SBV secures loan for new metro line

The Asian Development Bank will provide a loan package of US$500 million for HCM City to build its Metro Line No 2 (MRT2).

An agreement to this effect was signed yesterday by representatives of the ADB and the State Bank of Viet Nam (SBV).

This is the second loan package for construction of a 11.3-km section of MRT2, which will run from Ben Thanh Market in District 1 through Tan Son Nhat Airport to Tham Luong in District 12. The section will have 11 stations.

Nguyen Huu Tin, Deputy Chairman of the HCM City People's Committee, said MTR2 will be 20km long in total, starting from the Thu Thiem Area in District 2 and ending at the Tay Ninh Bus Station.

Construction of the line will be undertaken in two phases. The first one will cover the section from Ben Thanh Market to Tham Luong; and the second will cover two sections - from Ben Thanh to Thu Thiem and Tham Luong to the Tay Ninh Bus Station, said Tin.

The first phase requires an investment of around $1.38 billion, which will be sourced through loans from the ADB ($540 million), the German Development Bank (240.75 million euros or $313 million) and the European Investment Bank (150 million euros or $195 million). The Vietnamese Government will provide counter capital of $326.5 million.

Agreements for the project's first loan packages were signed in 2011 between the same parties.

Speaking at yesterday's signing ceremony, SBV Governor Nguyen Van Binh appreciated ADB's support for urban transportation development in HCM City.

The city authorities should be determined in implementing the project, especially in site clearance, in order to avoid contruction delays that would make the loans less effective, Binh said.

Tomayuki Kimura, Country Director of ADB's Viet Nam Resident Mission, praised the decision of the Vietnamese Government and the HCM City administration to invest in the development of rapid mass passenger transport systems in HCM City.

He said this was based on the recognition of challenges posed by the unwieldy development of individual means of transportation, including traffic congestion and accidents.

The project to develop the metro system will help Viet Nam become one of first countries in the region to address climate change impacts by using means of transport which discharge less carbon gases, Kimura said.

HCM City residents will also benefit from cheaper and more efficient public transportation services, he added.

Gold auctions still attracting buyers

Despite the fact that local banks now do not have to hunt for gold after completing settlement of gold arrears as of Sunday as requested by the central bank, up to 80,000 taels of gold still found buyers in the two gold biddings earlier this week.

In a gold auction held on Wednesday, the central bank only had 100 taels unsold among 40,000 taels on offer while the bidding on Tuesday sold out all the offered volume. The central bank, meanwhile, earlier informed that local banks already had enough gold to settle all arrears on Sunday.

As of Wednesday, the gold volume launched onto the market via auctions totaled about 39 tons, up nearly 10 tons from the initial forecast.

Gold buying demand for settlement of gold arrears has been satisfied, Le Minh Hung, deputy governor of the State Bank of Vietnam (SBV), said. However, he noted, many lenders have bought gold via auctions to help gold borrowers repay the precious metal to the banks before the due date as this is also one of the ways allowing them to settle lending position.

Outstanding gold balances stay at around 200,000 taels, equivalent to 7.5 tons. Gold buying via biddings now is adopted by those banks having demand.

At present, Asia Commercial Bank (ACB) is also negotiating with customers to convert gold loans into Vietnam dong and let the borrowers enjoy preferential rates to stop gold mobilization and lending completely. ACB now buys gold from auctions in order to sell gold to residents and to borrowers intending to service gold loans to the lender, said Nguyen Thanh Toai, ACB deputy general director.

In the next few days, gold biddings will still be carried out to meet demand from enterprises and banks and SBV will stop doing the job when local appetite cools.

As for gold deposits converted into gold custody services at local banks, Hung said SBV had told banks to make reports, so specific data is not yet available.

The opening price of one tael of gold quoted at Saigon Jewelry Holding Company was VND36.3 million for buying and VND37.1 million for selling on Wednesday morning, which then picked up by VND500,000 per tael to VND36.8 million and VND37.6 million respectively at 4:30 p.m. on the same day. Global gold prices, in the meantime, only inched up US$5.3 an ounce against the closing session in the New York market on Tuesday night.

WB helps spur Vietnam’s economic growth

World Bank (WB) experts made major recommendations to increase Vietnam’s economic competitiveness, at a workshop in Hanoi on July 4.

They suggested that Vietnam develop transport infrastructure and logistics services, simplify regulatory procedures for cross-border trade, and restructure agricultural and processing industry supply chains in order to participate in global value chains.

