Shares slide on rising caution in both bourses
Investors were more cautious following a continuous rising streak and increased profit-taking activities last week that resulted in shares sliding on both exchanges.
On the HCM City Stock Exchange, the VN-Index lost 0.21 per cent throughout the week, closing Friday at 593.04 points. Meanwhile, the HNX-Index on the Ha Noi exchange fell by a more substantial 3.64 per cent to end the week at 86.76 points.
Observers noted that cautious psychology was shown on decreased trading on both bourses.
Nearly 133 million shares, worth VND2.524 trillion (US$119.6 million), were traded each day on the HCM City bourse, down 34.5 per cent from the previous week.
On the Ha Noi Stock Exchange, the daily trading volume also declined 31.1 per cent during the period, averaging 89 million shares and valued at nearly VND1.03 trillion ($48.8 million).
Many investors opted to sell shares to realise cash profits after a long run of gains that caused heavy selling pressure on hot stocks in real estate, construction and mining, which had increased significantly during the previous uptrend.
Yet investors became more cautious following the news that this month the central bank will issue a document that will tighten activities of commercial banks, including the safety ratio in the funding business.
"Investors are concerned that this adjustment could adversely affect businesses and squeeze cash flows into the stock market," analysts from vietstock.vn wrote in a research note.
The market recovered on Thursday after information was released about the support package worth VND70 trillion ($3.32 billion) for the real estate sector, which will be disbursed by the central bank in the near future.
However, declining trading showcased that investors were still cautious and intended to wait for clearer signals before making investments.
"The market gained in the last two sessions, but liquidity fell substantially, that showed hot money has yet to come back the market," said Le Thi Bich Hang, analyst of FPT Securities Company in a report.
Hang predicted the Vn-Index would hardly surpass the threshold of 600 points this week, while the HNX-Index would remain below 92 points. The downtrend would likely prevail.
She suggested investors take profits in bull-trap sessions, while short-time investors should wait for the market to retreat to 565-570 points for the VN-Index, and around 80 for the HNX-Index to start buying.
"However, investors should choose their portfolios carefully, as performance of stocks will be different based on first-quarter business reports of companies," she said.
Also, foreign investors returned as net buyers last week after four consecutive net selling weeks. They purchased a combined value of VND1.717 trillion ($81.4 million) in shares in HCM City during the week, focusing on VinGroup (VIC) shares, which accounted for VND1.427 trillion through negotiations.
On the Ha Noi market, investors picked up shares worth a net value of VND28 billion ($1.3 million).
Building int'l brand beneficial to products: official
Building international brand for craft village products in Hanoi would contribute to developing craft villages and promoting products, Deputy Minister of Industry and Trade Ho Thi Kim Thoa has said.
Brand name plays an important role in the development of handicraft products, the official was quoted by the Vietnam Economic Times as saying at her recent meeting with the Hanoi Department of Industry and Trade.
Craft villages and their products are the capital’s specific characteristic, she said, adding that Hanoi should focus on developing craft villages, closely managing product quality and promoting the building of international brand for products.
She suggested Hanoi choose a specific product to build international brand. The ministry will coordinate with state management agencies and units to support copyright registration, she added.
“We do not need to build many brands at the same time. The building of international brand for a product will significantly contribute to promoting the brand of Hanoi craft villages."
Hanoi has paid special attention to building brand and advertising products for over years. The city’s efforts have been recognised by visitors and foreign importers. Bamboo and rattan products, embroidery and silk have been exported.
In particular, companies in craft villages such as Bat Trang Ceramic Village, Van Phuc Silk Village and Ha Thai Lacquer Village have signed contracts with foreign businesses.
However, due to the lack of brand name, products have not been yet sold at higher prices. Duc Phong company director Thai Dai Phong said that while labeling international brand, foreign companies could sell products at higher prices.
According to the department’s statistics, the city has 1,350 craft villages, of which 286 villages have been recognised.
In recent years, especially since 2009, craft villages have strongly developed. The number of manufacturing facilities in craft villages rises to 175,889 compared to 163,150 in 2009, while that of companies and cooperatives in Hanoi craft villages has also strongly increased with 2,063 joint stock companies, 4,562 limited liability companies, 1,466 private companies and 164 cooperatives.
The rapid development of the villages has also greatly contributed to the capital’s economic development. Hanoi craft villages’ industrial production index in 2013 reached 12.2 trillion VND (173.4 million USD), an increase of 4.55 trillion VND compared to 2009.
Thuong Tin district’s Ha Thai Lacquer Village, Gia Lam district’s Bat Trang Ceramic Village and Thach That district’s Chang Son Carpentry Village recorded high industrial production index in 2013.
Head of the d epartment’s Bureau of Small Scale Industry Management and Trade Village Trinh Thi Hong Loan said that thanks to efforts of the city’s industry and trade sector, craft villages have strongly developed. The city has focused on supporting vocational training, trade promotion, technology application in production and infrastructure for craft villages.
In the 2009-2013 period, Hanoi industry promotion organised vocational training for 43,850 workers and supported 24 projects to innovate machinery and equipment. In addition, thanks to trade promotion funding, Hanoi organised trade fairs to introduce handicraft products and craft villages in the city.-
Amended Investment Law to further empower enterprises
With the aim of giving more autonomy for investors, improving the investment environment in the direction of transparency, and increasing benefits for investors and businesses, the Ministry of Planning and Investment recently held a workshop to collect comments from experts and foreign investors to amend and complete the Investment Law, said the Vietnam Business Forum, a weekly magazine of the Vietnam Chamber of Commerce and Industry.
