Home » Business » BUSINESS IN BRIEF 11/9

More arrest rumours dog market

Shares declined yesterday on both nation’s stock exchanges, reversing a one-day rise last Friday.

On the HCM City Stock Exchange, the VN-Index concluded yesterday’s session at 388.88 points, a loss of 2.17 per cent from Friday’s close. However, trading was more active than during the previous session, with almost 48.8 million shares traded, an increase of 46 per cent. The value of trades rose by 63 per cent to over VND833 billion (US$39.7 million).

Decliners outnumbered advancers by 216-33. While blue chips were the driving force for last Friday’s gains, they were the primary culprit in dragging down the market yesterday.

The VN30 Index, which tracks the market’s leading shares by capitalisation and liquidity, lost 2.22 per cent overall to end the session at 455.59. Insurer Bao Viet Holdings (BVH), Vietinbank (CTG), real estate developer Hoang Anh Gia Lai Co (HAG), steelmaker Hoa Phat Group (HPG), financial conglomerate Ocean Group (OGC) and PetroVietnam Finance (PVF) all plunged to their floor prices.

Food processor Masan Group (MSN) was among the few gainers, picking up 1.9 per cent for its second rising session in a row to close at VND105,000 per share.

Sacombank (STB) was the most-active share by the end of yesterday’s session with trades totalling 2.9 million shares. STB closed flat at VND20,000.

FPT Securities Co analysts wrote on the firm’s website yesterday that the market was overshadowed by unconfirmed rumours that a high-ranking executive of Tan Tao Investment Industry Co (ITA) as well as another unnamed executive were arrested. On the market, investors rushed to unload ITA shares, driving them to their floor price of VND5,500 per share.

On the Ha Noi Stock Exchange, the HNX-Index lost 3.84 per cent to end the day at 58.07 points. The value of trades reached only VND270 billion ($12.9 million).

Blue chips plunged even more steeply, with the HNX-Index dropping by 4.72 per cent to 107.61 points.

Kim Long Securities Co (KLS) was the most-active share with over 4.3 million traded, dropping to its floor price of VND8,100 a share.

Foreign investors bucked the market trend, continuing as net buyers on both bourses. They were responsible for buys worth a combined net of VND46 billion ($2.2 million).

HCM City to host food, beverage expo

An international exhibition on food, beverage, and packaging to be held in HCM City this month has attracted the participation of almost 300 local and foreign companies.

Nearly 140 Vietnamese companies, including all the big names such as Vissan, Cau Tre, Sa Giang, and Canh Dong Vang from the food sector, and Sabeco, Habeco, Tan Hiep Phat, and Sabmiller Viet Nam from the beverage industry, will make use of the event to promote their products.

Their counterparts from 18 countries and territories including India, Japan, Hong Kong, mainland China, Singapore, Poland, the Czech Republic, and Germany will come looking for distributors for their food and beverage products and buyers for their food and beverage processing and packaging technologies.

Shrimp exporters top Taiwan market

Viet Nam has been the largest exporter of shrimp to Taiwan for the last five years and Vietnamese shrimp exports remained high this year, according to the Viet Nam Association of Seafood Exporters and Producers (Vasep).

The association said that according to the International Trade Centre (ITC)’s statistics on raw shrimp imports into Taiwan, Viet Nam took first place in the list of shrimp suppliers for the market during the 2007-11 period.

Vietnamese shrimp exported to Taiwan represented 24.5 per cent of total shrimp imported by that market in 2011. China followed with 17.5 per cent and Thailand with 16.8 per cent.

Meanwhile, the association’s statistics reported that Taiwan was the seventh largest importer of Viet Nam’s shrimp after Japan, the US, mainland China, South Korea, Australia and Germany. Shrimp shipments to the market continued to see stable growth during the first seven months of 2012.

As of July 2012, shrimp exports to Taiwan amounted to nearly US$42 million, up 16.2 per cent compared to the same period in 2011. In July 2012, shrimp delivery to the market increased by 23.5 per cent to over $8.2 million while shrimp exports to other markets such as Japan, the US, EU or South Korea sank.

Most of these exported crustaceans are raw black tiger shrimp. In 2011, raw black tiger shrimp made up 87 per cent of all the shrimp exported to Taiwan. As of July, this year’s raw black tiger shrimp exports to Taiwan reached $35 million, accounting for 83 per cent of all shrimp exported there.

“Taiwan is considered a promising destination for Viet Nam’s black tiger shrimp. In contrast, many major shrimp-consuming markets in the world are in favour of white-leg shrimp,” said Nguyen Minh Tam, the association representative.

