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BUSINESS IN BRIEF 22-2January sees better auto sales

As the demand for cars shot up at Tet, several firms recorded a dramatic increase in sales volume, leading to strong growth for the auto market in January.

Despite economic woes and the fear that consumers might suspend their car purchase plans to wait for registration fee cuts, car consumption in the first month of the year was high compared to the same period last year. Auto dealers and manufacturers said the market always enjoyed tremendous growth during the holiday period but last month was still a surprise.

Toyota Vietnam was among those with strong sales growth. In January, the Japanese giants sold over 2,700 vehicles, up 1,180 units year-on-year.

Because of the significantly higher demand, Toyota Vietnam could not fully supply customers during the Lunar New Year.

For example, the luxury car line assembled in Vietnam Camry recorded a sales volume of more than 750 units last month. But many customers will have to wait until March to receive their cars.

Similarly, over 500 Altis cars, 500 Vios cars, 480 Fortuner cars and 370 Innova cars were sold in January. Those who want to buy these particular models now have to wait until later this month or next month.

U.S. carmaker Ford Vietnam also achieved spectacular sales growth with 690 units sold, a four-fold increase compared to the same period last year.

The success of Ford Vietnam is attributed to the launch of the mid-end sedan Ford Focus, attracting more than 100 orders. In addition, the company organized “special sales day” with incentives for customers at all outlets across the country to celebrate the 150th birthday of Henry Ford, father of the automotive industry.

Honda Vietnam also recorded healthy sales last month with nearly 180 vehicles sold, a five-fold rise over the same period last year. Honda CR-V is still unavailable, so car buyers have to wait for the new version to be launched after Tet.

Mercedes-Benz, the only automaker from Germany with an assembly plant in Vietnam, said 133 vehicles were sold in January, almost double 2012’s figure.

U.S. carmaker GM Vietnam sold nearly 610 cars last month, an increase of 100 units year-on-year. Local car manufacturer Truong Hai (Thaco) sold more than 1,830 vehicles, a strong growth of 1,000 units against January 2012.

Automakers attributed the enormous increase in sales to the buoyant demand during Tet. Some firms had cut down on production, and thus supply did not meet demand.

Besides, at the same time last year, many traders experienced a sales slump due to the hike in car registration fee and number plate fee.

A number of carmakers remarked the market was warming up, partly because the Government had decided not to charge personal vehicle restriction fee while lowering the registration fee for cars under ten seats to 10% at the first registration and to 2% at the second registration.

Experts: More foreign capital to flow this year

Securities experts have predicted that foreign capital will keep flowing into the local stock market after the Lunar New Year holiday as foreign investors have become very active since the end of last year.

Trinh Hoai Giang, deputy general director of HCMC Securities Corp. (HSC) that holds the biggest foreign brokerage market share in Vietnam, said foreign capital will flow strongly into the market in the coming time.

The foreign investors have net bought around VND4 trillion worth of shares over the past two months, implying that they have jumped into the market, instead of staying on the sidelines. As they have focused on large caps, the VN30 index has strongly outperformed the VN-Index.

Local shares currently have a P/E (Price/Earnings Ratio) of 11, much lower than in other countries in the region with ratios from 15 to 18. Not just shares, investors in the U.S. have strongly bought Vietnamese government bonds, a good sign after the investors withdrew from the local bond market in 2008.

“Many investors I met during business trips asked for information about the local stock market, saying the market has made positive improvements and offered many investment opportunities. I think foreign investors have come back,” Giang said.

The Government is trying to fix shortcomings of the economy through restructuring programs while inflation and foreign exchange rates have been put under control. In addition, the banking system has been more stable than last August and September. These factors will help drive up foreign investment into the domestic market.

Many new products have been applied on the market and the industry is no longer in the group that does not receive Government support. Notably, the State Securities Commission has submitted to the Ministry of Finance a proposal to increase the foreign ownership limit in listed enterprises.

The director of a big investment fund also said that foreigners are pouring a huge capital flow into the market via ETFs (exchange traded funds), closed-end funds and open ended funds established overseas, concentrating on large caps on the two bourses. The director said this is natural as these enterprises are leading brands with profitable business, transparent operations and high dividends.

Foreign capital will keep flowing into these stocks in the coming time, especially after foreign room in listed firms is increased. Foreigners seem to be interested in consumer goods and pharmaceutical sectors, the director said.

Giang of HSC said strong fluctuations of the stock market have attracted the attention of foreigners.

