Vietnamese enterprises hold high expectation for 2014: VCCI

Vietnamese enterprises hold high expectation for 2014, with confidence that the economy will flourish, said the Vietnam Business Forum - a weekly magazine of the Vietnam Chamber of Commerce and Industry (VCCI), adding that they are ready for a new stage of development.

As a person in charge of Vietnam Business Annual Report, Pham Thi Thu Hang, General Secretary of VCCI, is not surprised at the bright results of the survey in late 2013. After 7 annual reports, it seems that the businesses feel more optimistic about the actual situation may seem. The difference is mainly more or less optimistic, said Hang.

While 2013 saw a record number of bankrupcies or shut-downs of enterprises, 2014 is expected to see a record number of revived enterprises. This belief is built on the basis of expectation that the sales this year will have great improvement compared with 2013 and average selling prices will also tend to rise.

Nguyen Tuan Hai, Chairman of Alphanam, after a period of "silence", has decided to "churn" back on the market with the projects that he viewed as a grasp of crowd psychology. Although he had not revealed his specific investment areas, the move to recruit senior personnel from the retail groups shows that he is looking to take advantage of rich land in big urban for a breakthrough target in the distribution market.

But what is he selling and distributing? He hinted that there will be Alphanam Food producing food and distributing goods for the No. 1 brand in the world. Only time will tell whether this investment in foods and beverages is a wise decision or not, but clearly Hai is not the only one making big investment decisions at this point of time.

Hang also indicated a more optimistic view: many businesses are confident that the their machines’ capacity will be much better than 2013. Many businesses after a period of "hibernation”, start to accelerate restructuring and have more confidence in the effective use of their resources. They expect that the number of orders will increase compared with 2013. A lot of businesses are confident with their plan to recruit more in 2014.

Nguyen Thi Nguyet Huong, Chairwoman of the Vietnam Investment Development Group (VID), a firm specialising in the development of industrial parks, export processing zones, is confident that 2014 will see more businesses expanding their activities, so her group plans to expand the industrial parks.

Naturally, businesses which want to develop cannot be separated from the macro- economic environment. VCCI 's survey showed that businesses which decide to expand their business scale for many reasons.

In particular, the reason of favourable economic outlook and availability of skilled labour with high competitive costs is chosen by many businesses, this ratio is 42.9 percent and 40.1 percent, respectively.

Businesses hold high expectations on changes in the labour market because this is the easiest time for businesses to recruit those who can immediately meet job requirements without being retrained, even for key positions. The second reason is the opening of markets, tax incentives and improved ability to raise capital. The third is improved infrastructure and support programmes.

Referring to the contents of the strategy of the socio-economic development period 2011 - 2020, the majority of businesses (64.6 percent) are aware that the increase in domestic value, added value and competitiveness of products are important objectives in strategy.

The rate of added value on price of one product of respondent enterprises is estimated at an average of 19.5 percent. This index ranged as low as 0.05 percent and as high as 85 percent. Notably, there were 77.5 percent of the surveyed enterprises considered this a key issue and among these businesses, the solution to improve the competitiveness of products is the most common (up to 74.3 percent enterprise applying the solution).

So far, Vietnam enterprises have not yet focused on research and development (R&D), only 32.5 percent of businesses choosing this method). Mentioning this problem, Economist Pham Chi Lan shared that she had just conducted the survey among enterprises in the southern region, through that, she felt the movement within the enterprises. Most of the enterprises recommended that the government promote industrial development to support businesses in raising the proportion of value added products.

Lan is happy to find that enterprises are now changing their mind, they do not just sit and wait for the state to support. They have changed the way of thinking and business strategies to survive and thrive instead of just stopping at the surface reforms.

Despite high expectation for the economic performance in 2014, there are still difficulties that enterprises need to be ready to cope with. Nguyen Dinh Cung, Director of the Central Institute for Economic Management (CIEM), in a debate on amendments to the Law on Enterprises emphasized that more than ever, businesses need to get the positive support from institutional reforms to create a stable macroeconomic platform for "micro levels" to develop.-

Driving force for Da Nang’s business development

The central city of Da Nang has decided to select 2014 as its Entrepreneurship Year. This is one of the solutions to ease enterprises’ difficulties and also a key measure for the city to achieve GDP growth of 9 to 9.5 percent this year.

The decision, which was made by the municipal People’s Council at its year-end meeting in 2013, has received consideration from the business circle operating in the city. They expect 2014 will be a better year as the city will issue more policies to help enterprises maintain and develop production and business and offer stable jobs.

Nguyen Duc Tri, General Director of the Hoa Tho Garment Joint Stock Company, said that the decision shows the city’s consideration to the business circle.

It will help enterprises in their business restructuring as well as put forth solutions to remove their difficulties, thus contributing to the city’s development, he added.

Da Nang has implemented a combination of solutions to facilitate businesses’ operations, including creating a transparent and convenient legal corridor. The enterprises also recommend solutions to make the year successful.

