Home » Business » BUSINESS IN BRIEF 16/10

Dong Nai: Export rises 12% in 9 months

The southern province of Dong Nai made export turnovers of over US$7.9 billion in the first 9 months of this year, up 12.2% over the same period last year, according to the provincial Department of Industry and Trade.

Dong Nai exported some 120,000 tons of coffee in the 9-month period, up 26%. However, export prices of rubber, coffee, cashew nuts and many other agricultural products dropped due to ongoing difficulties of the global economy.

The US was still the biggest export market of Dong Nai, with turnovers of US$1.7 billion, followed by Japan with over US$1 billion, and China nearly US$1 billion. The province’s exports to Southeast Asia increased some 10%.

Dong Nai’s trade surplus has trebled in recent months, bringing the total to over US$350 million.

Da Nang licenses 5 FDI projects in 2 months

Central Da Nang City has recently licensed five foreign direct investment (FDI) projects with a total registered capital of over US$10.4 million.

Among the licensed projects, two are from the US, one from Belgium, and the two ones from the Republic of Korea and Japan, according to the Da Nang Investment Promotion Center.

The city currently has 213 valid FDI projects totaling nearly US$3.2 billion, mostly in tourism, service, real estates and industry. It is taking drastic measures to lure bigger FDI this year.

On October 12, the municipal authorities met with Korean investors to discuss how they can do to facilitate their effective investment and introduced to them new incentives to better the investment environment there.

RoK to invest US$4 billion in Phong Nha-Ke Bang

The People’s Committee of Quang Binh Province has just signed a memorandum of understanding (MoU) with ZETA Group Holding, a real estate investment organization from the Republic of Korea, to build an international leisure center at the Phong Nha-Ke Bang National Park.

Accordingly, the project, worth US$4 billion, will include a casino area, hotels and urban facilities on the mountains, providing outdoor entertainment activities and cave exploring tours in Phong Nha-Ke Bang.

The Phong Nha-Ke Bang National Park was listed in UNESCO World Heritage Sites in 2003, thanks to its system of 300 caves and grottos with a total length of 126 km discovered up to April 2009.

Before the discovery of the Son Doong, recognized as the world’s largest cave, Phong Nha held several world cave records, as it has the longest underground river, as well as the largest caverns and passageways.

Businesses booming, more support needed

The number of businesses established in Viet Nam has quickly increased to some 663,000, featuring with the decrease in the State-owned enterprises and the rise in private and foreign-funded figures.

Businesses created jobs for nearly one fourth of the country’s workforce, tripling the total of the year 2000. While the number of workers in State-owned enterprises dipped 18.8%, the labor force in non-public sector experienced a six-fold rise and that of foreign-directed sector climbed 5.3 times.

Businesses’ export surged 34.2% in 2011 and 18.9% in the first nine months of 2012-an encouraging signal amid global economic downturn.

Despite difficulties, businesses contribute up to 69% to the total budget collection. They also help diversify economic sectors.

However, businesses are finding it hard to mobilize capital from securities market and commercial banks as the two channels are encountering slowdown.

Earlier this year, the Government issued Resolution 13 which figured out a series of measures to ease difficulties against production and support the market but more actions should be made.

To address the problem, the State Bank of Viet Nam has adopted measures to deal with non-performing loans to support them.

In the short-term, banks should extend payment deadlines and offer lower interest rates to businesses, said Deputy Minister of Industry and Trade Tran Quang Khanh. He also urged them to work closely with the Government to tackle challenges, towards stabilizing the macro-economy and restructuring the economy.

At present, they are also facing with high inventory levels mainly due to consumers’ thrift practices. Thus, it is necessary to reduce value-added tax to pull prices down in order to stimulate consumption.

Economists said the monetary policy needs to be adjusted in a more flexible manner to both curb inflation and create favorable conditions for businesses to thrive.

BIDV to list shares within next three months

The Bank for Investment and Development of Vietnam (BIDV) will list 2.3 billion shares on the HCM Stock Exchange under the code BID.

The exchange, which approved the listing last week, requires the bank to prepare for the listing within 90 days of the exchange’s decision.

The bank sold 84.7 million shares in an initial public offering last December at 18,583 VND (0.89 USD) per share.

Entrepreneurs encouraged to tighten ties with Laos

Vietnamese ambassador to Laos Ta Minh Chau presents certificate of merits for Nguyen Duc Moc, Chairman of Vietnam Entrepreneurs’ Association in Laos. Photo: VNA

Vietnamese entrepreneurs in Laos have been well involved in preserving and developing the special friendship between the two countries.

This was reviewed by Nguyen Duc Moc, Chairman of Vietnam Entrepreneurs’ Association in Laos, at a get-together to celebrate the Vietnam Entrepreneurs’ Day in Vientiane on October 13.

Vietnamese businesses have practically engaged in reducing poverty in their host country by financing the construction of schools, health clinics, roads and resettlement houses in localities where they have investments, Moc said.

He reported that by June this year, Vietnamese businesses have poured 3.45 billion USD in 214 investment projects in Laos, ranking third among 52 countries and territories investing in the land-locked country.

A majority of 193 Vietnamese firms currently operating in Laos cast their eyes mainly on energy, services and infrastructure, Moc added.

Speaking at the function, both Lao Minister of Industry and Trade Nam Vinhaketh and Vietnamese ambassador to Laos Ta Minh Chau shared the view that Vietnamese entrepreneurs have contributed to socio-economic development of both countries.

They encouraged them to step up investments in response to the 2012 Vietnam-Laos Friendship and Solidarity Year.

On this occasion, Vietnamese entrepreneurs raised over 15,000 USD for social welfare activities in their host country.

Shell Gas the 3rd global LPG brand to leave Vietnam

Dutch energy and petrochemical company Shell has pulled its LPG business out of Vietnam after having transferred its entire share in a joint-venture in Haiphong, and a Ho Chi Minh City-based company, 100 per cent of whose stake it held, to Thailand’s Siam Gas Co.

Shell Gas has thus become the third global liquefied petroleum gas brand to withdraw from the Vietnamese market, which is considered to have high potential with an average growth of 10 per cent a year.

In 2006, Exxon Mobil Unique Vietnam sold its entire gas segment with the Mobile Unique Gas brand name to Malaysia’s Petronas Co, while BP Gas, a unit of the UK Castrol BP Petco, officially ceased operation in Vietnam as of January 2009.

The stake transfer is in conformity with Shell’s business strategy, which is focusing on fewer markets but at a larger scale, Shell Gas Vietnam said in a statement sent to its dealers nationwide.

As for the development strategy in Vietnam, Shell said it may focus on the lubricating oil market, and is also eying the oil and petroleum sector.

Shell has been playing in the local LPG market for more than ten years, but its investment and effort didn’t pay off.

Although Shell Gas is a reputable brand name in the country, it has gained unwanted business results as revenues were not enough to cover expenses.

Shell Gas was once a typical example in setting up a dealer network that only sells its products.

But the system had to gradually narrow down, and the company ended up reluctantly allowing the dealers to sell gas cylinders of other brand names, a move it was forced to make in order to adapt to the local market.

But the change proved useless as Shell had to merge all of its office in Hanoi to Ho Chi Minh City to cut expenses in 2010, and now, pull out of the entire business out of the country.

The pulling out of global brand names, however, is not seen as a positive sign for local LPG suppliers, given the real reason that has driven these international firms out of Vietnam.

That is, according to analysts, the rampant, uncontrolled phenomenon of illegally extracting gas in Vietnam.

Elf, Total, BP, and Shell have earmarked huge expenses to protect their brand names in the local market, but efforts have proved ineffective as the market remains a mess, and foreign firms have no choice but to accept it.

Some 40 per cent of the cooking gas cylinders on the market are not returned to suppliers once they are used up, which opens the door wide for the illegal extracting rings.

Economics police have taken action, and several violators have been fined, but the phenomenon has yet to be fully curbed.

Whenever authorities crack down on an illegal gas extracting facility, two or three more are set up in other locations, with even busier operations.

Generali Vietnam works for clients

Italian life insurance firm Generali Vietnam has opened the door to a human resources development programme for its clients.

“Maximising your staff retention programme with Generali Vietnam Life” was the title of a seminar held last week in Ho Chi Minh City, the first gathering of what Generali plans to be an annual event.

Ainsley Oliveiro, Asia-Pacific manager for Generali Employee Benefits, said Vietnam was increasingly focusing on utilising employee benefits programmes to retain staff and enhance productivity. Employee benefits insurance is a tool within a company’s employee compensation and benefit framework that combines the benefits of cost optimisation and risk management.

Apart from basic salary, employees’ top consideration is security for and dependents, Oliveiro said. A human resource strategy that integrates the optimal use of employee benefits will support a company in attracting, developing and retaining qualified staff.