The amendments were drafted on the basis of perfecting mechanisms and policies, creating a clear legal framework, creating strong transition procedures in the implementation of investment projects; resolving the difficulties in investing activities of the enterprises, improving the effectiveness and efficiency of state management of investment activities; and creating a legal basis to consolidate and strengthen incentives and protection of foreign investment, a ccording to Deputy Minister Dang Huy Dong.
After eight years in practice, although the 2005 Investment Law has expanded autonomy and improved the business environment, some contents of this law reveal inadequacies such as the areas which are encouraged in the law are quite extensive, inconsistent and not really focused on attracting investment projects with high quality and efficiency; and the regulations on investment procedures and project implementation are still complicated.
According to Quach Ngoc Tuan, Deputy Director of Legal Affairs and member of the draft law compiling board, the scopes of the amended law include investment activities in Vietnam and investment from Vietnam to foreign countries, rights and obligations of investors; investment policies, incentives and guarantees; and the state management for investment activities. Thereby, there are five major contents to be amended and need to obtain comments from the experts.
For foreign investors, defining this concept is an important basis for the application of investment procedures and conditions for foreign investors in accordance with domestic law and international treaties. However, in the workshop, many experts suggested that the concept of "enterprises with foreign owned capital comprise any enterprise established by a foreign investor" is not specific. It should clearly define the capital ratio of foreign investors in enterprise for it to be considered an enterprise with foreign owned capital.
Regarding procedures to establish enterprises and investment projects, in the draft law, fundamental rules of procedure to implement investment projects are amended towards clearly defining requirements of investors in the process of preparing for investment and responsibility of local authorities in providing information about land planning and construction; investment registration certificates are replaced to reflect investment purposes, the nature of this paper is to note that investors register to implement investment projects; the project area to implement procedures for granting investment registration certificates is narrowed; the one-stop shop mechanism is set to receive and resolve investment and construction procedures; and the records and verification projects are specified.
Representative of the Vietnam National Oil and Gas Group (PVN) said now is a high time to amend the Investment Law as localities and businesses are waiting for foreign investment. However, at this point, there are still problems at the stage of business registration or granting investment certificate.
On the concept of investment fields and investment incentives, the draft also affirms the principle of equal treatment, fair and not discriminate between domestic and foreign investors. In addition, it continues to expand, encourage investment projects using high technology, new technology, environmental protection, production and use of clean energy, investing in agriculture - rural, farming, forestry, fisheries and development projects of education, training, health care, etc.
For overseas investments, under the old Investment Law and Decree 78/2006/ND-CP, depending on the size of investment capital, certificates for overseas investments serves as a business registration or under the investigation of overseas investment projects associated with the establishment of legal persons abroad. But the draft aims to amend and supplement a number of articles such as confirming investors must be responsible for the operational efficiency of investment, additional investment activities abroad which are encouraged such as market expansion, exploitation of natural resources in invested country, supplying raw materials for domestic production, and applying overseas investment registration procedures in the foreign exchange management bodies.
"Domestic investment and overseas investment are separate issues. Because Vietnam cannot apply its law when a corporation exports capital abroad. However, we need to closely manage this capital," stated Professor Nguyen Mai.
According to many participants, the one-stop shop mechanism is implemented at the local level only in the stage of receiving and returning administrative results, but in fact investors must file documents with many different specialised agencies of the provincial People's Committees. Survey results show that investors must perform an average of 18 procedures related to land, construction, deployment environment for investment projects. Many businesses also said that procedures in construction and land are the most cumbersome.
Currently, the project of Investment Law amendment is included in the programme to build laws and ordinances of the National Assembly in 2014. Lawmakers will soon approve to enact this important law to create a basis for increasing funding to attract foreign investment and boost economic development in the future.
New pact to yield export benefits
A free-trade agreement (FTA) between Viet Nam and the Customs Union of Russia, Belarus and Kazakhstan is expected to be completed this year.
This will create many tariff advantages for Viet Nam's exports, especially textiles, a report by the Ministry of Industry and Trade's Viet Nam Economic Times said.
Russia is one of Viet Nam's comprehensive strategic partners, with bilateral trade achieving great progress over the last several years.
According to the ministry, the revenues earned from Vietnamese exports to Russia increased more than 62 per cent per year and Russia became the biggest market for Viet Nam in terms of export growth in the 2010-2013 period.
In 2013, Viet Nam's exports to Russia was worth more than US$1.9 billion, up over 20 per cent from the previous year. In the first two months of this year, Viet Nam's exports to Russia reached $316 million, up 10.7 per cent year over year. The main exports included phones and components, computers, electronic products and components, textiles, garments, footwear, coffee, seafood, cashew nuts and rice.
The fourth round of negotiations over an FTA between Viet Nam and the Customs Union ended in February, while the fifth round is expected to take place from March 31 to April 4 and the negotiations are expected to end later this year.
The FTA is expected to pave the way for Vietnamese businesses to access a new, larger market with preferential tariffs.
According to the Viet Nam Trade Office in Russia, once the FTA is completed, many non-tariff barriers such as customs procedures, payment of goods and technical regulations, among others, in the union's markets will be removed, many taxes will be cut and services and investment development conditions will become more favorable.
In 2013, the textile exports to Russia reached $135.6 million, an increase of 11.02 per cent over 2012, according to the General Department of Viet Nam Customs.
The Viet Nam National Textile and Garment Group (Vinatex) said that with a population of 143 million, tariff preferences related to Russia's accession to the World Trade Organisation and the expected FTA between Viet Nam and the Customs Union, Russia will become a key market for Vietnamese textile and garment exports in the coming years.