In the Year of the Dragon, the VN-Index jumped 121 points, equivalent to 32.4%, while the HNX-Index rose 7.77 points, or 13.4%.

Viettel to launch US$50 smartphones

After the success of Viettel-branded smartphones priced at US$80-100 in the domestic market in October, the military-run telecom group intends to produce even cheaper smart gadgets this year at a mere US$50.

Le Dang Dung, deputy general director of Viettel, told the Daily that his firm was considering producing low-priced devices, such as smartphones and tablets, at its factories in Vietnam.

Previously, “Made by Viettel” smartphones were designed by Viettel but manufactured in China. “Domestic production is the only way to lower production costs,” Dung said.

Viettel’s factories are producing budget phones and USB 3G but have yet to make smartphones. In October, Viettel launched into the local market cheap models priced at US$80-100 and opened 50 product experience centers in Hanoi, HCMC and Danang.

“Made by Viettel” smartphones were sold for VND1.5 million each. They are 3G dual-SIM cell phones running on Android operating system with a display of 3.5 inches.

Nguyen Viet Dung, deputy director of Viettel Telecom, a member unit of Viettel, said the first batch of Viettel-branded models consisted of only 20,000 units, which had been sold in just two months. Therefore, Viettel ordered an additional 50,000 units, which were all sold a month before Tet.

Viettel intended to place an order for 50,000-100,000 more to meet the demand before and after Tet.

As “Made by Viettel” smartphones are well consumed, Viettel plans to produce “Made in Viettel” models to cut costs, stimulate demand and thus promote 3G development.

Seafood exports down in Q1

Vietnam’s seafood exports are predicted to experience a year-on-year decrease of 13 percent to 1.15 billion USD in the first quarter of this year, according to Thoi Bao Kinh Te Vietnam (Vietnam Economic Times).

The Vietnam Association of Seafood Exporters and Producers (VASEP) said the country’s tra fish and shrimp exports did not see bright signs so far this year.

By mid-January, the country earned only 63.38 million USD from tra fish exports, a year-on-year drop of 20.7 percent.

Due to the sharp reduction in exports to major markets such as the European Union (EU), the US, ASEAN, Mexico and Brazil, fluctuations in domestic prices and difficulties in access to capital by tra fish farmers, the nation is expected to earn only 230-250 million USD from tra fish exports in the first quarter of the year.

In the meantime, around 30 percent of the total 300 shrimp exporting enterprises that contributed 36-38 percent of the country’s seafood export value halted their operation because of the lack of capital, price hikes of raw materials and shrinking market share. The remaining businesses operated at half of their capacity.

VASEP has forecast three scenarios for shrimp exports this year. The revenue will reach 2.4 billion USD if the country properly solves the early mortality syndrome (EMS) in shrimps, the competition in buying raw materials, export market and the Ethoxyquin barrier. It will be 2.2 billion USD if EMS and the Ethoxyquin barrier are solved, and 1.9 billion USD if the two problems remain.

Because of a likely reduction of 20-30 percent in shrimp output in the first quarter of the year, the application of the barrier on the acceptable level of Ethoxyquin content, an antioxydant, in Japan and the Republic of Korea and the US’s launch of anti-subsidy lawsuit against Vietnam’s shrimp, the country’s shrimp exports are estimated at 360 million USD in the first three months of the year, a year-on-year decrease of 18-20 percent.

Businesses forecast shrimp exports will bring back 1.9 billion USD this year due to the outbreak of diseases since 2011.

Meanwhile, Chairman of VASEP Shrimp Committee Ho Quoc Luc said he was not optimistic about the 2.4 billion USD forecast, adding that it was difficult to predict as the cultivation depends largely on the weather.

The export value will be 1.9-2.1 billion USD if unfavourable weather and diseases occur this year, he added.

At present, he said, shrimp farmers need the Government’s support as they and processing businesses do not have mortgages to borrow loans.

On Feb. 15, the Hung Vuong and Go Dang Joint Stock Companies prepared their first batches of tra and clams worth 2.5 million USD for export to Europe and the Middle East .

Earlier, Hung Vuong Company shipped 30 containers of tra fillets worth 2 million USD to Europe and Go Dang Company, 200 tonnes of tra fish and clamsworth 500,000 USD to China .

General Director Nguyen Van Dao of the Go Dang JC company said the consumption demand in new market has risen and tra fish has been exported to Asia and America besides traditional markets such as Europe and the Mid-East.-

BMGF, UNICEF finance rural area IT project

The Bill and Melinda Gates Foundation (BMGF) and the United Nations Children’s Fund (UNICEF) will provide 500,000 USD for central Da Nang city to bring information technology (IT) to its rural areas in 2013.