By mid-August, Vietnamese shrimp exports to Taiwan had seen a year-on-year increase of 17 per cent to $45 million, she said.

However, Viet Nam’s black tiger shrimp products faced fierce competitiveness in price with other suppliers due to recent increases in production costs.

Since early this year, Taiwan’s economy was hit heavily by the European economic crisis and resulting downturn in the economy of mainland China, the key trade partner of Taiwan.

However, the Taiwanese economy was expected to recover in the last two quarters of the year. Thus, the growth in Viet Nam shrimp exports to that market could continue until the end of this year, she said.

The association also said the national shrimp export value might not reach the targeted export value of $2.5 billion for this year after reductions in turnovers for June and July due to increases in cost and competitiveness on the world market.

The total export value of shrimp fell by 4 per cent in June and 6.8 per cent to $200 million in July against the same months of last year.

The reductions were caused by pressure in competition with foreign rivals such as Thailand, Indonesia, Ecuador and China, high input costs and low demand in major export markets including the US, the EU and Japan, the association said.

The association expected that by the end of the year, local shrimp exporters could overcome their current difficulties due to state policies on credit that would allow them to take out more loans to promote production and export.

The total shrimp export value was estimated to reach $1.7 billion for the first three quarters of this year, including $690 million for the third quarter, it said.

Promo offers 5% off a Mercedes

Mercedes-Benz Viet Nam (MBV) has announced a promotional campaign that offers a 5 per cent discount for people who purchase cars between September 7-30, 2012.

The campaign is to mark the Viet Nam Motor Show 2012, which will take place in Ha Noi at the end of this month.-

Work starts on beer factory

Construction of Sai Gon-Vinh Long Beer Factory began on Thursday in the southern province of Vinh Long, with a total investment of VND600 billion (US$28.5 million).

The factory is equipped with advanced European technology and will be capable of producing 50 million litres of beer per year with the potential of expanding production to 100 million litres a year.

Construction is expected to finish in one year. The factory is one of the largest projects funded by Sai Gon Beer Alcohol Beverage Corporation (Sabeco).

Foreign investment rises

Southern Long An Province has attracted foreign investment from 31 countries and territories to invest in 442 local projects with a total investment capital of over US$3.5 billion to date.

Some 264 projects are now in operation, accounting for 60 per cent of the total investment capital.

According to the provincial People’s Committee Vice Chairman Pham Van Ranh, foreign investment in recent years has made a great contribution to the socio-economic development of the province. The GDP per capita reached over VND30 million and annual industrial value went up 20 per cent while export turnover rose 25 per cent each year.

Ministry earmarks $1.7m for trade promotion

The Minister of Industry and Trade, Vu Huy Hoang, has approved 44 projects in the second phase of the National Trade Promotion Programme that will run until the end of this year.

The programme, which aims to step up export and domestic trade promotion activities, especially in rural, mountainous, border and island areas, is estimated to cost VND35.456 billion (US$1.7 million).

With the second phase, the National Trade Promotion Programme 2012 will have a total of 90 projects costing VND79.39 billion ($3.78 million).

According to the Ministry of Industry and Trade’s Viet Nam Trade Promotion Agency, the projects will cover a range of promotion activities including domestic trade exhibitions, international conferences on export commodities and capacity building for trade promotion officials.

It aims to popularise the potential and strengths of various regions and localities and promote the use of Vietnamese goods by Vietnamese people.

Long An recalls delayed realty project

Long An Province’s authorities have cancelled a large-scale property project invested by DM LEE Limited Co. due to long delays, said the provincial Department of Planning and Investment.

The South Korean investor planned to construct serviced apartments, villas, public service facilities and offices with total investment capital of US$52 million on a total of 100 hectares in Long Hau Commune, Can Giuoc District. However, the investor has been unable to start the scheme even though nearly three years have passed since the investment license of the project was issued.

According to the planning department, the withdrawal of the project’s license will give opportunities for other investors to join the scheme. In fact, a number of local investors have shown keen interest in developing other real estate projects in the location.

The government of Long An Province in recent times has revoked the investment certificates of slow-moving and cash-strapped projects of local and foreign developers, including those to develop housing, golf courses and industrial clusters.

According to the department, the province has since 2009 taken back more than 13,515 hectares of land from foot-dragging projects, with 10,867 hectares recovered in 2009, 534 hectares in 2010 and 565 hectares in 2011.

In the year’s first half alone, Long An withdrew 1,548 hectares of land from 21 suspended projects. Among them is the Vietnam-South Korea golf course project covering 240 hectares in Can Giuoc District consisting of an entertainment facility and high-class residential area. Vietnam-South Korea Company as the investor of this project failed to get the project done on schedule due to financial constraints.

