Seminar tackles problems facing Japanese investors

A troubleshooting seminar intended to remove obstacles so Japanese businesses can thrive in Viet Nam took place in Ha Noi on Monday.

As of September 20, Japan had invested in 1,748 valid projects worth US$28.6 billion in Viet Nam, making it the country's largest foreign investor.

Head of the Foreign Investment Agency Do Nhat Hoang said out of the 500 Japanese firms surveyed who operate in Viet Nam, almost all of them faced difficulties with infrastructure, human resources, administrative procedures, laws and regulations on accounting, auditing, taxation, investment and trading.

Many Japanese representatives also touched on the tax reforms, the structure of the State budget's collection in the near future and the capacity of Viet Nam's Customs sector, particularly single gate customs clearances and e-customs.

 New rules govern share issuance, redemption

The Ministry of Finance issued Circular No 130/2012/TT-BTC on August 10, regulating the redemption and resale of treasury shares by enterprises and certain additional share issues. Under the circular, public companies which seek to redeem shares must have sufficient capital reflected in its most recent audited financial statements. Except in cases of public tenders or public redemptions in proportion to each shareholder's stake, public companies may not redeem shares owned by managers and their relatives in accordance with the Law on Securities, individuals whose shares are precluded from sale, or primary shareholders as defined in the Law on Securities.

The circular provides that dividends may be paid in the form of shares if a plan has been ratified by a general meeting of shareholders (GMS) and the company has posted a net profit.

Additional shares may be offered to employees of the company if an issuing plan setting forth a system for determining which employees are qualified to participate has been ratified by the GMS, total shares issued in any 12 months do not exceed 5 per cent of all outstanding shares, and the list of involved employees, principles for determining share price, principles for allocating the shares and the timeline for the allocation have been published by the board of management.

Circular No 130 took effect on Monday, replacing Circular No 18/2007/TT-BTC of March 2007.

Carrying gold in, out of country may be banned

The State Bank of Viet Nam has posted on its website a draft circular that would ban both Vietnamese and foreigners from carrying gold bars and gold materials when they enter or leave the country. Travelers wearing gold jewelry or bringing along gold items weighting more than 300 grams would also have to declare them with customs offices and pay taxes. Vietnamese with legal permanent residency abroad would be allowed to carry up to one kilogram of gold if they possess a permit issued by the provincial State Bank branch of the locality in which they reside.

Vu Ngoc Lan, deputy director of the State Bank's legal department, said the draft circular aimed to strengthen the management of the gold supply and keep the market stable.

"Strict management will create proper conditions for gold processing and trading and assure the rights of residents and gold enterprises," Lan said.

When finalised, the draft circular would replace Decision No 1165/2001/QD-NHNN, which allowed gold to be carried out of the country upon permit from the State Bank and declaration to customs officials.

BIDV delays share listing yet again

Bank for Investment and Development of Viet Nam (BIDV) has missed its listing debut in the third quarter because it failed to set a share price.

This is the second time BIDV has missed listing, the first being in June when its debut price was expected to be 50 per cent higher than its initial public offering (IPO) price.

Share's in its IPO at the end of last year sold at VND18,583 (US$0.89) a share. However, analysts said the market was on a prolonged downtrend and that price would be hard to beat at present.

Of the eight listed banks on the two stock exchanges, only Vietcombank (VCB) and Sacombank (STB) are being traded at around VND20,000-24,000 ($0.96-1.15) a share.

According to market insiders, the prolonged bear market was one of the reasons for the delay by BIDV, particularly as investors were now wary of bank shares after scandals surrounding former executives of Asia Commercial Bank.

BIDV registered to list about 2.3 billion shares, representing its whole charter capital of more than VND23 trillion (US$1.1 billion), under the code of BID on the HCM City Stock Exchange.

It received the nod in May from the State Securities Commission.

Last Friday, the southern watchdog also approved the lender's listing application but said no official listing decision has been made and BIDV needed to "add some factors".

"The completion is mostly about the debut price," said Tran Thi Anh Dao, head of the exchange's Listing Management and Evaluation department, as quoted by the Saigon Economic Times.

"We will issue an official listing decision after the bank adds its debut price."

She said BIDV would decide the listing date but the shares must be traded on the bourse within 90 days of the official listing decision being issued.

Late last week, Moody's downgraded credit ratings of eight banks in Viet Nam, including BIDV, alongside the downgrade of Viet Nam's government bonds.

Starved for cash
 
Enterprises remain thirsty for operating capital, with access to credit remaining difficult despite official measures to cap interest rates and provide incentives to lenders.

