Home » Business » BUSINESS IN BRIEF 22/11

Cashew machines make a mark

Viet Nam has taken great strides in cashew nut processing technology over the past few years, with local firms making 80 per cent of the machinery used by factories in the country.

The claim was made by Nguyen Thai Hoc, Chairman of the Viet Nam Cashew Association (VINACAS), at an exhibition of cashew nut processing machinery held in southern Binh Duong Province last week.

Hoc said the machines have helped reduce the problem of labour shortage faced by cashew processing factories.

Machines are now used in all phases of cashew nut processing, especially in shell cutting and peeling phases, which previously required a large number of manual workers.

Pham Van Cong, Vinacas deputy chairman, said “The cashew industry faces fierce competition from other industries in terms of attracting labourers.”

Currently, most young labourers want to work for foreign invested companies, and almost all workers at local cashew processing companies are in their forties. Processing firms therefore must use machines to solve their labour shortage, he said.

Shell cutter and peeling machines helped cut about 70 per cent of labour force required in these phases, he said.

Currently, more than 50 per cent of local cashew processing factories used locally made peeling machines, Hoc said, adding that the figure was expected to reach 100 per cent in the next two-three years.

Low price is one of the main advantages of locally made machines. A factory with a daily capacity of 5,000 tonnes can save 40 per cent of its investment cost if it chooses locally made machinery over imported ones.

Apart from the price, made-in-Viet Nam machinery also scored in performance, Hoc said.

“For example, a Vietnamese shell-cutting machine that is priced one-fourth of that from Italy can cut or split shells of different sizes of cashew nuts with lower loss rates,” he said.

Thanks to these advantages, Indian businesses have been ordering cashew nut processing machines from Viet Nam, he added.

Despite these advantages, Vietnamese manufacturers should focus more on improving the products’ accuracy and durability, Hoc said.

According to local cashew exporters, the use of machinery in cashew processing has not only helped address the issue of labour shortage, but also increased hygiene and safety of cashew products.

Banks face struggle for profits in final quarter

Sagging commercial bank profits are unlikely to improve in the final quarter of the year, forecast Vietcombank Securities Co in its latest report.

While many banks were therefore concerned about failing to meet their profit targets for the year, Vietinbank was among a few banks with brighter prospects.

According to the report, Vietinbank was on track to be the nation’s most profitable bank this year, posting an impressive net profit of VND4.5 trillion (US$214.28 million) in the first three quarters. The bank has projected total profits this year of nearly VND7.7 trillion ($365 million), exceeding its initial target of VND6.7 trillion ($321 million).

“The credit growth of Vietinbank will continue to improve in the fourth quarter, and its income from service fees will also increase significantly thanks to rising overseas remittances,” said the report.

Along with Vietinbank, Military Bank was expected to see a surge of nearly 36 per cent in pre-tax profit this year, posting a profit of VND3.6 trillion ($170 million) by year’s end. The report noted that the picture for interest and service revenues in the fourth quarter was optimistic, while Military Bank’s losses from financial investments were minor.

The report predicted that the credit growth of Vietcombank in the fourth quarter would be roughly 13 per cent, due largely to preferential lending interest rates offered by the bank. This would help lift Vietcombank’s pre-tax profits this year by about 4 per cent over last year to roughly VND5.9 trillion ($281 million), and allowing the bank to roughly meet its profit target for the year, the report said.

Sacombank, meanwhile, was expected to fall short of targets. The report predicted that the bank would only reach about 85 per cent of its pre-tax profit estimation of VND2.9 trillion ($137 million).

“Sacombank’s deposit growth will remain strong in the fourth quarter,” the report said. “However, as it covers its losses from securities investments, it will make it difficult for the bank to make strides in its foreign exchange and service revenues.”

Eximbank’s profits this year were also now expected to decline by over 25 per cent from last year’s level to only about VND3 trillion ($144 million).

Eurozone crisis likely to impact nation’s exports

Exporting to the EU market is predicted to be harder next year and growth will reduce to only 10 per cent against this year’s 20 per cent estimation, said Dang Hoang Hai, director of the Ministry of Industry and Trade’s European Market Department.

Hai even warned that domestic exporters would have to make every effort just to reach 10 per cent.

The difficulty was due to the bloc’s continuous debt crisis, Hai said, adding that statistics the European Union statistics office Eurostat released last week showed that the 17-member euro zone has fallen back into recession for the first time since the global financial crisis hit hard in 2009. GDP fell by 0.1 per cent in the euro area and increased by 0.1 per cent across the 27-member EU during the third quarter of 2012, compared with the previous quarter. In the second quarter of 2012, growth rates were – 0.2 per cent in both zones.