The province since 2007 has agreed to allocate land to investors to develop eight residential and urban area projects with golf courses included. However, the Prime Minister in 2009 only approved the planning of two golf courses.

There is only a golf course project left in Long An at the moment and it is being developed by C.S.Q International Investment JSC on a total of 200 hectares in Duc Hoa District.

Agriculture needs more private sector investments

The Government has underscored the role of the private sector in the Climate Smart Agriculture (CSA) strategy and sustainable agricultural development, saying it will work towards attracting more local and foreign companies to get involved in this field.

At the opening of the second Global Conference on Agriculture, Food Security and Climate Change on Thursday in Hanoi, Prime Minister Nguyen Tan Dung said Vietnam is heavily vulnerable to natural disasters and climate change.

In the 2007-2011 period alone, natural disasters killed over 430 people and caused property damages equivalent to around 1% of the nation’s GDP, Dung said.

According to forecasts, Vietnam is among the few countries to suffer consequences of climate change, especially rising sea levels. The nation’s agricultural production will be at risk.

The action plan of the local agricultural sector to cope with climate change is aimed at increasing agricultural output volume by 20%, cut carbon emissions by 20% and reduce poverty by 2020. To achieve these targets, Vietnam will need to create more catalysts for investors inside and outside the country to do business in the agriculture and rural development sector.

The Prime Minister said Vietnam in the near future would focus on tapping potentials in those areas, boosting science and technology research and development, and minimizing losses during and after harvests. The country will also improve land policies, connect production with processing industry development and adopt more incentive policies to attract more local and foreign investors to develop agriculture and rural areas.

Statistics of the Ministry of Agriculture and Rural Development indicate only some US$130 million in public investment is oriented towards climate change adaptation in the agriculture sector. Only US$22 million is sourced from the State Budget while the remainder is from official development assistance (ODA) loans.

In fact, to obtain the goals of the action plan against climate change, Vietnam will need total investment of up to US$3.5 billion. “This is the reason why Vietnam looks set to lure more private sector investors to carry out agricultural and rural development projects to translate the targets into reality,” Minister of Agriculture and Rural Development Cao Duc Phat said.

Phat said representatives in the three preparatory working days of the conference centered on ways to remove impediments to development of environmentally-friendly agriculture in Vietnam. They also called for Vietnam to launch more drastic policies to encourage private sector investment in agriculture and rural development.

Marketing industry moves beyond product focus

The time when advertisements mainly described products and spoke about their usefulness is gone forever, experts said at a conference held in HCM City last Saturday.

Advertising has instead become a tool to convey messages and ideas including the fostering of communities and protecting the environment, and this is a new stage that Viet Nam has entered, said Do Kim Dung, chairman of Viet Nam Institute of Advertising.

He said many interactive advertising campaigns in the world have helped people come closer together and people now like to watch ads that do not contain any advertisement.

Vietnamese people have a “high community spirit” and remain rooted in Asian culture, therefore advertisements that appeal to these characteristics are likely to be most effective, said Dung, who is also deputy chairman of the Viet Nam Advertising Association.

Viet Nam’s advertising industry is a relative newcomer in the world after decades of war, but five out of six big communication groups in the world are already present in the country, he said.

In Viet Nam, TV channels accounted for 78 per cent of the total advertising market in 2010, compared to 41 per cent in the Asia-Pacific region.

“Out of home” advertisements hold a very small share – about 4 per cent – of the advertising market, compared to 11 per cent in the Asia-Pacific region, he said.

Regulations relating to out-of-home advertising are very complicated in Viet Nam, causing difficulties for providers of these services, he said, suggesting that the government reviews them.

He also wanted the advertising and promotion expense cap imposed by the government to be removed so that enterprises can have more space to promote their brand names and expand production.

The cap has been in effect for 13 years, allowing enterprises to only deduct advertising costs if they are under 10 per cent of their total input costs.

It is estimated that for newly-established enterprises, advertising expenses could amount to as much as 15 per cent of total expenses for their first three years.

The global adverting industry is expected to achieve a growth rate of 4.7 per cent this year, with Asia-Pacific region well above the average at 7.2 per cent.

TV advertising will gain highest revenues this year globally, followed by advertisements in newspapers and magazines and the Internet, according to Dung.

However, revenue from Internet advertising is expected to exceed those from print publications next year.

Province focuses on marine economy

Northern Quang Ninh Province has settled on a development plan that will focus on creating sustainable and environmental-friendly industries and boost its potential sea economy.

