Home » Business » BUSINESS IN BRIEF 27/9

Seafood businesses, breeders face constant losses

Although the export turnover of seafood from Vietnam has increased marginally year-on-year, breeders have continued to suffer losses each year while several businesses have been operating perfunctorily or even shut down.

According to the General Department of Vietnam Customs, Vietnamese seafood export turnover reached US$3.95 billion in the first eight months of this year, a slight increase from $3.8 billion in the same period last year.

However, several seafood breeders and businesses have suffered bad losses.

Nguyen Khac Phuc, a pangasius breeder in Hong Ngu Town of Dong Thap Province, said that the price continued to fall over the last few days, causing him a loss of VND2,000-4,000 a kilogram.

Nguyen Trang Su, deputy chairman of the People’s Committee in Hong Ngu District, said that pangasius breeders have suffered consecutive losses this year due to drop in price and low consumption.

At present, the price is about VND20,000-22,000 a kilogram for the fish while the cost price is VND24,000 a kilogram.

Shrimp crops too have been stricken by diseases which have killed shrimps in masses.

Breeder Pham Van Quan, from Cau Ngang District in Tra Vinh Province, said that he bred more than 400,000 shrimps but they all died within one month, leaving him to face a loss of VND150 million (US$7,000).

Several households in Ben Tre, Soc Trang and Ca Mau Provinces have also suffered severe losses due to diseases.

As authorities still have to determine cause of these diseases, farmers dare not continue breeding.

The Vietnam Association of Seafood Exporters and Producers said that since the beginning of the year, businesses have met with difficulties such as capital shortage and low demand in markets.

Only 30 percent of processing plants are operating at 70 percent of their capacity over the last several months.

Fifty percent operate at 30-50 percent of their capacity and 20 percent have shut down.

Nguyen Van Dao, director general of Go Dang Company, said that seafood businesses were established far too easily. Several enterprises in fields like real estate, tourism and rice invested in seafood processing plants as they thought it was a profitable field.

This trend to jump on the band wagon led to unhealthy competition, poor management and low quality produce.

Most seafood businesses lack sufficient capital or access to bank loans after tightened credit policies. This, combined with high interest rates has killed many enterprises.

Mr. Dao said that authorized organs should tighten management of seafood breeding, processing and export. They should have clear norms on material infrastructure and product quality, which businesses must meet to be allowed to operate. Export prices must also be monitored.

CPI rises in September

The General Statistics Office in Vietnam has said that the Consumer Price Index (CPI) of the country in September increased by 2.2 percent from August and by 5.13 percent since end of last year.

The highest hike is on medicine and medical services with 17.2 percent, of which medical services jump by 23.87 percent due to the recent hospital fee increase.

Education rose 10.54 percent while food services did not change much with a rise of 0.08 percent only over last month.

Of the five major cities in Vietnam, Hanoi’s CPI saw the highest increase in September with 2.47 percent, followed by Hai Phong with 2.05 percent, and Da Nang with 1.99 percent.

CPI rose 1.21 percent in Ho Chi Minh City and 1.16 percent in Can Tho City.

The average CPI increase in the first nine months of the year was 9.96 percent higher than in the same period last year.

Property market hits rock bottom

The property market has hit rock bottom now, what with inventory of apartments taking up 70 percent of the total capital of construction companies, a complete change from earlier scenario when supply was greater than demand.

Once investors depended on bank loans to buy property, but now the lull in the real estate market has frozen demand and no one knows when the situation will revive again.

Not just high-end luxury apartments but all class of real estate is in excess supply with no takers. Real estate companies are living off their existing assets with no signs of growth.

Almost 70 enterprises have just announced their inventory of apartments in the second quarter of the year valued at VND72,405 billion(US$3.1 billion).

For instance, four leading property companies Van Phat Hung, Quoc Cuong Gia Lai, Sacomreal and Investment and Trading of Real Estate Company have reported their business results in the second quarter of the year at VND1,329 billion ($64 million); VND2,846 billion ($137 million); VND2,700 billion and VND1,813 billion respectively.

According to the Ministry of Construction, Hanoi and Ho Chi Minh City have a total inventory of 60,000 apartments. The number of unsold units in HCMC amounted to 20,000 at the end of 2011 while according to real estate consulting firm Knight Frank, the number of new units sold during the first quarter of 2012 were around 1,800, and there will be an additional 23,500 units built in 53 projects over the next three years.