The city should strengthen administrative procedure renovation and seek ways to improve its competitiveness index, said Phan Hai, Deputy Head of the Da Nang Young Entrepreneurs’ Association.

Meanwhile, Lam Quang Minh, Director of the Da Nang Investment Promotion Centre, suggested more favourable conditions for investors, such as incentives, infrastructure facilities, land, service and financial-banking support.

The 2014 Entrepreneurship Year is expected to create a momentum for the city’s business and production activities, contributing to making Da Nang a large socio-economic hub in the central region and an important driving force for development in the region and the Central Highlands.

Da Lat vegetable growers face profit losses

After the Lunar New Year of the Horse 2014, many vegetables grown in Da Lat city, Lam Dong province and neighbouring areas (branded Da Lat vegetables) dropped in price significantly, said the Communist Party of Vietnam(CPV) online newspaper on March 5.

It is time to harvest some vegetable gardens but traders offered to buy at very low price which is not enough to cover the cost of renting labour for the harvest, leaving farmers unable to sell their products, according to CPV online newspaper.

Actually, this is not the first time growers of Da Lat vegetables have had to leave their products in the field. The situation of bumper crops resulting in low prices, and seeing high prices only after poor crops has happened many times in the greatest vegetable growing area in the country.

The main reason is the poor linkage between production and consumption networks, and poor market information.

Da Lat is the largest and high-quality vegetable production area in the country. With the favourable condition of climate and altitude, farmers have experience and access to high technology, so vegetable production in Da Lat is a model for farmers in other areas.

Da Lat annually plants over 50,000 ha of vegetables, of which 12,000 ha is applied high technology.

Productivity, output and prices of vegetables produced by high technology is increasing. Revenue of high-grade vegetables is over 400 million VND/ha/year, 1.6 times higher than the average rate of the province. The trademark of Da Lat vegetables has been certified and appears throughout the country and in some foreign markets.

However, consumption markets for Da Lat vegetable have been precarious for years. Among about 1.7 million tonnes of vegetables produced annually, 13,000 tonnes are exported. The rest is consumed locally, and it is mainly sold to traders in wholesale markets.

Farmers sell kinds of vegetables they have, while traders only buy sort of vegetables which bring them high profits, if not they force farmers to sell at low price or leave farmers flat. Moreover, farmers usually rush to grow high price vegetables at the previous season but not know that the selling price could be changed at the next crop.

Although the Da Lat vegetable market is gloomy, production and consumption of vegetables of many households, collectives and businesses are still stable, such as Da Lat Gap Co., Ltd, Xuan Huong collective, and Anh Dao collective.

In these units, farmers produced vegetables with quantity and types ordered by supermarkets so they don’t worry about seasonal price dips. Furthermore, the distributors are active in their source of supply to ensure quality and standards.

This shows that for agricultural production activities, especially fresh products such as vegetables, market research and consumption network organisation are urgently needed. However this is not easy for farmers, and it should be supported by the State.

Indeed, over the past time, Lam Dong province had many activities to support farmers such as approving vegetable production area planning until 2020 for sustainable and effective development, associating production with processing and consumption of products.

In addition to infrastructure investment, promotion of scientific and technological application to improve the quality of fruits and vegetables, the province also pays attention to attracting investors in purchasing and processing products; building links between households, cooperatives, and businesses in the supply of agricultural materials and consumption of products; strengthening trade promotion, market development, building transaction floors for vegetables, fruits and flowers to create favourable conditions for businesses to participate in trading.

Vietnam looks to US$2.2 billion in cashew export

The Vietnam Cashew Association (Vinacas) targets to export around US$2.2 billion worth of cashew products this year.

According to Vinacas at a meeting last Wednesday, to obtain the cashew export of US$2.2 billion, with some US$1.8 billion of cashew nut exports, Vietnam has to import around 650,000 tons of crude cashew from Africa and Cambodia.

The cashew volume of the 2014 crop is estimated at 350,000 tons, which can meet only 35% of the domestic processing demand.

Vietnam imported 651,000 tons of crude cashew last year and obtained an export turnover of US$621 million, up nearly 96% in volume and over 83% in value from 2012.

Exports of cashew nut totaled 264,000 tons worth US$1.66 billion, up over 19% and nearly 13% respectively. Meanwhile, the total export value rose to nearly US$1.9 billion inclusive of cashew oil and deep-processed cashew products.

Vinacas forecasts that the global demand of cashew nut will rise. However, exporting enterprises will have to face trade barriers in many countries like the amended Food Safety Modernization Act (FSMA) of the U.S. Food and Drug Administration.

The U.S. is still Vietnam’s biggest importer of cashew nut with 30% of the export volume, followed by China and Europe with 25% each.

Falling buying power pushes up sugar inventory

The sugar inventory volume of factories recorded on February 15 amounted to nearly 420,000 tons, or 80,720 tons higher than last year’s same period, while the volume sold between January 15 and February 15 was 163,210 tons, down 8,920 tons year-on-year, according to the Vietnam Sugar Association.