The city’s Department of Information and Communications is coordinating with relevant agencies to promptly complete related procedures to receive the money and implement the project.

Director of the Department Pham Kim Son said that the project will focus on Hoa Vang district and combine with other IT programmes which involve the building of new rural areas.

Earlier, the foundation financed a pilot project to improve computer use skills and Internet access in Vietnam with a total sum of 50.6 million USD.

BMGF is the largest transparently operated private foundation in the world, founded by Bill and Melinda Gates. The primary aims of the foundation are to enhance healthcare and reduce extreme poverty globally.

Travel agencies to boost service in Berlin

Vietnamese travel agencies will participate in the International Trade Show Berlin (ITB) in the German capital from March 6-10, a source from the Viet Nam National Administration of Tourism (VNAT) told Viet Nam News yesterday.

The source said the national flag carrier Vietnam Airlines and 25 travel companies will attend to the world’s leading travel trade show with the aim of attracting long haul travellers from Germany and other European countries with direct flights.

According to VNAT, the country receives 100,000 German tourists yearly, and the figure increases year after year.

A tour operator from a Ha Noi-based travel agency, Nguyen Hung, said his company had launched its website for the German speaking market. “We target to attract tourists from Germany and German speaking countries such as Austria and Switzerland in 2013-14. We have opened our representative offices in Berlin, London, Paris, California and Sydney to boost sales.”

Hung added that his company would also offer a nine-day familiarisation trip to Viet Nam at the ITB.

Quang Nam records visitors in a week of new year

As many as 80,000 tourists visited two UNESCO-recognised world heritage sites – the ancient town of Hoi An and My Son Sanctuary – during the seven days of the lunar New Year holiday, said Dinh Hai, director of the Quang Nam Culture, Sports and Tourism Department

“Things are looking good for tourism in the central province of Quang Nam this year. We hosted 115,000 tourists this week – a 147 per cent increase in comparison to the same period last year,” Hai said. “Hoi An and My Son are still the two most popular sites for both domestic and foreign tourists.”

Around 10,000 foreign tourists stayed in Hoi An during the seven-day celebration of the Lunar New Year, he said.

The central province will host the fourth Quang Nam Heritage Journeys Festival on June 18-23.

Last year, the province hosted 2.8 million tourists, of which 1.3 million were foreigners, drawing revenue of VND1.4 trillion (US$67 million).

Russia, VN eye $7b in trade

Bilateral trade turnover between Russia and Viet Nam reached US$3.5 billion last year, up 40 per cent from 2011 and is expected to increase to $7 billion in 2013, officials said on Tuesday.

The figures were released by Anatoly V. Borovik, the Russian Consul General in HCM City at a press briefing held to mark the 63rd anniversary of diplomatic ties between the two countries.

He summarised Russia’s major current investments in Viet Nam, including their role in the construction of the Ninh Thuan nuclear power plant, which is a key project of both the countries and the wider region. Russia is providing Viet Nam with state-of-the-art technology to ensure the safety of the plant, said Borovik.

Outside of the energy sector, Russia is also co-operating with Viet Nam in several projects in southern provinces, including titanium exploitation in Binh Thuan Province.

In addition, the number of Russian tourists to Viet Nam in recent years has increased sharply and last year Viet Nam welcomed more than 200,000 Russian visitors. The effort of tourism companies in both countries and the opening of direct routes between Russia and Viet Nam have contributed to this success, he added.

Borovik declared that the potential to promote co-operation between the two countries further remains huge and the results achieved in 2012 provide motivation for this to happen.

Leading developer posts falling profit

The net profit of real estate developer Hoang Anh Gia Lai Group declined from nearly VND1.2 trillion (US57.14 million) in 2011 to just VND352 billion ($16.8 million) last year, a drop of nearly 70 per cent, the company reported.

In its fourth quarter financial statements for 2012, Hoang Anh Gia Lai (HAG) reported that revenue for the entire year reached VND4.4 trillion ($211 million), a surge of 40 per cent from VND 3.15 trillion ($150.7 million) in 2011.

However, costs of sales climbed by 85 per cent during the year to VND3.2 trillion.

Meanwhile, revenue from financial investments declined 59 per cent to about VND498 billion ($23.8 million), while costs relating to financial investments rose by 26 per cent over the previous year to over VND674 billion ($32.2 million). Other costs ate another VND80 billion ($3.8 million) away from profits.

