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Apparel sector races to hit targets

The textile and garment sector will take several measures to achieve its export target this year, according to the Viet Nam Textile and Apparel Association (Vitas).

Exports in the first nine months were worth US$10 billion, a year-on-year increase of seven per cent, but concerted efforts are indeed required to hit the target of $17-18 billion, it said.

The industry faces certain difficulties that will significantly affect production and trading, and serious efforts are needed to resolve them soon.

They include an ongoing dispute between Vietnamese textile firms and US cotton merchants – which could affect their purchase of cotton – and a Ministry of Finance plan to scrap the 275-day grace period for tax payment they currently enjoy.

The ministry plans to amend regulations to force companies to pay tax before customs clearance. The change will apply to firms that do sub-contract work for foreign partners and those that import products for re-export.

Without the grace period, production costs are expected to increase by 8-16 per cent.

Vitas vice chairman Le Tien Truong said the association has petitioned the ministry not to effect the change. It has also told its members to strengthen sales promotion abroad to consolidate existing markets and expand into new ones.

The Viet Nam National Textile Garment Group (Vinatex) will help its member companies explore ways to enter promising new markets like South Korea and Canada, and promote sales of fibre products to China, the Middle East, Turkey, and Africa.

The industry will intensify investment to upgrade fabric factories to ensure supply of quality material for exports.

A large polyester yarn production programme will be undertaken to meet 70-80 per cent of domestic demand by 2015.

If the programme is successful it will help the industry add value to textile and garment products.

Up-to-date information will be provided to textile firms about market fluctuations, changes in polices, and quality control in overseas markets so that they can make timely adjustments to their production plans.

In an attempt to help the industry, the Ministry of Trade and Industry is launching several sales promotion programmes, especially in promising markets like Hong Kong, Thailand, and Malaysia.

GM crops key to future food security: experts

Genetically modified (GM) crops will help Viet Nam achieve food security in the years to come when the demand for food rises further, experts said at a seminar held in HCM City yesterday.

Organised by University of Agriculture and Forestry and Monsanto, a leading global provider of technology-based solutions and agricultural products, the seminar discussed the pros and cons of growing GM crops.

Rashmi Nair, director of Regulatory Policy&Scientific Affairs in Emerging Markets of the Monsanto Company, said that bio-technology had given the world a new tool to improve food security.

However, the development of agricultural biotechnology is perceived by some as posing risks to human health and the environment, with most of the debate focused on genetically modified organisms (GMOs).

Nair cited the statement of the European Commission’s Chief Scientific Advisor Anne Glover that GMOs were no riskier than their conventionally farmed equivalents.

“There is no substantiated case of any adverse impact on human health, animal health or environmental health,” she said, adding that she was confident that there was no more risk in eating GMO food than eating conventionally-farmed food.

Ton Bao Linh, lecturer at the agriculture university, noted that Viet Nam has had to deal with the effects of “rapid population growth, decreasing agricultural farm areas, more frequent natural disasters, floods, droughts, and diseases.”

From 1990 to 2010, the country’s population increased from 66 million to 89 million. It is expected to rise to 90 million by 2015 and 100 million by 2020.

Linh said yields needed to be increased at the farm level to make more food available.

Project’s bad fashion statement

The runaway foreign investors of Lifepro Vietnam’s Luxfashion textile and garment complex, leaving $150 million in debts behind, have underscored the ugly side of foreign-invested projects that go wrong.

The $300 million European clothing complex, located in northern Ninh Binh province’s Gian Khau Industrial Park, has been totally locked down since early September, just six months after official becoming operational.

In late August, the local authorities were reported by a Vietnamese representative of Lifepro Vietnam that all foreign managerial staff of Luxfashion complex, one of Vietnam’s largest textile and garment factories, had left Vietnam without a trace for the last two months.

The 12.8 hectare complex’s assets are now protected by Vietnam Bank for Agriculture and Rural Development’s South Hanoi branch to which Lifepro Vietnam owes $150 million. The value of the sealed assets at the complex remains unknown. The bank has also asked Ninh Binh authorities not to appraise any application of Lifepro Vietnam’s ownership transfer to other investors without notifying the bank.

Regarding the case, Ninh Binh Provincial Industrial Parks Management Authority’s Investment Department chief Tran Van Trinh said three summons had been sent since early September to leaders of Luxfashion in the Ninh Binh complex and its representative office in Hanoi. However, they had been met by stony silence.

“The investors have not turned up since they secretly stopped operations. We [the local government] would like to work in a good-willed spirit with the investors to address their problems, while wanting to protect the local workers’ rights and our province’s prestige,” Trinh told VIR, adding that the local government was seeking higher-level help to deal with this case.

