Home » Business » BUSINESS IN BRIEF 12/10

Import taxes to rise for steel products

The Ministry of Finance plans to increase import taxes imposed on a number of steel products after local steel producers complained that they are in difficulties due to the overwhelming presence of imported steel.

The ministry announced on its website the draft version to amend and supplement Circular 157/2011/TT-BTC issued on November 14, 2011 setting preferential import and export tariffs.

As planned, the ministry will pull the import tax rate of stainless cold-rolled steel up to 7% from the current 5%.

The ministry came up with the uptrend tax adjustment after Posco VST Co., the country’s largest stainless cold-rolled steel plant with total output meeting over 70% of local demand, said its business is facing difficulties due to poor demand and tough competition from cheap imports.

Moreover, the firm also said it is encountering problems in maintaining steel prices at the most competitive level compared to prices fixed by steel import enterprises charged with an import tax rate of 5%.

Even though the tax rate of stainless cold-rolled steel was revised up to 5% in January from the initial 0%, the volume of this product imported into the nation amounted to 45,773 tons from January to May, a contraction of a mere 11.62% year-on-year.

Therefore, Posco petitioned the finance ministry to consider doubling the tax rate from 5% to 10% in order to help the firm secure its market share in the current tough conditions. Despite a tax rate of 5%, stainless cold-rolled steel is still being imported into Vietnam at low prices and the product has dominated the local market, the company said.

According to the Vietnam Steel Association, total output of the domestic stainless cold-rolled steel segment exceeds 300,000 tons while the annual demand for this kind of product of the whole country only stays at below 250,000 tons.

Responding to the proposal from Posco, the ministry is weighing the possibility of adjusting up the tax rate to 7%.

Now Posco is selling stainless cold-rolled steel at US$1,504 a ton for the 430 type, and US$2,770 a ton for the 304 type at home while the import prices of the products are US$1,400 and US$2,650 a ton respectively. With a 7% tax rate, the import prices of these steel products will be increased to US$1,428 and US$2,703 per ton and the prices will jump to US$1,470 and US$2,783 a ton with a tax rate of 10%.

Apart from the planned stainless steel tax rate, the ministry also plans to increase import taxes of a number of other steel products to support local steel makers in the current fierce competition with imported products given low import tariffs.

Vinamilk called ‘reliable business’

The Viet Nam Standards and Consumers Association (Vinatas) yesterday honoured Viet Nam Diary Products Co (Vinamilk) as the first company recognised as a “reliable business for consumers”.

“Carrying such a great responsibility is not simple,” said a Vinatas representative. “Vinastas has a supervising system on enterprises and can withdraw the title if they lose trust among consumers.”

Besides Vinamilk, the association is also considering other brands such as food processor Vissan, Ha Noi Beer, taxi group Mai Linh and consumer goods company Unilever Viet Nam.

PetroVietnam unveils divestment plans

PetroVietnam is seeking a merger between its financial arm PetroVietnam Finance Corp (PVFC) and a bank in a bid to facilitate its divestment of capital from the financial company to realize the restructuring scheme.

At a regular meeting in Hanoi on October 8, PetroVietnam Chairman Phung Dinh Thuc said that the parent company would not be able to divest capital from PVFC if the company continued to operate under the current business model as this model will no longer exist in the group.

“Therefore, in order to withdraw capital from this company, PVFC will have to merger with a bank to perform their banking functions,” he said, adding the group is actively seeking a trusted bank to make a deal.

The merger will be made under special supervision from the State Bank of Vietnam and the Ministry of Finance, Thuc said. He hopes to reduce the holding in this company to 20 percent by 2015 and then gradually to zero percent later.

At present, PetroVietnam owns over 70 percent of PVFC’s charter capital. Thuc said the group’s restructuring scheme has been basically approved by the Government, adding that its divestment plan will be carried out under a roadmap.

In early September, Prime Minister Nguyen Tan Dung urged PetroVietnam to restructure and divest capital from many subsidiaries and affiliate companies.

The group now has 29 subsidiary and 206 affiliate companies and it expects to reduce these numbers to 24 subsidiaries and 126 affiliates.

EU-Vietnam free trade agreement under negotiation

The first round of negotiation on the Vietnam-EU Free Trade Agreement (FTA) officially started in Hanoi on October 8.

It involves 60 experts from both sides. The Vietnamese delegation is headed by Deputy Minister of Industry and Trade Tran Quoc Khanh and the the EU delegation by Deputy Minister of Trade Mauro Petriccione.

As scheduled, both sides will engage in three rounds of negotiations from now into 2013 to be finished in 2014.

Vietnam wants to sign the FTA with the EU, in the hope that domestic businesses will be able to penetrate the European market and provide an opportunity for local consumers to purchase EU products at cheaper prices.

