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BUSINESS IN BRIEF 10-10Local gold prices unpredictable

The nation has in recent days continued to see unpredictable rises in gold prices given low supply, again widening the difference between domestic and global gold prices to VND3 million a tael on Tuesday.

Saigon Jewelry Company (SJC) at 4:00 p.m. on Tuesday posted up gold prices at VND47.55 million and VND47.85 million per tael for buying and selling respectively, rising by VND300,000 against the previous day. Meanwhile, the world gold price was US$1,778.9 an ounce on the website www.kitco.com. A tael equals to 1.2 troy ounces.

SJC from the end of August has mostly sold out gold. Local people only offloaded gold for a few days after September 20, when the State Bank of Vietnam (SBV) allowed reprocessing of 350,000 deformed and non-SJC gold bars.

Nguyen Cong Tuong, deputy sales manger of SJC, said the company sold only 1,700 gold taels on Tuesday, which was low compared to the daily average of last month. SJC had to limit selling volume as it had found it difficult to buy gold.

The precious metal has shot up by 14% over the past two months, making it an attractive investment vehicle compared to bank deposits and the stock market. Meanwhile, commercial banks have continued to buy gold to secure liquidity.

A source told the Daily there were nearly 45,000 deformed gold bars being refurbished by SJC on September 20, including 9,000 SJC gold bars, with the remainder of traders and banks.

Among 305,000 non-SJC gold bars, 32,000 gold bars are produced by various enterprises, while the remaining 270,000 bars, belonging to banks, have to be reprocessed by SJC. Therefore, the gold amount at banks has to be turned from other brands into SJC brand and that does not help raise gold liquidity at banks.

Although SBV has yet to give official information on the extension of gold lending and mobilization after the November 25 deadline, commercial banks at the moment have to seek approval from the central bank in issuing gold deposit certificates.

A representative of a large lender said that his bank has failed to issue gold deposit certificates as it doesn’t have permission to do so. Therefore, the bank has no choice but to buy gold to improve liquidity and pay out to customers if gold lending and mobilization operations are banned on November 25.

However, the bank still limits gold buying given concerns that high demand will push up gold prices. Meanwhile, it is difficult to buy gold as people do not want to sell it in anticipation of higher prices, the banker said.

Nguyen Thanh Toai, deputy general director of Asia Commercial Bank (ACB), said ACB has offered higher buying prices than SJC to lure gold sellers while the bank has to seek gold to secure liquidity.

If the bank fails to pay for those withdrawing gold, it will negotiate with them to pay in cash. ACB currently is still paying interest on gold deposits, Toai said.

Experts at odds over gold mobilization

Experts attending a gold mobilization seminar in HCMC on Thursday said multiple factors should be taken into account when weighing gold mobilization as the yellow metal is a risky investment vehicle.

Nguyen The Hung, general director of VietnamGold Corp., told the seminar held by the Vietnam Gold Business Association that the country would have an additional US$10 billion if gold was converted into cash.

However, when it comes to raising gold from the public, an array of issues should be considered, such as macroeconomic stability and interests of people, traders and the economy, said Hung.

He threw support behind a scheme to issue gold deposit certificates but, he said, it will need due attention.

For example, gold mobilization must be accompanied by gold conversion via derivative transactions and gold deposits for foreign currency loans. Foreign exchange risk is also an element to consider.

A report by economist Vu Dinh Anh sent to the seminar said gold mobilization should be done via certificates issued by the central bank. Such certificates should be treated as bonds or trusts.

Selling government bonds locally is another way to mobilize gold from the people, similar to local or foreign currency bonds, said Anh.

Luong Van Tu, former deputy minister of trade, said that as long as people still saw gold as a profitable investment vehicle, gold mobilization should be allowed.

However, other experts did not share the above view. Pham Do Chi asked what gold was mobilized for, and whether the amount of gold raised would be used efficiently.

He said the central bank is not a professional gold trader while international gold trading requires professionalism. After gathering gold from the public, the central bank must sell it on local or foreign markets to collect cash.

Financial expert Huynh Buu Son disagreed with the idea of mobilizing gold by issuing government bonds. At bond issues, the Government would raise huge volumes of gold, thus pumping large amounts of cash into the economy and then piling pressure on inflation.

In addition, when bonds fall due, the Government would have to import such big amounts of gold to repay the bondholders.

Most experts pointed out shortcomings in Government Decree 24/2012/ND-CP. In particular, the restriction on the number of gold bar trading points would face public opposition as it makes it more difficult to buy and sell gold, said Nguyen Thanh Long, chairman of the Vietnam Gold Business Association.

Hung of VietnamGold said developments in the local gold market had gone against what the Government expected when introducing this decree. The gap between local and global gold prices is widening, and banks are facing a gold liquidity shortage given the regulation that only the central bank can import gold.