Explaining the increasing sugar inventory in the year’s first two months, the head of a sugar firm said that domestic sugar was facing harsh competition with sugar smuggled from Thailand. The price of Thai sugar sold in Vietnam is 5-10% cheaper than that of locally produced one, he said.

Besides, after a period of boosting production of Tet confectioneries, firms have lowered the sugar use, affecting the buying power of sugar, he added.

According to sugar firms, with the current price of over VND12,000 a kilo, sugar factories suffer losses of over VND1,000 for every kilo they sell. Despite incurring losses, firms cannot lower the price of sugarcane they buy from farmers.

Sugarcane is now bought at VND930,000 per ton, equivalent to last year. Meanwhile, a kilo of sugar was priced at VND14,000 at this time last year.

According to updated statistics of the Ministry of Agriculture and Rural Development, the sugar price continues to drop by VND500-1,000 per kilo from last month. The current wholesale price of white sugar at Nong Cong, Son La, Nghe An, Quang Ngai, Ben Tre and Con Tho factories ranges between VND12,000 and VND12,600 a kilo.

Statistics recorded on February 15 showed that sugar factories had produced 835,000 tons, up 50,500 tons year-on-year.

Housing price falls, office occupancy rises in city

The housing price in HCMC continued the downward trend in the fourth quarter last year while office developers enjoyed a slight rise in occupancy, according to a report of Savills Vietnam on the real estate price index in the city.

Savills Vietnam said housing prices slightly decreased in the quarter with the absorption rate at 11%. Trading volume of housing was down by 7% over the previous quarter but was up 48% year on year.

Key factors that helped attract homebuyers included the reputation of the investors in keeping their promise on carrying out projects on time, and financial support from banks who assure borrowers with stable lending rates, the report said.

In the coming quarters, the housing trading volume is expected to continue rising and the housing price index will become stable, it said.

Also in its report, Savills said office rents have almost stood still since the third quarter of last year. However, the occupancy has risen.

During the fourth quarter of last year, 18,000 square meters of office area was occupied, a 58% fall compared to the previous quarter but a rise of more than 35% over the same period of 2012.

Savills Vietnam predicts that in the next three years, with the increase in demand for office space while supply being limited, the office market in HCMC will improve.

The office price index is expected to slightly increase in the first half of this year and strongly rise in the second half. By next year, the office market will have recovered.

Thanh Da condo buildings to be demolished soon

Residents in two Thanh Da condo buildings No. 4 and 6 in Binh Thanh District will be urgently relocated and the crumpling structures will be demolished soon, authorities said after a meeting on the issue on Monday.

“We are working with the municipal Department of Construction to determine the final solution, which will be announced right in this month (on the relocation),” said Duong Hong Thang, vice chairman of Binh Thanh District, after a meeting with HCMC leaders on Monday.

A well-informed source said the HCMC government has agreed to buy all 1,050 condos from a project currently under progress in Ward 12 not far from Thanh Da. These condos, which will be handed over to the city government this June and September block by block, will be sold or leased to those people who are to be relocated from Thanh Da condo buildings.

Late last year, HCMC Vice Chairman Nguyen Huu Tin assigned Binh Thanh District authorities to prepare a project to relocate people from the two above-mentioned Thanh Da condo buildings and to develop a new complex on the premises.

Under the city government’s decision, Binh Thanh authorities will select a financially-capable investor to develop new condo buildings on the premises of the two Thanh Da condo buildings and other nearby buildings.

The city government has also approved a proposal by the municipal Department of Construction to cancel a project earlier awarded to Vuon Xanh Real Estate Co. to develop an apartment complex on the premises of Thanh Da building covering 7.73 hectares.

Regarding the policy for residents in the old Thanh Da condo buildings, the compensation will be made with new condos, either at the new apartment complex in Ward 12 or other condos available under the district government.

Residents will not have to pay extra sums if the new condos are the same in sizes with the old ones. If the new condos are bigger, they will have to pay the difference at the market price.

The new apartment complex project in Ward 12, which started construction in late 2009, covers nearly 28 hectares bordered by Chu Van An and Nguyen Xi streets. The facilities there include condo buildings up to 20 stories high with 1,050 apartments of 60 to 90 square meters, a park and green areas covering over 8.1 hectares, a kindergarten, a primary school, a clinic and other public facilities.

Keppel Land launches Riviera Point with easy payment

Keppel Land Vietnam says it has designed a new flexible payment scheme for its high-end condo project Riviera Point to facilitate the sale program, as well as to meet the demand for quality homes from buyers.

The payment scheme, starting from this month, allows potential homebuyers to be able to own a home with a 50% down payment while the remaining amount will be paid over two years with no interest.

The company says this “move in with 50% payment” program follows the success of a similar campaign at The Estella in HCMC’s District 2.

Situated along the 40-meter wide Ca Cam River south of HCMC, Riviera Point is developed in phrases with a total of 2,400 units spread across 12 residential towers. When completed, the construction will be the tallest development in District 7.