However, the FTA also requires Vietnam to improve its legal framework on a par with international standards.

In 2011, Vietnam is the EU’s fifth largest trade partner among ASEAN member countries, with bilateral trade turnover reaching 18 billion euro, including 12.8 billion from Vietnamese exports.

In the first half of this year, the EU became Vietnam’s second biggest partner which accounted for some 7.3 billion euro or 17.1 percent of the country’s total export turnover.

The EU is currently one of the largest foreign investors in Vietnam, with its capitalization estimated at 1.4 billion euro or 12 percent of the country’s total registered foreign direct investment (FDI) in 2011.

First online financial library inaugurated

The Hongkong Shanghai Banking Corporation (HSBC) in Vietnam inaugurated its online financial library, the first of its kind in Vietnam on October 9.

The free-of-charge library is designed to help people improve their personal financial management through training courses on personal and business finance management.

It also aims to provide them with financial knowledge and information about banking businesses.

HSBC Vietnam CEO Sumit Dutta expressed hope that individuals and businesses will benefit from the library.

Nguyen Toan Thang, Deputy Governor of the State Bank of Vietnam (SBV) highlighted the library as a bridge between the bank sector and the public.

Internet users can access the library at http://www.hsbc.com.vn/1/2/about-hsbc/thu-vien-tai-chinh-truc-tuyen-hsbc.

Giant groups join hands to increase consumption of domestic goods

More than ten Vietnamese giant groups belonging to the Ministry of Industry and Trade signed a voluntary co-operation agreement yesterday stating they would use each others’ products. By doing so, they hoped to boost consumption of Vietnamese goods and help each other solve business difficulties.

The groups include Vietnam National Oil and Gas Group, Vietnam Coal and Mineral Industries Group, Vietnam Garment and Textiles Group, Vietnam Paper Corporation and Vietnam Industrial Construction Corporation.

Minister Vu Huy Hoang said the strategy would contribute to the national campaign “Vietnamese people using Vietnamese goods” which was launched in 2010. Enterprises throughout the country will also be asked to co-operate with one another in the near future.

Member Council Chairman of Vietnam Electricity Hoang Quoc Vuong said this action is essential for the country’s development. This Corporation will take the agreement very seriously and work with other State-owned enterprises to overcome any difficulties.

At present, EVN needs coal, fuel, power and electric facilities and looks to sell power, transformers and electric cables.

General Director of Vietnam Textiles and Garment Corporation Tran Quang Nghi said his corporation had recently made great improvements in product quality and design, and had also succeeded in using more local materials.

Two months ago, the ministry instructed enterprises nationwide to consume more domestic goods in order to solve difficulties in production and business. The ministry’s enterprises would take the lead in this initiative.

The ministry has also told its branches in major cities and provinces to determine whether the enterprises could meet local demand.

The volume of inventory items remained high in comparison with the same period last year, according to the ministry. There are about 8.9 million tonnes of coal in stock, while the inventory rate of iron, steel and cast iron increased by between 30 and 45 per cent and the rate of other items such as fertiliser, plastic products, and cars and motorbikes went up by 20 per cent.

Head of the ministry’s Domestic Market Department Vo Van Quyen said the enterprises’ potential to consume domestic products was very high. For example, Vietnam Chemical Corporation wants to buy coal, papers, labour uniforms and sell auto and motorbike tyres and tubes, pullers, various chemicals, welding rods and fertiliser. Meanwhile Saigon Beer Alcohol Beverage Corporation requires coal, papers and various plastic packing.

Although the country still faces a shortage of materials and advanced technologies, if each enterprise increases its production capacity, domestic materials may meet demand.

PVN invests over US$1.8 billion abroad

The Vietnam Oil and Gas Group (PetroVietnam – PVN) claimed to have invested US$1,814 million in oil and gas exploitation, petrol trading and mineral exploration abroad.

PVN Chairman of the Board of Members Phung Dinh Thuc said that joint ventures on oil and gas mining in Venezuela and Russia already got off the ground, producing 2.22 million tonnes and earning over US$2 billion. PVN has sent back to Vietnam more than US$242 million, he said.

Thuc revealed that the initial success in exploiting oil and gas in Venezuela has marked a turning point in PVN’s overseas operation.

Vietnam’s GDP likely to slow down, says EIU

Vietnam’s GDP growth in 2012 is likely to drop to 5.3 percent from 5.9 percent in 2011, according to the Economist Intelligence Unit (EIU)’s recent report.

EIU said although the inflation rate is forecast at 8.5 percent by the end of this year, the individual consumer growth will only reach 5.6 percent on average.

In addition, Vietnam’s GDP in 2013 will be reduced to 6 percent from the projected figure of 6.6 percent.