Generali Vietnam Life CEO Simon Lam said: “Being a new player in the Vietnamese market, we are committed to bring in positive differentiation. Our goal is to bring better choices to our customers and set new standards for the life insurance market in general and the employee benefits market in particular.”

Generali Vietnam Life launched its group business in October, 2011 and now provides insurance coverage for more than 5,000 policy-holders from multinational and Vietnamese companies.

Generali Employee Benefits, a unit of the Italian insurance group Generali, provides employee benefits solutions to multinationals throughout the world, including ones operating in Vietnam.

New food joint venture goes up in Vietnam

Belgium’s confectionery manufacturers Puratos Group and Grand-Place Holding on Thursday signed a deal to set up a joint venture in Vietnam.

The new joint venture, called Puratos Grand-Place Vietnam, will specialize in bakery, patisserie and chocolate, and make an investment of $10 million over the next five years.

Gricha Safarian, President of Grand-Place and General Director of Puratos Grand-Place Vietnam, said Puratos owned 70 pct of the joint venture while the rest was held by Grand-Place.

The $10 million will be used to expand the capacity of the plant and the logistics center in Binh Duong Province, and the chocolate production capacity will be doubled to over 10,000 tons per year. Besides, the venture will develop a product research and development center, he said.

According to Piet Sanders, regional director for Eastern Europe and Asia-Pacific at Puratos, with the population growth and the confectionery industry’s fast development in Vietnam, Laos and Cambodia, the next five years is a suitable time to strengthen the group’s position in the region.

Founded in Belgium in 1984, Grand-Place opened a representative office in Vietnam ten years later, and the $4-million Grand-Place chocolate plant in Binh Duong Province was put into operation in 2009.

Phu Quoc fish sauce protected in EU market

The name “Phu Quoc” was officially selected as the Protected Designation of Origin for Vietnamese fish sauce on October 11th, according to the European Union (EU) Delegation to Vietnam.

This name was in the list of more than 1,000 agricultural products and foodstuffs protected by the protected geological indication or protected designation of origin.

Vietnamese Phu Quoc fish sauce is the 11th product outside EU granted the protection status, after Colombian coffee, Indian Darjeeling and 8 Chinese products.

VFA revises floor prices for export rice

The Vietnam Food Association (VFA) has set new floor prices for export rice, effective since Wednesday, after many exporters slashed their selling prices.

The revised FOB floor prices are US$460 for each ton of the 5% broken rice, US$455 for the 10% broken rice, US$445 for the 15% broken rice and US$435 for the 25% broken rice.

The new floor prices are some US$20 per ton higher than the prices offered by exporters on Monday. Specifically, the offering prices of the 5% broken rice were US$435-445 per ton and the 25% broken rice was quoted at US$405-415 a ton this Monday.

According to VFA, the floor prices are adjusted to prevent rice exporters from lowering offering prices, affecting rice trading of Vietnam.

Lam Anh Tuan, director of Thinh Phat Company in Ben Tre, said rice traders were now urgently raising money to repay the bank loans that they had been granted to purchase 500,000 tons of summer-autumn rice for temporary storage.

Under pressure of bank debts, rice trading firms cannot boost buying, but they have to focus on their outlets. As a result, domestic rice prices have been falling since early September.

A rice exporter in Can Tho admitted: “The pressure of the loans for buying 500,000 tons forces us to cut selling prices to quickly gain money to settle bank debts.”

Local rice prices on Thursday were unchanged from Monday. The fresh paddy IR 50404 was priced at VND4,500-4,650 per kilo and the dried type at VND5,600-5,700 each kilo.

Material rice and finished rice prices remained unstable at VND7,250-7,500 and VND8,250-8,400 per kilo respectively.

Tax collection below target makes balancing the budget a challenge

Overdue taxes in the first nine months of the year reached a level of 6.8 per cent of total tax collections, with amounts owed by State-owned enterprises accounting for over 13 per cent of the total.

General Department of Taxation deputy director Tran Van Thu released the figures at a meeting held in Ha Noi yesterday to review State budget utilisation so far this year .

“The ministry has strived to bring the debt ratio to less than 5 per cent to ensure a balance between State budget collections and spending,” Thu said.

Total tax collections in the nine-month period were at 67 per cent of set targets, while total State spending amounted to VND643 trillion (US$30 billion), or 4.5 per cent increase over the same period of last year.

Value-added tax payments have also been extended for over 190,000 businesses, representing uncollected taxes totalling VND11 trillion ($523.8 million), while corporate income taxes have been delayed for 71,000 companies, for an additional total of VND2.9 trillion ($138 million).

Uncollected land use fees were also estimated to have totalled VND250 billion ($11.9 million) by the end of September.

Deputy Minister of Finance Vu Thi Mai also told the meeting that the Ministry of Finance had established a unit to review corporate income taxation, proposing a rate less than the current 25 per cent.

“The specific figure would have to be carefully considered to ensure competitiveness in the region,” Mai said.

She also told the meeting that the ministry had submitted to the Government a draft circular to provide guidelines on the revised Law on Securities. The ministry was also co-operating with the State Bank of Viet Nam to develop the stock market.

Samsung to build new mobile phone factory in Vietnam

Samsung Electronics Co., Ltd (SEV) issued a statement on October 13 announcing plans to invest US$700 million in building a new mobile phone production factory in Vietnam.

A Vietnam News Agency correspondent based in Seoul, the Republic of Korea, says this is part of the company’s efforts to expand its global production chain.

SEV, a subsidiary company of the world’s leading mobile phone maker, is considering building the factory in one of two northern Vietnam locations—either the northern province of Thai Nguyen, or the port city of Hai Phong.

SEV has run a mobile phone production factory in Yen Phong, a rural area in Vietnam’s northeastern region, since 2009. The factory has a design capacity of 150 million products each year.

Vietnam-Mexico trade increases

Two-way trade between Vietnam and Mexico reached US$548.5 million in the first eight months of this year, up 30.3 percent over the same period last year.

Despite the impact of the global economic slowdown, Vietnam maintained a trade surplus with the North American nation, with its export earnings fetching more than US$470 million, a year-on-year increase of 29.2 percent.

Its major exports included footwear, seafood, garments, electronic appliances and coffee.

As a result, Vietnam’s eight-month exports to Mexico met 71.5 percent of its annual set target and exceeded the planned monthly average by US$31.7 million.

Meanwhile, Vietnam’s Mexican imports also rose 37.7 percent to US$76.7 million in the reviewed period. Its primary import items included machinery equipment, electronic components, and animal feed.

Senegal – a potential export market for Vietnam

Senegal has emerged as Vietnam’s third largest trade partner in Africa, only preceded by South Africa and Egypt.

Located in West Africa, Senegal has a total area of 196,190sq.km and a population of 14 million. It pursues the diversification of its international relations as a means of harnessing foreign capital and advanced technology.

The country has joined the United Nations (UN), World Trade Organisation (WTO), African Union (AU), Non-Aligned Movement (NAM), French-speaking community (Francophonie), West African Economic and Monetary Union (UEMOA), and many other regional and international organisations.

In 1985 Senegal began economic reforms under a cooperation programme with the International Monetary Fund (IMF), liberalising its economy and developing the private sector.

In 2011 it achieved a GDP growth rate of 2.6 percent with a per capita income of around US$1,115. Its economy is heavily reliant on agricultural production, which makes up three quarters of its total exports.

As a result of prolonged droughts, rice cultivation only meets 30 percent of the domestic demand, forcing Senegal to import between 700,000-900,000 tonnes of rice annually to feed its population.

Besides food, Senegal also imports consumer goods, industrial products, and oil, mostly from France, China, Britain, Nigeria, the Netherlands, and the US.

Senegal is one of the four most powerful economies in West Africa, offering a surplus of opportunities for Vietnamese products to penetrate a market boasting 14 million consumers.

Over the past decade, as many as 30 Vietnamese commodities including rice, garments, motorcycle spare parts, rubber products, cassava powder and pepper have gained a firm food hold in this market.

Rice and motorcycle spare parts are imported into Senegal and then re-exported to other countries in the region.

The country has the most stable politics in West Africa. It currently enjoys a zero tax rate when exporting commodities to the European Union and United States. If foreign businesses invest in production or processing based in Senegal, this tax mechanism can be exploited for exports to the EU and US.

Senegal boasts the best transport infrastructure (seaport, airport and road) and telecommunication systems in West Africa. Its banking system offers reliable services, only second to Ivory Coast.

Currently, about 300 Vietnamese nationals are residing and working in Senegal, who serve as a bridge between Vietnam and the West African country.

Vietnam and Senegal established diplomatic ties in 1969. They signed a framework agreement on economic, trade, cultural, scientific and technological cooperation in 1995, and a tripartite cooperation agreement between Vietnam, the Food and Agriculture Organisation (FAO) and Senegal in 1996.

Between 1997 and 2005, Vietnam sent 100 agricultural experts to Senegal every year, all of whom earned praise for their competence. President Abdoulaye Wade has labelled the successful tripartite cooperation in agriculture an exemplary model for the South-South cooperation.

Vietnam has maintained a trade surplus with Senegal for years, with its exports increasing considerably from just US$21.3 million in 2001 to US$104 million in 2009. In 2011, its exports reached US$190 million, up 138 percent from 2010.

Major export items include rice, garments, motorcycle spare parts, steel, pepper, plastic materials, cookies, footwear, cases, hats, umbrellas, and ceramics.

Some of the items Vietnam imports from Senegal include iron scrap, cotton, machinery, equipment, woodwork, and animal feed.

Despite the positive signs, bilateral trade has yet to match the two countries’ economic potential mostly due to a lack of up-to-date information and infrequent exchanges of delegation visits.

The Ministry of Industry and Trade will send a trade promotion delegation to Senegal from October 16-22 to explore opportunities and expand cooperation with this West African country and its compatriots on the continent.

Businesses must have faith

The economic downturn has had a big impact on the business community for nearly four years, and many enterprises have taken great pains to maintain production and their workforce.

Vietnam currently has more than 675,000 registered businesses, but only two thirds, or 472,000, are still operating. In the past nine months, as many as 40,000 businesses have filed for bankruptcy or suspended operations, a year-on-year increase of 6.5 percent.

Most businesses have cut down on production costs to lower the price of their products, which is a reasonable way to reduce large inventories that can impede their production.

Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), reveals that some businesses, mostly small and medium-sized ones, have still maintained 30-50 percent annual growth.

The negative impact of the global economic recession seems to have had little effect on these businesses, as they have met the necessary conditions for sustainable development, says Loc.

According to the business executive, these enterprises have developed a good administration system to respond to risks, built a strong competitive edge, and operated in high value added areas. They have also been actively integrating into the global supply chain.

It is well known that recession poses risks but it also presents opportunities for executives to redefine business strategies and restructure organisations to survive an economic downturn.

The Phu Nhuan Jewellery JSC in Ho Chi Minh City is one such success story. To reach out to demanding markets in Europe and the US, the company has restructured itself and its efforts have paid off. It is now the leading jewellery company in Vietnam and one of the top 50 companies with shares listed on the bourse. It has also achieved an annual growth rate of 20 percent.

A representative of Thanh Hoa JSC which specialises in high-quality agricultural by-products says the company has adopted a new business strategy to adapt to changes in the market. It has cut unnecessary production costs, designed convenient and affordable products, and launched sales promotions.

Instead of distributing goods to agents, the company brings them directly to consumers, which enables it to consult with them to get to know their tastes, says the representative.

Tran Le Nguyen, General Director of the Kinh Do Bakery JSC, shares the view that businesses should take advantage of the recession to seek new opportunities and overcome difficulties. He says the crux of the matter is that businesses need to adapt quickly to market fluctuations and produce products that specifically cater to customer tastes.

Kinh Do has divested its capital from non-core business areas to focus on food processing. It has reduced production costs, diversified its products, and promoted sales at home and abroad to build up consumer trust.

The Vietnam Dairy Products JSC (Vinamilk) expanded its operation to food processing for two years but found it inefficient. It has now divested capital to increase investment in its primary dairy products and retain its well-known brand on the domestic market.

Large businesses suggest that the government promptly implement national trade promotion programmes to deal with unsold inventories of goods and support mergers and acquisitions (M&A) of inefficient banks to settle their bad debts.

Deputy Minister of Industry and Trade Tran Quang Khanh recommends that banks reschedule bad debts and continue to lower interest rates to ease difficulties for businesses. He also calls on businesses to join hands with the government to iron out snags, stabilise the macroeconomy and restructure the national economy.

One of the solutions introduced by experts is more flexible management of the monetary policy to contain inflation, support the business community, and create a healthier business environment for all economic sectors.

VCCI President Vu Tien Loc warns that given the slow recovery of the global economy, 2013 will be another tough year for businesses, and their primary task right now is to stand firm. To this end, he says, businesses need to have strong faith, redefine their strategies, and restructure their management to fit in with local and global economic trends toward sustainable development.

To support the restructuring process, Loc suggests that Vietnam should continue finalising its market economy institutions to create a transparent and equal business environment. Competitive capacity can be enhanced when the existing “give – and – take” mechanism is abolished.

Loc vows that the VCCI will help businesses keep abreast of up-to-date information on markets and risk warnings, while also boosting trade and investment promotions.

HCM City businesses store goods for Tet

Businesses in Ho Chi Minh City are already implementing their plans to meet high consumer demand during the last months of this year and for the Lunar New Year festival (Tet).

Shops that have joined the price stabilization programme have increased their budget for stockpiling essential goods to nearly VND6.7 trillion, nearly 1.3 billion more than for the same period last year.

The city’s Department of Industry and Trade (DoIT) said that despite many economic difficulties and a low purchasing power, most businesses are preparing their product sources and have committed to keeping prices under control.

A range of essential products, including meat, eggs, processed food, cooking oil and sugar have been stored to satisfy 50 percent of the market demand.

DoIT Head Le Ngoc Dao said that the department has worked with business associations in the city and neighbouring areas to diversify supply sources and the kinds of products that will be available.

Some supermarket chains in the city have also cooperated with suppliers and manufacturers to find practical solutions for delivering and transporting goods.

BigC has boosted buying its products from original sources, especially fresh food such as vegetables, fruit and seafood, in order to ensure good quality and stable supply while reducing “middlemen” in order to offer customers the best prices.

BigC has also offered the cheapest prices for ten essential products, including sugar, fish sauce, rice, eggs, instant noodles and cooking oil.

Coopmart director Nguyen Thanh Nhan said his supermarket is considering proposals of raising the prices from the suppliers.

If it is possible, Coopmart will try to convince suppliers to share difficulties with consumers, while gradually increasing prices in certain times to ensure the most essential products are always available.

Garments aim to enter Japanese market

Japan is a demanding market, and understanding its consumer behaviour, attitudes and perceptions towards products will help businesses, including garment markers, penetrate the market.

To capitalise on this lucrative market, many garment manufacturers have adjusted their operations and planned to increase export volume to Japan to 20 percent in 2013 from the current 10 percent.

They have also invested in upgrading workshops, production lines, and other facilities to meet the tough requirements of Japanese importers.

According to the Vietnamese Trade Office in Japan, Japanese businesses attach great importance to trust in transactions and require production to meet the highest technical standards.

Japanese consumers also have strict demands for imports in terms of quality, durability, reputation, and convenience. They are interested in after-sale services and various product distribution modes and are willing to pay high prices for quality items.

The Japanese are among the most health aware consumers in the world, forcing garments, footwear, food, handicrafts and even packaging design to be adjusted to cater to their tastes.

The Vietnamese Trade Office forecasts that in a couple of years there will no longer be the concept of “China plus 1”, meaning 90 percent of garments are produced in China and the remaining 10 percent come from other countries.

Therefore, there is a good possibility that foreign garment makers will shift their production bases from China to Vietnam to raise their share in this market to 20-30 percent.

Vietnam’s garment export volume to Japan is expected to exceed that to the European Union which is currently 16 percent.

In addition, many Vietnamese commodities imported into Japan such as farm products, seafood, garments, steel and electronic appliances are enjoying tax preferences under the 2008 Vietnam-Japan Economic Partnership Agreement (VJEPA).

This means Vietnamese garments will be exempt from Japan’s import tariffs if they meet the required specifications. It is also an incentive for Japan to relocate production bases and increase orders from Vietnam.

Apartment prices plunge further

The prices of apartments in Hanoi continued to decline in the third quarter, reflecting the prolonged stagnation in the city’s real estate market.

According to a quarterly survey on the capital city’s property market conducted by property services firm Savills Vietnam, secondary asking prices decreased in all districts, down 9 perent from the previous quarter in Tay Ho District, 6 percent in Cau Giay, and 5 percent in Hai Ba Trung.

The declining values were also related to such key factors as infrastructure development and construction progress of each project, Savills said.

End users were now the main buyers in the apartment market, which investors largely abadoned this quarter due to the market’s low liquidity. Developers have also taken to offering shell apartments to further reduce the prices offered to buyers, said the head of Savills’ research division, Do Thi Thu Hang.

CB Richard Ellis Vietnam’s third-quarter report on the Hanoi property market showed similar trends.

“Secondary asking prices continued to drop by 5 percent quarter-on-quarter to an average of about US$1,730/sq.m, following a downward trend that started in the last quarter of 2011,” said CBRE executive director Richard Leech.

“Looking ahead, in the current buyer’s market, the buyers’ purchasing power and mentality will drive the market recovery,” Leech said. “A dim economic outlook through to 2013 will further dampen buyer confidence, and the flight to safety will strengthen savings at the expense of investments. Cash is available, but does not flow into real estate. Consequently, the market is expected to pick up when the economy shows clear signs of improvement.”

Tran Nhu Trung, deputy director of Savills’s Hanoi branch, said the trend of falling prices since the third quarter of 2011 had caused most investors to change their business strategies.

Leech agreed that business restructuring had been taking place as developers were faced with the challenges of outstanding debts and stagnant demand, and a number of local corporations with non-core competencies in real estate were exiting or looking to exit the market.

Developers have been revising business strategies in terms of target customers and types of products offered, putting greater efforts into sales and customer service and showing a willingness to compromise on prices and payment structures, he said.

“Looking forward, restructuring businesses and revising strategies would be a main focus to most developers in the next two years, as the market now demands better products at more reasonable prices,” he said.

Knight Frank, a foreign property services company, has predicted that prices on the Hanoi apartment market would continue their downward trend through the final quarter of the year.

The mid-end and affordable segments were recognised as the segments with the highest demand, with end users expected to keep playing the primary roles in the apartment sales market in the fourth quarter.

To save themselves from difficulties down the road, a few developers have planned soft launches for their next projects to test the market and to try to boost sales with ongoing promotion campaigns.

Some local developers expect to settle for smaller profit margins in order to offer apartments at more affordable prices, including smaller units at prices of less than VND15 million (US$718) per square metre.

Some have joined social housing programmes or sold entire residential buildings to government agencies or to major companies looking for accommodations for their employees.

Danang calls for more RoK investment

A seminar was held on October 12 to encourage businesses from the Republic of Korea to invest in high-tech, support, and processing industries in the central city of Danang.

Addressing the event , jointly held by the city’s People’s Committee and the Vietnam Chamber of Commerce and Industry (VCCI), Vice Chairman of People’s Committee Vo Duy Khuong said Danang considers the RoK a major partner presenting huge financial potential.

He said Danang is willing to hear RoK businesses identify the difficulties impeding their operations that require the attention of the city’s authorities.

The RoK is now Vietnam’s second biggest foreign investor with a total registered capital of US$24 billion invested in 3,000 projects. In Danang alone, RoK businesses are operating 27 projects involving US$700 million in capital.

The RoK-Vietnam two-way trade reached US$18.6 billion in 2011 and is estimated at US$20 billion in 2012.

HSBC lowers Vietnam’s growth to 5 percent

The Hong Kong-Shanghai Banking Corp (HSBC) has adjusted Vietnam’s 2012 GDP growth to 5 percent, down from its earlier forecast of 5.1 percent in May.

The ongoing declining market demands in the US and the Europe have prompted the Southeast Asian economy to slowdown in 2012, even in 2013, according to HSBC’s latest Asian Economics Quarterly report.

HSBC predicts that Vietnam’s GDP growth will stand at 5.3 percent in 2013, or 0.5 percent lower than its previous forecast and inflation is likely to reach two-digit rate by the year’s end. It says that inflation will hit 12.6 percent in the third quarter before declining to 11 percent in the fourth quarter of 2013.

HSBC regards October’s consumer price index (CPI) reading as an important determining factor in identifying the inflation trend over the remaining months of this year.

The report points out that Vietnam’s CPI is rising despite credit growth falling, hinting at a possible increase in the last quarter of 2012. The State Bank of Vietnam (SBV) has decided to issue treasury bills lasting different terms – one month, two months, and three months – in order to improve the liquidity in the banking sector.

The central bank will not adjust interest during the remainder of this year, instead focusing on settling the bad debts plaguing the banking system.

In regards to the foreign exchange market, HSBC says that many big Vietnamese gold traders purchased large volumes of US dollars after the SBV banned the import of material gold. The US dollar to Vietnamese dong exchange rate will hover around VND12,500/USD at the end of 2012 and carry through to next year.

HSBC also highlights significant improvements in Vietnam’s macroeconomy, and acknowledges the country’s efforts in stabilising market prices, increasing foreign currency reserves, and controlling inflation.

Shrimp exports to Japan, US in a fix

Shrimp exports to foreign markets are likely to fall in the remaining months of the year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

The association said that exports to Japan – Vietnam’s largest shrimp importer, have kept decreasing after Japan raised the Ethoxyquin alert level to 0.01ppm.

In September alone, the volume of white-legged shrimp exported to Japan dropped by more than 22 percent from a year earlier.

Meanwhile, shrimp exports to the US faced fierce competition from India, Indonesia and Malaysia.

Over the past few days, the price of fresh shrimp in the Mekong Delta has increased sharply from VND5,000 to 15,000 per kilo.

It costs VND215,000-220,000 per kilo (20 shrimp) and VND130,000-VND140,000 per kilo (30 shrimp).

President applauds growing role of nation’s enterpreneurs

The status and role of businesses and entrepreneurs in society has been being increasingly underlined in important Party documents and recognised by society at large, President Truong Tan Sang said at a gathering on Saturday to mark the Viet Nam Entrepreneurs Day.

The nation’s community of entrepreneurs has developed strongly in recent years, making significant contributions to national socio-economic development, ensuring national defence and security, and expanding foreign relations, Sang said.

Entrepreneurs have also helped generate jobs, address social welfare issues and defeat poverty, thus strengthening the great bloc of national unity, he added.

Sang also praised many of the businesses for maintaining and expanding production despite the challenges posed by the economic downturn. He affirmed the Party and State’s continued commitment to creating conditions for businesses to stabilise production and surmount difficulties.

As regional and global integration became more intensive, local businesses needed to be proactive and creative to grasp opportunities, renew technology, reform governance models, and improve the quality of human resources, he said.

Business representatives at the event proposed that the Government reduce land use fees and corporate taxes, help businesses reduce inventories and settle bad debts, and proceed with wage and administrative reforms.

In the first nine months of this year, about 40,000 businesses have filed for bankruptcy or suspended operations, and many others have been operating in difficulties, they noted.

Entrepeneurs tighten ties with Laos

Vietnamese entrepreneurs in Laos are doing an excellent job of preserving and developing the special friendship between the two countries.

The view was expressed by Nguyen Duc Moc, Chairman of Viet Nam Entrepreneurs’ Association in Laos, at a get-together to celebrate Viet Nam Entrepreneurs’ Day in Vientiane on Saturday.

He reported that by June this year, Vietnamese businesses have poured US$3.45 billion into 214 investment projects in Laos, making Viet Nam the third highest investor among 52 countries and territories in the land-locked country.

Speaking at the function, both the Lao Minister of Industry and Trade Nam Vinhaketh and the Vietnamese ambassador to Laos Ta Minh Chau shared the view that Vietnamese entrepreneurs have contributed to socio-economic development of both countries.

Posco expands steel plant in Dong Nai

Posco E&C Viet Nam last Thursday opened its expanded steel-making factory in Nhon Trach Industrial Zone, southern Dong Nai Province.

The expanded factory, covering an area of 132,000 square metres, was backed by a total investment of VND100 billion (US$4.72 million) for construction.

The company’s steel products are exported for use in large construction projects such as Kallpa (in Chile) and Mega (in Brazil and Australia).

VTC warned over unlicensed games

The HCM City Information and Communications Department on Friday ordered VTC Intercon company to immediately stop providing several online games like Surprise Storm, DotA and Age of Emprires.

DotA and Age of Empires are not licensed while Surprise Storm has been banned due to its violence content since 2010.

But VTC continued to provide all three of them.

The company faces fines for advertising and providing unlicensed and prohibited games.

The city People’s Committee has instructed authorities to severely punish shops that sell gambling games and manufactures who install and sell gambling machines.

Gambling is illegal in Viet Nam.

BIDV to list within next three months

The Bank for Investment and Development of Viet Nam (BIDV) will list 2.3 billion shares on the HCM City Stock Exchange under the code BID. The exchange, which approved the listing last week, requires the bank to prepare for the listing within 90 days of the exchange’s decision. The bank sold 84.7 million shares in an initial public offering last December at VND18,583 (S$0.89) per share.

Brokers fined for lending violations

HCM City Securities Co brokers Nguyen Viet Xuan and Pham Thi Suong have been ordered by the State Securities Commission to pay a sanction of VND85 million (U$4,000) each for lending securities to clients on the accounts of other clients. The commission also revoked Xuan’s practice certificate and fined the company VND105 million ($5,000).

Pharmaceutical firm sees profit rise

Lam Dong Pharmaceutical Co (LDP) reported third-quarter earnings of VND102.1 billion (US$4.8 million), an increase of 10 per cent over the same period last year. However, due to increasing raw material costs, the company’s gross profit durng the third quarter was only VND12.76 billion ($607,600), a decline of 4.56 per cent. LDP’s profit for the first nine months of the year has reached VND17.16 billion ($817,200), exceeding the year’s target by 7.25 per cent.

(Vietnam Net)

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