Particularly, we should expand our co-operation in housing, urban development and eco-city development,” Nam said.

According to Suzuki Hideo, Japan’s minister-counsellor to Vietnam, one of the most important factors in promoting Japanese investment in construction and real estate was improving policies which presently hinder foreign direct investors.

“I can cite the examples of the tightening of regulations permitting foreigners to buy property and land in Vietnam, or the right of foreigners to re-lease their properties. Those issues were discussed in summer last year at the Vietnam–Japan Joint Initiative Phase 5 conference, and we hope we will make headway on this issue in the near future,” said Hideo.

Phung Quang Hung, chairman of Vinh Phuc province said that with the province’s large quantities of land and clean environment would make Vinh Phuc a suitable for real estate projects, especially those of housing development and eco-cities.

Meanwhile Nguyen Van Suu, deputy chairman of the Hanoi People’s Committee said that in the future, the city will aim to develop five satellite urban development areas in Xuan Mai, Phu Xuyen, Soc Son, Son Tay and Hoa Lac. All five satellite city projects are presently seeking Japanese investors.

In addition, the Nhat Tan to Noi Bai expressway, presently under construction, will present new opportunities for a range of urban development projects with the potential to attract Japanese investors.

The issue of developing eco-cities in Vietnam has long been a topic of discussion between the Japanese and Vietnamese governments and companies.

Last year, a group of Japanese private developers came to Hanoi seeking opportunities to co-develop eco-cities. Led by the Japanese Conference for Overseas Development of Eco-cities (J-CODE), a group of 20 companies met with the Hanoi People’s Committee to discuss possible sites for future eco-city projects.

January-September IIP posts slight growth

The January-September Index of Industrial Production (IIP) posts a slight rise of 5.4% year-on-year which signals an inconsiderable recovery of local industrial production.

According to the Ministry of Planning and Investment, with the growth estimated at 5.4%, the mineral exploitation index is still down dropped 0.2% while it marked up 1.9% year-on-year in the first six months of 2013. The lower growth is ascribed to local crude oil output volume dipping 0.1% year-on-year.

Similarly, coal consumption slumped in the rainy season while thermal-power sales volume fell given an increase in hydropower supply. At the same time, coal demand among household producers has shrunk due to difficulties in seeking outlets for the products.

Manufacturing-processing industries in January-September are up 6.8% over the same period last year, higher than the six-month growth of 5.7%. The increase is mainly contributed by a number of industries with big commodity volumes like textile-garment, footwear and vehicles. However, other manufacturing and processing industries showed a year-on-year decline in indexes, with iron, steel and cast-iron production slipping 1.9% and shipbuilding and floating components tumbling 24.4%.

In particular, the additional values of the manufacturing-processing sectors are mainly created by foreign direct investment (FDI) companies as exporters. The nine-month export value of the FDI sector was up 12.4 billion, exclusive of crude oil exports.

Power and gas consumption surged 8.3%, with power volume consumed by local producers including those in the manufacturing and construction industries surging 9.6% to 44.8 billion kWh and power consumption of agriculture and seafood jumping 16.2%.

Power consumption by industrial production, construction and agriculture-forestry-fishery industries are recovering, proven by the energy sales volume being higher than that in the same period in 2012.

The IIP indicated signs of improvements in early 2013, moving up from 4.9% in January-March to 5% in January-June and then to 5.4% in January-September. The ministry attributed the steady growth to the recovery of the manufacturing-processing industries rising to 6.8% in the third quarter from 4.6% in the first quarter.

ITG shut prominent textile plant amid dispute

Leading US fabric maker International Textile Group (ITG) and Vietnam’s Phong Phu Corporation are seeking investors to take over their cotton manufacturing joint venture in Danang after the factory has been held in stasis for nearly two years by a dispute between the two partners.

An anonymous source from Danang’s Industrial and Export Processing Zones Management Authority who is familiar with the case confided in VIR, saying that the joint venture had no interest in reopening the factory named Burlington Phong Phu Supply Chain City and that both had plans to divest by transferring the project to other investors.

“Foreign investors from Singapore and Hong Kong have expressed interest,” revealed the source. However, no final decision has been made.

In 2006, ITG partnered with Phong Phu – a wholly-owned subsidiary of state-run textile and garment giant Vinatex – to build the cotton manufacturing complex in the central coastal city of Danang.

The project was among Vietnam’s ten largest in 2006 with $80 million in investment capital, of which $22 million came from a Techcombank loan in October 2007. ITG is the majority shareholder with 60 per cent and Phong Phu the remainder.

Soon after opening, however, the project incurred losses primarily due to manufacturing inefficiencies, product quality issues, and a shortage of available operating capital, noted ITG’s November 2011 quarterly report.

VIR’s source revealed that ITG and Phong Phu were in regular dispute over capital contribution and resultantly, in December 2011, ITG’s board of directors passed a resolution suspending the project for an undetermined period of time. The facility was shut down in January, 2012.

In March the same year, the joint venture still owed Techcombank $18.2 million including the principal and accrued interest, reported ITG in March 2012.

Le Tien Truong, deputy general director of Vinatex, refused to comment on the case when contacted by VIR and this newspaper has not yet been successful in making contact with anyone from ITG who can comment on the dispute.

However, ITG in its March 2012 quarterly report stated that there was no dispute between the company and Phong Phu by that time. “The company and its joint venture partner have entered into arbitration to resolve their disputes,” said this report.

German group pledges to fund wind power project in Soc Trang

The German Enercon Industries Corporation has pledged to arrange funding and supply equipment for a wind power project in the Mekong Delta province of Soc Trang.

The project, projected to cost 1 billion EUR and have a design capacity of 2,600MW, is part of the province’s wind power development plan.

The group made the commitment after making a fact-finding tour to the province to assess local wind power potential.

Experts of the German group said Soc Trang has favourable conditions to develop wind power, particularly the coastal area.

The province has outlined a master plan on wind power development until 2020 with a vision to 2030, under which the coastal Cu Lao Dung and Tran De districts and Vinh Chau commune are zoned for the purpose.

Total investment for projects under this plan is estimated at nearly 8,300 billion VND (390 million USD).

Chairman of the provincial People’s Committee Nguyen Trung Hieu said he will create all favourable conditions for investors to carry out their work.

Lam Dong authorities scrutinise delinquent projects

An inspection is planned for nearly 500 delayed projects in Central Highlands’ Lam Dong province.

According to the Lam Dong Provincial Department of Planning and Investment, the province is now host to 452 delayed domestic projects and 15 delayed foreign direct investment (FDI) projects.

Many are in the areas of trade, tourism, agriculture, industry, and real estate.

Phan Van Dung, deputy director of Lam Dong Provincial Department of Planning and Investment said the department had reported the delayed projects to local authorities. He said that they were doing their best to avoid delayed projects as it has a major impact on residents and the investment climate of the area.

Dung added that the province had created sufficient conditions for investors and had already extended deadlines up to three or four times in certain cases. The province plans to meet investors in November and may withdraw their investment certificates if the projects are not planned to resume in the near future.

In the first eight months of this year, the province cancelled 10 delayed projects including an $800,000 agricultural project registered by Taiwan’s Singdong Co. At current, the province has 110 registered foreign invested projects capitalised at over $475 million.

Luu Trung Duong, head of the Foreign Economic Office under Lam Dong Provincial Department of Planning and Investment, said that of all the inspected projects, FDI was primarily going into agriculture or industrial parks and was small-scale, around $1 million each. The province’s bigger projects in tourism, service and real estate were capitalised by domestic investors.

The Sheraton Dalat Resort project in the Central Highlands’ Dalat city was invested in by Robin-Hill Resort Limited Company, a member of Saigon Invest Group, one of Vietnam’s leading private firms.

Scheduled to open in 2011, the $25 million project will feature 150 guest rooms and other facilities, including an indoor swimming pool, kids club, fitness centre, spa, and three signature restaurants and bars. The hotel will also feature nearly 500 square metres of meeting and banquet space. The project has yet to make anything more than regulatory progress.

Similarly, Cables and Telecommunication Materials Joint Stock Company (Sacom) broke ground on their Sacom Resort project at Ho Tuyen Lam tourist area in Dalat in 2008.

The $107 million resort will include both a 4 and 5-star hotel, an 18 hole golf course and 400 villas that can house 1,250 residents and 3,000 travelers.

As per its investment certificate, Sacom was obligated to complete the golf course in October last year, the villas in November 2014, the resort by the end of 2011 and remaining facilities also in 2012.

Thus far, the investor has only completed eight villas and nine holes of the golf course.

Do Van Trac, general director of Sacom said that the resort’s progress was still behind schedule due to land clearance issues and slow processing of compensation by the province.

In the Ho Tuyen Lam tourist area, a total of 36 housing projects with the total capital of $434.7 million were registered over the last eight years. Only two have been completed, most have requested extensions and 12 have yet to even break ground.

The Cam Ly-Mang Ling Trading Service Joint Stock Company’s Cam Ly-Mang Ling resort project, capitalised at $300 million, was granted an investment certificate in August 2006. It is still completing site clearance and compensation

Property developers woo buyers with incentives

Real estate developers are using promotion programmes in a drive to win buyers as the downturn of the real estate market is continuing to mount.

Property developers are introducing incentives that include supporting buyers in finding lessees for a share of rental payments made to the owner and temporarily subsidising potential lessors if they fail to find somebody to rent the property within a certain number of months.

These incentives, say experts, are supporting developers in finding buyers, but also protecting the buyers from risk in the early stages of ownership.

Refico, the developer of high-end apartment complex Watermark adjacent West Lake in Hanoi, offered customers a highly attractive incentive package that included nearly $10,000 in furniture and guaranteed a 14 per cent return on their investment.

This was the first real estate incentive programme to be offered in Hanoi.

The package includes a roughly $4,000 a month guaranteed rental payment from the developer for the first year of ownership to all investors, regardless of whether they successfully lease their unit or not.

"We consider this one of the most innovative incentives on the market today," said Vu Thanh Tung, general director of Tay Ho Tay Real Estate Joint Stock Company, the project's management company.

"These incentives protect buyers from the instability of the market and they can be sure of a specific return on their investment in the first year," Tung added.

The investor in Fusion Suites Danang Beach, a seaside residential project in Danang, announced it would guarantee lease payments for up to three years if the owner does not find a lessee and will cover potential losses sustained by buyers over the same period.

Another Danang project, the Hyatt Regency Residences developed by Indochina Land, is promising buyers capital gains of 5 per cent for the first two years. This means a $400,000 unit is guaranteed a cash return of $20,000 each year.

Experts say that more and more property developers will be offering incentives in the coming time to entreat buyers but that only those with sufficient capital strength should consider the option.

MoF considering penalising loophole auto importers

The Ministry of Finance is proposing the government collect back taxes from overseas Vietnamese (Viet Kieu) repatriates who imported automobiles and other vehicles into Vietnam for personal use but later sold them when they were obligated to register.

The time to start collecting back taxes will be after the date Ministry of Finance (MoF) Circular 118/2009/TT-BTC dated June 9, 2009 took effect (45 days from the date of signing).

Under current regulations, each Viet Kieu repatriate is allowed to bring one personal car to Vietnam for personal use. This vehicle would be exempted from import duties and value added tax and only incur special consumption tax.

In a report en route to the prime minister, Deputy Minister of Finance Do Hoang Anh Tuan argued that in light of Clause 21 in the Import Export Tax Law, people who had imported commodities that were exempt from tax and changed their use would have to pay back taxes up to the time they changed the use of those commodities.

Clause 6 stipulated that commodities that had changed their usage would pay the appropriate tax rates at the time the change occurred.

Accordingly, Viet Kieu repatriates who brought cars or other vehicles into Vietnam for personal use but later sold the vehicles prior to registering them (to avoid issues with the transition) were obligated to pay back taxes (import duty and value added tax).

The Ministry of Foreign Affairs agreed with the MoF’s proposal, but argued that collection of taxes needed to closely follow the law and have a specific timeline.

In its comments on the proposal, the Ministry of Public Security recommended stricter sanctions and that Viet Kieu who had sold their automobiles would have to pay back taxes and penalty fees for administrative violations.

Deputy Minister of Public Security Pham Quy Ngo even proposed confiscating the vehicles that were believed to cash in on legal loopholes.

Luxury automobiles imported by Viet Kieu for what they registered as personal use jumped sharply in 2011-2012. They were often very high-end and sold immediately after entering the country, resulting in a massive loss for the state budget as they avoided duties and taxes normally imposed on imported vehicles.

The MoF is reviewing its policies to establish whether it should go after back taxes on these automobiles.

Pepper exports hit 743 million USD in nine months

Vietnam fetched 743 million USD from exporting 112,000 tonnes of pepper in the first nine months of 2013, representing year-on-year increases of over 20 percent in volume and 16.5 percent in value.

In September alone, the country shipped around 11,000 tonnes of pepper abroad, earning 72 million USD, said the Vietnam Pepper Association (VPA).

The association attributed the increase to the rising demands of foreign importers and the mounting prices of pepper in the global market.

Vietnam has more than 50,000 ha under the spice, mainly in the six provinces of Gia Lai, Dak Lak, Dac Nong, Binh Phuoc, Dong Nai and Ba Ria-Vung Tau.

It exports pepper to more than 90 countries and territories around the world.

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