In the 2014-2016 period, Vietnam’s GDP will grow by 7 percent annually thanks to the healthy business climate.

However, it is difficult for Vietnam to achieve its target due to global economic recession and domestic economic instability.

Local retailers face crunch time

Local retailers had to overcome numerous hurdles in the past nine months as Vietnam fell out of the top 10, then the top 20 and finally the top 30 on the global list of most attractive retail markets.

Dr. Dinh Thi My Loan, Vice Chairwoman of the Vietnam Retailers Association, attributes Vietnam’s gloomy retail market to the global economic downturn, political instability and falling revenues for the world’s top ten retailers.

In 2011, the ten largest global retailers, excluding Tesco and McDonald’s, suffered a 2-percent drop in revenue (equivalent to US$4.26 billion) and had low growth rates of 1.6-1.8 percent as a result of high unemployment and the debt crisis in Europe, Loan says.

In addition, she states that the local market is less attractive to foreign retailers because of poor infrastructure.

While there is a sharp increase in fuel prices and input costs, domestic retailers find it difficult to access bank loans, especially when the Government is tightening monetary policy.

According to economists, in order to help local businesses iron out snags it is essential to evaluate the impact of inflation and deflation on each individual retailer, as well as the entire retail sector, from different angles.

Furthermore, Vietnamese retailers should be aware of the strong impact economic difficulties will have on their operational structure and consumer shopping habits.

Economists suggest that domestic retailers concentrate on reducing expenditures, accessing hidden risks inherent in their investment scheme, diversifying products, improving customer-care services and building strong trademarks through sales and marketing campaigns.

In the long run, they need to develop comprehensive marketing strategies and plans for their retail outlets, including shopping malls, large supermarkets and specialty shops. They also need to learn from successful retail models and mini-supermarkets in other countries like the Republic of Korea, Thailand and Indonesia.

Dr. Loan claims that many local businesses have gained initial success in developing retail models despite the impact of the global economic downturn. She says that VinatexMart – a giant garment and textile agent – has opened nine new supermarkets since the beginning of this year, bringing its total number of supermarkets to 70.

Other retailers such as Satra, Nguyen Kim, Co.opmart, Lottemart and Big C are also busy launching discount programs and expanding their distribution networks to boost the consumer purchasing power.

Most businesses agree that when it comes to the crunch they should join hands to support each other rather than gain a leg up on unhealthy competition.

Danang welcomes two million tourists

The number of tourists to the central city of Danang reached 2.1 million in the first nine months of the year, up 10 percent against the same period last year.

According to the city’s Department of Culture, Sports and Tourism, Danang earned VND1,200 billion from tourism services, up 18.1 percent from a year earlier.

In recent times, the city has organized many cultural activities to attract tourists, such as opening an indoors entertainment area on Ba Na Hills, holding international firework and parachute competitions, and putting a series of resorts into operation.

Travel agencies in the city have plans afoot to reduce tour prices by 20-35 percent and hotel and resort accommodation costs by 20-30 percent.

Currently, Danang has 55 tourism investment projects worth VND54,000 billion in total.

HCM City begins preparations for next Tet

Enterprises in Ho Chi Minh City have begun preparing commodities for the coming Tet Lunar New Year holidays.

The total capital required for stockpiling of Tet goods is estimated at VND6,681 billion, presenting a year-on-year increase of VND1,288 billion, of which VND3,436 billion is for goods listed under the price stabilization program.

Nguyen Thi Hong, deputy chairwoman of the City People’s Committee held a working session on preparing goods for the next Tet with relevant departments on October 8. Commodities for the next Tet are plentiful and diversified at a stable price, but price of green vegetables could be increased due to bad weather conditions.

The largest stockpile will be seen in oil, sugar, poultry, eggs and processed foods, as consumer demand for these have been seen to increase.

Saigon Commercial Cooperative Union or Saigon Co-op has prepared Tet goods worth VND3,350 billion, of which VND912 billion is for goods listed under the price stabilization program.

Vissan Food Processing Company has spent more than VND1,000 billion. Pham Ton Poultry Company, Saigon Industrial Food Stuff JSC and Ba Huan Company-a supplier of eggs, have stocked Tet goods worth VND814 billion, VND231 billion and VND165 billion respectively.

Supermarkets including Maximark, Big C and Citimart have also prepared goods 3-4 times more than usual.

According to Nguyen Phuoc Trung, deputy director of HCMC Department of Agriculture and Rural Development, a number of businesses in the City have imported bad-quality poultry. This is then sold cheap in the market, further lowering domestic prices of other meat products.

Ms. Hong noted that the city authorities have established a diversified distribution network such as supermarkets, convenience food stores, traditional markets, mobile markets that must now strengthen and improve service quality, and create a good rapport between enterprises and consumers.