Trade Counselor in Russia Pham Quang Niem said, the biggest problem for Vietnamese exporters is the absence of a centralised, stable trade transaction organisation in Russia, which makes it difficult for them to learn about consumer demands in this market.
Russia is an open market so the Vietnamese businesses trading with this market have to compete fiercely with rivals from other countries providing similar products, he said. It is a large import market that remains potentially risky because its legal system is inadequate and the payment process with Russian partners remains difficult, especially those made with letters of credit, he said.
For better access of the Russian market, Niem said that the enterprises should participate in annual fairs and exhibitions to introduce their products to Russian partners directly because they prefer that way to seek information through websites. This should be done while entering into joint ventures with Russian partners to establish enterprises which will process Vietnamese products in both countries to help increase sales in Russia.
SMEs seek financial support
Small and medium-sized enterprises (SMEs) and micro enterprises (MEs) are facing barriers in accessing trade financing, despite their remarkable contribution to the economy.
Cao Sy Kiem, the chairman of the Viet Nam Association of Small and Medium Enterprises claimed that Vietnamese SMEs accounted for 95–97 per cent of the total businesses and employed more than half of the labour force in the business sector. They also produce 40-50 per cent of the consumer goods exported by the country.
Speaking at the conference on APEC Public–Private Dialogue on Addressing Impediments of SMEs and MEs in Accessing Trade Finance held in Ha Noi yesterday, Kiem noted that SMEs have been an important factor, actively contributing to social stability and poverty eradication in all regions of the country, especially in the remote and mountainous areas.
However, majority of the SMEs and MEs lacked the required capital to expand their production and businesses. It has been a difficult task for the enterprises to mobilise capital from the market through stocks, shares, and bonds, as most of them were not qualified to be listed on the stock exchange.
In addition, joint mobilised capitals were rare among the businesses due to the high interest rate, while the possibility of using external loans, such as ODA, was still limited.
"It is this reason that most SMEs and MEs had to depend on bank loans, which accounted for 80-90 per cent of their capital," he emphasised.
Most of the bank loans provided to the businesses were short term and were not linked with businesses and production circles.
SMEs and MEs have also had to go through complicated procedures in order to access the loans.
"Another barrier faced by the enterprises is a lack of clear and concrete guidance for implementation of policies relating to finance, money, trade, and investment, though the Government has issued several policies to promote the development of SMEs," he remarked.
The law on SMEs has not been issued, thus creating a differential treatment without equality with other sectors.
He recommended to swiftly develop and approve the law regarding SMEs and specify current viewpoints, policies, and mechanisms, such as tax extension and prioritised export credits for SMEs.
Sharing his viewpoint, Dinh Manh Hung, the deputy director of the Viet Nam Chamber of Commerce and Industry stated that in 2013, the access of businesses to bank loans was more difficult than it was in 2012, although they had expected it to become easier by December 2012.
"In fact, the bank interest rate in 2013 had decreased by about 2-3 per cent as compared to that during the end of 2012, but still rather higher than other businesses, especially SMEs," Hung reported.
He suggested that SMEs and MEs should regularly update government policies to make use of incentives in order to overcome the barriers.
They were urged to continue to implement the Business Process Re-engineering program as well as differentiating capital sources in order to reduce the risk rather than depend solely on the credit offered by banks.
Hung also requested the government to provide enterprises the opportunities to borrow loans by continuing to implement non-performing loans' solutions, to categorise debts, and to streamline the payment period.
Hongyeol Lee, the head of South Korean the Small and Medium Business Administration (SMBA)'s international marketing department shared the country's experiences in providing support to SMEs.
He noted that the SMBA tailored the export and import finance structure to support SMEs during the respective stages of the entire process. It also increased SMEs' access to finance by establishing SME exclusive financial guarantee fund with the purpose of extending credit guarantees for the liabilities of promising SMEs, which lacked tangible collateral.
Microsoft system proving beneficial to VNG business
VNG Corporation, founded in September 2004, is a leading digital content provider and the number-one technology company in Vietnam.
Not only dominating the online games by publishing, producing and exporting successfully many games on the market such as Vo Lam Truyen Ky, Kiem The, Thuan Thien Kiem, Khu Vuon Tren May and Galaxy Pirates VNG has also been successful in many other fields, such as digital content and community connection (News Zing, Zing MP3 and Zing Me), e-commerce (123.vn, 123mua.vn), CSM management software and Zalo - Vietnamese communication and multimedia application on mobile phones.
Millions of Vietnamese people are entertaining themselves, connecting people, doing online shopping, and joining in community activities using VNG's products.
VNG is currently using diversified infrastructure and information platform for more than 1,300 servers and endpoint equipments, including 800 computers to serve 1,200 direct users. To improve the operational efficiency of more than 30 service groups, meet the highest demand of community, VNG is using diversified technologies in the platform of Windows, Linux, and Unix.
he biggest challenge to VNG is to integrate divergent technology platform into convergent one, making convenient for end users and standardise the supply process and improve the service quality.
By deploying Microsoft System Centre 2012, VNG has found out a solution which is seamlessly integrated with existing divergent infrastructure, saving cost for new infrastructure investment, and increasing the internal employees’ satisfaction.
Previously, while using Microsoft technology and open source platform from VMWare for Data Centre, different systems have not been integrated smoothly, the installation and management of application require entire IT human resources.
The requirement for human resources and installation time had slowed down the system productivity and caused unnecessary disruption.
VNG has decided to use Microsoft System Centre 2012 as this solution is capable to delivering unified management across on-premises, service provider, not only providing self-service for user, but also ensuring system security, and managing hybrid environments.
