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BUSINESS IN BRIEF 22-3HCM City deal to boost IT use

The HCM City People’s Committee has chosen the Viettel Group as its IT partner for e-governance, education, healthcare, transport, and chipset technology.

An agreement was signed yesterday between the city Information and Communications Department and Viettel.

Under the agreement, HCM City authorities can take advantage of Viettel’s 140,000 km of fibre-optic cable, 50,000 base transceiver stations, the largest 3G network in Viet Nam, three integrated data-base centres, and thousands of telephone operators around the country.

Viettel Group is providing free internet to 30,000 schools around the country, has co-operated with the city’s Education and Training Department to implement an education management software for 50 per cent of schools in the city, provided file management system for the Government Office, e-governance system for the northern province of Ha Giang, and online sales system for Vinamilk.

Deputy Minister of Information and Communications Nguyen Minh Hong, said: “2012 was a tough year for the national economy and impacted the telecom industry, but the industry still achieved good growth.”

He also hailed the co-operation between HCM City and Viettel Group.

Market changes hit furniture village

Wooden furniture makers in northern Nam Dinh Province’s La Xuyen Village are struggling to survive in a market downturn, a world-wide crackdown on illegal logging and a shortage of skilled workers.

The furniture village in Y Yen District, about 70km from the south of Ha Noi, once prospered from its carved furniture and other work, evidenced by the number of multi-storey houses and workshops in the village.

Village Trade Group chairman Pham Ngoc Tuan said the village had 27 enterprises which could earn from VND3 billion (US$144,000) a year for a small business to VND30 billion ($1.44 million) for a big business.

Ninh Duy Nhat, director of Hong Gia Company which employed 50 regular workers, 200 seasonal workers, and outsourcing manufacture to 20 local households, said that last year, the company operated below its capacity because of sharply reduced orders.

The economic slowdown had slowed the market, resulting in a halving of production.

Tighter legislation regarding timber imports was also leading to demands by major customers for legal proof of origin as a way to curb illegal logging. Up to 80 per cent of the timber was imported, mostly from Lao, Thailand, Cambodia and India.

The importers of finished products, including the U.S., EU and Australia, had regulations against illegal logging, for example the US Lacey Code 2010, EU Forest Law Enforcement, Governance and Trade 2013 and Australia illegal logging ban to take effect next year.

Speaking at a workshop held here last week about challenges for wood trade, EU Forest Law Enforcement representative Tim Dawson said the illegal logging was a global problem with trade worth $30-100 billion a year.

However, regulations were difficult to enforce because of the lack of co-ordination among countries to control the flow of timber.

The workshop was co-organised by the Viet Nam Timber and Forest Production Association and Forest Trends.

An expert from Viet Nam’s Forest Trend To Xuan Phuc said that Viet Nam was also making efforts to set up a Timber Legality Assurance System to ensure products were made from legally harvested timber.

The system would affect carpentry villages, like La Xuyen, he said, urging an impact report be produced on the village’s timber consumption and production.

Meanwhile, Duong Van Hien, director of La Xuyen Vang Joint Stocks Company, said it was also difficult to get young workers, despite the wage of VND8 million ($384) a month for a skilled woodworker.

“They prefer to go to university and then get a job in the city,” he said.

Job training was not given proper attention either. New apprentices now trained for six months instead of three years, he said.

Housing laws await huge alterations

The Law on Housing and the Law on Real Estate Business will soon see vast amendments, according to Minister of Construction Trinh Dinh Dung.

Problems in the current laws hindered the development of social housing as well as real estate management, Dung said; moreover, the real estate sector needed the State’s intervention to ensure sustainable development because real estate products were frequently associated with State-owned land.

According to Deputy Minister Nguyen Tran Nam, the ministry has asked localities, relevant ministries and organisations and experts to suggest potential amendments to these laws. The current draft amendments to the Law on Housing concern financing, management and use of apartment buildings and housing information systems.

The draft revised laws will likely be proposed to the Government in June and to the National Assembly in October for ratification in 2014.

Developers in Ha Noi are releasing more affordable projects as Tet concludes, providing home buyers with a variety of choices.

