$11m in funds to help protect forests

The German Government and the World Wildlife Fund (WWF) office in Germany have committed 8.2 million euro (US$11.7 million) to enhance the protection of forests near the Viet Nam-Lao border, the German Embassy announced yesterday.

The four-year project "Annamites Carbon Sinks and Biodiversity" aims to prevent forest degradation and promote sustainable management of 200,000ha of forest in the central provinces of Quang Nam and Thua Thien-Hue, and a national park in Laos.

The area, part of the Truong Son Mountain Range and a portion of the biggest mixed-forest region in Asia, is home to many endangered species such as Indochina Tiger, Saola (Pseudoryx nghetinhensis) and douc langurs (Pygathrix).

Project manager Nils Meyer said the project was a milestone in the joint commitments made by the German and Vietnamese governments to prevent the degradation of global biodiversity.

A majority of the funding, $10.3 million, will come from Germany's Federal Ministry for the Environment, Nature Conservation and Nuclear Safety through KfW Entwicklungsbank (the German Development Bank). The remaining funds will come from the WWF German bureau.

National road set for upgrade
 
The HCM City People's Committee yesterday signed a BOT (Build-Operate-Transfer) contract and handed over an investment certificate to IDICO Infrastructure Development Investment Joint-Stock Company (IDICO-IDI) to build three additional traffic works on National Road 1A from An Suong to An Lac.

Under the contract, traffic circles will be built at the intersections of National Road 1A with provincial roads 10 and 10B.

In addition, a 20.2-kilometre lane barrier separating different kinds of vehicles will be built by IDICO-IDI. Total cost of the project is VND704.5 billion (US$33.87 million).

The work will begin in the fourth quarter of this year and is expected to be completed after 18 months.

IDICO-IDI is expected to collect tolls until February 2033.

The project would help ease traffic congestion and reduce the number of traffic accidents on National Road 1A from An Suong – An Lac, which runs through Binh Tan District, District 12 and Hoc Mon District, said Tran Quang Phuong, director of the city's Department of Transport.

The BOT project initially upgraded and expanded National Road 1A from An Suong – An Lac into an eight-lane road. That work was completed in 2005 by IDICO-IDI, which began toll collection at that time as well.

Caution advised on bank reform
 
Restructuring the banking sector is necessary to improve its safety and soundness but the work should be done with caution if it is to be effective, high-ranking financial official say.

Nguyen Van Binh, Governor of the State Bank of Viet Nam (SBV), said recently that the domestic banking sector, with 80 credit institutions, was large compared to the current scale of the economy.

Vu Viet Ngoan, chairman of the National Financial Supervisory Committee, concurred, adding it was necessary to eliminate weak banks.

Many financial analysts said that restructuring the domestic banking sector was not a new issue. It had been dealt with by the central bank for a long time but the process was very slow.

Former central bank governor Cao Sy Kiem said the first task in restructuring was to review the entire banking sector in order to have a full understanding of its real situation, including its weaknesses and shortcomings.

Measures should be based on these findings and be concretised for each bank to ensure effect-iveness of the renovation process, Kiem told the Dau tu (Viet Nam Investment Review).

While the restructuring effort should be made soon, banks should first be classified into groups, Ngoan said.

Many measures are usually applied, such as increasing the prescribed capital or issuing other criteria to ensure safety, but each group of banks would need different measures in the restructuring effort, he said.

Other experts said that restructuring the banking sector should be implem-ented in phases since most domestic banks were young and cannot develop strongly immediately.

Nguyen Duc Kien, vice chairman of the National Assembly's Economics Commission, suggested that the legal framework for merger and acquisation of banks be fine-tuned soon to facilitate the restructuring process.

But Kien disagreed with the policy of cutting the number of banks.

Small or medium banks should not be forced to be merged into large ones if they were still able to contribute to the country's socio-economic development, he said.

The most important factor in restructuring the banking sector was to accurately evaluate banks' operations as well as their contributions to the national economy. Banks' effectiveness must be given top priority, Kien said.

Delayed hospital is in good health

United States-based Keystone Global Group is finally making good on its long-delayed commitment to build an international hospital in Hanoi.
 
The investor recently announced it would inaugurate the project, known as Hanoi American International Hospital, in the next two months.

The hospital, capitalised at $50 million, is the second healthcare foreign-invested project in Hanoi, following the French Hospital. The inauguration event will end a 14-year delay.

Keystone Global Group said it had to delay the project’s construction to wait for Ministry of Public Security’s and Ministry of Defense’s approval to build a helipad at the roof of the hospital. This procedure was completed last year.

“We are in the final stage of construction work and will operate this hospital at the year’s end,” said Nguyen Huu Lam, deputy director at Hanoi American International Hospital.

