Many firms thrive on turbulence

Despite the volatility of the stock market, many listed companies have managed to take advantage of the market turbulence to strengthen their own business.

Key strategies that have helped these companies succeed during a time of economic crisis include a focus on their core business, diversifying forms of fund raising and the determination to maintain their labour forces.

While the real estate sector was heavily hit by the crisis, FLC Group (FLC) last year was still able to raise their capital from VND100 billion (US$4.7 million) to VND170 billion ($8.1 million).

The company estimated its revenue and net profit last year to have reached VND120 billion ($5.7 million) and VND12 billion ($571,400) respectively, up 185 per cent over 2010.

FLC would also expand its business operations and plans to have a total of 13 branches across the country in the year to come.

"Although the econ-omy still faces challenges, our company will continue to ensure working conditions for nearly 200 employees," said the company's general director Doan Van Phuong. Employees were the greatest resource to ensure the development of the group, he added.

Meanwhile, steelmaker Son Ha International Corp (SHI) last year saw a decline in exports. Son Ha's deputy director Dang Minh Quang said the firm's business results reached only about 30 per cent of last year's target. However, the labour force had been retained, and wages even rose by 10 per cent.

Many listed companies are focusing on their core business, having learned lessons from State-owned firms that suffered huge losses after diversifying their business into sectors outside their core product or service.

Software giant FPT's (FPT) chairman Truong Gia Binh said: "We will concentrate on innovation in information technology and bring our training model to other countries."

Nguyen Bang Tam, Chairman of Binh Thanh Import-Export Co (GIL) said listed firms would continue to invest in their core business this year. Staying loyal to the garment industry, GIL last year expanded sales to markets in southern Vung Tau and central provinces. The company's revenue last year increased by 1.5 times compared to 2010, fetching over VND700 billion ($33.3 million), and profit reached over VND50 billion ($2.4 million).

"Many businesses are now no longer dependent on bank loans. Companies are increasingly issuing a small amount of shares to major shareholders and employees instead," Tam said.

FLC and Son Ha would also raise money from bonds and foreign partners.

"I think this year will still be tough, but those who were able to survive last year will go forward this year," Tam said.

A positive sign of farm product exports

Many local businesses have begun to sign farm produce export contracts after the Lunar New Year festival (Tet) in spite of difficulties.    

Entrepreneurs from Hongkong (China) recently toured the Mekong Delta region and decided to purchase 40,000 tonnes of rice. They are considering importing more rice from the region, according to the Vietnam Food Association (VFA).

Currently, businesses are speeding up the signing of contracts to export dragon fruit and rambutan to the US and European Union (EU). They have also inked contracts to ship nearly 20 containers of various kinds of fruit, including dragon fruit, to China and the Middle East.

Vinamit Joint Stock Company, which specialises in dried fruit products, said it has also secured deals to deliver products to China, Cambodia and Laos.

Almost all Tra catfish processing enterprises have now resumed production after Tet and a series of export contracts have been penned in the early days of this year.

The Vietnam Pepper Association said many businesses have signed contracts to export black pepper to foreign markets following the long Tet holiday. This is a positive sign for businesses in the context of economic slowdown.

Costa Crociere S.p.A. to send one more cruise ship to Vietnam

Besides the Costa Classica cruise ship, Costa Crociere S.p.A. this year plans to send one more luxury vessel named Costa Victoria to bring international visitors to the country.

Saigontourist Travel Service Company, the local tourism agent of the Italia-based ship operator, revealed Costa Victoria would make the first trip to Vietnam in May on the route HCMC-Danang-Halong and vice versa.

Costa Crociere S.p.A said on its website that the new vessel has up to 964 cabins, five restaurants, ten bars, a two-storey theater, a casino alongside many other entertainment services.

Costa Classica cruise ship carrying about 2,500 passengers and sailors dropped anchor at Halong on Wednesday. The passengers went to Halong Bay, Long Tien and Yen Tu pagodas, Hon Gai Market and enjoyed multiple artistic shows for the one-day visit only.

According to Saigontourist, Costa Classica in the first two months of the year will drop by Vietnam up to six times. The local tour operator last year welcomed over 115,000 tourists from several countries like Britain, France, Germany, Italy, Spain and Japan on large cruise ships such as Costa Classica, SuperStar Virgo, SuperStar Aquarius or Princess Daphne.

Vincom merger creates mega-share

Real estate developer Vincom (VIC) will list over 158 million additional shares on the HCM City Stock Exchange today, marking the completion of its merger with tourism and hospitality leading company-Vinpearl and becoming the market's leading share by capitalisation.