However, Decree 24’s biggest achievement is gold has become less attractive for investment.

Bosch opens branch in Danang

Robert Bosch Vietnam on Thursday opened its branch in the central city of Danang, marking the business expansion of Bosch in the local market.

Speaking at the opening ceremony, Martin Hayes, president and managing director for Southeast Asia at Robert Bosch, said that favorable economic conditions have encouraged Bosch to expand investment in Vietnam. He noted the company’s 2011 revenues surged 75% year on year to US$220.5 million.

Southeast Asia is a vibrant economic region and a major market in Bosch’s development strategy. Especially, Vietnam has proved itself as an active market and an attractive destination, said Hayes.

Vo Quang Hue, managing director of Robert Bosch Vietnam, said that the firm had many customers in Danang City, with big ones such as the Danang international airport project and the city’s administrative center.

Local firms bemoan sky-high land rents

Several enterprises complained on Thursday that their business is in difficulty due to land rents jumping by between eight and twenty four-fold compared to previous years.

Speaking to the Daily on the sidelines of a dialogue on policies and administrative procedures of tax and customs in HCMC on Thursday, a business owner in Dong Nai Province who declined to be named said his firm last year had to pay a land rent eight times higher than in 2010.

Based on Decree 142/2005/ND-CP on land and water surface rental, the land rent accounting for 0.5% of land price will be maintained for each project for five years. When the term is over, provincial-level Department of Finance and authorities will set a new rent level for the following term, according to the decree.

The company ended its term as of end-2010 and began a new term with a new fee fixed by competent authorities. As local land prices were revised up by eight times, the rent has also been increased accordingly.

As such, the company paid up to VND640 million for land rent last year compared to only VND84 million it paid in the previous year, thus pushing up its input costs.

Besides, those enterprises ending the land rent term after March 1, 2011 would be subject to Decree 121/2010/ND-CP, a new rule to amend and supplement Decree 142. It stipulates one-year land rental will be adjusted up by three times to 1.5% of the land price, meaning the land rent of local firms will mark up 24 times.

Similarly, businesses operating in HCMC are also facing the same woe.

In HCMC, an enterprise specializing in developing and leasing industrial parks said his company was subject to the price of VND250 for one square meter of land in 2007-2011. However, the municipal Department of Finance between late 2011 and early 2012 pulled the price up by some 24 times based on a decision of the local government.

The fact that the city authorities recalculate land prices yearly and the finance department applies the adjusted prices for enterprises is right, Deputy Minister of Finance Do Hoang Anh Tuan said. However, the sharp rise in land rent is not suitable to the current socio-economic situation when many companies are mired in difficulties, he said.

Supporting industries expo attracts 700 global brands

This year’s supporting industries expo, along with Metalex Vietnam and Nepcon Vietnam, kicked off on Thursday in HCMC with the participation of over 700 international brands.

The exhibition is hosted by Thailand’s Reed Tradex Co., the Japan External Trade Organization and the HCMC Investment and Trade Promotion Center.

According to organizers, Metalex and Nepcon exhibitions showcase manufacturing and supporting sectors in order to help local companies gain access to advanced technology in their business and production activities.

Metalex Vietnam features metalworking technology and machine tools with 500 leading enterprises. Nepcon Vietnam, meanwhile, features assembling, measurement and checking technology for electronics manufacturing industries with the presence of more than 200 brands.

The exhibition on supporting sectors has attracted over 100 domestic suppliers and Japanese manufacturing firms mainly in automobile, motorcycle and electronics parts manufacturing industries.

The combination of the three exhibitions is expected to create opportunities for domestic producers to meet new customers. Besides, it expected to help them approach the latest technology and inventions whilst offering foreign investors a chance to seek suitable local suppliers to reduce demand for component imports.

Large numbers of enterprises attending the exhibition shared the same view that Vietnam is an attractive destination to many foreign producers in the areas of electronics, automobile and electricity industries. They are confident that supporting industries in Vietnam would be a high-potential market to producers and suppliers involving machinery and equipment worldwide.

The event runs until Saturday at the Saigon Exhibition and Convention Center in District 7.

Anti-dumping warning system adds three more markets

Three more markets, namely India, Japan and South Korea, will be included in the Ministry of Industry and Trade’s early warning system on anti-dumping cases.

This was informed by Trinh Anh Tuan, head of the system developing group, at a seminar to introduce the early warning system on anti-dumping lawsuits against furniture items. The event was organized by the Vietnam Competition Authority under the Ministry of Industry and Trade and the HCMC Department of Industry and Trade in HCMC on Thursday.