By deploying Microsoft System Centre 2012, VNG has achieved the goal of building ‘IT as a service’ and creating the flexibility for users.
Deploying Microsoft System Centre 2012, VNG has improved internal operational efficiency, both IT department and all employees. As a consequence, operational productivity and system security has been also enhanced bringing the capability to provide the services to millions of customers.
"Managing a data centre with diversified device and platform is regularly complicated, costly and less effective. System Centre 2012 supports comprehensive management capabilities at the enterprise level for the application that is integrated throughout the cloud, from the environment of the service provider to the enterprise environment ", stressed Vu Minh Tri, Microsoft Vietnam’s general director.
Microsoft System Centre 2012 provides the ability to automate and integrate service management activities, then IT department that can help automate system tasks to meet the requirements of users and customers much more quickly, efficiently and higher accuracy. Specifically, this system enables remote control to update and deploy applications, no longer requiring IT staffs to manual configure at every endpoint equipment. At the same time, Microsoft solutions have helped every VNG employee proactively handle their desired tasks related to IT applications.
In addition to save tangible expenses for installing new infrastructure, this also keeps VNG on with regular operation without any disruption while new system is deployed and trained. Advanced technology platform plus the advanced features of Microsoft System Centre effectively helped VNG comprehensively monitoring the system, smoothly operating with higher efficiency, and closely managing endpoint equipments in entire system.
"System Centre 2012 allows us to well manage diversified IT environments including Windows, Linux and other open source software. With its commitment to better interact with the open source software, Microsoft has shown real commitment in every products like System Centre 2012," said Nguyen Thanh Phong, director of VNG’s IT Department.
“Instead of recruiting additional IT manpower to serve growing IT system, VNG has been deploying VNG appstore and getting closer to the goal providing "IT as a service ", helped VNG reduce 50 per cent in the resources required to support software installation and management and exceed 99.9 per cent of the system availability,” Phong added.
With the distinct of a technology company, VNG's 2,000 employees including 1,200 direct users on 800 computers in Hanoi and Ho Chi Minh City need online system available every working day. By integrating System Centre 2012 with existing diversified infrastructure, VNG has reached that goal. In addition to providing a stable, secure and responsive system to serve more than 30 service groups, the reputation of the IT department has been positively changed.
Fecon nails $26m in Q1contracts
Vietnam’s Foundation Engineering and Underground Construction JSC or Fecon – a leading contractor for foundation materials won several major contracts in the first quarter of 2014 valued at more than VND550 billion ($26.2 million).
Shortly after reaching a VND200 billion ($9.5 million) deal to do work on the $9 billion Nghi Son oil refinery and petrochemical complex, Fecon came to another agreement for the same project valued at VND20 billion ($950,000).
Immediately after, Fecon received a letter of approval from Korea’s Chunjo Construction Limited for a VND53 billion ($25.2 million) contract, also for the Nghi Son project.
The company so far has won some packages with the Nghi Son project with the total value reaching VND280 billion ($13.3 million).
Also recently, Fecon signed a VND28 billion ($1.3 million) contract with Bridgestone Vietnam’s factory in Haiphong and has bid on other projects including two packages for the Danang-Quang Ngai expressway.
In the first quarter of this year alone Fecon has secured orders from several pivotal national projects. Its total contract value thus far has reached VND550 billion ($26.2 million), 30 per cent of its annual revenue target.
In terms of the company’s business last year, it reported VND1.594 trillion ($76 million) in the total asset value and VND1.204 trillion ($57.3 million) in net revenue, 30 per cent up on-year. It saw post-tax profits of VND116 billion ($5.5 million), earnings per share were VND4,694 and dividends paid out 20 per cent (10 per cent in cash and 10 per cent in shares).
The company’s goals for this year include the revenue of VND1.5 trillion ($71.4 million) after-tax profit of VND148 billion (7.5 million) and a dividend payout of 15 per cent (cash).
Yarn sales drive E-land Thanh Cong profits
Korean-backed E-land Thanh Cong Company has high hopes pinned on yarn sales as its sales have increased significantly over the past year.
The Ho Chi Minh City-based textile and garment factory, 45 per cent owned by South Korean conglomerate E-land, reported profits from its yarn business in 2013 against losses in 2012, CEO Lee Eun Hong announced at the company’s annual shareholders meeting on March 29.
The executive added that last year E-land Thanh Cong restructured the US dollar long-term loans for its Tay Ninh spinning project from 8 to 4.3 per cent, reducing outlay.
Given high hopes on continued yarn sales and the apparel business, expected to get a boost from the pending Trans-Pacific Partnership (TPP) agreement, the company is eyeing sales of $133 million for 2014, 11 per cent up on-year and a considerably higher profit increase of 33 per cent.
The yarn business is instrumental in generating this growth, Thanh Cong’s chief strategy officer Tran Nhu Tung told VIR.
He said sales could not go beyond the planned increase, as the company’s facilities were already operating at full capacity. However, E-Land Thanh Cong is mobilising $30 million for another major plant in the Mekong Delta province of Vinh Long.
He said construction would begin very soon and the first stage was set go operational by the end of the year, producing garments. He added that stage two would be knitting and stage three would be pollution-free dyeing. The company estimates 3,500 workers will be needed in total and investment is being sourced from both bank loans and private investors.
The company’s 2013 dividend payout was 10 per cent and for this year is planned at 12 per cent.
Standard Chartered Bank Vietnam awarded Golden Dragon Award 2013
Standard Chartered Bank Vietnam was just honoured the Golden Dragon Award 2013 for ‘Most Favourite International Bank’.