The market capitalisation of the stock is estimated at over VND62 trillion (US$3 billion), accounting for 13 per cent of the HCM City market. After the merger, Vincom's registered charter capital will total VND5.5 trillion ($262 million).

The new shares will be issued in swap for shares of Vinpearl, formerly coded VPL..

At the same time, Vincom will be renamed Viet Nam Investment Group (Vingroup), operating both in commercial and tourism properties. Four business sectors of the new entity will be real estate development, tourist and recreation, beauty care and high quality healthcare services.

"The merger of the two companies combines Vincom's and Vinpearl's strengths, creating Vingroup's competitive strengths and capability," said Tao Minh Duong, head of Bao Viet Securities Co's corporate finance division, the consulting agent for Vincom during the merger. The merger would also make VIC a more alluring stock to investors, Duong predicted.

BIDV receives Euromoney honour

The world’s leading financial magazine, Euromoney, has named the Bank of Investment and Development of Vietnam (BIDV) as the Best Domestic Trade Finance Provider in Vietnam in 2012.

Euromoney conducted a survey of businesses using trade finance services and products. It has unveiled the results of the award for many nations in the world, including those in the Asia-Pacific region, such as China, Japan, the Republic of Korea, Thailand, Singapore, the Philippines, Indonesia, Malaysia and Vietnam.

The survey was conducted from early October 2010 till the end of September 2011 under such criteria as knowledge of products, the quality of consultation of staff, professional operation model with a focus on serving customers in accordance with international standards, management skills, risk reduction, competitive price, transaction points, branch network, and solutions and initiatives for customers.

Vinalines charts a steady course

Leading state liner Vinalines will take a raft of comprehensive measures to boost its business efficiency.

In 2012, Vinalines aims to earn VND27.2 trillion ($1.3 billion) in revenue and VND120 billion ($5.7 million) in profits, surging 10 and 93 per cent respectively against 2011.

“2012’s proposed profit is just one-eighth of that in 2009, but is still pilling big pressures on the corporation as the shipping market continues to be fraught with difficulties in the face of an uncertain economy and supply surpassing demand,” said Vinalines’ deputy general director Bui Quoc Anh.

To lessen dependence on shipping market performance, Vinalines has outlined a comprehensive suite of measures to quicken the pace of investment projects which could generate extra incomes such as second-phase Cai Cui port in Can Tho city, the first-phase Saigon-Hiep Phuoc port in Ho Chi Minh City, Saigon-SSA port’s international terminal, Vinalines ship repair factory in southern Ba Ria-Vung Tau province, Son Tra port in central Danang city and Dinh Vu terminal in northern Haiphong.

Besides, embracing Vinalines’ business restructuring plan for 2011-2015 after it was ratified by the prime minister was also a top priority, according to the corporation’s general director Nguyen Canh Viet.

“In 2012’s first half, Vinalines will strive to finalise streamlining its financially dependent member units to boost their specialisation parallel to shifting some other businesses into joint stock and sole-member limited liability companies to promote efficiency,” said Viet.

2011 was a tragic year for shipping operations on the back of global weakening economy and plummeting demand. The corporation then reported losses of VND660 billion ($31.4 million) in the first half of 2011.

However, Vinalines still posted a VND62 billion ($2.95 million) profit out of VND24.7 trillion ($1.17 billion) revenue in 2011.

In fact, Vinalines’ shipping fleet just transported an estimated 36.8 million tonnes of cargos in 2011, 1 per cent more than 2010’s and 2 per cent more than projected.

In respect to port business, over 64 million tonnes of cargos had passed ports managed by Vinalines, surging 10 per cent against 2010’s and 4 per cent against projection, helping the corporation to brighten its 2011 business picture.

“Despite a slow-down in 2011 economic growth compared to 2010, the country’s import export still kept on growth momentum, enabling ports to fulfill their targets,” said Viet.

Land-management inspections aim to stop growing violations

Inspections of land-related issues will be enhanced this year in an effort to address and prevent violations, and boost the efficiency of land use.

Under this year's inspection plan, which was recently approved by the Minister of Natural Resources and Environment, the inspections will cover land management and use, environmental protection, mining and waste water discharge.

Approvals of land use rights certificates in Ha Noi and HCM City will be a focus in response to many violations reported recently, which caused a stir among the public.

For example, inspections of land use rights certificate approvals for 19 housing development projects in the country's two largest cities at the end of last year uncovered violations in most cases.

Violations held up the approval process for buyers to purchase property, meaning that to date, only 20 per cent of the apartments sold in these projects had been granted purchase certificates.

In HCM City, the inspectors revealed land management and use violations valued at up to VND1.5 trillion (US$71.4 million) last year.