At a Ministry of Industry and Trade meeting on Monday, enterprises and trade associations urged the Government to provide further support to enterprises struggling with a shortage of cash and high inventories. September also saw little reduction in the inventories despite efforts by the Government and enterprises.

Moreover, Government support in terms of interest rate and tax relief has not been sufficient to stimulate lending or consumer demand, said Tran Du Lich, a member of the National Assembly Economic Committee.

Access to credit remained difficult for enterprises even though the Government has asked commercial banks to lower loan interest rates to below 15 per cent and provide interest support to small- and medium-sized enterprises. Central Institute of Economic Management deputy director Nguyen Dinh Cung also said that support measures had failed to address the underlying causes of the difficulties and that an "overdose" of stimulus might reignite inflation and economic instability.

Small- and Medium-Sized Enterprises Association vice president To Hoai Nam noted that credit grew across the entire banking industry in September by a mere 1.8 per cent and that the pace for the year remained far below the target of 8-10 per cent.

Low credit growth rates demonstrate that bank capital has not reached enterprises, said National Financial Supervision Committee chairman Vu Viet Ngoan.

"Enterprises are still mired in difficulties," Ngoan said.

It was a paradox that banks had money, while enterprises thirsted for capital but could not access it, said Doan Trong Ly, the director of a livestock company.

Yet high lending interest rates have been the cause of rising bad debts and increasingly tense relationships between enterprises and banks, commented the president of Lang Son Province's Small Business Association, Lai Van Toan.

More support was needed to help enterprises overcome hard times, even though about 6,100 enterprises have reported being able to restore full production since the tax relief package was implemented, said Deputy Minister of Finance Do Hoang Anh Tuan.

A tax support package worth roughly VND29 trillion (US$1.38 billion) was approved in May, extending or reducing land use fees, corporate income taxes and value-added taxes (VAT).

The Ministry of Finance has proposed that the Government provide another three-month deferral of VAT payments for small and labour-intensive enterprises, allowing VND3.75 trillion ($178.3 million) in VAT payments due in June to be extended to April of next year. The ministry was also proposing to offer a 50-per-cent reduction on 2013 land use fees.

Enterprises were also calling for the VAT rate to be reduced from 10 per cent to 5 per cent on certain products such as chemicals, footwear, fertilisers and garments.

Viet Nam Banking Association general secretary Tran Thi Hong Hanh said that commercial banks would continue to support enterprises with loan policies and join hands with enterprises to tackle their difficulties.

However, Hanh said, enterprises should be active in reorganising production to ensure consistency with their financial capacity while making their financial situations more transparent in order to facilitate banks in evaluating credit worthiness.

Thang Long-Noi Bai road toll may increase

A draft circular from the Ministry of Finance proposes that the road fee for vehicles passing through the toll gate of the North Thang Long – Noi Bai Road be increased about 1.5 times from the current level, which are VND10,000-120,000 (US$0.4-5.7) depending on the vehicle's loading capacity.

In June this year, the Viet Nam Road Administration approved the removal of 14 toll booths in order to avoid overlapping toll collections once the road maintenance fund is established in 2013. The North Thang Long – Noi Bai toll gate is one of them.

According to Viet Nam Automobile Transport Association chairman Nguyen Manh Hung, non-BOT (Build-Operate-Transfer) toll gates, including that of North Thang Long – Noi Bai, would be removed after 2013.

Phu Yen punishes companies that violate environmental regulations

Five companies in the northern province of Phu Yen were recently asked to terminate their production lines due to violations, according to a statement from the provincial People's Committee.

The manufacturers, all located in Phu Hoa and Son Hoa districts, are Dai Minh, Tri Hue, Hai Phu, Viet Nhat and Thanh Danh.

The statement reported that these companies has used from pollution-causing materials such as diatomite, bentonite, and calcium carbonate stone powder for making their products.

Also, they have not been given permission to use these materials or establish factories the statement said.

The provincial People's Committee has assigned the department of natural resources and environment and other relevant units to fine the cooperatives who leased land to the five companies.

The two districts take responsibility for fining the companies and inspecting any further production activities.

Shortfalls in seaport planning    

Vietnamese seaports now face the problem of being overload or not having sufficient capacity, revealing failures in planning.

Do Hong Thai, Deputy Head of the Vietnam Maritime Administration, said Haiphong Port witnessed backups, while newly-built ports in the Cai Mep-Thi Vai area have failed to reach their set capacity. Ports in the central region, except for Quy Nhon, have been operating at below capacity. This has been attributed to the wharf shortage for large ships, particularly container ships. Development of regional economic zones and industrial parks also remains modest.