Lifepro Vietnam, with legal investment capital of $50 million, was licenced in January 2011 with four shareholders – Hong Kong Golden Principal Investment (63 per cent), Canadian investor Ahmed El Fehdi (30 per cent), domestic private firm Lifepro Vietnam (5 per cent) and Vietnam’s state-owned Interserco (2 per cent).

Lifepro Vietnam was restructured from the former Enzo Viet Joint Stock Company established in 2007 by Ahmed El Fehdi and local Thanh Dong Fine Arts Export and Import Company. Internal disagreement resulted in the local firm pulling out Enzo Viet in 2008.

Luxfashion’s knitwear production for export officially came into service in March this year, with the peak time employment of 920 local workers.

“The investor came to Vietnam with the confidence that the country will open a good investment opportunity due to its encouraging investment environment for foreign investors. We hoped to develop the project, create jobs for more than 5,000 local and foreign workers,” Boubker El Fehdi, Ahmed El Fehdi’s son who acted as the executive general director of Lifepro Vietnam, wrote to VIR when contacted by email last week.

El Fehdi, who also left Vietnam and did not mention where he was, declined to directly respond to VIR’s question whether the $150 million debt would be repaid, but said: “The problem is not Luxfashion or the investors but it’s lack of support and to throw a spanner in the works that prevents the company to produce and earn an income. Only with revenue the company will pay the debts.”

“Our project remains the same for the future, that means to recruit, produce, export, grow the economy and small families of our workers in general,” he said in the email.

Lifepro Vietnam is the latest case of absconding investors leaving bad debts with Vietnam’s commercial banks to hit the headlines, amid Vietnam’s economic woes. It follows notorious Taiwanese furniture-maker Kenmark Group having disappeared without repaying $44 million to two local commercial banks. Kenmark’s two factories abruptly stopped operating in May 2010.

Five years ago, Kenmark boasted it would pump $500 million into northern Hai Duong province’s Viet Hoa Industrial Park to building industrial production, trading and services facilities and urban areas.

Dearth of cargo sees port investors coming up short

With this price [below $40], most ports are suffering losses – Nguyen Xuan Ky Deputy director of Cai Mep International Port

Southern Cai Mep-Thi Vai port complex investors are all at sea as they struggle to attract cargo.

Five terminals have been developed in Ba Ria-Vung Tau province’s Cai Mep-Thi Vai area including Cai Mep International Terminal, SP-PSA International Port and SP-SSA International Container Terminal, which are jointly invested by state-run Vinalines and Denmark’s APM Terminals BV, Singapore’s PSA International and US’ SSA Marines, respectively. The other terminals are Saigon New Port’s Tan Cang-Cai Mep Container Terminal and Hutchison Port Holdings’ Saigon International Terminals.

Ngo Minh Tuan, deputy director of Saigon New Port, said all terminals in Cai Mep-Thi Vai area were in a perilous state and suffering losses, some up to $30 million per year.

The port complex was touted as becoming an international transshipment port in the southern region to replace Ho Chi Minh City’s ports. However, despite the five terminals opening in 2009, cargo is still mostly handled by the second city’s ports.

The hunger for cargo has resulted in fierce competition between port operators at Cai Mep-Thi Vai, forcing them to reduce uploading and loading rates to attract vessels.

Nguyen Xuan Ky, deputy director of Cai Mep International Port, said investors jumped into the project on the assumption on loading rates at $55-$60 per 20-foot equivalent units (TEU). However, this had plummeted to below $40 per TEU, he said.

“With this price [below $40], most ports are suffering losses,” he added.

The Ministry of Finance late last month stepped in to propose the Vietnamese government set a minimum rate for loading and uploading services in ports. This proposal followed a petition by the Ministry of Transport, Vietnam Port Association and port operators at Cai Mep-Thi Vai.

Nguyen Thu Trang, director of Baria Serece Phu My Port, said a minimum rate would safeguard investors, but was just a short-term measure to address the current dire situation.

“There are many reasons for shippers to keep on handling cargo in Ho Chi Minh City’s ports. They have a habit of resolving custom procedures in inland clearance depots in southern Binh Duong and Dong Nai provinces and the construction of inland infrastructure linking terminals is at a very slow pace,” Ky said.

The expansion of the National Road 51 connecting Cai Mep-Thi Vai with other provinces like Dong Nai and Binh Duong, home to thousands of foreign-invested companies, remains under construction even though this project started in 2009. Meanwhile, the construction of internal roads in Cai Mep-Thi Vai port complex is also at very slow pace as the local authorities failed to arrange funds for this project.

Because of the losses at Cai Mep-Thi Vai’s terminals, in June the Vietnamese government instructed state-owned Vinalines to review and restructure its capital contributed to joint ventures with foreign partners at this complex, including Cai Mep International Terminal, SP-PSA International Port and SP-SSA International Container Terminal. Vinalines holds a 51 per cent stake in each port.

$8bn Nghi Son refinery plan still a headache

Delays to the $8 billion Nghi Son oil refinery project continue to cause concern.

Phung Dinh Thuc, chairman of state-run PetroVietnam – one of the project’s investors, last week said final preparations to kick off Vietnam’s second refinery in central Thanh Hoa province was underway after two years’ delays.

“Despite both our foreign partners from Japan and Kuwait having quite stable financial capacity when joining this project, they are very careful about every step of the project implementation.”

“They will proceed with the project very soon, I am sure,” Thuc said, adding that the EPC contract should start by this year’s end.

Two months ago Idemitsu Kosan – the third largest refiner in Japan – confirmed that it was in the final stages of negotiations to join this project with the Vietnamese government recently agreeing to guaranteeing its involvement.

The project’s make-up will see PetroVietnam hold a 25.1 per cent stake, Kuwait Petroleum International 35.1 per cent, Japan’s Idemitsu Kosan 35.1 per cent and the Mitsui Chemicals 4.7 per cent in Nghi Son.

Nghi Son refinery will have a capacity of 10 million tonnes of crude oil a year, or 200,000 barrels a day, 1.5 times greater than operating Dung Quat oil refinery’s capacity.

Dung Quat, located in central Quang Ngai province, is the nation’s first refinery with 100 per cent stake owned by PetroVietnam.

Nghi Son refinery is designed to refine oil imports from Kuwait, while Kuwait Petroleum will provide all the input materials for the refinery. Refined products will be sold in the domestic market and various petrochemical products will be produced for domestic and export markets.

The refinery will consist of onshore and offshore installations. The onshore installation will feature main refinery and petrochemical complex on 328 hectares and a marine harbour on 36ha. The offshore installations include main breakwater, access channel, turning basin, intake channels, crude oil pipeline and a single point mooring.

Vietnam is also calling for foreign investments to develop the third refinery in Long Son commune of southern Ba Ria-Vung Tau province.

BOT plan to get Vung Ang rolling in style

Investors behind Vung Ang 2 thermal power plant are expected to sign a build-operate-transfer  contract before the year of this year.

It will become the third foreign-invested build-operate-transfer (BOT) power project in Vietnam over the past decade, following Mong Duong 2 plant invested by AES Corporation, Posco Power and China Investment Corporation, and the Hai Duong power plant invested by Malaysia’s Jaks Resources.

Minister of Industry and Trade Vu Huy Hoang asked General Department of Energy and related agencies to expedite negotiations for the Vung Ang 2 project before October 15, 2012 to enable investors start construction next year.

The 1,200 megawatt Vung Ang 2 project is a part of Vung Ang thermoelectricity power centre in central Ha Tinh province, where PetroVietnam is building another 1,200 megawatt power plant known as Vung Ang 1.

The new project is being built by the Vung Ang 2 Thermal Power Joint Stock Company (VAPCO), a joint venture between the local firm Refrigeration Electrical Engineering Corporation (REE) and OneEnergy Asia Limited, which is a 50/50 partnership of Hong Kong’s CLP Holdings and Japan’s Mitsubishi Group. VAPCO was established in 2007, with BOT contract negotiations starting in 2009.
Conversion of foreign currency has proven to be a tricky obstacle in BOT contract negotiations.

Under the prime ministerial Document 1604/TTg-KTN, the Vietnamese government guarantees conversion into US dollar for 30 per cent of the project revenue in VND. However, investors of BOT power projects with ongoing negotiations such as Vung Ang 2 and Van Phong requested up to 100 per cent foreign currency exchange guarantee.

More investors could seek special investment carrots

Other investors could look to follow in Samsung’s foot steps, after the electronics giant received special incentives to expand its investments in Vietnam.

Minister of Planning and Investment Bui Quang Vinh, in a meeting on foreign direct investment strategy in Hanoi last week, said the government could propose National Assembly revise Law on Corporate Income Tax in order to allow other expanded projects to enjoy incentives. “Why do we just grant incentives for new projects? The expanded projects should be encouraged because these are the effective ones and the expansion is a proof for the long term commitment of investors in Vietnam,” Vinh said.

The Law on Corporate Income Tax, issued in 2008, stipulates that only new investment projects could enjoy corporate income tax incentives. Vinh said this regulation was a barrier to foreign direct investment into the country as well as reduced the attractiveness of Vietnam in comparison with other countries.

Samsung warned Vietnam authorities that it may have expanded investment in other countries if the government had declined to grant incentives for the expansion investment.

Although Samsung announced intentions to expand investment in Vietnam from $670 million to $1.5 billion in 2010, the South Korean investor delayed its final decision until the government approved incentives to the expansion. The $670 million factory in Bac Ninh province previously enjoy highest incentives with 10 per cent of corporate income tax for all products

“Without incentives, our products will lose in the competition against other rivals,” said Shim Won Hwan, general director of Samsung Electronics Vietnam.

Vinh, in a meeting with Samsung Electronics Vietnam, affirmed that the incentive requirement for expanded project was legitimate. He added that Samsung was not the only investor asking incentives for investment expansion in Vietnam, therefore the government would propose to revise the law.

Do Nhat Hoang, director of Foreign Investment Agency, said Vietnam faced tough competition from neighbouring countries like Indonesia, Thailand, China and Malaysia. As a result, it was essential to revise incentive policy to make the nation more attractive to investors.

“The incentive policy must be attractive and competitive,” he said. He also warned that if investors did not receive incentives in Vietnam they could relocate investment to other destinations.

Vinashin looks for safe port to berth

Vinashin Business Group is awaiting its turn to get back to a safe haven – the Ministry of Transport.

The ministry (MoT) has recently proposed next steps for restructuring Vinashin. Accordingly, Vinashin will only retain effective shipbuilding companies and potential ship repair firms. These companies will be switched into joint stock companies, in which the parent company will be wholly state owned business taking charge of managing state investment into member companies and affiliates.

“Vinashin has proposed the prime minister allow it to keep the parent company, 12 shipbuilding enterprises and the Shipbuilding Science and Technology Institute,” said Nguyen Ngoc Su, Vinashin’s chairman.

It also means that Vinashin will have to continue divesting from at least 30 other member enterprises. Plus, the proposal can be done only when the group cuts down on 216 associated businesses as proposed in the restructuring plan first step.

Analysts said this will be a very tough mission, particularly under current context of economic vulnerabilities. Meanwhile, the outcome of the selling assets in three businesses, offering for sale 13 enterprises and the transferring capital at 32 joint stock companies Vinashin promised to solve after the second quarter this year is not yet available at this time.

The black cloud of the shipbuilding industry is still acting a brake on seeking new contracts for Vinashin in 2013 and years ahead. It is reported that some ship owners have offered contracts to Vinashin, but at pretty low rates for acceptance.

“It takes at least three years for the sea transport market to recover completely on the back of current sinking demand. Shipbuilding industry will recover more slowly than transport industry,” said Nguyen Van Cong, vice minister of the MoT. With the technologies and the productivity available, retaining seven or eight shipbuilding factories was still difficult, he added.

The restructuring plan came on the heels of the proposal to transfer management of the “big four” Vietnam Airlines, Vinalines, Vietnam Railways and Vinashin to the MoT which has been submitted to the prime minister for approval.

It is unclear whether Vinashin will retain its business group status or not. Dinh La Thang, Minister of the MoT, said the proposal was important to improving the role and responsibility of the ministry towards businesses under its management.

According to the MoT’s report, Vinashin’s total revenue up to September, 2012 was estimated at $71.4 million, achieving 15.8 per cent of this year’s plan and dropping 71 per cent compared 2011 corresponding period. This result stemmed from the delivery of 8 ships and barges worth $55 million in which 3 ships were sold for only $10.6 million.

Auto sector set to turn the corner

The auto industry is pressing down the accelerator to speed up sales for the remainder of the year.

It follows news of retail sales volumes of Vietnam Automobile Manufacturers Association (VAMA) members and imported-CBU volumes of non-VAMA members in September hitting 7,669 units, up 9 per cent versus August.

Of which, car sales were up 15 per cent versus the previous month and truck sales up by 20 per cent.

“The auto industry in the fourth quarter is definitely moving faster than previous quarters,” said VAMA chairman Laurent Charpentier.

Charpentier, also managing director of Ford Vietnam, in VAMA’s latest report added that September’s results projected annual sales at 94,000 units. Sales in August hit 7,056 units, down 5 per cent versus July, resulted in an annual forecast on 88,000 units.

Despite the positive trend in September, some auto-makers are still reluctant to say Vietnam’s auto industry is on the road to recovery. Mercedes Benz Vietnam’s general manager Michael Behrens said the industry was still under pressure due to economic difficulties.

Pham Anh Tuan, deputy director of the Ministry of Industry and Trade’s Heavy Industry Department, said total auto sales within 2012’s first months had plunged 33 per cent year-on-year, while other countries’ auto sales recorded impressive increases such as Thailand with 208 per cent growth.

Tuan pointed to auto policy inconsistencies as the main reason for fragile performances.

Business Monitor International (BMI), in a recently released fourth quarter Vietnam auto report, stated that Vietnam’s vehicle market was characterised by fluctuating tariffs, which often made it difficult to identify sales patterns.

The sales of domestically-produced vehicles in 2008 were affected by an increase in vehicle ownership tax that year, BMI said. After the tax doubled to 10 per cent, the VAMA reported that average sales for the last four months of that year dropped by around half compared with the first eight months of 2008.

The registration tax was raised again in January, 2009 to 12 per cent in Hanoi and 15 per cent in Ho Chi Minh City. Furthermore, the special consumption tax was increased on April 1, bringing a return to the days of prohibitively high vehicle prices in the country.

“A further deterrent to sales was the country’s ever-changing tariff regime,” said BMI, adding that 2012 proved a difficult year for new vehicle sales in Vietnam because it depended on the government’s attitude and whether it decided to continue with the collection of the new road maintenance fee, personal vehicle user fees and charges for cars entering cities’ downtown areas in rush hour.

“For 2012, BMI now believes that a 15 per cent fall in output is the most likely outcome, reflecting the increased uncertainty surrounding the Vietnamese auto sector at the present time,” said BMI.

Firms, banks in trouble

Both companies and lender banks have been experiencing a host of difficulties this year, according to a survey conducted by Vietnam Report Co. and announced in Hanoi on Sunday.

The survey was done on 300 top-ranked enterprises, including some from VNR500 biggest firms, V1000 top corporate taxpayers, and FAST500 highest growing firms, plus a review of around 4,400 media articles published in January-August.

This examination, which was part of the preparations for announcement late this year of V1000 results, shows access to bank loans has become harder, with 44% of enterprises surveyed saying that this year they had not been able to take out as big bank loans as last year.

Meanwhile, 39% said they had borrowed more than last year but their loans accounted for half of the amount needed for their business operations.

More than half of the businesses examined said banks had still given lending priority to state-owned enterprises. Just one-fifth said small and medium enterprises had enjoyed credit priority from banks.

The Vietnam Report survey indicates that this is not a good sign given the country’s much-touted effort to create a level playing field for businesses in the state and non-state sectors.

According to the survey, this year is tough for the banking sector. By the end of the second quarter, many banks had realized 20% to 30% of their profit targets for the entire year. Those banks achieving half of the year’s profit goals by July are considering revising down their targets given the difficult market conditions.

The biggest problem faced by banks at the moment is that bad debt has ballooned this year. By end-June, bad debt in the banking system was put at VND256 trillion, around one-tenth of total outstanding loans, which was far higher than in 2009 with 2.5%, 2010 with 2.1% and 2011 with 3.3%.

Coal export tariff halved

The Ministry of Finance has approved a proposal of Vietnam National Coal and Mineral Industries Group (Vinacomin), the country’s biggest coal exporter, to halve the coal export tax to 10%.

Circular 169/2012/TT-BTC signed by Deputy Minister of Finance Vu Thi Mai is what Vinacomin had expected for a long time to lower coal export prices and thus step up shipments amid slackened global demand.

New building material plant opens in Nha Be

A precast concrete plant using Australian technology has come online in Long Thoi Commune in HCMC’s outlying district of Nha Be.

Australia’s Conrock International Group has transferred technology to local partner Conrock Australia Vietnam JSC to produce precast concrete products in Vietnam.

According to a representative of Conrock Australia Vietnam, the firm invested about US$3.5 million to build the facility with a total annual capacity of some 500,000 cubic meters of concrete. It is considered a new environmentally friendly technology solution for construction of industrial facilities, apartments, and office and commercial centers, the representative said.

Speaking at the inauguration, Deputy Minister of Construction Nguyen Tran Nam said local construction potential is huge as around 100 million square meters of home will be developed under the nation’s housing development strategy. Therefore, it is necessary to apply the new solution to speed up construction progress and to minimize expenses, Nam told the ceremony.

Conrock Australia Vietnam expects the technology to help reduce construction costs by between 10% and 15% depending on scales of projects and shorten construction time by 20-30%.

Exports to prove a bridge too far

Firms have a long way to go to scale up exports during the remainder of the year.

Ho Chi Minh City-based Saigon Garment Company 3 saw export values reach VND1.5 trillion ($71.4 million) in the first three quarters of 2012, tantamount to last year’s corresponding period, but profits shed 50 per cent on the back of escalating input costs, according to the company’s general director Pham Xuan Hong.

Binh Hoa Garment Company witnessed a 20 per cent decline in export orders in remaining months of the year compared to one year ago, said its director Phung Dinh Ngo.

Big players in the garment sector like Thang Loi Company also eyed sagging profits against rising revenue figures compared to last year’s same period.

The Ministry of Industry and Trade’s first nine month periodical report showed that some major export groups like the textile-garment, footwear, wooden furniture posted lower growth versus the country’s average, showing firms’ difficulties in sourcing export markets.