The Golden Dragon Awards are presented annually by the Vietnam Economic Times in collaboration with the Foreign Investment Agency and the Ministry of Planning and Investment, to recognise and celebrate foreign-invested enterprises for their significant contributions to Vietnam.
This is the seventh consecutive year that Standard Chartered has won this prestigious award.
As a leading international bank with a long history in Vietnam, Standard Chartered has been at the forefront of driving innovation and the introduction of world class expertise in the country.
In raising the bar for the entire industry, Standard Chartered has helped to create a more robust financial services sector in Vietnam.
Nirukt Sapru, general director of Standard Chartered Bank (Vietnam), said: “2014 is a very special year for Standard Chartered in Vietnam as it marks the 110th anniversary of the opening of our first branch in the country. Being recognised again as the ‘Most Favourite International Bank’ is a significant achievement and it has helped to make our anniversary celebration even more meaningful.”
“Standard Chartered is deeply committed to Vietnam. We will continue to support Vietnam’s efforts to attain sustainable economic growth and strive to offer more innovative banking products and services for our clients and customers,” he asserted.
Standard Chartered Vietnam’s achievements have been recognised both globally and locally.
Last year, the Bank was named ‘Best consumer internet bank 2013’ by Global Finance and ‘Best service provider in Vietnam’ in the three categories: Best Cash Management Provider, Best Structured Trade Finance Provider and Best eSolutions Partner Bank by the Asset.
Additionally, the State Bank of Vietnam Governor presented Standard Chartered with the ‘Excellent Labour Collective 2012’ award in recognition of its many contributions to the country.
Denmark increases private sector support
The Danish Business Partnerships Progamme announced on March 28 that it would increase support to development of the private sector in Vetnam with a focus on the areas of food safety and clean technology.
Since 1997, the programme granted more than $74 million to 300 pilot projects and to more than 150 long-term partnerships, several of which are still in business, even after the conclusion of Danida’s financial support.
”I strongly believe the Danish Business Partnerships Programme, together with other Danida business support instruments, can contribute to poverty reduction and sustainable development in Vietnam. Denmark, Danish companies and partners stand by Vietnam with our knowledge and know-how in the areas of food safety and clean technology,” said Danish ambassador to Vietnam John Nielsen.
Despite Vietnam’s recent years of economic growth, there is still demand for support in mutualising it with sustainability. Danida’s Business Partnerships Programme would address this, including support of green technology transfer, job creation and improving the environment.
Cement makers fail in energy-saving drive
Many cement makers have failed to implement waste heat gas generator systems as regulated.
Under Vietnam’s cement industry development plan until 2020 with a vision towards 2030, all cement plants having capacity of equal or more than 2,500 tonnes of clinker per day have to apply the waste heat gas generator system (WHGG) to save at least 20 per cent of their electricity consumption by 2015.
“Except for Holcim and Ha Tien 2, we have not seen any cement plants investing in the system at the moment. Most of cement plants are facing financial difficulties due to high debt and weak domestic demand, so they can’t invest in the system by themselves,” according to Stockplus financial media corporation’s release last year.
“We believe that there will be an extension from the Vietnamese government in relation to compliance on the matter,” said Nguyen Quang Thuan, Stockplus’ CEO.
Nguyen Quang Cung, chairman of the Vietnam Cement Association admitted to the delayed investment in the WHGG. “However, there won’t be an extension. The cement makers will be forced to implement this on time,” he said.
Nguyen Cong Minh Bao, director of Sustainable Development of Holcim Vietnam, which invested $18 million in a WHGG in 2012, said Vietnam should not extend the deadline. According to Bao, currently, 60 per cent of Chinese firms apply the system in China and the WHGG is an intrinsic component of a new project.
Holcim Vietnam’s WHGG has an output capacity of 44 million kWh per year. It will be enough to serve the firm’s Hon Chong Cement Factory for 88 days of operation, meaning Holcim Vietnam will save 9,000 tonnes of coal and reduce 25,300 tonnes of carbon dioxide gas per year.
Vietnam’s cement sector is considered as one of the country’s most energy intensive industries. Under the third draft of the retail pricing scheme conducted by the state-run Electricity of Vietnam (EVN) last year, 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 would dish out a power tariff hike of 2-16 per cent to steel and cement producers.
Vietnam oversupplied 8-12 million tonnes of cement every year during 2010- 2012. The oversupply was due to a mushrooming in the number of cement manufacturing plants in recent years. At present, Vietnam has 106 cement factories with total annual output capacity of 63 million tonnes of cement.
The Ministry of Construction estimated the domestic cement consumption would reach 62-63 million tonnes this year, a mere1.5-3 per cent increase in comparison with 2013. It is expected that Vietnam would export 14 million tonnes of cement this year, equal to last year.
Lotte Mart expands chain footprint to the capital
South Korea’s supermarket giant Lotte Mart inaugurated the first giant new shopping centre in the northern area in Hanoi’s Mipec Tower last week as part of its aggressive expansion in the run-up to Vietnam opening the doors to foreign retailers.
According to Vietnam’s World Trade Organization (WTO) commitments, from January 11, 2015, Vietnam would permit the establishment of wholly foreign owned retail businesses. Currently, foreign firms are constrained by being forced to enter into joint ventures with Vietnamese partners or via franchising.
According to Hong Won Sik, general director of Lotte Mart Vietnam, there will have an investment wave from foreign retailers in Vietnam as WTO commitments take effect next year.