Domestic exporters have also seen signs of difficulties when they come to shipping to the EU market next year.

Director of the Lien Phat Footwear Co Truong Thi Thuy Lien said that her company’s exports to the EU in the last months of this year and early next year were expected to be more difficult as the company has received few contracts for export to the market.

Lien Phat’s exports to the EU market in the first 10 months of the year went down by roughly 30 per cent over the same period last year due to the eurozone’s economic slowdown.

According to the General Department of Customs, Viet Nam’s exports to the EU in the first 10 months of the year surged more than 20 per cent to US$16.1 billion. However, the growth was mainly from exports of mobile phones, electronic products, machines and equipment, all produced by foreign invested enterprises. Mobile phone shipments to the market doubled from the previous period to reach $4.43 billion while computer and electronic products also surged more than 78 per cent to $1.11 billion.

Meanwhile, key staple Vietnamese producers export to the market barely inched up, if they did not decrease. For example, footwear exports surged only 2.2 per cent to $2.08 billion while textile and garment shipments declined 5.6 per cent to $1.98 billion.

Technology transfer policies lashed

Government policies should offer more support to enterprises to license and transfer technology in order to increase their competitiveness, according to a report entitled “Firm-Level Competitiveness and Technology in Viet Nam”, issued yesterday by the Royal Embassy of Denmark.

There was a lot of room for improvement and support schemes needed to be made more transparent and easier for enterprises to apply, said Professor John Rand from the University of Copenhagen, one of the report researchers.

A large gap remained between policy and practice and the proportion of firms integrating new technology continued to be small, the report said.

Only a very small number of firms have invested in technology adaptation and research and development, despite such Government policies as the National Focal Technical-Economic Programmes and the National Technology Renewal Foundation, as well as indirect support through the tax regime, the report noted.

Findings from the National Science and Technology Survey of over 7,000 enterprises conducted in 2011 showed that 84 per cent had no technology adaptation or R&D programmes, with the number engaging in R&D and technology adaptation at only 8 per cent and 5 per cent, respectively.

Of those firms, over 75 per cent used their own financial resources and were forced to adapt technology rather than purchase it due to cost limitations, the report said.

Exports were a driving influence for technology spillovers because exporting exposed Vietnamese enterprises to new processes and equipment. Longer contract relationships also helped establish higher levels of trust and increased the chance of transfers occurring. Yet, while the report revealed that about 1,300 of the 7,000 surveyed enterprises were exporters, only 1 per cent had contracts with suppliers or customers for 36 months or more.

Enabling firms to move into new overseas markets should remain a priority for policymakers, said the report, pointing to evidence from other countries that one of the benefits of foreign investment were technology spillovers.

Foreign-owned brokerages face hurdles

Under Viet Nam’s commitments when it acceded to the World Trade Organisation in 2007, foreign organisations must receive a right to set up a 100-per-cent foreign-owned securities company.

To meet this commitment, Vietnamese authorities have issued a number of regulations to create the necessary legal framework. They amended the Law on Securities and issued Decree No 58/2012/ND-CP in July of this year. On October 1, the State Securities Commission also issued the final draft of a regulation intended to replace Prime Minister’s Decision No 55/2009/QD-TTg of April 2009. The public comment period for the draft concluded on October 12 and the document now awaits approval and promulgation by the Prime Minister.

One notable change that the draft would make relates to the definition of foreign organisations. In contrast to Decision No 55, the draft clearly includes “investment funds” in its definition of “foreign organisations.” The draft would also require foreign organisations seeking to establish an entirely foreign-owned brokerage to: operate in the banking, securities or insurance industry; be in operation for at least five consecutive years immediately preceding the year of acquisition or establishment and without posting losses during the most recent two of those years; and be subject to regular supervision by a specialised regulator overseas in the banking, securities or insurance industry which has granted written approval for the organisation to establish a securities enterprise in Viet Nam.

The foreign enterprise must also have legal entity status; not be in the process of consolidation, merger, break-up, dissolution or bankruptcy; and otherwise qualified to own and operate an enterprise pursuant to the Law on Enterprises. After deducting the value of fixed assets, the remaining equity in the enterprise must, at minimum, equal the amount of capital proposed to be contributed to the local securities company, and there must be no reservations in the audited financial statements of the enterprise for the most recent year.

In addition, if the organisation is a commercial bank, insurer or securities enterprise, then it must not be subject to special control or other warnings and must satisfy all conditions for capital contributions and investment in accordance with the laws applicable to those sectors.

It is easy to see that the requirements for foreign organisations to invest in securities companies are quite restrictive. In light of the dismal state of the stock market and in hopes of strengthening Viet Nam’s stumbling economy, we hope the official decision issued by the Prime Minister will loosen some of these requirements.