Nam Cuong Group put 85 apartments in the CT3C building in the Tu Liem District Hong Quoc Viet Residential project on sale recently. Prices range from VND24-24.5 million (US$1,140 – 1,170) per sq.metre.

And Thien Duong Bao Son Tourism and Entertainment Company offered villas in Hoai Duc District’ An Khanh Commune for sale, with areas from 200-600 sq. metres, according to Nguyen Thanh Hai, head of the Sales Department. Many apartments on sale cost around VND15 million ($715) per sq.m. These include those in the Phuc Thinh Tower in Hoai Duc District (VND13-14 million per sq.m), the OCT2 building in Tu Liem District (VND12.9-14.9 per sq. m) and Xa La and the Sun Garden project in Ha Dong District (VND14-18 million per sq. m).

According to the ministry, apartment prices decreased by 5-10 per cent in 2012. In Ha Dong, Thanh Tri, Dan Phuong and Hoai Duc districts, prices fell by up to 30 per cent. Many experts expected the real estate market to warm up this year as prices decreased and the Government offered support to home buyers to resolve bad debts and provide tax and land fee deferrals as well as preferential loans and interest rates. Yet investors worried about when these policies would see effects and called for detailed instructions to ensure that the support reached those who really needed it.

Investment needed in renewable energy

Investment in generating electricity from new and renewable energy sources is still lower than expected in HCM City.

Deputy chairman of the city’s People’s Committee, Le Manh Ha, told Thoi bao kinh te Viet Nam (Vietnam Economic Times) that such investment was costly but returns were low and therefore unattractive to investors.

The city now produces only about 3MW of electricity from new and renewable energy sources.

This power is generated from waste in the Go Cat Electricity Plant and from solar energy at Thanh An Island’s solar power plant.

Meanwhile, the city is scheduled to produce 48MW of electricity from new and renewable sources, equal to 1 per cent of its total power consumption, by 2015, Ha said.

Residential and public lighting at present costs about VND130 billion (US$6.2 million) a year.

But Ha said that efforts to halve this consumption had failed.

“So applying new technologies to generate electricity for public lighting from solar energy and wind power is a sustainable solution for a smart city,” he said.

And producing power from the sun and wind is now one of the global trends for sustainable development, Ha added.

Therefore the People’s Committee reviewed the use of new and renewable energy resources to develop policies to encourage investment in the sector.

It also directed relevant agencies to give preferential treatment in lending capital for generating electricity from new and renewable energy resources.

Support for technology and locations for producing this power were also offered to investors, Ha said.

Raising public awareness of the benefits of using solar energy and energy-saving equipment was also necessary. Authorised agencies would support investors to finish scheduled projects such as the Can Gio wind power plant, which would have a capacity to produce 200MW of electricity a year and be worth VND10 trillion. It is expected to be operating by 2016.

In the short term, the city would invest in two 3MW wind turbines and in a pilot scheme using solar energy at some Government offices to lure both domestic and international investors to the sector, Ha said.

Fund rolls out sustainable development projects

The Worldwide Fund for Nature (WWF) launched three projects this month to improve the sustainability of shrimp farming, develop responsible tourism and eco-tourism, and promote low-carbon development.

To cost US$1.5 million, they are funded by the Danish International Development Agency and involve policy makers, the private sector, and civil society at every stage.

The Greater Mekong region in which Viet Nam is situated along with Cambodia, Lao, and Thailand faces immense challenges as the countries try to balance economic development and poverty alleviation with environmental protection.

Each of the WWF projects will support the development of frameworks for sustainable use and management of natural resources.

This includes the implementation of pilot models that improve livelihoods and promote more efficient use of natural resources.

They will also ensure economic gains and that benefits and costs of natural resource use are shared among all stakeholders.

“Aquaculture, energy, and tourism are three of the fastest growing sectors in Viet Nam, all with high risk of negative environmental and social impacts,” Jacob Fjalland, the manager of the Greater Mekong programme, WWF-Denmark, said.

“But each of these sectors also has the potential to contribute to a sustainable green economy if they are developed in the right way, and this is what WWF aims to demonstrate and advocate for through this programme,” he said.

Viet Nam’s plans for the future of the energy sector largely focus on fossil fuels meeting its growing energy demands, though attention has also been paid to renewable energy.

