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BUSINESS IN BRIEF 21-3Supermarkets set up to serve workers in Industrial Zones

Industrial and Export Processing Zones in Ho Chi Minh City have recently coordinated with Saigon Union of Trading Co-Operatives to open supermarkets to serve workers right at the zone precinct.

Ho Thi Kim Oanh, head of Co-op Food Supermarket in Linh Trung 2 Export Processing Zone in Thu Duc District, said the supermarket has been drawing workers every day. A diverse variety of commodities, including fresh and processed food, are now selling at subsidized rates in the supermarket.

Le Hong Gam, a worker at the zone, said that earlier she had to go very far to a marketplace from her rental room to buy food items but now the supermarket has made it very convenient for her to buy her daily needs.

Setting up of supermarkets in Industrial and Export Processing Zones will also help reduce vendors along roadsides in the zone areas.

According to the Industrial and Export Processing Zone Management Board in HCMC, seven supermarkets and three price subsidized stores have been built in Industrial and Export Processing Zones since last year.

The management board is also building two trade centers in Le Minh Xuan and Vinh Loc Industrial Zones, and will work with the City Department of Industry and Trade and other businesses to provide more price-subsidized items for workers.

US$57 million Diamond field project launched

Petroleum Equipment Assembly and Metal Structure Joint Stock Company (PVC-MS) has officially launched the Diamond field development project in Vung Tau on March 15.

The US$57 million project is a Petronas Carigali Vietnam Limited (PCVL) investment. PVC-MS has assumed a general contractor role for EPCC (engineering, procurement, construction, and commissioning).

The field is expected to enter operation on May 19, 2014.

Addressing the ground breaking ceremony, PVC-MS General Director Nguyen Dinh The committed the company—with its professional engineers and modern equipment—to ensuring the project’s safety, quality, and strict adherence to deadlines.

Vietnam-EU FTA under discussion

Ho Chi Minh City hosted a March 15 seminar to discuss the contents of the Vietnam-EU Free Trade Agreement (VEFTA) that Vietnamese businesses need to consider.

The event was co-organized by the European Trade Policy and Investment Support Project (EU-MUTRAP) and the Vietnam Chamber of Commerce and Industry (VCCI).

The VEFTA is a comprehensive free trade agreement drafted to benefit both parties and honour their obligations as World Trade Organization members.

Under the agreement, Vietnamese exports will enjoy exemptions from at least 90 percent of EU taxes, helping to direct the attention of EU capital towards Vietnam.

But Vietnam will also face challenges arising from opening its service market, clarifying its business and investment regulations, and complying with the zero import duty commitments applicable to most taxes.

The Ministry of Industry and Trade’s (MoIT) Multilateral Trade Policy Department Deputy Head Le Trieu Dung said the VEFTA negotiations cover not only commodities and services but also intellectual property, public procurement, and sustainable development.

Dung believes Vietnamese businesses should follow the progress and contribute their opinions to the VEFTA negotiations in order to protect their legitimate rights, prepare for the tax reduction roadmap, and effectively take advantage of their preferential positions after the agreement is signed.

Jean-Jacques Bouflet—Minister-Counsellor for the European Union’s Delegation to Vietnam—said the VEFTA is mutually supplementary rather than competitive. The future signing of the agreement will offer opportunities based on a market approach that will benefit both sides.

Stronger Vietnam-EU economic relations in recent years have helped Vietnamese exports surge. Exports in 2012 represented a 22.5 percent increase over 2011. EU import growth recorded rates of 18 percent in 2011 and 13.3 percent in 2012.

Vietnam’s primary EU exports are electrical engineering equipment, garments and textiles, footwear, coffee, and seafood, while its major imports include advanced technology products, machinery and equipment, and transport vehicles.

CEO forum discusses solving enterprise difficulties

Economists and policy makers have gathered at a CEO forum in Hanoi on March 15, discussing approaches to economic crisis control and macroeconomic solutions to difficulties burdening businesses.

Economic experts forecast the national economy will encounter challenges in 2013 due to the global economy’s sluggish performance.

Deputy Minister of Industry and Trade Tran Tuan Anh said that overcoming existing difficulties requires businesses to control input factors, reduce costs, and create efficient product outlets by improving distribution systems to provide consumers with products at reasonable prices.

To promote exports, businesses should focus on seizing the advantages offered by signed Free Trade Agreements (FTAs). They should also embrace e-commerce and online export opportunities, and keep abreast of the information from Vietnam’s international trade offices to proactively recognise potentially lucrative established and emerging markets.