The draft would not change current rules limiting foreign shareholders to a maximum of 49 per cent of the total number of shares in a publicly held securities company.

Indonesia firm buys into Geleximco

PT Semen Gresik, the largest Indonesian cement producer, signed an agreement last week to buy shares of Thang Long Cement Company from Geleximco, becoming the largest shareholder in the company.

Vu Van Tien, Geleximco’s chairman, told the Jakarta Post newspaper that the business would provide Geleximco with capital for developing two new projects and increase annual cement output at Thang Long Cement Company to 6.5 million tonnes from the current output of 2.3 million tonnes.

Meanwhile, Semen Gresik’s general director expected the co-operation would help Semen Gresik increase its shares in Viet Nam’s cement market and approach Myanmar’s market.

Neither Thang Long Cement Company nor Geleximco had an official press release on this business transaction.

VNPT hands off Post Corporation

The Prime Minister decided to change the owner of state capital at the Viet Nam Post Corporation from the Viet Nam Post and Communications Group to the Ministry of Information and Communications on Friday.

The ministry will manage charter capital of VND8.122 trillion (US$386 million) at the corporation from the first day of 2013.

The corporation’s core businesses include establishment, management and development of public post offices, providing public postal services, publishing domestic and foreign newspapers and magazines and trading telecom services.

Vietnam Airlines eyes new routes

Vietnam Airlines plans to open two new routes between HCM City and Jakarta and between Ha Noi and Phu Quoc on December 2, the national flagship airlines said yesterday.

The airlines will have four Airbus A321 flights per week between HCM City and Jakarta. This is the first direct air link between Viet Nam and Indonesia and also the second international route Vietnam Airlines will offer this year.

The airlines will also have five flights per week between Ha Noi and Phu Quoc.

 Firms target strategic stakes in suppliers

There is no dearth of listed companies whose major shareholders are also exclusive providers of raw materials or distributors of their products.

It helps businesses to have stable operations during a crisis but, at the same time, it generates problems in corporate governance when the remaining shareholders are vulnerable.

The Electricity of Viet Nam (EVN) is the largest shareholder (30 per cent) of Vinh Son-Song Hinh Hydropower Co (coded VSH). EVN is also the only customer for its commercial electricity.

“We have yet to reach an agreement with EVN on the electricity price after long negotiations and have to delay the shareholders’ meeting,” said VSH chairman Nguyen Van Thanh.

Therefore, when making its financial statement during the first 11 months of last year, VSH had to assume an electricity selling price to EVN equalled 90 per cent of the price in 2009.

Meanwhile, PetroVietnam Low Pressure Gas Distribution (PGD) suffered a drop in third-quarter profit due to its major shareholder’s domination.

PetroVietnam Gas Corporation-PV Gas (GAS) holds more than 50 per cent of PGD, being the exclusive provider of its gas. Therefore, the operation of PGD depends entirely on supplies from the parent company.

In late August, PV Gas increased the gas price for PGD from US$8.35 to $10.55 for a million British thermal units of gas (MMBTU). Most notably, the price was retroactive to April 1.

PGD’s profit in the third quarter fell to VND159 billion ($7.5 million) from VND383 billion ($18.2 million) in the second quarter.

Similar cases can be found in building contractor Song Da Corporation and its subsidiaries; oil and gas giant PetroVietnam’s companies; transportation and petroleum companies.

A stakeholder of VSH told Dau tu chung khoan (Securities Investment) newspaper that the dominant role of EVN affected the operation of many other electricity companies such as Pha Lai Thermal Power (PPC), Ba Ria Thermal Power (BTP) and Thac Mo Hydropower (TMP). Meanwhile, with the gas price going up 26 per cent, PV Gas enjoyed a significant profit from PGD.

Textile industry expo to open

An exhibition of machinery, equipment, materials, and accessories for the textile and garment industry will open today at the Sai Gon Exhibition and Convention Centre.

Around 180 companies from 14 countries and territories, including Canada, China, Germany, Hong Kong, India, and Japan, will showcase their products at the four-day exhibition.

On show will be spinning, weaving, knitting machines, yarn processing equipment, chemicals and dyes, embroidery and sewing threads, and other products.

There will also be seminars on the changes enterprises have to make to further tap export markets and improve sourcing of materials and accessories.

Members of the HCM City Garment, Textile, Embroidery and Knitting Association will put on fashion shows.

The organisers, Vinexad and three partners from Hong Kong and Taiwan, expect the four-day event to attract 12,000 visitors.

The convention centre is at 799 Nguyen Van Linh Avenue, District 7.

