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HCM City sBUSINESS IN BRIEF 14-12ets 9.5 pct GDP growth for 2013

The Ho Chi Minh City People’s Council approved a resolution on socio-economic development for 2013, aiming to record a GDP growth rate over 9.5 percent.

Under the resolution, the city will strive to raise its GDP per capita to US$4,000, mobilise social investment totalling more than VND248,500 billion (or36 percent of GDP), and increase the export growth rate to 13.5 percent.

It will also reduce the poverty rate to 2.32 percent and the unemployment rate to less than 4.8 percent. In the coming year, 89 percent of urban residents will have access to clean water supplies and  traffic congestion will ease.

HCM City Mayor Le Hoang Quan stressed the importance of controlling inflation, increasing investment efficiency, stabilising financial markets, and protecting the environment.

He also highlighted the needs to alter underlying economic structure, increase State management, combat corruption, and ensure social welfare.

Hanoi exhibition shows audio visual equipment

The 2012 Audio Visual Equipment Show (AV Show) began in Hanoi on December 7.

The event has attracted 10 domestic and international businesses, including Audio Choice, Advantage, Viet Trung Audio, Hoang Hai Audio, and Anh Duy Audio.

Their displays exhibit loudspeakers; amplifiers; VCD, DVD, and tape players; LCD, plasma, and projection screens; cameras and media recorders; spare parts; and other home appliances.

The exhibition is expected to offer suppliers, exclusive distributors, and the dealer system as a whole a valuable opportunity to directly advertise their products and famous trademarks to Vietnamese consumers.

The AV Show, organised by the Vietnam Electronic Industries Association in coordination with Consumer Electronics Magazine, Audio and Visual Magazine, So Hoa online newspaper, and Nam Binh Advertising Co. Ltd, will last through to December 9.

Vietnam, Mongolia recognise market economy status

Vietnam and Mongolia have exchanged diplomatic notes on mutual recognition of their full market economy status.

Mongolian ambassador to Vietnam Dorji Enkhbat presented the note to Deputy Foreign Minister Bui Thanh Son in Hanoi on December 7.

The same day, the Vietnamese ambassador to Mongolia handed over a similar document to the State Minister of Mongolia in Ulan Bator.

At a reception for Dorji Enkhbat in Hanoi, Deputy FM Son stressed that the mutual recognition is an important step towards implementing the Vietnam-Mongolia Friendship and Cooperation Treaty, meeting the interests of the two peoples.

He noted with satisfaction the positive development of the friendship and cooperation between the two countries over the past six decades, and proposed that Vietnam and Mongolia further enhance cooperation in all areas to help maintain peace, stability, security, and development in the region and the world.

Ambassador Dorji Enkhbat confirmed that Mongolia attaches great importance to the friendship and multifaceted cooperation with Vietnam, considering the mutual recognition a practical move to foster bilateral ties, especially in economics and trade.

The two diplomats agreed that the move shows both countries’ mutual trust and assistance at multilateral forums, aiming to raise two-way trade which is currently modest at nearly US$20 million.

Leaf-cutter bee destroys pine forest

Nearly 1,000ha of pine forest aged from 8-12 years belonging to the Southern Paper Company in the Central Highlands province of Kon Tum is being attacked by pine sawflies.

The sawflies, with scientific name of Nesodiprion biremis, are eating 20-70 per cent of the pine trees’ leaves with a density of about 2,000 sawflies a tree.

The company has sprayed chemicals but the pesticide didn’t work.

Previously, about 20ha of pine trees in two districts of Dak Na and Dak To were also destroyed by the insect.

The watermelon he grew may be sweet, but for Nguyen Van Dong it has been a bitter harvest this year as the price of the fruit has dropped dramatically.

Dong of An Khe town in the Tay Nguyen (Central Highlands) province of Gia Lai said he had planted one hectare of watermelon this year and recently harvested nearly 30 tonnes. He could get a mere VND1,500 per kilogramme for it, meaning he lost nearly VND50 million (US$2,300).

He is one of thousands of farmers in the Central Highlands who are facing severe losses after the fruit price fell from VND7,000-8,000 per kilo last year.

Farmers blame the fall on China, a major buyer, which has reduced purchases.

With the harvest not complete yet, farmers fear prices will fall further since local traders have cut back on buying.

Ca Van Dong, a trader who buys the fruit in the Central Highlands and central region, said after the prices plunged many traders who had paid advances to farmers simply wrote them off.

In Dak Lak Province’s Ea Sup District, farmers are fearful since they cannot find traders any longer.

Ea Sup has around 400ha under the fruit, according to its Agriculture and Rural Development Bureau.

Tran Van Long, deputy head of the bureau, said watermelon has been grown here since 2000 and most of it has been exported to China.

Last year it had fetched a high price, so more farmers planted the fruit this year, he said.