This was said at a working session last weekend between the provincial Party Standing Committee and the Politburo. The session was held to discuss the province’s project on economic and social development until 2020 with a vision to 2030, and was chaired by Party General Secretary Nguyen Phu Trong.

The province has planned a pilot project to turn parts of Van Don and Mong Cai into special administrative and economic zones of the province by 2020 and of the country by 2030.

Secretary of the provincial Party’s Committee Pham Minh Chinh said that Van Don District would be developed into a beach city, a centre for ecological and resort tourism with high-class entertainment and a gateway for international trade.

Meanwhile, Mong Cai City would become a modern international city that could act as an important gateway between Viet Nam and other Asian countries, he said.

Chinh added that the development project aimed to develop Quang Ninh into an economic powerhouse for the North and reform economic growth there.

The province aims to achieve a GDP growth rate of 14 per cent by 2020 with GDP per capita reaching US$4,000 by 2015 and $8,000 by 2020. It projects that local services will reach 51 per cent by 2020, while industry and agriculture will be down to 45 per cent and 4 per cent respectively.

Addressing the working session, Trong highlighted the province’s strategic location in terms of economics, politics, culture, national defence and security.

Trong also urged relevant sectors of the Party and the Government to work with Quang Ninh Province to improve the proposed plan and submit research results to the Politburo as soon as possible.

Ministry of Industry and Trade proposes further coal price hikes

The Ministry of Industry and Trade made a proposal the Government to raise price of coal sold for power producers from September 1, following closely on the heels of the last one on July 1.

Under the proposal, coal sold to power producers will be made equal to last year’s market prices beginning in the fourth quarter this year and would be raised to current market prices next year.

Despite July’s price hike, Vietnam National Coal and Mineral Industries Group (Vinacomin) still complained that it expects to take losses of VND8.5 trillion (USD404.7 million) this year.

The ministry is also seeking the Government’s approval for slashing the pit-coal export tariff to 10% to mitigate losses for Vinacomin.

Vinacomin said the current pit-coal export tariff of 20% is too high, meanwhile the world coal prices have dropped 25-40% from the levels of late 2011. After deducting export tariff, Vinacomin will not be able to cover its costs, slowing down exports.

In July 1, when electricity prices increased, coal price also went up by 10-11.5%, but Vinacomin said they continue incurring losses because their prices are lower than that of the global market.

They said that, due to lower export prices, the company has already seen a losses of VND4 trillion (USD190.4 million) in revenues.

Meanwhile, companies that buy most of the coal from still owe Vinacomin a combined total of VND2 trillion (USD95.23 million). Electricity of Vietnam (EVN) accounted for half of the total debt.

Banks receive credit report cards

Thirty-two domestic commercial banks have been rated at four competitiveness levels, A, B, C, and D, according to the Viet Nam Credit Rating Annual Report 2012 released on Saturday.

Level A banks have a high competitiveness, strong market power, stable financial resources, effective performance, and long-term development potential.

Level B consists of banks with fairly high competitiveness, good market power, reasonable financial resources, stable performance and good development potential.

Banks with average competitiveness, limited market power, acceptable financial strength, and less stable business performance belong to level C.

Level D refers to banks with limited competitiveness. These banks suffer from deficiencies like a weak business network and market power, acceptable financial strength, and less stable business performance.

According to the report, the nine banks to receive A ratings were Techcombank, ACB, Sacombank, Eximbank, DongA Bank, MB, Vietcombank, Vietinbank, and BIDV.

The Level B banks were BacA Bank, HDBank, MaritimeBank, Orient Commercial Joint Stock Bank, Sai Gon Bank for Industry and Trade, Southern Bank, VIB, PG Bank, and Viet A Bank.

VPBank, ABBank, DaiA Bank, Kien Long Bank, MHB, Nam A Bank, Oceanbank, Habubank, Navibank, and SHB were placed in level C.

Level D is comprised of Vietbank, Western Bank, and MDB.

Agribank was not rated in this year’s report.

The launch of Viet Nam Credit Rating Annual Report 2012 was announced by the President’s Office and the Viet Nam Chamber of Commerce and Industry (VCCI).

This is the 3rd consecutive year this kind of report was conducted. This year’s report provides an overall evaluation of Viet Nam’s banking system together with competitiveness ratings of the banks.

 Automakers back rigid import law

The trade organisation representing the nation’s auto industry is voicing its support for a recent regulation requiring automobile importers to be authorised dealers of the auto manufacturer from which they are importing vehicles.

Ministry of Industry and Trade Circular No 20, which took effect in June of last year, has drawn fire from some dealers who have claimed that the strict requirement has effectively created an auto import monopoly.