Moreover, only six big companies hold more than 69 percent of cash flow while other enterprises rely heavily on bank loans. Accordingly, enterprises in the apartments segment are facing pressure from banks to repay loans and to cover their other expenses which will force them to sell off houses at reduced prices and dump unsold stock to prevent further losses.

Competition to offer reduced prices by developers in Hanoi and HCMC is increasing despite July (on lunar calendar) being the month when investors avoid buying and selling of any commodities, as the month is considered unlucky.

Carina Plaza Complex on Vo Van Kiet Boulevard in District 8 in HCMC is where sale price is down from VND15.5 million to VND13.2 million per square meter. Hoang Anh Gia Lai Group (HAGL) has broken the rule by lowering apartment prices, compelling others to follow suit.

After two years of buying high-end Hoang Anh Riverview apartments in the upscale Thao Dien residential area in District 2 in HCMC, Dai Tin A Chau Company and An Binh Land have decided to offered price cuts of a shocking 40 percent. They reduced prices on 120 apartments from VND24 million per square meter in 2009 to VND18.5 million today.

In the competition, a director of a property company said some enterprises lost 70 percent of their capital. People now hope the market will pick up again by the end of 2015.

Experts warn that reduced prices of apartments cannot speed up sales, but instead make customers doubt the quality of the building.

The property market has two problems of bad debts and inventory. To solve these, real estate enterprises expect management agencies to allow them to build apartments in smaller areas of 50-60 square meters, valued at around VND1 billion–a price that more people can afford.

September trade deficit hits $100 million

Vietnam’s trade deficit in September is estimated at $100 million, despite a $51 million export surplus in August, according to the latest statistics.

Vietnam earned about $9.7 billion from exports in September, $600 million lower than in August, while its imports reached $9.8 billion.

Statistics show that export revenues hit $83.789 billion in the first eight months of this year, a year-on-year increase of 18.9 per cent. The country’s total import turnover was $83.75 billion, up 6.6 percent compared to the previous year.

As a result, Vietnam’s nine-month trade surplus fell to $34 million from $134 million in the first eight months.

Many exported commodities earned over $1 billion, including garments ($11.25 billion); telephones and spare parts ($8.55 billion), crude oil ($6.34 billion), seafood ($4.14 billion), and computers and electronics ($5.36 billion).

The foreign-invested sector fetched $6.35 billion from exports, including crude oil, bringing its nine-month export value to $52.49 billion, accounting for more than 62 per cent of the national total.

Vietnam Securities Depository and Standard Chartered sign MoU

To promote the growth of Vietnam’s financial services industry especially the funds services business, Vietnam Securities Depository (VSD) and Standard Chartered Bank (Vietnam) Limited today signed an MOU to set-up and provide transfer agency services for the open-ended funds in Vietnam.

Today, at the office of Ministry of Finance, Ms. Phuong Hoang Lan Huong – Chief Executive Officer of Vietnam Securities Depository and Mr. Louis Taylor – General Director of Standard Chartered Bank (Vietnam) Ltd., signed a Memorandum of Understanding. The ceremony was witnessed by The Lord Mayor of the City of London, Alderman David Wootton, Vietnam Minister of Finance Vuong Dinh Hue and H.E. Dr Antony Stokes, Ambassador.

Retail Transfer Agency is the product offerings to support open-ended funds, both at retail investor level and at distributor level. The offerings include (i) the maintenance of a register of investors, (ii) the establishment and management of their trading accounts, (iii) the processing of subscriptions, redemptions, switchings, and transfers of fund certificates, (iv) the support for corporate actions and (v) the provision of trade confirmations, account statements, and other related documents and reporting requirements.

At the ceremony, Phuong Hoang Lan Huong, chief executive officer of Vietnam Securities Depository said: “This MoU states general principles of the cooperation between VSD and Standard Chartered Bank (Vietnam), including technical assistance from the banker to VSD in developing infrastructure of transfer agency service for open-ended funds following international practices and the co-ordination between the trustee bank and transfer agents in providing services for this kind of product, laying foundation for diversification of the young fund management industry in Vietnam”.

“Both Vietnam Securities Depository and Standard Chartered Bank (Vietnam) are interested in the sustainable development of Vietnam’s fund management industry and this partnership will help strengthen the offering for the open-ended funds. This will help in the formation of a pool of long term domestic capital that can invest in the development of the Vietnamese economy. We see it as another example in Vietnam of Standard Chartered fulfilling our brand promise, to be Here for good,” Louis Taylor, general director of Standard Chartered Bank (Vietnam) Ltd. said.