The low carbon development project hopes to increase the attention paid in these plans to sustainable renewable energy by supporting the development of energy policies at national and provincial levels.

It includes the piloting and replication of low carbon and sustainable energy initiatives in the productive activities of households and small- and medium-sized enterprises in strategic sectors in the central province of Thua Thien Hue.

The project will work in close partnership with provincial decision makers, planners, and private enterprises in Thua Thien Hue.

Nationally, the project will work to build the capacity of civil society organisations. The responsible tourism and eco-tourism project aims to provide a clear example of how tourism activities around protected areas can contribute to sustainable incomes for local people, thus reducing the need to exploit natural resources there. The project will work with travel agencies, national parks, and local communities to develop a community-based tourism model in and around Cat Tien and Bidoup Nui Ba National Parks.

By involving the local communities directly, the project has created a sustainable finance scheme where the benefits of using resources return to the locals.

The success of the pilot model will be integrated into national guidelines and will be applied for all protected areas in Viet Nam.

Local shrimp farmers will be educated, with WWF providing training in management practices.

The project aims to ensure that production is in line with shrimp Aquaculture Stewardship Certification standards for responsible production, trade, and investment.

RoK promotes its tourism in Vietnam

RoK Toursim Year has been launched in Vietnam by the Republic of Korea (RoK) General Department of Tourism.

The campaign includes a number of festivals and fairs such as the Mini Tourism Fair (March 21-23), featuring a variety of tours and Korean products.

Vietnamese travel agencies will introduce popular destinations in the RoK through the internet, musical performances and a range of cultural activities, aiming to encourage more Vietnamese people to visit Korea.

Within the framework of the program, a film crew from a well-known Korean TV show,“Let’s Go Dream Team,” will make a short film in Hanoi to introduce the beautiful Vietnamese landscape and people to their country.

A K-Pop Showcase and R-16 Korea dance contest will also be held on March 21-22 as part of this campaign.

The RoK welcomed more than 160,000 Vietnamese visitors in 2012, 0.9 percent more than in 2011.

Mongolia, Vietnam boost economic ties

Vietnam and Mongolia will expand bilateral cooperation in all areas, especially economics, trade and science-technology to meet their national interests.

The agreement was reached at the 15th session of the Vietnam-Mongolia Inter-governmental Committee for Economic, Commercial, and Scientific and Technological Cooperation in Hanoi on March 18.

Both sides showed their keen interest in agricultural cooperation, in which Mongolia will supply its consumer  goods such as animal products, wool and leather to Vietnam, and in turns Vietnam will ship rice, sugar, fruits, vegetables, tea and other agro-forestry products to its partner.

They agreed to increase cooperation in animal health examinations for lamb, goat meat and other frozen meat imported into Vietnam from Mongolia. They agreed to send Vietnamese veterinarians to work in Mongolia, and select quality meat production enterprises to export their products to each other’s markets.

The Vietnamese side expressed their desire to invest in Mongolia’s food and agriculture industry.

Both sides agreed to jointly implement cultivation projects, continue negotiations of animal feed production, and establish a joint venture to grow vegetables in Mongolia.

They are scheduled to sign the minutes of the meeting in Hanoi on March 19.

The meeting is being co-chaired by Vietnamese Minister of Agriculture and Rural Development Cao Duc Phat and Mongolian Minister of Industry and Agriculture Kh. Battulga.

US investors eye Vietnam market

Representatives from 30 US private equity firms are gathering in Hanoi on March 19-20 for a first-ever conference held by Texas Pacific Group (TPG) to explore business opportunities.

David Bonderman, one of the two TPG founders, and TPG experts from around the world attended the conference.

The event also saw the participation of chief executive officers (CEO) of key TPG-invested companies from China, Israel, India, Vietnam and other Asian countries, who assess global investment trends.

Madhur Maini, CEO of Masan Group, one of the two TPG-invested companies in Vietnam, is scheduled to highlight Masan as a success story of private investment, as well as opportunities for expanding operations in consumer goods production and other areas in Vietnam.

Most of the participants have not yet been to Vietnam, and their firms have total assets of up to US$1,000 billion. Therefore, the conference offers TPG limited partners a great chance to sound out business and investment opportunities in Vietnam.