Doan Anh Hung, general manager of Keppel Land in Vietnam, said despite the challenging market conditions, both Keppel Land and its joint venture partner Tan Truong were committed to completing Phase 1A on time.

Topped up in last year’s December, the first phrase includes three residential towers comprising some 540 apartments, with the selling price starting from VND31 million per square meter. The first phrase is planned for completion in 2015.

“Vietnam’s property market is showing early signs of a recovery with buyer confidence slowly returning. We remain confident of the long-term investment potential in Vietnam,” Hung said.

He said Keppel Land would continue to leverage its reputation as one of Singapore’s leading property developers and continue to deliver quality homes and offices in the years to come.

TMV obtains high auto part export

Toyota Motor Vietnam (TMV) on March 3 announced its business results of last year with car and components exports hitting a record high after 18 years of operation.

TMV’s export of auto parts exceeded US$39.2 million last year, which is the highest to be recorded by TMV after over nine years since its auto part export center went into operation. This helped raise the total export turnover of auto parts in nine years to US$246 million.

Major exporting products of TMV include antenna and exhaust valve that have been shipped to 13 countries and territories, including Thailand, Indonesia, the Philippines, Malaysia, India, Argentina, South Africa, Venezuela, Pakistan, Taiwan, Brazil, Egypt and Kazakhstan.

Last year TMV achieved a record export volume with over 31,000 units. Besides, it set a record of auto sales with 33,288 units, inclusive of completely built-up ones, up 34% from 2012 and holding a market share of 34.4% in Vietnam.

Yoshihisa Maruta, general director of TMV, said that this year TMV planned to introduce new car products with many improvements and offer a series of activities for customers.

Sacombank funds tourist building construction

Saigon Thuong Tin Commercial Bank, or Sacombank, signed a credit contract with private enterprise Son Thinh last week to fund construction of Son Thinh tourist service building in Vung Tau City.

Sacombank will lend the enterprise VND350 billion in 60 months with an interest rate of 13% per annum. This is part of the bank’s scheme to give assistance to real estate enterprises.

The project includes a commercial center, two basements and 400 condos with the total investment of over VND780 billion. The flats are from 100 to 160 square meters each and priced from VND19-25 million each square meter.

Sacombank will also give financial supports to homebuyers of the project with loans up to 70% of the condo value.

Phan Dinh Tue, deputy general director of Sacombank, said in a statement released last week that the bank launched three preferential housing credit packages for individual customers in 2013 with the total value of VND3.2 trillion. Earlier this year, the bank made VND1 trillion more worth of loans available for homebuyers.

Farmers earn big bucks from growing grass for cows

Farmers contracted by the Vietnam Dairy Products Joint Stock Company (Vinamilk) to grow grass and corn as feed for dairy cows are earning over VND100 million per hectare, and a senior executive of the dairy company.

Vuong Ngoc Long, technical director of Vinamilk, said the company last year signed contracts with farmers to grow grass and corn on more than 1,200 hectares. However, the amount supplied by domestic farms meets only 50% of feed for the company’s dairy herd, while the other half including hay and soybean is imported from the U.S.

The average price contracted with local farmers is VND1,000 per kilo of corn stalks and VND500-600 per kilo of grass, Long added. Farmers can earn around VND60 million per crop, which enables a profit of up to VND100 million a hectare each year.

Such benefits have encouraged many local households in Thanh Hoa, Nghe An, Lam Dong, and Binh Dinh provinces to switch their farms from sugarcane into grass and corn for Vinamilk. Recently, the company has invested on about 3,500 hectares for farming cattle feed.

This year and next, Vinamilk will develop four more dairy farms with 36,000 head in Tay Ninh and Thanh Hoa provinces, raising the company’s total herd to 46,000 cows in nine farms. Still, such a herd can supply only 40% of the company’s dairy processing demand.

“Due to a lack of farming areas for fresh feed in Vietnam, the company is proposing the Government help solve this issue”, Long said.

A shipment of 2,000 pregnant dairy cows arrived in Vietnam on Tuesday and this is the first batch out of 5,000 pregnant cows that will be imported by Vinamilk from the U.S. and Australia this year.

Saigon Co.op to open 30 more stores in 2014

Saigon Co.op, owner of the Co.opmart supermarket chain, targets to open 10 supermarkets and commercial centers and 20 food stores while reaching total revenue of VND25 trillion this year.

Speaking at a review meeting in HCMC on Wednesday, a Saigon Co.op leader said that two more Sense City commercial centers will be launched into operation in the Mekong Delta this year with the combined capital of VND500 billion, taking to three the total number of Sense City centers in the region.

Saigon Co.op will also open eight Co.opmart supermarkets in HCMC, Hanoi, Daklak, Dong Thap and Pleiku to raise the total number to 76. The supermarkets are invested with VND60-80 billion each.

In addition, the retailer has plans to launch 20 more Co.op Food stores in HCMC, taking the total number to over 90.