Last Thursday, the General Department of Customs joined in the calls to amend Circular No 20, reporting to the Ministry of Finance that the requirement was signficantly reducing import tax revenues and harming car dealers.

According to Customs statistics, Viet Nam imported 16,000 cars worth US$335 million in the first seven months of this year, a decline of 58 per cent in volume and 44 per cent in value from the corresponding period last year. Import tax revenues have therefore also declined. Ministry of Finance figures concur, suggesting that a slump in auto imports could lower tax collections by as much as $2 billion annually.

In response, the Viet Nam Automobile Manufacturers Association (VAMA) yesterday sent a letter to the Ministry of Industry and Trade expressing surprise at the opposition to the regulation and urging the ministry to keep Circular No 20 in place. VAMA argued that amending or abolishing the circular would create market, negatively affect local production, and harm the interests of the cars buyers.

The opposition to the regulation continues to argue, however, that the regulation effectively allows only joint ventures, most of which are VAMA members, to import vehicles with fewer than nine seats and threatened the operations of over three-quarters of the nation’s private auto importers and dealers.

They complained that they would be unable to document that they are authorised dealers of various auto manufacturers, most of which grant only exclusive licenses to a particular distributor in the country.

They are calling for an end of this requirement, a move which would enable more importers and dealers to participate in the market while benefiting consumers by boosting the supply and variety of imported cars.

Ha Noi Automobile Co director Nguyen Van Dung, one of the dealers opposing the regulation, said he would be able to resume importing foreign cars only if the regulation were loosened.

Dung late last year turned his 300sq.m showroom in Gia Lam District into a restaurant called the Ha Noi Automobile Beer Restaurant.

Hung Long Automobile Co director Nguyen Ba Hoc said he was fined VND40 million last year for importing 16 Lexus sedans without proper documentation.

“The ever-changing regulations in the automotive sector have discouraged the development of the industry as a whole,” Hoc said.

Following last week’s Viet Nam Auto Show 2012, VAMA attempted to forge solidarity with auto importers by announcing an alliance with a group of authorised importers. Representatives of domestic manufacturers and authorised importers also sat side-by-side and co-chaired a press conference last week to launch the auto show.

VAMA chairman Laurent Charpentier said the alliance would help develop the nation’s auto industry as a whole.

While VAMA has argued in for co-ordinated long-term policies to improve the transportation sector and avoid negative impacts of development, the organisation has long lobbied the Government to apply stricter policies on auto importers in order to give a greater advantage to domestic producers.

In March, for instance, VAMA asked the Ministry of Transport to postpone a series of car fees, urging the Government to first issue a policy to develop and diversify the transportation sector to meet public demand.

The Ministry of Industry and Trade in April forecast that Viet Nam’s total car sales in 2012 would drop drastically and return to 2007 levels of around 80,000 units. Last year, sales reached 138,000 units, a drop of 5 per cent from the previous year.

Real estate market still feels economic pain

The domestic real estate market is not showing signs of recovery and no one is sure when the situation will begin to improve, said industry and construction experts at a seminar held by the National Assembly Economic Committee on Wednesday.

The deputy head of the Central Institute for Economic Management (CIEM), Nguyen Dinh Cung, told the seminar that construction and property enterprises faced many problems, including accessing capital due to high interest rates, and a reduction in demand and purchasing power.

Cung said current credit loosening policies were inefficient in the short-term though the expansion and reduction of taxes for construction and property enterprises had temporarily eased difficulties.

Meanwhile, Mai Xuan Hung, head of the economic committee’s trade and service sub-committee, said the market might not bottom out until 2014 and requested the Government to reduce inventory of building materials such as cement and steel.

According to Pham Chi Cuong, chairman of the Viet Nam Steel Association, property sector is to blame for 80 per cent of of the country’s debts due to trillions of Vietnamese dong being ploughed into undeveloped projects.

In response, Tran Ngoc Hung, chairman of the Viet Nam Federation of Civil Engineering Association, said the state should not license enterprises to develop more property projects as many finished projects in HCM City had no buyers while many land areas had not been implemented in Ha Noi.

He added that the majority of capital should be for buyers and leasers, especially low-income people, while limited capital should be given to property enterprises.

Looking for signs of positivity, Sai Gon Co.op chairman Nguyen Ngoc Hoa said the construction sector should focus on producing affordable property projects due to sustained high demand for such products. By doing so, Hoa added that this would provide a chance to promote purchasing power on the property market as well as consumption of building materials such as cement and steel.