The MOU entails SCBVL, through its international experience and product expertise, providing advisory and technical assistance to VSD for a Retail Transfer Agency. This agreement supports the direction of the Ministry of Finance to allow the establishment of open-ended funds in Vietnam as per Circular 183/2011/TT-BTC dated 16/12/2011.

The partnership marks a milestone in the relationship between the two organizations. In the meantime it supports the sustainable and long-term growth of open-ended funds in Vietnam. The signing ceremony is a testament for the strong relationship between United Kingdom and Vietnam, according to Financial Cooperative Program between Ministry of Finance of Vietnam and the City of London (UK) in 2012 and following the spirit of the Strategic Partnership Agreement signed by the two countries in 2010.

Tax woes a big headache for FIEs

Many taxation and customs entanglements are causing ugly headaches for foreign-invested enterprises in Vietnam.

That was the message sent by Korean enterprises at a conference held by Vietnam’s Ministry of Finance (MoF) to update policies and administrative procedures in taxation and customs. At the conference, Deputy MoF Minister Do Hoang Anh Tuan and leaders of the General Department of Taxation and General Department of Customs answered questions about tax and customs policies in Vietnam.

Young Lee, deputy manager of Vina Pioneer industrial – which produces special polybags for garments, said that the MoF’s current regulations on environment protection tax for imported goods for processing were unclear.

“For such items like polybags, who will pay the tax, manufacturers or importers?” Lee asked.

MoF Tax Policy Department deputy director Pham Dinh Thi said for polybags used for packaging to export, both manufacturers and importers would no longer have to pay environment protection tax. “In the process of implementating the Environment Tax Law, tax policy makers found that these goods will be packed to make exported products which will not affect Vietnam’s environment,” Thi said.

He added that the government approved the MoF’s proposal to exempt tax for these items and released Decree 69/2012/ND-CP dated September 14, 2012 on this matter. Meanwhile, the foreign contractor tax is the problem for Daewoo-Hanel Electronics Limited Company.

Its general director Park Jong Hee said the company was borrowing capital from Korean Eximbank. However, under Vietnam’s regulations on foreign contractor tax, foreign contractors must pay a kind of tax for bank loans.

“According to the Double Taxation Agreement between Vietnam and Korea, does our company have to pay foreign contractor tax in Vietnam or not? If not, do we have to send documents to be tax free?” Hee said.

For this problem, Tuan said in case that a foreign-invested enterprise borrowed capital at a bank in its country with the state holding more than 51 per cent, it would not be subject the foreign contract tax in Vietnam.

However, Tuan said the company still had to submit the documents to implement the Double Taxation Agreement to enjoy tax exemption in Vietnam. Regarding tax administrative procedures, Bona Apparel Vietnam director Lee B.D wondered about value added refund procedures in cases of refund first, check later and check first, refund later.

According to current VAT regulations, in the case of refund first, check later, tax refund must be finished within 15 days after the tax agency received enough documents from enterprises. In the case of check first, refund later, the duration was 60 days.

However, according to the revised Law on Tax Administration which is expected to be approved by the National Assembly this October, from July 1, 2013, the duration for refund first, check later will be reduced to six from 15 days and for checks first, refund later from 60 to 40 days, said Tuan.

To be checked first refunded later, he added, enterprises must meet some criteria such as having enough time on business and production and have never violated on tax and customs regulations in Vietnam.

Shippers facing turbulent seas

While Vietnamese shipping firms struggle in rough business seas, strong headwinds also face foreign firms which are said to dominate the Vietnamese shipping market.

Peter Smidt-Nielsen, general director of Maersk Line Vietnam & Cambodia Cluster, said for the rest of the year the market outlook did not look bright and Maersk Line would also be hit by a weak market outlook.

“Maersk Line in Vietnam has so far this year been growing slightly. Going forward we want to maintain our market share, but it is crucial to increase our rates, as the current rates are not sustainable for any shipping line,” he said.

A representative from Ho Chi Minh City-based First Logistics Development – a Singapore-Vietnam joint venture, said: “We are experiencing an unprecedented hard time. We have to slash costs by 10 per cent and are possible of cutting workforce in the coming time.”

“Now is the time of common difficulties for both shipping businesses and port operators, and we are facing a severe competition,” she said. “Our company is trying to maintain operations in Vietnam and will not expand operations in the country in the coming time.”