Saigon Co.op will expand cooperation to compete against foreign retailers that have made deep investment in the domestic market.

To meet target revenue of VND25 trillion and growth rate of 14%, Saigon Co.op will focus on restructuring, logistics improvement and manpower management.

For international cooperation, Saigon Co.op and Singapore’s NTUC FairPrice launched Co.opXtra Plus supermarket into operation in HCMC’s Thu Duc District in 2013.

It has also cooperated with Mapletree to develop SC VivoCity shopping mall in District 7 with total investment of US$100 million. The project is expected for opening in 2015.

Last year, Saigon Co.op obtained VND22 trillion in revenue, up 13% against 2012.  

Sacombank yet to find strategic partners

Sacombank has recently announced it will increase foreign room to 30% against the current level of 10% as it has yet to find strategic investors that can hold a 20% stake in the lender.

In May, 2013, Sacombank closed foreign ownership limit (FOL) ratio at 10% instead of 30% as regulated in prevailing laws. The bank set aside the 20% stake for foreign strategic partners after ANZ Bank walked away.

Sacombank Chairman Pham Huu Phu told the Daily that the bank has yet to find any strategic investors after negotiating with many foreign banks, including a number from Japan, in recent times.

Difficulties of Sacombank and the entire banking system have obstructed its negotiation process. Some foreign organizations have given gloomy forecasts about the local banking network, so Vietnamese banks have been at a disadvantage during negotiations with foreign partners.

In addition, many investors are expecting an FOL hike in banks.

“They wish to hold up to 49% in banks for better management, not just 20% like now,” Phu said.

Therefore, it is high time to increase foreign room to raise liquidity of shares and give a boost to share prices, he added.

Sacombank is also seeking approval to turn its branch in Laos into a subsidiary bank. The plan will be realized in the first quarter.

In 2013, the bank reported credit growth of 14.8% with total outstanding loans of over VND110 trillion. Sacombank will organize its annual general meeting on March 25.

Foreign, joint-venture banks post strong growth

Foreign and joint-venture banks have for the first time taken the lead in assets growth, which is put at 26.9% in the year to the end of 2013, according to statistics of the central bank.

Meanwhile, total assets of State-owned commercial banks picked up a slight 13.7%, and those of commercial joint-stock banks rose 14.8%. Finance and finance leasing firms were still in distress as their assets plunged 57.7% during the period.

Industry sources said they were surprised at the assets growth of State-owned and joint stock commercial banks. As 2013 was a tough year with credit remaining sluggish and bad debt staying high, such assets growth rates enjoyed by local banks was impressive.

A bank’s total assets do not reflect the true nature of its growth but their growth figures raised questions.

The return on asset (ROA) and return on equity (ROE) of the banking sector was 0.49% and 5.18% by late 2013 respectively, both lower than in late 2012. This suggested the health of local banks deteriorated last year.

The local banking system reported total assets of over VND5,700 trillion as of end-2013, rising over 13% against late 2012. Its total equity surged nearly 10% to around VND467 trillion, of which State-owned banks reported a jump of 21.3% due to strong mobilization while joint stocks banks gained growth of just 6.5%.

Total chartered capital of the banking system was nearly VND424 trillion, up 8.1% against late 2012. The loan-to-deposit ratio was 84.7% while the capital adequacy ratio (CAR) was 13.2%.

Dragon Capital’s bond funds merged

Fund manager Dragon Capital has merged VDeF-A and VDeF-B under the Vietnam Debt Fund SPC (VDeF), forming a general portfolio to improve investment and risk management.

The merged fund now has total asset of US$38.5 million. Converting all bonds in the VDeF-A into the VDeF-B was approved at Dragon Capital’s shareholder meeting in Hong Kong last month.

Established in 2007, VDeF is an open-ended Cayman Island-registered fund that seeks sustainable profits in the local debt market. It has been listed on the Ireland stock market in Dublin.

The VDeF-A fund concentrates on government debts and debts of State-owned enterprises. Meanwhile, the VDeF-B has a broader investment strategy with corporate bonds included.

VDeF has made strong growth over the past three years with VDeF-A and VDeF-B rising 9.25% and 10.36% respectively. With the results, the two funds took the lead in the Emerging Market Corporate Debt report announced by the analytical service provider Camradata recently.

Banks awash with spare capital as demand stays low, SBV says

Local banks have seen liquidity soaring up due to weak consumption, falling consumer price index (CPI), sluggish trading after the traditional Lunar New Year holiday, or Tet, and low capital demand, according to the State Bank of Vietnam (SBV).

Speaking at a news briefing last week, SBV reported that credit of the banking system as of February 20 dropped 1.66% against late 2013. In recent years, credit has always seen low growth or even declined in the early months of year.

Credit in dong declined 1.94% while foreign-currency credit rose 0.11%.

The forex market and exchange rate saw stable developments in the first two months of this year. The central bank continued to buy foreign currencies to supplement foreign reserves.

As of February 26, banks’ exchange rates had been stable, fluctuating between VND21,080 and VND21,120 to the U.S. dollar.

