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BUSINESS IN BRIEF 25-1Foreign investors form strategic partnerships

Foreign investors carried out several large value transactions last year through negotiations, aiming to become strategic partners of Vietnamese joint stock companies.

In December, Thailand Siam Cement Group purchased 85 per cent of brick producer Prime Group with a value of around US$250 million. More recently, investment fund Kohlberg Kravis Roberts spent $200 million to increase its ownership in Masan Group’s (MSN) subsidiary Masan Consumer. Although the transaction was announced in January, it was prepared months earlier.

“Large purchases outside of the stock exchange are increasing,” HCM City Securities Co deputy director Trinh Hoai Giang told Dau tu chung khoan.

The domestic and international markets were ripe for carrying out the transactions, he said.

“Foreign investors become strategic partners of Vietnamese enterprises to control their financial situation, import and export activities and other important areas rather than directly operating the companies,” he added.

Meanwhile, they were hunting for businesses with industry advantages, long-term growth potential and market expansion opportunities.

Promising sectors included the food industry, natural rubber and pharmaceuticals.

“Foreign companies who have invested or are looking for investment opportunities in Viet Nam are quite diverse,” Giang said. “However, the majority come from Asia, particularly Japan, South Korea, Singapore and Thailand.”

Foreign investors have seen many opportunities in the Vietnamese market since the Government took drastic steps to bring the economy towards long-term stability.

In addition, the stock market was being reformed, which would open up more chances for foreign players.

“In particular, the most important factor to foreign investors is that Vietnamese shares are cheap,” Giang said.

In the past year, the average ratio of price to earnings (PE) of stock markets in the region was more than 15, while it was only 8-9 in Viet Nam.

Some domestic enterprises had positive business performance and as much development potential as other firms in the region, while share prices were quite attractive.

State lender stimulus mooted

The Bank for Investment and Development of Viet Nam (BIDV) has called on the Government to establish a national mortgage company to help reinvigorate the nation’s stalled real estate market.

Under the proposal, the new company would be formed with charter capital of VND5 trillion (US$238.1 million) sourced from the Government, official development assistance, deposits and other sources, said BIDV chairman Tran Bac Ha

The company could also operate in refinancing and buying low-income housing loans from commercial banks, helping ease the bad debt and liquidity crises facing the banking system, Ha said.

Through its operations, the company could raise another VND50 trillion ($2.4 billion) over the next five years to finance the low-income housing market, equal to 250,000 appartments or 7.5 million square metres of low-income housing, he said.

Low-income borrowers could benefit from loans with extended terms of 15-30 years and interest rates below market rates.

BIDV would be willing to provide support during the set-up and initial operation of the company to ensure its effectiveness, Ha said.

BIDV already planned to provide VND30 trillion ($1.4 billion) in loans at preferential interest rates to help develop low-income housing during 2013-15, he added.

Samsung Viet Nam exports hit $12.7b

Samsung Electronics Viet Nam (SEV) has announced it gained an export turnover of US$12.72 billion last year.

Mobile phone export revenue reached $12.6 billion, while the rest came from vacuum cleaner exports.

By the end of 2012, total capital disbursment obtained amoutned to $950 million, out of $1.5 billion registered capital from two cell phone projects which were merged into Samsung Complex.

Vinacomin to continue coal dust exports

The Ministry of Industry and Trade (MoIT) has allowed the National Coal and Mineral Industries Group (Vinacomin) to continue exporting coal type 5 (medium type) dust in two first quarters of the year.

Earlier, MoIT had released a circular to stipulate that from 2013, dust coal type 5 exports will be cancelled to use domestically only.

However, according to the coal supply project for fueling thermo-power plants to 2020, toward 2030, after ensuring the supply for domestic production, there will be 1-3 million tonnes remaining in the 2011-2015 period. Vinacomin also reported that by the end of last year, the amount of coal type 5 dust in stock stood at 1.4 million tonnes. In 2012, Vinacomin exported 14.4 million tonnes of coal, including coal type 5 dust.

Experts discuss ways to boost services sector

The services sector’s close link to industry means that it will prosper only when production is expanded, experts said in a recent conference on how to develop the services industry.

Le Xuan Nghia, former deputy head of the National Financial Supervisory Committee, said the services sector made the largest contribution to the country’s GDP growth rate of 5.03 per cent.

But while the sector’s contributions to the economy were increasing, the economic crisis had left a deep impact. And while transport, restaurant and hotel services were still growing, the finance and banking sector plunged.