Continuous rain plunges rice price in Mekong Delta

Price of autumn-winter rice has plunged in the Mekong Delta in recent days due to continuous heavy rainfall that has lasted for more than a month.

On October 8, the price of one kilogram of IR50404 dropped to VND3,400-3,500. Several rice fields have been flooded and flattened due to long lasting heavy rain.

In Can Tho City, Hau Giang, Kien Giang and Dong Thap Provinces, hectares of rice fields are under floodwaters and in other places the crop has been flattened, from persistent non-stop rain.

Ngo Xuan Hien, head of the Agriculture and Rural Development in Chau Thanh A District in Hau Giang Province, said harvesting costs have doubled as combine harvesters cannot operate in wet fields. Farmers have had to hire manual labor to cut their rice crop with hand sickles.

Price of rice has dropped by at least VND1,000 a kilogram and it is becoming difficult to sell the damp rice.

Chau Thanh A District has 9,000 hectares of autumn-winter rice crop but only 40 percent of this crop has been harvested so far.

Huynh Phu Loc, a rice trader in Lai Vung District in Dong Thap Province, said that several traders have stopped purchasing rice because the rice quality has gone down from long-lasting rainfall and consumption is still rather low.

 Vietnamese seamen in high demand  

Vietnam plans to train 39,000 maritime officers and crew members to meet local and export demands, said captain Tieu Van Kinh, chairman of Vietnam’s Captains Club.

With a coastline of 3,260 km and a population of nearly 90 million people, Viet Nam is considered to be in an ideal position for maritime transport, Kinh said.

This was why the marine economy was regarded as a major force in the national economy. Kinh said the promotion of maritime transport would speed up economic development throughout the country.

But to achieve the goal, it was important to train highly skilled human resources, the chairman said.

The Department of Overseas Labour said Vietnam had been hiring out its seamen overseas since 1992. Forty local companies had sent more than 18,000 crew members to work on vessels owned by Japanese, Korean, Taiwanese and Chinese companies.

Vietnam also sends many crew members to work on foreign fishing vessels where they can earn between US$250 to $600 a month.

The local labour export association said foreign shipping companies had high demand for Vietnamese, but the nation could only supply 30 to 50 per cent of the demand. Many of the overseas workers joined fishing vessels.

Vietnam Maritime Administration said that from 2010 to 2015, the country could train about 4,800-5,000 maritime officers and 8,000-8,500 crew members.

But Dang Van Uy, Rector of Vietnam Maritime University, said it was not easy to train such a large number of crew members because of the shortage of qualified education.

Uy said several foreign shipping companies had offered scholarships and jobs to students who would later work for them.

To Van Long, deputy director of UT-STC Human Resources Training Marine Limited Company, said his company had trained 260 outstanding students on such scholarships in the past six years.

Vu Van Tai, vice chairman of HCM City Marine Science and Economics, said the State should increase investment in training facilities and create preferential policies to encourage organisations and individuals to get involved in training.

Tai said local training schools should expand co-operation with maritime countries to develop more joint-venture training models.

Vietnam, EU start free trade agreement negotiations   

Vietnamese Deputy Minister of Industry and Trade Tran Quoc Khanh and Chief Negotiator of the European Union (EU) Mauro Petriccione launched negotiations on a free trade agreement (FTA) between Vietnam and the EU, in Hanoi on October 8.

The negotiations were also attended by 60 Vietnamese and EU experts.

Vietnam is the third ASEAN member to talk FTA with the EU.

At present, Vietnam is the EU’s fifth trade partner in ASEAN with the union is Vietnam ’s third trade partner.

The EU is the largest importer of Vietnam in the world, with an import turnover of EUR12.8 billion in 2011. Its exports to Vietnam reached USD5.2 billion (over EUR4 billion) last year.

According to EU Trade Commissioner Karel De Gucht, the negotiation process is likely to take place in a long time. However, he said he hopes it will be completed before his working tenure finishes in October 2014.

Vietnamese cosmetics fail to secure a hold in domestic market   

Despite making great efforts to improve the quality of domestic cosmetics, Vietnamese products are still regarded as inferior to their foreign rivals.

According to the HCM City Chemical Cosmetics Association, by September this year, Vietnamese cosmetics companies had launched hundreds of products with various brands, but they accounted for just 10% of local market share. Meanwhile, the remainder is held by foreign products.

Vietnamese cosmetics products are widely used in Cambodia, but they fail to attract local customers.

Nguyen Thi Thanh from Tan Binh District has used a domestically-made face powder named Two Way Cake produced by Thorakao for some years. She has found that it is very suitable for her skin and cheap at just VND64,000 (USD3.4) per box. “However, it’s not a famous brand so I don’t want to show it off in front of my colleagues,” she confessed.