According to the experts, Vietnam’s trade growth fuelled by trade liberalisation has reached a saturation point. Since 2003 the country has enjoyed an annual average growth rate of 18 percent thanks to its constant effort to improve the export structure, thus reducing raw material exports, expanding the processing industry, and quickly accessing international markets.

However, they said Vietnam has been less successful in diversifying its exports basket and in moving up the global supply chains. Its ability to escape the “middle-income trap” is also predicated upon its ability to create a more competitive and efficient economy.

They highlighted a number of potential obstacles facing Vietnam, such as domestic businesses’ widening trade deficits, sluggish trade diversification, low added values of products, and technological deficiencies.

The experts said success will require considerable and sustained effort by all stakeholders, with the government playing the role of a facilitator and coordinator.

Political commitment will be needed from the top leadership, given that the recommendations will affect country competitiveness and directions of social and economic development at large.

WB Vietnam Country Director Victoria KwaKwa emphasised international economic integration brings both opportunities and challenges.

She said improving the quality of services, infrastructure, and trade will play an important role in promoting the country’s key exports. To raise added value in global supply chains, Vietnam should accelerate administrative reform at a macro level, facilitate trade activities, and seek to hone its competitive edge.

Seminar promotes Vietnam-Brazil business links

The Vietnam-Brazil Friendship and Cooperation Association (VBFCA) has operated efficiently, helping increase two-way trade turnover to US$1.6 billion in 2012.

The view was shared by VBFCA Vice President Nguyen Thach Dinh and Brazilian Ambassador to Vietnam Alice Cleaver at a seminar in Hanoi on July 4 examining the impact of rock crystal on human.

They asserted that in addition to promoting bilateral friendship, the association bridges both countries’ business communities to expand investment ties and cushion the impact of the global economic downturn.

Experts at the seminar summarised the origin of rock crystal, its scientific use, and the best rock crystal selection methods.

Two-way trade focuses on the import and export of cotton bags, cement, steel, footwear, ceramics, rock crystal, coffee, food, soya beans, and frozen seafood.

Vietnam joins ASEAN Competition Conference in Singapore

A delegation of the Vietnam Competition Authority (VCA) is attending the 3rd ASEAN Competition Conference in Singapore on July 4–5.

Themed “Moving Towards the Regional Integration of Competition Policy and Law”, the event has brought together 200 government officials, scholars and experts from ASEAN member countries and others.

Delegates heard a report on competition legislation in Southeast Asia, presented by Pham Chau Giang, deputy head of the VCA International Relations Department.

Speakers from Hong Kong (China), the US, Japan, Mexico, New Zealand, and Australia suggested possible mechanisms for regional competition.

They also pointed out potential challenges inherent in the regional economic integration process, especially if the ASEAN Economic Community is established by 2015 as scheduled.

Singaporean Minister of Trade and Industry Lim Hng Kiang affirmed healthy competition mechanisms will help boost the production capabilities and international competitiveness of regional markets.

He called on ASEAN members to develop their competition laws harmoniously, facilitating internal ASEAN trade and investment and expanding the bloc’s presence on the global market.

Five of the ten ASEAN member nations have issued competition laws, with the remaining intending to finalise this legislation by 2015.

Imported steel under microscope

The Ministry of Industry and Trade (MoIT) has decided to launch an anti-dumping investigation into cold-rolled stainless steel imported from China, Taiwan, Malaysia, and Indonesia.

The decision was made on July 2 targeting imported steel products coded HS 7219.32.00; 7219.33.00; 7219.34.00; 7219.35.00; 7219.90.00; 7220.20.10; 7220.20.90; and 7220.90.10; 7220.90.90.

On June 5, the Vietnam Competition Authority (VCA) received legal dossiers from local steel producers Posco VST Co. Ltd and Hoa Binh Inox Joint Stock Company arguing the above products should be liable to between 20–40 percent anti-dumping taxes.

Some steel importers voiced concern over the anti-dumping investigation, noting comparable Posco steel products are more expensive than their imported equivalents.

The VCA said that relevant investigation agencies will carry out legal proceedings against the imported products according to Vietnam’s anti-dumping legislation.

The investigation’s concerned parties can register for updates regarding the case until 30 days after the MoIT’s decision takes effect.

Exports to Singapore rise sharply

Vietnam’s exports to Singapore increased 23% to SGD1.237 billion over the first five months of this year.

According to Statistics Singapore, four groups of major products recorded export values exceeding SGD100 million - machinery, equipment, and tools (SGD436.7 million), phones and spare parts (SGD256.2 million), paper and paper products (SGD134.5 million), and glass and glass products (SGD106.7 million).