Deputy Minister Nguyen Manh Hien told Ha Noi Moi (New Ha Noi) newspaper that one of the problems was that inspections had not been given their due focus by both State agencies and local authorities.

Inspections must be carried out strictly and identify the parties responsible for any violations in order to better deal with the problems, he said.

The General Department of Land Administration will also probe into the use of farm land and forest land in some provinces and evaluate the results of provincial land management and use inspections several others.

Environmental protection inspections will be carried out in firms and industrial zones, especially those operating in the management and treatment of hazardous wastes. They will also be performed in mining areas and waste water discharge sites.

A more detailed inspection plan is needed to ensure that this year's inspection proceeds efficiently.

Southern hub firms enter year on a high

Scores of Ho Chi Minh City-based production firms are leaping into the Lunar New Year days.

Tan Binh district’s Indochina Steel Company Limited got orders worth around VND1 billion ($47,600) from several strategic partners right after long Lunar New Year holidays.

The firm also set to open three new branch offices in southern Dong Nai and Binh Duong provinces and Mekong Delta’s Can Tho city shortly after Tet.

As soon as Tet holidays ended Thien Nam Elevator Joint Stock Company got an order for manufacturing 30 elevators worth VND21 billion ($1 million) from a Japanese plant operating in Vietnam, according to the company’s deputy director Nguyen Tan Vu.

Vu said Thien Nam’s early export shipment in 2012 headed Japanese market with four elevators weighing 3,500 and 4,000 kilogrames each.

“2012 would be a tough one for investors in property and related areas like us but Thien Nam will try to keep product prices stable in the first quarter amid escalating pressures from appreciating material costs,” said Vu.

Vinatexmart clothing store system’s deputy general director Tran Thanh Nhan said right after Tet the company would inaugurate a new fashion centre in Hanoi’s Ba Trieu street and one new clothing mart in Ha Dong district.

Vinatexmart aims to enlarge sales network to include 30 new stores in 2012, bringing total store number to 93 by the year’s end.

An Phong Investment Joint Stock Company, the developer of Maximark supermarket chain, planned to break ground of third Maximark supermarket in Ho Chi Minh City’s Go Vap district. Six Maximark supermarkets are currently in place, two in Ho Chi Minh City, one in Can Tho city and other three in south-central coastal province of Khanh Hoa.

A representative from Switzerland-backed cement maker Holcim Vietnam Limited unveiled the firm would pump $3.5 million into expediting electrostatic dust filtration project right in 2012’s first quarter and would make $18 million power generation plant fueled by heat from waste gas usage with an annual capacity of 44 million kWh come online in August 2012.

Some city-based garment firms are running at full capacity despite a predicted shortfall of 15 per cent in the sector’s export orders later last year.

“Right in the first week after Tet holidays our company will export several containers of 60,000 products worth $1 million and launch a new $200,000 embroidery enterprise in Binh Duong to ease dependence on export processing orders,” said Sai Gon 3 Garment Company general director Pham Xuan Hong.

Hong also said after Tet the company would recruit 200 new workers for its two new production lines to boost output.
 
Techcombank grants credit to Ninh Binh fertilizer company

Viet Nam Technological and Joint Stock Commercial Bank (Techcombank) will grant a credit loan of VND600 billion (US$28.6 million) to Ninh Binh Nitrogenous Fertiliser MTV Company, a member of the Vietnam National Chemical Corporation (Vinachem), to develop production.

According to a contract signed recently in Ha Noi, the company will use the loan to buy materials for production. It is expected to contribute to creating a stable and long-time source of fertilizer for agricultural production in provinces along the Hong (Red) River Delta and other northern provinces.

Techcombank's Deputy General Director Pham Quang Thang said his bank would continue granting credit loans for similar activities this year to contribute to reducing the pressure on the trade deficit and to help stabilise the economy.

Techcombank and Vinachem have worked under a comprehensive co-operation agreement that was signed in October 2008. Vinachem's members, including Sao Vang Rubber Company, Ha Bac Nitrogenous Fertiliser Company and Lam Thao Chemical Company, have used credit loans from the bank to improve production and expand their operations.

Farm sector struggles to attract assistance

The agricultural sector planned to attract US$300 million in Official Development Assistance (ODA) this year, a reduction of $37 million against last year, said Bui Ba Bong, Deputy Minister of Agriculture and Rural Development (MARD).

According to Luong The Phiet, head of the International Co-operation Department under MARD, the ODA coming into Viet Nam in general and the agricultural sector in particular had decreased since the country was officially recognised as a middle-income country in 2010.