HCM City to organize mobile shops for subsidized goods

Ho Chi Minh City plans to organize 700 mobile shops to sell subsidized goods within the City as well as in suburban districts, industrial parks and export processing zones during the coming Tet Lunar New Year holidays.
The file photo shows customers choosing eggs produced by egg and chicken producer Ba Huan  in a supermarket.

The HCMC Department of Industry and Trade said preparations for supply of goods for Tet Lunar New Year are going smoothly.

Enterprises participating in the program to provide a range of subsidized goods such as meat, eggs, processed food, cooking oil and sugar have been stockpiling to meet the demand during Tet.

The department said it is working with business associations in the City and People’s Committees in 24 districts to set up distribution networks and diversify products that will be available to consumers.

A large variety of goods will be supplied to meet the demand at a reasonable price.

The City will have more than 100 distribution stores including four supermarkets and 40 convenient shops and small retail units in residential quarters. District authorities have been asked to register the volume of goods and place for storing the items, so that the department can place orders for the various enterprises.

Enterprises that are participating in the program such as Vissan, Saigon Co.op, Satra, Ba Huan and Pham Ton have finished setting up their distribution networks. Until now, Saigon Co.op has developed 60 supermarket chains and 55 food stores, and Vissan has just announced the opening of its 100th store.

Saigon Co.op said it will organize at least 150 mobile supply trucks to distribute price subsidized goods to disadvantaged and distant communes. Customers will enjoy a discount of 5 percent for subsidized goods in the country, compared to supermarkets in the City.

Farmers join pilot scheme for agriculture insurance

Ever since the Government introduced a pilot scheme for agriculture insurance in 20 provinces and cities a year ago, around 135,916 households have joined in the program, 85 percent of who are very poor.

Agriculture insurance has so far lured only 135,916 households, collecting VND126,770 million (more than US$6,000) for insuring of trees, plants, animals and aquaculture valued at VND2,000 billion ($96 million).

The entire rice area of 24,792 hectares is insured belonging to 125,539 households, valued at VND800 billion ($38 million).

In reality, insurance companies have compensated farmers VND6 billion and aquatic breeders VND19 billion for losses arising from natural disasters such as drought, floods and storms.

The Ministry of Finance will work with the Ministry of Agriculture and Rural Development and the people’s committees of provinces and cities to increase the premium rate for those living close to the poverty line.

Firms cautious about preparing goods for Tet Lunar New Year

Purchasing power usually increases towards year-end, with most firms scrambling to stockpile goods for coming Tet Lunar New Year holidays, but this year the mood remains dull mainly because of the current economic slump.

According to a survey by the Ministry of Industry and Trade, the domestic market has shown signs of recovery, as inventories have reduced by 14 percent compared to four months backs. In October, inventory index fell to just above 20 percent while inventory of industrial processing industries was at 35 percent-in the past six months. However, many experts predict that there are still many ordeals ahead.

In the past few years, at this time, firms usually increased manufacturing to meet production demands. But this year, although October has passed, firms are producing perfunctorily and manufacturing growth has been low, with firms still facing many obstacles in production, especially in consumption and finance.

Nguyen Thu Phuong, CEO of Nam Duong Investment Corporation, said that the market has never been in such a volatile situation before. As a distributor, Nam Duong had stockpiled a large amount of goods since the beginning of this year, but distribution has been very slow with dealers hardly placing any orders or buying goods in smaller volumes because of weak purchasing power. High inventory has caused the company’s capital to become stagnant.

Nguyen Tien Vi, head of the Planning Department under the Ministry of Industry and Trade, said that inventory that dropped in October was not because of purchasing power getting stronger but because some industries had adjusted their operations, indicating that firms are becoming more cautious.

Ahead of the economic slump, firms became more careful in preparing goods for Tet Lunar New Year holidays. Though, many firms said that their production plans for year-end and Tet have not changed in the past few months.

Truong Chi Thien, director of Vinh Thanh Dat Company, said that in the last few years, his company had to increase production to meet market demand, but this year, it will not increase output. Currently, most companies are afraid that they cannot even clear their present stocks.

The survey showed that Huynh Gia Huynh De Company, Bidrico Beverage Company and Saigon Food Company also set same production targets as previous years, but Viet Huong Food Company, which produces sausages and fermented pork rolls, said that it will only produce at customers’ requests. Although sweetmeat producer Bibica had already prepared all materials for manufacturing, it will not mass produce, partially to adjust its production plan that depends on purchasing power.

According to firms, although sales during Tet increase higher than normal, the current economic crisis won’t allow consumers to spend as much as before. Thus, firms might suffer losses if they raise their stockpile. Some food producers even considered reducing their goods for Tet by 20 percent, compared to last year.