Rice, produce, and seafood exports were also higher than last year’s figures.

Vietnam’s Singaporean imports fell 2% to SGD5.431 billion during the same period. Vietnam primarily imports petroleum and its products (SGD899.7 million, down 18%), machinery, equipment, and tools (SGD379.3 million), paper and industrial products (SGD204 million), and plastics (SGD127 million).

Two-way trade turnover totalled SGD15.8 billion in 2012, of which SGD2 billion came from Vietnamese exports.

Seminar on Government draft vision to 2020

A seminar was held in Hanoi on July 3 by the Central Institute for Economic Management (CIEM), the Government Office and the Ministry of Home Affairs to discuss a roadmap for implementation of a Government draft vision to 2020.

This is part of a project funded by the Swedish International Development Cooperation Agency (SIDA) to build a roadmap for the implementation of the Vietnamese Government vision.

The draft vision covers issues related to the economic restructuring process in Vietnam, macroeconomic management and governmental modernization until 2020 with a focus on improving administrative procedures and helping people get easier access to information and services by smart cards.

Paul Collins, an international advisor said the Vietnamese Government’s plan to bring 600 young intellectuals to remote areas shows its determination to narrow the widening gap of development in these localities.

As a middle-income country, he maintained, Vietnam will receive less ODA funding than before. If the country fails to stimulate economic growth, it will lag behind.

CIEM Head Ass.Prof. Dr Le Xuan Ba expressed his hope that participants will actively contribute their opinions to the draft vision.

Hanoi to host int’l food supplements festival

Consumers will have the chance to select their favourite natural health products at an international dietary supplements festival to be held in Hanoi on September 27–29.

Vietnam Association of Functional Foods (VAFF) President Tran Dang told a July 2 press briefing in Hanoi that the festival, the largest of its kind in Vietnam, will help businesses introduce their best-sellers and meet directly with consumers.

More than 100 producers, traders, and distributors will showcase their products ranging from food supplements to medicines tailored for the elderly, children, and pregnant women.

The festival also encompasses a food supplements seminar discussing the industry’s outlook with a vision to 2020.

The domestic food supplements market is currently enjoying strong and stable development. Around 6% of the population report using supplements regularly, with 43% of these customers residing in urban areas. Around 2,000 businesses produce, trade, and distribute more than 5,500 kinds of supplements.

With its emphasis on natural ingredients, food supplements aim to improve general health and immune system resistance and prevent non-infectious illnesses including heart disease, hypertension, and cancer.

Farmland owners may get housing construction permits

Owners of small lots of farmland scattered in residential areas in HCMC may be granted permits for building temporary houses, a move that will help relieve poor people of difficulties in improving their housing conditions.

The city’s Department of Construction has just completed a draft version on the cases to be issued temporary construction licenses in line with the local actual situation.

As such, farmland is still considered for temporary housing development it is located among residential areas and is unsuitable for agricultural farming. However, the special treatment is only applicable to separate home construction for individuals and households only.

According to the construction department, there is still a lot of farmland scattered in residential areas in the city but local people have been unable to get permits to build houses there as the land is considered not eligible for being turned into residential land.

Therefore, to ensure legitimate benefits of local residents in these areas, the department proposes the cases to be allowed for temporary construction.

Subsequently, temporary construction permits will be issued to separate houses on agricultural land among residential areas that households and individuals had used in a stable way prior to July 1, 2006, with no disputes reported.

For houses which had existed before the approval and announcement date of the 1/2,000 scale planning but are found unsuitable for the planning later, temporary construction permits will also be issued to legalize the housing works. Houses which were constructed after the planning approval and announcement date are only allowed for repair and upgrade without affecting the scale of the current construction works.

Besides, the department also proposes the issuance of temporary construction permits to houses partly or entirely located on areas planned for road expansion as long as competent State agencies have not issued decisions to recall such areas.

Regarding the scale of the temporary works, the department suggests the construction of no more than three floors. The temporary works will be allowed to exist for five years from the date of the zoning plan being announced.

Neither compensations nor supports will be given if the State recalls the land within five years. However, after five years, any decision by State agencies to recall the land will result in compensations and supports.

Loans for HCM City’s prioritized sectors rise strongly

The preferential lending program for five prioritized industries in HCMC which began in early 2012 disbursed a total of around VND117 trillion as of June 6, growing 134% from the period before the scheme’s launch.

Nguyen Trung Kien, an official of the HCMC branch of the State Bank of Vietnam, said the special credit program has shown positive ripple effects in the city’s business community in the context that local banks had tightened lending in all of 2012.