He said that at that time, Vietnam’s retail market would become more competitive and Lotte had therefore concentrated on establishing a firm foothold before the floodgates opened.
Sik revealed that by the end of this year, Lotte Mart would open more three shopping centres in Hanoi, Ho Chi Minh City and Ba Ria-Vung Tau. The South Korean retailer aimed to expand its chain to 60 supermarkets nationwide by 2020.
Lotte Mart Dong Da, its first shopping centre in Hanoi, is its seventh in Vietnam. The $25 million 20,000 square-metre four floor leased outlet at Mipec Tower will offer a shopping experience including a range of entertainment services and supermarket.
Lotte Mart entered Vietnam in 2006 as a joint venture with a local partner based in Ho Chi Minh City. According to the investment certificate that Lotte Mart won in October 2006, the firm boasted the initial investment capital of $65 million, with the local partner Minh Van Company, holding a 20 per cent stake.
In October 2012 Lotte Mart received Ho Chi Minh City authorities’ approval to turn its joint venture into a 100 per cent foreign-invested company. At the same time, the Korean investor raised its chartered capital to $120 million with an aim to developing more projects in Vietnam in the future.
Lotte Mart now has six retail centres in Ho Chi Minh City, Dong Nai, Danang, Binh Duong and Binh Thuan.
Spanish enticed by array of major infrastructure projects
A delegation of over 30 Spanish businesses arrived in Hanoi last week to express interest in possible investment in transport infrastructure, energy, shipbuilding, water and wastewater treatment and technology. The tour included representatives from leading Spanish companies.
José Manuel García-Margallo, Spain’s Minister of Foreign Affairs and Co-operation, who led the mission, told a meeting at the Ministry of Planning and Investment (MPI) that Spanish companies were keen to seek opportunities in Vietnam considering its potential growth.
José Manuel Revuelta Lapique, president of shipbuilder Navantia said: “We’re a major shipbuilding company with lots of experience. We know that shipbuilding is an important industry in Vietnam and we want to share our experience with Vietnamese partners.”
The Spanish companies were particularly interested in transport infrastructure including railways, motorways and airports.
“We’ve participated in motorway, railway and metro projects in many countries. We want to know more about Vietnam’s road infrastructure plans and what models they’re interested in adopting, whether its Public-Private Partnership (PPP) or other alternatives that the Vietnamese government is prioritising,” said Juan José García Gabián, general director of CAF.
MPI Minister Bui Quang Vinh said the Spanish companies shared similar investment interests with the Vietnamese government. Vinh said Vietnam needed $400 billion for developing the country’s infrastructure until 2020.
The minister also introduced the visitors to major transport infrastructure projects that Vietnam was seeking investment for, including the Long Thanh International Airport project in the southern province of Dong Nai.
Vietnam is also co-operating with the Japan International Co-operation Agency to study an upgrade to the existing north-south railway route or construction of a new route capable of reaching 160 kilometres per hour.
The country is considering hi-speed railway projects for the Hanoi to Vinh and Ho Chi Minh City to Nha Trang routes and projects to upgrade rail links between Hanoi and Haiphong, Hanoi and Lao Cai and Hanoi and Thai Nguyen.
“Spain has a good railway network. We’d be happy to see Spanish involvement in the sector,” Vinh said.
He added that the $883 million metro project in Ho Chi Minh City had already received a $200 million pledge from the Spanish government but the domestic component of the funding was currently nearly $700 million short.
Delayed super-project bitter taste
A $300 million solar battery complex, once a joint deal between the United Arab Emirates’ Global Sphere Group and local partner Worldtech JSC, which failed to materialise has adversely affected certain groups of people, reported newswire Vietnamnet.
Last year the project’s kick-off ceremony took place jubilantly at Phong Dien Industrial Park in central Thua Thien Hue province in early January.
It was planned to go on-line after 30 months construction, turning out environmentally-friendly products and using renewable energy sources for power generation to reduce pollution.
But after this grand ceremony, the project has seen no progress. Its construction site is empty with only the remnant of an incomplete warehouse.
While at first the investor rented an office and purchased materials to build a warehouse, after, all the people simply vanished.
According to Doan Vien and wife Le Thi Hai, who live in the area, deputy head of the local project management unit Cao Xuan Hai rented their house for the project office; they lived there in six months, then the investors gradually left until there were none left.
“They still owe us over VND30 million ($1,400) in rental and food expenses,” Vien said.
Similarly, Nguyen Minh Hoang who also lives in the area, said the investor owes him VND15 million ($700) for workers’ wages to build the warehouse.
Le Xuan Luong, an owner of a building material shop, said the project owed him around VND20 million ($950).
Head of Thua Thien Hue Industrial Zone Authority Nguyen Huu Tran attributed Global Sphere’s project delay and disappearance to a cancelled contract with local partner Worldtech.
“In September last year, the authority amended the project’s investment certificate. Worldtech, facing capital distress, was sourcing a new partner for the project. We will urge the investor to pick up the pace,” he said.
Tran added that under current regulations, the project would potentially have its investment certificate revoked if it failed to make progress within a year.
Regarding the owed moneys, Tran said the authority would seek the funds from the investor.
State bank governor suggests lower lending rates
Lending rates may go down by another 1-2 per cent this year.
This was the message State Bank Governor Nguyen Van Binh delivered at a recent meeting with the Mekong Delta province of An Giang.
“Given favourable lending conditions, credit institutions may reduce lending rates by 1-2 per cent,” said Binh.
He added that with inflation forecasted at around 6 per cent in 2014, interest rates were likely to remain at the current level. But he said that if conditions became appropriate, banks could lower their rates, but by a maximum of 1-2 per cent.