As a result, developed countries and international organisations were less likely to offer aid, and would closely supervise the implementation of projects they did support, Phiet said.

Since the global economy went into recession, attracting ODA had become a much more difficult challenge, he added.

Le Van Minh, the department's former head said the target of attracting $300 million in ODA this year would be difficult to fulfil.

He cited the lack of an orientation plan for the mobilisation and use of ODA for agriculture, the uneven allocation of funds between localities and the lack of a professional unit to manage ODA as the main reasons.

According to Minh, the agricultural sector contributed around 8 per cent of the nation's GDP and provided jobs for 70 per cent of workers, so it regularly attracted large amounts of ODA.

There are around 200 agricultural projects implemented using ODA each year, but the scopes of these projects are different and the areas of implementation are largely concentrated in rural, mountainous areas and islands.

According to a MARD report, during the 2009-11 period, the ministry received an average of US$310 million of ODA, mostly from Japan, Australia and international organisations including the Asia Development Bank (ADB) and the International Fund for Agricultural Development.

Of the total funding, investment in irrigation made up 41.7 per cent while agricultural activities accounted for 32.2 per cent.

From 1993, non-refundable ODA in agriculture was also high compared to other sectors, totalling $50.4 billion. However, since July last year, Viet Nam has failed to attract more ODA projects in agriculture.

According to Tomoyuki Kimura, country director of the Asia Development Bank in Viet Nam, since 1993, ADB's assistance to the country's agriculture and natural resources sectors had amounted to $1.46 billion, a share of about 14.4 per cent of the cumulative lending amount.

"ADB will maintain our close engagement in the sector, focusing on rural development and infrastructure improvement, which will contribute to empowering the poor and other vulnerable groups," he said.

Kimura pointed out, however, that due to Viet Nam being classified as a low middle income country, the country's access to grants and concessional lending terms offered by the bank may become more limited in the medium term.

"This may impact on the type, scope, and coverage of our assistance as the government follows a policy that non-revenue generating projects such as rural development and natural resources management receive only concessional loans."

Another representative of major ODA providers, the Japanese Embassy said Japan would continue to provide comprehensive support through ODA with the aim of improving the livelihoods of Vietnamese people in rural areas.

To achieve this, Japan would need to consider the content and nature of its assistance, requiring an appropriate combination of technical assistance, grant aid and loans, added the embassy.

Vu Thi Bich Hop, director of the Centre for Sustainable Rural Development, an NGO, said the mobilisation of ODA was much dependent upon project development capacity, disbursement capacity and the quality of project management and supervision to ensure transparency and effective use of funding.

To boost ODA for agriculture, the roles of localities in proposing ODA development and management ideas should be raised, she added.

Hop also said that Government programmes and policies for agricultural and rural development such as the National Target Programme on new rural development would make it easier to attract ODA over the next few years.

Farm sector to focus on raising rice value
 
The agricultural sector aimed to improve the value of rice as production of this key crop would face several difficulties this year, said the Ministry of Agriculture and Rural Development.

This year would be a hard year for rice production due to impacts from climate change, limited farming land and a growing population, said Nguyen Tri Ngoc, head of the Plantation Department.

In response, the department set a target to export 6.8 million tonnes of rice while also improving its quality, Ngoc said.

Until 2016, the ministry would continue to invest in projects that research and create new rice varieties with high yields, better quality and are adaptable to changes in the weather, he said.

The ministry will also develop a trademark for rice exports, including organisation of large rice fields as samples and production under GAP standards, to increase competitiveness on the world markets, especially the US and the European Union markets. The ministry expects to increase the volume of rice exports to both markets in the next five years.

The rice production sector has plans to develop technologies for post-harvest processes and standards for grinding factories and storehouses. It also intends to establish a rice purchasing system and will encourage rice purchasing contracts between export rice processors and farmers.

Ministry of Agriculture and Rural Development statistics show that Viet Nam exported 400,000 tonnes of rice worth US$240 million in January, a decrease of 25.4 per cent in quantity, but only 14.2 per cent in value against the same period last year.

In December, the Viet Nam Food Association (VFA) announced that Viet Nam rice producers had fewer export purchasing contracts for the first quarter of this year compared with the same period last year. The country's rice exports are expected to reach about 1.1 million tonnes in the first quarter this year, 700,000 tonnes less than last year's figures.

Viet Nam's 25 per cent broken grain rice faces tough competition from India, Myanmar and Pakistan, and may lose up to 20 per cent of its market share in Africa. In 2011, Viet Nam's low quality rice exports decreased by 61 per cent while five per cent broken grain and fragrant rice increased by 5 per cent and over 100 per cent respectively.