Before the city introduced the credit program, enterprises in the five prioritized sectors had difficulty gaining access to loans. During the program, the capital volume that local firms borrowed surged up to 134% compared to the period before the program’s introduction.

According to the central bank’s HCMC Branch, the total amount of preferential loans taken out by local entities were some VND117.12 trillion, accounting for 40% of total outstanding loans in the city in the same period. Of which, outstanding loans to small- and medium-sized businesses amounted to about VND74.58 trillion and those to exports and agricultural and rural investment posted some VND17.83 trillion and VND20.54 trillion respectively.

In the meantime, entities investing in supporting industries borrowed a combined VND7 trillion while hi-tech firms took out credits totaling VND120 billion.

* Local firms still find it difficult to take out bank loans as lending conditions are too stringent while lending rates remain high, heard the seminar “Cash flow solutions for small- and medium-sized enterprises (SMEs)” in HCMC last week.

At the seminar last Thursday, Ngo Duc Hoa, chairman of Thang Loi International Garment Joint Stock Company, said the central bank had already lowered the deposit rate but local firms have still failed to borrow money from banks due to strict conditions.

Hoa said he used to apply for loans using machinery and equipment or inventories as collateral but now this way is no longer accepted by lenders. He had asked many banks for loans but these lenders all refused, saying they only provide loans to enterprises with land as collateral.

Furthermore, the current lending rates imposed on companies are still high, Hoa said, adding his firm is still unable to access loans at the annual rate of 12% as earlier committed by local banks.

Similarly, Mai Dinh Kiem, director of Saigon Woolen Carpet Company, told the seminar that his enterprise since early this year has secured several orders from foreign partners, so the company applied for a VND5-billion loan to expand production capacity.

However, Kiem’s company failed to carry out the plan as the lending rates offered by banks are up to 13% annually.

“With such a sky-high rate for long-term investment loans, I’m afraid that few entities can afford. The most important thing is that numerous firms have missed good business opportunities to overcome difficulties because of the hard access to loans,” he remarked.

In response to complaints from troubled enterprises, Dang Bao Khanh, general director of SeABank, explained that there are many enterprises with bad debts at home, so local banks cannot lend them.

Speaking at the seminar, economist Tran Du Lich suggested lenders to review their lending policies and offer easier conditions for cash-strapped corporate clients to access loans.

30 provinces want to expand IPs

Up to 30 provinces are seeking approval from competent authorities to expand industrial parks (IPs) to continue luring investment and developing production and business.

This is the result of a recent review and assessment by the Ministry of Planning and Investment on reorganizing management and raising operational efficiency of economic zones (EZs) and IPs in line with the Directive 07 of the Prime Minister.

Among 59 provinces with IPs planning review and adjustment reports, 30 provinces proposed expanding IPs compared to the previous plans, the Government reports on its website at chinhphu.vn. Some 29 others, meanwhile, suggested maintaining or reducing the existing facilities’ areas.

The provinces ascribed their proposals to a great necessity to catch up with demand for investment in large-scale schemes and specialized technology in sync with the policy of calling for new investment appropriate with local conditions.

The planning ministry says it will make an IP adjustment and supplement plan for submission to the Prime Minister for approval based on comments from related ministries and agencies. Besides, the adjustment schemes of these provinces will be added into the national master plan which will be considered by the Government as a foundation for the national IP development planning adjustment with a vision to 2020.

The country now has 289 IPs on a total area of more than 81,000 hectares and 43 EZs, attracting some 5,000 foreign-invested projects and nearly 6,000 local projects totaling over US$100 billion and VND900 trillion.

Myanmar the new promised land

As the Vietnam property market continues to struggle, some real estate firms are setting sights on more lucrative investments in Myanmar.

Leon Cheneval, associate director of CBRE told VIR last week that there would be a lot of interest from Vietnamese developers to go to Myanmar due to the Vietnamese property market’s big freeze. Myanmar today is really an underdeveloped market. Hence, it represents a good opportunity for developers if they can be quick enough on the draw.

“We are seeing a lot of Vietnam-based developers looking strongly toward Myanmar for future investments if they have sufficient financial ability,” added Leon Cheneval.

Nguyen Huyen Trang, assistant to general director of Bac Son Development and Investment Joint Stock Company revealed that the Myanmar market would be a new part for its investment plans abroad, mostly in retail properties.

Trang agreed that Myanmar would be a potential property market for foreign developers including Vietnam-based firms because Myanmar was suffering shortages in all sectors, while demand is soaring, especially for residences, offices and hotels.