He feared that a part of the crop could be left in the fields to ruin.

Many farmers in the Central Highlands have resorted to selling their watermelon along roads in the hope of reducing losses.

In the section from Kon Tum city to Dak To District in Kon Tum Province, many farmers have in fact set up tents along the road for this purpose.

Delta flower, fruit farmers get ready for seasonal holiday sales boom

Farmers in Cuu Long (Mekong) Delta provinces are busily working to produce flowers and special-shaped fruit traditionally sought after by people for Tet (Lunar New Year) holiday decorations.

The Phu Tri Agriculture Extensive Club, owned by farmer Vo Trung Thanh in Hau Giang Province’s Phu Tan village, has already received orders from HCM City and other provinces for 5,500 wine gourd-shaped pomelos.

His plan was to produce at least 10,000 pomelos for the Tet markets.

One pomelo will cost VND300,000 (US$14,28)-VND700,000, depending on the size.

Thanh said he had recently stopped taking orders because the flowers of nearly 2,000 pomelo trees had bloomed early, meaning the harvest would come sooner than expected.

“I hope I’ll be able to harvest more than 8,000 pomelos, ” he said.

Thanh said farmers of his club would also grow at least 3,500 wine-gourd watermelons.

The wine-gourd shaped watermelons grown by Delta farmers for the first time sold well last year.

One watermelon of this special shape will cost VND600,000-VND1,500,000, which would be the same as last year’s prices, according to Thanh.

Pomelos and watermelons are typically displayed on the traditional altars of Vietnamese people during Tet holidays.

Gardeners in Ben Tre Province’s Cho Lach District are expected to supply about 5 million pots of flowers, mainly roses and marigolds, for Tet markets in Cuu Long (Mekong) Delta provinces and HCM City.

For the Year of the Snake, hundreds of pots with 1.5-metre-high ornamental trees with stems twisted in the shape of a snake are being made by the Nam Cong Shop in Cho Lach District for orders from HCM City.

Farmers in Dong Thap Province’s Lai Vung District will supply about 40,000 tonnes of tangerines, a speciality of the district, to provinces around the country, according to Ta Van Hoi, Party secretary of Lai Vung District.

Authorities in Cuu Long (Mekong) Delta provinces said there would be an abundant supply of goods at shops and markets, satisfying the diverse demand of consumers in the region. The People’s Committee of Tra Vinh Province said it would provide interest-free loans of VND31 billion (US$1.4million) to businesses that have joined a programme to stabilise prices of Tet items.

Both businesses and the Industry and Trade Department of Hau Giang Province have spent more than VND380 billion, 5.5 per cent more than last year to stock commodities like dried shrimp, meat, processed food, rice and sugar for Tet.

Can Tho City’s businesses have prepared many essential items for Tet, including beverages, clothes, food, candies and sugar-preserved fruits worth a total of VND2,400billion, up 10 per cent from last year.

Trade and tourism in Cuu Long River Delta promoted

Cuu Long (Mekong) River Delta Investment-Trade-Tourism Promotion Conference took place in My Tho City, Tien Giang Province on December 6th.

The conference reviewed and assessed promotion programs in the framework of annual Cuu Long River Delta economic development cooperation forums in different fields and created opportunities for localities to approach and meet with enterprises to popularize their potentials and lure more investment.

Since 2007, the Cuu Long River Delta has attracted around 635 projects. Among them, 554 projects with total investment capital of over VND 220,000 billion and 81 FDI projects with registered capital of about $5 billion have received investment licenses.

The delta has also strongly boosted trade promotion, increasing its annual export turnover from $4.16 billion in 2007 to over $8 billion in 2011.

Notably, via Cuu Long River Delta economic development cooperation forums, a number of enterprises have pumped investment into tourist projects. So far, 5 projects valued at more than VND 300 billion have been put into operation.

At the conference, localities’ representatives discussed situations and orientations of development and shared experience in investment-trade and tourism promotion, and worked out measures for a better future.

On this occasion, An Giang, Ben Tre, Hau Giang, Tra Vinh and Tien Giang provinces granted 7 investment licenses for projects with total capital of more than VND 5 trillion.

Harbour to boost Phu Yen province

Vietnam Maritime Administration has approved the $439 million Bai Goc harbour to serve the Hoa Tam Petrochemical Industrial Zone.

The southern Phu Yen province project will cover 1,560 hectares, including 190ha of land and 1,370ha of water. The harbour will receive ships of up to 300,000 dead weight tonnes with a liquid goods wharf for up to 8,000dwt vessels.

The port’s estimated volume through to 2020 is 15.8 million tonnes per year.

However, Phu Yen Economic Zone Management Authority deputy head Huynh Xuan Minh said it was unclear when the project would take shape.