Mrs. Trang Anh, who uses Vietnamese cosmetics at a beauty salon on Le Thanh Ton Street in District 1, opposite Ben Thanh Market, said “When I show my customers Made-in-Vietnam products, they just stare at me. I know that most of customers around here just prefer famous brands. No shop around Ben Thanh Market sells Vietnamese cosmetics.”

She used foreign products, but finally found domestic goods were more suitable for her, so she hasn’t hesitated in showing them off in public.

Nguyen Thi Be in Binh Thanh District is a fan of Vietnamese crocus cream over the last five years. “I have used many different kinds of imported cream, but they’re no better than crocus cream, while they’re very expensive. A tub is just VND12,000 (USD0.57),” she added.

Vietnamese cosmetics products are often made from natural materials such as coconut oil, lemon, grapefruit, citronella, crocus and soapberry. However, shampoo extracted from soapberry by Lana, Saigon Cosmetics and Thorakao fails to draw customers who prefer similar products manufactured abroad.

Luong Van Vinh, Director of My Hao Cosmetics Ltd. Company, who started his business by producing soap, said, “Previously, Vietnamese companies produced soap using coconut oil, but now, they have also followed the world trend to use palm oil. Foreign industrial firms turned palm oil into soap and Vietnamese producers buy it while mixing it with colours and scents to make their own products.”

Pharmacist Huynh Ky Tran has spent much time researching crocus-extracted soap which helps to make the skin become whiter. However, sales of this product are much slower than Camay’s own product.

While allegedly Thorakao’s face powder is as good as foreign manufactured alternatives, it’s sales have only increased by 15%.

The sale of Vietnamese cosmetics remains modest and they almost are unable to compete with foreign brands.

According to the HCM City Chemicals Cosmetics Association, Vietnam is now home to 430 chemicals and cosmetics producers and businesses, yet foreign products account for over 90% of the domestic market share.

Hanoi starts work on waste water treatment station   

Work on the construction of a waste water treatment station at Bay Mau lake in the city’s largest green park started on October 7, helping improve the capital city’s environment.

The project worth 500 billion VND (24 million USD) has a daily capacity of 13,300 cu.m. Facilities of the project are built 13m under the ground in order not to affect the park’s landscape.

Once being completed, the project will serve an area of 217 hectares in the city’s centre with a population of more than 45,000.

After treatment, water will be pumped back into the surrounding lakes of Thien Quang, Bay Mau and Ba Mau, reducing pollution in the lakes, particularly in dry season, as well as in the local Set river.

The Kolon Global Group of the Republic of Korea has won the contract to build the station during a period of 756 days, while Nippon Koei and Viwase provide consultancy services.

Opinions differ over gold import

Several banks have yet to mobilize enough gold to settle their contracts before gold lending and mobilization get banned from November 25, raising a question whether gold import should be allowed now. But experts are greatly at odds over the question.

Nguyen Thanh Long, chairman of the Vietnam Gold Business Association, said a long-term vision is necessary for management of the gold market, and now the deadline for gold lending and mobilization should be extended to reduce the pressure on the market.

Another solution that should be considered is the central bank directly imports gold and help resolve the gold liquidity problem of commercial banks. This should be a last chance for banks to settle the issues relating to gold, said Long.

Sharing this view, economist Pham Do Chi said the central bank should import gold to deal with the gold liquidity problem at a couple of banks. Commercial banks can mobilize foreign currency on their own, so the foreign currency status of the Government will not be affected, said Chi.

He suggested considering connecting gold import and export markets in the future. Once there is no barrier between the local market and the world market, there will be no gap between local and global gold prices.

Meanwhile, another source showed concerns over forex fluctuations if gold is to be imported.

The source, who asked not to be named, cited the past practice, saying that when the difference between local and global gold prices widened, the central bank often enabled gold import to stabilize the market. As information about gold import was released, foreign currency prices usually picked up due to speculation.

The situation is the same this year. If the central bank announces the volume of gold to be imported, then foreign currency prices will fluctuate, said the source.

“The forex market will already turn volatile with import of US$50 million worth of gold, whereas we need some US$1 billion to import a sufficient volume now,” said the source. Therefore, he said gold import should be the final option only.

“We imported a not-so-small amount of gold every year in the past, foreign currency was spent, but gold supply was always not enough to meet the demand. Then, how much is enough?”

Instead, the central bank should consider extending the deadline for gold lending and mobilization at a number of banks currently facing liquidity shortage, said the source. In particular, the central bank should set a specific new deadline for each bank and closely supervise their operations.