Foreign investors turn up noses on brokerages

After September 15, when Decree No 58 takes effect, the number of foreign-invested brokerages will remain low even though the previous 49 per cent maximum ownership limit has been scrapped.

On July 20, Decree No 58/2012/ND-CP was issued, guiding the implementation and amendment of the Law on Securities.

Foreign organisations that meet the conditions will be allowed to own 100-per-cent of the charter capital of operating securities companies or to set up a new 100-per-cent foreign-invested securities company.

Although the decree will go into effect in a few days, the local securities market has yet to see many changes.

The local stock market has 105 operating securities companies, of which 15 are invested in by foreigners, who own 49 per cent of their charter capital.

Twenty-five other securities companies have between 20 and 25 per cent of their chartered capital owned by foreigners.

Most foreign stake-owners at Vietnamese securities companies come from Asia, many from Japan, Malaysia and Singapore.

In recent years, many foreign companies invested in Viet Nam’s stock exchange market because the prices of shares of local securities companies were low due to sluggish market conditions. The prices were especially low compared with those of securities companies in other countries in the region.

In February 2011, Nikko Cordial Securities Inc. bought 8,916,300 shares or 14.9 per cent stake of PetroVietnam Securities Incorporated (PSI), becoming a major shareholder of the listed firm.

Prior to that, ROK Securities and Investment Company purchased nearly 49 per cent of the stake of Vietnamese Gia Quyen Securities Company (EPS), intending to purchase EPS in anticipation of Decree 58 that will allow them to set up a wholly foreign-invested securities company.

Huong Viet Securities Company also sold 48.33 per cent of its stake to Singaporean Morgan Stanley, while Click and Call sold 49 per cent of its stakes to South Korean Golden Bridge.

In addition, Viet Nam Securities Company sold 49 per cent of stakes to Malaysian HB Bank.

In spite of these changes, the number of wholly foreign-invested securities companies will not be as high as expected.

Several limitations remain in Viet Nam’s stock exchange market. It is still small-scale and has strong fluctuations and low liquidity, with total capitalised market value of only US$25 and $30 billion, equivalent only to 0.5 and 1.5 per cent of many markets in the world.

Also, many securities companies have been established at a time when the country’s stock exchange market is too small, thus creating unhealthy competition. Legal regulations related to securities activities are also still unclear, making management of the local stock exchange ineffective.

Only a few foreign-invested securities companies in Viet Nam are profitable, another reason many foreign companies are not setting up business.

Low home loan rates

Since September, HDBank will offer loans with the low interest rate of 8.6 per cent per year to people who want to buy housing.

ANZ is also offering loans at an interest rate of only 11.8 per cent per year for those who want to buy houses. HSBC, Vietcombank, BIDV and VIB are lowering the interest rate of loans provided for people to buy houses to between 9 per cent and 9.9 per cent per year.

Preferential credit packages that the banks have set aside for the real estate sector are worth thousands of billion dong.

BIDV, ACB, Vietcombank, VIB, VietinBank and SeaBank alone have committed to provide loans worth VND20 trillion for property buyers.

The banks are actively trying to increase credit growth targets set for the year.

To pump money into the real estate market, the banks have cooperated with owners of real estate projects to lend people who want to buy houses and land plots. However, the amount of loans has been modest.

Last month, the Tan Binh Construction and Investment Company decided to sell 60 apartments in its Tan Mai project in Binh Tan District.

To attract customers, the company joined hands with two banks to offer buyers loans at the interest rate of 13 per cent per year and the maturity of between 10 and 20 years.

However, only four buyers wanted to borrow money from the banks to buy the houses.

Vietinbank has set aside VND5 trillion worth of loans for individuals who want to buy houses.

The bank has worked with 40 real estate project owners and has been ready to offer loans at an interest rate of only 8 per cent per year for those who buy apartments, and a rate of zero per cent for some projects.

The bank hopes that its loans at such preferential interest rates will encourage individuals to buy apartments. As a result, project owners will be able to sell their apartments and have money to pay back bank loans. The bank can then offer more new loans to the real estate market.

However, the banks’ efforts in lending to the real estate sector have proved ineffective as only a small number of people have sought bank loans to buy houses at this time.

People are hesitant to borrow money because, although the banks’ loan interest rates have been lowered, they are still high compared with the house buyers’ financial potential.

In addition, the banks’ loan interest rates are unstable. People who want to buy houses will be offered preferential loans within a few months and they then may have to suffer between 14 per cent and 18 per cent per year for the loan maturity.

The fact also shows that the prices of properties have been cut, but they still stood at a level higher than expected.

So, many people do not want to borrow money to buy houses at this time and want to wait for a further reduction in pricing.