Lam said the 500 bed-hospital would provide services for Vietnamese and foreigners living in Hanoi as well as surrounding provinces. The Hanoi American International Hospital will contribute to fulfilling the gap between rising demand and the country’s poor healthcare system.

A recent The Nielsen Company survey showed that healthcare was among the biggest concerns of Vietnamese.

London-based Business Monitor International Company last month forecasted Vietnam’s healthcare expenditure would augment from $7.93 billion in 2010 to $8.66 billion this year. French Hospital - the first international private healthcare provider in Vietnam – last year raised the number of bed at the hospital from 68 to 100 to meet the rising healthcare demand.

Domestic Intracom Company, which replaced the Korean investor Yukjin at $198 million Oriental Health Care Complex in Hanoi’s Tu Liem district, is speeding up project construction this year.

Oriental Health Care Complex is located on a 9.5 hectare site, consisting of 57 high-tech medical departments and 1,000 beds. The investors plan to receive around 6,000 patients each day and will help reduce the current pressure on the region’s other hospitals.

Lang Son looks to bridge gaps

Infrastructure problems are jeopardising the future of Lang Son province’s largest ever foreign-invested project.

The Planning Department of the province’s 394 square kilometre Dong Dang Border Gate Economic Zone told VIR that Dragon Automobile Company Limited The North of Vietnam’s $50 million project at the zone’s Van Lang district was without power, water and access roads although the project was expected to go live at the end of the year.

Dragon Automobile plans to manufacture and assemble a range of automobiles at the plant.

The company is a joint venture between a Chinese businessman named Zeng Fan Yu and Lang Son-based Bao Ngoc Export-Import Trade and Service Joint Stock Company with the latter holding a nearly 10 per stake. The venture was granted an investment certificate in August, 2008.

Being the first project of the type and largest foreign invested project in Lang Son, this project was expected to help lay the foundation for the province’s automobile industry, said the department’s head Hoang Van Quyet.

“The project’s site clearance has been completed with the factory now being built. Its Japanese and Chinese technologies will be imported soon. However, there are no power and water provision systems or roads for the project,” Quyet said.

The province’s authorised agencies have met many times to find infrastructure-related solutions for the project. However, nothing has been done yet, according to the department.

The project is located at the zone’s non-tariff area, which borders on China.

Quyet said the area’s planning into a non-tariff area had already been approved by the province’s authorities for years, but the government’s specific regulations for the non-tariff area were still unavailable.

“The investors want to know what specific incentives and priorities they will get when investing here. Capital is not a big problem for them,” he said.

As designed, the project’s first phase is to run from 2011 to late 2013. Some 12,000sqm will be used to manufacture and assemble a total of 6,000 lorries, tourist cars and seven-seat cars annually.

This figure would be raised to 30,000 per year during the second phase, from 2014 to 2019, and to 100,000 per year during the third phase, from 2020 to 2022. At that stage, the production area would be expanded to nearly 34,000sqm.

All products would be exported to Asian countries, while materials and spare parts would be both imported from China and Japan. The factory would employ several hundred of local workers and make a significant contribution to the zone’s coffers, said the department.

According to the zone’s authority, site clearance problems and the current poor economic picture are hampering the zone’s attempt to lure local and foreign investment. China’s Guangdong Enterprise Association early this year asked the authority about the possibility of building a 1,600-2,000 hectare industrial park to produce industrial products. But the project was considered not feasible because no site could be found.

In a similar development, last year, the authority granted an investment certificate to locally-owned Hanoi-based Hoang Tra company for a 10ha project worth over $5 million. The company was to assemble automobiles at the zone’s Dong Banh Industrial Park. However, calculations showed that the company would have to pay a large amount of cash as compensation to households for reclaimed land. In the end Hoang Tra gave up on its plans.

In another case, Vietnam Urban And Industrial Zone Development Investment Corporation was several years ago granted an investment certificate for a project worth over VND1 trillion ($52.5 million) to construct a 143ha transit park for ASEAN goods and commodities being transported to China. However, site clearance for the project remains in its early stages.

New decree clarifies State support for investment, contracts

A decree on the provision of State credit to support investment projects and export-import contracts was issued by the Government earlier this week.

The decree, which will take effect on October 20, states that the projects or contracts must be fruitful and solvent, and the lending must include finance and debt payment appraisals from the Viet Nam Development Bank (VDB).

The maximum loan to an investment project will be restricted to 70 per cent of its total investment capital.

The figure for an export or import contract is 85 per cent of the total value of the contract.

Under the decree, maximum lending to an investment project or an export-import contract may not exceed 15 per cent of VDB's charter capital.

In special cases that require larger loans than permitted, the Prime Minister will make a decision after reviewing proposals from the Ministry of Finance.

