Scooters to take bigger motorcycle market share

Motorcycle producers have projected a bigger market share for scooters in Vietnam as local demand for this type of motorcycle is rising and manufacturers have launched a wide selection of new models to woo customers.

The market share for scooters is estimated to increase to 40-42% of Vietnam’s motorcycle market this year from the 37% last year.

Hoang Ha, director of marketing at Yamaha Motor Vietnam in the northern region, said the domestic motorcycle market in general has not performed well as the demand for manual gear-box motorcycles tends to go down but scooter sales still fare well, especially the fashionable high-class models.

As many as 2.5-2.8 million motorcycles were sold in Vietnam last year with scooters making up 37%. This year, the demand for motorcycles is put at less than three million units but the market proportion of scooters will reach 40-42%.

According to motorcycle producers, more local consumers prefer new luxury scooters.  Piaggio Vietnam is now the leader in this segment with Vespa Primavera, Vespa LXV and Piaggio Liberty, followed by Honda Vietnam and Yamaha.

Costantino Sambuy, general director of Piaggio Vietnam, said the local content of 3V engines installed on the scooters is nearly 90% and this helps the company reduce the selling prices of its scooters and enhance its competitiveness. The company has plans to launch a number of high-class scooter models in the future.

Piaggio aims to produce and assemble 300,000 scooters in Vietnam a year after it commissioned a manufacturing facility in the northern province of Vinh Phuc.

Yamaha has recently unveiled its new scooter Nozza Grande 125cc priced at VND40-42 million a unit to compete with Honda Vietnam’s scooters including SH Mode and Lead 125cc and even the scooters of Piaggio Vietnam in this market.

Suzuki Vietnam has also marketed a brand new scooter called Impulse 125cc at a selling price of less than VND31 million per unit, which is lower than Honda’s AirBlade and Yamaha’s Nouvo SX.

Motorbike manufacturers said in addition to prices and designs, local consumers also pay much attention to fuel efficiency given the rising fuel prices in Vietnam.

Sugar firm cuts strategic deals with three partners

Major sugar producer Thanh Thanh Cong (TTC) Group on Monday signed strategic cooperation agreements with three big foreign enterprises –PepsiCo Vietnam, ED&Fman Group, and Pegas Touristik Company.

TTC Group and PepsiCo Vietnam agreed to join forces in promotion and consumption of their products. TTC Group will also make new products such as liquid sugar and one-ton Bigbag suitable for the production technology of PepsiCo Vietnam.

Both parties hoped these new products would help the beverage company reduce cost and shorten its production process.

In cooperation with AD&Fman Group, TTC Group will be able to distribute its products to foreign markets.

In the deal with Turkey’s Pegas Touristik Company, TTC can get more involved in the field of tourism and hospitality, one of the three main business operations of the local group.

As Pegas Touristik has plans to bring 250,000 Russian passengers to Vietnam in 2014, TTC Group will be a key provider of travel services for its guests.

TTC is now a large private corporation with 20 subsidiaries and associated companies. It is active in such sectors as tourism, real estate, sugarcane and financial investment.

Total revenue of this group amounted to VND6.5 trillion in the first half of this year, up 14% compared to the same period of last year. In particular, the sugarcane sector contributed VND5.4 trillion, while its tourism business generated VND350 billion.

Vietnam Air reports pre-tax profit of US$4.7 million

Vietnam Airlines obtained pre-tax profit of some VND100 billion (around US$4.7 million) in the first half of this year while all of last year saw the carrier achieving a staggering VND533 billion.

The airline said in its updated report that its total revenues neared VND28 trillion in the period, 48.5% of the year’s target.

The corporation carried more than eight million passengers on 62,088 flights, up 8.5% over the same period last year and 0.5% higher than its target for the first six months.

The number of passengers on the airline’s international flights accounted for over three million, up 10% versus the same period last year, and the guests on its domestic services increased 7.6% to more than 4.95 million and 2.3% higher than its target for the January-June period.

The national flag carrier said a number of its international flights were affected by China’s illegal placement of a giant oil rig in Vietnam’s exclusive economic zone and continental shelf, and unrest in Thailand and Ukraine.

Vietnam Airlines will focus on restructuring and equitization plans as well as service improvement in the second half of this year.

Lotte Mart to sell Vietnam goods in S.Korea

South Korean retailer Lotte Mart is proceeding with plans to sell aquatic and seafood products, cashew nuts, coffee, apparel, footwear and other Vietnamese goods at its 107 stores in South Korea this October.

The plans to promote Vietnamese goods at Lotte Mart’s stores in South Korea were unveiled by Hong Won Sik, country director of Lotte Mart Vietnam, at the opening day of a Vietnamese goods exhibition last week.

The 10-day program is taking place at the Lotte Mart stores in Saigon South, Binh Duong and Dong Nai provinces until August 3. The event showcases as many as 100 Vietnamese products, including foods and beverages, household appliances and clothes among others.

Hong said the program was aimed to build strong links between South Korean importers with local suppliers and survey Korean consumers’ demand for Vietnamese products in order to find appropriate items for export to the Northeast Asian market.

The exhibition is co-organized by Cong Thuong (Industry and Trade) newspaper, Lotte Mart Vietnam, Small and Medium Enterprises Development Support Center and Glory International Co., Ltd.

AIA Vietnam posts strong growth in new premiums

AIA Vietnam Life Insurance Company Limited, or AIA Vietnam, obtained year-on-year growth of 40% in new premiums and 129% in value of new contracts in the first six months this year.

The life insurer announced the business results on Monday. Stephen Clark, CEO of AIA Vietnam, credited the strong growth to heavy investments in the company’s sales team, diversification of services for customers and service quality.

AIA Vietnam has opened more than 80 offices in 48 cities and provinces nationwide, and sold more than 350,000 contracts to policyholders. As of late June this year, the company had settled combined insurance payouts of over VND1.5 trillion (US$70.7 million) for 228,000 cases.

Vietnam is one of the 17 markets in Asia Pacific where AIA Group is active, excluding Japan. Its total assets were US$159 billion as of May 31 this year.

Cheap Nokia phones still on store shelves

Some retailers have announced to maintain Nokia’s low-cost phones, including Nokia 105 and 106 models, on their store shelves.

The retailers confirmed they would continue selling the products normally in the coming time despite rumors that Nokia phones will not be sold on the local market from next month.

Microsoft Mobile has also rejected the rumors. In the coming time, Nokia will focus more on smartphones but they will still produce Nokia X using Android operating system, Asha phones and feature phones.

Earlier, some news sites reported that Microsoft Mobile would stop selling Nokia X running on Android operating system, Asha phones and feature phones from August. The news reportedly came from a distributor.

According to the retailer, Nokia had sent an official notice to its agents. But in fact, Microsoft had announced to focus on Windows Phone and maintain feature phones such as Nokia Asha, Series 40 and Nokia X with limited volumes.

Nguyen Bach Diep, CEO of FPT Retail, said the Nokia feature phones are still available in the FPT Shop network. However, smartphone sales are better than other products.

Diep said she just read the information on some websites and Nokia Vietnam (Microsoft Mobile) has not given any official notice.

Some retailers said that feature phones are an important segment of Nokia in Vietnam. The firm would be affected if the products are gone.

According to FPT Shop, Nokia feature phones like Nokia 206, Nokia 106 and Nokia 105 were among the 10 best-sellers in the first six months of the year.

Timatex takes legal action against city taxman

Timatex Vietnam Co., Ltd. has taken legal action against the HCMC Department of Tax, claiming the department had wrongly imposed the contractor tax to the tune of nearly US$2.8 million from 2009 and 2012.

The case attracted the attention of participants at a dialogue between authorities and foreign-invested enterprises in import and export fields in HCMC last week.

Nguyen Minh Sang, who represented Timatex to present the case at the dialogue, said the HCMC People’s Court accepted the company’s case on April 2 this year but has not opened a hearing.

Sang said the announcement that “Timatex no longer operates but has not closed its tax code” has made it difficult for the company to submit reports online and register personal income tax codes for its employees.

Worse still, the announcement did exist on the Japan-funded Vietnam Automated Cargo Clearance and Port Consolidated System (VNACCS), which came online in HCMC on June 30, threatening the survival of Timatex as it has disenabled the company to import or export goods. Stockpiles built up at Timatex while materials could not be imported to process goods for the orders already signed with foreign clients.

Reporting the situation to the HCMC Tax Department on July 1, Timatex had its tax code reactivated the following day but the company was unable to complete import and export procedures at Linh Trung Export Processing Zone 2 as the VNACSS system failed to get the update.

Timatex reported the problem to the HCMC Department of Customs but the reply was that no one could intervene in the automated system, and the best way for the company is to wait for a couple of days to have its problem solved.

Timatex’s tax code was activated on the VNACSS system on the afternoon of July 7 after the company had exerted effort to contact the HCMC Department of Customs and the General Department of Customs.

The incident caused heavy losses for Timatex, Sang said.

Therefore, Sang proposed the General Department of Customs publicize hotlines for businesses to seek assistance in addressing their problems. Customs agencies should have competent units in charge of solving the difficulties of enterprises effectively after getting their complaints or requests.

ETF capturing investor attention

ETF VFMVN30, Vietnam’s first exchange-traded fund, has launched an initial public offering in a way that sets it apart from domestic stock funds that are normally classified into either closed-end or open-end funds.

“ETF is a brand new product, thus it is no surprise that it will be the center of attention,” said Chau Thien Truc Quynh, brokerage manager of VietCapital Securities.

According to her, this new initiative is much likely to be well received since the VN30Index possesses three-fourths of the stock value being traded on the market. This group consists of 30 leading high-liquidity stocks owned by companies with the highest capitalization ratio in HOSE.

Over the past three or four years, FTSE Vietnam Index ETF and The Market Vector Vietnam, which altogether capture a huge equity value of roughly US$1 billion, have been reported to account for significant market fluctuations early each fiscal quarter whenever they add or remove some sticker symbols in their portfolio charters.

Quynh said, “The periodical restructuring and adjustment of the stock tickers in the group’s portfolio early each quarter are paving the way for new opportunities which are appealing to all investors.”

 “ETF is kind of brand new stuff, so it takes some time for investment gurus to get acquainted to the fund,” said Trinh Hoai Giang, deputy director of HCMC Securities Company.

As a member of VN30 Index Committee, Giang said he can’t recall how many times identical questions have been raised by curious investors, something like “Why should I purchase fund certificates managed by someone else rather than running my own securities portfolios?” he added, “You might want to spend a huge bunch of money sewing your own clothes, yet there are similar items of outfit on the market sold at much lower prices.”

His metaphoric comparison is drawn upon a reality. Over the past six or seven years, both individual and institutional investors in the domestic stock market have struggled desperately with just a few success stories. The starter of this year seemed fair with the VN-Index scoring nearly 100 points in Quarter 1, peaking at a record of above 600 points for the first time after four years.

However, Ngo Cong Duc, a trader of HCMC Securities Company (HSC) situated at 569-571 Tran Hung Dao Street, HCMC, can’t find any reason to delight. “I also won some at first, but then the East Sea incident took it all. And now I am in the red, so sad…”

Duc has been consistently trading on the stock exchange for at least seven years, yet he is not an exception from the group of investors who have seen six profitless months in a streak, while during the same phase, VN30 made an impressive growth of 14%. Supposing that Duc had shifted his money into VN30, he would have now filled his pocket with VND14 million interest out of VND100 million investment thanks to the index fund escalation.

ETF VFMVN30 is an exchange-traded fund that replicates at the closest extent possible to any changes of the reference index - VN30. ETF portfolio is somewhat proportionate with the component basket of VN30Index.

In reality, VN30 has just edged down by 10% compared to its peak, a sharp drop caused by the East Sea tensions, yet its outstanding growth of 14% is still twice as much as what the 12-month deposit interest could offer.

Nguyen Dich Thanh, deputy director of HOSE’s R&D Department, says that the appearance of ETF as the first local exchange-traded fund is consistent with the flourishing trend of domestic stock market over the last 20 years.

Most notably, ETF has registered a quantitative growth rate of 15 times, reaching 3,000 smaller inner funds by end-2013. ETF is so affluent thanks to its success in rectifying the typical limitation of liquidity faced by open-end funds and price discount commonly seen in closed-end funds.

Stock trader Duc confirmed his interest in ETF, yet he is still hesitant. This investment psycho can be perceived in all stock exchanges though ETF training rooms are always full.

Explaining this reality, Giang said individual investors tend to be cautious when it comes to new products even though fund certificates can ensure good profit if investors know how to pick them up at the right time. “HSC is investing in certificates VF1, VF4, and VFA, and we are earning initial profit of 60%.”

Giang claimed that local investors will need some extra time to see what happens next, especially to the new local ETF. Foreign investors might be more interested in this product since there are not sufficient expat-investors in Vietnam to cover adequate market intelligence.

 “Trading of such exchange-traded funds like ETF will become more bustling in the next five or seven years, yet we need to take actions now to tap future potentials of this new fund,” said Vu Bang, Chairman of the State Securities Commission of Vietnam, at a conference held early this year to address new solutions for sustaining local stock market development.

Taiwan promotes products, brands in Vietnam

The Taiwan External Trade Development Council (TAITRA) launched an international campaign in Hanoi last week to promote products and brands of Taiwanese companies in Vietnam.

The Taiwan Excellence campaign highlights 45 brands in sectors such as information technology, household appliances, and sport and healthcare equipment, including Acer, BenQ, HTC, Transcend, Caesar and Kymco.

The campaign is part of Taiwan’s international trade promotion program to introduce Taiwanese-made products to Vietnamese consumers as well as connect Taiwanese and Vietnamese companies.

Local consumers will have the opportunity to try Taiwanese goods. The first event was organized at Vincom Mega Mall Royal City in Hanoi last week and the next event will take place in HCMC in mid-August.

Statistics from the Ministry of Planning and Investment showed that Vietnam’s imports from Taiwan grew nearly 6% last year over the previous year to US$8.9 billion while exports reached US$6 billion, up 14%.

Taiwan is one of the largest foreign investors in Vietnam.

Thanh Hoa road needs additional financing

State-run Thanh Hoa West Road needs additional funding to finish on time, which would allow other projects such as the Trung Son hydropower plant to be completed on schedule.

Ngo Viet Hai, general director of Power Generation Corporation 2 (EVNGENCO2), investor in the hydropower project, said the plant’s timetable cannot be achieved if the road is not finished before the end of May next year.

According to Vice Chairman of the Thanh Hoa Provincial People’s Committee Nguyen Ngoc Hoi, flooding caused by the construction of the Trung Son plant forced the committee to change the road’s route, which lengthened it by 6.2 kilometres. Currently the road needs VND578.2 billion ($26 million) in additional funding to reach completion.

The state-run Electricity of Vietnam (EVN) and the Thanh Hoa Provincial People’s Committee have several times warned the prime minister and ministries about the problem, to which they have given no answer.

A representative from EVN, at a recent meeting between Chairman of the Thanh Hoa Provincial People’s Committee Trinh Van Chien, the group and the World Bank (WB), said that EVN was facing difficulties providing the needed capital to the Thanh Hoa plant, as it is also having to borrow money for its own investment.

As for the country director of the WB in Vietnam Victoria Kwakwa, she said the state could use $26 million out of a recent WB’s $200 million loan provided to the country. Another solution she proposed was to provide Thanh Hoa a new loan to finish the road, but said the lending process was overly time-consuming.

Chien said EVN’s representative has agreed to ask the prime minister and other authorities to arrange the needed capital.

The 260 megawatt Trung Son hydropower plant started construction in 2012 and is expected to operate in 2017. It has the total investment capital of $410.68 million, including a $330 million WB loan and the remainder from EVN.

Banking experts advocate M&A drive

Cross ownership and excessive ownership has put banks into deep hardship and M&A seems to be the only way out.

According to the State Bank of Vietnam (SBV), small-scale, weak banks will be merged in the near future to reduce the total number of banks in the country to 20-25.

“To best compete, banks should unite in developing technology, personnel, and also management model,” said SBV former governor Cao Sy Khiem. M&A can help prevent manipulation through cross ownership and excessive ownership in banks,” he added.

Joining Khiem, banking expert Huynh Buu Son said “M&A is one way to buy us more time, and we have to act now.” According to Son, total individual customer deposit capital is now eight to ten times that of shareholders’ capital.

“We need to respect the capital we use. It belongs to the citizens,” Son underscored.

Under the Law on Credit Institutions 2010, the ownership rate is capped at 5 per cent of the chartered capital for individual shareholders, 20 per cent for affiliated shareholders (often family) and 15 per cent for organisational-based shareholders.

However, over the three years since the law came into effect, major shareholders of many banks have been discovered violating the regulation on ownership limitations, reported the SBV.

Five banks were found to have individual shareholders with over 5 per cent ownership, another five had organisational shareholders controlling larger than regulated stakes, and eight had affiliated shareholders controlling combined stakes that exceeded the 20 per cent cap.

The SBV has requested that all banks, expect those with restructuring plans approved by the prime minister and SBV, eliminate excessive ownerships no later than March 31, 2015.

If they do not meet this deadline, shareholders and groups will be forced to transfer their shares to the SBV and may lose their voting rights and the ability to stand for a post on a supervisory board.

Additionally, the draft amendment to the Law on Credit Institutions 2010 forbade credit institutions from granting new credit to shareholders or groups with excessive ownership. Banks are also required to halt all transactions with the aforementioned.

Son underscored, “We need a change from within, to respect banking regulations, business ethics, and also the money of the people. It doesn’t matter how many banks there are, it matters that they work.”

Over 42,000 new enterprises established in seven months

Nearly 42,400 enterprises were formed nationwide in the first seven months of the year, with a total registered capital of VND262.4 trillion (US$12.33 billion), down 7% in the number of new businesses and up 17.8% in capital compared with the same period of 2013.

The average registered capital per newly established enterprise was VND6.19 billion (US$290,930), a year-on-year increase of 26.7%. Over 629,000 labourers are expected to earn employment at the new companies, surging 6.5% against last year.

The period also saw 37,612 enterprises dissolved and suspending operations, representing an increase of 9.8% against the previous year. Of this, 5,610 enterprises were dissolved; 6,774 businesses temporarily halted operation with registration; and the remaining 25,228 ceased their operation in wait for payment of enterprise code or without registration.

Total registered capital of those in difficulties which are bound to stop operation reached VND291.6 trillion (US$13.7 billion), accounting for 84.5% of the total capital supplemented during the period.

As many as 9,428 businesses have resumed operation in seven months, decreasing by 6.4% against the same period last year.

Promoting agricultural exports to Israel

The Middle Eastern nation of Israel, though small in size, is a highly lucrative market for Vietnamese agricultural exports with tremendous potential for growth.

Two-way trade turnover between Vietnam and Israel has steadily been accelerating over the past years.

According to the Vietnam Trade Office (VTO) in Israel, the country principally exports agricultural products, garments and electronic equipment while it imports fertiliser, machinery, equipment and electronic parts from Israel.

In the first six months of the year, Vietnam’s agricultural exports to Israel dipped 6% compared to the same period last year to US$45.7 million and accounted for 13% of the Vietnam’s total export revenues.

The VTO in Israel said the decline in agricultural exports is largely attributable to the protracted and complicated political situation between Israel and Palestine.

Vietnam Customs’ statistics reflect that agricultural exports to Israel for last year were US$100 million, comprising 27% of the country’s total exports to Israel.

Major agricultural export products included seafood (US$42.4 million), coffee (US$25.9 million), cashew nuts (US$23.8 million), peppers (US$7.5 million), rice (US$5.9 million), rubber (US$3.2 million) and other products like vegetables and fruit, tea, cassava and sweet fennel (US$1 million).

With a population of more than 8 million people, Israel is the most important consumer of Vietnamese coffee in the Middle East as it has many coffee processing enterprises to ship their products to regional markets as well as Europe and America.

Last year, Vietnam’s coffee exports to the market accounted for 56% of total export value to Middle East.

Israel is also an important market for Vietnamese cashew nuts with its value making up 30% of total export revenues to the Middle East.

The country is also the third largest importer of seafood (around 20%), rice (16%) and rubber (7%) and the fourth largest importer of pepper (8%).

The VTO in Israel reported that the country has high demand for importing agricultural products not only for domestic use but also for processing instant food for exports to the third countries.

Israel cannot grow the farm produce that Vietnam exports to it even though it has high demand for them, leading market analysts report.

Once the political unrest and conflict in the region is dealt with effectively, Vietnam’s agricultural exports to the country will jump significantly.

The key to the prospects for enhanced cooperation with Israel lies in the fact that it possesses advanced technologies, especially in agricultural production and due to restricted land and labour forces, the country cannot fully utilise the technology.

This provides a great opportunity for the two nations to cooperate in agriculture, and Vietnam should encourage Israeli businesses to transfer technology and find outlet markets for agricultural products.

Experts are optimistic that Vietnam and Israel have the potential for long-term sustainable agriculture cooperation to make full advantage of the opportunities and strategies, which stimulates stronger development. The Ministry of Industry and Trade has devised measures on market development with Israel, including agricultural and seafood demand at markets and export mechanisms and export facilitation policies.

In addition, the ministry has actively worked to expand export markets with Israel for agricultural and seafood products by reducing tax, opening market and removing trade barriers through negotiations on Trans-Pacific Partnership (TPP) agreement and the Vietnam-EU Free Trade Agreement (VEFTA).

It has also enhanced opportunities for finding potential partners and markets for businesses and updating them with protectionism, trade barriers and trade lawsuits of import markets.

Nielsen: Vietnam’s consumers concerned about finance, jobs

The Vietnam Consumer Confidence Index reached 98 points in the second quarter of 2014, a slight drop from the previous quarter, as people were more concerned about personal finance and job prospects over the next 12 months, according to Nielsen.

According to the latest global survey of consumer confidence and spending recently released by the global information and measurement company, only 44% of online respondents thought their job is good or excellent while more than half (53%) are positive at the same level about their personal finance.

These numbers are both lower than the regional average at 65% and 62% respectively.

The survey showed 38% of respondents thought this year will be good time to buy things they want and need. This proportion stays below the regional average (42%) and other neighbors such as Thailand (47%) and the Philippines (50%) but higher than Singapore (37%) and Malaysia (29%).

Nielsen’s survey revealed that although Southeast Asian consumers remain among the world’s most optimistic, they have been less bullish in recent months in the face of escalating political instability around the region and rising food prices.

Consistent with their cautious confidence levels, Nielsen said consumers in Southeast Asia are committed to building up “a nest egg for the future.” Across the six Southeast Asia markets, channeling money into savings tops the rankings for how consumers utilize their spare cash.

Eight in 10 Vietnamese respondents (79%) chose to save spare cash after covering all the essential living expenses, the highest rate over the past three years and much higher than regional average at 62%.

Thai consumers are the most-committed in Southeast Asia to keeping an eye on their household expenses as more than nine in 10 (92%) have changed their spending in the past year to save on household expenses.

In Vietnam, 85% of consumers have changed their spending to save on household expenses, as have 80% in Malaysia and the Philippines, 79% in Indonesia and just 58% in Singapore, compared to 64% globally.

When it comes to keeping household expenses in check, limiting spending on new clothes is the most common focus for Southeast Asian consumers, along with cutting down on out-of-home entertainment and trying to save on gas and electricity.

“Together with a dramatic fall in the last six months within Fast-Moving Consumer Goods (FMCG) in Vietnam, this report once again gives us a very clear picture of how Vietnamese consumers react to the current economy as well as their concerns in the coming months,” said Vaughan Ryan, managing director of Nielsen Vietnam.

“The sentiment remained relatively flat in the second-quarter report and we do expect the market sentiment to pick up towards the end of the year.”

Established in 2005, the survey measures consumer confidence, major concerns, and spending intentions amongst more than 30,000 respondents with Internet access.

Jan-Jul industrial index up 6.2%

The index of industrial production (IIP) achieved a year-on-year growth rate of 7.5% in July and 6.2% in the seven-month period, Vietnamplus reports, citing a report of the General Statistics Office.

According to the report, the processing and manufacturing industry recorded growth of 8.1% versus last year’s same period, and contributed 5.7 percentage points to the sector’s overall growth. It was followed by electricity generation and distribution with 11.4% growth and 0.8 percentage point, and water supply, waste and wastewater treatment with 6.5% growth and 0.1 percentage point.

However, mining was in decline in the period with a 1.7% drop.

Industries posting high year-on-year growth also included the manufacture of electronic, computer and optical products at 34.9%; motorized vehicles 21.2%; leather and leather products 20.5%; and textiles 19.2%.

Danang City reported the highest industrial rise of 10.8% while the respective figures of Quang Nam Province, Haiphong, HCMC and Hanoi are 10.2%, 10%, 6.2% and 4.2%.

Although production and consumption witnessed positive changes, the inventory index, as shown in the report, was increasing.

On July 1, the inventory of the industry inched up 13.2% year-on-year, well above  the 8.8% recorded a year ago, and the average inventory rise in the January-June period was 77.2%. Pharmaceuticals, chemicals and chemical products and food processing were among those reporting high inventory increases in the period with 161.2%, 127.1% and 98.2% respectively.

The number of newly established enterprises in the January-July period was 42,398 with total registered capital of VND262.4 trillion, down 7% in the number and up 17.8% in capital compared to last year’s same period.

In July alone, there were 5,083 new enterprises set up with registered capital totaling VND31.518 trillion.

However, the number of enterprises going bust and suspending operations in the first seven months was rather high, at 37,612, rising by 9.8% year-on-year.

Social insurance files to get digitized

All the social insurance files at the HCMC Social Insurance agency are expected to be digitized by the end of this year, said the contractor in charge of this digitization for the State-owned insurance agency.

Khue Tu Company, the supplier of this digitization solution, said its online system currently can handle an average of 800-1,000 insurance files daily. The company said it is now turning over the system to the authorities of the city’s social insurance agency.

This project was introduced on a trial basis at the end of last year and has been put into operation this July.

As planned, all the social insurance files stored at the agency will get digitized by the end of this year. It is estimated that the headquarters and other agencies located in the city’s districts are holding millions of social insurance files.

The social insurance sector will also assemble all the data over the Internet so that policyholders in the upcoming time can visit the website and check their data online.

In Vietnam, the procedures, documents and benefits of social insurance that are often described as inconvenient due to the poor information technology application have caused numerous obstacles to beneficiaries.

Bank reassures depositors after senior execs arrests

Vietnam Construction Bank (VNCB) has reassured its clients that their deposits are guaranteed as the bank’s liquidity remains stable after its chairman and general director were detained by police.

A source from the bank said with support from the State Bank of Vietnam, it has made all preparations to ensure its stable liquidity and safety for all of its clients’ deposits.

The HCMC branch of the central bank has assigned an inspection team, led by a deputy director of the branch, to monitor the bank in order to give timely assistance in case the bank has to deal with any unexpected events, another source told the Daily.

The team has worked with other local lenders to prepare enough cash in case VNCB customers want their deposits back, it said.

However, the bank has made efforts to keep its customers and so far just a few have made withdrawals.

On July 28, the VNCB board decided to remove chairman Pham Cong Danh and general director Phan Thanh Mai from their posts.

One day later, Ministry of Public Security investigation police detained Danh, Mai and Mai Huu Khuong, a former member of the bank’s board, according to the State Bank of Vietnam.

The three former executives were accused of intentionally violating State regulations on economic management causing serious consequences at the HCMC-based Thien Thanh Corporation in accordance with Article 165 of the Criminal Code.

Before the arrests, Danh, born in 1965, had also served as chairman of Thien Thanh while Mai, born in 1971, had been general director of the company.

The central bank has recently approved new senior executives for the bank.

Vu Bach Yen, member of the bank’s board since February 2012, is now new chairwoman while Dam Minh Duc, former deputy general director of the bank, has taken up the post of general director replacing Phan Thanh Mai.

Viettel distributes iPad in Vietnam

Vietnamese telecom firm Viettel started on July 30 to distribute iPads in Vietnam after several years of serving as a distributor of iPhones for Apple on the local market.

Viettel sells iPad Air Cellular and iPad mini Retina Cellular at its stores nationwide. This is the first time a local mobile service provider has cooperated with Apple to distribute iPads on the domestic market.

Viettel and another local major mobile service provider, VinaPhone, have been authorized as iPhone distributors in Vietnam.

A source from VinaPhone told the Daily that it does not have plans to distribute iPads in Vietnam at the moment but this could be possible in near future.

Besides Viettel, iPads are also sold on the local market by FPT Group, which has been in partnership with Apple since 2005. FPT started with distributing iPads, Macbooks and iPods to electronics shops in Vietnam before opening stores to sell Apple items.

The group has set up its F.Studio shop chain in the three levels of APR (Apple Premium Reseller), AAR (Apple Authorized Reseller) and iConner stores. It now has five shops in Hanoi and HCMC and 120 iConner outlets throughout the country.

FPT said revenues of Apple products at its F.Studio and iConner rise 30% annually.

Buyers of Apple products sold via official distributors are granted a 12-month warranty.

Traffic congestion sends commodity prices up

Prolonged congestion on the road leading to Phu My Bridge in HCMC’s District 7 and mounting backlogs at Cat Lai Port in District 2 in the past two weeks have affected the circulation of goods and resulted in unexpected costs which are then factored into goods prices.

Trinh Chau Khanh, director of Kim Loi Minh Transport Company, told the Daily that he has received a lot of complaints about late deliveries from export and import firms.

According to Khanh, his company’s goods delivery is now one hour later than usual due to traffic congestion on Phu My Bridge. With each hour of congestion, a truck with two containers consumes an additional 20 liters of oil, let alone other costs.

Do Xuan Phu, director of Minh Lien Transport Company, shared this point, saying many of his clients have complained about late deliveries. “Export and import firms do not need to know about transport infrastructure but only care about delivery schedules.”

Phu added his company could deliver two containers of goods in one day in the past but the volume is halved now due to congested roads. Congestion not only pushes up costs but also pushes down revenues by 30% as the company has to cover fuel costs.

He also expressed concerns that the deteriorating quality of Mai Chi Tho Street and the eastern ring road could further aggravate congestion.

Regarding the rising backlogs at Cat Lai Port, Gia Long Company director Tran Viet Tien said his company had to bear many additional costs arising from materials to storage. As a result, business associations in HCMC and neighboring areas should raise their voice about the increasing fees of container storage at the port to cope with the difficulties firms are facing, and policies should be revised consistently, he said.

As costs keep rising, enterprises and consumers are the ones who suffer, said Nguyen Lam Vien, general director of Vinamit Company.

Ho Hoang Bao Vinh, director of A Dong Transport Trading Company, said that when the storage fee at the port goes up, the company has no choice but to increase commodity prices correspondingly to ensure their profit margins.