Market reaction in the past months has shown that promotional programs that offer a discount of 5-10 percent were not able to boost consumption as consumers are cutting down on spending, said  Le Thi Thanh Lam, deputy CEO of Saigon Food Company. As food products must sell before expiry date, some firms offered a discount of upto 50 percent. However, when every business adopted this trick, the market became saturated and consumers only bought necessary products–thus, the higher the discount, the bigger the loss.

Currently, weak purchasing power has created a non-stop discount competition among producers because if they do not continuously run promotional campaigns their revenues will possibly fall by upto 40 percent.

However, Nguyen Chi Hung, sales manager of Chi Thanh Plastic Company, said that discounting is merely a band-aid measure to clear inventory and to keep market share as despite weak purchasing power, the price of materials has climbed continually. Therefore, firms are only able to run promotional campaigns for a short time or their finances will become exhausted.

Huynh Van Minh, chairman of Ho Chi Minh City Union of Business Association, said that although inventory of city-based companies dropped by 10-15 percent compared to previous months, it still accounted for 50 percent of the company’s capital. Moreover, credit sources are running low so firms do not have money to invest in husbandry, cultivation, and manufacturing. So some companies have not had material for production though they even received orders for exports.

In the recent past, at this time of the year, firms were rushing to prepare goods for Tet holidays. This year though, sweetmeat producers have not even started manufacturing. In this situation, the amount of sweetmeats in the market will lower by 15 percent compared to last year, with prices likely to increase marginally.

Vietnam Tourism, VietJet Air to further boost domestic tourism

The Vietnam Tourism Association (VITA) has signed an agreement with Vietnam’s private carrier VietJet Air to create affordable, dynamic package tours and tourism products that will boost both domestic and foreign tourism in Vietnam.

VietJet Air has agreed to offer Vietnam-based tour agencies low-fare air tickets while VITA and associated travel agencies will offer discounts on accommodation, meals and transportation costs.

This will allow tourists to enjoy major discounts on tours within Vietnam with absolutely no compromise on quality and service.

Both partners are also devising competitive international tours with upto 30 percent discount, to be made available when VietJet Air starts its international service early next year.

This deal is a continuation of VietJet Air’s ongoing mission to work with tourism bodies to help stimulate domestic tourism.

Previously, the low-cost carrier inked cooperative deals with Ho Chi Minh City Tourism Association (HTA) and VITA by offering discounts of upto 49 percent on VietJet Air flights.

VietJet Air now operates six domestic routes connecting Ho Chi Minh City to Hanoi, Nha Trang, Da Nang, Hai Phong and Vinh, plus Hanoi to Da Nang. The airline will also launch new routes before the end of the year including Ho Chi Minh City-Hue; HCMC-Phu Quoc; and Hanoi-Da Lat.

The move will increase VietJet Air’s total number of domestic routes in operation to nine by the end of 2012. Its first international flight will take off early next year.

International flights to Southeast Asia and Northeast Asia are also scheduled for early 2013. To meet expansion plans, the carrier aims to further professionalize its fleet, which will increase to 15 aircraft by 2015.

The airline’s newest aircraft also features VietJet Air’s signature colorful exterior with an image of the airline’s famously fun-loving and hospitable flight attendants.

Hanoi uncovers gross land misuse

The Government Inspectorate announced that VND9.8 trillion (USD470 million) needed to be recovered from land-use violations in nine districts in Hanoi during 2001-2010.

The violations mostly involved outstanding land-use fees and improper land-use and services fees.

Violators had improperly used 5,718 square metres of land and wrongfully collected VND5.4 trillion in fees, includingVND2.9 trillion of wrongful land-use fees in four projects in former Ha Tay Province.

According to the inspectors, the investors in many new urban areas such as Van Quan, Van Phu and new projects in Tu Liem District had deliberately increased the number of floors, the number of buildings and changed the registered blueprints.

The inspectorate proposed to collect outstanding land-use fee of VND2,574 billion, the fines for slow payment of land-use fees totalled VND1,880 billion, with outstanding improper fees at VND5,345 billion.

Deputy Prime Minister Nguyen Xuan Phuc ordered the Ministry of Finance to co-operate with the Ministry of Natural Resources and Environment and Hanoi authorities to inspect and propose solutions to the Prime Minister in early 2013.

After the inspection in former Ha Tay Province and Hoa Binh Province, Hanoi authorities halted 192 of 398 projects that covered total 19,608 hectares due to their inconsistency with the city’s urban planning.

 Banks play coy on interest rates

The State Bank of Vietnam has set ceiling interest rates, but banks have been slow in making the announcement public.

People who work in agriculture, export industry or small and medium-size businesses can borrow money at 10-13% per year, other businesses can borrow at 12-15% per year. Businesses who want to borrow US dollars will have to pay interest at the rate of 5-7% per year for short-term and 6-8% per year for long term loans.

However, the publicised lending interest rates are for the first period of the term loan only, while customers have not been informed about the ceiling rates. To know the ceiling rates, customers have to rely on good relationships with their banks.

A banker said he had to oversee 200 customers and each of the customers had their own interest rate. “We have a common calculation, but the interest rate will differ. It is based on our results after inspecting the customers assets, credibility and whether they are regular customers or not.”

Richard Harris, Head of Retail Banking of Vietnam International Bank (VIB) said lending interest rates play an important role in customer planning. If the bank publicises their rates, customers can estimate their own interest rates and be more proactive in making plans to borrow and repay loans.

Furthermore, it’s also easier for the management agencies to monitor the market and make suitable adjustments.

The credit growth rate of Vietnam banking system is 3.36% per year, meaning there is still sufficient capital in the banking system for firms to take out loans. According to the experts, the banks will still not be able to lower deposit rates in the short term but they could lower lending rates.

Exports to U.S. forecast at US$20 billion

Local authorities and companies expect the target of US$20 billion in exports to the United States is achievable this year.

This expectation is based on the performance of the nation’s export sector in January-September. Despite the current economic slump, Vietnam’s exports to the U.S. in the first three quarters totaled US$14.32 billion, a year-on-year rise of 14.83%.

Statistics announced by the American Market Department under the Ministry of Industry and Trade on Thursday indicate textile products have still been among the country’s key products bound for the U.S., with the nine-month export revenue reaching around US$6.2 billion.

The director of a HCMC-based apparel exporting company who declined to be named said the American market showed signs of recovery in the third quarter after demand from several traditional customers in the U.S. had tumbled in the first quarter.

“The item with the sharpest decrease in demand was jacket, with a lot of orders revised down by up to 30%,” he told the Daily.

However, he said, multiple companies since the third quarter’s beginning have won new orders for the upcoming Christmas and New Year holidays, with each order valued at around US$1 million. The export orders local firms received in the third quarter jumped some 20% against the year’s beginning.

Footwear products also accounted for a high proportion of total export value contributed by U.S. importers in the first three quarters, at a combined US$1.82 billion.

Wood and wooden products, meanwhile, ranked third among the Vietnamese items shipped stateside with a total value of over US$1.46 billion.

The American market also surpassed other markets in terms of consumption of Vietnamese seafood, especially tra fish. While the nations’ exports to European nations were declining, exports to the U.S. marked up about 30% to some US$995.5 million in the nine-month period.

According to the Vietnam Association of Seafood Exporters and Producers, obtaining the goal of US$1.8-2 billion in tra fish exports to the U.S. is within reach this year.

In related news, a U.S. trade mission comprising eight companies in the infrastructure industry led by Francisco J. Sanchez, Under Secretary for International Trade at the U.S. Department of Commerce, is in Vietnam to sound out business opportunities.

At the meeting with Minister of Planning and Investment Bui Quang Vinh in Hanoi on Wednesday, Sanchez said the business trip is a good chance for both sides to get more information on how to use the public-private partnership (PPP) format  for important infrastructure projects in Vietnam.

Over US$4.7 bil. in steel trade deficit by mid-Oct

The steel industry’s trade deficit had amounted to over US$4.7 billion in the year to mid-October, said the Vietnam Steel Association (VSA).

Vietnam had imported nearly nine million tons of steel worth some US$6.2 billion. The major steel products imported to Vietnam in the period were black steel sheets, coils, scrap and billets.

Meanwhile, local steelmakers had exported around 1.6 million tons of steel products and materials, bringing in nearly US$1.5 billion. The main export items were steel sheets with over 353,000 tons, construction steel with 268,000 tons, and welded steel pipes with 151,000 tons.

Construction steel producers are concerned about cheap import steel, especially from China, which has been hitting domestic production hard.

VSA said it had met with relevant authorities in late October to discuss how to control steel imports from China, including coils that contain boron.

Statistics of local customs offices show the volume of steel coils with boron imported from China in the first seven months of the year rose 5.5 times year-on-year.

In previous years, the pace of construction often accelerated in November as contractors wanted to accomplish their yearly targets, but it is not the case this year. Building material consumption has dipped steeply.

Speaking to the Daily, construction contractors in HCMC said they had had no work to do for a couple of weeks now, while some others have been depending on several small repair projects.

Pham Quynh, a contractor in HCMC’s District 10, said: “Tet (Lunar New Year) has three months to go but I’ve contracted fewer projects than last year. I should let my workers return home earlier for Tet holiday. I’ve never faced such a situation like this before.”

The slowdown in the construction sector has caused a decline in production and consumption of many building materials.

VSA reports a year-on-year drop of 7.1% in the output of cement, 8.8% in construction steel, 12.8% in concrete and other products made of cement and 21.2% in stone, sand, grave, clay and kaolin.

In addition to cutting back on production to reduce inventories, many steel makers since the middle of October have brought down prices of their products by an average VND200,000-400,000 per ton.

Outbound tourism still thrives

While small travel firms complain that the number of local tourists traveling abroad dropped sharply in the first ten months of the year, large companies still achieved significant growth in outbound tourism.

Although the situation remains difficult with a fall in the number of individual tourists, many tour operators are still performing well.

Vietnamese tourists are still attracted to familiar destinations such as Thailand, Malaysia, Singapore, Hong Kong, China and South Korea, but it is the tours to far-flung destinations that bring big profits to travel companies.

From January-October Benthanh Tourist, Du Lich Viet, Lien Bang Travelink, Saigontourist, Viettours, Carnival Group and Vietravel all recorded growth in outbound tourism.

Specifically, Viettours obtained growth of some 10-15% over the same period last year. Benthanh Tourist enjoyed a rise of 20% in outbound tourism revenue and earned higher profits for selling tours to high-grade guests traveling to the U.S. and Europe.

Vietravel said tour sales and the number of outbound tourists in the first ten months had met the estimates for the entire year. Meanwhile, Saigontourist said it had arranged tours for 40,000 customers, an increase of 6% year-on-year, which is forecast to hit 10% by the year’s end.

The economic woes have affected individual and average-income tourists, resulting in a fall in the number of such tourists at many companies. However, high-income tourists were still willing to spend for long-distance trips abroad.

Remarkably, many companies in the fields of drugs, tobacco, oil and gas still spent big on outbound tours for their employees and partners. However, the number of customers from State agencies fell steeply due to local budgets for overseas business trips being tightened upon request of the Government.

“The overall market situation is still very difficult but we achieved better growth in outbound tourism than domestic and inbound tourism, thanks to the number of tourists from drugs, paint, oil and gas companies, while the major customers of last year such as commercial centers are now spending less, and buying domestic tours,” said Lai Huu Phuong, director of Benthanh Tourist Travel Service Center.

USTDA sees great opportunities in Vietnam

The director of the U.S. Trade and Development Agency (USTDA) said U.S. businesses have great opportunities to participate in various infrastructure projects in Vietnam.

Leocadia I. Zak touched on the opportunities at a meeting with reporters in HCMC last Friday, when the USTDA director led a trade mission grouping U.S. firms that provide infrastructure products and services to this economic hub of Vietnam.

Zak reiterated good chances for U.S. companies in Vietnam during her meeting with provincial leaders in HCMC last Friday.

“U.S. businesses have such a great opportunity to work together here in Vietnam, to help Vietnam meet its goal with respect to infrastructure development,” she said, citing infrastructure areas of good potential to include transport, energy, and telecommunications among others.

Zak clarified energy production and transmission, flood control management were among the major topics of conversations between the U.S. firms and the provincial leaders.

A representative of Black and Veatch said in support of Zak that there was a need for assistance to improve the environment with respect to pollution in the course of industrial development in Vietnam. Localities also sought training support for operators and managers of infrastructure projects.

Mai Trang Thanh, president of Honeywell in Vietnam, told reporters that the company found the potential in selling the technology to improve energy efficiency.

Thanh said U.S. businesses expressed their interest in infrastructure for airport projects and metro projects in Vietnam at their meeting with the Ministry of Transport in Hanoi. The ministry stressed the need for U.S. technology in the aviation industry to back Vietnam Airlines’ plan to launch direct service to the U.S.

Zak said USTDA had established a long relationship with Vietnam’s Ministry of Transport, with a focus on aviation through providing the feasibility study and funding technical assistance for capacity improvement for long-haul flights.

A representative of General Electric said at the press conference that this company was positive about Vietnam and had been doubling investment for GE’s wind power turbine factory in Haiphong since 2010, when the factory was commissioned at an initial investment capital of US$60 million.

Zak said though no contracts had been signed during the trade mission’s visit to Hanoi and HCMC, she pinned high hopes that signing would be soon. She confirmed the Association of Southeast Asian Nations (ASEAN) with Vietnam being one member was a high priority market for the U.S.

According to a press release at the press conference in HCMC, U.S. consul general in HCMC, Le Thanh An believed Vietnam was “a true emerging market offering significant business opportunities for U.S. companies.”

An said as Vietnam’s economy expanded, there was infrastructure needs in the areas ranging from education, healthcare to aviation, construction and engineering services.