The decree also states that borrowers, or project owners, must contribute at least 20 per cent of the total investment capital to the project in addition to ensuring the remaining necessary funding.

Loan duration will be calculated based on the payback and solvency of the project but it cannot exceed 12 years. The duration for export-import contracts is 12 months.

Investment credit interest rates will be announced after the VDB general director completes the necessary calculations based on the average interest rate of all VDB capital sources plus VDB operational costs, and receiving approvals from the Ministry of Finance.

The decree identifies 14 types of investment projects and four types of goods that are eligible for State credit.

Industrial park moves offset FDI downturn

Rising industrial park foreign investment is turning the page on a positive chapter in Vietnam’s sometimes hard luck investment story.

Total foreign direct investment (FDI) commitments are declining in Vietnam, but new industrial park investment registration shows the country is still attractive to foreign manufacturers.

Committed FDI into industrial parks nationwide from January to July was $3.315 billion, up 15 per cent against the same period last year, according to the latest statistics from the Ministry of Planning and Investment’s (MPI) Department of Economic Zones Management. In which, foreign investors committed to invest into 143 new projects in industrial parks with total investment capital of around $2.28 billion, while registering to expand investment at 129 projects worth around $1.03 billion, the report said.

Vietnam witnessed a drop in new FDI commitment during the past eight months with 26 per cent less than the corresponding period last year, but the MPI’s Foreign Investment Agency reported the biggest drop was seen in the risky property sector, which accounts for only 3 per cent of total new commitment over past eight months in comparison with 20 per cent in the same period last year.

British Business Group in Vietnam chairman Patrick Regis recently told VIR that foreign investors’ business sentiment was falling though they remained confident about Vietnam’s long-term business potential.

“Most foreign manufacturers are long-term investors so that they will have a long view on Vietnam’s solid advantages like abundant workforce, market potential and political stability rather than the short-term pains of local economy,” Prof. Nguyen Mai, Vietnam Association of Foreign Invested Enterprises chairman, said.

The investment commitment from global giant manufacturers underlines Vietnam’s attractiveness as a good manufacturing base. United States-based First Solar early this year committed to build a $300 million solar panel factory in Ho Chi Minh City.

Taiwan’s Wintek Group in March also registered to build a factory in Bac Giang province to produce touch panels for Apple’s iPhones and iPads.

In May, the world’s leading glass and glazing system manufacturer NSG Group announced to expand investment in My Xuan A industrial park in Ba Ria-Vung Tau province. Total investment will be $320 million, with both lines due to start production in 2013.

The MPI expects total FDI commitment into industrial parks this year to reach $6.5-$7 billion, accounting about 50 per cent of total committed FDI.

Distributors to hold congress

Vietnam Supply Chain, an independent association grouping over 8,000 distribution professionals, will hold a congress on purchase, manufacturing, retail and distribution in HCM City next month.

Source.Make.Deliver 2011, to be organised at the InterContinental Asiana Saigon Hotel on October 17-19, will focus on three main topics: Viet Nam sourcing and outsourcing, Viet Nam manufacturing, and Viet Nam distribution-retail.

The organisers hope to receive around 200 delegates each day from industries like retail and distribution, warehousing, logistics, automobile, electronics, construction materials, shoes and leather, garment and textiles, chemicals, food, drinks, energy, and pharmaceuticals.

Speakers will include Shashi Shekhar, founder and president of the Dubai-based non-profit organisation Supply Chain and Logistics Group, and Chris Catto Smith, a supply chain development, perishables, and logistics management specialist, and managing director of cold chain and logistics company Freshport Asia.

The congress will also feature an exhibition on advanced technology trends and best solutions for the supply chain.

Commercial center transfer on uptrend

Offices for lease along with commercial and retail center areas are usually leased out by property project developers but lately the real estate market has witnessed an upward trend of project owners selling these spaces, wholly or partially, for their partners.

The property consultant firm Knight Frank Vietnam said it has just signed a cooperation contract with Inveskia Co., a joint venture between Prudential Vietnam Fund Management, Kien A and Invesco companies. Under this contract, Inveskia is assigned to be a marketing and offering agency for the commercial area of the Imperia An Phu building in District 2.

Stephen Wyatt, director of retail service division at Knight Frank, said the Imperia An Phu project would offer to investors as much as 4,200 square meters of retail space, including a supermarket, wedding hall, restaurant, beauty salon, daycare center, private school, healthcare center and gymnasium.

The project is developed on a two hectare site, consisting of four blocks of 24-28 storey buildings with some 700 apartments and a retail section. The total investment for this project is US$130 million.

Also at Cat Lai T-junction area, The Vista project of the Singaporean property developer CapitaLand is under progress for completion after offering its products to the market in 2007. The project includes two blocks of buildings with about 850 commercial and serviced apartments, as well as retail and office spaces.