As of December 31, HAG’s total assets totalled nearly VND31.3 trillion ($1.50 billion), while overall liabilities totalled about VND20.5 trillion ($979.4 million), an increase of nearly VND5 trillion ($239 million) over the previous year.

Long-term payables reached VND13.75 trillion ($658 million), up from just VND8.7 trillion ($416.3 million) at the end of 2011. Of that total, bank loans accounted for VND 5.5 trillion ($263 million), international convertible and common bonds for VND3.75 trillion ($180 million) and domestic bonds VND5.4 trillion ($258.3 million).

Rising construction costs, which climbed to nearly VND9.95 trillion ($475.6 million) last year, were one of the main factors pushing up the company’s liabilities. HAG’s construction projects last year included office buildings, sugar mills, power plants and rubber plantations.

This year, HAG expects to begin construction on a $300 million commercial complex in in Yangon, Myanmar to include shopping, offices and hotels. The project has been slated for completion in 6-7 years.

Earlier this year, the group announced a plan to issue additional shares to existing shareholders at a ratio of 5:1 as well as to issue VND1.56 trillion ($75 million) worth of international convertible bonds.

It’s not the right time for FX adjustment: SBV

It is not the right time to make any adjustment to the exchange rate as many factors will increase inflationary pressure in the near future, the Monetary Policy Department of the State Bank of Viet Nam have declared.

The decision was made despite economists recently recommending the central bank to devalue the dong by roughly 3-4 per cent in a move to spur exports and improve the competitiveness of local producers.

The department said that it would remain cautious about changing the forex rate as the Government has targeted keeping this year’s inflation lower than in 2012 while stimulating higher economic growth.

They argued that as the pace of price increases accelerated 1.25 per cent in the first month of the year, and was expected to increase further this month in the wake of the Tet holiday effect, any current devaluation of the dong would cause a rise in inflation. Raising the prices of imported goods would also add to inflationary pressure while making it more difficult to repay foreign debts, they said.

However, some economists remain adamant that maintaining the 2012 foreign exchange policy this year may not be as beneficial as it was in recent times.

Nguyen Duc Thnh, director of the Ha Noi-based Vietnam Centre for Economic and Policy Research (VEPR) under the Viet Nam National University in Hanoi, said that the central bank should actively devalue the dong by about three per cent with a 1-1.5 per cent margin implemented throughout the year to support exports and competition. He argued that if imported goods become more expensive then domestic production would be more actively encouraged.

Le Xuan Nghia, former vice chairman of the National Financial Supervisory Committee, said that import demand was expected to rise significantly in the second half of the year when the economy was forecast to rebound. The country at that time would have a trade deficit instead of a trade surplus like now, so he said it would be necessary to adjust the forex rate gradually in favour of exports and restrict imports.

Echoing Nghia, banking expert Nguyen Tri Hieu recommended that rather than devaluing the dong, the central bank should merely allow the exchange rate to fluctuate as much as 3 per cent, adding that the most appropriate timing is within the first quarter of this year.

He stated that this measure would mean the bank would avoid intervening in the foreign exchange market while letting the self-correction mechanism of the market work.

However, he admitted that while the adjustment would benefit exporters, it could also cause instability and a loss of confidence in the dong. He concluded that just as there is no medicine that can cure every disease, there is no solution that can help keep all sectors of the economy healthy, and so some tough measures were necessary.

Over 50,000 local firms reportedly underwent insolvency and dissolution last year and the number of enterprises facing difficulties due to credit is rising.

In 2012 the average inter-bank exchange rate set by the central bank remained stable at VND20,828 per US dollar. The official market exchange rate also remained stable at around VND20,850 per dollar, although at one point the rate shot up to VND 20,820 and VND21,295 per dollar for bid and ask.

Exporters urged to meet growth target

Exporters must both exploit new and traditional markets and introduce new products in order to meet the export growth target of 10 per cent this year, according to the Ministry of Industry and Trade.

For the traditional market of Japan, for instance, the ministry recommended exporters step up shipments of agricultural products, particularly rice.

Though Viet Nam is among the world’s largest rice exporters, it only sends US$20 million worth of the grain to Japan, accounting for a scant 3 per cent of Japan’s total rice import value.

Japan has become a lucrative market for Vietnamese exporters, given its annual demand for nearly 200,000 tonnes of rice and the fact that the price of imported rice in Japan is normally 10 per cent higher than the average price in other markets.