In Vietnam, TPG injected US$36.5 million into FPT in late 2006 and another US$35 million into Masan group in late 2009.

TPG holds the annual conference in San Francisco for its LPs to review their investments and operational efficiency. This is the first time such conference has been held outside the US.

TPG has selected Vietnam as the venue of the gathering following the successful operation of Masan group in the country. Masan is one of several TPG-invested companies that have achieved the highest growth rate globally.

With a population of more than 90 million, Vietnam is considered a lucrative market for consumer goods production – an industry which is yet to develop on a par with its potential.

Hosting the event in Vietnam also demonstrates TPG’s growth fund operations as more than half of its portfolio is invested in developing markets.
Founded in 1992, TPG is one of the largest private equity firms in the US with a total asset of US$54.5 billion.

Exports to some Africa nations fall

Vietnam’s exports to some large African countries plunged in February, the Ministry of Industry and Trade (MoIT) has reported.

Exports to Senegal plummeted 75 percent against the same month last year to hit US$4.38 million.

Export earnings from Egypt, the Ivory Coast and Ghana tumbled 40 percent to US$34 million, 59 percent to US$4.8 million and 13 percent to US$13.2 million, respectively.

Rice exports to the Ivory Coast slumped 83 percent to US$1.68 million while to Senegal they fell slumped 87 percent to US$1.6 million.

The fall in rice exports was partly due to fierce competition from cheaper Indian and Thai rice with which it was difficult to compete because of the distance to Africa increasing transport costs, according to a MoIT expert.

Conversely, export turnover to four other Africa markets showed stable growth across a range of goods. South Africa continued to be Vietnam’s largest trade partner in the bloc, importing US$97 million worth of goods, including mobile phones and components, footwear, chemical products and garments – up 24 percent year-on-year.

It was followed by Algeria US$35.2 million (up 5 percent), Angola US$16.5 million (up 42 percent) and Nigeria US$16 million (up 15 percent). Eight countries accounted for 65 percent of total export value to the African bloc.

Vietnam insurer to pour US$5 million into Laos, Cambodia

The Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation (BIC) has announced it will pour nearly US$5 million into its subsidiary companies in Laos and Cambodia.

Under BIC’s plan recently approved by the Finance Ministry, the corporation will spend US$420,000 to increase its stake in the Laos-Vietnam Insurance Joint Stock Company (LVI) from the current 51 percent to 65 percent.

BIC will also buy back the 65 percent stake of the Cambodian Investment and Development Co., Ltd ( IDCC ) worth US$4.55 million in the Cambodia-Vietnam Insurance Joint Stock Company (CVI).

Established in 2008 with a chartered capital of US$3 million, LVI currently holds the second largest share in Laos’ insurance market.

Founded in 2009 with a chartered capital of US$7 million, CVI is now the fourth largest insurer in Cambodia, with an average annual premium growth of 70 percent in the 2010-2012 period.

Vietnam-Ukraine trade up 4.5 pct

The import-export turnover between Vietnam and Ukraine reached US$313 million in 2012, increasing by 4.5 percent compared to 2011, according to the Vietnam General Department of Customs.

Vietnam’s export earnings hit US$221 million, up 13.6 percent. Major exports included seafood, garments, pepper, footwear, cashew nuts and rice, which accounted for 30 percent of the country’s total export turnover to Ukraine.

However, its imports fell 12.2 percent compared to the previous year to US$92 million. Vietnam mainly purchased iron and steel, machinery, equipment and spare parts, means of transport, chemicals and fertilizer, which made up 70 percent of its total import value from Ukraine.

To raise exports, Vietnamese businesses need to boost trade promotion, expand their markets, reduce exports of raw materials, and increase exports of processed products.

VASEP demands fish import tax recalculations

The Vietnam Association of Seafood Exporters and Processors (VASEP) has opposed the US Department of Commerce’s new calculations of tax rates imposed on Vietnamese Tra fish imported to the US.

In its recent annual administrative review, the US department chose Indonesia as a benchmark country to calculate anti-dumping margins on Vietnam’s frozen fish fillet exports instead of Bangladesh which is used for the calculations seven times previously.