The warning system is being updated, with warnings now only given to the ten major industries that export over 1,500 types of products to the five main markets, the U.S., the EU, Canada, Brazil, and Australia. The ten industries are electronic equipment, interior decoration, seafood, plastic, rubber, paper, textile, garment, footwear, and electronic components.

Since 1994, there have been 32 anti-dumping lawsuits against Vietnamese products. Two-thirds of such cases were filed against the 15 major export items, and three-fourths of them were initiated by Vietnam’s main export markets like the U.S., the EU and India.

Dumping accusations are often brought against labor-intensive industries such as seafood and leather-shoe, according to the Vietnam Competition Authority.

A representative of the Handicraft and Wood Industry Association of HCMC (Hawa) said wood processors in several EU nations and Japan had gradually become consumers of furniture products from Southeast Asia and China. Therefore, anti-dumping tariffs set by these countries against furniture are less likely.

Fresh FDI funds in city mainly sourced from old investors

Foreign direct investment (FDI) into HCMC in the year to date is mainly additional capital of operational projects, while fresh funds have been in steep decline.

The city licensed 278 new FDI projects in the first nine months, up 3.35% year-on-year, but the total pledged capital of these projects is only US$447.5 million, a drop of a staggering 76.4% over the same period last year.

Meanwhile, 85 operational projects citywide applied for capital increases in the January-September period, with a total of US$623 million added, surging 78.73% year-on-year, much higher than the total fresh capital.

Overall, HCMC had attracted US$1.07 billion in FDI in the year to end-September, equal to 47.47% of the year-ago figure, said the HCMC Department of Planning and Investment.

Though FDI inflow declined significantly, it has regained the uptrend recently. In the third quarter, 100 new FDI projects were granted investment certificates, up 10% year-on-year, with total registered capital of US$200 million, a hefty rise of 70.6% against the same period last year.

In addition, 35 operational projects raised their capital by US$128 million, taking the total newly-registered and additional FDI in the third quarter to US$327 million, picking up 32.23% over the year-ago period.

Despite the troubled property market, fresh FDI in this sector ranked first in September with over US$117.6 million poured into seven projects. Manufacturing and processing took the second place with 29 projects worth US$94 million, followed by wholesale, retail, and auto and motorbike repair, luring some US$89 million into 91 projects.

Hoi An projects could wash away

A group of luxury resort properties  on the world heritage Hoi An’s Cua Dai beach are under dire threat from accelerating erosion of oceanfront land.

\These projects include Sunrise Hoi An Resort owned by Ocean Hospitality & Service JSC, Hoi An Hideway Resort, a resort developed by Hoi An Tourist Holding Company and the other project of Cu Lao Cham Tourist JSC.

Just three years ago, those resorts were protected by a wide band of sandy beach stretching tens of metres from their construction site to the sea. Today, the sea has eroded deeply along a seven kilometre stretch of Cua Dai beach in the famous, historic Hoi An city, a popular tourist destination south of Danang.

Truong Van Bay, Deputy Chairman of Hoi An Municipal People’s Committee, said sea erosion “severely” threatened tourism property projects located on this beach. A developer has even had to stop construction of a five-star hotel and villa project because sea eroded into construction site itself after washing away the beach. Though the developer has built a small concrete dam close to villas to prevent erosion, the construction has not been resumed yet. This project looks deserted at this time.

The developer of this project refused to comment on this issue when contacted by VIR.

The current situation of those affected projects raised a question on the environmental risk assessment of their developers when deciding to invest into this area, especially in the context of that Vietnam is the most vulnerable nation to climate change. This also a warning for other resort projects located on Cua Dai beach, which so far have not yet been affected by sea erosion.

A wrong assessment on environment risk could cause losses for developers or increase investment costs at the projects. Ocean Hospitality and Service JSC, for example, had to invest more $1.5 million to Sunrise Hoi An Resort project to prevent erosion, Sven A.Saebel, general director of the resort, said in an announcement posted on its official website.

“We have worked over the last three years with foreign and local experts to review how to prevent further erosion from affecting our famous Cua Dai beach, which was reduced by more than 50 metres during the last typhoon in 2009.” A.Saebel said.

To protect Cua Dai beach from erosion, Quang Nam Provincial People’s Committee decided to spend VND400 billion or $19.2 million at current exchange rate to build a seven kilometre dam along the beach.

Bay said a sum of about VND60 billion ($2.8 million), was disbursed. But he said developers should have had their own measures to protect their properties while waiting for the dam completion.

“SunBay” suburb may shine in the south

Five years after plans were unveiled to reclaim a seascape and transform it into a distinctive suburb of Ho Chi Minh City, the bold vision for “Can Gio-Saigon SunBay” is now being revived.