The Ministry of Planning and Investment’s Enterprise Development Department Head Ho Sy Hung advises businesses to expand their markets, promote exports, and limit consumer good imports to stimulate domestic consumption.

Nguyen Quang Tien, a senior official from the General Department of Taxation, emphasised the need for an information portal that can provide tax payers with tax-related services.

Economic Times Editor-in-Chief and Professor Dao Nguyen Cat said that restructuring processes undertaken over the 2013–2014 period will make the market healthier. The restructuring gives businesses the opportunity to improve the quality of existing human resources in the interests of sustainable development.

The CEO forum’s policy makers and economists also touched upon supporting businesses through capital sources and market and tax policies.

Property market remains in a fix

The property market remains gloomy and requires combined efforts by relevant players, including a restructure of investments by developers to recover, analysts said.

Le Hoang Chau, chairman of the HCM City Real Estate Association, said the large inventory and bad debts by property companies are the most serious problems.

“To resolve them, developers must first of all have an overview of their projects and restructure their investments and products to match market needs,” said Chau.

They should be willing to make bold decisions like scuttling a project if necessary.

“They should apply to change the nature of their projects as well as apartment sizes according to demand and their financial capacity.

“Lowering prices, even accepting losses, to avoid further losses will help address the two problems.”

The Government is considering buying projects with apartments of 70sq.m or less for resettlement purposes or sales under the social housing programme. It is introducing more incentives for overseas Vietnamese and foreigners to buy apartments.

Earlier this year the Government decided on a stimulation package, which includes a credit programme of VND20 – 40 trillion (US$1-2 billion) at an interest rate of 6 percent to help low-income earners buy apartments.

Dr Tran Du Lich, member of the National Financial and Monetary Policy Advisory Council, said the programme would only have a positive impact on the market in the medium- and long-terms.

Deputy Minister of Construction Nguyen Tran Nam recently signed a circular on the conversion of commercial residential projects into social housing ones. The conversion of projects, whether yet to begin or under construction, requires approval from authorities. If the developers have signed contracts with buyers, the conversion must be agreed to by all parties.

Sam Cuccurullo, executive managing director of CBRE’s asset services APAC, said that in a situation where supply greatly exceeds demand, developers should make sure their project stands out among the crowd, manage well, and add value to the assets.

The National Assembly’s Economic Committee said in a recent bulletin that many developers have not cut their prices and are waiting to be rescued by the Government.

Indian businesses eye HCM City market

Representatives of leading Indian businesses say they are interested in incentives HCM City is offering to foreign investors and want to establish partnerships with local businesses.

The representatives, who are members of the Confederation of Indian Industry (CII), expressed their desires at a working session with Le Thanh Hai, HCM City Party Committee Secretary, in New Delhi on March 15.

They said they want to establish partnerships with Vietnam in the areas of automation equipment manufacturing, human resource training for the healthcare, agricultural and transport sectors, and transport infrastructure development.

Hai, who was visiting Indian, briefed his hosts on HCM City’s major development achievements, business environment and incentives, and vowed to create the best possible conditions for foreign companies, including those from India, to do business efficiently in the city.

They discussed the potential for investment cooperation between Vietnam and India, as well as between HCM City and India.

The same day, Hai met with New Delhi Chief Minister Sheila Dikshit who spoke highly of Vietnam’s Renewal achievements.

Both host and guest exchanged experience in developing urban transport infrastructure and pledged to facilitate the two sides’ business operations in HCM City and New Delhi.

Earlier Hai met with President Pranab Mukherjee and General Secretary of the Communist Party of India (CPI) Sudkhar Reddy.

Businesses win contracts at Int’l Furniture Fair

About two thirds of 27 Vietnamese businesses showcasing their products at the recent 2013 Int’l Furniture Fair Singapore have received new orders, worth a total of nearly US$2 million.

Half of the value was the result of a contract signed between Grass, a company producing bamboo-made decorations in the southern province of Tay Ninh and its counterpartners from the EU and the US, announced the Vietnam Trade Office in Singapore.

The Trade Office said after the fair most Vietnamese businesses have entered into partnerships with foreign businesses that pledged to come and explore the Vietnamese market in the near future.

Vietnamese businesses will have to expand operations to fill those orders, and this is a positive sign for the local wood product processing industry, said the Trade Office.

Vietnam is currently the largest timber product exporter in ASEAN, the second in Asia and the tenth in the world.

Last year, its timber product export earnings reached US$4.5 billion, an increase of 19 percent over 2011.

The country’s products are mostly shipped to the US, EU, Japan and China, accounting for 70 percent of its total timber product export value.