The source said the gold liquidity problem could be resolved in one-year time. Therefore, it is not necessary to import gold to avoid affecting the foreign currency status of the country.

Frasers wins deal to manage hotel in Vietnam

Frasers Hospitality Pte Ltd has won a deal to manage a hotel residence project in HCMC in a move to expand the Capri by Fraser brand across Asia five months after launching the new hotel residence brand.

The Capri by Fraser property, which is under construction in District 7, is scheduled to open late this year. This is the third Capri by Fraser property to be secured by Frasers Hospitality in Southeast Asia following the opening of the first Capri by Fraser hotel residence in Singapore and announcement of a second property in Kuala Lumpur, set to open in March 2013.

Designed to meet the lifestyle needs of the e-generation travelers, Capri by Fraser is a hotel residence that offers its residents with a menu of services to choose the way they want to rest, relax and recharge.

The Capri by Fraser property in HCMC has 175 rooms that feature studios with one bedroom and one-plus-one bedroom suites with fully-equipped kitchen walls and home entertainment systems.

The property also comprises of three floors of in-property leisure and business facilities including an all-day dining café, deli and coffee bar, grocery and retail outlets, gym with steam and sauna facilities, a yoga and sun-tanning deck, and spa.

The Capri by Fraser brand is introduced into Vietnam as part of an agreement signed in Singapore last month between the hotel management firm and Luxel APT JVC, which is a joint venture between real estate developer BB Dai Minh Corp. in Vietnam and KRDF, an investment fund by one of the largest Korean funds in Vietnam, Korea Investment Trust Management Co Ltd.

The new brand also reinforces Frasers’ commitment to establishing a stronger presence in Vietnam, as the group now manages Fraser Suites Hanoi, which was launched in 2009.

Choe Peng Sum, chief executive officer of Frasers, said in a statement obtained by the Daily that Frasers was working with Luxel APT JVC to bring the new hotel residence concept into Vietnam to meet the work-life balance needs of a rapidly growing e-generation market sector.

“Based on the positive response to our new Capri by Fraser brand to date, we are very confident that this will be an important catalyst for us to build a stronger presence in Vietnam to meet the different residential needs of the increasing number of travelers,” Peng Sum said.

Lee Young Jin, general director of Luxel APT JVC, said the Capri by Fraser hotel residence concept specifically catered to the needs of singles and couples traveling to HCMC.

Figures of General Statistics Office indicated international arrivals in Vietnam in September grew by up to 61.6% to over 640,000, and in the first nine months of 2012 exceeded 4.85 million, up 13% compared to the year earlier period.

Frasers Hospitality quoted sources including the World Tourism Organization as saying that Vietnam’s tourism industry was expected to grow at an annual rate of 11.5-12% until 2020, generating a total revenue of about US$18-19 billion. The country is also projected to be among the top three rapid growth markets in Asia Pacific for 2013.

Frasers Hospitality’s current portfolio, including those in the pipeline, stands at 73 properties in 39 key gateway cities, and more than 12,200 apartments worldwide.

Japan manufacturers say unable to find local suppliers

Many Japanese manufacturers at the supporting industries exhibition in the city complained that they could not find local suppliers, which explains why the local supporting industries are still underdeveloped.

Vietnamese firms’ capability of supplying products for supporting industries is now limited to simple products, according to Japanese producers at the exhibition that wrapped up last week in HCMC.

As a firm specializing in producing printers for export, Canon regularly attends exhibitions on supporting industries to seek components suppliers for its two plants in Bac Ninh Province and one in Hanoi City, aiming to increase the local contents of its products manufactured in Vietnam.

According to Okada Kinya from Canon Vietnam, the firm can find some local component suppliers every year to increase the localization rate of printers and lower the product price. However, most of high-tech components are supplied by foreign-invested enterprises in Vietnam.

Meanwhile, Vietnamese enterprises only produce simple products such as paper boxes, plastic bags or products of low technology. After over ten years doing business in Vietnam, Canon has so far increased the localization rate to 70%, with around 60% of components supplied by foreign-invested enterprises.

Similarly, Toyota Vietnam has also joined the above annual exhibition for several years to find simple auto components such as plastic and rubber products also to increase the localization rate and lower the price.

With such exhibitions, Toyota Vietnam can normally build a database of potential suppliers. However, after close inspection and evaluation, there are very few suppliers meeting Toyota’s safety, environment and quality requirements.

Besides, Toyota Vietnam’s suppliers are mainly foreign-invested firms, with only one Vietnamese firm.

Some other Japanese producers such as Suzuki, Brother and Nidec said that the quality of products supplied by Vietnamese firms was not high.

The weakness of Vietnamese suppliers, according to Japanese firms, is that they are unfamiliar with the harsh competitive environment, which has hindered the development of Vietnam’s supporting industries.