Nguyen Dinh Thai, general director of Can Gio Tourist City Corporation, developer of the project, has announced that the firm had fulfilled conditions to restart the project this month about 50 kilometres from Ho Chi Minh City downtown.

Can Gio- Saigon SunBay is described as a “marine tourism urban project,” with the first phase that will call for a 15.5 hectare encroachment on the sea at Long Hoa village. It would expand the only suburb of Ho Chi Minh City to be located between sea and forest, with in-fill work to commence before the end of October.

The announcement, some observers noted, came despite a large oversupply of high-end residential properties in Vietnam, while questions have also been raised about the Can Gio’s infrastructure needs. But the project’s boosters seem undaunted.

With a six-month target for completing the landfill, the developer plans to build a five-star resort that would be in operation within two years. Thai said that the project’s second and third phases would be constructed immediately afterward, with the project expected to be completed in 2019.

After completion, the project will has a 200ha interior sea and beachside and a 400ha tourist services and residential areas. It is envisioned as a massive tourist attraction on the sea, with features to be known as Heart Bay, for relaxation, Life Bay, for high-class living formed, Blue Bay, offering an entertainment space, and EcoBay, to showcase Can Gio’s ecological features.

Saigon Sunbay is expected to accommodate 33,000 people, with 25,000 tourists and 8,000 permanent residents.

Total investment capital for Can Gio-Saigon Sunbay was calculated as $1.5 billion, Thai said. About $350 million will be used for seadyke construction system and infrastructure.

Initially kicked-off in 2007, the 600ha Can Gio-Saigon Sunbay is recognised as Vietnam’s largest sea encroachment project – much larger than the other sea encroachment plans in southern Kien Giang province and central Danang city.

Ho Chi Minh City authorities expected that with the unique design and location, Can Gio-Saigon Sunbay will not only bring long term economic interests to the city but bring Vietnam’s tourism appeal to new heights.

Vietnam seeks to show its titanic strength

More importantly, we could not go on a right direction without a specific titanium mining and processing strategy.

Vietnam has big plans for titanium mining and processing industry, but for now a topsy-turvy market is creating problems. Up to now, Vietnam’s titanium inventory recorded nearly 500,000 tonnes, including 301,000 tonnes in the central coastal Binh Dinh province, one of the country’s titanium hubs. The huge inventory was attributed to the government’s policy of banning raw titanium exports, effective in July this year.

Vietnam’s reserves accounted for some 5 per cent of the world’s total titanium reserves, just behind Canada, the US, Norway, India and Australia, according to Vietnam Titanium Association. For many years, domestic and foreign companies have been mining titanium in this province and exporting the
raw material to the gloabl market.

Titanium is important for shipbuilding, airplane manufacturing and painting industries, among others. Nguyen Van Tong, general director of Binh Dinh Minerals Joint Stock Company, said that the high stock was pushing firms into corner and firms still found it hard to invest into advanced processing technologies and facilities.

However, Nguyen Manh Quan, director of the Ministry of Industry and Trade’s (MoIT) Heavy Industry Department, said that for the last five years, the Vietnamese government had urgently asked titanium mining firms to invest in processing facilities before the ban took effect, but the result did not live up to expectations.

“The Vietnamese government wished that firms would have to concentrate on producing refined products such as titanium slag, refined ilmenite, synthetic rutile and TiO2 pigments, all of which have high added value,” Quan said.

Tran Van Quan, chairman of Duong Lam Mining Joint Stock Company, said that firms like his were finding ways to invest in advanced processing technologies and facilities, but money was a big problem. “More importantly, we could not go on a right direction without a specific titanium mining and processing strategy,” he said.

Quan from the MoIT said that the ministry had completed such strategy, which is now in the stage of collecting comments from relevant industrial experts and the business community.

In accordance to this draft strategy, incentives would be given to potential foreign investors teaming up with local firms in developing titanium mining and processing projects with advanced technology transfer, and effective marketing of products locally and globally.

NCS gets tongues wagging

Hoa Lac Hi-tech Park’s NCS software research and development centre project has got insiders talking.

Hoa Lac NCS software research and development centre project, of NCS Technology Joint Stock Company, was considered of great importance to materialise the company’s commitment for production scope expansion, technology innovation and product-service diversification.

Despite being licenced in November 2010, the project is yet to get off the drawing board.

In a recent talk with VIR, the company’s chairman Dao Xuan Anh affirmed the company was certain in the project’s implementation, despite facing many hardships.
“At this point, our company signed a design consultancy contract and within this year will start work on the project.”

Anh attributed delayed software research and development centre project to Vietnam’s economic vulnerabilities in 2011 and the fact that the company’s operations were badly influenced by Japan’s tragic earthquake and tsunami in early 2011, as NCS handled software outsourcing services for this market.