Penetrating overseas IT markets

Businesses are seeking ways to penetrate the information technology (IT) market in the Republic of Korea (RoK), Japan and the US.

Nearly half of the more than 100 enterprises operating in the Quang Trung Software City (QTSC) are from these countries, which are now considered the IT powerhouses in the world.

Now is a good time for local enterprises to seek cooperation opportunities with these countries, says Lam Vu Hai Long, QTSC Deputy Director.

However, it also poses many challenges as most Vietnamese IT companies are small and medium sized and the country’s IT industry is in its infancy.

To gain a share in these markets, Long says, Vietnamese companies have to thoroughly understand their partner’s business culture.

J. Cheon from the RoK’s Soongsil University, shares this opinion, saying that in 2009, his country’s top electronic group, LG, dismissed all of its business department managers for not fully understanding the consumption habits of Asian people, resulting in ineffective business strategies.

Last year, more than 270 Japanese businesses invested in Vietnam and hundreds of others have been seeking opportunities in the country in the first quarter of this year.

Osato Kauhiko, Director of the Japan External Trade Organisation (JETRO), says this is an optimistic signal for Vietnamese enterprises. However, he notes that it normally takes Japanese businesses two to three years to understand their partners before penning contracts.

Herb Cochran, Executive Director of the American Chamber of Commerce (AmCham) in Vietnam, says that the US is a multicultural country and its businesses always welcome others with unique cultural values and potential human resources.

Cochran suggests that Vietnamese businesses do their research well and develop their employees’ skills.

Footwear firms buoyed by prospect of EU deal

Free trade agreements between ASEAN countries and the EU will help Vietnam’s footwear industry enjoy a reduction of tariffs from the current 12.4 percent to zero.

Footwear is one of Vietnam’s major exports, accounting for between 7-12 percent of the country’s total export turnover.

According to the Vietnam Leather and Footwear Association (Lefaso), the footwear industry includes more than 500 businesses that employ over 65,000 workers, 75 percent of them are women.

The EU is an important trading partner for Vietnam and also a traditional market for the footwear industry.

Last year, footwear export earnings hit US$8.76 billion, accounting for 7.6 percent of the country’s export revenue. Of the total, shoe exports generated US$2.65 billion and bag exports raked in US$434 million.

Vietnamese footwear products have several advantages in the EU market, as the anti-dumping levy on Vietnamese leather-upper shoes was lifted. However, the domestic footwear industry faces strong competition from India and Indonesia.

Lefaso leaders affirm that FTAs offer great opportunities for Vietnamese products to access the EU’s 27-nation market with a population of 499 million.

In bilateral trade relations, the EU mainly imports shoes and bags from Vietnam while the latter uses the consultancy service and purchases machines and equipment from Spain, Portugal and Italy. In addition, Vietnam’s footwear industry also benefits from EU-funded projects.
To help develop a sustainable footwear industry, Lefaso has urged local shoes makers to update technology to enhance their productivity and improve product quality to create high added value products.

Auto sales plunge in February

Total car sales in February dropped 53 percent from the previous month with 4,325 units being sold, consisting of 1,620 cars and 2,633 trucks.

Of the figure, locally assembled cars totalled 3,439 units (down 61 percent) while imported vehicles numbered 841 (down 50 percent), according to the Vietnam Automobile Manufacturers’ Association (VAMA).

VAMA members alone sold 3,679 vehicles last month, just half of January’s figure.

The association attributed the fall to the high demand for vehicles in January ahead of the lunar New Year holiday and the low demand immediately afterwards. They added that February is a very short month, which also negatively affected the sales.

VAMA Chairman Laurent Charpentier acknowledged that two-month sales were down 1 percent from the previous year, but warned against undue pessimism.

Revenue in the first month of this year was extremely low due to an increase in registration fees introduced on January 1, he said.
Japanese Toyota retained its top position in sales last month, with 1,337 units sold, followed by Vietnamese carmaker Truong Hai.

Ford Vietnam ranked third, but retail sales rose more than 63 percent year-on-year to 351 vehicles, the highest increase recorded by any carmaker.

Its strong February performance allowed Ford to capture 8.3 percent of the overall vehicle market for the month.
VAMA has projected that overall car sales this year will rise 8 percent from 2012 to about 100,000 units.

National Quality Awards presented to 67 businesses

Sixty-seven Vietnamese businesses were honoured in Hanoi on March 17 recognising their efforts to improve product quality in the integration process.

Among award winners, 17 received gold medals and 50 were presented silver medals.

Three businesses also won the 2012 Global Performance Excellence Award (GPEA) from the Asia-Pacific Quality Organisation. They were Ba Ria-Vung Tau Drainage and Urban Development Co. Ltd, Tien Phong Plastics Joint Stock Company, and Nghe An Agricultural Material Joint Stock Company.