Earlier, speaking at the Government’s regular meeting, SBV Governor Nguyen Van Binh said that the central bank bought over US$4 billion to spur foreign reserve in the first two months.

As banks have been sitting on huge capital, SBV has not given refinancing loans to lenders over the past time, Binh said.

Explaining redundant capital at banks, Binh said the State Treasury is still depositing over VND57 trillion at credit institutions. The central bank wants to speed up disbursement and has requested the Government and related ministries to boost bond issue in the first quarter of 2014.

Mobilization rates have dropped back after Tet, with those of tenors from one to two months dropping by 0.3 to 0.5 percentage point. Lending rates have also been stabilized.

Doan Thai Son, deputy head of legislation under the central bank, said that SBV is still supervising restructuring plans of nine weak banks. Aside from eight banks that have presented their restructuring schemes, the remaining bank has also submitted its plan with participation of foreign investors.

As foreign ownership limit is still low, the Government will consider restructuring projects on a case-to-case basis. If the plans are not approved, credit institutions will have to undergo more drastic measures.

Meanwhile, Nguyen Quoc Hung, vice chairman of Vietnam Asset Management Company (VAMC), said that VAMC has bought VND39 trillion worth of bad debts from banks versus its 2013 target of VND30 trillion. The enterprise has issued VND31 trillion worth of special bonds.

Some banks have sought approval from the central bank to provide them with refinancing loans basing on value of the special bonds issued by VAMC. However, no banks have obtained capital via this channel so far.

VAMC is appraising VND7 trillion worth of debts and has plans to buy around VND10 trillion in the first quarter.

Banks cut interest rates to boost sluggish lending

Local banks have slightly lowered lending rates to step up sluggish demand for loans following a reduction of deposit rates.

Speaking at a business matching session between companies and banks last Thursday, Nguyen Van Binh, governor of the central bank, said he would call for banks to further cut lending rates.

Interest rates for depositors last year dropped to below 7% per annum for tenors of less than six months, so it is tough for the central bank to go for another rate cut as inflation control remains a priority this year. However, banks should find ways to lower lending rates to buoy consumption given the low consumer price index (CPI) in the first two months this year.

“This is an opportunity for banks to cut lending rates by 0.5 percentage point. The central bank has lowered the lending rate for the VND30-trillion home loan program to around 5% a year, so banks should follow suit to support enterprises and citizens,” Binh said.

Short-term lending rates offered within the bank-business connectivity program hovered at around 9% in late 2013. Banks should reduce short-term lending rates to 7-8% while maintaining medium and long-term rates at around 10%, compared to the 10-12% range last year. Binh said that if it was done, lower rates would benefit corporate borrowers and the economy as a whole.

The central bank has also proposed the Government support the agricultural and rural sector, especially enterprises applying high technology. In recent times, the central bank has given assistance to TH True Milk Company and An Giang Plant Protection Company.

In fact, the current lending rates offered by banks are lower than those before Tet holiday.

Pham Linh, deputy general director of Orient Commercial Bank (OCB), said OCB reduced lending rates by 0.5 percentage point after Tet. At present, the bank’s short-term lending rates range from 9.5% to 11% and medium to long-term rates from 11% to 12%.

Phan Huy Khang, general director of Sacombank, said the bank’s medium to long-term rates are 11-12% and short-term rates 9-10%.

During the meeting, four banks in HCMC – Sacombank, Agribank, VietinBank and Vietcombank – signed credit contracts to lend over VND800 billion to 11 corporate clients. The interest rates range from 6 to 8.5% for short-term loans and 9-11% for medium to long-term loans.

Last year, the city government organized 28 business matching sessions between banks and businesses, with over VND13.7 trillion loans lent to 654 enterprises, family-run businesses and cooperatives. VND12.3 trillion of this amount has been disbursed.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said banks would continue lending this year, with priority going to high-tech firms. Local banks expect to lend VND156 trillion this year.

Admin procedures for businesses to be handled faster

The technical system connecting ministries participating in the first phase of the national one-stop service mechanism was officially launched last week in Hanoi, enabling enterprises to shorten the process of conducting administrative procedures.

The Ministry of Finance, the Ministry of Industry and Trade, and the Ministry of Transport will perform procedures via the one-stop service mechanism, also called single-window system, including e-customs declaration form, clearance decision, goods clearance, notice of ship arrivals and departures, departure permit, and transit permit. The mechanism will also include registration to import ozone-depleting substances, application to import industrial explosives, application to have Kimberley certificate regarding crude diamond trade, and notification of online dossiers received.

Deputy Prime Minister Vu Van Ninh said that the technical connection with the three ministries was an important beginning for ministries and agencies to conduct administrative procedures on the national one-stop service system sufficiently and comprehensively. This is also a good preparation for deploying the following phases before conducting international connection, he added.

The event demonstrates the Government’s commitment to ASEAN countries when ratifying the agreement on implementing the national single window mechanism and the ASEAN single window mechanism as well as shows commitments of ministries on innovation to support businesses.