Tran Van Thanh, general director of the House Viet Nam joint-stock company, said that few banks had offered loans for property projects.

Thanh, however, said that many real estate developers did not want to borrow funds now, even with lower interest rates.

This is because the former were unable to sell their projects so they do not have the money to pay the interest rate.

Although banks want to offer more new loans to the real estate sector, they have also been careful about lending. They lend only to those who buy apartments in highly feasible projects.

Baking up business

Last week the 19th store of South Korea-based Tous Les Jours opened in District 3’s Cao Thang Street, heating up competition between local and foreign pastry makers.

On Cao Thang Street, there are seven pastry stores side by side. They include South Korea’s Paris Baguette, Singapore’s Breadtalk, and Vietnamese shops, Givral, Kinh Do, Sweet Home Bakery and Duc Phat.

In recent years, many famous chains have penetrated the market with special selling points and products, as well as attractive premises and designs.

One of these is Tous Les Jours, which is a South Korean franchise owned by CJ Foodville, a business group under the CJ Group.

It opened its first store in HCM City in June 2007 and has expanded its chain quickly here. Its store chain is expected to reach a total of 30 in Viet Nam by the year-end.

Another foreign pastry company is the South-Korea based French Boulangerie. It began in 1988 at a single location and has grown to become the No. 1 franchise bakery in Korea. There are more than 1,700 locations in three different countries.

The company opened in Viet Nam in April this year and is going to open its third store in October.

Two other famous pastry chains with Singaporean names are also important contributors to the Vietnamese market: Bread Talk and Lovebread. In spite of being present in Viet Nam for only two years, Bread Talk has six stores in the country.

Lovebread now has 16 stores located in the Co.opmart system. It opened its first shops in Viet Nam in 2004.

Most of these famous pastry places chose HCM City as their first destination in Viet Nam to build up brand names in the country. They then spread them to other localities.

Most foreign coffee shops are located in the centres of major cities, where they can be more competitive.

Their presence, however, has created fierce competition for Vietnamese pastry makers to retain market share and their image.

Local shops will have to keep renewing and updating their products and services so they can remain alive in the market.

Kinh Do, for example, a well-known Vietnamese pastry and cake company has set up a chain of Kido Bakery&Cafes that have a new style quite different to the company’s old chain.

Givral has also set aside significant investments, with the purpose of renewing its stores, so they can serve customers on the spot.

Bank scandals shake investor confidence

Both of the nation’s stock exchanges saw negative performances last month, as the stock market was dragged down by scandals surrounding the arrests on fraud charges of two of the nation’s leading banking tycoons.

On the HCM City Stock Exchange, the VN-Index lost 4.5 per cent of its value last month, falling to 396 points, with volume averaging 38 million shares per day. On the Ha Noi bourse, the HNX-Index plunged by a more dramatic 11.2 per cent over the course of the month to 61.43, with trades averaging 33 million shares per session.

While the scandal in the banking industry accelerated the market decline, August was the fourth consecutive month in which the two benchmark indices have posted negative returns. Gains posted in the first five months of the year have been almost entirely erased.

Movements on the market in August can be divided into two halves. In the first 20 days of the month, the VN-Index gradually extended its short-term recovery from a low in early July. However, news of the arrest of banking tycoon Nguyen Duc Kien the next day then sent the market into a nosedive.

Kien was a founding shareholder of Asia Commercial Bank (ACB), and the stock itself quickly lost almost 25 per cent of its value over the next five sessions, despite the fact that Kien has no longer played any major role in the management of the bank.

Sacombank (STB) and Eximbank (EIB) contributed to the massive breakdown of stock market. Panic reactions appeared among local investors over the first three days after the news hit, and shares across the board were sold aggressively, causing a dramatic drop in both of the benchmark indices. Market volume almost doubled during these sessions.

Investor sentiment improved slightly during the last trading week of the month after efforts from the State Bank of Viet Nam to ensure the liquidity of the system eased market concerns. Major market-driving blue chips such as Vinamilk (VNM), Phu My Fertilisers (DPM) and PV Gas (GAS) gradually recovered from their loss, helping the VN-Index regain some points.

Support from foreign investors also helped shore up the market, as they added around VND600 billion (US$28.6 million) in net buying value.

The arrests of ACB founder Nguyen Duc Kien and former chief Ly Xuan Hai led to a plunge in banking shares across-the-board and a run on deposits.

Nevertheless, there was a clear differentiation among banking shares themselves. Banks directly involved with the arrests were Asia Commercial Bank (ACB) and Eximbank (EIB), both large-cap stocks with major impacts on the movement of indexes.