Accordingly, the new tax rates were adjusted to increase more than 10 times, from just several cents per kilo to several dollars per kilo.

The VASEP expressed its indignation over the DOC’s sudden benchmark country replacement and claimed the US decision was unreasonable.

According to the VASEP, the DOC relied on the Indonesian government’s study of its Tra fish prices based on information from just several localities of the country, resulting wider margins.

In the previous seven administrative reviews, Indonesia was not chosen as a model for tax calculations as it had no sufficient pricing and financial data. In fact, Indonesia imports frozen Tra fillets, mainly from Vietnam, and it does not export Tra fish products to the world market.

The VASEP and its Tra fish businesses will take necessary legal measures to protect the fishery industry and ask the DOC to correct its decision according to US laws and WTO agreements.

The VASEP proposed that the DOC maintain Bangladesh as the reference country for calculating prices of Vietnamese Tra fish products.

Rice exports hit 906,173 tonnes

As of March 14, Vietnam has exported 906,173 tonnes of rice, earning US$411 million, according to the Vietnam Food Association (VFA).

The price of dried paddy rice in the Mekong Delta region is currently hovering around VND5,150-5,250 per kilo, with long grain rice being sold at VND5,350-5,450 per kilo.

Unhusked five-percent broken rice is selling for VND7,950-8,050/kg, while unhusked 15-percent and 25-percent broken rice are VND7,550-7,650/kg and VND7,250-7,350/kg, respectively.

The country’s average rice export prices in January fell by 20 percent compared to the same period last year.

Hoang Duc Nhuan, Head of the Africa Division under the Ministry of Industry and Trade’s Africa, Western and South Asia Markets, said that 2013 is proving to be a relatively difficult year for Vietnamese rice exports due to competition from other global rice producers such as Thailand and India.

Japan businesses seek opportunities in Ba Ria-Vung Tau

Businesses from Japanese city of Kobe made a fact-finding tour of Ba Ria-Vung Tau province on March 18 to sound out opportunities for investment cooperation.

They comprise companies specialising in seaports, forwarding services, shipbuilding, fish farming and processing, automobile manufacturing, electronics-telecommunications, information technology, and auditing.

At a working session with local authorities, Ho Van Nien, Vice Chairman of the provincial People’s Committee, briefed his guests on Ba Ria-Vung Tau’s potential for developing tourism, oil and gas exploitation, aquaculture, and seaports.

As the province will prioritise developing seaports, seaport logistics, and support industries in the next 30 to 50 years, it needs intensive foreign investment, said Nien.

He pledged to create the best conditions for foreign businesses, including those from Japan, to invest in potential areas in the province.

Ba Ria-Vung Tau is finalising policies, including the One-Stop Shop policy, running Japanese language courses for workers, and upgrading its infrastructure to meet Japanese investors’ requirements.

It is implementing a pilot programme to integrate the Japanese language into the high school curricula in the 2012-2013 academic year.

The province has signed a business cooperation deal with Japan’s Kawasaki prefecture and is building the Kawasaki industrial zone to attract Japanese investors.

FDI businesses paying off well in Vietnam

In the past two months, FDI businesses in Vietnam earned nearly US$11 billion in export revenue (58.75 percent of the country’s total).

17 of them exceeded the average level of 58.7 percent, and 14 others boasted up to 60 percent as they focused on producing chemicals, plastics, glass and steel at reasonable prices.

In addition, textiles, footwear, bags, wallets, suitcases, umbrellas and wood furniture also showed strong growth along with seafood, vegetables, coffee, pepper and rubber.

Quang Binh attracts more than VND2 trillion from investors

The central province of Quang Binh has received 17 new investment projects worth over VND2 trillion.

Most remarkable is Kim Tin Ltd. Company’s Medium-density fibreboard (MDF) wood processing project (VND1.2 trillion).

Once in operation, it will generate jobs for hundreds of local labourers to use timber from local forests.

The new projects cover 80-90 percent of total land use in the Tay Bac Dong Hoi and Bac Dong Hoi industrial zones.

In addition, the Hon La and the Cha Lo Border Gate industrial zones have a total of 40 projects valued at VND41 trillion by far.

The largest one is the VND36 trillion Quang Trach Thermal Power Plant invested by the National Oil and Gas Group (PVN) with a capacity of 2,400MW.