Lending interest rates should be cut to approximately 9 per cent this year in order to help companies, Nghia said.

For a long time, Vietnamese firms had not paid much attention to promoting brand names or investing in marketing and advertising.

Now, he suggested, it was time for them to develop marketing strategies to take back market share from foreign companies.

Nguyen Duc Kien, deputy chairman of the National Assembly’s Economics Committee, said the main problem facing enterprises was large stockpiles.

“Therefore, the first solution was not to decrease interest rates; rather, how to help enterprises deal with the stockpiles, which were mainly a problem for seafood, textile and garment, steel and iron production,” he stressed.

Truong Dinh Tuyen, former Minister of Trade and member of the National Monetary Policy Advisory Council, said that companies must not hesitate to lower prices.

“Without lowering prices, they would not be able to reduce inventories,” he said, meaning that they would also lack the necessary capital to clear debts and continue production.

Nguyen Van My, director of the Lua Viet Tourism Company, recommended the Government offer enterprises practical support instead of issuing regulations that created more difficulties for them.

For instance, the director said, the new regulation raising the visa fee for tourism companies arrived at a time when companies are struggling to survive, even turning to desperate measures like reducing prices and launching promotions.

The regulation would deal a death blow to the sector, My said.

Firms feted for high-quality products

There were 59 new winners and 42 who had won the annual recognition for 17 years in a row as 415 firms received the 2012 Producer of High Quality Vietnamese Goods award at a ceremony held yesterday.

The 415 firms were selected following 16,000 survey questionnaires sent to consumers nationwide by the Business Association of High-Quality Vietnamese Goods.

The winning firms were makers of sauces, spices, non-alcoholic beverages, drugs, dry foods, instant foods, frozen foods, plastic products and others.

The association co-operated with localities and relevant agencies to check the firms’ compliance with product quality management, their discharge of social responsibilities and other factors.

Yesterday’s ceremony was orgainsed by the association in collaboration with the Business Studies and Assistance Centre in HCM City and the Sai Gon Tiep Thi newspaper.

In a related development, a forum last week heard that increasing numbers of consumers were aware of the need to buy more locally made goods, three years after the Government launched its “Vietnamese use Vietnamese goods” campaign.

The forum focused on ways to raise consumers’ trust in Vietnamese goods and services.

A report tabled at the forum said cited survey results as showing around 59 per cent of consumers are satisfied with the Vietnamese products purchased while 38 per cent of respondents said they would advise their relatives to use Vietnamese goods.

The campaign has had a positive impact in increasing awareness and changing perceptions on using Vietnamese goods, the report said.

However, consumers’ preference for imported goods is based on verifiable origins and accurate information, high quality, effective marketing, and good customer care, said Dinh Thi My Loan, chairwoman of the Viet Nam Retailers Association.

She said a national strategy that effectively uses the resources and skills of management agencies, business communities and mass media is needed to raise consumers’ trust in Vietnamese goods and services.

As a bridge between producers and consumers, domestic retailers should be more active in implementing the “Vietnamese use Vietnamese goods” campaign, she added.

She said retailers should understand trends and shopping habits of consumers to introduce and promote Vietnamese goods in a proper way.

They must attach special importance to ensure reasonable prices, friendly service, and send consumer feedback to producers and distributors, she said.

Other forum participants said producers should be socially responsible and also transparent in providing information about their products and prices.

Business representatives attending the forum wanted the Government to strictly punish production and trading in fake goods to protect the legal interests of enterprises and consumers.

The Government can also do more to promote consumption of Vietnamese products, they said.

North looks to south to supply flowers for Tet

Traders in northern Viet Nam have bought large quantities of flowers from farmers in the south for the upcoming Tet (Lunar New Year) holiday, even though prices have increased compared to last year.

The Cuu Long (Mekong) Delta’s two most famous flower villages, Sa Dec in Dong Thap Province and Cai Mon in Ben Tre Province, have already begun transporting flowers to the north.

Flower farmers said the price of most flowers, especially hybrid chrysanthemums, had increased. The latter are now selling for VND95,000-100,000 (US$4.5-4.8) per two pots.

Lu Minh Thien, deputy chairman of the Cai Mon Flower and Ornamental Tree Co-operative in Ben Tre Province, said that farmers had not planted as many chrysanthemums because of unfavourable weather.