Despite efforts by the central bank to prevent a run on these banks, investor confidence towards these stocks was quite low, and stock prices kept falling through the end of the month despite the market showing signs of recovery overall. By the end of month, these two stocks had each declined by over 20 per cent.

Among six other listed banks, the average losses in share values were contained at around 10 per cent, slightly smaller than market average. Demand for this group of shares has steadily recovered since the shock of the arrests. Moreover, concerns for a breakdown of the banking system have disappeared and investor outlook for banking shares has recovered some equilibrium.

The only ongoing concern is whether there would be fallout for the market from a perceived confict of interest between the Government and banking officials in the prosecution of the fraud cases.

From the point-of-view of fundamentals, meanwhile, banking stocks are considered less attractive in general due to the issues of rising bad debts and low credit growth. So the arrest of Ly Xuan Hai may have done some lasting harm by increasing the concern of investors about management fraud at commercial banks during the economic downturn. In terms of technical review, it may be a long time before these stocks can rally.

Economic factors otherwise support a possible rally in the remaining months of the year. Third and fourth quarter earnings of listed companies are expected to be more positive.

Aviation helps regional growth take off

The aviation industry, which has played an important role in economic development in the Asia Pacific region, will continue to do so but faces challenges, a senior international aviation official said at the South East Asia Airport Expansion Summit 2012 in HCM City yesterday.

“Significant investments are needed to meet the projected growth in demand, including fleet expansion using newer, more fuel efficient aircraft, more necessary aviation infrastructure with modern airports and air traffic management systems,” Vinoop Goel, assistant director of the International Air Transport Association (IATA)’s Member & Government Relations said.

“Around $700 billion has been invested in the industry in the last 20 years but air travel at some airports is still “a mess,” he added.

He urged all IATA members to enhance the passenger experience by offering them the ability to self boarding, self bag drop, and track bag location from mobile devices.

“Security systems should be upgraded as security checkpoints have slowed to a throughput of just 149 passengers per hour (compared with 350 prior to September 11, 2001).”

But he reminded the principles for airport investment: long-term view, optimising capital expenditure, focus on cost-efficiency, and consultations.

He gave out several key numbers for the aviation industry: “Economic footprint is estimated at US$2.2 trillion, or equivalent to 3.5 per cent of the world GDP.

“The industry generates a total of 56.6 million jobs globally with direct employment of over 8.4 million.”

In 2010 the Asia Pacific accounted for 34 per cent of global traffic share with 780 million passengers. It had 1,207 commercial airports and 359 airlines, providing 24.1 million jobs and adding $470 billion to GDP.

This region is estimatedly increasing traffic by 3.9 per cent for and capacity by 3.3 per cent this year.

Around 600 airplanes were sold to the region this year out of a global total of 1,560.

By 2030 the regional industry hopes to triple the passenger number to over 2.2 billion and increase the cargo volume by 6.3 per cent per annum.

Fisheries centre planned for Delta city

The Ministry of Agriculture and Rural Development met with Can Tho University representatives and authorities of several Mekong Delta provinces last Friday to reach an agreement on building a fisheries centre in Can Tho City.

Can Tho centre, the first pilot project of its kind in the country, aims to build fishery markets for the Mekong Delta, to establish an aqua-product processing complex, a freshwater aqua-product trading floor, and a fishery-supporting industry for the region.

The centre will include fishery research institutes and a human resource development centre for the region, and a fishery entrepot for the Mekong Delta, and the domestic and overseas markets as well.

Representatives of other Mekong provinces agreed with the plan to locate the fishery centre in Can Tho. However, they proposed that the centre’s facilities should be located in localities that have advantages in each sector.

They also proposed building a facility that will conduct research to prevent and combat diseases that affect tra fish.

According to the Ministry of Agriculture and Rural Development, the coastal cities of Hai Phong, Da Nang and Can Tho and the provinces of Ba Ria – Vung Tau and Khanh Hoa have been chosen as locations for five fishery centres.

Hundreds of stalls at farming fair

More than 200 stalls took part in the opening of this year’s Hau Giang Agriculture Fair, held in the southern province’s Vi Thanh City, yesterday.

The fair, orgainised by the province’s Industry and Trade Department and Sai Gon Viet Trade Promotion Company at Hoa Binh Park, showcases the agricultural achievements of rural areas, specialities and product trademarks of southern provinces, and aims to increase regional trading activities.

The fair is divided into four areas, including an exhibition displaying Hau Giang’s agricultural achievements, other provinces’ agricultural products, consumer goods essential for rural farmers, and a seed trading area.

The fair ends on September 12.


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