Two Vietnamese CEO among top 50 businesswomen in Asia

Mai Kieu Lien, Chairman and CEO of Vietnam Dairy Products Joint Stock Company (Vinamilk) and Pham Thi Viet Nga, Chairman of DHG Pharmaceutical Joint Stock Co, Ltd have been placed 27th and 31st in the Forbes Asia’s 2013 list of 50 Businesswomen In The Mix.

Forbes commented that Vinamilk is one of the most profitable brands in Vietnam and a blue chip on the local stock exchange. Vinamilk has achieved consistent growth in revenue and profit since its stock market listing in 2006. Despite a difficult year for most companies in Vietnam, Vinamilk booked a 23 percent rise in 2012 sales to US$1.3 billion while net profit jumped nearly 40 percent to US$$280 million.

Ms Lien has propelled the dairy company into international markets with a wide range of products to 23 countries in the world.  Last year, Forbes listed Ms Lien among Asia’s 50 most successful businesswomen.

The magazine also praised Ms Nga for her outstanding achievements since she joined DHG in 1998 to transform what was a merger of several small, ailing state-owned enterprises on the verge of bankruptcy into the country’s biggest publicly traded drug company.

DHG currently produces and markets more than 300 pharmaceutical products and is also involved in the manufacture of containers and packaging. Its net profit jumped 18 percent to US$24 million, on US$140 million in revenue, last year.

US group hosts limited partners conference in Hanoi

Texas Pacific Group (TPG), one of the largest private equity firms in the US, will organise its limited partners (LB) conference in Hanoi from March 19-21.

This is the first time the group has decided to hold an LP conference outside the US.

Vietnams is a potential Asian market of 90 million consumers. Its strong domestic consumption growth is making the country an attractive destination for private equity players.

The event will be an opportunity for the LPs to explore the business opportunity and experience firsthand Vietnam’s dynamic country.

TPG has invested US$36.5 million in technology corporation FPT in 2006 and subsequently invested US$35 million in Masan Group Cooperation (MSN) in 2009. Both FPT and MSN are listed in the Ho Chi Minh City Stock Exchange.

Founded in 1992, TPG now belongs to an elite group of largest private equity firms in the US with a total asset of approximately US$54.5 billion.

Illegal cultivation of hybrid rice discovered in Tien Giang Province

Cao Van Hoa, deputy director of the Department of Agriculture and Rural Development in Tien Giang Province in the Mekong Delta, announced on March 18 that local authorities have recently discovered a variety of illegal hybrid rice being cultivated on a 0.2 hectare field in Hamlet 5 of Binh Xuan Commune in Go Cong Town.

It was reported that Nguyen Duc Man, director general of Pioneer Hi-Bred Vietnam Co. Ltd, leased the land from farmer Nguyen Van Viet to grow the F1 type of more than 354 rice varieties which originated either in Indonesia or the Philippines and was given phytosanitary certification by the Department of Plant Protection in May 2012.

At the moment, the rice field is around 100 days old with four varieties having been reaped and so far not shown any harm to neighboring fields.

The People’s Committee of Binh Xuan Commune, however, is assigned to closely watch the case to avoid any possible danger it may cause in the future.

Since Man is growing hybrid rice on a non-appointed area and without a legal license from the government, the Tien Giang Department of Agriculture and Rural Development is now checking his documents and will hold a meeting with local authorities to resolve this issue.

Tien Giang is currently not on the list of areas allowed to grow new hybrid rice as per the Department of Plant Protection.

In related news, residents of Tan Loi Hamlet in Tan Tien Commune in Tri Ton District of An Giang Province, discovered suspicious looking strangers trying to lease 12 hectares of land to grow hybrid rice. Had they not been found out and reported to local authorities, these strangers would have organized an informal discussion to introduce growing techniques for this hybrid variety to farmers.

Conversion to social housing to reduce inventory

According to a Resolution passed by the Prime Minister, one of the measures to deal with housing inventory is to permit investors to transfer commercial projects into social housing, a plan aimed to reduce unsold inventory considerably.

The Resolution allows investors to transfer apartments of less than 70 square meters of price below VND15 million per square meter into social housing.