According to an unofficial source, CapitaLand has transferred the office building, serviced apartment and commercial center segments with total area of 5,700 square meters for its partner.

Earlier, VinaCapital Real Estate Company chose the property service provider Cushman & Wakefield as a broker to offer each floor or the entire Metroplex office building project in Phu My Hung urban area in District 7.

Some experts said the offer of partial office and retail spaces provided investors with opportunities to purchase and possess commercial real estate instead of renting. The acquisition of partial office building is popular in many countries but still unfamiliar to the Vietnamese market.

However, from another angle, experts saw a shortage of capital in the property market leading investors to seek new financial sources. Along with selling a complete project, offering a partial project is a new approach to capital mobilization for their other project constructions.

Regarding the office and retail area businesses, market observers said the average price of the HCMC-based offices for lease has continued to fall for ten consecutive quarters. In particular, rental price dwindled to some US$36 per square meter in grade-A offices and US$22.5 in grade-B ones.

The current market difficulties force property project owners to launch preferential policies so as to attract new tenants as well as enforce their bonds with old customers.

Meanwhile, the retail market saw no new supply for lease in the city’s central area in the past two quarters adding to the available 353,000 square meters.

According to CB Richard Ellis (CBRE), the average rental price of commercial centers is US$109 a square meter, rising by 6% against the beginning of the year. The price is US$33 per square meter for projects outside the downtown area.

Owners of these projects, due to location disadvantage, are offering competitive prices to attract more tenants.
 
BIC wants to sell 20% stake to foreign partner

BIDV Insurance Corporation (BIC) is selecting strategic foreign shareholders to whom it would sell a maximum 20% stake.

The corporation under the bank BIDV began working with some consulting firms and seeking potential partners after BIC’s first general assembly of shareholders, taking place in 2010, had approved the plan to sell a maximum 20% stake to strategic foreign shareholders.

According to a statement from BIC, Insurance Australia Group (IAG) on Monday worked with BIC management board, BIDV director general Tran Anh Tuan, and relevant boards of BIDV about their bilateral cooperation opportunities.

IAG, which obtained a total AU$7.78 billion in insurance premium in 2010 and had assets totaling AU$20.44 billion, is a large insurance group with plenty of experience in carrying out types of insurance such as bancassurance and online insurance.

“Insurance is one of the two main fields of BIDV. We will continue supporting BIC so as to maximize the profits of the system as well as providing customers with financial services package via the bancassurance channel,” said Tuan of BIDV.

Also according to the statement, IAG believed that if becoming BIC’s strategic partner, IAG could provide technical and technological assistance as well as method of governance to help BIC exploit bancassurance products in Vietnam.

Vietnam highlights Japan’s investment quality

The Vietnamese Government always highly values the quality and efficiency of Japan’s investment and called on Japanese businesses to increase their investment to develop Vietnam’s supporting industries, affirmed an official of the Vietnamese Ministry of Planning and Investment (MPI).

Addressing the fifth seminar on Vietnam-Japan economic relations in Tokyo, Japan, on Sept. 5, MPI Deputy Minister Dang Huy Dong said that Japan have recorded many achievements in manufacturing and supporting industries. Meanwhile, Vietnam boasts abundant natural resources and hardworking people to develop these industries.

The combination of the two countries’ advantages would open more opportunities and prospects for developing these industries in Vietnam, Dong said.

He confirmed that Vietnam would apply special preferential policies for Japanese investors, such as building an industrial zone (IZ) for Japanese small and medium-sized enterprises investing in supporting industries, along with exemption from legal service charges and document translation fees when registering to invest in this IZ.

Vietnamese Ambassador to Japan Nguyen Phu Binh affirmed that Japan is one of Vietnam’s most important economic partners and Vietnam highlighted the role of Japanese businesses in Vietnam’s socio-economic development and the Vietnam-Japan strategic partnership.

President of Japan’s International Friendship Exchange Council (FEC) Ken Matsuzawa shared the same view with Ambassador Binh and took the occasion to thank the Vietnamese Government and people for their valuable support to Japanese earthquake and tsunami victims since March 11, considering it a symbol of the two countries’ friendship.

At the seminar, representatives of MPI, the Ministry of Industry and Trade and northern Bac Ninh province and Hai Phong city of Vietnam briefed participants on Vietnam’s investment environment and foreign investment encouragement policy, particularly in supporting industries.

According to MPI, Japan is among the countries with the largest FDI in Vietnam over the past two decades.

By the end of July, 2011, Japan ranked fourth among 93 countries and territories investing in Vietnam with 1,560 valid investment projects with a combined registered capital of 21.6 billion USD.

PV