Earlier last month, Nguyen Thi Hong, head of the Monetary Policy Department under the State Bank also said lending rates could go down given the right conditions in terms of the economy, the banking sector context and risk management.
MobileWorld announces share HSX share issue
MobileWorld, Vietnam’s top mobile retailer, announced it planned to list 63 million shares on the HSX in June.
This follows shareholder approval of its listing plans on February 10. As of 2013, the company operated 213 mobile shops located in every province throughout the country and another 12 electronics shops under the name Electronic World in the south.
Last year the group announced sales of VND9.5 trillion ($452.38 million), up 28 per cent on-year and pre-tax profits of VND351 billion ($16.7 million), up 108.2 per cent on-year.
Profit growth saw such high percentage growth thanks to 25 per cent revenue growth from shops as the group closed underperforming stores, 822 per cent increases from the group’s rebates following early payments to manufacturers, and a 52 per cent decline in financial expenses thanks to lower interest rates. The mobile segment in general enjoyed a good year with 17.3 per cent in sales while the electronics segment saw a drop of 22.2 per cent.
MobileWorld’s strategy is to expand its electronics chains with the goal of seeing growth equal to that of the mobile industry and thereby taking the lead as the number one mobile and electronics retailer. Their strategy is price competitiveness with superior service.
Up to now the company’s electronics stores total 13 with 4 in Ho Chi Minh City and another 9 in southern provinces with average store revenue of VND9.7 billion per month.
This year the company plans to open several new stores in the south, but has no plans for the north due to a perceived low demand in the market. It also announced it has plans to move into consumer segments beyond just IT and electronic appliances.
In response to the share issue announcement, Ho Chi Minh City Securities Company reported in its newsletter that it believed MobileWorld would continue to see strong earnings thanks to growing consumer demand.
It added that the firm would see sales of VND13.7 trillion ($652.38 million) this year, up 44 per cent against 2013 with after-tax net profits of VND366 billion ($17.4 million), up 42 per cent. They estimated earnings per share of VND5,384.
Green Valley condo garners rave reviews
Phu My Hung Development Corp launched the first phase of Green Valley project on March 23 that captured the attention of 200 customers from Ho Chi Minh City, Hanoi and provinces throughout the country. Indeed, 70 per cent of the 156 apartments in the first phase have been deposited by customers right at the launching event.
Green Valley is the second apartment project overlooking the Saigon South Golf Course and scenic river after Happy Valley apartment project. On-site facilities include swimming pool, flower garden and convenience stores. Each apartment also has sufficient parking space for a car and two motorbikes, providing a much welcome bonus in a city notorious for its lack of parking. There's also spacious parking space for visitors.
Thanks to its convenient location, residents can also easily access District 1 and 3 by about 20 minute drive. With a variety of apartment sizes at affordable prices, Green Valley offers a rare opportunity to purchase Phu My Hung condo as this is the Phu My Hung’s second condo project for middle-income earners since Sky garden 2004.
It’s no surprise that the motto “easy to buy, easy to sell, easy to lease,” has become a popular expression when referring to Green Valley. Phu My Hung Development Corp. has been trying to add extra values and benefits via comprehensive investments in infrastructure and facilities. As a result, the appearance of Phu My Hung City Center is growing at multiplying rate over 15-year development.
A large foreign community occupying up to 40% of total residents here has been developed such as Chinese, Japanese, Korean, etc. in line with a modern educational system concentrating many international schools such as SSIS, Japanese School, Taipei School and Korean School. A positive sign for foreigners is that several foreign individuals have been able to complete the procedure to get the Certificate of house ownership in this urban area since the beginning of 2014. Phu My Hung Development Corp. also offers a long-term leasing programme for expatriates who are residing in Vietnam but remain ineligible to purchase a house. During the leasing contract, individuals and corporate customers can receive whole-hearted supports from Phu My Hung Development Corp. to convert from leasing to purchasing when they are qualified to make house purchases in Vietnam.
The second phase of the Green Valley apartment project is expected to be launched by end of April 2014.
Agriculture sector sees cheap funds beyond reach
The central bank has decided to cut lending rates for the aquaculture sector but most enterprises are still finding it difficult to access low-interest loans.
According to Document No. 1691 released on March 19, the central bank has told Vietcombank, VietinBank, BIDV, Agribank and MHB to cut the lending rate cap for the sector to 8% per annum, the next move after the ceiling deposit rate was slashed to 6% per annum on the previous day.
However, many enterprises and farming households still bemoan a host of hindrances to bank loans.
Speaking to the Daily, Nguyen Ngoc Hai, head of Thoi An Tra fish farming cooperative in Can Tho City, said that lending conditions of banks were not suitable to the current market conditions.
Banks do not make unsecured loans and they require borrowers to have mortgage assets. However, farmers had already used all their properties as collateral for bank loans to finance their losses over the years, so they were unable to take out more bank loans now, Hai said.
Nguyen Van Kich, general director of Cafatex Group in Hau Giang Province, said that to speed up development of the sector, the central bank should create favorable conditions for borrowing and cut lending rates to 4-6% per annum.
Vo Dong Duc, director of Can Tho Seafood Import-Export Joint Stock Company, said the Tra fish farming industry had been trapped in a chronic supply-demand imbalance, export risks and falling prices. Many firms in the industry have suffered losses.
Banks had been cautious in extending loans to seafood firms due to high risks in the industry. Credit ceilings for the sector now range from 40 to 60% of those in 2012, Duc said.