According to a survey among 4,000 Japanese enterprises in Asia and Oceania conducted by the Japan External Trade Organization (JETRO) last year, the local contents ratio of Japanese products in Vietnam was only 28.7% compared to 60% in China, 53% in Thailand, 41% in Indonesia and India, and some 40% in Bangladesh and Malaysia.

This year’s exhibition on supporting industries attracted over 100 local suppliers and Japan manufacturing firms in the auto, motorcycle and electronic fields. Among these, there were up to 53 Japanese producers wanting to find Vietnamese suppliers.

Sotaro Nishikawa from JETRO said that the expo aimed to help Vietnamese firms expand transactions and boost sales of products to Japanese customers right in the local market.

“With the expo, we also open opportunities to help Japanese producers lower the production cost and operate smoothly in Vietnam,” he said.

Logistics firm builds Binh Duong distribution center

Transforwarding Warehousing Joint-Stock Corp., or Transimex Saigon, on Monday started constructing a goods distribution center in Song Than 2 Industrial Park in Di An District, Binh Duong Province.

The distribution center, which will cover a total area of 18,000 square meters, will consist of a 12,000-square meter warehouse system, a parking lot for trucks and a container yard. It will be constructed in four months’ time with total investment capital of VND94 billion.

Le Duy Hiep, general director of the firm, said the fact that the center is located near industrial parks in the province as well as ports in HCMC will help shorten time and reduce costs for transporting commodities of local exporters and importers.

When in place, the center will serve demands for production and import-export activities of enterprises in industrial parks in Binh Duong and in the southern region.

Tran Van Lieu, director of Binh Duong Industrial Parks Authority, said 28 industrial parks have been established in the locality so far. The province will have 38 concentrated industrial parks covering a combined 19,000 hectares in line with the provincial zoning plan by 2020, he added.

Therefore, now is the right time to build up sizeable transforwarding centers to meet the rising demand for commodities transport among companies in southern provinces in the near future.

CBRE acquires offshoot in Vietnam

The American property services provider CBRE Group, Inc. on Monday announced to have acquired its offshoot in Vietnam, officially merging CB Richard Ellis Vietnam Company to its system after some 10 years franchising its brand into the Vietnamese market.

Both sides declined to reveal the value of the acquisition.

Rob Blain, chairman and chief executive officer of CBRE Asia Pacific, said at a press briefing in HCMC on Monday that the acquisition of CBRE Vietnam was to strengthen the company’s Asia Pacific platform and its ability to offer fully integrated services in the rapidly growing Southeast Asia region.

CBRE set its foothold in Vietnam’s property market in 2003 through a franchise deal, providing property services such as property sales, office and retail leasing, occupier advisory services, residential project marketing, property and facilities management, project management, consulting, research and valuation.

Blain said it was not the first time the group made a purchase of affiliates; it had acquired its associate companies in Japan and India. The group has a plan to buy some other affiliates in other countries in the years to come.

Marc Townsend, managing director of CBRE Vietnam, said merging to the group’s platform will help CBRE Vietnam to have more resources to enhance and expand its service offering, and further tap into CBRE’s global network.

Blain said although current market condition was challenging in Vietnam, CBRE believed the country has strong long-term growth potential, and CBRE Vietnam would be a key pillar in its service delivery platform in the emerging economies across Southeast Asia.

TNK-BP unit’s offshore field produces first gas

TNK Viet Nam, a fully owned subsidiary of TNK-BP, has successfully produced the first gas from Lan Do field in Block 06.1, about 360km offshore of the southern coastal province of Ba Ria-Vung Tau, the company announced yesterday.

TNK-BP is a joint venture of British Petroleum in the UK and Russia’s AAR.

The Lan Do wells were opened for gas production at 20:40 local time last Sunday. The two vertical subsea wells at a depth of 185m are now tied back to Lan Tay Platform in Block 06.1 through 28km of single 12-inch flow line and umbilical, enabling TNK Viet Nam to produce gas using existing infrastructure facilities.

The Lan Do field, which has a production capacity of up to 5 million metric standard cu.m per day (mmscfd), is expected to bring 2 billion cubic metres of gas to market annually.

“Lan Do is the first offshore field development project in the past 10 years for the team in Viet Nam, and the first ever for the TNK-BP Group. We are honored to mark this significant milestone for our operations in Viet Nam,” said TNK Viet Nam general director Hugh McIntosh.

“The development of our offshore fields is of massive significance in terms of TNK-BP’s long-term strategic development,” said TNK-BP executive vice president Alexander Dodds. “This first gas at Lan Do field opens a new phase in the life of our company. We have effectively delivered our first offshore drilling project in TNK-BP’s history, thereby proving that the company has all that is required to undertake such sophisticated and complex projects. The experience we’ve gained will allow TNK-BP to successfully participate in the development of other offshore oil and gas projects in the future.”

TNK Viet Nam entered Viet Nam through the acquisition of BP’s upstream assets in October 2010 and became equity owner and operator of Block 06.1, receiving its investment licence in October 2011. The Lan Do field development project, commenced in 2010, became intensive from the beginning of this year, with successful completion of drilling operations in April, umbilical installation in June, flow line installation in July, and mechanical completion and well test at design flow rate this week. The project was delivered within budget and without any lost time incidents.

Vietnamese-German University disburses $180 million

Vietnamese-German University (VGU), the first of four planned new model state universities in Vietnam, recently disbursed a $180 million loan funded by the World Bank.

VGU president Professor Juergen Mallon told VIR at its recent opening ceremony of academic year 2012-2013 that the money was used for building a new campus in Binh Duong province.

“The new campus is in construction design process. We will also build up laboratory, scientific centre and import modern scientific devices serving studying and researching of teachers and students,” said Mallon, adding that the campus was expected to be completed by 2017.

The VGU in Ho Chi Minh-City and Binh Duong New City is a young autonomous university providing study programmes in the fields of engineering, technology and business.

It has an international background and cooperates with German partner universities focusing on the fields of research and development, teaching and lifelong learning, university governance, and are heading to become a world-class institution in the South-East Asian market within the next two decades.

Currently, there are 500 students following the study programme at VGU.

Furthermore, VGU is designated to provide capacity building measures for the entire higher education sector in Vietnam.

Myanmar’s investment treasures to be revealed

A must see event is to put potential Myanmar investors in the picture.

Centre for Management Technology (CMT), a Singaporean conference organiser, will hold the second New Myanmar Investment Summit in Yangon on October 17-18, 2012, to help foreign investors discover new opportunities in Myanmar’s mining, telecoms, automotive, port and inland shipping industries.

With its extensive reforms, Myanmar is attracting substantial foreign investors keen to seize lucrative opportunities in various sectors of the economy. Numerous global foreign corporate executives and regional businessmen are convening in Myanmar to firm and tie up deals. Keeping in step with the latest reshuffle of key cabinet posts and officials of various sectors, CMT’s Second Investment Summit brings a top panel to the country’s hot spots including mining, power and electricity, telecommunications, property and agriculture and plantation as well as trading sectors.

Two key officials, U Aung Naing Oo, director general, Directorate of Investment & Company Administration (DICA) with a paper on “Investment Opportunities and Private Sector Development”, and U Maung Maung Win, director general of Ministry of Finance and Revenue’s Budget Department addressing “Financial & Banking Reforms in Myanmar” will be present at the summit.

Senior representatives from ministries of Transport, Mines, Finance and Revenue, are also scheduled to brief foreign and local businessmen expected to attend. Other speakers include leading authorities representing the private sector – All Myanmar Investment Partner, VDB Loi, Frost & Sullivan, General Electric Company, Economically Progressive Ecosystem Development (EcoDev) Group, P&A Asia, Colliers International Thailand, and TNS Asia Pacific.

The summit’s theme “Towards Successful JVs and Financing” defines the event which offer new understanding of key areas including new investment laws, joint ventures, structuring of right business models, implications of the Foreign Investment Law for investors, environmental compliance of doing business in Myanmar, land sourcing for industrial, agricultural, hospitality and commercial use.

Petrol dealers to dip into fund

The Ministry of Finance yesterday issued an official letter regulating fuel prices in the local market for the next 30 days in an effort to curb a potential hike following fluctuations of world oil prices.

The ministry said from October 9 to November 8, it would continue to allow petrol traders to claim compensation from the petrol price stabilisation fund, which stands from VND300 – VND500 per litre, for losses incurred from potential global price hikes.

In addition, fuel retail prices in the period will be calculated basing on the world average price plus 12 per cent import tax for gasoline, 10 per cent for kerosene and 8 per cent for diesel.

Other taxes such as special consumption tax, environment tax and value added tax will also be applied as usual to calculate retail prices.

Fuel transportation fees will also be added to prices as is the norm with, VND600 for gasoline, diesel and karosene and VND400 for mazut oil.

The ministry late last week sent a letter to liquefied petroleum gas (LPG) importers nationwide asking them to register their sales prices before putting their products on the market.

The letter said gas importers must email price changes with e-signatures or fax notifications to the ministry, and then call to confirm they have been received.

Importers are also required to explain reasons for price changes and inform their distribution networks.

The move follows a hike in cooking gas prices last week, which spiked by VND16,000 (0.77 US cent) to an average of VND434,000 (US$ 21) per 12-kg canister.

(VietnamNet)

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