Ngo Minh Tuan, Director of Sai Gon New Port Company, said most seaports in the Cai Mep-Thi Vai area suffered from losses in 2011 and the first months of 2012. The losses ranged from USD7 million to USD30 million.

“Vietnam is at risk of losing its ports to joint ventures with foreign partners. This could lead to the foreign domination of Vietnamese seaports,” Tuan warned.

Vietnam has been steadily building seaports over the past years, but less than 10 can receive foreign medium-sized ships. The northern central region has many deep-water ports, but they only serve ships of around 30,000 tonnes.

Shipping route planning has also been found wanting for the scale of development in the industry, while logistics infrastructure fails to meet the real demand.

Deputy Minister of Transport Nguyen Van Cong suggested that the Government focus only on key seaport project instead of making massive investment. Private investment should be relied on for other projects.

Vietnam has 30 operational seaports, excluding offshore floating ports for crude oil-related. In 2011 the ports handled a total of 291 million tonnes of cargo.

HSBC predicts 5% GDP growth
 
The Hong Kong Shanghai Banking Corporation (HSBC) Global Research has released their report on Vietnam's macro-economic outlook which claims Vietnam's economic growth this year could reach 5%.

According to the report released on October 2, Vietnam has achieved certain goals in stabilising the macro-economy. "An economic downturn could be a chance to find out weaknesses and remove the shortcomings from a complicated market where state-own enterprises have been working inefficiently," the report stated.

However, the GDP growth is still low. The country’s September headline CPI increased 6.48% against last September. Core inflation in August and September also increased 8.8% and 11.2% compared to the same period last year.

Meanwhile, food prices in September decreased to 1.8% , down from 2% in August.

Though Vietnam still has to take precautions with an increase in both the headline and core inflation rate, HSBC said price rises in gas, electricity and health care services increased due to administrative measures.

"This could help to cover the budget deficit and stabilise market prices." the report said.

The fact that the Purchasing Managers' Index (PMI) has increased over the last three months despite low domestic and global demand due to the economic downturn is a positive sign.

HSBC recorded a comeback in many key export products such as textiles, rice, coffee and crude oil. Vietnam’s trade deficit in 2012 could reach 2.3% of GDP and Vietnam may contain its headline inflation rate to single digits.

US bank approves USD118 million loan for VNPT  

US-based Export-Import Bank (Eximbank) has approved a loan of USD118 million for the Vietnam Posts and Telecommunications Group (VNPT) to buy satellites and services from US aerospace giant Lockheed Martin.

"By providing financing for VNPT, the Eximbank loan supports US manufactured satellites and US jobs," said Linda Reiners, Lockheed Martin Space Systems Commercial Ventures vice-president.

According to Reuters, this marks the first satellite transaction between the Eximbank with the government of Vietnam , with the loan approved first by US President Barack Obama in June. Eximbank estimated the transaction will provide about 525 full-time equivalent American jobs and bring export sales to USD215 million.

The VINASAT-2 satellite, which was released into its targeted orbit on May 25 has completed a series of tests. VNPT hopes to use the satellite for increasing television and telecommunications demand in Vietnam, Cambodia, Laos and Thailand.

BNP Paribas Bank will serve as the documentation agent and letter-of-credit bank for the aforementioned loan.

VNPT leaders in early June confirmed that they wanted to borrow USD125.9 million from Eximbank for the VINASAT-2 satellite.

Hoang Minh Thong, Director of the Management Board of VNPT’s telecommunication projects said that they wanted to take the loan, as despite the interest rate being unclear, it's seemed lower than most domestic interest rates.

Investment fund predicts seven-year term to sell 70,000 apartments   

Vietnam will need at least seven years to sell 70,000 apartments that lie empty if the country does not apply any stimulus measures.

The comments come from Dragon Capital and were included in a report presented at the Autumn Economic Forum recently hosted by the National Assembly's Economic Committee.

Statistics revealed that at present the apartments in Hanoi and HCM City have not yet been sold, however, the research group said the real figure was likely to be much higher.

According to the report, by the fourth quarter of 2011, 69 listed real estate companies owed debts of VND67 trillion (USD3.19 billion) and were having to spend VND13.4 trillion (USD638 million) in interest annually.

Short-term loans in the fourth quarter of 2011 increased to VND26.4 trillion (USD1.25 billion) adding increased bite to the debt schedules. This leaves real estate developers having to source VND39.8 trillion (USD1.8 billion) to pay off their debts in 2012.

Meanwhile, the report showed that 69 companies only had enough funds to pay a quarter of the debt, while their profits were capable of only covering a third of the annual interest.

If the apartments were sold at an average price of VND1 billion (USD47,600), much lower than the prices two to three years ago, the total value of the apartments would reach VND700 trillion, said Head of the Vietnam Economics Institute Tran Dinh Thien, adding that this was a worrying figure which could threaten the Vietnamese banking sector. This would continue to add pressure to local government to deal with the real estate sectors bad debts.

Rice prices down, harvest cost up

Finished rice prices in the Mekong Delta go down again after staying high for a long time, while rains and high tides adversely affect the quality of the autumn-winter paddy being harvested in Hau Giang and Can Tho and push up harvest cost.

In several Mekong Delta provinces, commercial rice prices have fallen by VND150-200 after reaching the peak of VND5,000-5,100 per kilo for the fresh IR 50404 over a half month ago.

According to the rice trading firms at Ba Dac Market in Tien Giang’s Cai Be District, the fresh paddy IR 50404 is now sold at VND4,800-4,900 per kilo and the dried one at VND5,750-5,850. However, in the localities hit by floods and heavy rains like Hau Giang and Can Tho, prices are only VND4,000-4,200 and VND5,500-5,600 a kilo for the fresh and the dried types respectively.

Giving explanation for the price drop, a representative of the rice company Tan Hong Phuc said domestic consumption was slowing down because of rains, while the demand of importing countries was weakening.

“Rice warehouses in the Mekong Delta are hardly piling up now, only 3-5 out of ten warehouses are still buying rice, with purchasing prices on the fall,” said Duong Van Men, a rice trader in Lap Vo District in Dong Thap Province.

Finished rice prices in Thot Not District, Can Tho City and at Ba Dac Market have dipped by at least VND100 per kilo against two weeks ago.

Specifically, material for the low-grade rice IR 50404 is now priced at VND7,550-7,650 per kilo, while the price is VND7,600-7,700 for the long-grain categories. Meanwhile, finished IR 50404 and long-grain rice products are sold at VND8,500-8,650 and VND8,600-8,750 each kilo respectively.

In certain provinces like Tien Giang and Long An, farmers are enjoying profits from the third rice crop. On the other hand, rice growers in Hau Giang and Can Tho are facing a lot of difficulties because of rains and rising tides.

According to the Hau Giang Department of Agriculture and Rural Development, rains and high tides have submerged more than 500 hectares of the third rice crop, including about 180 hectares of newly-sown paddy.

Similarly, Pham Van Quynh, director of the agriculture department of Can Tho City, said the city had cultivated 58,300 hectares of the autumn-winter crop, exceeding the initial plan by 3,000 hectares.

However, torrential rains have damaged 1,050 hectares of the third rice crop, affecting rice quality and incomes of farmers, Quynh stressed.

Pham Thi Mong Hoang in Can Tho’s Binh Thuy District said in addition to harvest behind schedule due to rains, it is difficult to find workers for rice harvest. As such, the cost of harvest has picked up, ranging from VND6 million to VND7 million for each hectare.

“The cost of rice production in this autumn-winter crop is higher than the previous years because of pests. Moreover, when coming to harvest, rains and high tides also cause difficulties and push up cost for farmers because they cannot take harvesters to the fields, while labor cost is rising,” Quynh said.

The Vietnam Food Association (VFA) said in the first 20 days of September, Vietnam had exported 341,000 tons of rice, worth over US$149 million. Overall, since the beginning of the year, Vietnam has exported nearly 6.2 million tons of rice, worth approximately US$2.78 billion.

Credits hardly grow in city

Credit growth in HCMC is put at a mere 1.3% by end-September, making the target of 8-10% for the whole year unobtainable, said a central banker.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said despite the programs to connect banks and businesses, not so many firms could satisfy the credit ratings requirements for loans. This explains why these programs are slowing down.

In the coming time, the central bank’s branch will look for more eligible enterprises. Many banks have pledged to give out loans, said Minh.

Seeking enterprises with feasible business plans and ability to repay debts is currently an urgent need of the city-based banks, Minh noted. Enterprises are now mired in troubles, so they have little demand for loans, while those in need lack viable business plans for them to gain access to credit capital, he said.

“Many banks want to give out loans with interest rates of around 13-14%, much lower than that in the year-ago period, but they cannot find corporate borrowers. They themselves are struggling to meet their business plans when unable to disburse capital,” said Minh. He informed credit growths of some lenders were still negative, although they had launched several lending rate support packages.

As for businesses, Pham Ngoc Hung, vice chairman of the HCMC Union of Business Associations, said connection programs had helped a number of enterprises approach bank loans. However, capital access is wider to big firms than small ones, Hung stressed.

He suggested banks should renew old debts and then granted enterprises new loans for them to carry on operations.

Do Tan Truc, deputy head of the financial investment consultancy department at HCMC Credit Guarantee Fund for Small and Medium Enterprises, remarked that although banks had offered many supporting packages, the process of loan approval had been tightened. Regarding non-collateral loans, Truc said they were only given to long-term corporate clients of banks.

According to the September socio-economic report of HCMC, deposits at banks totaled more than VND952 trillion, rising 6.58% against end-2011, while credits amounted to VND774 trillion, inching up 1.3%. The ratio of bad debts was 6.59%, versus 4.3% in late last year.

At wholly foreign-owned banks, outstanding loans dropped 3.9% in the first eight months of 2012 because of stricter lending process, said Minh.

Pirated books detrimental to publishing industry

Pirated books are causing troubles and damages for the publishing industry of Vietnam, stated Nguyen Van Phuoc, director of the publishing company First News.

At a press briefing last week, Phuoc said his company had taken legal actions against several violators to protect his firm’s interests.

The company has just filed a lawsuit against the American International School in Hanoi, claiming compensation of VND729 million for violation of the copyrights belonging to First News.

AIS has violated the copyrights of many books owned by First News, such as TOEIC Analyst, Target TOEIC, and Developing Skills for the TOEFL iBT. This is the third lawsuit of this kind that First News has pursued.

Previously, First News has sued the Australia International English School and the Vietnam Australia Society English Center in HCMC for similar wrongful acts. The two schools have accepted to pay compensations of VND380 million and VND390 million respectively.

Phuoc said there are currently 800 large-scale foreign language centers and thousands of small centers nationwide. First News is investigating violations at some 20 large centers.

The common violation of the foreign language schools is pirating books and CDs for TOEFL and TOEIC, whose copyrights are held by First News, to sell to their students.

Retail sales growth estimated at 18-19%

The total retail sales of goods and services is estimated to grow 18-19% against 2011 inclusive of price hikes, much lower than the rates in previous years as the market is now affected by many factors, including consumption decline.

This is a forecast given by the Ministry of Industry and Trade in a report on industry and trade situation in September and the first nine months of 2012, after statistics on the total retail sales in September were released.

In the first nine months, consumption slowed down due to economic woes, pushing up inventories, causing many difficulties for businesses, said the trade ministry.

In September, the total retail sales of goods and services reached VND195.1 trillion, taking the nine-month figure to some VND1,713 trillion, up 17.3% year-on-year.

This is a relatively low growth, because in the previous years, the total retail sales often picked up 20-22% year-on-year, said the ministry. With price increases excluded, the total retail sales of goods and services rose 6.7% in nine months.

The trade ministry predicted the market would see complicated developments in the final months, especially shrinking consumption. Therefore, the total retail sales growth in 2012 is estimated at 18-19%.

In 2011, the total retail sales of goods and services reached VND2,004 trillion, up 24.2% against 2010, or 4.7% exclusive of price hikes. Meanwhile, in 2010, the total retail sales rose 24.5% over the preceding year, or 14% with price increases excluded.

Supermarkets keep launching promotions

After gaining positive achievements thanks to the Sales Promotion Month in September, supermarket chains in HCMC keep launching other discount programs in an effort to woo local consumers in the current tough conditions.

Speaking to the Daily, representatives of many retailers affirmed that they will continue launching promotions this month to lure customers.

Nguyen Phuong Thao, director of Maximark Cong Hoa, said this month her supermarket will offer discounts of 5-10% for 1,500 product lines. She expected the program to stimulate demand of consumers who are tightening their purse string to cope with rising expenses of fuel, healthcare services and education.

Meanwhile, Big C supermarket chain plans to carry out a series of new promotions, including a pledge to sell products at the lowest possible prices and to stabilize prices of 300 essential items. The programs’ deadline is extended by an additional two months to early next month instead of September 3 as initially planned.

There will be discount programs applicable for 1,000-1,500 products such as a sharp discount from last Monday to next Sunday for some 500 essential commodities like cooking oil, instant noodles, processed foodstuff and rice cookers. Also, the supermarket introduces a program to mark down prices of 2,000 items of cosmetics, accessories and fashion products of about 200 suppliers.

Duong Thi Quynh Trang, public relations director of Big C, said as the on-going economic difficulties have adversely impacted local demand, her store chain has come up with scores of solutions to attract customers.

According to Trang, retailers have to make promotions attractive to local buyers. They should secure supply of fresh foodstuff from the very source to lower prices whilst negotiating for cheaper prices of essential goods, she said.

In the context of the present stagnant consumption, retailers need to have policies to control prices when working with suppliers, Trang noted.

Travel firms join hands to sell tours in flooding season

Saigontourist Travel Service Company and Dong Thap Tourist Company have agreed to jointly promote the tour program “Dong Thap – Flooding Season” to local and international tourists.

This is the first time travel companies have joined hands to offer this special kind of tour to foreign tourists. The two firms will jointly develop and market tours during the flooding season in Dong Thap Province, beginning in October, as a typical product of the Mekong Delta.

Doan Thi Thanh Tra, marketing manager of Saigontourist, said her company began to promote flooding season tours last year. Brochures about this kind of tour have been sent to foreign partners of Saigontourist.

This year, the tour operator starts to seek international tourists for flooding season tours. Especially, the river tour from Cambodia to the Mekong Delta provinces, including Dong Thap, is very attractive to German and French visitors as well as local tourists.

“We are still selling tours so we have yet to sum up the total number of tourists, but the number of local tourists may be 1,000. We also consider this as a new product to lure international customers,” said Tra.

Travel firms over the past few years have offered tours for tourists to travel to the Mekong Delta provinces like An Giang and Dong Thap in the flooding season to experience how local lead their lives there. However, this kind of tour did not attract so many travelers.

Japanese appointed as VCB deputy general director

Yutaka Abe, a Japanese national, has been appointed as Deputy General Director of the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank or VCB), as of September 30.

According to the Lao dong (Labour) newspaper on Oct. 3, the appointment is in line with the stock purchase contract between Vietcombank and the Japan’s Mizuho Corporate Bank Ltd.

Abe is also a member of the bank’s board of directors.

German investors find an Asian home

Increasing direct investment from Germany to Vietnam is flagging that the Asian country is becoming the promised land for many German companies.

After years in Vietnam, ThyssenKrupp Group - one of the leading industry manufacturers in Germany - saw huge growth potential which led to a decision for investment expansion in this country.

ThyssenKrupp Materials Vietnam, formerly a joint venture between ThyssenKrupp Materials International GmbH and Vietnam’s Dong Do Metal Company, in June announced that it became a 100 per cent foreign-invested company after the German company acquired all stakes of Dong Do Metal Company.

“The conversion reflects ThyssenKrupp Group’s strong and long-term commitment to the Vietnamese market, especially when Vietnam’s economy and global economy are experiencing a tough time,” said Doan Tuan Viet, general director of ThyssenKrupp Materials Vietnam.

Established in Vietnam in 2007 with initial investment capital of $8 million, ThyssenKrupp Materials decided to increase total investment capital up $20 million.

ThyssenKrupp Materials Vietnam has become one of the leading companies in supplying metal materials for Vietnam. The group has not only expanded in the materials market, but also in other sectors. So far, ThyseenKrupp Group has three companies in Vietnam, namely ThyseenKrupp Materials, ThyssenKrupp Elevator and ThyssenKrupp Polysius and two representative offices.

The rapid economic growth over the past two decades has made Vietnam be an attractive investment venue for investors in Europe, especially in Germany, the largest European economy.

Vietnam’s Foreign Investment Agency reported that as of the end of August 2012, German companies committed to invest in 184 projects in this South East Asia country with total investment capital of around $900 million.

Many well-known German companies have been present in Vietnam for a long time, including Siemens, Schenker, Bayer, Mercedes-Benz, B-Braun, Metro Cash & Carry, Bosch and Messer Group.

Mercedes-Benz is now running a manufacturing facility in Ho Chi Minh City, pharmaceutical producer B-Braun is having two manufacturing facilities in Hanoi. Meanwhile, Metro Cash & Carry opened 17 wholesale centres in Vietnam.

Like ThyssenKrupp Group, many German companies have drawn investment plans in Vietnam.

Robert Bosch last year started investing in a high-tech facility for the production of push belts used for continuously variable transmission in automobiles, at a total cost of $42 million. The firm also announced to build a research and development (R&D) facility in Vietnam. Robert Bosch stated that it would double investment in its pushbelt plant to $132.6 million by 2015.

During the German Minister of Economics Philipp Roesler’s recent visit to Vietnam, Siemens Vietnam – a subsidiary of Siemens Group - signed a contract with Vietnam Motors Industry Corporation for manufacturing an ELFA hybrid bus prototype. Accordingly, Siemens would supply all necessary ELFA components and provide technical support while Vinamotor would prepare the platform and manufacture remaining parts of the bus for operational readiness.

Meanwhile, Germany-based Hellmann Worldwide Logistics, one of the world’s leading logistics providers, is looking for bigger investment opportunities in Vietnam. The firm early this year announced it wanted to establish a joint venture or private-public partnership (PPP) on providing logistics services in the fields of healthcare, fashion and garments, food, electronics, spare parts and specialised logistics services in Vietnam. The joint venture or PPP is set to become the company’s headquarters in ASEAN+3+6+8 and in the region of Trans-Pacific Partnership.

“Hellmann is committed to invest in business joint venture or PPP in Vietnam, becoming a trusted partner of the government and people of Vietnam and contributing to the social economic development strategy in the country,” said Achim Georg Deja, president of Tima International GmBH - a Hellmann affiliate, in his meeting with the Vietnamese Ministry of Planning and Investment.

In the health care service sector, German-based MMS International, specialised in hospital operation and management, is looking for investment opportunities in Vietnam. “We will step into two hospital projects in Ho Chi Minh City and one in Hanoi if things go smoothly,” said Matthias Deters, general director of MMS International.

Another German company, TSB Technology Systems Business AG, is also in the mix. “Hanoi and Ho Chi Minh City are our top targets since most high-paid people are residing here. We are negotiating with some partners to get our investment plans for building quality hospitals in Vietnam up in the shortest time,” said Michael Sprotte, director of the company.

German Minister Roesler, at a business forum held in Hanoi, affirmed German enterprises wanted to increase investment in three sectors including renewable energy, high technology and healthcare.

Most of German companies said that Vietnam could attract more investment from Germany if this country further improved infrastructure systems and legal frameworks.

“Vietnam is moving up rapidly and has invested largely in infrastructure. However, this will remain a challenge in luring foreign direct investment to Vietnam. Vietnam has to further invest in this sector as well as resolve issues related to public investment and financial sector to lure more German investors,” said Christiane Laibach, member of board of management at Kfw Banking Group.

Hapro thinks outside the square

Hapro Group’s recent proposal for a specific mechanism to develop its distribution network has got the industry talking.

In a recent Hanoi workshop discussing Vietnamese goods in the modern retail system, one of Vietnam’s leading corporations in export, import, production and trade services voiced its proposal to be supported in hiring suitable business spaces in Hanoi and some northern locations to expand footprints in urban and rural areas.

Particularly, Hapro wants to increase visibility of its HaproMart and HaproFood in Hanoi’s crowded residential quarters, resettlement and new urban areas like Trung Hoa-Nhan Chinh, My Dinh, Dinh Cong, Viet Hung and Van Quan.

Hapro also proposed for a specific mechanism giving it the right to hire first floor space at residential blocks in these above urban areas, about one or two venues at each urban area, each venue covering 300-500 square metres to enlarge HaproMart and HaproFood chains.

In this respect, Hanoi Supermarket Association chairman Vu Vinh Phu assumed Hapro had reasons to make the move since the group was expected to become a leader in Hanoi’s trade sector.

Hapro possesses several hundred shops, but up to 30 per cent of them are small in size measuring between 10-20sqm and mingled among private housings, making it difficult to boost trade.

Phu, once the chairman of Hapro founding project and former deputy director of Hanoi Trade Department, did not advocate Hapro’s intention to ask for this special mechanism saying that “Hapro has for long enjoyed too many incentives compared to other Hanoi retailers but has not yet developed effectively. It now needs to compete impartially with other businesses.”

Phu assumed human resources quality was a thorny issue at Hapro. Around 20 per cent of staff at this group are aged above 45 years old whereas half of staff, including top management posts, have yet to be trained in modern trade.

The current operational apparatus remains cumbersome with lax cooperation among different sections. Hapro’s Vietnamese product distributors have paid undue attention to design improvements while materials had to travel different stages, resulted in high input costs.

Besides, Hapro’s negligence to equitising move is believed to hinder the group’s further development in a market economy.
“The ability to grasp opportunities timely is essential in doing business, but Hapro not yet acute in this respect,” Phu said.

Phu said the Hanoi base group would soon open a new trade centre in Cat Linh street for supermarket trading and office space leasing.

“It would be a smart move if it took place a decade ago but not now since office rental has plummeted in recent years,” Phu said.

Hapro is a state business under direct management of Hanoi People’s Committee.

It operates under a parent company and subsidiaries model in three core areas - import export business, home trade and investment-development of trade infrastructure system.

After seven years in operation Hapro now consists of an expansive retail network with three big Hapro shopping centres, three market trading venues, 40 supermarkets and convenience shops HaproMart and 40 safe food shops and outlets HaproFood. Besides, it possesses a system of over 100 shops selling electro-mechanical, civil electrical products and garments in Hanoi and some northern locations.

Hapro’s retail revenue surpassed VND4 trillion ($190 million) per year in recent years, with revenue from locally made items growing an average 30-50 per cent annually.

Vietcombank champions villa ownership

Don’t miss the opportunity for luxurious villas ownership with great support from Vietcombank.

Vietcombank and Flamingo Dai Lai Resort JSC- developer of top-notch Flamingo Dai Lai Resort - have recently signed an agreement ‘Privileged offer of great interest to villa buyers at Flamingo Dai Lai Resort’.

Accordingly, customers wishing to buy a villa at the resort can receive a Vietcombank loan up to 60 per cent of the contract value for 15 years at a rate of 6 per cent per year for the first 12 months.

The price of each villa starts from VND2.8 billion ($133,000).

According to Flamingo Dai Lai Resort, the price covers the construction and landscaping costs of the villa, without taking land prices into account.

Villa owners will also have a chance to get other benefits at this luxurious resort. For instance, they can receive over VND35 million ($1,650) per month when taking part in the programme ‘lending villas, getting in return marginal profits’.

One of top-class large scale eco resorts in the north, Flamingo Dai Lai is only 20 kilometres from Noi Bai international airport and 45km from Hanoi’s centre.

The resort, positioned in northern Vinh Phuc province’s Phuc Yen district, cover 123 hectares area and is surrounded by 500ha of water surface and thousands hectares of pine forests.

HDBank is Vietnam’s the best cash management service provider

The prize “The best Cash Management Service of Vietnam" has been awarded to HDBank by Asiamoney Magazine at Hong Kong.

The award is for its highest achievements in all three types of businesses.

“According to the survey’s result of more than 5,500 leaders of enterprises and financial institutions throughout Asia-Pacific region, HDBank was highly appreciated as meeting all these requirements including the most creative cash management solutions, the best cash liquidity management solutions, payables and receivables, great knowledge in business strategy, objectives and requirements before proposing cash management solutions to businesses, the best capacity in online electronic technology and after-sales services as well as good ability in finding external cash management services for enterprises,” said a Asiamoney representative.

To ensure fair poll among institutions of the same size, the organisers purposely grouped the answers into three categories of small, medium and large annual sales.

Through the survey results, the local bank was the top enterprise of three categories and got this prestigious award.

Asiamoney belongs to Euromoney Institutional Investor PLC whose headquarters is in the UK and mainly operates in the communications field of the global financial industry.

Asiamoney is a monthly magazine specialising in reporting banking and financial markets in Asia Pacific.

Manufacturing PMI signals worsening operating conditions

The HSBC Vietnam Manufacturing PMI signaled a further worsening of manufacturing sector-operating conditions during September.

However, the rate of deterioration was only slight. This was highlighted by a rise in the headline index from 47.9 to a five-month high of 49.2 points.

September’s data showed that manufacturing output was little changed since the month before, following a solid reduction one month previously.

Meanwhile, new orders decreased again in September, with panelists largely attributing this to subdued market demand conditions.

The rate of decline in new work was the weakest in the current five-month period of contraction, however, only modest.

In contrast, the pace of reduction in new export business accelerated since the month before.

Although only modest, the latest decrease in foreign orders was the sharpest recorded by the series to date.

The size of the Vietnamese manufacturing sector workforce was changed little in September. Meanwhile, the backlog of work declined at a sharp rate that was the steepest in the short series history.

The latest decrease in outstanding business extended the current period of reduction to six months.

Purchasing activity continued to fall in September. The rate of decline in input buying was only slight, however, having eased markedly for a second successive month.

Stocks of purchases fell as a result, although the rate of decline was the slowest since November, 2011.

Meanwhile, companies continued to report shorter lead times from vendors, largely reflective of sufficient stock of inputs at suppliers.

The average input costs faced by goods producers rose for a second successive month in September, with the rate of inflation accelerating to a five-month high.

The overwhelming reason given by panelists for a rise in average prices was that raw material costs had increased over the month. Some survey respondents also mentioned higher prices paid for fuel.

Despite the rise in average costs, goods producers reduced their output charges during September in an attempt to attract new business. The rate of output price discounting was only slight.

Commenting on the Vietnam Manufacturing PMI survey, Trinh Nguyen, Asia economist at HSBC said: “The stabilisation of manufacturing activity in Vietnam is a positive development, especially given the downturn of the global trade cycle and the still-fragile domestic business environment. New export orders continue to contract but, at close to 50.0, the print for the output index is in line with our view that growth will pick up in the fourth quarter.”