Ninh requested ministries, agencies and localities to promote administrative reform and simplify procedures while still ensuring the State management and legitimate interests of businesses and the people.

Duties and tasks of ministries and agencies involving in the implementation of the single window mechanism should be defined. Besides, the implementation should be reviewed after a period of time before being expanded in accordance with the road map set by the Government and the national steering committee.

The ASEAN single window mechanism and the national single window mechanism are regarded as the first and important step of ASEAN member countries in reforming and simplifying administrative procedures concerning export-import activities to meet the integration and development demands of each country as well as to boost connection and cooperation among the countries.

The test use of the national single window mechanism started under Decision 48/2011/QD-TTg of the Prime Minister on August 31, 2011.

HCM City to have one more software park

The project to build Quang Trung 2 Software City will be presented to the HCMC government this June, said deputy director of Quang Trung Software City (QTSC) Nguyen Hai Long.

The project aims to attract investments of local and foreign enterprises in outsourcing, researching and developing information technology (IT) products and solutions.

“We have finished making the detailed planning and will present it to the city government in June,” Long said.

According to Long, three locations where the project can be developed are being considered.

QTSC is also working with Lam Dong and Nam Dinh provinces on small-sized software parks. Besides, QTSC is coordinating with Nam Dinh Province to build a data center to serve the demand of enterprises and agencies in the province.

Total revenues earned by IT enterprises in QTSC were estimated at VND2.865 trillion last year, up 35.5% from 2012. Last year’s export value rose by 39.7% to US$70.85 million.

QTSC attracted 21 IT enterprises last year, raising the total number of enterprises operating in QTSC to 108.

Private, FDI sectors boost city’s budget revenue

The budget revenue of HCMC amounted to VND23.9 trillion in the first two months of 2014, with revenues collected from domestic private enterprises and foreign-invested enterprises accounting for 53.4%, said the city’s Department of Finance.

The department noted that revenues from the business community surged 21% year-on-year, indicating economic recovery. Of the total revenue, centrally-governed State-owned enterprises contributed VND3.11 trillion and local State-owned enterprises some VND2.31 trillion, but over VND6 trillion and VND6.76 trillion came from the domestic private sector and FDI enterprises respectively.

The department said at a meeting on the January-February socioeconomic situation last week that most of the target for budget collection has been achieved. The 21% rise in tax payment from enterprises has indicated a sharp recovery in enterprises’ operations.

However, investment in the city’s economy this year to date has shown contrasting developments, said Thai Van Re, director of the city’s Department of Planning and Investment. Re said that foreign investment is rising while domestic investment decreased.

In the two-month period, the domestic investment has declined 14% with only VND131.6 trillion of fresh investment registered while the city’s FDI rose 226% year-on-year to nearly US$217 million.

Re said that export value of the city totaled US$4.1 billion in two months, down 2.5% year-on-year. In January, the city’s export value reached almost US$2.4 billion, dropping 10.3% year-on-year.

A fall in export value is due to the lower export volumes of many kinds of core export products including coffee, computer, electrical products and components, shoes and clothing.

IP tenants fret about relocation

Enterprises at Bien Hoa 1 Industrial Park in Dong Nai Province are frightened at the possibility of being forced to relocate their factories to new places in the next couple of months, as such a move will cost them dearly in terms of labor and infrastructure.

Most tenants in the IP have objected to the plan, citing huge damages to the production, while the park owner Sonadezi has reiterated its plan to develop a commercial-urban complex on the premises of the IM now.

Nguyen Thi Kim Vinh, deputy general director of Dien Quang Lamp Joint Stock Company, told the Daily that the company had two workshops at Bien Hoa 1 IP with 500 workers. If the workshops are moved to Giang Dien Industrial Park as suggested, the distance from there to the company’s main office in HCMC as well as its other factories is longer, not to mention costs for new workshops, she added.

According to Vinh, what is more concerning is the loss of laborers. Workers of Dien Quang are experienced and well-trained but most of them may not work for the company any more if the workshops are relocated. Meanwhile, if Dien Quang operates shutter buses, production costs will be pushed up, making it hard for the company to compete with cheap imported products.

For others, the relocation would mean a waste of existing facilities.

Bien Hoa Steel Joint Stock Company (Vicasa) has recently spent VND40 billion on an emission treatment system. If Vicasa moves its factory from Bien Hoa 1 to Nhon Trach Industrial Park, the investment in the emission treatment system is meaningless.

According to Le Van Cam, general director of Vicasa, the company has hired 26 hectares at Nhon Trach for its relocation plan.

However, Cam said that the budget for relocation at this point of time was limited as Vicasa had earned tiny or no profits in recent years.

Vicasa earned only VND500 million in profits last year. Due to the steel oversupply, its factory runs at a capacity of 120,000 tons per year compared to the designed capacity of 180,000 tons.

Vicasa forecasts to lose over 140 among some 490 skilled local laborers if the relocation is enforced.