Meanwhile, Do Xuan Quynh, general secretary of Vietnam Shipowners’ Association (VSA), said more participation and expansion of foreign shipping companies in domestic and international routes have exhausted of domestic shipping lines and many Vietnam firms are struggling for survival.

“Only shipping businesses with strong financial capabilities can keep alive their fleet,” he stressed.

According to Quynh, only about 8-10 per cent of Vietnamese exports were currently transported by domestic shipping lines while foreign ship owners dominate more than 90 per cent of Vietnam’s shipping market. Noticeably, 100 per cent of container goods is handled by foreign vessels. For this reason, foreign shipping lines have teamed up to push up freight loads, causing difficulties for Vietnamese exporters and importers.

“The shipping market will go on with numerous hardships in the remaining months of 2012 and in 2013, even in the market segmentation of dry cargo carrying ships that is strong point of Vietnam,” Quynh said.

Meanwhile, Nguyen Canh Viet, general director of state-run Vinalines, said many ship-owners had been seeking to sell their vessels even with prices much lower than buying prices.

“The year of 2012 is still very hard for shipping businesses,” Viet said.

Nguyen Kim Chinh, chairman of Haiphong city-based Tan Binh Co.Ltd., a private shipping line, also predicted the shipping sector would be difficult until the end of 2013 and only a modest recovery would be possible in 2014.

“We have been strenuous to be able to maintain stable operations. We have constantly changed our business strategy and have been flexible with every situation,” Chinh noted. In order to improve Vietnam’ shipping sector, Peter Smidt-Nielsen of Maersk Line said the country should improve inland infrastructure links from/to seaports as well as belt ways connecting major industrial areas. In particular high-capacity access roads to port areas are needed to cope with the increasing container movements.

In addition, he said, Vietnam should review port dues charged to the shipping lines to increase Vietnam’s competitiveness against other South-East-Asian ports to attract more additional international transit volume, ease transit procedures for containers and cargoes exported from a Vietnamese port but transited in another Vietnamese port before going onto final vessel.

Dredging maintenance and channel upgrades would help terminals in Haiphong, Ho Chi Minh, Cai Mep-Thi Vai serve larger vessels and reduce long-term costs. “Lastly, Vietnam should allow foreign shipping lines to transship full and empty containers in the country,” Smidt-Nielsen said. “Otherwise, Vietnam is just losing this income opportunity.

Soft drink market thirst

Leading domestic soft drink maker Tan Hiep Phat Group has a thirst to battle foreign-invested firms in the ready-to-drink tea market.

It has just started construction of its $71 million Number One plant in northern Ha Nam province four months after it kicked off a $91 million plant covering 27 hectares in central Quang Nam province’s Chu Lai Economic Zone.

The Ha Nam plant will have an annual output of 600 million litres per year including two phases, with the first stage of production expected to be operational by the end of 2013. Tran Phuong Uyen, deputy director of Tan Hiep Phat Group, said that the group’s two plants would turn out non-alcohol beverages with natural origins that reinforce the group’s soft drink market position. The Ha Nam plant will supply mainly northern provinces, while the other will supply Danang and central-western highland provinces.

“The capacity of our existing plant in southern Binh Duong province is 1 billion litres per year, and the new ones are expected to increase Tan Hiep Phat’s capacity to 2 billion litres per year,” said Uyen.
Tan Hiep Phat continued to lead ready-to-drink tea in 2011 with 41 per cent share of off-trade value sales. The group launched its massively successful energy drink Number One, followed by Zero Degree green tea, Dr Thanh, Barley Lemon Green Tea and Laser.

Vietnam’s consumption of non-alcoholic beverages rose 3.7 per cent year-on-year in 2011, while the consumption of carbonated and non-carbonated products grew 12.2 and 18 per cent, respectively, signaling positive growth for the beverage market amid the economic slowdown.

Vietnam-India trade picks up

Two-way trade turnover between Vietnam and India reached US$2,493 million in the first eight months of this year, showing a year-on-year increase of 2.2 percent, according to the General Department of Customs’ statistics.

Vietnam earned US$1.058 million from exports to India, up 12.9 percent, while its imports from the country fell by 4.5 percent to US$1,435 million, the trade deficit was estimated at 33.4 percent lower than the same period last year.

Vietnam’s key export items included mobile phones and components (US$243.5 million),  machinery and other accessories (US$154 million), natural rubber (US$105 million),  computers, electronic products and spare parts (US$87,5 million),  and coffee (US$41.7 million).

Commodities imported from India were corn (US$247.7 million), fodder and materials (US$199.6 million), pharmaceutical products (US$185.9 million), cotton (US$88.4 million) and other machinery and spare parts (US$83.5 million).

Rice exports pay off well

Up to September 20, Vietnam had exported 5.436 million tonnes of rice valued at US$2.469 billion.

The Vietnam Food Association (VFA) said the average price was US$443.8 per tonne as the volume of 5-percent broken rice increased by 62 percent against the same period last year.

The country expects to export over 7 million tonnes of rice in 2012.

Kazakhstan airline eyes Vietnam market

Air Astana has decided to open a direct air route to Vietnam because the country is a potential market of nearly 90 million consumers, says Air Astana President Peter Foster.

Vietnam is a potential market for Kazakhstan, says Air Astana President Peter Foster.

VNExpress wire quoted Foster as saying with a dynamic economy and a large population, the Southeast Asian nation has great air travel demand, and Air Astana still finds room for a slice of the cake.

According to Foster, both Kazakhstan and Vietnam have developed a fine political relationship. The two countries have entered a new period of economic cooperation, especially following the Kazakhstan President’s visit to Hanoi in October 2011.

During a visit to Kazakhstan from September 9-11 by State President Truong Tan Sang, both sides agreed to launch a direct air route between Almaty city, the former capital of Kazakhstan and the nation’s largest city, and Ho Chi Minh City, the largest economic hub in Vietnam. The first flights are scheduled to take off this December.

The launch of the air route is part of Air Astana’s long-term investment strategy to promote economic, trade, and investment, as well as tourism cooperation between the two countries, said Foster.

Air Astana is rated as the best in Kazakhstan, and the first four-star airline in East Europe and the Commonwealth of Independent States (CIS).  It will vie for market share in Vietnam, and premium quality services are the airline’s competitive advantage, said the CEO.

It plans to conduct two flights a week, carrying a total of between 80-100 passengers in the first phase. It will target Kazakh and Vietnamese tourists, entrepreneurs, and guest workers.

 Vietnam, UK boost financial cooperation

The Vietnam Securities Depository (VSD) and the Standard Chartered Bank Vietnam have signed a memorandum of understanding (MoU) on cooperation to develop financial services in Vietnam, especially in fund service.

Minister of Finance Vuong Dinh Hue and the Lord Mayor of the City of London Alderman David Wootton witnessed the signing of the MoU in Hanoi on Sept. 24.

Under the MoU, Standards Chartered Bank will provide technical assistance to VSD in building infrastructure for transfer agent services of open-end funds, in line with international practice.

The cooperation follows a policy of the Vietnamese Ministry of Finance, which allows establishing open-end funds in the country under Circular 183/2011/TT-BTC issued on December, 2011.

It also marked the growing relations between the UK and Vietnam in the field of finance, in accordance with the financial cooperation programme between the Ministry and London city in 2012 and the Strategic Partnership Agreement signed by the two governments in 2010.

President praises welcomes Japanese businesses

President Truong Tan Sang on September 24 highly valued the role the Japan Chamber of Commerce and Industry (JCCI) plays in strengthening the economic, trade and investment ties between the two countries.

Meeting with JCCI Chairman Tadashi Okamura in Hanoi, Sang said he hopes the Chamber will continue to encourage Japanese businesses to invest more in Vietnam, particularly in areas of high technology, infrastructure, human resources development and the environment.

The President affirmed that despite global political and economic complications in the past years, the strategic partnership between Vietnam and Japan has unceasingly developed.

He spoke highly of the large amount of ODA that Japan, a leading investor and the largest bilateral donor of Vietnam, has offered to the country.

Okamura said his organisation, as a top economic agency in Japan with more than 1 million members, is formulating policies to support small-and-medium-sized enterprises in boosting cooperation and investment in various countries in the world, including Vietnam.

The increasing number of Japanese enterprises operating in Vietnam is clear evidence of the Japanese businesses’ interest in a country that plays an important role in Southeast Asia, he said.

The Chairman also affirmed that he will exert more effort to further strengthen economic, investment and trade cooperation between the two countries.

 London Lord Mayor wants further links with Vietnam

The Lord Mayor of the City of London, Alderman David Wootton, has said he hopes business links will add to the UK and Vietnam’s ambitions of increasing two-way trade to US$4 billion by 2013.

Speaking on September 24 at a roundtable discussion in Hanoi with the Vietnamese Ministry of Planning and Investment (MPI) on Public-Private Partnership (PPP) legal frameworks, Mayor Wootton said London aims to build a strong strategic business partnership with Vietnam and share experiences in infrastructure, finance, law and other services.

He also proposed that both sides continue negotiations to extend cooperation agreements that will expire in 2013, in order to lay a firm foundation for strengthening business cooperation.

MPI Minister Bui Quang Vinh said the UK is one of the major providers of ODA for Vietnam. He also said the country is now calling for investment resources to build infrastructure for public services.

Therefore, Vietnam hopes to boost PPP cooperation and wants the UK to share experiences in improving PPP models for infrastructure projects.

 It’s time for SMEs to prosper

President of the Vietnam Chamber of Commerce and Industry (VCCI), Vu Tien Loc, has stressed the importance of small-and medium-sized enterprises (SMEs) in the economy.

SMEs play a crucial role in the national economy, serving as support industries for large groups and businesses, Loc told a September 24 dialogue held in Hanoi by the VCCI and Japan Chamber of Commerce and Industry (JCCI).

The dialogue was designed to foster links between SMEs of Vietnam and Japan.

In the current difficult global economy, both Japanese and Vietnamese businesses are feeling the need to strengthen cooperation and exchanges.

Through dialogues, exchanges, and meetings, they will be able to understand each other better and work out measures to support each other.

JCCI President Tadashi Okamura said the Vietnam visit by more than 100 Japanese enterprises is aimed at exchanging information, seeking business partners, and learning about the investment environment in the Southeast Asian nation.

It will also help Vietnamese enterprises develop and improve the investment environment, thereby contributing to overall national development.

He also said he hopes that Japanese and Vietnamese businesses will work more closely together to fully tap their potential and strengths.

During the event, businesses proposed various measures to boost investment in Vietnam, with a focus on support industries, electronics, informatics, and consultancy services.

Japan is Vietnam’s third biggest partner, after China and the US, with two-way trade reaching more than US$21 billion in 2011 and US$12 billion in the first half of 2012.

Both countries aim to raise that figure to US$30 billion by 2015.

Smart Shirts invests in north

The Hong Kong-based Smart Shirts Ltd group has decided to build a factory in Bao Minh Industrial Park in the northern province of Nam Dinh. it will open next year.

On an area of 20ha the group will build a complete chain from fibre production to dyeing and garment making.

In the first phase of its project, it will invest US$18 million in a fibre producing factory with a capacity of 3,200 tonnes per year.

Other textile and garment companies such as Far Eastern and Global Dyeing are also discussing investing in the Bao Minh IP which has a standard system for waste-water treatment and is said to be suitable for dyeing and garment producers.

Covering an area of 154ha, the industrial park also has investors from other sectors, including textile machines, electronic appliances and construction materials.

Located in Vu Ban District, the park has helped create thousands of jobs for local people.

Trade deficit widens this month

The country’s trade deficit hit an estimated US$200 million this month after three consecutive months of trade surplus, the Ministry of Planning and Investment’s General Statistics Office (GSO) reported.

The GSO said Viet Nam’s export turnover this month was $9.7 billion, declining 6 per cent over last month, while import turnover was $9.8 billion, down 4.5 per cent from August.

During the first nine months of the year, the country’s export turnover reached $83.789 billion, representing a 19 per cent increase over the same period last year. Foreign invested areas registered export turnover of $52.5 billion, accounting for 63 per cent of the total.

Import turnover during the period reached $83.755 billion, increasing 6.6 per cent against the same period last year.

The figures saw the country enjoyed a trade surplus of $34 million during the nine-month period.

Foreign invested areas also enjoyed a trade surplus of $8.6 billion during the period, while domestic businesses saw their trade surplus shrink during the same period last year.

Eight-teen groups had export turnover of more than $1 billion. The garment and textile industry took the lead with turnover of $11.25 billion, followed by the mobile phone and accessories sector with $8.55 billion, crude oil with turnover of $6.34 billion, electronics and computers registering $5.36 billion and aquaculture seeing turnover of $4.14 billion.

The GSO added that key import items during the period were electronics and computers with a turnover of $9.28 billion, petroleum at $7 billion and steel at $4.7 billion.

Investors flee City apartment market

Secondary investors in HCM City are running away from apartment market to cut loss.

However, fewer of them have been successful even though they had cut down price.

With a search on Internet, it is easy to find an individual or secondary real estate companies who advertised to cut down the price by around 30 per cent in order to sell their apartments.

Previously, the Dai Tin A Chau company and An Binh Land company announced to cut down prices of 120 apartments in Hoang Anh River View project by 30 per cent from VND24 million (US$1,1000) per one square metre to VND18.1 million ($860).

It is surprise when not many people care about this although in the past this was a hot project with the price of $2,300 per one square metre by the end of 2008. And, to buy the apartment in this project, investors had to queue up.

Other secondary investors of other famous projects in HCM City such as Sunrise City in District 7 and Sai Gon Pearl in Binh Thanh District are also struggling to look for customers despite they cut down the prices by 10 per cent.

Not only companies but also individuals want to run away from this market to avoid loss. However, they seemed not to get the goal.

Mai Thi Trinh, an individual investor in HCM City, said she had lent money from banks to buy two apartments from two big investors in Tan Binh and Binh Tan districts.

At that time, however, she could not sell her apartments to get the money back because although the time has passed, her apartments have not been handed over.

She really faced difficulties because of being under strong pressure caused by banking loan.

Another investor shared that she poured money to invest in apartments in 2009. Up to date, however, she could not receive house so was not able to sell them despite the price declination.

Specialists said that the price declination at that moment was mostly from secondary investors.

Two or three years ago, these investors had poured money to invest in the hot real estate market to earn benefit, they said.

However, due to frozen market, these investors met financial difficulties. To cut loss and get the money back, the only and the easiest way was to cut down the prices, specialists explained.

However, the situation was not as easy as they thought because many of them had cut down by the same time and the supply exceeded the demand, they added

Specialist To Van Nhu commended that the discount price was now lower than the investment price. This was the best time for consumers who had true demand on apartment, he said.

 Soaring China steel imports draw fire

Steelmakers are calling on the authorities to crack down on unlawful steel imports at a time when the domestic industry is already struggling with low demand and large stockpiles.

Viet Nam Steel Corporation’s deputy director Vu Ba On said the country had recently seen a sudden increase in imported steel volumes, especially from China.

Figures from the Viet Nam Steel Association (VSA) show that imports from China in the first eight month of this year reached 137,500 tonnes, more than 5 times the quantity in the same period last year. According to the VSA, the entire quantity of steel entering from China last year totalled only 53,600 tonnes.

Much of this stell was with boron was added (about 0.0008 per cent), allowing it to be classified as “alloyed steel” and enjoy a lower import tax rate than construction steel. Construction is subject to an import duty of 15 per cent while “alloyed steel” faces a duty of only 10 per cent.

The Import Export Analysis and Classification Centre of General Department of Customs has also complained that it lacks the facilities to test for and verify the boron levels of steel entering the country.

Once imported, steel from China is sold at prices VND800,000-VND1 million (US$38-47) per tonne below the domestic price, creating unhealthy competition for domestic producers, said On, accusing China of pushing to increase exports of its own steel surpluses into Viet Nam and other ASEAN countries.

Meanwhile, domestic steel production and demand have both decreased by about 10 per cent from the level in the same period last year, while the volume of steel sold in the third quarter, at 300,000 tonnes per month, was well below the usual monthly average of around 420,000 tonnes, VSA vice president Nguyen Tien Nghi.

The total capacity of all steel mills nationwide was about 12 million tonnes per year while this year’s demand was estimated at only 5 million tonnes, Nghi said.

In order to promote consumption, Nghi proposed that the value-added tax applied to steel be reduced from the current 10 per cent to 5 per cent, while additional measures be taken to curtail the low of imported product.

“If State administrative agencies do not take measures to deal with this issue and domestic enterprises get a more reasonable price, imported steel will continue to flood the domestic market,” he said.

Samsung receives new tax incentives

Prime Minister Nguyen Tan Dung has given the nod for tax incentives to be granted to South Korean giant Samsung Electronics, allowing the company to begin work on a factory expansion project in northern Bac Ninh Province.

The proposal was made by the Ministry of Planning and Investment as a means to boost economic development and create jobs, while contributing to the State revenue.

Samsung Electronics Viet Nam (SEV) will now proceed to expand the factory, investing a total registered capital of US$1.5 billion in the period 2015-20 to turn it into a “Samsung Complex”, manufacturing mobile phones, laptops, tablets and other electronic products.

The factory, which opened in 2009, currently covers an area of 100 hectares in Yen Phong Industrial Zone.

SEV already enjoys tax incentives as a Government recognised high-tech firm. They are exempt from paying tax for their first four years of operation, and for the following 15 years they will pay a preferential income tax rate of 10 per cent, compared to the normal 25 per cent.

The expansion project will be granted the same tax incentives that apply to newly-established projects, despite the Law on Enterprises declaring that tax incentives would not be given to expanded investment.

The Prime Minister’s decision came as a result of a petition from Samsung and the provincial authorities, who said that the company would face difficulty in carrying out its expansion project without the Government’s support.

The Prime Minister also agreed to offer peak incentives to Samsung’s investment in a new factory in northern Thai Nguyen Province.

SEV plans to reach a turnover of $10 billion this year and create jobs for as many as 22,000 local workers.

 Ha Noi plans to boost IT application in public sector

The capital city of Ha Noi will invest VND900 billion (US$43 million) to foster the application of IT in its administrative agencies in the 2012-15 period, according to the city’s Department of Information and Communications.

The cash will be allocated to develop IT infrastructure, applications, training and IT management, the department said.

The project, which will integrate information and data, will help synchronise and connect all city administrative agencies and networks.

Practically, all of those working in the sector will be equipped with PCs while 70 per cent of the staff in districts and towns will have access to PCs.

Meanwhile, in the 2014-2015 period, the city will build an e-government platform which will enable administrative agencies to carry out 50 per cent of meetings and conferences online (internet conferencing).

In addition, most of the city’s agencies will apply an e-signature in 2015.

According to the Ministry of Information and Communications, Viet Nam has made great strides in recent years in applying IT to public administrative activities.

To date, 96.6 per cent of ministries and sectors have established their own websites, all 63 provinces and cities have e-portals, and 83.6 per cent of information related to Government and central agency policies is posted on the internet.

Techmart exhibition sees 1,200 new contracts signed

More than 1,200 contracts and thousands of transactions worth a combined total of VND1.52 trillion (US$72.6 million) were inked during the Viet Nam Technology and Equipment Market 2012 (Techmart 2012) which closed in Ha Noi on Sunday.

Co-organised by the Ministry of Science and Technology, the ASEAN Committee on Science and Technology and the People’s Committees of HCM City and Ha Noi, the four-day event was considered an important highlight of the EU – ASEAN year of science, technology and innovation.

Seminars on clean technology, food security, new energy and materials, scientific and technological achievements and industry were also held on the sidelines of the event.

Thanh Hoa approves new trade, tourism, investment centre

The People’s Committee of central Thanh Hoa Province last week approved the establishment of a centre on trade, investment and tourism promotion.

The centre will be eligible to organise promotional programmes on trade, investment and tourism and call for foreign and domestic investment capital to be invested in the provincial branches of these sectors.-

Vietnam’s macro-economic risks discourage foreign investors: Expert    

Continuing macro-economic risks is a main reason for the weakening of the Vietnam’s competitiveness, discouraging foreign investors, said a local economist.

At a recent conference in Hanoi on the challenges facing the country in its restructuring plans, Dr. Nguyen Duc Thanh, Director of Vietnam Centre for Economics and Policy Research (VEPR) under University – Vietnam National University, Hanoi, said the fall of registered foreign direct investment (FDI) is evidence showing that Vietnam is becoming less attractive to foreign investors.

In 2008, Vietnam’s total registered FDI reached record high of USD64 billion, however, the figure sharply dropped to USD21.48 billion in 2009, USD18.6 billion in 2010, USD14.7 billion in 2011 and just USD8.47 billion in the first eight months of 2012.

Japan has been among the biggest investors in Vietnam over the past 20 years, however, now, many Japanese companies are also pessimistic about its investment climate when they are really sceptical about the future of the Vietnamese economy, Thanh said.

According to the economist, he recently had a meeting with Japan International Cooperation Agency (JICA) representatives discuss the Vietnamese business environment.

“JICA representatives raised concerns over Vietnam’s economic future. They are afraid that Japanese investors would move to other regional nations like Indonesia and Myanmar in the coming years,” Thanh said.

The Saigon Times cited Dang Xuan Quang Ly, Deputy Head of the Ministry of Planning and Investment’s Foreign Investment Agency, as saying that, the lower FDI could be attributed to the global economic downturn. He said that despite the decline in registered FDI decline, actual disbursement disbursement has stayed at levels equal to previous years. Between January and August this year, FDI disbursement is estimated at USD7.28 billion, equal to 99.7% of the 2011 figure. This year, total disbursed FDI is expected at USD11 billion.

However, Economist Dr. Nguyen Duc Thanh does not have such an optimistic viewpoint, specifying that “FDI inflow has continued coming to regional countries like Indonesia, Thailand, