M&A activity tipped for another strong year

In an interview late last year with a Wall Street Journal reporter, the State Bank of Vietnam’s Deputy Governor Nguyen Thi Hong said it was encouraging weak banks to voluntarily restructure themselves in 2015 through mergers and acquisitions.

These M&As are coming about as part of the State Bank’s efforts to mop up bad debts and restructure the country's fragmented banking sector after a decade of rapid expansion.

An estimated six to eight M&As are likely to occur in 2015. Vietnam's largest bank in terms of market value, Vietcombank, could link with Saigon Bank for Industry and Trade and Hanoi-based VietinBank may join with OceanBank, the State Bank initially announced.

BIDV could take similar steps with Mekong Housing Bank and VietinBank might also merge with Petrolimex Bank, according to the State Bank’s preliminary reports.

The State Bank later recanted and said the details of possible mergers were not technically official, and any M&As would be formally announced to the market as the specifics materialise.

Other potential mergers in the pipeline include the Maritime Bank with Mekong Development Bank, and Sacombank with the Southern Bank for which preparations got underway last year.

The first three months of this year have also seen strong M&A activities in a number of non-banking industries.

At the beginning of the year, Hoang Huy Investment Services Joint Stock Company announced it would acquire a 99.78% stake in Hoang Giang Services Development Joint Stock Company.

If the acquisition is successful, Hoang Huy Company could reach a revenue of VND3,400 billion and an after tax profit of VND283 billion for 2015.

The government has also decided to let go of its 97.7% stake in the Vietnam Motor Industry Corporation (Vinamotor) once considered the key enterprise central to its strategy to develop the automobile industry.

Four private investors have come out of the wood work voicing an avid interest in acquiring Vinamotor since the State first announced its long awaited intention to part with it.

The M&A wave has also spread to aviation. Analysts have said they see signs that the State may be trying to quicken the equitization process of selling off its control of enterprises in an ever widening number of industries.

Undisclosed sources have indicated the State is considering selling its entire interest in the Quang Ninh Port currently held by Vinalines, the state-owned flagship shipping carrier, to the T&T Group.

The owner of T&T Group, Do Quang Hien, a highly influential businessman, reportedly is prepared to chip in VND490 billion to close the deal.

In addition, as icing on the cake, T&T Group is hoping the government will toss in the opportunity to acquire a controlling interest in the Phu Quoc International Airport.

Although technically not an M&A deal, the National flag carrier Vietnam Airlines has announced it is seeking to sell off a 20% stake in the company. The company made the announcement on March 12 at a shareholders meeting in Hanoi.

After the proposed sale, the government’s share would shrink to 75% from the current 95%, which is a clear indication of the intent by the government to relinquish control through a series of staggered sales.

Many domestic and foreign investors are also eyeing M&A deals in electronics, which too are expected to be busier than usual this year.

A representative of leading Thailand electronics store Power Buy, owned by Thailand’s second richest person recently announced his company is acquiring a major stake in one of Vietnam’s largest shopping centre chains, Nguyen Kim Trading JSC.

Nguyen Kim is among the biggest electronics shopping centre operators in Vietnam, currently running 23 stores nationwide.  

Recently, a spokesperson of The Gioi Di Dong company announced it too has plans to expand rapidly by acquiring prime locations through mergers and acquisitions to shortcut the lengthy time it takes construct new facilities and wait for them to mature.

Leading economist Dinh The Hien notes that M&A activities last year focused on real estate, banking and production. This year, long-term investors are looking to acquire a controlling interest in government run enterprises.

SBV's forex policy must adjust to account for all industries' needs

The State Bank of Viet Nam (SBV)'s foreign exchange policy will be based on macroeconomic management and harmonised with the benefits of all industries and sectors, and not exports alone.

This statement was made by the Deputy Director of SBV's Credit Department, Vo Minh Tuan.

The central bank's foreign exchange (forex) adjustment is based on three factors: current balance, capital balance and the national monetary policy's management orientation, Tuan said, adding that SBV's Department of Monetary Policy and Foreign Exchange Management were closely watching the market in order to determine the most suitable measures that can be adopted.

Tuan made the statement at a recent meeting where many agricultural, forestry and fishery exporters and associations revealed they were facing major difficulties due to the appreciation of the Vietnamese dong against the US dollar, while the greenback had also appreciated sharply against the Euro and the Yen in the world market.

Representatives from the Vietnam Association of Seafood Exporters and Producers said seafood exports during the first quarter (Q1) of this year dropped nearly 23 per cent, the steepest decline seen in the past five years. The drop was evident in the three main markets of the United States (down 44 per cent), the European Union (EU) (down 11 per cent) and Japan (down 15 per cent).

Besides the US anti-dumping tax imposed on Vietnamese seafood, the representatives also attributed the sharp drop to the appreciation of the dong against the dollar in the local market.

Vietnamese seafood exports to the EU and Japan declined sharply because the Euro and the Yen had been devalued against the dollar, while Vietnamese export payments were made in the dollar, they said.

Also, SBV's policy of keeping the dong stable, while currencies of other exporting countries, such as India, Indonesia and Thailand were devalued had caused Vietnamese export products to become more expensive than those countries', they said.

The Chairman of the Vietnam Wood and Forestry Association, Nguyen Ton Quyen, said exports of wood and forestry products during Q1 this year had also slipped by more than 6 per cent though the exports in the previous years had been strong.

Besides the low demand for wood and forestry products in the world market and the devaluation of the Euro against the US dollar, Quyen also attributed the decrease to Vietnam's stable forex policy at present.

Admitting that the appreciation of the dollar in the global market and the stability of the dollar-dong rate in the domestic market would result in Vietnamese products becoming less competitive than other countries', Tuan said imports would also have to bear the negative impact and the national public debt would also increase if a devaluation of the dong against the dollar was announced.

He said that keeping the exchange rate unchanged at the moment was more beneficial than devaluing the dong, because 90 per cent of the raw materials for Vietnam's exports were purchased abroad.

Therefore, an increase in the value of the US dollar would hurt exporters since input costs would also escalate, especially as demand for imported materials was rising, he explained.

The central bank recently confirmed that the forex rate would be adjusted by no more than 2 per cent this year as per a pledge made by SBV Governor Nguyen Van Binh in December last year.

In January, SBV had devalued the dong by 1 per cent from VND21,246 to VND21,458 per US dollar, the first exchange rate adjustment since June 2013.

Packaging sector posts strong growth

The country’s strongly growing packaging industry is creating good chances for foreign manufacturers and suppliers of machines and equipment to speed up their exports to this market, heard the opening of the 10th International Processing and Packaging Exhibition and Conference for Vietnam (ProPak Vietnam 2015) in HCMC yesterday.

Speaking at the opening ceremony of the exhibition, Vera Fritsche, markets and exhibitions manager at the German Engineering Federation (VDMA), gave figures to prove Vietnam’s promising packaging sector. She said Vietnam consumed around 4.4 million tons of packaged foods last year and the volume is predicted to rise to 5.5 million tons in 2018.

She said with the young population and increasing average income per capita, more Vietnamese people have switched to using packaged foods and beverages, and this promised much potential for enterprises. Therefore, manufacturers and suppliers of machines and equipment for the packaging sector will have more opportunities to export their products to Vietnam in the coming years.

She boasted German firms are strong at machines and technologies for meat processing, dairy production, and canned beverages.

“Many German firms have shown keen interest in Vietnam’s packaging sector and we hope that the volume of German machines and equipment imported to Vietnam will increase in the coming time,” Fritsche told the Daily.

Vietnam spent 47 million euros (US$50.48 million) importing German machines and equipment for the local packaging sector in 2013, and the exports have since increased by 10% a year.

Up to 80% of 267 exhibitors at ProPak Vietnam 2015 are from Germany, Italy, South Korea, Japan, Taiwan and Singapore.

Fritsche said 30 German firms are showcasing their products at ProPak Vietnam 2015 at the Saigon Exhibition and Convention Center (SECC) in HCMC’s District 7, which will last until Thursday.

The number of German exhibitors at the event is up 21% against last year, according to the event’s organizers Singapore Exhibition Services (SES) and the Vietnam Chamber of Commerce and Industry (VCCI).

The exhibition features modern technologies and equipment for canning, confectionary and cosmetics production, liquid and milk processing, food additives, measurement devices, pharmaceutical production and packaging.

ProPak Vietnam 2015 will comprise of conferences on green packaging and production, food processing technologies and food safety.

Tran Viet Dung, deputy director of VCCI Exhibition Service Co. Ltd, said with a population of 90 million, Vietnam’s packaging industry holds much potential for both local and foreign enterprises.

Agro-forestry-fisheries exports decline 13.2% in Q1

Agro-forestry-fisheries exports in the first quarter of this year fell by 13.2% to around US$6.13 billion due mainly to the falling currencies of Vietnam’s major importing countries.

Speaking at an emergency meeting held in Hanoi on Monday to find ways to prop up farm produce exports, Minister of Agriculture and Rural Development Cao Duc Phat said main farm produce made up US$2.92 billion out of the US$6.13 billion, down 15% over a year ago.

Nguyen Ton Quyen, general secretary of the Vietnam Timber and Forest Products Association (Vifores), said shipments of wooden products grew strongly in the previous years but dropped 6% in January-March.

The reason, according to Quyen, was the falling demand for outdoor furniture imports from the EU market. The ongoing economic woes have sent demand for the product in France down 27%, the Netherlands down 33% and the UK down 5%.

The strong decline of the euro against the U.S. dollar made it hard for local exporters to find new orders. On top of that, many wood enterprises have racked up substantial losses for the orders signed since last April, Quyen said.

Coffee exports were in the same situation when revenue in the first three months plummeted almost 40% to US$734 million.

Besides falling prices, coffee farming is not favorable at the moment, according to the Vietnam Coffee and Cocoa Association (Vicofa). Prolonged drought in the country’s main coffee producing regions may lead to an output slip of 20%.

Last year, forecasts of a coffee price uptick encouraged farmers to stockpile coffee beans with a total of about 400,000 tons.

Seafood exports have also tumbled since last October, said Nguyen Hoai Nam, deputy general secretary of the Vietnam Association of Seafood Exporters and Producers (Vasep).

Nam cited figures of the agriculture ministry as saying that seafood exports in the period went down 20.6% year-on-year to US$1.27 billion, the steepest drop in five years.

Seafood exports to the U.S., Europe and Japan fell 44%, 11% and 15% respectively, Nam said.

In addition to anti-dumping measures in the U.S. market, declining seafood exports were attributable to a weakening of currencies like the euro and Japanese yen against the greenback while the exchange rates in Thailand, India and Indonesia are floated. Therefore, Vietnam’s seafood products are unable to compete with those in regional countries.

The tea sector is not an exception. Nguyen Huu Tai, chairman of the Vietnam Tea Association, said though tea exports fell only 2.2% to US$38 million in quarter one, the depreciation of the Russian ruble has affected Russian partners when they import Vietnamese tea.

Tax procedures remain time-consuming

Despite much effort to simplify administrative procedures, the tax sector has maintained hundreds of steps and these time-consuming procedures have made life tough for enterprises and individuals.

An administrative reform report presented by the Ministry of Finance at a government cabinet meeting yesterday showed that there were 432 steps in tax procedures by the end of 2014 after the ministry removed 53 and streamlined 262 others.

The ministry admitted that the complicated procedures have lengthened tax payment time. Up to 24 out of 70 important steps on tax filing, payment, refund or inspection have yet to be adjusted and simplified. Online tax payment remains dismal with only 40,500 out of 488,000 enterprises taking part in the program as of March 25.

The ministry also said that administrative reform has yet to benefit individuals and family-run businesses as much as expected.

According to a report on the business environment of International Finance Corporation (IFC) and the World Bank (WB), enterprises in Vietnam still have to spend up to 872 hours a year preparing, filing and paying taxes, with 335 hours for social insurance paperwork and 537 hours for tax procedures.

To reduce the total payment time to 171 hours a year, the tax payment time should be cut by 415.5 hours to 121.5 hours and the social insurance payment time by 285.5 hours to 49.5 hours.

The ministry pledged to support businesses, helping realize the target set by the Government in its Resolution 19 issued for tax authorities to streamline procedures for enterprises to prepare, file and pay taxes to an average of 171 hours per year in line with the ASEAN 4 bloc.

The target for this year is tax payment time would be no more than 121.5 hours, the proportion of enterprises registering online payment at 95% and the e-payment rate at 90%, the ministry said in the report.

Besides, the ministry will build and announce tax refund data and guarantee quick tax rebate for enterprises.

PVCFC makes debut on HOSE

PetroVietnam Ca Mau Fertilizer Joint Stock Company (PVCFC), also known as Dam Ca Mau (DCM), on March 31 made its debut on the Hochiminh City Stock Exchange (HOSE) with over 529 million shares offered at the reference price of VND14,500 each.

Closing the first trading day, 385 million DCM shares changed hands at VND13,600 per share.

PVCFC is one of the three biggest domestic fertilizer producers with total assets of over VND15.42 trillion (some US$716.9 million) and chartered capital of around VND5.29 trillion.

Bui Minh Tien, general director of PVCFC, said many farmers in the southwestern region of the country have used urea fertilizer products made by PVCFC and the enterprise now holds 55% market share in the region.

Its sales from its three target markets – the Mekong Delta, the southeastern region and Cambodia – have increased steadily and now account for 80% of its total revenue.    

PVCFC said it would continue focusing on the three markets in the coming years.

Ca Mau Urea Plant has an annual capacity of 800,000 tons. But it turned out 805,000 tons for the local market last year and obtained profit of over VND800 billion on revenue of nearly VND6.3 trillion.

Tien said PVCFC aimed to sell 782,000 tons of urea, and post revenue of over VND5.58 trillion and after-tax profit of VND662 billion this year.

DCM is the 368th stock code on HOSE. PVCFC sold out 129 million shares offered at the initial public offering (IPO) in December last year.

Rice exporters struggling with woes

Local enterprises have signed more rice export contracts this year than in the previous year but they are still grappling with a host of difficulties due to a supply-demand imbalance on global markets.

As of March 19, member enterprises of the Vietnam Food Association (VFA) had clinched export deals for over 1.9 million tons, up nearly 7% from the same period last year. About 1.2 million tons of it was from commercial contracts and the rest from government-to-government contracts, a source from Can Tho City’s Department of Agriculture and Rural Development told the Daily on March 31.

According to Oryza.com, the world’s five leading rice exporters Thailand, India, Vietnam, Pakistan and the United States had exported over 6.6 million tons of rice in the year to March 17, rising 12% year-on-year.

Despite improved export volume, exporters are under great pressure to find clients as supply still outpaces demand on global markets.

Recently, the Thai Rice Exporters Association (TREA) has suggested the government delay the third auction to curb a domestic rice price decline. The nation now offers 5% broken rice at around US$392 per ton, down around US$13 against February.

Meanwhile, Vietnam sells 5% broken rice at only US$365 a ton, down US$5 per ton versus last week and US$20 year-on-year. India and Pakistan have also revised down their prices to US$380 and US$370 per ton respectively.

On the other hand, rice demand has weakened and even slumped in China. The nation imported only 189,000 tons of rice in the first two months of 2015, down 44% against the previous year.

The U.S. Department of Agriculture forecast the Philippines would import 1.6 million tons of rice this year, up 33% from 2014, but the demand is not strong enough to support the market.

In Vietnam, a VFA report showed that its 128 members had purchased 760,000 tons of rice by the end of March, representing 76% of the volume approved by the Government in a rice stockpiling scheme in the 2014-2015 winter-spring crop. However, rice prices are lower than those during the 10 days after the program began on March 1.

Tu Bao Duy, director of Hua Ngoc Loi Company in Soc Trang Province, said exporters are buying unprocessed IR50404 rice at VND6,200-6,300 per kilo and fresh paddy at VND4,200-4,300 a kilo, down around VND100-300 a kilo compared to the 10 days after the beginning of the program.

Given the low prices, local farmers have yet to benefit from the rice storage program, which will end in a fortnight with around 240,000 tons of rice still to be purchased.

Rise of “New Wealth Builders” seen in Vietnam

Economist Intelligence Unit (EIU) has just issued a global report of The New Wealth Builders, which is sponsored by Citi, revealing that the new wealth builders in Vietnam will grow 34.9 per cent in period of 2014-2020.

According to the report, new wealth builders today have $88 trillion in global assets and are expected to grow at a compound annual growth rate of 7.1 per cent, to reach $145 trillion by 2020. Since 2010, the group has grown faster than any other wealth sector— including high net worth or mass market segments—and is forecast to grow even faster in the next decade.

Vietnam is among three Asian emerging economies having high growth rate of new wealth builders in future, following India (47.4 per cent) and Indonesia (41.2 per cent). Meanwhile, the growth rate in Thailand is 23.6 per cent, and the Philippines is 22.8 per cent.

 “New wealth builders represent an increasingly important phenomenon in the world economy driving growth in savings and economic activity more generally. They are typically self-made, socially conscious and sharply focused on growth,” said Jonathan Larsen, global head of Retail Banking and head of Consumer Banking, Asia Pacific, Citi.

Additionally, the EIU predicts robust economic expansion in Vietnam through 2018, with 35 per cent. Analysts foresee a steady acceleration in private consumption growth that will shake off the effects of the spiraling inflation of 2011- 2012.

Economic performance surpassed expectation in 2014, prompting the EIU to raise expectations for 2015. Credit is given to a steady increase in private consumption growth, rooted partly in stable price conditions and accelerating wage growth. Conditions favourable to new wealth builders in Vietnam should prevail for the next two decades, the EIU predicts.

Citi serves customers including new wealth builders around the world by providing retail and wealth management services through Citibank, Citigold and Citigold Private Client. In Vietnam, Citi offers Citigold services to emerging affluent customers across the country.

Thaco cuts prices of four Peugeot models

The Truong Hai Automobile JSC (Thaco) has reduced the prices of four models – Peugeot 208, 408, 508 and RCZ – in the Vietnamese market, by VND20 million to VND 240 million.

The new prices of the four models became effective on April 1.

Director of Thaco's touring car department Bui Kim Kha told Bizhub yesterday the prices were reduced due to the fall in the exchange rate between the Euro and the Vietnamese dong.

The prices of Peugeot 508 and RCZ have been cut by VND185 million ($8,800) and VND240 million ($11,400), respectively.   

Peugeot 508 is now selling for VND1.39 billion, or US$66,000, the previous price being VND1.575 billion, or US$75,000.

With its balalanced, sporty and sophisticated design the Peugeot RCZ is one truly stunning coupe. From the double bubble roof to the low driving profile there's never been a car quite like it. VNS Photo

Meanwhile, the price of sports model RCZ has been reduced from VND1.995 billion ($95,000) to VND1.75 billion ($83,000).

Peugeot 208 is selling for VND890 million ($42,000), down from the previous price of VND948 million ($45,000), while the price of Peugeot 408 (Deluxe) has been cut from VND945 million ($45,000) to VND925 million ($44,000).

Thaco has opened seven showrooms with 3S designs (sales-service-spare parts) nationwide and plans six more by the end of this year, following the first roll-out of the locally manufactured Peugeot 408 model in the Truong Hai-Chu Lai Auto Complex in the central Quang Nam Province last year.

Thaco, the largest automobile manufacturer in Viet Nam, produces and distributes vehicles for Kia from South Korea, Mazda from Japan and the French giant Peugeot.

Infrastructure vital to call for investors

Improving the infrastructure network in the impoverished northwestern region is paving the way for further investment inflows in the time to come.

In 2013, Sun Group began construction of the Fansipan-Sapa cable car system in the tourist town of Sapa in Lao Cai province. Upon completion later this year, the three-wire cable car system will stretch seven kilometres from Sapa town to the peak of Fansipan Mountain – the highest mountain in Indochina.

It will be the world’s longest cable car system, and will be capable of carrying a maximum of 2,000 people per hour. This system reduces what was once a dramatic two-day trek to a mere 15-minute ride.  This investment marked an important milestone for Sun Group, and particularly for the northwestern region, where there is huge untapped potential within the tourism industry.

Donaco International, an ASX-listed company, also opened a new five-star hotel and casino in the region last year. The Aristo Hotel – in Lao Cai city – follows on from the company’s three-star hotel which the company has been running since 2003. The hotel has 400 rooms, as well as a health spa and nightclub. Like Sun Group, Donaco International is expecting the growing demand in the tourism and entertainment sector of Vietnam’s northwestern region.

Joey Lim, managing director and CEO of Donaco, said the company was aiming to capture the increasing demand for gaming and leisure entertainment from the Chinese target market.

 Home to about 30 ethnic groups and long mountain ranges, the northwestern region is also a huge draw for tourists coming to Vietnam. Asides from its tourism potential, the region also boasts a lucrative mining industry, with private investors pledging at least $4 billion in committed investment capital since 2008.

The mountainous northwestern region is a place of strategic importance where a co-operative project is being implemented by both Vietnam and China. Lao Cai Cast Iron and Steel Plant, a joint venture between Vietnam Steel Corporation, Lao Cai Mineral Joint Stock Company and China’s Kunming Iron and Steel Group, opened doors of its steel factory in September. The plant can produce 500,000 tonnes of billets per year from iron ore exploited in the region.

Also, in the region’s Hoa Binh province last December, Czech BTG Holdings began construction of its $116-million brewery, which has the capacity of 190 million litres a year. The factory will mainly produce Budweiser Budvar beer which will be exported to neighboring countries including Korea, Japan, and China, and will also be available for local customers.

In addition, BTG Holdings plans to build a $136-million biomass-fired power plant with the generation capacity of 50 megawatts, which will ensure a stable power supply for local factories which include an electronic chip manufacturing facility, a milk processing plant and a solar cell producer.

Although it boasts many avenues for new investment projects, the northwestern region’s poor infrastructure development has still held region back. Since 2008, many investors have pledged billions of dollars in investment to this region. However, because of the slow pace of infrastructure improvement, disbursement has been modest over the years.

Until now there has been a greater hope in recent years with the Vietnam Expressway Corporation officially opening Vietnam’s longest highway in September, linking Hanoi with the northern border province of Lao Cai.

The 245-kilometre four-lane highway cost $1.2 billion, most of which was covered by official development assistance provided by the Asia Development Bank.

The highway stretches through five cities and provinces of Hanoi, Vinh Phuc, Phu Tho, Yen Bai and Lao Cai. This major route has shortened travel times from Hanoi to Lao Cai down from 10 hours to 3.5 and has established a reliable transport link between Vietnam’s northern provinces and the Chinese city of Kunming.

ADB report underlines recovery driven by FDI

Foreign direct investment and its manufacturing exports will continue being the key drivers of Vietnam’s economy this year.

The Asian Development Bank’s Asian Development Outlook 2015 report released last week claimed Vietnam’s gross domestic product growth was set to edge up to 6.1 per cent in 2015 and 6.2 per cent in 2016, higher than last year’s 5.98 per cent, with foreign direct investment (FDI) and manufacturing exports being important drivers.

The report stated that on a sector basis, industry was expected to be the major driver of growth. FDI and government investment would spur construction while recent increases in imports of manufacturing inputs, including chemicals, cotton, and plastics, signalled renewed strength in the industrial sector.

The report is practically illustrated by a series of billion-dollar projects inagurated in the first quarter of 2015, starting with the $1 billion high-resolution screen manufacturing line put into operation in Bac Ninh province by Samsung Display in early March. It was followed by the $1.95 billion Mong Duong 2 thermopower plant’s official operation of its first turbine station with a capacity of 560MW  in Quang Ninh province in the middle of March.

And last Friday saw the official opening of LG Electronics Vietnam’s $1.5 billion factory in Haiphong City.

Many smaller foreign invested projects have also come online recently, adding to the country’s manufacturing and export capacity.

Last week, Japan-backed Yazaki Haiphong Company put into operation its $35 million car electrics component factory in Quang Ninh province. Covering 7ha, the factory licensed last August will annually produce 2.76 million sets of products.

Last week also saw South Korean-backed Chadiostech Vina Company licensed in Vinh Phuc province for a $13.9 million project to manufacture voice coil motors and camera lens for mobile phones and other electronics equipment, on an area of 2.3ha. The plant is expected to come into operation in November 2015 and annually produce 167 million units for export.

Earlier, Vinh Phuc authority also granted an investment certificate to South Korea’s Partron Vina Company for raising investment and charter capital for the 18th time to $140.5 million and $122.5 million, respectively. This was also the second time that this company has increased its investment and charter capital since early this year.

The company makes electronic spare parts provided for South Korea’s Samsung Group.

Data from the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency also revealed that new FDI commitments rose to $15.6 billion in 2014, while an additional $4.6 billion committed to existing foreign-funded projects.

The MPI reported that Vietnam’s first quarter export turnover totalled $35.7 billion, up 6.9 per cent on-year. Of which, foreign enterprises held $24.02 billion (including crude oil exports) occupying 67.5 per cent of Vietnam’s total export turnover and up 16.2 per cent on-year.

According to the ADB report, better economic performance in the major industrial economies - particularly the US, Vietnam’s biggest export market - would spur exports. Exports of manufactured products will continue to expand, given that 76 per cent of last year’s disbursed FDI was directed into manufacturing.

Thanh Hoa offers peak incentives

Despite plentiful advantages and potential for development, the mountainous region in the north-central province of Thanh Hoa still lags behind in terms of socio-economic development.

In a bid to bolster the region’s development and effectively tap its strategic position in the province, the local authorities have crafted a number of incentives to increase the region’s appeal to investors.

In light of government Decree 108/2006/ND-CP dated September 22, 2006 detailing implementation of some clauses in the Law on Investment, most of Thanh Hoa mountainous districts have qualified as areas facing especially-difficult conditions for socio-economic development. Thanks to this catagorisation, investors and businesses wishing to set up shop in the province’s mountainous region are entitled to the highest-level investment incentives as per the current laws. These incentives cover land and water surface leasing, preferential taxes and more.

Investors can also benefit from other diverse support policies intended to promote employment and craft production. These will support the construction of markets, supermarkets and trade centres or those encouraging private investments in education, vocational training, healthcare, culture, sports and environmental protection.

In recent years the provincial mountainous region has received special support policies to help ensure social well-being. This includes the government’s Programme 135 on fast and sustainable poverty reduction for villages and hamlets in difficult conditions for development, policies targeting permanent settlement and farming of local people through completing transport infrastructure, power, irrigation and water supplies, or the government’s Programme 134 to ensure the provision of safe water.

For its part, the province has applied specific policies to achieve fast and sustainable poverty reduction. Specifically, the provincial party committee has enacted Resolution 09-NQ/TU striving to boost production and business, create more jobs, raise people’s incomes, and improve cultural facilities and training opportunities for local people.

The resolution also strives to revise and supplement policies to support poor households in the mountainous region. These policies aim to encourage more investors to pump capital into spurring the region’s development.

“We have been and are applying a variety of measures with a view to constantly bettering the investment climate as well as accelerating the pace of the administrative reform to help investors save time and cost,” said Pham Dang Quyen, Deputy Chairman of the Thanh Hoa Provincial People’s Committee. “Efforts have also geared towards establishing a simple and open legal corridor, stimulating the application of information technology progress at organisations and businesses to boost operational efficiency.”

“We are committed to providing as much support to investors as possible in the disadvantaged mountainous region under the slogan “simplicity, speediness and convenience,” Quyen said.

Thanh Hoa’s provincial authorities are committed to extending favourable investment incentives to new investors

Thanh Hoa’s mountainous region has benefited from the diversity of its highland and midland areas, including the northwest mountain range and 600-700m Truong Son mountain range.

The province’s Chu river and associated estuaries are ideal for building hydropower plants.

Thanks to fertile soil, southern low-lying mountainous and hilly areas are suitable for growing cash crops and specialty plants such as eucalyptus, wattle, cinnamon and rubber. Thanh Hoa also leads the country in growing bamboo subspecies with over 70,000 hectares in the region, ready to generate commercial value.

The region also abounds with mineral resources such as limestone with reserves of 370 million tonnes, chrome ores (21,989 million tonnes), and alluvial gold in Cam Thuy, Ba Thuoc and Thuong Xuan areas. Other valued minerals are clay, iron ores, pumice stone, facing stones and more.

This region also features a majestic karst system, creating beautiful caves and imposing natural heritage sites such as Pu Luong karst mountain in Quan Hoa and Ba Thuoc districts, Hai Van in Nhu Thanh district. Famous caves are Ngoc, Lo Cao in Nhu Thanh district and Ca Than in Cam Luong-Cam Thuy districts.

The province also boasts improved transport links. Route 15A connects the province’s northern and southern districts. Road 217 heads to Laos’ Hua Phan province while national highways 47 and 45 link the mountainous region to Thanh Hoa city and other low-lying districts.

The ‘legendary’ Ho Chi Minh Trail, running through the western part of the province is regarded as a key transport backbone, linking localities in the region as well as connecting mountainous districts to other provinces to the rest of Thanh Hoa.

Thanh Hoa consists of 11 mountainous districts covering more than 853,000ha, tantamount to 76 per cent of the provincial area and is home to over 1.08 people (32 per cent of the provincial’s total population).

Nearly 60 per cent of the mountainous region population are ethnic groups, mostly Thai, Muong, H’mong, Dao, Kho Mu and Tho ethnicities.

The province shares a 192 kilometres borderline with Laos spreading along 16 highland districts facing special difficult conditions for development in five districts of Muong Lat, Quan Son, Quan Hoa, Lang Chanh and Thuong Xuan.

Maritime Bank merges with Mekong Development Bank

The Maritime Bank (MSB) announced its plan to merge with the Mekong Development Bank (MDB) on its website on March 31.

The announcement came after State Bank of Viet Nam (SBV) Governor Nguyen Van Binh approved the merger earlier last month.

The new institution would be named Maritime Bank, and have a charter capital of VND11.75 trillion (US$560 million) and total assets of VND113 trillion ($5.38 billion).

MSB has 800 million shares circulating in the market, and MDB 375 million shares. Their stock is valued at VND10,000 (48 cents) each.

MSB will issue 375 million additional shares to carry out the merger, with every share of MDB converted into a share of MSB. All rights and interests, as well as responsibilities of existing shareholders of the banks will be retained.

The merger plan was approved at the two banks' shareholders meeting in 2013, with the aim to boost financial strength and competitiveness. The banks expected the merger would help them be counted among the largest banks nationwide in terms of charter capital and transaction network.

This is first merger this year since SBV officials stated that they expected about six bank merger and acquisition (M&A) deals to be implemented in 2015, as part of an effort to clean up the banking sector.

Credit ratings agency Moody's reportedly said recently that the growing number of M&A deals in the domestic banking sector was a positive sign that would help reduce systematic risks. They would also enable the authorities to better manage the area, and banks to extend loans and expand markets more advantangeously.

MSB has VND8 trillion ($380.95 million) in equity and more than VND107 trillion ($5.10 billion) in total assets, while MDB has VND3.75 trillion ($178.57 million) and nearly VND6.44 trillion ($306.67 million) respectively.

Hanoi Toserco offloads all shares in IPO

The Hanoi Tourist Service Company (Hanoi Toserco) offloaded all 20.7 million shares in its initial public offering (IPO) on March 31.

Organiser of the deal, the Hanoi Stock Exchange (HNX) said the company earned VND299.2 billion ($13.9 million) in the sale, adding it was the largest IPO in terms of value this year.

The average price of the shares was VND14,469 ($0.67), an increase of 45 per cent over the reference price of VND10,000 ($0.46).

Among the 18 investors who registered to buy the shares, nine were Vietnamese individual investors.

Hanoi Toserco has a charter capital of VND440 billion ($20.6 million). It plans to increase the capital to VND748 billion ($35.1) after equitisation.

Established in 1988 in Ha Noi, the company is one of the city's first tour operators. It owns about a 30 per cent stake in the four-star Ha Noi Hotel and another 35 per cent stake in the five-star Pullman Ha Noi hotel.

After the IPO, the state still has a 45 per cent stake in the company.

Savills, Vinaliving launch second phase of The Point

Savills Viet Nam and VinaLiving will officially launch the second phase of The Point next Thursday, Savills Viet Nam said on April 2.

The second phase of VinaLiving's The Point, a golf villa development project located at the Da Nang Beach Resort, has 20 villas, with plot areas ranging from 260 to 340 square metres, the company said.

Savills Viet Nam, which is the lead sales agent for The Point, reported that since the official launch of the first phase was completed in October 2014, 16 out of 20 villas had been sold.

Currently, more than 80 per cent of the villas in the first phase have completed their foundations, with house construction advanced to ensure that the first phase homes are delivered from the last quarter of this year.

"About 70 to 75 per cent of the total buyers during the first phase are Hanoians, while foreign buyers account for 5 per cent of the total, and the remaining buyers are from HCM City and other locations," said Truong Thi Minh Hanh, VinaLiving's Associate Director Sales and Marketing representative from VinaCapital.

"With many positive signs emerging in the real-estate sector towards the end of 2014 and the impact of the amended housing law, which would be officially enforced in July, we forecast that the housing market in general, especially the holiday home sector, would continue to improve," said Mathew Powell, Ha Noi Branch Director, Savills Viet Nam. "Resort property in Viet Nam is now very competitive and a realistic option for many in the region."

VinaLiving, VinaCapital's real-estate brand, is backed by VinaCapital, one of the leading foreign real-estate developers in Viet Nam, which invests in and develops residential, retail, hospitality and mixed-use projects across the country.

Savills Viet Nam is the largest and most experienced real-estate group in the country, with offices in Ha Noi and HCM City, providing comprehensive property services. Savills Viet Nam won the Asia Pacific Property Award in 2014.

Viet Nam to cut customs clearance time in bid to improve business environment

Co-operation amongst customs agencies and ministries still leaves much to be desired, said Pham Thanh Binh, a customs expert from USAID's Governance for Inclusive Growth Program in Viet Nam.

Binh attributed the continuance of the country's sluggish and complex process of customs clearing to the poor inter-agency co-operation at an online conference about Viet Nam's customs practices yesterday.

"There is a lack of consistency in standards and procedures during the customs clearance process," Binh said, "different sets of regulations are being applied by various customs agencies and ministries."

He gave an example of how different agencies use differing methods to calculate the fee to verify goods caused confusion for businesses. Some agencies based their fees on weight while others on the value of the goods.

Tran Quoc Tuan, Head of the Quality Assurance Department under the Ministry of Science and Technology, said the ministry has long accepted quality certificates sent by fax but customs agencies still refuse to do so.

"If the ministry and customs agencies co-operate on this front, we will be able to remove a bottleneck in the process," he said.

The Ministry of Industry and Trade (MoIT) is set to implement a pilot project that will provide businesses with electronic documents for their imported and exported goods. Certificates of origin will, however, remain in paper form as mandated by Viet Nam's international trade agreements, said Do Thi Thu Huong, deputy head of the Import and Export Department under MoIT.

Le Nhu Quynh, deputy head of the Customs Modernisation Committee (CMC) under the General Department of Viet Nam Customs, said more procedures will be processed electronically and the department is ready to step up co-operation with other ministries this year.

The department is also undertaking a survey to determine the time required for customs clearance and businesses' satisfaction level.

A CMC report in 2013 reported that the average length of time for customs clearance was 115 hours, calculated from time of import entry. Of the lengthy clearance process, 32.37 of those hours were spent on registration alone.

In resolution 19/2015, the Government set out objectives to improve the country's business environment. Reducing customs clearance time would contribute greatly to that objective, it opined.

The Government aimed to reduce customs clearance time to less than 10 days for exporting goods and less than 12 days for importing goods, which would be on par with neighboring Indonesia, Malaysia, Thailand and the Philippines.

Quang Ninh paves path for business

Authorities in the north-eastern Quang Ninh Province will facilitate businesses' operation and quickly resolve their difficulties, Pham Minh Chinh, secretary of the provincial Party Committee, assured attendees at a conference.

Chinh was addressing more than 400 domestic and foreign enterprises participating in a business support conference held in the province on Monday, which focused on businesses' effectiveness and their development.

The province had organised five such conferences since 2014 to evaluate in a timely manner, 284 proposals and respond to questions about access to capital, interest rates, human resource development, trade promotion and temporary imports and re-export, especially in the context of international integration.

Of these, 116 proposals were evaluated and questions were answered at the conferences, while the remaining responses were sent directly to the companies.

Nguyen Van Thanh, vice chairman of the provincial People's Committee, said businesses' operations had seen an improvement.

By the end of last year, the province had 849 newly established businesses, boosting the total to 10,348, with a total registered capital of VND118 trillion (US$5.5 billion).

Its net turnover rose from VND241 trillion ($11.2 billion) in 2013 to VND293.2 trillion ($13.7 billion) in 2014.

The contribution of State-owned enterprises to the province's State budget last year was VND8.2 trillion ($383 million), increasing by 4 per cent; non-governmental contributions were pegged at VND1.3 trillion ($60.7 million), up 10 per cent and foreign direct investment at VND1.22 trillion ($50 million), rising 14 per cent.

Several big and important projects saw construction being commenced and progress in socio-economic development being accelerated.

Thanh said attention had also been paid to land clearance, especially for projects in the Van Don Economic Zone.

The province attracted 21 projects in the first quarter of the year, with a total registered capital of VND11.3 trillion ($528 million), double than that during the same period last year.

The People's Committee had especially reviewed and rearranged collections and fees to reduce impediments for firms, he added.

Representatives from domestic and foreign companies also praised the authorities' efforts.

More than 10 proposals focusing on capital support, petroleum port planning and mechanism for businesses operating casinos, construction licences, tax incentives, land rentals and environment were also discussed at the conference.

Luong Hoang Thai, head of the Ministry of Industry and Trade's Multilateral Trade Policy Department, said management agencies and the province should create favourable conditions for businesses, thus supporting them in taking advantages of opportunities stemming from the ASEAN community.

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