The U.S. mission also had a meeting with HCMC Vice Chairman Le Minh Tri last Friday. Tri said the city was encountering numerous challenges linked to traffic congestion, flood and environmental pollution, so it was in dire need of cooperation with the providers of modern technologies.

The infrastructure trade mission was led by Under Secretary of Commerce for International Trade Francisco Sánchez in Jakarta of Indonesia and Hanoi of Vietnam. In HCMC, the USTDA director headed the mission.

Condo project owners seek chances at year-end

While many projects have been put on hold to wait for more favorable times, certain condo project owners keep launching their products hoping that they can find buyers in the final months of the year.

It is easily seen that most condo projects, from high- to low-end, are now on sale with offering prices accompanied by supporting programs for buyers, instead of discounts.

For instance, Nova Real Estate Investment Corp. (Novaland) on Sunday started offering the Central Tower of its Sunrise City project on Nguyen Huu Tho Street in HCMC’s District 7.

Apartment sizes have been readjusted to some 76 square meters per unit with prices of around VND2.7 billion. Moreover, buyers can choose between fully furnished apartments or bare ones.

The project owner also applies a flexible payment method, in which buyers will make a down payment equivalent to 30% of the apartment price and pay the rest by installments within five years.

Besides, Novaland has joined hands with banks to give homebuyers interest-free loans worth 70% of the contract values. In other words, the project owner will pay bank interest sums for their customers.

This project includes the South Tower with six buildings comprising about 500 completed apartments. In addition, four buildings of the Central Tower are under construction and around 800 flats will be launched into the market.

Also on Nguyen Huu Tho Street, the Dragon Hill Residence and Suites project of Phu Long Real Estate Corp. in Nha Be District will go on sale next month. Kicked off two years ago, the project consists of two 27-story blocks with 352 luxury apartments and some 20,000 square meters of commercial space.

The offering prices have not been announced yet, but a source from the company said prices would be softer than high-end apartment projects in Saigon South.

Additionally, the project owner has inked deals with banks to provide homebuyers with preferential loans. For instance, ANZ Bank will give loans with terms of up to 15 years and zero interest rate in the first year.

Meanwhile, in Hanoi, Cau Giay Trading and Service Co. has put up for sale the Discovery Complex project on Cau Giay Street.

The VND5-trillion project comprises a 38-story office building and a 50-story apartment block. When completed in the first quarter of 2016, the project will supply about 45,000 square meters of office space for rent and 500 luxury condos, together with other utilities.

The commercial area of the project will be directly connected to the elevated metro line that will run through many locations across the city.

Each apartment is priced at VND27 million per square meter, with payment divided into eight installments. The project owner will give parking spaces with a term of 50 years to the first 20 customers signing home purchase contracts.

Recently, CFTD-VLA Building Joint Stock Co. has launched 140 condos and 7,000 square meters of office space of the Star Tower project on Duong Dinh Nghe Street in Hanoi City’s Cau Giay New Urban Area. The condos have a starting price of VND31.2 million a square meter.

Sale programs with flexible payment methods are welcomed by the market. For example, Nam Long Investment Corp. has sold out 190 condos of its Ehome 3 Saigon West project in three months.

Though targeting average-income earners, the project owner still seeks ways to stimulate demand by cooperating with banks to offer loans equal to 70% of the home values in 15 years with payments of principal and interest sums delayed until buyers receive their houses.

In the coming time, Nam Long will continue to launch 130 apartments with a price unchanged at VND615 million per unit. In addition, a 3% discount will be given on the occasion of the 20th anniversary of the company’s establishment.

Economic expert Dinh The Hien said the discount trend resulted in homebuyers waiting for further price cuts. However, not all buyers are waiting as transactions are still taking place.

In fact, many projects with discounts and financial aid programs have attracted a number of customers who take advantage of opportunities better than those who are waiting.

Aeon to bring Vietnamese goods onto global network

Japan’s Aeon Group will cooperate with Vietnamese producers and suppliers to bring domestic products to its global retail network, said Yasuo Nishitohge, general director of Aeon Vietnam Co. Ltd.

Speaking at the scholarship granting ceremony in HCMC last week, Nishitohge said that Aeon had held a meeting for suppliers in the city early this month as a first move to secure local supply. The enterprise will pay attention to export products Vietnam has advantages such as apparel, footwear and plastic.

Aeon last Thursday presented scholarships worth VND6 million each to 60 students of the Japanese faculty of HCMC University of Education and HCMC University of Social Sciences and Humanities.

This scholarship program aims to help Vietnam develop manpower, Nishitohge said.

Aeon-Celadon Tan Phu shopping center is expected to start operating in 2014 with the invested capital of US$100 million while 20 more centers will be opened countrywide before 2020. Each center will need 2,000 staff.

(Vietnam Net)

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