However, “I do not think that Myanmar is regarded as a solution for Vietnam-based property firms. It is not the right time unless you understand the market. The Vietnam market is still highly appreciated by regional countries. Because Myanmar is a new land, it will have more investment risks,” added Trang.

Vu Duc Cuong, manager of the project investment development office of the State Capital Investment Corporation stated that in the context of Vietnam’s lacklustre real estate market, where supply far outstrips demand, the Myanmar market represented a good opportunity for Vietnam-based real estate firms.

According to Cheneval, the opportunities for Vietnamese firms to invest in Myanmar were clear. Particularly in the sectors of hotels, serviced apartments and office space, Myanmar had high rent and low supply, a clear opportunity for any real estate firm.

CBRE reported that foreign developers investing in Myanmar would enjoy a number of advantages over those who invest in Vietnam, such as maximum lease terms over 50 years, unlimited foreign ownership of a condominium building, and the concession that national registered companies with majority national ownership can buy land.

According to CBRE’s latest figures on the citywide supply of condominium units as of 2013’s first quarter, Bangkok had the greatest supply with 352,261 units, followed by Hanoi with 117,233 and Ho Chi Minh City’s 95,776 units, while Phnom Penh and Yangon only had 2,455 and 2,936 respectively.

Regarding office rents, Myanmar features disproportionately high rates. Grade A office space in Hanoi goes for $33 per square metres, Ho Chi Minh City $31 per sqm, Bangkok $27, while grade B offices in Myanmar will set companies back a staggering $83 per sqm.

CBRE added that occupancy in Yangon’s retail market was high. Department stores and supermarkets were general fully occupied, while shopping centres average an occupancy of around 96 per cent.

Firms outcry over price power hikes

Domestic steel and cement makers are calling for fair treatment in retail power pricing scheme.

Associations representing cement and steel producers have sent a document to the prime minister objecting to the application of higher power tariffs for major power consumers, including steel and cement plants.

Under the third draft of the retail pricing scheme conducted by state-run Electricity of Vietnam (EVN), steel and cement producers using power voltages of 110kV or higher during peak hour would pay 10 per cent more than the asking price for their normal power. Overall, the draft hands the power tariff hike of 2-16 per cent to steel and cement producers. The new rule is scheduled to take effect on July 1, 2013.

“There should not be any adjustment of power prices for the steel and cement industries. A price change, if any, should ensure fair treatment for all manufacturing industries, meaning power prices should not be increased for the steel and cement sectors only,” said Pham Chi Cuong, chairman of Vietnam Steel Association (VSA).

Cuong also pointed out that the cost of power only represented about 2 per cent of the total cost for making steel.

“It is not fair to apply separate power prices for the cement and steel sectors,” agreed Nguyen Van Thien, chairman of Vietnam National Cement Association.

The rational for the increase is that these industries consume a large proportion of the country’s total power production, particularly as the majority of steel and cement factories are using outdated, high-energy consuming technology.

Thien said cement plants recently improved their technology with improvements from G7 countries.

“The total designed production capacity of Vietnam’s cement industry reached 68 million tonnes, mostly using high technology equivalent to other ASEAN members’,” said Thien.

“Moreover, most domestic cement firms are suffering due to the woeful real estate market. If the power price increases it could push a number of them to the wall,” he added.

Steel firms presently fare no better. There are currently 30 large-scale steel producers and some 100 smaller ones. To date, no steel manufacturer has declared bankruptcy, but according to VSA, a large number of the firms cannot find buyers for their products and have had to halt production.

Building a future on hope

Foreign investors are bravely backing Vietnam’s construction sector in the hope a recovery is imminent.

Japan’s Toto Group, a well-known sanitary ware maker, has recently expressed interest in building a manufacturing factory in central Quang Nam province in order to expand its production in Vietnam, according to Quang Nam Provincial Investment Promotion Centre.

The details of this investment plan have not been revealed, but the authority announced that Toto wanted to expand production in Vietnam to serve both local and foreign markets.

Lixil, another Japanese firm, broke ground late last year on its $441 million factory in southern Dong Nai province, which is expected to be operational by November 2013. The company now owns and runs 11 factories in Vietnam, and just last month it revealed a plan to build one more in Binh Duong.

The investment expansion of both Toto and Lixil is in stark contrast to the downward trend of Vietnam’s construction sector that has been so seriously impacted by the domestic economic slump.

However, in line with Thailand’s SCG acquisition of Prime Group, the expansions indicate that foreign investors are still optimistic about the growth of the Vietnamese market in the long term.