“The company will comply with the province’s relocation plan but enterprises need supporting policies,” Cam said.

A survey of Sonadezi, investor of Bien Hoa 1 Industrial Park, shows that only 15% of the enterprises operating at this industrial park agree to move while 44% do not want to.

Many enterprises say they are anxious when moving to Giang Dien or other industrial parks, which are 20-60 kilometers away. They also worry over moving and installing equipment and machines, and having no products for customers or losing the market when conducting the relocation.

Speaking to the Daily, a leader of Sonadezi said that Sonadezi would start to change the functions of Bien Hoa 1 Industrial Park into an urban-service-commercial area in the middle of this year with an initial investment estimated at some VND14.65 trillion.

Sonadezi is currently seeking opinions of ministries and agencies about tax and credit policies for relocated enterprises, solutions regarding capital sources, and land for their relocation.

Bien Hoa 1 Industrial Park established in 1963 covers an area of 324 hectares and currently has 104 enterprises with over 26,000 laborers.

Each day sees 100 cars imported into Vietnam

This month’s auto imports are estimated to amount to 3,000 units, or 100 units a day, equivalent to that in January but up by around 2,000 units from a year ago, according to the General Statistics Office.

The import value is down to US$48 million this month from US$65 million recorded in January.

Around 6,000 completely built-up cars have been imported into the country in the first two months with a total value of some US$113 million, up 39.8% in volume and 26.1% in value.

Auto traders expect a possible pickup in business this year as the city government has lowered the automobile registration fee for under-ten-seat vehicles to 10% from the previous 15%.

The auto market has been warming up since the tax on completely built-up cars imported from Southeast Asia markets was reduced to 50% early this year from the former 60%. And demand of Vietnamese consumers remains strong.

The Vietnam Automobile Manufacturers’ Association (VAMA) has forecast around 120,000 units will be sold this year, up 9% from last year.

Auto imports last year reached nearly 34,500 units worth US$709 million, up 25.9% and 15.2% respectively.

Daklak to register Buon Me Thuot trademark in China

After winning the Buon Me Thuot trademark back from an enterprise in China’s Guangzhou, the Central Highlands province of Daklak will take steps to register for appellation protection for the name in China.

Daklak has asked for a financial support of VND100 million from the Vietnam Coffee and Cocoa Association (Vicofa) to pursue the process of registration for geographical indications of Buon Me Thuot across China, the EU and some other important markets, said Nguyen Viet Vinh, general secretary of Vicofa. Buon Me Thuot is the capital city of the province.

Vinh said about five Vietnamese coffee trademarks will join an upcoming trade promotion program in Shanghai to promote the brands and values of Vietnam’s coffee products in this market.

Meanwhile, the EU has been supporting Vietnam in registering geographical indications for its products in this leading market, Vinh said.

On Sunday, Vicofa got the official judgment from China’s Industry-Trade Ministry on cancelling the trademark of Buon Me Thuot Coffee registered by a Chinese firm named Guangzhou Buon Me Thuot Coffee Co. in this market.

That Chinese ministry’s judgment was given on the basis that Buon Me Thuot is a famous place in Vietnam for growing coffee and has been registered with geographical indications in Vietnam since 2005.

In addition, Guangzhou Buon Me Thuot Coffee Co. did not lodge any appeal to a higher court in China, so the judgment will be effective 45 days after February 16 when the judgment was given.

CJ, Sumitomo cooperate in flour production

South Korea’s CJ Cheil Jedang Corporation under CJ Group and Japan’s Sumitomo Corporation have set up a joint venture to develop a wheat flour plant in Vietnam.

The venture called CJ-SC Global Milling LLC commenced work on the wheat flour factory at My Xuan B1-Tien Hung Industrial Zone in Ba Ria-Vung Tau Province on Thursday.

The US$44 million facility will be equipped with CJ Cheil Jedang’s production technologies. It is expected to be up and running in May 2015 and its markets will be Vietnam and regional countries.

CJ Group already has a Tous Les Jours bakery chain in Vietnam, so the forthcoming factory will be able to sell its products to the bakery chain.

Nearly US$70 million for refinery maintenance

Dung Quat Oil Refinery will stop operation from May until early July for routine maintenance at a total cost of nearly US$70 million, said Nguyen Hoang Yen, head of science and technology at Vietnam Oil and Gas Group (PVN).

This is the second routine maintenance since the refinery started operation in February, 2009, Yen told the Daily on Monday. The maintenance this time costs much more than the first one in July, 2011, which was at around US$40 million.

According to Yen, routine maintenance is performed every three years. Contractors participating in maintenance are from South Korea, Japan and Asian countries.

With this maintenance, the refinery’s annual production volume will be reduced by around one million tons.

Dung Quat Oil Refinery having a production capacity of 6.5 million tons per year is operated by Binh Son Refining and Petrochemical Co., Ltd.

According to PVN, Binh Son earned VND2.806 trillion in after-tax profit last year and has paid over VND26 trillion to the State budget.

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