Traders in the north have also purchased orchids from southern farmers for Tet. Prices have increased by 20-30 per cent compared to last Tet, according to orchid-garden owners.

About 40 per cent of yellow-apricot trees, a symbol of Tet in the south, began blooming more than one month ago, leading to a decline in supply of yellow-apricot trees.

Most farmers have also planted fewer flowers for this year’s Tet compared to last year because they were unsure about finding outlets for their products. Last year, many farmers were unable to sell all of their flowers.

Farmers in Sa Dec Flower village in Sa Dec town planted about 3 million pots of various kinds of flowers for Tet last year, but have cut that amount considerably this year.

Nguyen Van Giau, a flower artisan from the village said his family had planted one-third fewer flowers compared to last year during the same period.

Auto sector in dire straits

Vietnam’s fledgling, foreign-backed auto industry is fretting about the state of the domestic market and seeking government help to endure shaky financial conditions en route to 2018, a critical year for the industry in Asia.

Toyota Motor Vietnam’s general director Yoshihisa Maruta last week told VIR that Vietnam needed to convey support for the manufacturers if the country wanted to develop the car industry to succeed.

“The most important timing is 2018, when the auto import tax among ASEAN countries comes to 0 per cent. In order to develop the car industry, Vietnam needs to sustain the manufacturers,” Maruta said.

With the domestic market mired in the economic slump and sales slow, assemblers worry about their investments. Last year, Maruta’s predecessor at of Toyota Motor Vietnam forecasted only three foreign invested manufacturers could stand in Vietnam till 2018.

Maruta said the government’s supports in terms of tax, land rent, human resource training and technology transfer would help attract foreign investment.

Meanwhile, GM Vietnam and Honda Vietnam remain silent on their investment in the near future.
Business Monitor International (BMI), an independent provider of analysis, last week also warned that a lot needs to be done in terms of policy changes to make Vietnam an attractive market for autos-related investment in the Asia-Pacific region.

“Although the government has tried to increase domestic production in the industry, in particular by raising import tariffs on vehicles, there has been little in the way of rewards for companies which have chosen to invest,” stated BMI.

The agency also reported that in the ‘rewards’ section of BMI’s industry risk/reward ratings for the autos sector in Asia, Vietnam scored far below its neighbours in terms of the industry rewards on offer.

As such, it had a pessimistic outlook for the production segment. BMI cited a March 2012 report by Vietnam’s Chamber of Commerce and Industry highlighting structural weaknesses in the country’s auto sector and the ongoing threats to the demand side of the industry.

Currently, auto assemblers said the demand for automobiles was still very high for long term.
Vietnam has the population of about 90 million people with increasing income, while the number of cars per capita still remains at low rate of 18 units per 1,000 people.

Two way street in auto tax news

No dramatic changes are expected to automobile industry tax policies in the upcoming period.

In its recent report, the Ministry of Finance (MoF) said auto industry tax policies would be cautiously devised and still put manufacturers under high pressure to lower selling prices while still ensuring consumer interests.

The MoF has recently issued circulars promulgating special preferential tariffs with diverse tax rates in three years from 2012 to 2014 for the auto industry in light of Vietnam’s trade agreements with the international community.

Under the MoF’s stipulations, from 2015 onwards, Vietnam will need to seek comments from relevant state agencies and business associations and submit to the prime minister for approval before making public auto industry import tariffs.

As regards to tax reduction roadmap following Vietnam’s World Trade Organization (WTO) commitments, the MoF said it had strictly abided by these tax reduction commitments and made public announcements annually.

The MoF said it would be firm on its stance that passenger cars subject to usage restrictions, and those with up to nine seats will still incur high tax rates.

Accordingly, the current import tax rate of 74 per cent on brand-new cars will be eased gradually to 47 per cent for under-2,500 cylinder capacity (cc) vehicles and 52 per cent for 2,500cc plus by 2019.

The MoF unveiled the import taxes on component kits would be maintained at current levels even after brand-new cars import duties fell to such levels.

The current import duties on component kits and spare parts for passenger cars of up to nine seats are on the range of 18-20 per cent against 15 per cent rate five years ago when brand-new cars import duty fetched 100 per cent.

The main reason, according to the MoF, is Vietnam-based manufacturers have mainly imported completely knocked down (CKD) components and spare parts with low breakdown levels, resulted in low localisation rate.

Ceiling levels will be imposed on import tax rates for used cars, according to the MoF.

The MoF argued lower import duties on component kits would fail to encourage firms to invest in hiking current low localisation rate as well as boosting supporting industries development as committed by the government.

Accordingly, component kits and spare parts for vehicles of up to nine seats will basically be retained at ceiling regulated levels as per WTO commitments.

The components specified in the list of supporting industries approved by the prime minister in Decision 1483/QD-TTg dated August 26, 2011 will have import duties upwardly revised to ceiling levels under WTO commitments.

Decision 1483 specifies the list of supporting industry products to be prioritised for future investment.

According to the MoF, the auto industry currently reports very low domestic production value with up to nine-seat cars featuring rather low localisation rate of 15 per cent and other cars fetching localisation rate from 30-40 per cent against the set goal of 50-60 per cent.

Japan continues large investment into Vietnam

The results of an investigation into Japanese business activity in Asia and Oceania, with a focus on their operations in Vietnam, were released in a report on January 23.

The Development Strategy Institute (DSI) and the Ministry of Planning and Investment (MoPI) have co-ordinated with the Japan External Trade Organisation (JETRO) to unveil the report.

According to JETRO, Japanese investment in Vietnam has hit a record high over the past two years. Last year, for instance, Japan’s investment contributed to a quarter of all new projects in the country, equivalent to around 50 percent of its total capital invested.  JETRO said that the real challenge is how to maintain and encourage Japanese investment in Vietnam.

Despite the difficulty in increasing Japan’s investment amid the global economic downturn, it is likely that there will be a greater number of Japanese businesses investing in Vietnam this year, according to JETRO.

The report has also identified several difficulties faced by Japanese businesses operating in Vietnam, such as the need to upskill the local workforce and the limited availability of necessary materials, and the low localization rate of materials and components.

Vietnam, India boost trade exchange

An exhibition was held in HCM City on January 23 to showcase India’s chemical products and promote trade exchange between the two nations.

Chairman of the Chemicals, Pharmaceuticals and Cosmetics Export Promotion Council (CHEMEXCIL), Satish W.Wasgh, said that the two-day event aims to boost India’s chemical exports through the consolidation of trade relations, promotion of partnerships and the expansion of the market in Vietnam.

Nguyen The Hung, Deputy Director of the Vietnam Chamber of Commerce and Industry (VCCI) branch in HCM City, said that trade turnover between Vietnam and India reached around US$4 billion last year, ranking India among Vietnam’s top ten trade partners.

India is currently has substantial investments in Vietnamese oil and gas, steel, mineral exploration, agriculture and food processing industries, with a total registered capital of around US$250 million.

It is now the second largest provider of chemical products to Vietnam, with imports reaching US$213.2 million in the first 11 months of 2012. It is expected that the growth will continue, as ten categories of chemical products have been pegged to create more favourable trading conditions between the two countries as part of Vietnam’s 2020 chemical industry development plan.

ANZ offers market-leading mortgage interest rate

The Australia and New Zealand Banking Group Limited (ANZ) will offer a 2-year fixed mortgage rate of 12.5 percent per annum for any new drawdown from now until February 23, 2013.

Head of Retail Banking ANZ Vietnam Duong Duc Hung said, “ANZ always puts customers first. ANZ is the first foreign bank in the market to offer such a competitive mortgage interest rate which is fixed for as long as two years.”

“This is a unique offer amidst the market interest rate fluctuation over the last few years. ANZ customers will not only benefit from the low interest rate but also be able to plan their financials for the next 2 years,” he added.

The offer applies to all existing and new customers for any new drawdown over VND01 billion during the promotion period.

ANZ is offering the interest rates based on a reduction in loan balances for home loans, home investment loans, home construction loans and home equity loans.

With loan tenures of up to 20 years, customers can borrow up to 70 percent of the property value after a simple application process. Flexible interest rate periods of one, three, six or 24 months and options to redraw are available to help customers manage interest rate risks.

ANZ was among the first international banks to operate in Vietnam, establishing its first office in 1993. The bank now has 10 branches and transaction points in Vietnam, offering a full range of services including Retail Banking, Commercial Banking for small, medium and emerging businesses, as well as Institutional Banking.

In 2010, ANZ was voted “Excellence in Best Mortgage Business Award” in Asia by The Asian Banker magazine.

Exports up 14.4 percent in January

Vietnam’s total export earnings have reached US$4.94 billion since the beginning of January, a year-on-year increase of 14.4 percent, according to the General Department of Vietnam Customs.

Among the ten items recording the highest turnover, mobile handsets and spare parts took the lead, fetching US$737 million, followed by computers and components (US$398 million), garments (US$681 million) and wood products (US$ 209 million).

The foreign direct investment (FDI) sector posted an export value of US$2.49 billion, up 19.5 percent over the first half of January 2012, making up nearly 60 percent of total export earnings.

Like the previous months, Vietnam continued achieving a trade surplus of US$139 million in the first half of January 2013.

Experts discuss ways to boost services sector

The services sector can only developed when the scope of production is expanding, said experts at a recent conference.

Le Xuan Nghia, former deputy head of the National Financial Supervisory Committee, spoke highly of the sector’s considerable contributions to the economy’s GDP growth rate of 5.03 percent.

Despite the fact that transport, restaurant and hotel services continue growing, the finance and banking sector remains in a bind, he said.

To help domestic businesses, Nghia said, lending interest rates should be cut to approximately 9 percent this year.

Nghia argued that for a long time, they have not paid due attention to promoting brand names or investing in sales and marketing. He suggested it is now time for them to develop marketing strategies to secure a foothold in foreign countries.

Nguyen Duc Kien, deputy chairman of the National Assembly’s Economics Committee, urged them to deal with their large stockpiles in the first place to keep the seafood, textile, steel and iron industries purring along.

Truong Dinh Tuyen, former Minister of Trade and member of the National Monetary Policy Advisory Council insisted that they should not hesitate to lower product prices. If not, they will lack necessary capital to clear outstanding debts and maintain production activities.

Nguyen Van My, director of Lua Viet Tourism Company, recommended the Government provide businesses practical support instead of issuing new regulations that would put them in a difficult position.

Vietnam-EU FTA negotiations begin in Brussels

The second round of free trade agreement (FTA) negotiations between Vietnam and EU began in Brussels, Belgium, on January 22.

Four-day discussions are focused on the exchange of goods and services, investment, intellectual property, labour, and the environment, among others.

After the success of the first round, the second round is expected to speed up bilateral negotiations as agreed upon by top leaders of the two sides.

The Vietnamese delegation is led by Deputy Minister of Industry and Trade Tran Quoc Khanh, and the EU delegation is headed by Mauro Petriccone, Director for Asia and Latin America of the Directorate General for Trade of the European Commission.

In October 2010 leaders of Vietnam and the EU agreed to conduct bilateral negotiations of an FTA after completing technical matters.

In June 2012 Vietnamese Minister of Industry and Trade Vu Huy Hoang and EU Trade Commissioner Karel De Gutch announced the start of the negotiations, and the first round took place in Hanoi from October 8-10, 2012.

Both sides plan to conduct four rounds of negotiations in 2013.

The EU is Vietnam’s largest export market, consuming US$20.3 billion worth of Vietnamese goods in 2012.

Once the FTA is signed, it will help promote trade and investment cooperation between Vietnam and the EU, bringing practical benefits to both business communities and peoples.

HCM City needs Japanese support for key projects

Secretary of the Ho Chi Minh City Party Committee Le Thanh Hai has expressed his hope that Japan will continue assisting key projects in the city.

While receiving Japanese Ambassador to Vietnam Yasuyaki Tanizaki in HCM City on January 22, Hai highly valued the efficiency of the Japanese-funded projects in the city over the years, which, according to him, has made a positive impact on its socio-economic development.

Hai hoped that HCM City will continue receiving Japan’s assistance to Cho Ray 2 hospital and Long Thanh international airport projects.

Tanizaki spoke highly of the city’s efforts to ease difficulties for the East-West Highway and urban railway No.1 linking Ben Thanh and Suoi Tien projects.

He also pledged to work closely with the city on projects in health care, education and sea port.

Banks urged to restore market confidence

State Bank of Vietnam (SBV) Governor Nguyen Van Binh believes the banking sector will implement practical measures to limit inflation rates to between 6–7 percent and maintain a credit growth rate of 12–13 percent.

Addressing a conference in Ho Chi Minh City on January 22, Governor Binh highlighted the banking sector’s operational efficiency during 2012 and expressed optimism about the national economy’s 2013 prospects despite lingering challenges.

He asked HCM City-based banks to focus on regaining market confidence by settling bad debts, reducing inventory levels, and pushing on with bank restructuring processes.

Nguyen Thi Hong, Vice Chairwoman of the HCM City People’s Committee, praised local banks’ consistent efforts to endow the economy with greater credit access and help businesses respond to difficulties exacerbated by the current economic context.

She called on banks to continue offering struggling economic organisations incentivized loans and unite with municipal authorities as they work to control inflation, stabilise the macroeconomy, and ensure social welfare.

Big investors place trust in Vietnam economy

Major companies are eager to do business in Vietnam with an increasingly longer outlook towards the future.

AIA Group Limited Chief Executive Officer Mark Adward Tucker made the statement at a reception given by Deputy Prime Minister Vu Van Ninh in Hanoi on January 21.

Tucker said many big foreign companies acknowledge the Vietnamese government’s efforts in containing inflation and maintaining reasonable economic growth, boosting their confidence in the national economy.

He noted that AIA has operated profitably since it was licensed in Vietnam in 2009. The group plans to inject an additional US$30 million into this market after having received approval from the Ministry of Planning and Investment.

Deputy PM Ninh congratulated the insurance group on its outstanding performance in 2012 despite local and global economic difficulties.

He said Vietnam is currently restructuring its economy and renovating the growth model to achieve sustainable development.

This year, he said, the government will deal with bad debts burdening enterprises and banks, and mobilise resources for infrastructure construction.

Stabilising the macroeconomy is the primary task of Vietnam, he told his guest.

Vietnam possesses great potential for developing the insurance industry, but will only reward services and products meeting its market’s specific needs, said the Deputy PM.

He recommended that the American Insurance group, with its experience and powerful financial capacity, invest in Vietnam’s worthy undertakings like infrastructure development or involve itself in financial-banking reforms, including insurance and securities companies.

Vietnam-US trade to hit US$50 bln by 2020

Vietnam-US trade turnover is likely to reach US$50 billion in 2020, according to the American Chamber of Commerce in Vietnam (Amcham Vietnam).

Amcham forecasts that bilateral trade would exceed US$27 billion by 2013 with Vietnam’s exports estimated at US$22.5 billion, and would rise to US$33 billion by 2015 with its exports amounting to more than US$27 billion.

It notes that trade relations between the two nations continued to grow in 2012 but at a lower level than the previous years at just US$24.6 billion.

Vietnam’s garment and textile exports to the US market increased by only 8 percent to US$7.8 billion. There is high hope that they will reach US$8.4 billion in 2013, US$9.1 billion in 2014 and US$9.7 billion in 2015.

Vinamilk Chairwoman wins best Asian CEOs title

Mai Kieu Lien, Vinamilk Corporation Chairwoman cum CEO, is among Asian CEOs, who have been granted the 2012 Asian Excellence Recognition Award in Investor Relations by the Corporate Governance Asia Journal.

She is credited for her strong commitments to improving business management skills in investor relations, social responsibility, business ethics, environmental responsibility and financial performance.

Lien is also the first and only Vietnamese CEO who has shared the honour with other leaders from large groups in the region, such as China Telecom, Maybank, DBS Group, Singapore Airlines, HTC, Thaibev, Nissan Group and San Miguel.

This is the second time Lien has been honoured by the journal.  The first time was in in May, 2012.

The award ceremony will take place in Hong Kong (China) on March 27 to celebrate the 10th anniversary of the journal.

In 2012, Vinamilk produced over four billion products and earned more than VND27.3 trillion in revenue, with its exports hitting nearly VND3.75 trillion.

The corporate contributed nearly VND2.9 trillion to the State budget.

Additional EUR 500,000 for SMEs development

Prime Minister Nguyen Tan Dung has agreed to provide EUR 500,000 non refundable aid from the United Nations Industrial Development Organization (UNIDO) for a project to develop small and medium-sized enterprises (SMEs).

The Ministry of Planning and Investment (MoPI) was assigned to coordinate with related agencies to extend the operating time for the project to December 31.

The project, implemented by the MoPI and the UNIDO since 2009 under the sponsorship of Italy with a total capitalization of EUR3 million, aims to help SMEs improve their competitive capacity, got involved in the global value chains and make full use of their advantages in the World Trade Organisation (WTO).

The project is initially focused on three sectors, including textile, footwear and wood processing to promote international business partnership.

Vietnam Airlines increases night flights for Tet holiday

The national flag carrier, Vietnam Airlines, will operate night flights during the upcoming Lunar New Year ( Tet) holiday to reduce the overload at airports.

There is an increasing demand for travelling by air before and after the Tet holiday, which falls on February 10 this year.

The airliner has even arranged an around-the-clock schedule for a number of overloaded flights from February 6-8 and from February 15-17.

The carrier plans to conduct 400 flights on February 8, an increase of 38 percent compared to its normal schedule and up 5 percent from the same period last year.

It will increase the number of flights to 430 on February 16, up 43 percent and 7 percent compared to its normal schedule and the same period last year, respectively.

So far more than 308,000 passengers have booked Vietnam Airlines flights  in the peak season, and there still have 125,000 more blank seats.

Vietnam Airlines has also decided to transport peach, apricot, and kumquat trees on domestic flights from January 21 to February 19, using Boeing 777s, Airbus A321s and A320s.

First Japanese resort inaugurated in Danang

Japan’s P&I Enterprise Company has opened its US$12 million Pulchra Resort on Truong Sa Street in the central city of Danang.

The wholly-foreign invested project, the first of its kind in Danang, was built on an area of 10ha, following the Champa architectural design.

The first phase of the project has 31 villas of various types and a series of luxury sailboats, swimming pools and a professional tennis court.

P&I president Shoji Nishikawa says the resort primarily targets Japanese visitors. However, in the first phase it offers diverse services to cater to the tastes of local and foreign visitors from Europe and East Asia.

Shoji Nishikawa says he hopes that direct flights between Japan and Danang will open soon to attract Japanese holiday-makers to central Vietnam which is home to several UNESCO-recognised world cultural heritage sites.

In the second phase, the resort will have an additional 20 high-class villas, a series of Japanese restaurants and other high-quality services.

Banks expect 2013 to be a difficult year

At a conference in Ho Chi Minh City on January 21, Nguyen Van Binh, Governor of State Bank of Vietnam, reflected that in case the economic growth in 2013 is 5.5 to 5.7 percent and inflation rate lower than 6.8 percent, the target of credit growth set for 2013 will be 12 to 13 percent.

According to Governor Nguyen Van Binh, the Central Bank monetary policies in 2013 were very cautious and flexible, focusing on curbing inflation and stabilizing macro-economic development.

The Governor said this year the Central Bank could provide capital for credit institutions at more reasonable interest rates to boost lending in priority sectors.

Binh explained that reducing the lending interest rate below 10 percent per year would encourage businesses to take out loans to expand their production and business.

The Governor predicted that the lending interest rate might go down rapidly in time to come, but also warned about the return of inflation in Vietnam due to loose monetary policies early this year, saying the Central Bank will remain cautious.

The Central Bank confirms that there will be no ceiling interest rates applied on all borrowers. Rather, interest rates will apply to specific sectors. For instance, sectors benefiting from priority policies will enjoy a 12 percent lending interest rate per year.

At the same time, to handle difficulties in the real estate market and bad debt problems, the Central Bank is expected to lend VND20-40 trillion ($80-190 million) to individual home buyers this year to stimulate housing demand.

To Duy Lam, director of the State Bank branch in HCMC, said business in 2012 dropped considerably.

Revenue of all credit institutions in HCMC in 2012 totaled only VND667 billion, down sharply from 2011, only 4.4 percent as compared with 2011.

Yet Lam also warned that given the current climate of mounting bad debts and inventories and low purchasing power, banks needed to be careful when giving out loans.

In 2013, capital was likely to focus on key industries such as exports, manufacturing and trading, he said.

Meanwhile, commercial banks are trying to increase credit growth this year as the State Bank has given them a target of 12 percent.

Tran Anh Tuan, director general of Nam A Bank, said his bank was not worried about reaching this target.

According to Tuan, this was the first year the Central Bank did not set an individual target for each bank’s credit growth. Rather, the bank has lifted the lending rate limit for non-manufacturing sectors.

According to several economists, people believe this will be a chance for banks to boost their credit growth in 2013.

Banks with good liquidity and abundant capital reserves, as well as strategies to provide individual home loan programs, would be at a particular advantage.

The director general of Eximbank said his bank would set aside VND5 trillion for an individual home loan mortgage program with a preferential interest rate of 12 percent per year.

“The interest rate would remain the same for the first two years,” he said, adding the bank would accelerate disbursement under the program this year.

HCMC vice chairwoman Nguyen Thi Hong said the fact that the Central Bank had nailed down explicit credit policies to provide lending to non-manufacturing sectors, especially the real estate sector, offering a good opportunity for banks to boost their lending.

Meanwhile, Dr Tran Hoang Ngan, member of the National Financial and Monetary Policy Advisory Council, said the housing market would warm up after the Central Bank nailed down explicit policies to support this field.

Ngan, however, suggested lending rates to be set at 5-6 percent to support individual home buyers and thaw the frozen property market.

HCM City to prioritize housing for low income people

Le Hoang Quan, chairman of the People’s Committee of Ho Chi Minh City, said on January 22 that the City will focus on housing projects for low income people, improve downgraded apartment blocks and remove houses along canals.

He made this statement at a conference to implement Government Resolution 02 on measures to resolve trade and production difficulties and clear bad debts.

Chairman Quan instructed authorized organs to examine and report to the People’s Committee on the status of real estate projects in the City. He asked them to focus on limiting high-grade projects and developing more social housing projects. They should also help businesses to clear inventory.

Mr. Quan said that the City will support businesses to overcome difficulties and recover but will ostracize those producing bad quality goods and increase prices unreasonably. They are expected to join hands to share difficulties with the community in the current economic crisis.

Nguyen Van Lai, director of the Department of Industry and Trade, said that inventory in HCMC has fallen by six percent in January. The drop was not much but is a good sign.

At the meeting, the Department of Construction proposed some measures to solve difficulties for the real estate market. For instance, the City should speed up disbursement of capital to social housing and dormitory projects.

Relevant organs should regularly supervise and speed up such projects, spend City budget to purchase commercial houses for resettlement purposes and create conditions for businesses to reduce prices to make apartments more affordable.

Vietnamese want stable macro-economy: WB report

In its latest report on Global Economic Prospects 2013, the World Bank has noted that Vietnamese people pay more attention to stability of the macro-economy, unlike other nationalities.

Four years after the onset of the global financial crisis, the worst appears to be over. However, global economy remains fragile, as high-income countries continue to suffer from volatility and slow growth, said the World Bank report.

A World Bank survey on 50,000 Vietnamese people showed that a large number ignored growth percentage but wanted stable prices and sufficient daily expenses.  Up to 44 percent of people in the survey expressed greatest concern on inflation rather than jobs and income.

World Bank’s lead economist, Deepak Mishra, said that earlier the Vietnamese government was focused on speeding up growth, but in recent years there is more concentration on stabilizing macro-economy and implementing fiscal and monetary policies to curb inflation prudently.

This is the right way, he said.

Growth is projected to increase by 6 percent by 2015 in Vietnam, which had slowed recently due to tough measures– but will now benefit from stabilizing commodity prices.

However, economic experts from the World Bank warn of risks in the country’s economy in 2013, including high inflation and low foreign currency reserves compared to other countries in the Southeast Asian region.

Pressure on loose fiscal and monetary policies may lead to re-occurrence of inflation, the WB warned.

Export earnings touch US$4.94 billion

According to a report released on January 22 by the General Department of Vietnam Customs, total export earnings reached US$4.94 billion since the beginning of January, a year-on-year increase of 14.4 percent.

Among the ten items with the highest turnover, mobile handsets and spare parts took the lead, fetching $737 million, followed by computers and components ($398 million), garments ($681 million) and wood products ($209 million).

The Foreign Direct Investment (FDI) sector posted an export earning of $2.49 billion, up 19.5 percent over the first half of January 2012, making up nearly 60 percent of total export earnings.

Like in previous months, Vietnam continued a trade surplus of $139 million in the first half of January 2013.

Meanwhile, the second round of Free Trade Agreement (FTA) negotiations between Vietnam and EU began in Brussels, Belgium, on January 22.

The four-day discussions will be focused on exchange of goods and services, investment, intellectual property, labor, and the environment, among others.

After the success of the first round, the second round is expected to speed up bilateral negotiations as agreed upon by top leaders of the two sides.

The Vietnamese delegation is led by Tran Quoc Khanh, Deputy Minister of Industry and Trade, and the EU delegation is headed by Mauro Petriccone, Director for Asia and Latin America at the Directorate for Trade of the European Commission.

The EU is Vietnam’s largest export market, consuming $20.3 billion worth of Vietnamese goods in 2012.

Once the FTA is signed, it will help promote trade and investment cooperation between Vietnam and the EU, bringing practical benefits to both business communities and people.

Vietnam and the UK alone have agreed to increase all-round cooperation, especially in trade, maritime navigation, finance-banking, and education, aiming to raise bilateral trade to $4 billion this year.

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

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