At the ceremony, Deputy Prime Minister Nguyen Thien Nhan noted that the awards testify to business efforts to raise the quality of their oroducts in the context of economic downturn.

He expressed his belief that the awards will serve as source of encouragement to 400,000 other Vietnamese businesses to improve their product quality and increase their status in domestic and international markets.

The National Quality Award is given to businesses that have recorded outstanding achievements in developing and applying systems for quality management according to the criteria of the US’s Malcolm Baldrige Award.

173 outstanding businesses honoured

As many as 173 businesses that excelled in their performance in 2012 received Gold Dragon and Strong Brand Awards in Hanoi on March 16.

Gold Dragon awards went to73 foreign-invested businesses operating in the fields of banking-finance, insurance, cement and automobile manufacturing. Some of the winners include Chinfon Cement Company, Ford Vietnam Co. Ltd, and Lavie Co. Ltd.

Professor Dao Nguyen Cat, Editor-in-chief of the Vietnam Economic Times, the main sponsor of the award, said the community of foreign investors is willing to share the burden of economic difficulties with their Vietnamese counterpartners through real contact with enterprise leaders and commit to doing long-term business in Vietnam.

Foreign-invested businesses are playing an increasingly important role in the Vietnamese economy, especially in industry and exports, Cat noted.

In 2012, foreign investors poured over US$13 billion into Vietnam, US$10.5 billion of which was disbursed. This was greatly appreciated given that the previous wave of foreign investment into the country is decreasing drastically due to the impact of the global economic downturn.

Last year, the foreign-invested sector also reached an export turnover of over US$73 billion, equal to 66 percent of the country’s total export earnings.
At the awards ceremony, 100 domestic businesses were also given Vietnam’s Strong Brand Prize in recognition of their efforts to deal with various economic challenges over the year.

Gambling in Hanoi still open only to foreigners

Hanoi has six foreign-invested casinos, containing over 350 machines open to foreign customers, according to a recent report by the Hanoi Department of Culture, Sports and Tourism (DCST).

Casino operators have set up management boards with the power to supervise such activities.

The DCST also reassured that registered facilities would be required to separate their gambling facilities from their other service areas.

According to DCST, all registered facilities have been equipped with security systems that can strictly monitor the gambling area. Casinos, and foreigners who wish to gamble must show their passports.

The Hanoi Department of Culture, Sports and Tourism said that gambling machines are strictly controlled, adding that each registered machine is consistently monitored by the municipal Department of Finance, with the operations.

The government has held to the position that only foreign passport holders should be allowed to gamble at Vietnamese casinos.

 Scandal undermines confidence of foreign investors

Nguyen Duc Kien was arrested on August 20, 2012 on charges of fraud in connection with three companies he owned. He is alleged to have taken billions of VND.

The incident has caused distrust in the Vietnamese market among foreign investors, according to Dr. Edmund Malesky, of Duke University, who mentioned the case’s impacts at a recent conference to announce the Provincial Competitive Index (PCI) on March 14.

He added that in recent years ACB has been considered a key player in foreign investment.

Controlling stakes in ACB are held by Standard & Chartered, with 15%, Jardine & Matheson, with 7% and Dragon Capital accounting for 6.7%.

At the time of the arrest ACB was the largest non-state bank in Vietnam registered in the stock exchange, and had total assets of VND256 trillion and VND22.6 trillion in capital.

The Vietnamese stock market plunged immediately after Kien’s arrest, with the VN-Index losing 4.7%, dropping to 416.84 points within one day. In the course of the next two days the market saw a 10% drop.

Such a significant drop sounded alarms among players in the investment and banking sectors.

In the 30 days following Kien’s arrest the PCI survey showed a significant reduction investment plans by foreign companies in Vietnam.

According to the survey, the confidence index for foreign-invested companies fell by 22% during 30 days after the arrest.

Nguyen Duc Kien was arrested on allegations of misconduct while serving as chairman of three separate companies.

SBV tightens control over weak banks

The State Bank of Vietnam (SBV) is planning to force incompetent banks to accept outside “special control” in a push toward restructuring and mergers and acquisitions.

Circular 7, issued by the SBV, will take effect from April 27, and will require banks deemed to be weak to accept direct control by SBV. Such banks will include those who have committed serious violations and those who are unable to meet their financial obligations. The state bank said this is a measure to protect the banking system as a whole.

The SBV will require managers of these institutions to increase their chartered capital for a determined period of time. Failing to do so would result in forced restructuring or mergers.

The regulation stipulates that banks showing high losses in their latest financial reports or those which file for bankruptcy could pose a threat to the entire banking system in the country, so steps must be taken to prevent this, including forced mergers and acquisitions by more stable financial institutions.

The governor of SBV also mandated the appointment of a committee of banking experts, including members of both SBV and Deposit Insurance of Vietnam, to be set up to take control of failing banks.

The committee will be authorised to request weak banks to make self-audits or hire independent agencies to assess the banks’ solvency and management structure. The committee will also be granted powers to evaluate the capacity of weak financial institutions to pay debts. The committee will also seek approval from  the governor of SBV for any plans to buy stakes in banks considered “weak” by other financial institutions.

Any bank placed under special control will also have to create plans to strengthen their operations upon request from the committee.

More Japan firms to come

Vietnam is not only a destination for Japanese producers, but it is now a highly potential market for trade, service and infrastructure firms from Japan, heard a seminar in HCMC on Thursday.

Themed “Vietnamese market from the perspective of Japanese businesses” organized by Tuoi Tre and Manichi newspapers, the seminar attracted 200 Vietnamese and Japanese entrepreneurs.

Most of the large Japanese companies are now present in Vietnam. Therefore, small and medium enterprises from Japan will continue to flock to Vietnam, said Nakajima Kazuo, marketing director of Brainworks Asia Co. Ltd.

He said Japanese firms would continue to invest in production for export given their strength in technology. They will also boost investment in resorts, hotels, housing, retail, aquaculture, agriculture, service and healthcare in addition to the traditional fields like production, IT, education, construction, consultancy and labor supply, he predicted.

Jun Suetake from the foodstuff department of Kanematsu Corporation said the sushi processing plant of his firm in the north had mainly produced for export. Now, as the domestic demand is surging, Kanematsu is looking for distributors to bring its products into the local market.

Speaking at the event, Japanese investors expressed a desire to join hands with local partners to develop infrastructure projects in HCMC. Still, they found the public-private partnership (PPP) investment form not so attractive.

Morifusa Ueda, a consultant in infrastructure, said Japanese investors were confused by the constant changes in the policy on the PPP format.

Nguyen Mai Bao Tram, deputy general director of HCMC Infrastructure Investment Joint Stock Company (CII), said her company really wanted to jointly develop infrastructure projects with Japanese investors.

CII has pledged to spend at least VND23 trillion on six projects of infrastructure, clean water supply and wastewater treatment in the next five years. The company wants to set up 51:49 joint ventures with Japanese firms to carry out such projects, she said.

What bothers Japanese businesses is the fact that it has not been clearly stated which infrastructure projects will be invested by the State and which will be developed under the PPP format.

Japanese enterprises invest in Vietnam through cooperation in infrastructure projects in industrial parks or via Japan International Cooperation Agency (JICA), said Kazuya Hashimoto, head of the planning and investment department of Kanematsu Corporation.

Tran The Ky, deputy director of the HCMC Department of Transport, said the capital demand of the city-based traffic projects in the 2011-2015 period was around US$11 billion, of which the department can meet only 20%. Therefore, the city feels the urgent need to lure foreign investment into traffic projects from now to 2020.

Yakabe Yoshinori, Japan’s deputy consul general in HCMC, said the fact that Japanese Prime Minister Shinzo Abe had chosen Vietnam as his first destination abroad after being elected, highlighted how important a strategic partner of Japan in Asia-Pacific Vietnam is.

Japan was the biggest investor in Vietnam last year with fresh and additional capital of over US$5.1 billion, or nearly 40% of the total foreign direct investment approvals in Vietnam.

Road fund to pay debts for toll stations

The Directorate for Roads of Vietnam has proposed the Ministry of Transport allocate nearly VND128 billion from the road maintenance fund to settle debts for five toll stations.

The toll stations in question are Madrak on National Highway 26, Nhon Tan and K’Dang on National Highway 19, Buon Ho on National Highway 14 and the station to the north of Hai Van Tunnel.

When the fund was launched earlier this year, 17 toll stations, including the five mentioned above, were forced to shut down.

The five toll stations were set up by the Regional Road Management Unit No. 4 and the Regional Road Management Unit No. 5 under the road directorate to recover their investment sums.

However, as those stations were forced to close earlier than scheduled, the two units did not collect enough funds to pay off the loans they had borrowed from banks. Currently, they still owe banks VND114 billion.

Banks have sent their requests to the two units, asking them to pay principal and interest sums periodically and saying that they would charge overdue interests on late payments.