Shedding some light on why garment export markets are often less vibrant at year-end period compared to other time in the year Hong said importers from EU, Japan and the US often place rising orders based on seasons but do not abruptly increase orders in the lead to festive or New Year occasions.

“Our customers from Europe are shifting into placing orders with Cambodia to benefit from zero per cent tax policies in this country, making Vietnamese firms less competitive in securing export orders with regional peers,” said Ngo.

Ngo added that it is hard for small firms to step into the Japanese market due to stringent quality requirements placed on imports. To meet such requirements, firms needed to invest in cutting-edge equipment which is beyond their financial capacity.

Hong said firms had turned to competent management agencies for several proposals to help them get through this tough period but the outcome remains modest.

For instance, garment exporters proposed the Ministry of Finance not abolish the 275-day tax grace policy for imported materials, but a final decision has not been made.

“Since firms are struggling on the back of current woes, using the year-end period to boost production remains almost impossible,” said Ngo.

Firms assumed the government should increase support through tax vehicle like reducing corporate income tax from 25 to 20 per cent or lowering value added tax to 5 per cent to get firms out of difficulties, from there enabling them to expand scope or accelerate production.

Project owners seek ways to survive tough times

The current housing oversupply, plus slackened demand, has forced many project owners and investors in Hanoi to cut prices, hand over near-complete homes and leasing apartments, among others.

The sale of Dai Thanh condo project in Thanh Tri District sent shock waves to the Hanoi market when its price was lowered to VND10 million a square meter last week. Business of Lai Chau No.1 Construction Co., the project developer, has become bustling with the presence of large numbers of interested customers since then.

With the price cut, the condos on offer cost VND360 million to VND470 million per unit and buyers are able to pay money in line with the construction pace.

Earlier, the developer of the VP3 Linh Dam condo project in Hoang Mai District had slashed prices by an additional VND3 million a square meter. The apartments now are priced at between VND22 million and VND23 million a square meter from VND25-26 million.

The condos’ prices have shrunk a combined VND10 million compared with the previous prices of VND31-32 million for one square meter.

In this year’s third quarter, COMA 18 Co. adjusted down prices of the high-class Westa apartment project in Ha Dong down to an average VND17.9 million a square meter of unfurnished housing and VND21 million for a square meter of furnished housing, dipping from VND5 million to VND7 million a square meter against the previous levels. Some other projects also saw their prices going down in the same period.

In recent times, besides promotions to lure homebuyers, a slew of developers have come up with delivering near-completed housing products to homebuyers to lower prices. The Xuan Mai housing project in Ha Dong is launched for sale at VND14 million a square meter of near-completed apartment and at over VND17 million for a square meter of completed condo.

The project owner of the Golden Palace project in Tu Liem has also revised down the selling price from VND30-33 million a square meter to VND27-29 million as the country’s economic woes are still biting. Another high-end project located on Hoang Minh Giam Street, Thanh Xuan District, is offered at VND30 million, down from VND40 million reported in 2011.

According to many project owners, adjusting down the prices for incomplete condos has partly stirred up local housing demand.

Given poor local demand for housing, multiple secondary investors have had no other choice but to lease out their apartments after having failed to find buyers for a long time.

Thai newspaper calls for investment in Vietnam

Bangkok Post in its October 15 edition pointed out four key areas for investors to consider business in Vietnam.

In its article “Don’t turn your back on Vietnam” the news wire said that foreign investment in Vietnam dropped by about a third since September 2011, with some blaming a weakening economy, inflation, high debt, and the fallout from a property market crash.

However, Thai businesses are still interested in investing in Vietnam, a market of approximately 90 consumers, and they believe they will continue to focus on their long-term strategies and creating real value there.

The news wire confirmed that Vietnam will bounce back from its recent difficulties, and more quickly than people think.

There are four key areas that businesses should consider when deciding to invest in this market, according to Bangkok Post.

First, Vietnam is changing:  In the past, corrupt loans to inefficient state- and privately owned companies resulted in a rise in non-performing loans and pressure on the wider economy.  The Vietnamese Government is now taking steps to remedy these problems in the banking sector.

Second, growth is stable: The current growth rate of around 4 percent is predicted to average out at around 5 percent over the next two years.  This is a sustainable level of growth, and will keep excessive inflation at bay, while also helping Vietnam prepare for the economic integration prompted by the ASEAN Economic Community.

Third, Vietnam is a springboard to opportunity lying just beyond its borders:  Laos and Cambodia are dynamos of growth and Vietnam can provide a gateway for Thai investors wishing to access these markets, directly or through Vietnam subsidiaries.

Last but not least, cost savings: With a glut of overextended Vietnamese companies looking to divest or offload assets, there are bound to be bargains for savvy Thai entrepreneurs looking to expand their operations.  Furthermore, labor costs in Vietnam are significantly lower than in many countries in ASEAN, helping to reduce startup costs.

According to the Thai Consulate in Ho Chi Minh City, Thailand is the 11th largest investor in Vietnam and the third largest among ASEAN members, with total investment value of US$5.9 billion.

Filipino investors keen on Vietnamese market

Filipino businesses gathered at a seminar in Ho Chi Minh City on October 16 to discuss investment opportunities in Vietnam.

The seminar, entitled “Vietnam – A Destination for Investors”, aims to help businesses from both countries strengthen cooperation and promote the effective implementation of bilateral economic agreements.

Le Manh Ha, Vice Chairman of the Ho Chi Minh City People’s Committee, said bilateral trade has developed well in many fields and there have regular direct dialogues that have benefitted both sides.

He pledged to create the best conditions for foreign businesses to operate in HCM City, including those from the Philippines.

The Filipino ambassador to Vietnam, Jerril Santos, said that his country currently ranks 27th among Vietnam’s foreign investors with many large firms capitalized at nearly US$300 million.

He said in HCM City alone, Filipino businesses are involved in 26 projects with a total investment of US$46 million. The two countries should fully tap their potential for trade and investment cooperation, especially in agriculture, he added.

Other delegates at the seminars also highlighted prospects for Vietnamese and Filipino businesses to cooperate and utilize their advantages in human resources and food processing.
They had a direct talk with Vietnamese companies to establish partnerships.

19,800 cars imported into Vietnam

Vietnam imported 19,800 complete built units worth US$448 million in the past nine months, a year-on-year decrease of 56 percent in volume and 47.2 percent in value.

The General Department of Customs reported that 9,880 nine-seater sedans were purchased, costing Vietnam US$104 million, down 66 percent in volume and 72 percent in value.

The Republic of Korea was the main car supplier to Vietnam with 7,800 units in nine months.

Rice exports to reach record high

Vietnam is likely to export a record volume of 7.5 million tonnes of rice this year, up 4 percent over 2011, according to the Vietnam Food Association (VFA).

VFA says businesses have so far signed contracts to sell 7.2 million tonnes to foreign importers, and the volume of rice in stock is more than 1.7 million tonnes, big enough for domestic use and export.

A 40-percent fall in rice exports in the first quarter prompted Vietnam to lower its rice export volume set for this year to 6.5 million tonnes, but the export level has picked up in the following months.

By October 11, businesses had delivered 6.018 million tonnes to their importers at an average price of US$440 per tonne.

Enterprises optimistic despite global turmoil

Businesses are optimistic that they will not have to scale back their operations this year despite tough market conditions, according to a recent survey by the Vietnam Chamber of Commerce and Industry (VCCI).

The survey on business during the third quarter, conducted through the chamber’s website www.vbis.vn, found that nearly 97 percent of local enterprises will maintain their current business scales by the end of this year.

About 18 percent of respondents said they would possibly expand business activities while over 11 percent intend to narrow the scale of their operations. About 0.7 percent might suspend operations and 0.2 percent said they may close down or dissolve.

Surveyed companies said their production and business situation was much tougher in the third quarter than that in the second, but they anticipate conditions would ease during the remainder of the year.

VCCI General Secretary Pham Thi Thu Hang said production and business indices, especially turnover, profit and inventory levels, tend to worsen at many firms, and these factors will continue to worry enterprises.

Sharp falls in profit were the main cause for the overall dim situation during the third quarter, she said, adding that economic difficulties had resulted in falling production capacity as well as employee cut-backs at businesses.

Enterprises said they assess that the country’s macro-economy is getting worse, although transparency, consistency and equity are improved for administrative procedures.

While nearly 83 percent of those polled said they are borrowing capital with interest rates of 15 percent and below, only 0.6 percent think the 15 percent rate is reasonable and about 56 percent said they will not be able to meet this level in the long run.

Around 20 percent said they couldn’t access bank loans due to high interest rates, strict lending conditions or complicated borrowing procedures; and many firms are seeking other capital sources.

Over 65 percent said loosening lending policies positively affected their activities, while about 25 percent said these policies hardly had any impact on them, since many firms now do not need to borrow money due to falling purchasing power on the market.

About 63 percent said high inventories are serious concerns for them, with 35 percent having seen inventories increase in the third quarter over levels during the second quarter.

To deal with this problem, 53 percent are seeking new export markets, 24 percent are cutting selling prices and 4 percent are attempting to sell more goods in rural areas.

Meanwhile, 29 percent said the Government should organize more trade promotion programs, and 26 percent said input costs for enterprises such as electricity prices should be cut to help firms reduce inventories.

19 export items surpass US$1 billion mark

Nineteen export products have earned more than US$1 billion each so far this year, according to the Vietnam General Department of Customs.

The garment and textile sector fetched more than US$11.1 billion, topping the list. It was followed by phone handsets and electronic components (US$8.63 billion) and crude oil (US$6.3 billion).

In September alone, three more export commodities that earned more than US$1 billion each were cassava and its products( US$1.06 billion); bags, wallets, cases, hats and umbrella (US$ 1.1 billion), and steel (US$1.01 billion).

In nine months, Vietnam’s total import-export turnover hit US$167 billion, up 12 percent compared to the same period last year.

Of the total, exports reached US$83.55 billion, up 23.6 percent, and imports nearly US$83.41 billion, up 6.1 percent.

Therefore, the country enjoyed a trade surplus of US$143 million in the review period.

Contracts worth US$12.8 mln signed at Vietbuild

Contracts totally worth US$12.8 million were signed at the International Exhibition of Construction, Building Materials, Housing and Interior Décor (Vietbuild 2012) in the Mekong Delta city of Can Tho.

The event, jointly organized by the Ministry of Construction and the Can Tho municipal People’s Committee from October 11-15, drew the participation of 261 Vietnamese businesses, not to mention others from the Republic of Korea, Japan, Indonesia, China, Germany, Italy, Thailand and Malaysia.

As many as 40,000 domestic and foreign visitors had a chance to find out about construction materials, interior and exterior decor, and technologies used in the construction industry from 450 stands at the exhibition.

Toyota Vietnam recalls over 5,000 cars

Toyota Motor Vietnam (TMV) has decided to recall 5,299 Toyota sedans nationwide to check if there is a faulty power window switch.

According to a report sent to the Vietnam Competition Authority, the recall involves 1,489 cars of Corolla ZZE142L-GEMGKH and ZZE142L-GEPGKH models (produced from July 24 2008 through December 23 2008) and 3,810 units of Vios NCP93L-BEMRKU and NCP93L-BEPGKU models (produced from September 13 2007 through December 31 2008).

TMV said in its report that any efforts to fix the fault with regular lubricants may cause a melted switch.

The recall will be made as of October 17 at TMV agents and service centres. All related faults will be checked and replaced for free.

The recall will also be applied to officially-imported cars by TMV.

Vietnam International industrial Fair 2012 opens in Hanoi

The 2012 Vietnam International Industrial Fair (VIIF) opened at Hanoi‘s the Giang Vo Exhibition Center on October 17.

The five-day event has drawn many foreign enterprises from China, the Republic of Korea, Russia, the Czech Republic, and some ASEAN member countries with a total of 200 stalls covering 2000sq.m.

Nguyen Danh Thuan, Deputy Director of the Vietnam Exhibition Trade Fairs, said VIFF is one of the biggest industrial fairs in Vietnam, which creates opportunities for businesses to promote investment and trade exchange particularly in the industrial sector, between Vietnam and other countries across the world.

On display are the latest processing technologies, equipment and spare parts for production, transport means, medicines, garment and textiles, and other consumer goods.

Airbus A320 delivered to VietJetAir

Low-cost carrier VietJetAir took possession of an Airbus A320 in HCM City on Sunday.

The airline’s fourth aircraft will soon be joined by more as VietJetAir aims to meet its network expansion plans by the end of this year with further internal and international destinations planned.

VietJetAir is the first private carrier in Viet Nam licensed to fly domestic and international routes. It now offers 22 flights a day across an expanding network, which will soon connect the whole country with nine domestic routes by the end of this year. International flights to Southeast Asia and Northeast Asia are also scheduled for this year.

Dong Nai eyes $99 million medical equipment plant

Japanese Terumo Co has announced it would invest US$98.9 million in building a medical equipment factory in southern Dong Nai Province’s Long Duc Industrial Zone.

The 10-ha factory, the fourth Japanese-invested project in the zone, is expected to open its doors in the second quarter of 2015.

Enterprises to explore Indian market

Fifteen Vietnamese enterprises will have the chance to seek business opportunities in the Indian cities of New Delhi and Kolkata, the Ministry of Industry and Trade has announced.

Co-organised by the ministry’s Trade Promotion Centre and the Africa-West-South Asia Markets Department, the trip from December 16-22 is aimed to help domestic enterprises better advertise their trademarks and products, seek trade and investment opportunities and accelerate their exports to this potential market.

Belgian-invested food venture gets go-ahead

Belgium’s Puratos Group and Grand-Place Holding last week signed an agreement to set up a joint venture in Viet Nam with an investment of US$10 million for the next five years.

The joint venture, called Puratos Grand-Place Viet Nam, will specialise in bakery, patisserie and chocolate.

The investment amount will enable the two companies to expand production and establish a research and development centre in the province.


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