New business startups not appealing to fund managers

Two foreign investment funds Monk’s Hill Ventires (MHV) and Media Partners (DMP) at a recent screening seminar were unable to find new business startups in Vietnam to invest in, as local firms joining the event were deemed not attractive to the investors.

Tech In Asia Arena, which organized the seminar, chose six out of 32 newly-established enterprises to introduce themselves to DMP and MHV.

Hannah Nguyen, representative of DMP, said there were many factors influencing her fund’s investment decisions, especially revenue and potential development of the chosen companies.

Firstly, the annual revenue has to reach US$700,000. This revenue is calculated by multiplying the most recent three-month revenues by four.

Secondly, the companies’ operations must have been stable at home and suitable to expand abroad. In addition, their management boards must have the ability to control all operations in case of their directors’ absence.

However, all applicants failed to meet the two funds’ requirements.

Six business startups presented at the conference included Triip, BabyMe, Cloudjet Solutions, Direct Data, VES – Clean Tech for Life, and Kool Things.

Among the above firms, Triip, a local travel company, could not meet these stringent conditions due to its low revenue and unstable business development though experts highly appraised its presentation.

Gwendolyn Regina T, representative of Tech In Asia, said the chosen projects had to meet three following requirements, namely a suitable business model, extensive distribution channels, and commercialization of the projects’ products.

Gwendolyn added most of projects were just the young’s business ideas, which have not been implemented in reality.

PVCFC proposes gas price cut

PetroVietnam Ca Mau Fertilizer Company Limited (PVCFC) is seeking Government support for reducing the gas price for fertilizer production after its equitization this year, with an aim to shorten the capital recovery period and help the company cope with difficulties.

The proposal was made by Bui Minh Tien, general director of PVCFC, when a Government delegation led by Deputy Prime Minister Vu Van Ninh had a working visit to the gas-power-fertilizer industrial complex in Ca Mau Province Tuesday.

According to Tien, the fertilizer price has been going down while PVCFC has had to pay high interest for bank loans since it started operations two years ago, chinhphu.vn reports. The fertilizer producer is expected to launch its initial public offering in the fourth quarter before becoming a shareholder-held concern.

Deputy Prime Minister Vu Van Ninh applauded PVFC’s efforts in equitization but stressed that the gas price should be driven by market forces.

Ninh said that during the initial period after the IPO, the Government would hold a majority stake but gradually decrease its ownership at the enterprise.

The US$2-billion Complex of Gas - Electricity - Fertilizer in U Minh District in the southernmost province of Ca Mau is located on an area of 200 hectares, including a gas pipeline, power plants and a fertilizer factory.

The PM3-Ca Mau gas pipeline with an annual capacity of two billion cubic meters of gas has transported ten billion cubic meters to Ca Mau 1 and 2 power plants and Ca Mau urea plant. Total revenue has reached some VND34.7 trillion.

The gas-fired Ca Mau 1 and 2 power plants, which were commissioned at the end of 2008, have generated 48 billion KWh for the national grid.

Ca Mau urea plant has a designed capacity of 800,000 tons of urea a year. After two years of operation, the factory has turned out more than 1.7 million tons of fertilizer for agricultural production, generating more than VND13.8 trillion. Especially, the total investment of this project was US$700 million, US$200 million lower than the original estimate.

Vingroup to open new center in Halong

Vingroup Joint Stock Company will open its new Vincom Center Halong on October 19 as a shopping and entertainment complex meeting international standards in Halong City in the northern province of Quang Ninh.

With four stories and one basement, Vincom Center Halong is built on a total area of nearly over 3.7 hectares modeled after the European royal architecture.

A highlight of the center is an ice-rink measuring 830 square meters, which can serve up to 100 ice skaters at a time. Other attractions in this new facility include a gaming center with hundreds of slot machines and a playground for children along with seven studios for cinema lovers.

The fashion center and supermarket are two other noteworthy facilities at Vincom Center Halong. Covering an area of more than 900 square meters, the fashion center features products of renowned domestic and international brands while the 3,500-square-meter supermarket offers essential goods for consumers.

Vincom Center Halong is the first shopping mall and entertainment center outside Hanoi and HCMC of Vincom Retail Joint Stock Company under Vingroup.

With three Vincom trade centers and two Vincom Mega Malls in HCMC and Hanoi, Vingroup is now the leader in the country’s modern retail business sector.

After its Vincom Center Halong, the group will continue to expand its retail system to other cities and provinces, with Haiphong City and Danang City coming next in the list.

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