But Japanese consumer fastidiousness means that exporters must work hard to meet the country’s strict regulations on chemical residue.

The Viet Nam Trade Office in Japan said that local exporters should also improve the quality of rice to compete against their Thai rivals, which are also seeking to broaden their foothold in the Japanese market.

Chairman of the Viet Nam Food Association Truong Thanh Phong suggested local rice producers and exporters study Japan’s market trends and consumer tastes.

As for new markets, the industry and trade ministry recommended the United Arab Emirates, where there is high demand for Vietnamese products such as tea.

The UAE is the world’s second-largest tea importer, with a total import value of nearly $500 million yearly.

Currently, Sri Lanka is the country’s largest tea supplier, accounting for roughly 20 per cent of the UAE’s tea import volume.

Support from the diplomatic sector will help exporters reach these markets, foreign minister Pham Binh Minh said in the “Citizens ask – Ministers answer” programme broadcast recently on Viet Nam Television.

After the success of the Viet Nam-Latin America Forum last year, Minh said, the ministry planned to boost ties with Latin America as well as parts of the Middle East and Africa.

HCM City-owned firms ‘must restructure’

The city Department of Finance has asked local authorities to develop measures to restructure city-owned companies that have had difficulty surviving during the economic downturn.

The department’s director Dao Thi Lan Huong said the city People’s Committee should speed up the process of either merging or selling six companies slated to be restructured.

The department also suggested that the committee make a final decision to either equitize or restructure seven remaining businesses.

According to a department report, the city owned 108 businesses by the end of last year.

Of that number, 95 businesses operated normally and 13 businesses will be merged or will be declared bankrupt.

Last year’s total turnover of the operating businesses was VND123 trillion (US$5.8 billion), an increase of 24 per cent compared with the figure in 2011.

Many major companies last year did not reach their business targets, including Cho Lon Export, Import and Investment Corporation, Sai Gon Medicine Corporation, and Packaging and Industrial Printing Corporation. They were all operating at a lower capacity than normal.

A total of 29 businesses out of 95 that were operating normally have lost their charter capital or have had capital losses, equal to a total of VND720 billion ($34.28 million).

Moreover, goods have been stockpiled at many of the operating businesses. The total value of stockpiled goods was VND14 trillion ($666.67 million), an increase of 3.25 per cent compared to 2011.

The department said the city should take urgent measures to deal with capital losses and stagnancy at these businesses.

It also asked the city to set up auditing teams to closely monitor the use of capital at the businesses.

In addition, the department said the city should prevent businesses from making investments outside their authorised operations.

High-Tech Park hopes to lure major projects

The Saigon High-Tech Park (SHTP) aims to attract between six and ten investment projects with a combined registered capital of around US$150 million in 2013, according to SHTP’s management board.

The park also seeks export revenue of at least $2.7 billion this year.

In addition, SHTP will continue its efforts to attract more exports and develop high-tech human resources training.

To reach this year’s target, the park’s management board petitioned the HCM City People’s Committee for capital to use in improving research and building infrastructure for functional spaces.

The board is also seeking the City’s approval for land lease prices.

SHTP proposes the Government provide the same investment for the park’s second phase as it did for the first. HCM City is currently in charge of 70 per cent of the total investment, while the remaining 30 per cent comes from the State budget.

Earlier this year, the city’s People’s Committee signed off on SHTP’s VND8.175 trillion ($392.64 million) second phase, which covers 587ha in District 9, bringing the park’s total area to 913ha.

SHTP’s management board expects foreign and domestic investment capital flow in the 2013-18 period to hit $3 billion. —

Hai Phong among top FDI recipents in Jan

The Northern port city of Hai Phong lured five FDI projects worth US$117.6 million in January, becoming the country’s second largest FDI recipient, according to the Foreign Investment Agency (FIA).

In January, the city’s total newly-registered capital amounted to US$118.1 million including US$0.5 million of additional capital of a former project.

Last year, the locality attracted 39 new projects, worth US$1.12 billion, up 25.8% in terms of number and 80.8% in terms of value against 2011.

Meanwhile, up to 25 projects got additional capital. The amount of FDI attraction touched US$1.233 billion, a 1.27% year-on-year increase.

The success was attributed to a series of solutions on FDI attraction. Particularly, the Hai Phong Department of Planning and Investment sped up the progress of setting up FDI representative offices and branches.