In December last year, the Ho Chi Minh City People’s Committee had reported to the Prime Minister that the City had 14,490 apartments as unsold inventory.

Investors of 28 projects, which are complete but unsold, have said that HCMC has 1,356 apartments still in stock. Of these, only six percent are less than 60 square meters, 56 percent are 60-90 square meters and 39 percent are more than 90 square meters.

The City People’s Committee said that most unsold houses have large areas which are unsuitable for many residents.

Reason for the high number of large-area apartments is due to construction standards for high-rise buildings which the Ministry of Construction issued in 2004.

Apartments are divided into small, medium and large areas. The ratio among these three types is 1:2:1, meaning the small scale ones account for only one third.

The area of small scale apartments is said to be 50-70 square meters, medium size 75-90 square meters and large scale of 95-120 square meters.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, said that most unsold houses are of medium and large scale. If the Government just permits changing apartments of less than 70 square meters into social projects, it will still not help deal with high inventory.

In a draft circular issued by the State Bank of Vietnam, low income groups, including civil servants and those working in the military and police forces, can avail loans for a ten year period at only six percent interest rate for the first three years–a scheme that is valid till April 15, 2016.

According to the above circular, a 60 square meter apartment will cost VND720 million if the price is VND12 million per square meter.

Customers will pay 30 percent in advance and the remaining amount will be VND500 million. If payment is made in three years, they will have to pay more than VND15 million, including six percent interest rate a month. This money is not less for low income groups.

The circular also said that after the first three years, customers will continue to enjoy another preferential interest rate offered by the State Bank. However what this rate will be is still unknown.

The HCMC Real Estate Association says that the State Bank does not specify the interest rate after April 15, 2016–causing doubt in customers.

High rates, collateral block bank lending

The central bank is battling with a paradox: banks cannot lend the billions of dong they have in cash while businesses are unable to borrow due to high interest rates and difficult collateral conditions.

According to the State Bank of Viet Nam (SBV)’s HCM City branch, the money that banks in the city mobilised in the first two months of the year increased by 2.49 per cent while their lending was only up by 0.22 per cent.

Consequently, many banks are sitting on piles of cash.

Truong Van Phuoc, general director of the Export-Import Joint Stock Commercial Bank (Eximbank), said many businesses had not been able to expand production or sell their products, so they did not want to borrow from banks now.

Imports in the last two months were modest – at just US$17.3 billion – reflecting the fact that companies’ demand for raw materials and equipment as well as consumer products was very low, he said.

To step up lending, banks have cut interest rates on short-term loans to be injected into certain priority sectors to 9-12 per cent. Rates on loans to other sectors have been slashed to 11-15 per cent.

The Asia Commercial Bank has, for instance, cut average lending rates to 11.5 per cent.

The Ban Viet Joint Stock Commercial Bank has announced mortgages at 10 per cent for the first three months of the contract.

Yet banks find it difficult to attract new borrowers.

A top executive at a commercial bank, who declined to be named, said many banks are ready to lend to companies, but the latter want to get long-term loans at low interest rates, but this was not possible.

Businesses complain about the high interest rates and tough lending conditions.

Nguyen Tuyet Mai, deputy director of Truong Thinh Company based in Vinh Loc Industrial Park, said: “Our company specialises in production of handicraft products for exports. Recently, our business has met many difficulties caused by importing countries due to the global economic downturn, so we lack funds to maintain production.

“We now need money to buy materials and equipment to maintain production and improve quality.

“However, the interest rate at some banks are still rather high, about 14 per cent.

“In addition, most banks require assets for collateral while small- and medium-sized companies like us only have factories and equipment, which are not acceptable as mortgage.”

Nguyen Dang Hien, general director of Quang Minh Production and Trading Company in Binh Chanh District, said the SBV has made efforts to reduce lending rates, but they still remain too high to promote investment in production.

Expanding production often requires large amounts of money, so loans at high interest rates would deter companies, particularly in the current difficult economic situation, he added.

The SBV’s branch in HCM City has co-operated with the HCM City Export Processing Zone Authority to hold several meetings between banks and companies.

Speaking at one such event, Nguyen Hoang Minh, deputy director of the SBV’s city branch, said credit growth at local export processing zones and industrial parks remained very low at around 5 per cent.