Toshimasa Iue, president of Lixil Group, in a visit to Binh Duong last month, underlined that the Vietnamese market retained its future potential, a major reason for the firm’s desire to continue building factories in the country.

“Vietnam is a very potential market of construction materials,” said Nguyen Van Nghia, deputy general director of Prime Group. “Certainly, it will attract a lot of foreign companies. The industry is growing fast and is more competitive than ever. The economy is recovering and is expected to be fully recovered in the next few years.”

Prime Group was previously the largest domestic private building material maker in Vietnam, accounting for approximately 20 per cent of the market.

With SCG taking over 85 per cent of shareholdings in Prime Group in April this year, Nghia affirmed that the Prime Group’s strategy remained unchanged.

“We are focusing on the domestic market and plan to gain more market share by launching new products, improving our product and service quality and increasing capacity. Due to our synergy with SCG, we can supply a greater product variety to explore and serve a greater number of market segments,” said Nghia.

Lotte Mart in landmark move to the capital

South Korean retailer Lotte Mart has pushed back the date of its first Hanoi-based supermarket to 2014’s first quarter.

A source from Lotte Vietnam Shopping Co. Ltd. told VIR that Lotte Mart’s first outlet in Hanoi would be inaugurated in the first quarter of next year, instead of late this year as initially scheduled.

Thomas Hofer, general manager of Mipec Service and Management Joint Stock Company, which manages Mipec Tower in Dong Da district where the retail outlet is to be located, also confirmed the news.

“At present, Lotte Mart wants to concentrate on investing in its two supermarkets in Binh Duong and Phan Thiet that are expected to become operational in November and December this year” said the source from Lotte Vietnam Shopping.

Hofer added that in the tough economic climate, shopping centres were experiencing difficulties in attracting customers, however “I do not think this will hurt this new supermarket”.

Four Lotte Mart supermarkets are operating in Vietnam, of which two are in Ho Chi Minh City, one in Dong Nai province and one in Danang.

Lotte Mart set up its first retail outlet in Vietnam in 2008 with the opening of Lotte Mart South Saigon, located in District 7 of Ho Chi Minh City. In 2010, it expanded with the second one – the Lotte Mart Phu Tho in District 11.

In November and December last year respectively, Lotte Mart opened one outlet in Danang and another in southern Dong Nai province’s Bien Hoa.

Lotte Mart Danang is located in Hoa Cuong Bac ward, Hai Chau district on 10,000 square metres with total investment capital of $30 million.

Meanwhile, Lotte Mart Bien Hoa is located in Amata Commercial Complex covering 8,300sqm and worth $40 million in investment capital.

The South Korean retailer aims to expand its network in Vietnam to 60 supermarkets nationwide by 2020.

Northern province attracts additional 98.6 mln USD in FDI

The northern province of Hai Duong lured 98.6 million USD in foreign direct investment (FDI) in the first six months of this year, according to the provincial Department of Planning and Investment.

In the reviewed period, 10 FDI projects worth of over 47.4 million USD were granted new licences. Meanwhile, eight existing projects received additional capital of 51.2 million USD.

The province targets to attract 150 million USD in 2013.

Over the past six months, Hai Duong has revoked one investment licence and canceled one project.

From now to the end of this year, the province will continue reviewing some other projects which are still on paper or behind schedule to revoke their investment licences and transfer land fund to other projects.

Hai Duong, located in the Red River Delta, about 60 km from Hanoi on the way to Hai Phong city, is among the most industrialised and developed localities nationwide and a favourite destination of foreign investors.-

Vinamilk to export products to US

The Vietnam Dairy Products Joint Stock Company (Vinamilk) said it has been licensed by the US Food and Drug Administration (FDA) to export its products to the US.

According to the US regulations on food safety and anti-bioterrorism, food producers, who want to have their products consumed in the US, must register with FDA.

FDA’s assessment and license granting are initial obligatory procedures for foreign enterprises to ship commodities to the country.

FDA may suddenly inspect any Vinamilk production facility and this process takes place very strictly.

Vinamilk products, mainly powdered milk, baby food, condensed milk, fresh milk, soya milk and fruit milk, have so far been exported to several countries, including Australia , Canada , Russia , Japan , Thailand and Middle Eastern nations.

The company’s export turnover reached almost 180 million USD in 2012 and the figure is 92 million USD in the first two quarters of this year.

Developer hands over houses

EcoXuan, the biggest ecological urban area in Binh Duong's Thuan An town, handed over to buyers 100 per cent of the town houses it built in the first phase.