“The company’s business is much better now. Our nine-month results surpassed projections and the leadership envisages re-starting listing plan,” Anh said.

Earlier, according to NCS’s 2011 annual report released in July, 2012 the company will carry out NCS software project after raising money from auctioning its shares to the public. In fact, NCS did not succeed in the much expected auction.

NCS reportedly intended to spend around VND69 billion ($3.3 million) from the sum raised from the auction to pump into five projects on bettering NCS eLearning solution and providing supplemental investment to eLearning services, its restructuring plan, developing added value services on 3G background, building a software research and development centre at Hoa Lac Hi-tech Park and supplementing working capital.

NCS is not unique with its project’s delay in the Hanoi hi-tech park. Hoa Lac Hi-tech Park Authority gave warning to Tinh Van Corporation’s digital content centre building project, Misa Company’s ICT item production and computer software research and development centre project or VNG’s added value services and software production centre project about their slow progress.

Besides difficulties due to the economic slump, firms claimed the slow pace in site clearance and infrastructure investment at the hi-tech park led to delay of their projects.
NCS Technology specialises in handling software outsourcing contracts for foreign partners mainly coming from Japan and the US. This is one of first Vietnamese businesses working with Japanese customers in outsourcing, with around 70 outsourcing contracts in different areas.

The company aims to become a leading software business in Vietnam, operating in research, development and supply of products and services like core financial systems, security systems/services and eBusiness systems.

Kobe’s $1bn plan in the balance

Japanese giant Kobe Steel’s dream of holding a stake in Vietnam’s largest iron ore mining project has been burst.

This raises a big question on the prospects for its planned $1 billion iron nugget manufacturing facility in the central Nghe An province. A reliable source at Nghe An South-East Economic Zone Management Authority, confirmed to VIR that the Vietnamese government had turned down state-run Vinacomin’s proposal to get Kobe Steel involved in Thach Khe Iron Joint Stock Company (TIC), the developer of the mining project.

In July this year, state-run Vinacomin, TIC’s current biggest stakeholder, proposed the prime minister that it would either sell part of its stake in TIC to Kobe Steel or set up a joint venture with the Japanese heavyweight.

Established in 2005,TIC was formerly comprised of Vinacomin with 30 per cent, state-run Vietnam Steel Corporation (VNSteel) (20 per cent), Ha Tinh Mining and Trading Corporation (Mitraco) (24 per cent), VNPT (4 per cent), Song Da (5 per cent), BIDV (5 per cent), Vinashin (5 per cent), Bitexco (4 per cent) and Thang Long Mineral (3 per cent). Last year, BIDV, Song Da, Vinashin and VNPT sold their stakes to Vinacomin. Vinacomin is now waiting for prime ministerial approval to raise its stake in TIC to either 54 or 60 per cent.

Located in the central Ha Tinh province, Thach Khe is estimated by geologists to hold iron ore reserves of some 500-600 million tonnes, at least 300 million tonnes of which was thought to be commercially exploitable. The estimated investment capital of the first mining phase with the capacity of five million tonnes per year is around $400 million. Preparations for mining works at Thach Khe deposit stopped in mid-2011 due to TIC’s restructuring plan.

“The government did not agree to sell any stake in TIC to Kobe Steel, but it is committed that the world’s fourth largest steel-maker will be supplied with Thach Khe iron ores on a long-term contract so as to facilitate the operation of its facility in Vietnam,” the source told VIR.

Kobe Steel obtained the investment certificate for its iron nugget manufacturing facility in 2010 in Dong Hoi Industrial Zone as a part of its oversea investment expansion. The firm announced this $1 billion facility, which would use the next-generation ITmk3® iron-making process that it developed, would produce and market 2.4 million tonnes of iron nuggets per year.

“Since its ground breaking ceremony two years ago, Kobe Steel has done almost no further works at the project site. Kobe Steel told us it would like to acquire a slice in TIC before it continues developing the facility,” said the source, adding that Nghe An authorities had already granted the firm a grace period.

In a related move, Nghe An authorities recently asked the Vietnamese government for special incentives for Kobe Steel’s facility as a mega-foreign-invested project located in a special difficult area.

The proposed incentives include 10 per cent corporate income tax for the facility’s lifetime, import tax exemption for five years for input materials and equipment not produced in Vietnam and an exemption of land and water surface rental fees for 11 years since the facility comes into commercial operation.

Tasty roading projects set to hit the fast lane

Plans to expand and upgrade National Highway No1 are moving forward with the long-awaited wishlist of 15 build-operate-transfer projects announced last week for the stretch from central Ha Tinh province to Mekong Delta’s Can Tho city.

The wishlist, which was signed by the Minister of Transport on September 30, proves the efforts to quickly widen National Highway No 1 to six lanes, with parallel expressways as an option.

Plans call for four lanes devoted to motorised vehicles and two for non-motorised rides, as well as an improvement of existing road surfaces.

According to the ministerial decision, the estimated construction cost of a listed build-operate-transfer (BOT) project with the length of less than 30 kilometres would be in the range of VND930 billion ($44.7 million) to VND2.1 trillion ($101 million) depending on factual conditions of each location and building requirements.

Thus the total cost estimates for listed 15 projects could reach VND23 trillion ($1.105 billion), according to the decision. At present, at least one-third of those 15 BOT projects have received investment proposals from potential domestic investors.

For example, two BOT projects – the Ca Pass Tunnel and the Phu Gia Tunnel, were led by the Ca Pass Investment Joint Stock Company and Xuan Cau Company Limited respectively.

Previously, the Minitry of Transport (MoT) proposed that the upgrade and expansion plans of National Highway No1’s Ha Tinh-Can Tho section would be divided into 18 BOT projects with 60-80km in length per each. Such a project would need an estimated investment cost of VND4-6 trillon ($192.3-$288.5 million).

A representative of the MoT’s Public Private Partnership (PPP) Project Management Unit (PMU) the change was needed to make the list of BOT projects on offer become more attractive to domestic investors.

Nguyen Ngoc Long, vice president of Vietnam Road and Bridge Engineering Association, said the length and construction cost reshuffle would help investors make a good return on their investments.

According to MoT’s Deputy Minister Truong Tan Vien, the PPP PMU was recently appointed to be in charge of working with investors who would be interested in taking on those listed BOT projects, instead of Directorate for Roads of Vietnam and the MoT’s Department of Planning and Investment.

Back to school for education regulations

Vietnam has just chalked up a broad suite of guidelines for foreign investors to jump into the country’s education and training sector.

The government last week introduced Decree 73/2012/ND-CP dated on September 26, which provides long-awaited specific criteria for establishing foreign-invested education and training institutions in Vietnam such as required investment capital and the percentage of Vietnamese learners.

According to the new decree, foreign investors are allowed to establish “short-term” training centres, kindergartens for foreign children living in Vietnam, primary and secondary schools for foreign and Vietnamese students, vocational schools and universities.

For foreign-invested vocational schools and universities, the Vietnamese government gives no limitation on the Vietnamese student percentage, but there is a 10 per cent limit for Vietnamese pupils at primary and junior high schools and 20 per cent for Vietnamese pupils at senior high schools.

Nguyen Thanh Huyen, deputy director of the Ministry of Education and Training’s International Cooperation Department, said the decree also provided comprehensive guidelines for foreign investors to establish education and training institutions in Vietnam, opening their branches or cooperating with Vietnamese partners.

“The newly issued decree is expected to lure more foreign direct investment in Vietnam’s cash-strapped education and training sector,” said Huyen. Though the Vietnamese government has been encouraging foreign direct investment in education and training sector, the result is still modest.

Ministry of Planning and Investment (MPI) statistics show that foreign investors have jumped into 158 education and training projects in Vietnam, since the country opened door for foreign direct investment in 1987. Most of the established institutions provided short-term training courses.

Foreign investors have set up only three universities in Vietnam – RMIT University, Dresden University and British University Vietnam. Foreign investors, at the annual Vietnam Business Forum, usually blamed complicated investment procedures and unclear regulations as the main hindrances for them to invest in Vietnam’s education and training sector.

Lawyer Nguyen Thi Nguyet said the new decree provided certain improvements to allow foreign investors to provide education and training services to Vietnamese students. However, she does not believe the decree can timely boost foreign direct investment inflows in the sector.

“The new decree is not completely satisfied to the desire of foreign investors because foreign investors would like to provide education and training services for Vietnamese students without any restrictions,” she said.

The new rule also regulates specifically minimum required investment capital at each level of education and training. A foreign invested kindergarten must secure a minimum investment fund of VND30 million, nearly $1,500 per child. Meanwhile, a foreign invested university in Vietnam must secure a minimum investment fund of VND150 million, or $7,211 per student.

“These are not new regulations since they were set out in Circular 14/2005/TTLT-BGD&DT-BKH&DT dated April 14, 2005. I think that these are reasonable requirements since the government wants to see that foreign investors have strong financial capacity to invest in the nation’s education and training sector,” said Nguyet.

Phuong Nam gets sinking feeling

Seafood firms are struggling to keep their heads above water after Phuong Nam Foodstuff Corp, a privately held export seafood company, appears to be in deep trouble.

Phuong Nam raises shrimp and fish, processes and exports to the US, Japan, Europe, Canada, the Middle East and other countries.

It is ranked as the third biggest seafood and second biggest shrimp supplier in Vietnam.

The trouble comes on the heels of shattering news that Lam Ngoc Khuan, the chairman of the Phuong Nam Foodstuff Corp, has resigned and allowed seven banks located in Soc Trang to restructure the company.

Thus, many seafood firms are now in dire need of support from bodies involved to help them out. Otherwise, it is hard for the seafood enterprises to hit the target of exporting $6.5 billion by the end of 2012.

“After the move, many banks are finding ways to take capital from the seafood processing companies. Only strong enterprises with abundant capital sources will be able to survive,” said Nguyen Tuan Anh, general director of Ut Xi Seafood Processing Joint Stock Company.

He added enterprises such as packaging suppliers, sub-material companies and shipping firms all required the seafood companies to pay in cash as soon as transactions are done.

”Most seafood processing enterprises are devoid of working capital because customers only pay export bills after one to two months. Approaching new capital sources is also difficult because banks are cutting down on outstanding loans among seafood processing companies,” he said.

Seafood enterprises’ trouble comes from the lack of capital because many of them got bank loans for big investment plans in recent years, but failed in repayment and could not borrow more, according to Bui Nguyen Khanh, general director of Ca Mau Seafood.

Meanwhile, the seafood export market shows no sign of recovery after the third quarter. Statistics point out that August’s seafood exports to US, EU, Japan, South-Korea all plunged dramatically.

Japan, one of the biggest shrimp export markets of Vietnam, began to examine Ethoxyquin residue in Vietnamese seafood since May, 2012. This was the main cause leading to Ut Xi’s declining export volume in 2012’s first nine months which shed 7 and 20 per cent, respectively, compared to 2011 and 2010 corresponding period.

“Although we expect $80 million export value in 2012, it could be 70 per cent at best if this situation continues till the year’s end,” he added.

It is reported that Japan also examined Ethoxyquin in seafood products from Thailand, Indonesia. However, these countries’ governments have talked to Japanese authorities to find a solution.

“It is high time for the government to send people to Japan to work on the issue,” Khanh suggested.

According to Ministry of Industry and Trade, Vietnam’s seafood export up to September this year was lower than in the previous years, with its export turnover fetching $4.4 billion.

Vietnam exports over 5.8 mln tonnes of rice in 9 months

Vietnam’s rice exports recorded 5.845 million tonnes in the first nine months of this year, equal to the same period last year, said the Vietnam Food Association on October 5.

The figure accounted for over 81 per cent of the country’s whole-year plan of exporting 7.2 million tonnes of rice.

In September alone, rice exports totalled about 750,000 tonnes, a decrease of 50,000 tonnes compared to the set plan. The decline was attributed to the unfavourable weather conditions impacting the delivery, weak import demands and a slump in number of registered contracts.

It is expected that Vietnamese businesses will export around 1.4 million tonnes of rice in the last three months of this year, estimated the association.

Business confidence index down in Q3

The business confidence index (BCI) fell by 13 points in the third quarter of this year, painting a gloomy picture for the national economy.

In the quarterly survey released on October 8 by the Vietnam World’Vest Base (WVB) Financial Intelligence Services, the third quarter BCI dropped to 107 points, 13 points less than the previous quarter’s figure, but an increase of 7 points compared to the first index score recorded in the third quarter of 2008.

Only 28.18 percent of respondents say that overall economic conditions have improved compared to one year ago, 34.55 percent believe that the economic situation has stayed the same, and 37.27 percent say that current economic conditions are getting worse.

Despite the flat economic situation in the third quarter, businesses still believe that the Government’s macroeconomic policy will help improve the economy in the future.

Forecasting the economic outlook, 69.09 percent of respondents think overall economic conditions have improved considerably from a year ago and will continue to get better over the next twelve months, while only 6.36 percent are worried about a dismal economy in the upcoming year.

Regarding employment, 42.73 percent of the surveyed businesses say they plan to recruit more employees and 47.27 percent think they will have the same number of employees during the next twelve months. Only 10 percent report they will cut their company’s workforce.

In addition, 56.36 percent of respondents say they will maintain the same investment in fixed assets for the next 12 months, 29.09 percent think they will invest more, and 14.55 percent say they will reduce fixed asset investments in the next 12 months.

More than a half of the questioned businesses are confident that their sales will increase over the next 12 months, while 36.36 percent believe their revenues will stay the same, and only 6.36 percent are worried that their sales would decrease.

Talking about anticipated profit growth, 53.64 percent say they believe their profits will increase in the coming year and 23.64 percent say that their profits will remain stable, while 22.73 percent are worried about their profits dropping over the next year

The survey is conducted quarterly by WVB Vietnam drawing the participation of leading enterprises well-known in trademarks, total assets, total revenues, and employee numbers.

The third quarter survey extended from September 15 to the first week of October and included responses from 110 companies in 10 key sectors and industries in Vietnam. Half of the surveyed participants were small-and-medium-sized enterprises (SMEs).

Wood exports to reach US$3.4 billion

Wood exports would reach US$4.3 billion for this year, up US$400 million over 2011, said the chairman of the Vietnam Timber and Forestry Product Association, Nguyen Ton Quyen.

Wood exports would reach US$4.3 billion for this year, up US$400 million over 2011, said the chairman of the Vietnam Timber and Forestry Product Association, Nguyen Ton Quyen.

Wood businesses also forecast that exports would increase till the end of the year thanks to rising demand in the world market.

Quyen said although the world woodwork market has shrunk 30 percent, the domestic wood industry has not been significantly affected, adding that the remaining 70 percent offered a great opportunity for Vietnamese businesses to tap.

Moreover, local wood producers and exporters are not dependent on bank credit so they have not faced the same financial challenges of producers and exporters in other industries.

According to the General Statistics Office, wood export turnover hit nearly US$3.4 billion in the first nine months of this year, representing a year on year rise of 20.2 percent. The US, China and Japan were major importers of Vietnamese wood products during the period.

The country has roughly 4,000 wood producers and exporters besides 30,000 households doing work related to the industry.

Chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (Hawa) Nguyen Chien Thang said that Vietnam, which ranks sixth in the world for woodwork exports, will likely see wood exports grow by US$15-20 billion in revenue in the next 10-15 years.

However, experts also urged the industry to restructure, saying that the industry’s growth contains potentially unsustainable factors that could seriously impact future expansion.

Solar energy used in new desalination equipment

Scientists from Vietnam’s Academy for Water Resources have succeeded in designing equipment that turns saltwater into freshwater, using the sun’s energy.

The new equipment, which was successfully tested in Cam Ranh Bay in the central coastal province of Khanh Hoa and Do Son district in the northern port city of Haiphong, can produce more than 6 litres of fresh water per square meter each day, using solar energy.

The appliance comes in various sizes and can be installed almost anywhere.

Regional meeting looks to improve agricultural statistics

The 24th meeting of the Asia-Pacific Commission on Agricultural Statistics (APCAS) opened in the Central Highland province of Lam Dong on October 8, with 85 delegates from 25 countries and international organisations taking part.

Jointly organised by the United Nations Food and Agriculture Organisation (FAO) and Vietnam’s General Statistics Office, the five-day event will look at ways of ensuring the accuracy and quality of agricultural statistics, as they determine the nature of agricultural and rural development policies in the region.

Addressing the event, Deputy Minister of Planning and Investment Dao Quang Thu said that the quantity and quality of information on agriculture and rural areas that is currently available has yet to meet the growing demand of Vietnamese users.

He said he hopes that the event will help regional countries to ensure the integrity of their agricultural statistics and draw up plans to implement the global strategy on agricultural statistics.

This is the first time that APCAS has been held in Vietnam since it was formed in 1966 and is convened every two years.

Exports to Indonesia increase sharply

Two-way trade between Vietnam and Indonesia hit nearly US$3.3 billion over the past nine months, of which Vietnamese exports generated US$1.664 billion, up 5.4 percent.

Vietnam also enjoyed a trade surplus of US$40 million with Indonesia in the review period, according to the Trade Office of the Vietnamese Embassy in Jakarta.

Staples that attained the highest export growth included phones and accessories, steel, rice, crude oil and coffee.

Products which achieved high annual export earnings were coffee, mineral ores, phones and accessories, chemicals, steel, electric wire and cables, paper, chemicals, footwear, tea and plastics.

Rice is one of Vietnam’s hard currency earners which makes up 50 percent of its total exports to Indonesia. However, Indonesia has so far this year not imported Vietnamese rice.

Between January-September 2011 it consumed US$616.3 million worth of Vietnamese rice.

Expanding Danang-Hong Kong tourism links

Representatives of Hong Kong’s travel agencies and newspapers are making a fact-finding tour of Danang city from October 8-12 to seek ways to boost tourism between Vietnam’s central city and Hong Kong.

They are traveling to major tourism destinations such as the Danang Golf Club, Mongomerie Links, and Island Gold Club, as well as the Cham Museum, Ngu Hanh Son (Marble Mountains) and various tourism resorts.

They are scheduled to take part in a seminar on business opportunities with travel agencies in Danang that want to eye the Hong Kong market.

Vietnam’s national flag carrier, Vietnam Airlines, ran its first maiden flight on the Hong Kong-Danang route on September 30 and it expects to officially launch direct flights between the two destinations in the future.

Two other similar flights also took place on October 4 and 7.


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