Therefore, the road directorate has petitioned the transport ministry to give its two subordinate units VND114 billion this quarter for them to clear bank debts.

The directorate has also asked for VND13.6 billion from the road maintenance fund to cover the additional cost of the project for repairing the road surface of National Highway 1A.

Before the road maintenance fund was launched, the transport ministry decided to shut down the five toll stations that had to repay loans from January 1 and suggested using the State budget to settle their debts.

There are 57 toll stations on national highways and expressways across the country, according to the transport ministry. Seventeen stations were lifted on January 1, while the rest, mainly BOT stations, will continue toll collection until contracts expire.

Earlier, the road directorate has proposed using part of the road maintenance fund to build 45 weigh stations. However, experts have objected to the idea, saying such stations might give rise to corruption.

The 45 stations would require more than VND6.3 trillion. The directorate said funding should come from the road maintenance fund, State budget, ODA loans and BOT capital. Thai Van Chung, general secretary of the HCMC Goods Transport Association, said the decree on the road maintenance fund clarifies that the fund is for road maintenance. Therefore, he described the proposal for use of the fund to build weigh stations as absurd.

Echoing Chung’s view, transport expert Pham Sanh said the goal of collecting road maintenance fees is to maintain roads, so using the fund to construct weigh stations is unreasonable.

Multiple projects seek low-cost status

Twelve property projects in HCMC are seeking approval for conversion into low-cost housing developments in a bid to improve sluggish sales, according to the city’s Department of Construction.

Anh Tuan Housing Construction and Trading Ltd Co. has applied to convert an apartment project with 520 units in Nha Be District into one for low-income people while Lan Phuong Co. is seeking ways to sell 1,100 condos in a project in Thu Duc District under the low-cost status.

Similarly, Transport Engineering Construction & Business Investment Company 584 wants the same treatment toward its 1,000-condo project in Binh Chanh District.

The Ministry of Construction has issued a circular providing measures designed to prop up the dormant housing market by offering financial incentives to promote the sale of apartments to low-income earners.

The originally commercial projects eligible for the ministry’s scheme must have each apartment measuring less than 70 square meters and priced at no more than VND15 million per square meter.

The conversion is expected to make it easier for low-income people, civil servants and military officers to own a home.

However, the construction department announces not to accept the conversion of commercial housing schemes which have completed technical infrastructure but have not kicked off construction. It is because the city has approved in principle the development of 25 projects so far, 22 of them set for completion by 2015 with 17,900 units.

Besides, the department said, the city government has yet to consider converting housing projects into resettlement homes while the list of resettlement housing projects from now to 2015 is already available.

Relating to trading forms, the department said the State will not use State money to buy housing. Low-cost home developers will have to directly sign selling and leasing agreements with customers who are approved by the Council of Low-cost Housing Leasing, the department claimed.

The HCMC Steering Committee for Housing Policy and Real Estate Market on Thursday worked on how to deploy Resolution 02 of the Government to seek solutions to difficulties facing the real estate market.

The city has around 1,321 housing projects at the moment as reported by the construction department, with only 131 of them already complete.

The city now has some 14,500 apartments, more than 300,000 square meters of land lots and nearly 59,000 square meters of office space worth a combined VND30 trillion remaining unsold or unoccupied.

Mekong Auto bemoans operational difficulties

Mekong Auto Ltd Co. is facing difficulties in raising chartered capital for business expansion and investment, Chung In Jong, general director of the company, said at a meeting with the HCMC government on Tuesday.

Jong ascribed the difficulties to the unclear legal status of Sakyno, a local shareholder of Mekong Auto.

Mekong Auto, established in 1991 and specializing in making and assembling car brands like Fiat, SsangYong and PMC, is a joint venture between Saeilo Machinery Japan and South Korea’s Sae Young International and two Vietnamese enterprises Corporation of Engine and Agricultural Machinery (Veam Group) and Sakyno.

Due to the ineffective business strategy, Sakyno has been mired in troubles and stopped its operation in 1997. Sakyno’s workers became jobless while the firm has been unable to pay mounting debts to partners, Jong said.

Sakyno therefore filed for bankruptcy at the HCMC People’s Court in 2000, he added.

However, the legal status of Sakyno in the joint venture is yet to be resolved clearly and transparently, which is badly affecting the livelihood of 350 skilled employees of Mekong Auto.

The ambiguous legal existence of Sakyno has made it impossible for the other investors in the joint venture to organize board member meetings to make decisions on operational activities of Mekong Auto such as increasing capital to expand production and investing in other industries and schemes.

“Sakyno now has become a burden hindering Mekong Auto’s development,” Jong stressed.

To deal with the situation, Jong proposed the city’s government either appoint a new corporate member to take over and represent Sakyno’s equity in Mekong Auto or allow other investors to acquire the equity at a reasonable price.

Sakyno’s revenue since 1997 has only come from leasing a space of 11,176 square meters to Mekong Auto at 507 An Duong Vuong Street in Binh Tan District.

Executives of Mekong Auto have repeatedly petitioned local relevant authorities to seek ways to settle Sakino’s capital contribution but have received no response so far.

Samsung plans hi-tech project in Thai Nguyen

Samsung Electronics Co. will build a hi-tech complex in Thai Nguyen, which is expected to have a greater scale than its current project in Bac Ninh.

In a Government Office dispatch signed this Tuesday, the Prime Minister asked relevant ministries to help Thai Nguyen Province accelerate verification and certification procedures so that Samsung can timely carry out its project.

A source told the Daily that Samsung last month signed a contract to lease 100 hectares in Yen Binh Industrial Park in Thai Nguyen’s Pho Yen District for development of its new project. Under the 49-year leasing contract, the lessor will hand over land in two phases but will finish the handover within this year.

Earlier, Samsung had made a proposal to the authorities of Thai Nguyen concerning the establishment of a wholly foreign-invested export-processing company. This move is aimed at building a factory for producing, processing and assembling cell phones and hi-tech electronics products in the province.

The sum that Samsung will invest in this project has not been revealed. However, it may be larger than the amount it spends on the operational project in Bac Ninh.

The technology complex project of Samsung in Bac Ninh has lured 53 satellite companies into Vietnam along with 50,000 workers. After four years of operation, the project achieved a capacity of 11 million products per year and a total export value of US$12.6 billion in 2012, nearly doubling the figure in 2011.

Samsung currently has 28,000 employees and intends to recruit an additional 10,000 this year, according to the Government web portal.

When the second project of Samsung in Thai Nguyen starts operations, Vietnam will become its largest center for production of handheld devices for export in the world.

Samsung initially planned to spend US$670 million on its Bac Ninh-based project. In November last year, the Bac Ninh Industrial Zones Authority granted the company an investment certificate for the second phase of its project, with investment capital spurred to US$1.5 billion.

As such, Samsung needs an additional 40 hectares in Yen Phong Industrial Park to transform the current factory into a technology complex. In the second phase, it will produce not only cell phones, but also electronics and telecom products for export.

Samsung’s investment expansion and establishment of a research and development center is expected to raise its revenue to US$20 billion and attract some 300 satellite companies, according to the authorities of Bac Ninh.

Steel, cement makers fear power cuts

Steel and cement producers are concerned about the impact of power cuts on their operations as Vietnam Electricity Group (EVN) is seeking to reduce supply for those consuming too much power.

“A sudden power cut is a huge disaster for a steel furnace. It is difficult to overcome and consequences will be unpleasant,” said Dinh Huy Tam, general secretary of the Vietnam Steel Association (VSA).

EVN on Monday asked HCMC Power Corporation and Southern Power Corporation to restrict supply for customers that consume too much power, such as steel and cement makers.

This measure is aimed at dealing with the high possibility of power shortage in the southern region during this year’s dry season, said the electricity group.

Nguyen Van Thien, chairman of the Vietnam Cement Association, said limited power supply was not so worrying since the cement industry had revised down its estimated output in 2013 from 60 million to 50 million tons due to a fall in demand.

“A number of factories are operating at only 70% of their designed capacity, the market demand is shrinking, so power cuts will not spell much trouble,” he told the Daily.

However, if all cement factories, even those in the areas with high demand, currently running at full capacity, were to suffer power cuts, then it would result in a huge headache, he added.

It is estimated that there were nine million tons of cement produced in the first quarter, down 8% year-on-year. There are some 50 cement producers nationwide. Most small-scale cement kilns have halted operations and the rest are running at 70-80% of capacity.

Tam of VSA said power suppliers should provide producers with a specific power cut schedule so that they can be prepared.

Toyota Vietnam facelifts Innova, Fortuner

Toyota Motor Vietnam (TMV) on Thursday introduced new Innova and Fortuner 2013, which are two of the most successful models among multi-purpose vehicles introduced in Vietnam.

The new Fortuner 2.5G is equipped with the new diesel engine, the 2.5-liter with variable turbocharger VNT (Variable Nozzle Turbo), thus increasing the vehicle’s maximum output by 41% to 142 hp while average fuel consumption is reduced by 11% to 7.4 liter per 100 km.

Safety features are also enhanced in the new Fortuner as well as Innova, including anti-lock braking system, two front airbags, and emergency belt pre-tension for front safety belts. Automatic door lock and rear sensor features are also fitted to the Fortuner and Innova.

Innova and Fortuner are two of five multi-purpose vehicle models developed by Toyota. In Vietnam, Innova was first launched in 2006 and Fortuner in 2009. In many years, Innova and Fortuner have continuously been the bestselling vehicles in Vietnam.

Urban area plans social housing

Investors of Kien Hung Urban Area in Ha Noi, Ha Dong District hope to devote 20 per cent of the project area to social housing.

The plan will be submitted to the Ministry of Construction and the city’s People’s Committee for approval.

Construction on the urban area, covering a total area of 43ha, began in 2008. However, the project was halted due to a lack of detailed planning.-

Ha Noi asks HUD for project report

The Housing and Urban Development Corporation (HUD) has been asked to provide a report on the implementation of the My Dinh 2 project in Tu Liem District, particularly focusing on the construction of infrastructure and schools.

HUD must also submit a report about the legality of the unused land and the transfer of land to two other companies, the Ha Noi authorities requires.

The Berjaya-Handico Joint Venture is also asked to submit a report on the implementation of the Ha Noi Garden City project in Gia Lam District.-

HCM City’s urban plan due September

The HCM City People’s Committee asked the municipal Department of Planning and Architecture and district authorities to complete a detailed urban plan by the end of September.

Relevant authorities must also create conditions for consultancy organisations to collect comments from residents who would be affected by the plan.

The city currently lacked detailed plans at the necessary scale, particularly in outlying districts, which made construction licensing and land division difficult.

50 per cent VAT reduction proposed

The Ministry of Construction proposed to the Finance Ministry that it halve the value added tax levied on social housing to help lower social housing prices and warm up the real estate market.

Additionally, the tax imposed on apartments below 70 square metres should be cut by 30 per cent and the corporate income tax should be lowered by 10 per cent, the ministry suggested.

Law firms merge to create energy giant

The Viet Nam International Law Firm (Vilaf) has merged with LDV, a leading energy law firm.

The merger, the companies said, has created the largest energy team in the country, and would benefit their current and future industry clients. After the merger Luu Hoang Ha, managing partner of LDV, has become a partner in Vilaf.

He will be one of seven partners working on power, oil and gas, water infrastructure, and mining projects.-

Hong Quang Company invests in Laos province

Vietnamese firm Hong Quang Co has reached an agreement with the Lao province of Khammouane to pour US$152 million in a project in the Thakhek Special Economic Zone.

The agreement, with a 75-year term, was signed on March 11 in Khammouane province, the Laos news agency KPL reported on Thursday.

The investment project, covering 14 hectares, involves the building of a shopping mall, five-star hotel, entertainment complex and restaurants. The company has provided over $360,000 to the Executive Board of Thakhek Special Economic Zone to compensate local people who are affected by the project.

BIDV Insurance Co boosts overseas presence

BIDV Insurance Co would increase its stakes in two joint ventures in Laos and Cambodia, the company announced.

Accordingly, it would increase its ownership in Laos-Viet Insurance Co Ltd from 51 per cent to 65 per cent of the charter capital.

The additional investment will reach around US$420,000. The Laos-based company currently ranks second in market share. At the same time, BIDV Insurance will also purchase the entire 65 per cent stake of Cambodia Investment and Development Co in Cambodia-Vietnam Insurance Co Plc (CVI) for $4.55 million.

Crab exports to EU increase sharply in the first two months

Crab exports to the European Union (EU) during the first two months of the year enjoyed a dramatic year-on-year rise of nearly 200 per cent.

The export of crab and other crustaceans to the EU generated US$8.3 million during the period, up 18 per cent from last year.

Statistics from the Viet Nam Association of Seafood Exporters and Producers (VASEP) show that exports to the UK, France, Holland and Belgium saw the highest growth rate.

Crab exports are expected to enjoy accelerated growth in the second and third quarters of this year as consumer demand from Viet Nam’s traditional markets tends to increase.-

VietJetAir gets nod for in-house aircraft servicing

HCM City-based low-cost carrier VietJetAir has received the green light from the Civil Aviation Administration of Viet Nam (CAAV) for in-house servicing of its aircraft.

The aviation authorities’ AMO (Approved Maintenance Organisation) certification means, with its own maintenance teams in place, the carrier will have more flexibility in planning and controlling maintenance activities, reducing costs and maximising operational efficiency.

Lai Xuan Thanh, head of the CAAV, said: “VietJetAir meets our requirements in excellence of manpower, engineering facilities, spare parts and tooling, and documentation.”

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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