Despite the difficulties in the property market, the handover was done a month earlier than promised, said Leong Swee Chow, director of Setia Lai Thieu Ltd, the main investor and a subsidiary of Malaysia's leading property developer S P Setia.

But the company refused to disclose the number of units, pleading "business secret."

The three-phase project, to cost around US$177 million, will also contain villas, luxury apartments, and serviced residences when completed in mid-2014.

Export taxes stifle local coal industry

The export tax on coal will rise by 3 per cent to reach 13 per cent from July 7, prompting Vinacomin to cut its shipments by more than half to between 400,000-500,000 tonnes a month.

This a drastic fall compared to the 1.2-1.3 million tonnes currently being exported every month, says Nguyen Van Bien, who is deputy general director of Vinacomin (Viet Nam National Coal and Mineral Industries Group).

Bien said that with the new increase in export tariff, in the last six months of this year, the total amount of coal exported is estimated to reach 2 to 3 million tonnes.

This means that the country's total coal exports for this year are expected to reach 10.5 million, or 4-5 million tonnes less than 2012.

He said that if the current export tariff remained unchanged, the country's total coal export volume could reach between 41.5-43 million tonnes a year.

Coal consumption has seen a gradual decline as the fossil fuel has been hit with many kinds of fees and taxes. For instance, the tax on natural resources, which affects coal, has risen from VND230 billion (US$11 million) in 2007 to VND3,120 billion ($148 million) last year.

In addition, there is no tax refund on the value added tax (VAT) paid on coal. Prior to 2005, coal exports enjoyed a tax refund on VAT. As of 2009, this policy was not applied to coal exports, therefore this resulted in coal for export becoming VND150,000 a tonne more expensive.

Bien said Viet Nam's tariff on coal exports are among the highest in the world. Every year Indonesia exports around 280 million tonnes of coal but no export taxes apply. Australia also applies a zero export tariff and China exports hundreds of millions of tonnes of coal every year but has only a 10 per cent export tariff.

He said that if export tariff on coal rise to 13 per cent, this would put Vinacomin's business performance in jeopardy. Currently, most domestic coal is unprofitable after a 10 per cent export tariff has been deducted.

The domestic coal sector also still suffers from difficulties due to the global economic slowdown while many countries have invested heavily in coal mining,creating an abundant supply of coal on the global market.

Coal now also has to compete with a range of new energy sources, some of them renewable. This saw a sharp drop in global coal prices last year which has now panned out to create a new price level.

However, coal mining in Viet Nam has entered a difficult period as coal mines have now become deeper with many now over 300 metres deep and coal miners risk being trapped by flooding, fires or collapses.

To cope with the increase in production costs, Vinacomin has come up with a number of solutions, including increasing productivity. However, this is a temporary solution, and if it becomes prolonged, this will affect the sustainable development of the coal sector in the future

As a result, Vinacomin has had to slash its salaries by 5 per cent and a mass temporary layoff is also being considered due to the low level of coal sales. Also, a 5 per cent pay cut across the board in the first half of the year would follow last year's cut of 10 per cent.

According to the Ministry of Industry and Trade, in the first half this year, coal consumption stood at 21.5 million tonnes, an increase of 9.15 per cent against the same period last year.

Dragon fruit targets 1 billion USD in exports to US

Vietnam expects to earn 1 billion USD from exporting dragon fruit to the US market by the end of this year.

Radio the Voice of Vietnam (VOV) website quoted the Southern Fruit Research Institute (SOFRI) as saying that there is an increasing demand for imported fruit in foreign markets, including the US, Japan , the Republic of Korea (RoK), and Taiwan .

Dr. Nguyen Huu Dat from the Department for Plant Protection said Vietnamese dragon fruit has great opportunities to enter the US market. Since Vietnam was allowed to market this fruit in the US, the export volume has increased sharply from 100 tonnes in 2008 to 1,200 tonnes last year.

This year, dragon fruit exports to the US are likely to reach 2,000 tonnes as the export volume has doubled in the first half of this year. Other markets like Japan and the RoK also saw a 25 percent increase over the previous year, Dat said.

Vietnamese rambutan is also favoured in the US , although its price triples that of Mexico (about 15 USD/kg). In 2012, about 350 tonnes of Vietnamese rambutan were shipped to the US, earning 3 million USD.

Over the past few years, Vietnam’s fruit export turnover has increased considerably from 185 million USD in 2010 to 360 million USD in 2012.