The local authorities also reviewed and classified projects to timely resolve difficulties for FDI projects and dissolve inefficient ones./.

Firms to raise profile in Africa

Vietnam’s export turnover to Africa is expected to rise by 20 percent this year, underlining the market potential that the continent’s one billion population presents for Vietnamese enterprises.

The total export turnover to Africa is estimated to reach 3.12 billion USD in 2013, according to the Thoi bao kinh te Vietnam (Vietnam Economic Time).

According to the United Nations, Africa ’s population could increase to 1.2 billion people by 2050, a factor that indicates the possibility of high consumption demand.

The Ministry of Industry and Trade’s Trade promotion Agency said Nigeria , South Africa , Egypt , Algeria , Ghana , Angola , Morocco and Mozambique have emerged as leading consumers of Vietnamese goods over the past several years.

Export shipments to these markets have seen a strong growth rate of 20 percent year.
Earnings from export to South Africa reached 62.9 million USD in January, with the main products being phones, spare part for phones footwear, cashew and coffee.

To Senegal , Vietnamese businesses exported 2.93 million USD worth of rice, textiles and garments, cars, motorbikes and auto spare parts.

Algeria imported good worth 18.9 million USD from Vietnam including 4 million USD worth of rice and 9.9 million USD worth of coffee.

It is expected that in the coming years, many Vietnamese items will have big opportunities to penetrate further into the African market.

For instance, rice consumption in the continent is forecast to increase significantly. Africa as a whole will consume 24-24.5 million tonnes of rice per year, of which 10 million tonnes will be imported.

VietinBank in top 500 global banking brands

Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) has been named in the top 500 banking brands globally with a trademark value of 271 million USD.

According to the list, recently launched by The Banker, the world’ leading banking-financial magazine, VietinBank ranked 328th, a 106-place leap from its position last year.

It is also the only Vietnamese bank to enter the top 10 that enjoy the highest growth rate of brand value in 2013.

The result reflects VietinBank’s safe, effective and sustainable operations in 2012, especially the bank’s prestige and development prospect after it sold a 20 percent stake to its Japanese strategic partner, the Bank of Tolyo-Mitsubishi UFJ (BTMU), which is listed in the top 10 brands in Asia .

This is the eighth year the top 500 banking brands has been issued by The Banker, which is the world’s premier banking and finance resource, providing global finance intelligence since 1926.

Banks join social housing push

State owned commercial banks will offer at least three percent of their outstanding loans to people who are eligible to buy of rent social housing.

This is part of new regulations on loans for social housing with low interest rates and flexible maturity compiled by the State Bank of Vietnam (SBV) and the Ministry of Construction in a join effort to tackle the frozen domestic real estate market.

Speaking at a meeting with the National Assembly Standing Committee late last month, SBV Deputy Governor Dang Thanh Binh said the regulations are expected to be completed and issued in the first quarter of this year.

Binh said they would help low income earners and State employees access credit to buy or rent social housing or commercial houses with areas of less than 70 square metres at a cost of less than 15 million VND (720 USD) per sq.m.

Social housing investors and enterprises who switched commercial housing projects to social housing apartments would also gain access to loans with interest rates and maturities suitable to their financial situations, Binh said.

The SBV would offer commercial banks 20-40 billion VND (960,000 – 1.9 million USD) each year as a support for social housing lending, Binh said.

‘The State Bank will inject more long-term capital into real estate to shake up the market,” he said, adding that it is necessary to have a mechanism to shift from short-term funding to middle- or long-term.

Binh explained that the bank is planning to set up a national housing re-mortgage agency to diversify sources providing long-term funds for the market.

Construction Minister Trinh Dinh Dung said that this year would see more interest in social housing projects which would gradually help to meet demand.

“It is difficult to implement social housing projects because the profits are relatively low and most enterprises aren’t interested,” he said, adding that more policies are needed to encourage enterprises to get involved.

The ministry plans to offer social housing enterprises and low income earners more incentives with regards to social housing. For example, those eligible will be exempt from land-use fees, reduced value added tax and offered low interest loans to buy houses, he said.

According to SBV statistics, up to last November, outstanding loans for real estate investment and trade were over 215 trillion VND (10.3 billion USD), of which bas debt accounted for 5.55 percent.

Nearly 300 real estate companies had loans of at least 100 billion VND (4.8 million USD) and their total debts to credit institutions were 125 trillion VND (6 billion USD).-
HCM City to have less bus firms by 2015

The HCMC Department of Transport will implement a restructuring plan for commuter bus services cooperatives this year in a bid to reduce the number of public transport providers to around seven by 2015.

The department will restructure Ba Chieu-Cho Lon, Phuong Nam, Hiep Phat and No.4 cooperatives. Phuong Nam and Ba Chieu-Cho Lon have already been merged to form Dong Nam Cooperative.

Duong Hong Thanh, deputy director of the department, said the restructuring of bus cooperatives is one of the measures to improve the quality of bus operations in the city.

When merged with large cooperatives, members of smaller cooperatives can still run on the routes which they have been active before. Merging small cooperatives into bigger ones is expected to help improve management at the small units.

Many members at first protested against the restructuring plan for fear of losing their right to the operational routes, according to Phung Dang Hai, general director of the HCMC Union of Transport Cooperatives. In fact, he said, a majority of small cooperatives have failed to manage their operation as effectively as expected.

Meanwhile, members of small units can benefit from mergers as their management costs will be scaled down accordingly.

The number of public passenger transport businesses will be adjusted down to about seven by 2015, the transport department said. By the end of last year, the city had 15 commuter bus services providers, down from the previous 30 plus.

Vung Ro Refinery to kick off in Q2

Construction of Vung Ro Oil Refinery in the central province of Phu Yen is expected to begin in the second quarter of this year with total investment of US$4.3 billion.

Speaking to the Daily on Monday, Le Van Truc, vice chairman of the province, said that investors of the project, the UK’s Technostar Management Ltd. and Russia’s Telloil Company, will meet with local authorities today to discuss license, site clearance capital advance and the date to kick off the project.

The Prime Minister earlier approved the plan to increase the capacity of the refinery from four million to eight million tons a year.

Accordingly, the project will be moved from a 180-hectare area in Vung Ro Port to a new location covering 450 hectares in Hoa Tam Industrial Zone in Dong Hoa District. The previous site in Vung Ro Port will be set aside to gather materials and machines for the project.

For the new location, around 80 households have yet to relocate from the affected area. Local government has plans to move these households and grant the adjusted investment license to the investors in this quarter to facilitate ground breaking in the second quarter, Truc said.

Local authorities expect the project to help boost development of other sectors in Phu Yen Province such as supporting industries, petrochemical and services, Truc added.

Constructing the project, the investor will apply technology and technical designs from the U.S. and use crude oil from Russia and the Middle East.

The Government has approved in principle to levy a 0% export tax rate on products of this project.

Local authorities granted an investment license to the project in 2007 with capital of US$1.7 billion in the first stage. The refinery produces liquefied petroleum gas, gasoline, diesel oil, benzene and polypropylene among other products.

Financial woes hit tra fish industry

Rising input costs and lack of outlets are seen as the main reasons behind the sharp profit decline of local tra fish exporters last year.

The consolidated financial report of Vinh Hoan JSC shows that net revenue of the company in the fourth quarter in 2012 reached VND1.11 trillion, a strong growth over the year-ago period.

However, Vinh Hoan only obtained VND41.51 billion in after-tax profit, slumping 61% year-on-year, according to the report. It posted about VND4.21 trillion of accumulated net revenue in all of 2012 while its after-tax profit stayed at more than VND208 billion, slipping by up to 47% against 2011.

Similarly, Viet An JSC reports over VND456 billion of net sales and VND16.46 billion of after-tax profit during last year’s quarter four, shrinking 17% and 48% year-on-year respectively. The enterprise attributed the negative business result to the tough conditions faced by the seafood industry along with higher financial expenses and related fees.

Viet An had accumulated around VND1.87 trillion of net sales for the whole year 2012 which is equivalent to the preceding year’s amount but the firm had seen its after-tax profit drop by 8% to approximately VND47 billion last year.

Hung Vuong JSC also faced the same problems, with its after-tax profit going down 77% year-on-year to VND24.4 billion in the fourth quarter in the same year. The company in 2012 enjoyed net revenue which equals to the 2011 figure but its after-tax profit was only VND324.7 billion, down 33% compared to 2011.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the country’s tra fish export generated US$1.74 billion in 2012, down 3.4% versus 2011 and lower than the US$1.8 billion target. The association ascribed the situation to tough access to loans for production and export of member companies, slackened demand, volatile supply of input materials and decreased export price.

VASEP forecasts the local tra fish industry will continue to face the same challenges this year, with certain tra fish farms expected to be scaled down at small farming households. The association also believes that there will be many enterprises suffering severe capital shortfalls in 2013.

Rice storage begins as crop half-harvested

The one million tons of winter-spring rice buying program for temporary storage kicks off today while more than half of the crop has been harvested.

According to the departments of agriculture and rural development in the Mekong Delta provinces, around 941,000 of the 1.6 million hectares of the 2012-2013 winter-spring paddy crop has been harvested, accounting for over a half of the farming area in the region. Fresh paddies have been sold right after harvest.

Dr. Le Van Banh, rector of the Mekong Delta Rice Institute, questioned the effectiveness of the stockpiling program: “The program begins when rice growers have almost finished harvesting, then what will be bought for temporary storage?”

He said the delay in temporary storage had led to a drop in domestic rice prices, affecting farmers’ profits.

However, the director of a member company of the Vietnam Food Association (VFA) in the Mekong Delta said that under the Government’s Decree 109 on rice trading, rice stockpiling will only be implemented when prices don’t ensure a 30% profit margin for farmers.

“The Ministry of Agriculture and Rural Development has set a schedule for simultaneous sowing, meaning harvest will also be done simultaneously. According to the sowing schedule of the winter-spring crop, the harvest time is late February,” he said.

IPTV firms seeking niche market

Enterprises offering Internet Protocol Television (IPTV) services are exploring business opportunities in the areas of online education and shopping on television.

Cao Quoc Dat, deputy sales director of Electronics Communications Technology Investment Development Joint Stock Company (Elcom), an IPTV services firm for the hotel segment, said Elcom was boosting cooperation with electronics retailers in distributing devices converting LCD TVs into smart ones.

“Via an IPTV decoder, in addition to watching movies and other television programs, and browsing the Web, users can play online games, do the online shopping, read e-books and newspapers, and study foreign languages on TV,” Dat said.

Besides, the device running on the Android operating system makes it easy for parents to educate their children by selecting appropriate movies and educational games.

Elcom has such a device imported from abroad but develops the software itself, so the device is cheaper than the imported one. The investment set aside for developing the device and researching the market amounts to around VND3 billion.

Similarly, Van Phong Online Service Trading Company (Iwind) is joining hands with China’s Huawei to exclusively sell Huawei-made devices converting LCD TVs into smart ones, which will be made available in Vietnam next month, according Iwind director Pham Thi Minh Trang.

“According to our statistics, there are over 700,000 LCD TVs for every one million households in big cities like HCMC, Hanoi and Danang and this is a potential segment,” Trang said.

Van Phong has also worked with HCMC University of Natural Sciences to evaluate the product’s quality and cooperated with VNPT’s network providers to increase Internet access quality for customers.

Software firms boost export to Japan

Japan will continue to be the major market for Vietnam’s software this year, and Vietnamese software firms are finding ways to boost shipments to this market.

Nguyen Thanh Lam, general director of FPT Software, said opportunities for Vietnam abound as Japan tends to move its software outsourcing contracts out of China. Vietnamese software enterprises need to take this opportunity to promote their presence in Japan and increase the software outsourcing market share in this country.

Meanwhile, Ngo Van Toan, deputy general director of Global Cybersoft (GCS), said that Japan would still be the biggest market for GCS’s software in terms of both contract number and revenue.

To win contracts in the Japanese market, FPT Software will promote development activities there with a growth target of 30% this year, Lam said.

FPT Software will focus its resources on retaining traditional customers. The firm has proposed Japan’s leading groups select Vietnam as a center for research and development, information technology services and outsourcing.

Besides, the firm will continue to provide and develop traditional services and products such as embedded software and mobile services.

According to the Vietnam Software Association (Vinasa), Japan currently brings in annual revenue and profit growth of 35% and 40% respectively. Vinasa will organize more trade promotion programs in this market this year and hold a meeting with a group of Japanese software companies in the middle of the year, aiming to create business opportunities for Vietnamese firms.

According to the 2013 Information Technology White Book of Japan released by the Japan Information Technology Promotion Agency (IPA), Vietnam remains the most desirable partner of Japan with 31.5% of 1,100 surveyed enterprises planning to pick Vietnamese firms as their partners. This figure far exceeds 20.6% of enterprises choosing India and 16.7% opting for China.

In reality, there are 23.3% of surveyed enterprises making orders in Vietnam compared to 17.8% recorded in 2010.

Japanese firms’ selection of Vietnam results from low outsourcing costs, and abundant and skilled labor. Besides, Japanese businesses want to increase their offshore activity for fear of earthquakes and tsunamis at home.

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

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