Bai Goc habour project is a part of the $19 billion Hoa Tam petrochemical industrial zone project including the harbour, Hoa Tam petrochemical industrial zone, a multi sectors industrial area and some other works.

In late 2010, Ho Chi Minh City-based Hiep Hoa Phat Company was granted an investment certificate to develop the zone’s infrastructure which was given up previously by Singapore-based SP Chemicals Company in 2009.

“To the end of 2012, the project’s detailed plan is expected to receive approval,” said Minh.

Under the province’s economic development plan, the Hoa Tam petrochemical industrial zone project was approved in 2007, though Singapore-based SP Chemicals Company, the first developer of Hoa Tam petrochemical industrial zone project asked to abandon this project.

Harbour to boost Phu Yen province

Vietnam Maritime Administration has approved the $439 million Bai Goc harbour to serve the Hoa Tam Petrochemical Industrial Zone.

The southern Phu Yen province project will cover 1,560 hectares, including 190ha of land and 1,370ha of water. The harbour will receive ships of up to 300,000 dead weight tonnes with a liquid goods wharf for up to 8,000dwt vessels.

The port’s estimated volume through to 2020 is 15.8 million tonnes per year.

However, Phu Yen Economic Zone Management Authority deputy head Huynh Xuan Minh said it was unclear when the project would take shape.

Bai Goc habour project is a part of the $19 billion Hoa Tam petrochemical industrial zone project including the harbour, Hoa Tam petrochemical industrial zone, a multi sectors industrial area and some other works.

In late 2010, Ho Chi Minh City-based Hiep Hoa Phat Company was granted an investment certificate to develop the zone’s infrastructure which was given up previously by Singapore-based SP Chemicals Company in 2009.

“To the end of 2012, the project’s detailed plan is expected to receive approval,” said Minh.

Under the province’s economic development plan, the Hoa Tam petrochemical industrial zone project was approved in 2007, though Singapore-based SP Chemicals Company, the first developer of Hoa Tam petrochemical industrial zone project asked to abandon this project.

HCM City approach to investors unprofessional: Economic Expert

Ho Chi Minh City has been luring investments for development of infrastructure, such as the traffic sector, for the last ten consecutive years but in turn has been most unprofessional in its approach towards investors, said Nguyen Van Thanh, a Fulbright economic scholar from the HCMC University of Economics.

Thanh noted that the City reverts to professional experts to issue policies for infrastructure projects and to study documents submitted by investors. However, when it comes to regular dealings, many of the City departments adopt a very unprofessional approach in dealing   with investors.

One enterprise that has been involved in construction work of several traffic projects in the City, but does not want name revealed, said that although capital recovery method and time are clearly stated in the project contracts, none of this is implemented in actuality.

Departments vacillate with excuses and cite a multitude of reasons to delay toll collection payments.

Though some reasons may be valid, untimely delays are not fair on investors who have taken out bank loans that go into hundreds of billions of dong. Postponement of toll collection payment causes serious difficulties for businesses.

Thanh said that most investors receive guarantees from State companies and only such enterprises can maintain a flexibility to operate in the above bureaucratic way of functioning by departments.

He said this is a matter of grave concern as the State has not actually mobilized capital and human resources in society.

As a result, the city should build a mechanism to ensure rights of residents, State and investors also.

For instance, if economic conditions are tight and residents cannot afford to pay fees, the State should have a mechanism to compensate investors. If there are too many toll stations in the same area and authorized organs cannot permit another one to function, they can organize to collect the fee in the entire area and divide the proceeds among investors.

Besides, the people’s committee and people’s council must work in coordination in supporting investors, and preventing instances in which the people’s committee approves a traffic project but the people’s council refuses to clear toll collection payment.

Thanh was of the view that the City must remain committed to terms signed with investors, even if in the short term the City has to face a loss but in the long term its image and commitment will lure more investors.

For example, in the case of the BOT project to build Binh An Water Plant, the City stayed by its pledge to buy back water produced by the plant right after it came into operation, although the pipe line to receive water was not yet complete.

Small businesses face distribution problems in HCMC

Many of the smaller manufacturing businesses in Ho Chi Minh City find it difficult to distribute their products because of a poorly developed distribution network, high distribution costs and limited advertising budget.

Nguyen Nguyen Phuong, head of the Trade Management Division under the HCMC Department of Industry and Trade, said there are far too many small production units in the City, making it difficult for the distribution system to cater to all of them.

Though the City has ten million residents there are only 27 commercial centers, 163 supermarkets, 500 convenience stores and 243 markets.

To cater to the City’s vast expanding population, at least 100 commercial centers, 1,000 supermarkets and 10,000 convenience stores are needed, said Phuong.

As a result, small manufacturing units find it hard to distribute their products and even more difficult to sell their goods through channels like supermarkets and trade centers. Distributors have the upper hand here, rather than manufacturers.

Dang Thanh Buu, director of Sa Giang Company in Dong Thap Province, said that cost of taking goods to supermarkets is very high, adding upto 23 percent on the total cost. This is a major obstacle for smaller manufacturers.

Pham Van Thuan, deputy director general of Seafood Company 584 Nha Trang, said that fish sauce produced by his company has been recognized as a high quality product for 13 years. However the company still meets with difficulties while distributing goods as they do not have sufficient funds for advertising.

Pham Thi Huan, director of Ba Huan Company, suggested that authorized organs must help smaller manufacturers to find distributors and also assist them in introducing their products at trade fairs, so as to reach a broader market.

Economists outline Vietnam’s economy for 2013

Economists outlined three alternative scenarios for Vietnam’s economy for 2013, during a meeting held by the National Center for Socio-Economic Information and Forecast (NCEIF).

The nation’s growth rate is likely to reach 5.68 percent in 2013, under the likeliest scenario discussed by experts at a conference held here last week to review economic growth in 2012 and prospects for development in 2013.

Economists say an export-driven economy like Vietnam will continue to be subject to the vicissitudes of the global market.

While the US and European economies were on track to recovery, which would be important for Vietnamese exports, both markets tended to erect more aggressive trade barriers, said the center’s deputy director.

Japan’s growth was also forecast to slow next year, which would have a negative influence on Vietnamese exports, since Japan was one of the nation’s three top trading partners as well as the country’s leading source of foreign investment.

Based on an analysis of the economy’s strengths and weaknesses this year, as well as predictions for global growth in the coming year made by a number of international organizations, the research group from the Ministry of Planning and Investment’s National Center for Socio-Economic Information and Forecast presented to the conference three possible scenarios for Vietnam’s economic growth next year.

In the second and most likely scenario, the eurozone would find its way out of its debt crisis, political and island sovereignty disputes would ease, the US economy would enter a modest recovery, and Japanese growth would match 2012 levels. Under this middle scenario, Vietnam would see growth next year of 5.68 percent.

Inflow of foreign direct investment (FDI) and official development assistance (ODA) were likely to be higher next year, giving further impetus to domestic growth. Slowing growth in India and China will also offer a competitive opening for Vietnam, which could still offer labor and input costs to foreign investors lower than these regional giants, experts noted.

Under the best-case scenario, the global economy would develop at 3.6 percent next year and the Vietnamese Government would undertake effective measures to stimulate domestic production and lower bad-debt levels. Under this scenario, growth could reach 6.34 percent, the research team said.

To achieve either of the latter two scenarios, the Government would need to maintain economic stability, keep inflation at 2012 levels, implement tight yet flexible monetary policies, and find ways to improve the efficiency of investment in the economy, especially among State-owned enterprises, they said.

Experts at the conference also stressed the important role to be played by corporate restructuring, especially at State-owned enterprises, to reduce waste in the use of State capital and create a healthier competitive environment among enterprises.

However, the negative impact of the global economic downturn is still lingering on.  The Japanese economy, which is forecast to slow further in 2013, will affect the Vietnamese economy. Japan is not only one of Vietnam’s three biggest trade partners, but also one of the country’s largest foreign investors. Its economic difficulties will detract from the influx of foreign direct investment into Vietnam.

Although Europe and the US are showing green shoots of recovery, the reactive domestic market safeguards they are applying on trade will be the biggest obstacles to Vietnamese export expansion. Global demand is expected to remain stable as foreign markets maintain import caution.

The three economic scenarios extrapolated by NCEIF experts are based on Government forecasts, the national economy’s internal orientation, and reports by international organizations.

Real estate market set to bottom out next year

Vietnam’s real estate market may continue to fall to next year as more banks sell their guaranteed assets and investors further cut prices.

Banks are shifting assets in a move that started in late 2011 but will further develop in the time to come due to a serious shortage of capital.

Over the past period amid economic difficulties and tightened monetary policies for the real estate market, several banks have yet to sell off their assets due to the market slump and weak asset evaluation on the part of financial institutions.

Ly Van Manh, General Director of Hung Vuong Group, said the future of the real estate market would heavily depend on the country’s economic situation next year. If credit is not loosened, a gloomy outlook was inevitable.

The few real estate investors who don’t have bank debts may survive amid such context while others may have to further lower prices to cut losses.

Several experts said that in theory the market would bottom out when selling prices equalled initial investments and the market would fall to below these evaluations if prices further decrease.

However, several projects, despite low initial investments have still had to apply sharp price cuts due to the dramatic plunge in market valuations.

U.S.-Vietnam trade continues growing despite challenges

Two-way trade between the United States and Vietnam has continued to fare well though the fiscal cliff looms large stateside and a number of macro-economic issues remain unsolved in Vietnam.

U.S. Ambassador to Vietnam David Shear told the Daily after a function Intel Vietnam hosted last Friday in HCMC that he expected the bilateral trade would continue increasing, especially when the American and Vietnamese economies recovered.

He said the two countries experienced a strong increase of 20% in two-way trade last year, with Vietnam enjoying a trade surplus of around US$13 billion.

According to the American Chamber of Commerce (AmCham) in Vietnam, the U.S.-Vietnam trade had undergone a substantial rise over the last 12 years, from only US$1.5 billion in 2001 to US$9.7 billion in 2006 and over US$22 billion last year.

AmCham Vietnam has projected a new level for this year. “We expect that Vietnam-U.S. bilateral trade will be US$24.5 billion this year, and will reach nearly US$50 billion by 2020, if present trends continue,” Christopher Twomey, chair of the HCMC chapter of AmCham Vietnam, told the Vietnam Business Forum in Hanoi last week.

Twomey, however, noted U.S. imports of apparel from Vietnam had been slowing in recent years due to rapidly increasing labor costs, competition from neighboring countries and weak demand in the U.S. because of the continuing financial and economic crisis since 2008.

Shear said negotiations were progressing on the fiscal cliff issues. He hoped that there would be a good outcome and a good rebound in the U.S. economic situation and its economy would get stronger.

Trans-Pacific Partnership is expected to give a boost to U.S.-Vietnam trade and investment relations as the two sides take part in negotiations over this deal, which is planned for conclusion and taking effect in several years’ time.

“This is a very important free trade agreement. It will benefit both Vietnam and the U.S. greatly,” Shear said.

Despite economic challenges, the U.S. ambassador said there were opportunities still in Vietnam’s economy for U.S. companies, particularly in the consumer goods sector.

Twomey of AmCham HCMC said the investment outlook for those companies, focused on Vietnam’s demographics, growing per capital GDP, and consumption trends, was promising.

Sherry Boger, general manager of Intel Products Vietnam, said the company would continue to invest, particularly in facilities in years to come as part of long-term commitment to the country.

Boger stressed the long-term investment plan in response to the Daily’s question at a Q&A section of the function that Intel Vietnam hosted to celebrate winning the U.S. Secretary of State’s 2012 Award for Corporate Excellence (ACE).

This was the first time Secretary of State Hillary Rodham Clinton had presented the award to Intel in Vietnam, which was conferred on Intel at an event in Washington DC late last month. 2012 was the second year in a row in which the U.S. Embassy in Vietnam nominated Intel Vietnam for the ACE award.

“That Intel Vietnam won ACE 2012 award is a testament to our good corporate citizenship, as well as the tremendous and continuing impact that Intel has had in Vietnam,” Boger said. She explained the award recognized Intel Vietnam’s efforts in environmental protection and participation in transformative educational programs for community.

High rent makes retail space less attractive

Exorbitant retail space rent is said to be one of the reasons behind Vietnam’s freefall in the Global Retail Development Index over the last few years.

Vietnam’s retail sector has fallen from a ranking of number one in 2008 to sixth in 2009, 14th in 2010, 23rd in 2011 and is currently 32nd in the Global Retail Development Index of A.T. Kearney.

Retail space rent at hundreds of U.S. dollars per square meter is placing a financial burden on the industry players and sees them hesitate in expanding operations in Vietnam, heard the Retail Conference 2012 co-held by Nhip Cau Dau Tu magazine and Nguyen Kim Trading Joint Stock Company in HCMC last Tuesday.

Richard Leech, executive director of CB Richard Ellis Vietnam, said retail space rent in big cities like HCMC is quite high, as much as VND2-4 million (US$100-200) a square meter. Modern retail space supply is rising but its quality is not guaranteed.

However, Vietnam remains an attractive destination among the emerging markets thanks to its many potentials, he said.

This year witnesses major players in the fields of dining, entertainment and essential items continue to expand their operations in the local market. In addition to the entry of Burger King and the expansion of Domino’s Pizza, the fashion sector is also busy with Sisley, Banana Republic, Hugo Boss, Dolce & Gabbana, Christian Dior and Hermes.

Apart from commercial centers, street houses at prime sites are also preferred by retailers, especially those providing dining services.

Huynh Kim Doan, director of Eden Real, said a Singaporean company had asked her firm to find 20 locations in HCMC for it to set up a restaurant chain.

Improvement in street houses used as retail shops will continue to put pressure on rent, especially in the outskirts, said Leech.

Retail space in HCMC this year has increased by around 75,000 square meters, including 38,000 square meters from Vincom Center A, 25,500 square meters from Pandora City building and 12,000 square meters from Bitexco Financial Center.

The surging demand of foreign and domestic retailers is enough to fill up this supply, said Leech.

Retail space supply in HCMC is forecast to grow by some 200,000 square meters from now to 2015, when Saigon Center 2, SC Vivo City and high-grade condo projects like Cantavil Premier, Thao Dien Pearl and Aeon Celadon City are completed.

Mechanisms for Phu Quoc development forthcoming

Deputy Prime Minister Vu Van Ninh has met with members of the working group in charge of studying mechanisms and policies for development of Phu Quoc Island off Kien Giang Province, the Government said on its website (chinhphu.vn).

Ninh told the working group to report to the Prime Minister the results of its review on the current mechanisms and policies and propose short-term mechanisms and policies.

“The final product must be a set of mechanisms and policies, including specific and feasible mechanisms, ensuring rapid and sustainable development of Phu Quoc and maximizing its potentials,” said Ninh at the meeting held in Can Tho City last week.

Meanwhile, the Southwest Steering Committee, relevant ministries and localities should continue to study and propose specific mechanisms and policies. Thereafter, they should have meetings with the working group, scientists and economic experts to perfect the scheme, Ninh suggested.

He asked the working group to submit the final product to the Prime Minister by the end of the third quarter of 2013.

Phu Quoc Island lies in the heart of Southeast Asia, linking Vietnam with other countries in the region and the world and having great potentials in economic development. It also has a great meaning to national security and defense.

In 2004, the Prime Minister approved the master plan for development of Phu Quoc until 2010, with a vision to 2020. In May 2010, the Prime Minister gave the nod to adjustments of the general construction planning for Phu Quoc until 2030.

On September 25 this year, the Prime Minister decided to form a working group in charge of studying mechanisms and policies for development of Phu Quoc Island.

Since then, the group has collected proposals on short-term mechanisms for development of Phu Quoc and set goals and orientation for development under the plan approved by the Prime Minister.

Deals cut for key road link

Vietnam Expressway Corporation (VEC) last Friday signed contracts with consortiums for building four kilometers of road to link the East-West Highway in HCMC and HCMC-Long Thanh-Dau Giay Expressway.

This is the first component of the HCMC-Long Thanh-Dau Giay Expressway project, according to the Ministry of Transport.

Construction package No. 7 has a length of two kilometers, including one interchange and over 600 meters of bridge, and includes planting trees, and installing drainage and lighting systems. This package will be implemented in nearly two years by a consortium between Vietnam Waterway Construction Corporation and Phuong Thanh Transport Construction and Investment Joint Stock Company at a cost of some VND1.04 trillion.

Construction package No. 8 also develops two kilometers of road, consisting of an interchange and more than 500 meters of bridge. The package costing nearly VND1.15 billion will be carried out in two years by a consortium grouping Truong Son Construction Corporation and Van Cuong Construction United Company.

The HCMC-Long Thanh-Dau Giay Expressway project is divided into two components. HCMC was previously appointed as investor of the first component (a 4-km section from An Phu Interchange to the expressway), while VEC was chosen as investor of the second component (the main road).

However, since HCMC had difficulty developing the first component of the project, the Transport Ministry has assigned VEC to take charge of both components. Currently, the second component is 60% complete and scheduled to open to traffic in 2014.

Le Manh Hung, director of the authority for the southern expressway projects, said it would take around 30 months to handle mud pockets and soft soil in the area for building the approach to the HCMC-Long Thanh-Dau Giay Expressway.

Earlier, as site clearance for the 4-km road linking HCMC and the expressway could not be finished on schedule, VEC planned to build a temporary approach running from Do Xuan Hop Street in District 9 to the expressway.

The HCMC-Long Thanh-Dau Giay Expressway with a total length of 55 kilometers connects HCMC and Dong Nai Province. The entire project costs over VND18.8 trillion, with the first phase needing VND9.89 trillion funded by ODA.

The expressway is an important part of the North-South Expressway. When completed, it will shorten the time for traveling from HCMC to Dong Nai and Ba Ria-Vung Tau, creating favorable conditions for goods transport to and from Cai Mep-Thi Vai port system.

Fecon gets the nod to step into giant project

Taiwan-backed Formosa Ha Tinh Steel Corporation has chosen Fecon as one of the major contractors for the $22 billion project.

Accordingly, by the end of 2012, Fecon will supply and place over 100,000 metres of D400-D600 PHC poles used in foundation construction, out of a total committed 1.2 million metres of poles which would generate for Fecon more than VND1 trillion ($48 million) in estimated revenue.

Formosa Ha Tinh iron steel complex covers more than 3,000 hectares in five communes in north-central Ha Tinh’s Ky Anh district and will be built in two phases. The first phase, capitalised at an estimated $10 billion, includes the construction of the Son Duong port with handling capacity exceeding 30 million tonnes per year parallel to 11 wharves, a steel factory capable of producing more than seven million tonnes per year, and a power plant with an annual capacity of 650 megawatts.

Once commissioned, the complex will become one of South East Asia’s largest iron steel complexes, providing nearly 10,000 jobs.

According to the developer’s latest report, about 93.7 per cent of site clearance for phase one had been completed. Relevant contractors and several sub-contractors are in full gear involving in survey, testing, foundation treatment, pole positioning and infrastructure building striving to ensure the project progress targets.

Taxes eased to boost business goals

The government will reduce corporate income tax in 2013 to encourage investment and strengthen the economy’s competitiveness.

Deputy Prime Minister Vu Van Ninh last week made this pledge to the business community at the Vietnam Business Forum (VBF) in Hanoi. “The government will propose to the National Assembly to revise the CIT Law including lowering the tax rate in 2013,” Ninh told the VBF, a dialogue between the government and the private sector prior to the Consultative Group (CG) meeting of donors.

The government has indicated it would refrain from increasing taxes and fees for enterprises given the current global and domestic economic woes. Moreover, a Corporate Income Tax (CIT) reduction was included in the pathway of Vietnam’s Tax Reform from now till 2020 approved by the government in May, 2012.

Ninh added that the government would also consider slashing other taxes and fees to reduce financial burdens for enterprises.

According to a Vietnam Chamber of Commerce and Industry (VCCI) report, Vietnam’s current 25 per cent CIT rate was higher than other regional countries which decreased the country’s competitiveness to attract investment. Specifically, the CIT rate in Thailand is now 23 per cent, while Japan, South-Korea and Taiwan have 17 per cent for small- and medium-sized enterprises.

The government’s action follows proposals from foreign and domestic business communities for restrictions on taxes and fees. They proposed reducing the CIT from 25 per cent as currently to 20 per cent to encourage investment.

“We believe that a tax reduction would make Vietnam more competitive. The government should take changes in neighbouring countries into consideration when deciding the reduction of the CIT,” said Preben Hjortlund, chairman of European Chamber of Commerce in Vietnam (EuroCham).

Foreign business interests also urged serious reform in Vietnam’s state-owned enterprises (SOEs). Christopher Twomey, chairman of the American Chamber of Commerce (AmCham) Ho Chi Minh City, said despite policy on SOEs reform, this sector still had a disproportionate and negative impact on the Vietnamese economy while it just contributed 22 per cent of gross domestic product (GDP).

The inefficient operations of SOEs, Twomey said, were regarded as the root for macro-economic volatilities. If the problems of SOE management were not addressed, he said, Vietnam’s development would face many challenges.

Ninh said the government aimed to restructure SOEs with the guideline of putting the enterprises in a fair and healthy competitive environment. “SOE equitisation will gear up with a small part of SOEs in some monopoly sectors to be kept, while remaining SOEs to be equitised in 2015-2020,” he added.

Copy this: Fuji Xerox

Fuji Xerox last week revealed plans to set up its first factory in  Haiphong next year.

Fuji Xerox Haiphong factory will be established in the Vietnam Singapore Industrial Park with the capital investment of $36 million and start operations in November 2013.

Its initial production capacity will be two million units per year. It will mainly manufacture products such as digital colour multifunction devices and small-sized light-emitting diode (LED) printers.
It will also manufacture components for these devices such as printed wiring boards and drum cartridge components.

Hitoshi Fujiwara, deputy president of Fuji Xerox, said the company picked Vietnam over other Asian countries because of Vietnam’s steady progress towards industrialisation.

“The country is advantageous as it has industries such as information equipment manufacturers in a concentrated manner, as well as an extensive land transportation network connecting the country with China, Thailand and other Association of Southeast Asian Nations (ASEAN) which will facilitate Fuji Xerox in establishing supply chains,” said Fujiwara.

The factory will have an annual capacity of 2 million units in its initial phase and the capacity will be doubled in the later phase. Fujiwara said he had no intention to set up other factories in Vietnam, because the Haiphong location had sufficient land for developing a second factory.

This capacity, according to Fujiwara, was equal to two-thirds of the capacity and scale of other Fuji Xerox factories in Japan or China. In the later phase, the scale and capacity will be increased equally to those in Japan and China.

“Haiphong is the third largest city in Vietnam and further growth is expected for the city as urban development projects are currently under way to make it an industrial district,” Fujiwara said.
Fuji Xerox Haiphong will vertically integrate manufacturing of the aforementioned components and the product assembly lines to enhance manufacturing efficiency.

Further, it will strive to reduce costs by expanding component procurement sources throughout Asia to ultimately produce competitive products for the emerging markets in Asia-Pacific, the United States and Europe.

In addition, Fuji Xerox will make efforts to standardise the manufacturing line equipments and tools with its other manufacturing sites to establish a company-wide decentralised manufacturing system. The company will also promote manufacturing platforms that will enable the manufacturing of different models on a same manufacturing line, thereby curtailing the total cost.

Considering an environmental impact, Fuji Xerox Haiphong will introduce energy-saving facilities—a sprinkler system recycling rain water collected on the factory roof to reduce load of air conditioning; hybrid outdoor lighting equipment using wind and solar power; and LED lighting for inside of the factory and office. Also, by fostering partnerships with its local partners, Fuji Xerox Hai Phong aims to make contributions in the community and local industry.

JX Nippon turns its back on Dung Quat oil refinery

JX Nippon Oil & Energy Corporation, a unit of JX Holding and Japan’s largest oil importer and distributor, has declined to participate in a joint venture to expand the existing Dung Quat oil refinery.

Dung Quat is the first refinery in Vietnam and commenced commercial operations in 2010 with the annual capacity of 6.5 million tonnes. Currently the refinery runs at full capacity and supplies approximately 30 per cent of the total country’s petroleum demand. The expansion phase will increase the current refinery capacity by a half, or 200,000 barrels per day.

Nguyen Hoai Giang, chairman of Binh Son Petrochemical company (Binh Son) – operator of Dung Quat refinery – confirmed JX Nippon’s decision JX Nippon did not reveal the reason for this withdrawal, Giang said, while noting that negotiations were still at an early stage.

Binh Son now was continuing negotiations with other potential partners. Earlier this year, PetroVietnam – the parent corporation of Binh Son – announced that a memorandum of understanding among PetroVietnam, Petróleos de Venezuela S.A. (PDVSA), Korea’ s SKE and JX Nippon was close to completion and expected to be signed soon. But with the withdrawal of JX Nippon, the progress figures to slow until a new partner or the remaining participants come to another arrangement.

The expansion is expected to be completed and come into commercial operation by 2018 with estimated investment of $1.5-2 billion.

So far, the pre-feasibility study of the expansion phase has been approved by the government.

The expansion is expected to enable the refinery to process crude oil imported from central eastern countries and Venezuela, while the capacity of Bach Ho oil field is reducing.

The expansion of Vietnam’s Dung Quat refinery to 10 million metric tonnes of crude a year, or 200,000 barrels a day, from the current of 6 million tonnes, is expected to make the refinery become more economical.

PDVSA and PetroVietnam have partnered on the expansion plans for Dung Quat refinery since April 2011.

One plan calls for the use of crude oil from the Orinoco Oil Belt, contributed by Petromacareo, a joint venture formed between Venezuelan state companies for extraction and upgrade of crude in the Junin area of the reservoir.

JGC, a Japanese company, in 2010 was chosen as the consultant of the project to expand Dung Quat refinery.

JGC had previously involved in a joint venture with French Technip and Spain Tecnicas Reunidas to build the existing Dung Quat refinery. Of this JGC was responsible for Residual Fluid Catalytic Converter, LPG Treater and Naptha Treater areas.

The expansion phase of Dung Quat will be built on 134 hectares next to the current refinery.
For the existing refinery, PetroVietnam is offering opportunity to buy up to 49 per cent in the project to other foreign partners.

Timar looks for winds of change in Ninh Thuan

Malaysia’s Timar Wind Solar Energy Company has got the thumbs up to study wind power potential in Ninh Thuan province.

This is an initial step towards an $800 million wind power farm in Vietnam. The company will have nine months to study the potential and feasibility of the investment project, according to a Ninh Thuan People’s Committee document sent to Timar Wind Solar Energy.

In May, Timar Wind Solar Energy signed a memorandum of understanding with Ninh Thuan People’s Committee for developing a wind power farm in this province.

A Ninh Thuan People’s Committee source said the Malaysian firm had to file application and feasibility reports before September, 2013. If it misses the deadline, the provincial committee will remove its approval for Timar’s investment project.

Timar is a technology innovation-oriented enterprise which integrates research, manufacture with sale, project and service of wind turbine system. It owns advanced green energy technology, known as Maglev, that has a power generating capacity 20 per cent higher than a traditional turbine, a life span of 50 years and can save more than 50 per cent in operational costs. The investment will represent Timar’s first step into Vietnam energy market, where the supply of energy is far behind the demand.

Southern Ninh Thuan province is said to have huge potential for wind power and has been eyed by many renewable power industry investors. Belgium Enfinity in 2011 gained investment certificate for building a $250 million wind power farm in this province. Previously, Impas Singapore also got the thumb-up for expanding its feasible study areas from 600 hectares to 1,000ha.

The provincial committee reported it has planned 14 wind power farm projects in Ninh Thuan with total capacity of around 2,000 megawatts. In addition, provincial authorities are also studying wind power potential at other 17 sites in hopes of attracting foreign investors.


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