Vietnam plans to boost exports of mangos to Japan , Taiwan , the RoK and New Zealand . It is also completing procedures to ship other types of fruit, such as litchis and longans, to these promising markets.

Many projects in hi-tech park moving slowly

Many projects in HCMC-based Saigon Hi-Tech Park (SHTP) have made little progress under the impact of economic hardship, said Le Bich Loan, deputy head of the SHTP management board.

Due to the economic downturn, many investors are facing financial distress and thus their projects are falling behind schedule.

“The management board has revoked some investment certificates. Meanwhile, a number of investors have asked for permission to extend the project schedules or postpone their projects. Notably, most of them are local investors,” said Loan.

As of end-May, 16 projects licensed for development in SHTP had not got going. Among them, five projects were granted investment certificates last year.

The SHTP management board last year cancelled five projects, including the Taiwanese-invested New City project, a workshop construction project of SHTP Development Company, a project of Trancimex, a project of Vien Lien Company, and the Saigon College project.

Unavailable infrastructure is another reason why many projects in the park are moving at a slow pace, said Loan.

With 300 hectares in the first phase, SHTP now has no free space for lease. Meanwhile, over ten investors have registered for investment in the park in the second phase with an area of 613 hectares, but infrastructure is not available yet.

There has not been a bonded warehouse in SHTP to serve export of technology products. The power, water and traffic systems are still being completed, with traffic connection to the park not yet convenient.

The second phase of SHTP will be carried out until 2020 with total investment of over VND8 trillion as per the approval from the HCMC government in late 2012

To accelerate infrastructure development, the SHTP management board has proposed the municipal authorities to allow for participatory development. For example, apart from the city’s budget, SHTP will mobilize other funding sources such as loans, build-transfer (BT) capital and private capital to develop infrastructure in the second phase.

SHTP so far has attracted 71 projects with total registered capital of US$2.24 billion, in which foreign-invested enterprises pledge US$1.8 billion.

By the end of this May, 37 projects had been operational, three projects were still under construction procedures and 16 projects had not got off the ground. In the first five months, the SHTP-based companies exported US$1.07 billion worth of goods, taking the accumulated value to nearly US$5.3 billion.

Last year, hi-tech product exports from HCMC totaled US$2.46 billion, a three-fold increase from 2011. Intel alone exported US$1.9 billion worth of products.

The companies operating in SHTP have created jobs for nearly 17,000 workers.

Banks keen to sell bad mortgaged assets to VAMC

Banks want to sell mortgaged assets that have deteriorated to Vietnam Asset Management Company (VAMC), saying they can handle the not-so-bad ones themselves, heard a conference on a draft circular regulating VAMC operations

The circular only contains provisions on trading of secured debt, and does not mention unsecured debt, whereas most lenders are having trouble dealing with the latter, said a representative of Viet A Bank.

Sharing his experience of debt settlement, a representative of Kien Long Bank said he faced the biggest challenge when mortgaged assets deteriorated and debtors moved away. However, the circular does not mention how to deal with such cases.

“If mortgaged assets were good, banks would have sold them out already,” he told the conference held by the Vietnam Banks Association in HCMC last Thursday.

VAMC is set up to buy the assets mortgaged for the loans that have turned irrecoverable, but this company will eventually authorize banks to handle such assets.

A representative of Orient Commercial Bank wondered if the authorized banks could freely choose between negotiating with clients to liquidate such assets and putting them up for auction. He also asked who would cover the costs of debt recovery.

“Who will watch over mortgaged assets? In case VAMC failed to handle the mortgaged assets and had to return them to banks, which party would be responsible if the assets had deteriorated?” he questioned.

A representative of Asia Commercial Bank noted VAMC could only do two jobs, taking bad debts off the books of banks and accelerating the treatment of mortgaged assets under Decree 53/2013/ND-CP. If bad debts could not be handled, they would eventually be returned to the creditors, he said.

He suggested the banks forced to sell bad debts to VAMC should be those with a bad debt ratio of over 4%, instead of 3% as currently stipulated.

He added: “If banks had a bad debt ratio of over 3%, but most of the bad debts were unsecured or unqualified for trading, how could they sell debts to VAMC to lower the bad debt ratio to below 3%?”

Varying comments were given at the conference, saying what banks really need is an open debt settlement process and simplified procedures for auction of mortgaged assets to accelerate debt recovery. VAMC actually does not help much with debt recovery, said participants in the conference.

Tran Thi Hong Hanh, general secretary of the Vietnam Banks Association, said the association would gather the comments of banks and submit them to the central bank and the Government.

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