This year the banking sector would implement policies to give firms easier access to bank loans, he said, adjusting interest rates and restructuring repayment periods to reduce enterprises’costs as well as bad debts.

Banks would also give priority to the five sectors the Government and the city People’s Committee have in mind, he said, and create relationships with businesses in rural districts, he said.

Minh added that the SBV would allow banks to lend to enterprises that can use their cash flows as collateral.

VITAS boost cooperation with Korean partner

Viet Nam Textile and Apparel Association (Vitas) last week signed a strategy cooperation deal with Korea’s Daegu Gyeongbuk Textile Industries Association (DGTIA) that will help the two sides boost development cooperation in textile industry and exploit the ASEAN-Korea Free Trade Area (AKFTA) more effectively.

Under the deal, Vitas and DGTIA will develop cooperation projects in the textile industry and support programs for textile companies from both countries to penetrate into each other’s markets, as well as exchange information on trade fairs, exhibitions and related events.

Quang Binh attracts more than $95 million

The central coastal province of Quang Binh received 17 new investment projects worth over VND2 trillion (US$95.24 million).

Most remarkable is Kim Tin Company’s medium density fibreboard (MDF) wood processing project with investment capital of VND1.2 trillion ($57.1 million).

The new projects cover 80-90 per cent of the Tay Bac Dong Hoi and Bac Dong Hoi industrial zones.

In addition, the Hon La and the Cha Lo Border Gate industrial zones have nearly 40 projects valued at VND41 trillion ($1.9 billion) so far.

The largest one is the VND36 trillion ($1.7 billion) Quang Trach Thermal Power Plant funded by the Viet Nam Oil and Gas Group (PVN) with a capacity of 2,400MW.

HCM City unveils fifth annual IT-Telecom awards

HCM City’s Department of Information and Communications has called for entries for the fifth annual Information Technology-Telecommunications Awards. Companies, organisation, groups, and individuals making innovative information technology products should access for more information about the award. Entries can be submitted from now until May 12. The awards, instituted by the city People’s Committee, will be presented on May 21.

Exports to some Africa nations fall

Viet Nam’s exports to some large African countries plunged in February, the Ministry of Industry and Trade said.

Exports to Senegal plummeted 75 per cent against the same month last year to hit $4.38 million.

Export earnings from Egypt, the Ivory Coast and Ghana plunged 40 per cent to $34 million, 59 per cent to $4.8 million and 13 per cent to $13.2 million respectively.

Rice exports to the Ivory Coast slumped 83 per cent to $1.68 million while to Senegal it slumped 87 per cent to $1.6 million.

The fall in rice exports was partly due to fierce competition from cheaper Indian and Thai rice with which it was difficult to compete because of the distance to Africa increasing transport costs, Nhuan said.

Conversely, export turnover to four other Africa markets showed stable growth across a range of goods. South Africa continued to be Viet Nam’s largest trade partner in the bloc, importing $97 million worth of goods, including mobile phones and components, footwear, chemical products and garments – up 24 per cent year-on-year.

It was followed by Algeria $35.2 million (up 5 per cent), Angola $16.5 million (up 42 per cent) and Nigeria $16 million (up 15 per cent). Eight countries accounted for 65 per cent of total export value to the African bloc.

Japan seeks business, investment projects

A business delegation from Kobe, Japan visited the southern province of Ba Ria-Vung Tau yesterday to seek business and investment opportunities.

Members of the Kobe delegation specialise in fishery and seafood processing, automobiles, electronics and telecommunications, auditing and accounting and IT.

During their visit, they sought investment opportunities in seaports, logistics and support industries in the province.

Ho Van Nien, deputy chairman of Ba Ria-Vung Tau People’s Committee, said the province had been focusing on the development of ports and logistics services and the support industry.

Nien said that Japanese language courses have been offered in senior high schools in the province since the 2012-13 school year.

The province has also signed a business cooperation agreement with Kawasaki Province of Japan. A Kawasaki-style industrial park is now under construction to attract Japanese investors.

The Japanese delegation was especially interested in infrastructure and human resource development in the province’s districts of Tan Thanh and Chau Doc, where there are Japanese investment projects.

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

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