Nguyen Van Nhiem, chairman of My Thanh shrimp association in Soc Trang Province, said that credit approval was a little bit easier than in his locality. Besides secured loans, Agribank has also given loans to enterprises having feasible projects and whose debts have been rescheduled.
Speaking at a recent seminar in the Mekong Delta, Nguyen Viet Manh, head of the credit department under the central bank, said that farm produce and fruits were strengths of the region, but the products usually face high risks due to global prices and anti-dumping laws.
In addition, unhealthy competition and ineffective investment of some enterprises have made banks hesitant at extending loans to this sector, he said.
VND8.3 trillion loans for enterprises to stabilize prices
Eight banks have signed up for HCMC’s market stabilization program this year, offering combined loans worth VND8.3 trillion (US$393.5 million) for enterprises to help stabilize the prices of dairy products, schooling items, essential foods, core pharmaceuticals and others in this city.
This year’s program will start tomorrow and be financed with the loans that are more than four times higher than last year’s program.
Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s HCMC branch, said among the eight banks, the Vietnam Bank for Agriculture and Rural Development (Agribank), Vietnam Export Import Bank (Eximbank), Saigon Thuong tin Commercial Joint Stock Bank (Sacombank), Bank for Investment and Development of Vietnam (BIDV) and Vietnam Bank for Industry and Trade (Vietinbank) had joined the program since last year. Newcomers are the Military Bank (MB), Dong A Bank and Housing Development Bank (HD Bank).
Participating enterprises of the program would get short-term loans with an annual interest rate of 6% and long-term loans with 8-10%, Minh said.
Minh said last year’s price stabilization program generated many benefits for the lenders, including the opportunities for brand building, expanding relations with corporate borrowers, helping stabilize product prices and rein in inflation in HCMC. This was why more banks wanted to join this year, he added.
According to the HCMC Department of Industry and Trade, the loans with soft interest rates are on offer for not only product producers and suppliers of the program but also related entities, including husbandry farms and vegetable cooperatives.
This year, the program has attracted 64 entities, or five more than the number of last year. With their own capital and the loans from the banks, participating enterprises will have to prepare the goods volumes that are 20-30% higher than those of last year and account for 20-60% of the city’s demand.
The department also said more efforts would be made to distribute the products of agricultural cooperatives and those items produced in accordance with the Vietnamese Good Agriculture Practice (VietGap) standards and Global Good Agriculture Practice (GlobalGap) criteria so as to provide consumers with qualified products at reasonable prices.
The program will last until March 31, 2015.
The program was initiated by the HCMC People’s Committee in 2002.
In the first years, participating enterprises of the program got interest-free funds from the city’s budget to stabilize prices of essential food items during the Lunar New Year, or Tet. Later, more products were added and the program ran for a longer period, from early April a year to the end of March of next year.
Banks started to take part in the program last year by lending to the participants at soft interest rates.
Up to now, 50 cities and provinces across the country have carried out a similar market stabilization program.
Vietnam’s GDP could grow 13.6% in 2025, says Harvard professor
Vietnam will enjoy strong economic and trade expansion if the country signs the Trans-Pacific Partnership (TPP) agreement, with gross domestic product (GDP) growth forecast at 13.6% in 2025, said Professor Robert Z Lawrence from Harvard Kennedy School.
Speaking at an international workshop on economic reform in Hanoi City on Tuesday, Lawrence said Vietnam’s exports and gross national product (GNP) would grow faster than other TPP participating nations given tax barrier removals by large markets such as the U.S. and Japan.
The TPP is a free trade agreement currently being negotiated between 12 countries including the U.S., Canada, Mexico, Peru, Chile, New Zealand, Australia, Singapore, Malaysia, Brunei, Vietnam and Japan.
Vietnam’s GDP growth rate may reach 13.6% in 2025, much higher than 0.4% of the U.S., 2.2% of Japan, 1.4% of Peru and 6.15% of Malaysia. Meanwhile, Vietnam’s exports will surge by 37.3%, higher than 4.4% of the U.S., 14% of Japan and 12.4% of Malaysia, the professor said.
Vietnam’s economy expanded by 5.42% last year. The GDP in the first quarter grew 4.96%, slightly higher than the rate in the same period of 2012 and 2013 (4.75% and 4.76% respectively).
Vo Tri Thanh, deputy director of the Central Institute for Economic Management (CIEM), said that the professor’s estimations were sound though his foundations were unclear.
However, Thanh explained that this did not mean that Vietnam could benefit the most from TPP. “Vietnam has a low starting point, so the nation can spring up at the highest speed compared to other countries,” he said.
Lawrence said that implementation of TPP commitments will help speed up domestic economic restructuring. Vietnam is striving for internal reforms during TPP negotiations, including reforms of institutions, State-owned enterprises (SOEs) and the banking system.
At present, SOEs usually receive favorable policies to access low-interest capital sources. The enterprises also see little impact from normal rules and get tax incentives and priority in signing procurement contracts.
CIEM director Nguyen Dinh Cung said that SOEs’ contributions did not correspond to priorities they have got.
Around 1,000 SOEs account for 45% of the total investment and fixed asset and 27% of the total outstanding loan. However, they contribute less than 17% of industrial output and generate jobs for just 1% of people of working age.
Lawrence said the SOEs chapter for the TPP negotiations would discuss natural competition between SOEs and private enterprises, transparency and financial structure of SOEs.
Therefore, TPP could be a fulcrum for domestic reforms, the professor said.
In addition, there would be adjustments in the local market when the TPP agreement is signed and some farmers and producers will be replaced.
Enterprises must renovate operations and some would have to struggle against the process, he added.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR