Google: Online travel research more common than in US

The number of Vietnamese holidaymakers accessing Google to research their vacation plans is increasing and higher than people in the US, according to a recent report from Google’s Consumer Barometer.

Google users in Vietnam continue to increase on an annual basis and travel is among the most searched keywords, according to Ms. Helena Lersch, country lead for public policy and government relations in Southeast Asia.

Vietnamese use Google to plan trips and search for everything from travel destinations and tourism products to hotels and flights.

About 48 per cent of Vietnamese smartphone users search for hotel information, compared to 18 per cent in the US, according to the report. Respective rates for destination and flight information in Vietnam were 42 per cent and 37 per cent versus 25 per cent and 18 per cent in the US. As many as 94 percent of flights are purchased online in Vietnam.

Figures also shows that Thailand, the US, and Qatar are the most searched destinations for Vietnamese travelers.

The report was released at an international conference held to boost e-commerce and e-marketing in the tourism sector, organized by the Vietnam National Administration of Tourism (VNAT). Experts at the conference agreed that e-commerce and e-marketing are on the rise in Vietnam’s tourism industry. Online information regarding destinations and hotel prices has become one of the key factors when vacationers plan their trips.

Many businesses have also gone online, allowing holidaymakers to book hotels, tour packages, and air tickets entirely via the internet.

The World Bank’s latest figures show that 43.9 per cent of Vietnamese have access to the internet.

Slowly taking hold

For Mr. Nguyen Thac Dung, a 57-year-old grocer in Lang Street in Hanoi, he never paid much attention to insurance until he had a heart attack and had to hand over VND70 million ($3,080) for heart surgery. “With insurance, I would have only paid 20 per cent,” he said. Many Vietnamese people are becoming like Mr. Dung, and thinking differently about the importance of insurance. 

To determine attitudes towards insurance, VET conducted a pocket survey on 100 respondents earning monthly incomes ranging from VND10 million ($440) to VND50 million ($2,200). The survey focused on popular insurance products, use of insurers, willingness to pay for insurance, and factors that impact on their decision to take out insurance.  

Respondents were first asked what type of insurance they have already taken out. Forty-two per cent said they have life insurance, 25 per cent non-life insurance, and 30 per cent both. 

In term of insurers, Bao Viet Life, Prudential, Manulife, Dai-ichi Life, and PVI Insurance were the most commonly used. Bao Viet Life topped the list, with 45.8 per cent of respondents having a policy of some sort with the insurer, followed by Prudential with 16.7 per cent, Manulife 12.5 per cent, PVI 8.3 per cent, and Dai-ichi Life 4.2 per cent. Other insurers accounted for 33.3 per cent. 

Notably, healthcare insurance was the most common insurance type, with 91.7 per cent of respondents. Meanwhile, 45.8 per cent of respondents have had motor vehicle insurance, 8.3 per cent business damage insurance, 4.2 per cent fire insurance, and 4.2 per cent credit insurance. 

It’s not surprising that healthcare insurance is a priority for many Vietnamese. Health has become the Number 1 concern among Vietnamese consumers, with over one-third (34 per cent) naming it their biggest or second-biggest concern over the next six months, according to a report from Nielsen on Vietnam’s Consumer Confidence Index (CCI) in 2016. “Although my income is not very high, my family is still interested in health insurance because in the case of sudden accident or illness, insurance would reduce the economic burden,” said Mr. Dung. 

Despite its important role, Ms. Nguyen Thuy Hoan, a retired teacher in Hanoi’s Nguyen Chi Thanh Street, said she did not intend to take out healthcare insurance because she had heard of cases where policyholders had been cheated. “I only use social insurance,” she said. “Instead of buying insurance, I put money in the bank. I think it’s a safer investment.” 

Ms. Hoan’s attitude is quite common in Vietnam. According to figures from the Ministry of Finance released last year, only 8 per cent of Vietnam’s 90 million people have life insurance. The figure suggests that awareness about life insurance in the country remains limited, while it is considered a necessity of life in developed countries. Notably, most people bought life insurance for saving and protection. 

Similarly, VET’s survey revealed that 78.3 per cent of respondents bought insurance for family protection and savings. Notably, investment is becoming a factor in the decision to buy insurance, with 17.4 per cent of respondents saying they took out policies both for investment and protection purposes. The remaining 4.3 per cent did so for other reasons. 

In recent years, in addition to the need to protect themselves, the majority of people are keen to buy insurance as an investment. Mr. Phuong Tien Minh, Deputy General Director of Prudential’s Marketing Department, told a local media that there is a tendency to move from traditional life insurance products combined with savings to life insurance products combined with investment.

According to the Vietnam Insurance Association, in the past four years investment products in insurance has been increasing steadily and grew an incredible 50 per cent in the first quarter of 2016. “This shows that Vietnamese are tending to choose life insurance products that combine protection with profit maximization,” he said.

Though recognizing its importance, Vietnamese people are still not willing to spend large sums on insurance. Seventy-five per cent of respondents said they spend less than 10 per cent of their income on insurance, while 25 per cent spend 10 to 20 per cent. None spend more than 20 per cent. 

More than half of respondents (53 per cent) said they had not purchased insurance as yet due to the cost. Thirty-eight per cent said they hesitated because product information is unclear, and the remaining 9 per cent said they were too busy to care about insurance. 

Finding a company with strong potential and good business is the top priority when customers decide to take insurance, with 58.3 per cent saying they are attracted by insurers with high turnover, steady growth, sound financial capacity, and large market share, to ensure the company’s ability to make payouts. 

Fifty per cent of respondents said they were interested in a company’s customer care policy when choosing insurers. Meanwhile, a clear contract is also an important factor when choosing insurers, according to 50 per cent of respondents. Diversified products was identified as being important by 25 per cent, competitive premiums 29.2 per cent, and a long history in Vietnam 20.8 per cent. 

Vietnam’s insurance market is poised for robust growth in 2017, bolstered by the anticipated improved economic outlook along with the government’s policies for promoting the services market, according to Mr. Phung Ngoc Khanh, Director of the Ministry of Finance’s Insurance Supervisory Authority.

Last year, the insurance sector earned total revenue of some VND102 trillion ($4.48 billion), including insurance premiums of roughly VND86.05 trillion ($3.8 billion), up 22.74 per cent against 2015, and income of VND15.7 trillion ($690.8 million) from investment activities. Notably, life insurance premiums shot up 30.5 per cent, a record high, while non-life insurance premiums climbed 12.5 per cent. 

Kien Giang: WB-funded project helps change old farming practices

A World Bank-funded project has improved capacity of agricultural cooperatives in the Mekong Delta province of Kien Giang and helped change the farming practices of local farmers.

According to Le Huu Minh from the management board of the project “Vietnam Sustainable Agriculture Transformation” (VnSAT) in Kien Giang, thousands of local farmers have learned new rice cultivation techniques – “three reductions, three gains (3R3G)” and “one must, five reductions (1M5R)” – during the recent Winter-Spring rice crops. The techniques have helped them reduce costs and improve rice production efficiency and competitiveness, thus increasing their incomes.

3R3G refers to reductions in seed, chemicals, and water; and gains in productivity, quality, and economic efficiency while 1M5R means using registered seeds and reductions in seed, chemical fertilizer, pesticide, water use, and post-harvest loss.

More than 30 pilot farms applying 3R3G technique have been set up to guide farmers on proper use of pesticides and fertilisers in which a cut of 20-80 kilogrammes of seeds, 10-30 kilogrammes of fertilisers and 10-15 percent of pesticides are applied to each hectare of rice. As a result, each hectare yields 0.3 tonnes more and saves 300,000-350,000 VND in cost.

However, many challenges hindered the project’s progress, including extreme weather events like drought, saltwater intrusion, and storms; poor irrigation systems; and difficulty in changing old farming behaviors.

Additionally, Kien Giang doesn’t have a brand name for local rice produces and still lacks high-quality or organic rice products, affecting the province’s export capacity.

Chairman of the provincial People’s Committee Pham Vu Hong said the province will accelerate communication campaigns to raise farmers’ awareness of the project’s benefits to resolve the problems. It will also work with companies to scale up rice production.

The province has asked local banks to provide agribusinesses and cooperatives with easier access to soft loans and directed the provincial Department of Trade and Industry to put more efforts into market forecasts and to ramp up trade promotion events to help local rice products access overseas markets.

According the Kien Giang Department of Agriculture and Rural Development, the VnSAT project in the province has investment of over 14.5 million USD, including 9.4 million USD sourced from the Official Development Assistance fund, more than 1.7 million USD from local budget and about 3.45 million USD funded by the private sector.

It has been carried out across over 29,500 hectares of rice in 16 communes of Tan Hiep, Giong Rieng, Chau Thanh, Hon Dat and Giang Thanh districts. About 14,446 farmer households from 46 farm cooperatives have taken part in the project.

Changes needed in energy strategy: expert

It’s time for Vietnam to change the mindset on and approach to energy strategy, while considering the saving of energy in production and consumption as a must instead of a choice, stated Assistant ProfDrTran DinhThien, head of the Vietnam Institute of Economics.

Addressing the “Vietnam EnergyForum: Present and Future” held by the Ministry of Industry and Trade in Hanoi on May 4, Thien said that energy wasting in using, which leads to a high energy cost, reduces the country’s competitiveness.

Vietnam’s growth model has long been dependent on exploiting natural resources, traditional industries, energy-consuming and low technology sectors, he added.

Thien noted that currently, energy consumption in the cement industry is 50 percent, while that of the pottery industry is 35 percent;garment and textile, 30 percent; steel, 20 percent; and agriculture, 50 percent.

He also stressed the need to promote the reasonable use of energy in a smart economy, along with the application ofmodern technology in energy production and consumption to reduce cost.

Meanwhile, experts at the event highlighted that energy strategy should be included in technology strategy to deal with the tension of energy supply and demand, while prioritising the development of high technology industries instead of “classical” ones that require large amount of natural resources and energy.

It is also necessary to focus on a green and safe energy system with the key pillar being renewable energy, they said.

According to the Ministry of Industry and Trade, Vietnam is facing challenges in energy as the energy demand is surging amidst stricter environment requirements that put pressure on the ensuring of energy security.

From an energy exporter, Vietnam has become a country importing energy, added the ministry.

It noted that the energy demand in the recent five years rose about 9.5 percent each year, which is forecast to continue to increase in the next 15 years. At the same time, energy consumption increases averagely 13 percent each year in the 2006-2010 period and 11 percent in the recent five years and about 10 percent in the future.

A representative from Department of Industry under the Central Committee’s Economic Commission said that along with ensuring energy supply through the comprehensive development of the energy system, it is crucial to re-assess the trend of energy using in the world and apply modern technology and saving energy.

In order to reach the target of 1-1.5 percent reduction in energy loss each year, stronger measures are needed in energy saving nationwide, said the official.

Deputy Minister of Industry and Trade Hoang Quoc Vuong said that the ministry is concentrating on building policy and mechanisms with approach of economical and effective energy using and application of environmentally-friendly technology in energy production towards a low-carbon economy.

Workshop on domestic trade development strategy to 2025

The Ministry of Industry and Trade (MoIT) and the US Agency for International Development (USAID) jointly held a consultation workshop on May 4 on the draft domestic trade development strategy to 2025 with a vision towards 2035.

The strategy is expected to address issues pertaining to the organization of traditional and modern distribution channels; commercial infrastructure; forms of business; types of firms and cooperatives and household business for separate product lines and for urban and rural areas, said director of the MoIT’s Domestic Market Department Vo Van Quyen.

It also clarifies the role of the State, businesses and trade associations in the management, building and development of distribution systems with a view to enhancing the role and position of domestic firms in the context of global integration, he added. 

Trade activities at home should accord with Vietnam’s commitments to the World Trade Organization (WTO) and signed bilateral and multilateral trade agreements on opening the distribution market, including wholesale, retail, and franchise, Quyen emphasised.

Director of the Institute for Trade Research under the MoIT Pham Nguyen Minh said the third draft of the strategy has basically satisfied the requirements, but suggested supplementing some contents for the development and modernization of trade, especially increasing the rate of localization. 

Minh also called for more attention to building supply chains for export and a distribution network of imported goods in the domestic market to ensure sustainable economic, social and environmental development.

Le Trinh Minh Chau, a representative from the USAID, said the domestic trade development target for 2025 with a vision towards 2035 is to create modern and professional wholesale and retail services with the participation of many economic sectors under various forms, and with diverse distribution channels.

He proposed that strategic solutions should focus on improving business environment, and creating a transparent and equal business environment for wholesale and retail companies.

New thinking in agricultural investment stimulus

Vietnam Business Annual Reports in recent years showed that while agriculture accounts for about 20% of the nation’s GDP, the number of agricultural enterprises only accounts for 0.96% (of which only 3% comprise FDI ones). Total investment in the sector is also very low, at about 1% and labour force accounts for 2.3%. This is the consequence of the fact that Vietnam has not yet developed a suitable policy system to meet the demand for agricultural investment stimulus in the new period.

While experts and managers are searching for the key to unlocking a VND100 trillion (US$4.4 billion) credit package to stimulus investment in hi-tech agriculture, the Ministry of Planning and Investment (MPI) - the agency assigned by the government to comply a decree to replace Decree No. 210/2013/NĐ-CP (Decree 210) dated December 19, 2013, by the government on policies to encourage businesses to invest in agriculture and rural areas - is also actively finalising the new important document to replace the old one.

A series of "bottlenecks" have been identified. Despite the large number of farmers and promising potential, Decree 210, after three years of implementation was considered to be "not meeting the set target", as of limited resources and budget support, unstable agricultural production, small-size rural enterprises, and insufficient linkage of agricultural product supply and demand.

According to assessment from the decree implementation, there were 64 investment projects in agriculture with the total investment of VND6.4 trillion (US$281.6 million,) on average VND100 billion of registered capital per project.

However, the central budget only supports 23 localities with VND279.5 billion out of the total VND379.5 billion committed. The average support level is about VND93 billion a year but decreases rapidly over each year, of which 2015 at VND168.68 billion, 2016 VND78.4 billion and the plan for 2017 is at only VND32.3 billion.

While the funding is too little and lack attractiveness, administrative procedures to which investors receive support for investment in agriculture are still complex (according to the MPI’s review, administrative procedures might include at least 15 steps). In addition, there are many other procedures related to land, construction, and environment that take a lot of time and costs for enterprises, leading to the slow implementation of projects and affecting businesses’ confidence.

The promulgation of Decree 210 expresses strong determination to attract more investment in agriculture, but right at its birth, it was left behind as a range of new laws and documents issued, defined many new regulations, such as the Law on Investment, the Law on Public Investment and the Law on Construction. Thus, the replacement of Decree 210 is now necessary, but the problem is whether it should only be adjusted or it should be replaced completely?

In response to the need to accelerate the agricultural structure and modern rural area construction in order to increase land accumulation and create a "boost" for attracting businesses to invest in agriculture and rural areas, Decree 210 should be "renewed."

The amended contents of Decree 210 proposed by functional agencies mainly focus on amending and supplementing administrative procedures and adjusted support conditions towards reducing the scale, expanding the participants, and increasing the level of support for some conditions, particularly those with special preference, as well as adding some new areas that need to be encouraged for investments.

Such amendments are necessary to open up capital flow but they need to be implemented in line with addressing pressing challenges of Vietnam's agriculture and rural areas, as well as linked to today's issues related to agricultural restructuring, modern rural area construction, land accumulation for large-scale production and construction of key agricultural value chains and strong agricultural product brands in the fields that are the nation’s strength.

One obvious problem is that despite the agricultural sector currently owning comparative advantages in resources and natural conditions, particularly in production and business of rice, shrimp, tra fish, coffee, fruits, such advantages have not yet transformed into true competitive advantages.

Some new content in the draft decree such as "support for land accumulation" is just partially adjusted extended by just "allowing enterprises to effectively coordinate the use of transformed land in agro-forestry companies." The issues of regional linkage, linkage based on the value chain of key regional products under the new guidelines and financial mechanism for start-up in agriculture have not been "shaped" in the new designed policy.

Many big issues need to be "transformed" into the policy of encouraging investment in agriculture in a hope of creating a real "boost". Thus, in order to avoid fragmentation of resources, the demand for regional access and strengthening regional connectivity is being set as an indispensable requirement and an imperative for development.

The restructuring of agriculture and strengthening regional integration in the fields related to agriculture, farmers and rural areas, need to be properly understood on the basis of thoroughly researching on theory and comparing with practice to synchronously organise and direct implementation in a more practical and effective manner.

The good thing is that recently, Japanese and Korean investors have made good progresses in this area. In particular, Japan identified the "map" of the five key regions to invest in Vietnam’s agriculture, including the Mekong Delta, Ho Chi Minh City, Lam Dong, Nghe An and Hanoi, while it did not miss out on market access through field trips and contacts with local authorities and potential partners.

This trend needs to be supported by more strongly encouraged policies, as attracting FDI into agriculture needs to be accelerated. On the other hand, it is also necessary to strongly develop domestic enterprises to be eligible to become partners or counterbalance.

Agricultural restructuring is imperative, so the Decree on encouraging investment in agriculture should be an effective tool to meet this requirement. The role of State agencies over cross cutting issues going beyond traditional agriculture must be renewed in the sense of "less directing, more supporting." Only then, enterprises and farmers would receive effective support through the system of policies and tools that only the State has.

SBV requires banks to clear difficulties for breeding industry

The State Bank of Vietnam (SBV) has sent a document requiring credit institutions to take part in solving difficulties for the breeding industry.

According to the requirement, banks should base on their financial ability and relevant regulations to implement suitable measures, restructure debt payment time to suit customers’ payment ability, consider loan interest and overdue interest exemption or reduction, collect original debt first and interest debt later.

When extending debt payment deadline, commercial banks should continue providing customers with feasible production and trading projects to resume production and trading.

Difficulties during the implementation process of the requirement should be reported to the State Bank of Vietnam to consider and handle.

In related news, LienVietPostBank has announced a credit package worth VND500 billion (US$22 million) for pig breeders and processing plants in response to the call by the Prime Minister, the Minister of Agriculture and Rural Development, the Minister of Industry and Trade and the SBV Governor to rescue the pig breeding industry.

The package’s interest rate is 2 percent lower than market rates and the low interest loan time will be one year.

Market predicted to move flat in May

The local stock market has seen several sessions of deep correction after a long winning streak since early this week, so the VN-Index is expected to move sideways on low turnover in May, said some securities experts.

After stumbling at the start, the VN-Index underwent three straight days of gains to end last week up 0.17% at 717.73. However, the market closed April down 0.6% for its first losing month of the year.

Chau Thien Truc Quynh, brokerage director of Viet Capital Securities Company, predicted dismal trading this month but some sectors are expected to strongly attract cash flow. These include enterprises with specific information on business strategies and annual general meetings, positive results in the first quarter and promising restructuring activities.

However, interests will differ within a sector. For instance, investors will pay attention to VCB and ACB in the banking sector and HPG and HSG in the steel industry, while others in such industries may see lukewarm responses, Quynh said in an interview with Dau Tu Chung Khoan website.

Large caps such as VNM, GAS, VCB and VIC were key market drivers during the latest uptrend, suggesting that investors focused on stocks with good fundamentals while reducing investment in speculative stocks. This good signal will help strengthen market stability.

In addition, investors may fix their eyes on some over-the-counter (OTC) stocks that have announced specific listing schedules. In fact, investors have gained big profits from outstanding OTC stocks like VJC of VietJet Air and PLX of Petrolimex. At present, investors are expecting listing information of VPBank, resulting in bustling trading of the bank on the market.

Lastly, stocks possibly added to portfolios of exchange traded funds in the second rebalancing period will see active trading at the end of this month, Quynh added.

Phan Dung Khanh, head of investment advisory at Maybank Kim Eng Securities Company, forecast a gloomy outlook for May if turnover fails to improve.

The market is currently influenced by psychological factors, especially after a long rising streak, while risks turn visible given a high ratio of margin trading. Besides, the nation has seen economic growth slowing down with inflation and bank interest rates rising, causing bad impacts on the stock market.

If the factors do not improve and the VN-Index plunges to below 700 points, the market may face downturn risks in the short term. In case the supporting level at 700 points is breached, small caps may attract attention due to low prices and strong fluctuations, Khanh predicted.

Solutions for 12 loss-making projects determined

Of the 12 projects incurring a loss of trillions of dong under the Ministry of Industry and Trade, the Government and the ministry have decided to auction one project and offered many different options for the remainder.

The 12 slow-moving, loss-making and inefficient projects managed by the trade ministry include four fertilizer plants, three bio-fuel production projects, two steel production projects, Dinh Vu polyester fiber factory, Dung Quat Shipbuilding Industry Company Limited (DQS), and Phuong Nam paper pulp mill.

Currently, six active projects are running at a loss, three are being put on hold because of rising costs and lack of operating capital, and the other three have stopped production due to exorbitant costs and big losses.

The total initial investment of these 12 projects was some VND43.67 trillion, which was later adjusted up to VND63.61 trillion (up 45.65%), or roughly US$2.7 billion at the current forex rate. Of this sum, VND14.35 trillion, or 22.56%, was their equity, while loans made up 74.6%, about VND47.45 trillion, and the remaining 2.84% came from other sources.

The accumulated losses of the 10 projects that are operational or have stopped production as of end-2016 had totaled over VND16.12 trillion, with total liabilities of more than VND55.06 trillion

The total disbursed capital of the three incomplete projects had been around VND8.61 trillion, of the estimated VND13.06 trillion.

Since late 2016, the Government and related ministries have issued 120 documents to deal with the shortcomings of these 12 projects. The proposals for treatment have been put forward to the Prime Minister for consideration and submission to the Politburo. 

For the four fertilizer plants (Ninh Binh, Ha Bac, DAP 1 - Haiphong, and DAP 2 - Lao Cai), their difficulties and obstacles should continue to be handled under the direction of the Government Steering Committee, with solutions related to corporate governance to improve their efficiency of production and business. After successful operations are achieved, the State capital in these projects will be put up for sale or withdrawn (after 2018).

For Quang Ngai bio-fuel production plant, it is proposed that PetroVietnam Central Biofuels Joint Stock Company (BSR-BF) transfer or divest capital from this project. However, before that, it is a must to calculate the factory restart, and deal with all problems with the EPC contractor in the wastewater treatment component in order to complete the final settlement.

For the two other bio-fuel projects, Phu Tho and Binh Phuoc, their options are also capital transfer or divestment and the investment.

For Phase 2 of the expansion of Thai Nguyen Iron and Steel Complex, it is necessary to pull out State capital from TISCO and restructure the company.

For Quy Xa iron ore mining and quarrying project and Lao Cai iron and steel plant, the treatment plan is to solve problems and obstacles to further develop and improve the efficiency of their production and business, accompanied by negotiations to amend the joint venture contract and their rules. On that basis, their investment components, production and business should be further perfected to better the efficiency of the whole projects.

Dinh Vu polyester fiber factory shall undergo restructuring, equitization and divestment via cooperation with foreign partners to produce PSF fibers for two years, followed by divestment. Another option is the company should change hands.

For DQS, the top choice is to let the company go bust in accordance with the law. However, the plan for ownership conversion through valuation, auction of assets and liabilities may be considered, if investors meeting the requirements of this plan are found.

For Phuong Nam paper pulp mill, Deputy Prime Minister Vuong Dinh Hue in September 2016 approved in principle for sale of all its fixed assets and inventories. At present, the Ministry of Industry and Trade has determined the starting price and completed the auction plan, and is performing the necessary legal procedures for a public auction.

More enterprises have to pay informal customs fees

The proportion of enterprises having to pay informal fees during the customs clearance process has risen to 31% in 2016 from 28% in 2015, according to a survey on 1,000 enterprises conducted by the Vietnam Chamber of Commerce and Industry (VCCI).

Meanwhile, about 31% of enterprises said they did not know of such informal fees and 38% of enterprises said they did not pay informal fees.

Among enterprises not paying informal fees, 44% said there was no discrimination against them, 17% said they were discriminated and 39% said they had no idea.

At a conference announcing the survey’s results on April 27 in Hanoi, director of the Legal Department of VCCI Dau Anh Tuan said enterprises are still afraid of customs clearance procedures as customs officers may take overloading as an excuse to delay processing their documents. Therefore, they often give extra money to customs officers to ensure promptness.

General Secretary of the Business Association of Hai An District, Hai Phong City Dang The Luong said that although local customs units have applied electronic services, they could not meet the time due to overloading. “Enterprises need to pay informal fees if they want their cargos to be processed in advance,” he added.

According to Tuan, informal costs remain high because enterprises have to work directly with customs officers. Therefore, he suggested applying one-door and online customs services to solve the problems.

Many other inadequacies were pointed out in the survey. Specifically, 93% of enterprises said there are too many customs regulations, making it difficult for them to comply. More than 89% said many of the regulations are impractical and 82% said the coordination between agencies is not good.

Multiple investors want to develop terminal at TSN airport

The adjusted master plan for Tan Son Nhat International Airport has not been approved yet, but four investors have expressed keen interest in developing the new passenger terminal called T4, according to the Ministry of Transport.

These investors are Imex Pan Pacific Co Ltd; a joint venture between Danang International Terminal Investment and Operation JSC and Thang Long Infrastructure Investment JSC; Vietnam Airlines Corp; and VietJet Aviation JSC.

Imex Pan Pacific wants to work with the Airports Corporation of Vietnam (ACV) to finish the project within one year and a half.

Meanwhile, the joint venture also wishes to cooperate with ACV to set up an investment company next month if approved, according to its report to the ministry. The consortium is committed to providing adequate capital in line with the regulation, and inking a credit agreement before work on the project begins. It pledges to complete the project by the end of next year, and run on a one-month trial basis before the 2019 Lunar New Year holiday.

The adjusted master plan for the airport has yet to be approved, so ACV still has not made up its mind to develop the project on its own or shake hands with other investors, according to Lai Xuan Thanh, director general of the Civil Aviation Authority of Vietnam (CAAV).

He stressed the regulations should be strictly complied to ensure the objectivity and transparency regardless of the selected investment method.

Under the adjusted master plan for Tan Son Nhat International Airport, besides the two existing runways, a parallel taxiway and two exits for aircraft will be built anew. In addition to the current passenger terminal, a new one called T4 will be developed to accommodate 15 million passengers on an annual basis.

Therefore, Tan Son Nhat will be able to serve from 43 to 45 million passengers a year, with around 80-85 parking spaces for airplanes, says the CAAV in its recent report to the Transport Ministry.

The expansion of the airport is estimated to cost more than VND19.3 trillion funded by various capital sources including the State budget and loans.

Due to the urgency of the project, CAAV has proposed the ministry pick the ACV as the investor to construct a number of components on its own capital, as well as mobilize capital from various organizations to develop the passenger terminal T4.

HCMC’s budget revenues leap 22.4% in first four months

Total budget revenues of HCMC reached VND124.427 trillion (about US$5.47 billion) in the first four months of 2017, up 22.4% over the same period last year and meeting 36% of the 2016 estimate, according to a report of the city’s Department of Finance.

The increase of budget revenues showed that the production and business activities of the city in January-April kept growing well.

In particular, shared earnings in the first four months reached VND4.76 trillion, including about VND1.8 trillion of tax payment from Saigon Trading Group, up 196% year on year. The tax payment period changed from every six months previously to every three months from 2017 also contributed to the revenue increase.

Meanwhile, revenue from land and water rents reached VND1.66 trillion, a 50.7% year-on-year increase. Notably, Tan Hoang Minh Group paid VND264 billion and Empire City Limited Liability Company paid VND2.8 trillion of land-use fees in Thu Thiem new urban area in January-April.

In addition, personal income tax revenue reached VND11.52 trillion, (up nearly 20% over the same period last year), revenue from crude oil reached nearly VND5.83 trillion (up 26%) and revenue from import-export activities reached VND34.5 trillion (up 14.7%).

According to the resolution on budget allocation in 2017 approved by the HCMC People’s Council, the city targeted to gain a total budget revenue of VND347.88 trillion (about US$15.3 billion and 15.79% higher than the 2016 estimate), including VND226.48 trillion of domestic revenues, VND109 trillion from import-export taxes and VND12.4 trillion from crude oils.

Budget allocation for the city in 2017 will total VND70.646 trillion (about US$3.1 billion), including VND25.164 trillion for development investment, VND34.2 trillion for regular expenditures, VND1.511 trillion for interest payments and the remaining for other expenditures.

CIEM suggests amending Decree 109 on rice export

The Central Institute for Economic Management (CIEM) has proposed the Government scrap unreasonable conditions on rice export in Decree 109/2010/ND-CP and replace them with quality conditions for each rice species.

Firstly, the Government should give small-scale enterprises a green light to export their own rice of high quality in small quantities, facilitating them to penetrate demanding and choosy markets, CIEM said in its report entitled “Challenges in the development of Vietnam’s rice value chain.”

Secondly, the Government should not directly participate in government-to-government contracts but to assist enterprises in their direct negotiations by offering market information, predicting rice prices, and accessing international distribution channels. The current rice export mechanism dictated by the Vietnam Food Association (VFA) and State-owned enterprises (SOEs) has had an adverse effect on the rice value chain.

Thirdly, it is necessary to equitize SOEs and remove VFA’s monopolistic power. VFA should not have the right to decide on rice export and distribute benefits to its member enterprises. Besides, VFA should be equally represented by all stakeholders in the chain, especially rice producers.

Stringent regulations in the Government’s Decree 109 have eroded the competitiveness of the rice export sector. To get a certificate for rice export, enterprises are required to have at least one warehouse with a minimum capacity of 5,000 tons, and a milling facility with a minimum hourly processing capacity of 10 tons, and to have exported rice for 12 consecutive months.

There were over 200 rice exporters before the decree took affect but the current number is reduced to 145 enterprises, according to the VFA.

CIEM says the regulation has made the VFA hold a monopoly position in rice export and create barriers to healthy competition among rice exporters.

Article 17 of the decree prescribes enterprises must register with the VFA within three working days after their rice export contracts are clinched. This means they must submit copies of their contracts that mention their export rice prices and available amount of rice.

The VFA has the right to request local departments of trade and industry to check the reported amount of rice which may cause difficulties in enterprises’ rice export activities. Besides, rice export traders must report on the progress of their contracts with the VFA.

CIEM says the current legal regulations are creating unfair advantages for SOEs to export rice. This seems to run counter to the 2013 Constitution, prescribing participants in various economic sectors are equal.

SOEs currently account for a high proportion of rice export shipments, thanks to government-to-government or so-called centralized contracts. These contracts are usually assigned to the VFA for the management and distribution to its own members.

Meanwhile, SOEs like the Vietnam Northern Food Corp. and the Vietnam Southern Food Corp. are VFA’s leading companies, and their leaders are also VFA’s leaders. These enterprises are mainly involved in the final stages of export activities and rely heavily on intergovernmental contracts.

FLC to develop 35-hectare urban complex in Binh Dinh

Binh Dinh Province’s government has given nod to FLC Faros Binh Dinh Investment and Development Co. Ltd. to develop an urban complex named FLC Lux City Quy Nhon spanning over 35 hectares in the province’s Nhon Hoi Economic Zone.

Faros, a member of FLC Group JSC, will invest over VND600 billion in the project, said the Investment Promotion Center of Binh Dinh Province.

The project is aimed to build a high-grade functional urban area to develop Nhon Hoi eco-tourism urban area. It will also feature landscape architecture, commercial services and housing meeting international standards.

Covering an area of 32.59 hectares, the project will include low-rise buildings and villas on an area of over 11 hectares. Besides, a kindergarten, offices, a car park and a greenery area will also be developed in remaining area. The two-phase project is expected for completion in about two years.

FLC Group introduced the FLC Lux City Quy Nhon project as a large urban complex in central Vietnam in March. The project will be implemented in combination with an ocean park with art stone sculpture garden, food-entertainment-shopping streets, hospitals, schools, cinemas and parks to serve more than 1,000 households at FLC Lux City Quy Nhon.

FLC Group is currently the investor of many large projects in Binh Dinh such as FLC Quy Nhon Golf Links and eco-tourism site, Eo Gio eco-tourism resort and a five-star hotel. More noteworthy is the FLC Quy Nhon Beach & Golf Resort project on an area of 1,300 hectares with a total investment of VND7,000 billion. The project includes resorts and five-star hotels of 1,500 rooms, a 36-hole golf course, a marine eco-tourism park, and a wildlife park among others.

FECON asks for permission to transfer stake in Phu Ly bypass project

FECON Foundation Engineering and Underground Construction Joint Stock Company (FECON) has requested permission from the Ministry of Transport (MoT) to transfer the capital, rights and obligations in  the Phu Ly bypass project to three Japanese investors. 

The BOT (build-operate-transfer) project includes a bypass road on National Highway No.1 at Phu Ly town and reinforcement works at Km215+775-Km235+885 of the northern province of Ha Nam.

The transferred part makes up 40 per cent of the chartered capital of the project company FCC Infrastructure Investment JSC (equivalent to 11.2 million shares). FECON explained that the deal is because it  wanted to restructure of its investment portfolio.

Specifically, FECON will transfer 5.6 million shares, equivalent to 20 per cent of the chartered capital, to its subsidiary Infrastructure Joint Stock Company (FCI), 3.92 million shares (14 per cent) to Japan  

Expressway International Company Limited (JEXWAY), and 1.68 million shares (6 per cent) to Central Nippon Expressway Company Limited (NEXCO).

The Phu Ly bypass project was kicked off in 2014, completed in 2016, and officially put into operation and started collecting tolls at the South Gie Bridge toll booth on November 24, 2016.

With the total length of 43.4 kilometres, the Phu Ly bypass project has a total investment sum of over VND2.046 trillion ($97.5 million). Investors of the project include FECON, Cotec Construction JSC  (Coteccons), and Civil Engineering Construction Corporation No.1 (Cienco 1).

Currently, the South Gie Bridge toll booth offers a 30 per cent lower rate than other BOT toll booths on National Highway No.1.

Malaysia's Tan Chong Motor to open new plant

Malaysia’s Tan Chong Motor Holdings Berhad plans to build another auto assembly plant in Vietnam through its subsidiary Tan Chong Industrial Equipment Sdn Bhd (TCIE), according to a source from the Ministry of Finance.

TCIE plans to assemble autos and not directly import or have a sales system in Vietnam. It will cooperate with a Vietnamese company to import completely-knocked-down (CKD) vehicles, which are then transferred to TCIE.

Tan Chong’s automobile history goes back to the 1950s, when the Malaysian company became involved in auto sales. The group now offers vehicles from Nissan and Renault. It runs two assembly plants in Malaysia, with a combined annual output of 100,000 units.

The Malaysian auto group moved overseas at the turn of the century, setting up an assembly plant in Vietnam. In 2010, it won the exclusive distribution rights to Nissan vehicles in Cambodia and Laos. In 2014, it struck a partnership with Kawasaki Heavy Industries to sell Kawasaki motorcycles in Vietnam. It currently operates dealerships in the country.

Tan Chong has made a great deal of effort to learn about the directions and policies for the development of the automobile industry in Vietnam, especially preferential policies for the localization of parts and components and cooperation with other foreign partners to import auto parts.

TCEI has an assembly plant for Nissan motor cars at the Hoa Khanh Industrial Park in central Da Nang city on an area of 129,500 sq m, with investment capital of $40 million. The plant’s modern assembly line has an annual capacity of 65,000 vehicles.

According to figures from the Vietnam Automobile Manufacturers Association (VAMA), sales in 2016 increased 24.3 per cent against 2015, to 304,427 units. Sales of cars assembled in Vietnam jumped 32 per cent while imported units rose 5 per cent.

The Truong Hai Auto Corp., which assembles trucks, buses and sedans, led the sales tally, followed by Toyota Motor Vietnam.

Total automobile sales in the first quarter of 2017 saw a year-on-year increase of 8 per cent to 64,729 units, with passenger cars up 23 per cent while commercial and special-purpose vehicles fell 10 per cent and 13 per cent, respectively.

Land prices surge amidst unconfirmed rumors in suburban Ho Chi Minh City

Land prices in Ho Chi Minh City’s suburban areas have recently skyrocketed over rumors of upgrading and merging outlying districts or the implementation of major projects.

The prices have increased by 30 to 40%, even 100% in some areas, in District 2 and District 9, as well as outlying districts including Binh Chanh, Can Gio, Cu Chi, and Hoc Mon.

Along Nguyen Xien Street in Long Thanh My Ward, District 9, which was previously a secluded neighborhood, land prices have hiked after a rumor that a major realty project would be initiated later this month.

Advertisements have filled the area, while brokers hand out leaflets on a daily basis.

According to Van Anh, a broker, houses in a residential area named DV were first put on sale seven months ago.

Speculators began buying nearby land slots earlier this year, causing prices to rise, Anh elaborated.

Areas along Nguyen Duy Linh Street in District 2 have also been in high demand.

Hoang Nam, a local broker, stated that buyers of houses in the neighborhood have been mainly speculators while those having a real demand for residences make up a small portion.

Tuoi Tre (Youth) newspaper reporters have noticed a 20-50% increase in land prices along National Highway 50 in Binh Chanh District compared to the beginning of the year.

National Highway 50 is a major road leading to provinces in the Mekong Delta, Ngan, an experienced broker, explained, adding that Binh Hung Commune in the district is expected to be upgraded, leading to the price surge.

A 4m x 16m house, previously sold at about VND500 million (US$22,000), is now hard to find although the price has doubled, Ngan continued.

Land prices in outlying Can Gio and Cu Chi Districts have also spiked due to some hearsay that many developers will carry out their projects in the areas.

Against the backdrop of the ‘land fever,’ real estate experts recommend that buyers should be cautious before opening their pockets.

As major investors have occupied all profitable projects in downtown areas, smaller ones will seek for potential property in less prominent neighborhoods such as District 2 or 9, said Nguyen Xuan Loc, general director of Techcomreal, a realty company.

That the city’s authorities are developing infrastructure in suburban areas has been leveraged by brokers, boosting land prices, Loc added.

“Buyers should only choose those projects having a legitimate building permit, easy access, and connections to other infrastructure and sign deals with proper contracts to avoid pricing traps,” he suggested.

According to Tran Khanh Quang, general director of Viet An Hoa Real Estate Consultant JSC, investors should not be hasty as rumors can be false.

Even if they are true, they will only become a reality in three to five years, Quang elaborated.

Le Hoang Chau, president of the Ho Chi Minh City Real Estate Association, assessed that the ‘land fever’ is not related to a housing bubble.

Five measures proposed to save pig-farming industry

Minister of Agriculture and Rural Development Nguyen Xuan Cuong has submitted five solutions to Prime Minister Nguyen Xuan Phuc to help the pig-farming industry in the context of a sharp fall in pork prices.

Over the recent months, the price of live pigs has been on the decrease, down to VND30,000 (US$1.3) per kilo, the lowest for the last 10 years, down from the previous VND40,000 (US$1.7).

According to Minister Cuong, the government should assign the Ministry of Agriculture and Rural Development (MARD) to co-operate with the Ministry of Finance as well as localities to instruct enterprises to reduce prices of animal feed and veterinary medicines. 

Meanwhile, the Ministry of Foreign Affairs and the Ministry of Industry and Trade need help to seek outlets for pork.

The minister suggested the government instruct banks and credit institutions to charge off and extend the payment term of debts for pig breeders, and people selling animal feed.

He also proposed domestic companies such as Vissan, Hapro Hanoi and Saigon Coop to increase the purchase of meat from farmers. 

The minister recommended the halt of the temporary import and re-export of meat products to protect domestic products of the same kind.

In the long run, MARD will apply more modern and advanced technologies to slash production costs, improve productivity and seek potential export markets for domestic pork meat. \

The ministry has planned to ask localities nationwide to restrict the licences issued for new animal-feed processing facilities as current productivity is 31 million tonnes annually, far more than the target of 25 million tonnes by 2025.

The ministry will also reduce livestock from the current 4.2 million sows to three million by 2019. 

Localities should not increase their quantity of pigs especially sows, Cuong said, calling them to raise pigs that generate high yield or special varieties popular with certain groups of consumers.

Ninh Thuan works on 2 solar power projects     

Leaders in Ninh Thuan province on Wednesday began joint work with Power Generation Corporation 3 (Genco 3), under Viet Nam Electricity Group (EVN), on two solar power projects in the province.

Operating under the plan of the Ministry of Industry and Trade and EVN on renewable energy development, Genco 3 proposed investments in two solar power projects in Phuoc Minh Commune, Thuan Nam District.

The proposed projects cover an area of 554 hectares with an installed capacity of 350 MW and total investment of nearly VND9.58 trillion.

Construction of the project is expected to begin in the second quarter of 2018 and to finish in the first quarter of 2021.

In addition to producing solar power, Genco 3 will provide hi-tech agricultural production within the project area.

Currently, Genco 3 is managing 12 thermal and hydropower plants nationwide, with a total capacity of 6,549 MW, accounting for nearly 17 per cent of the nation’s power system output.

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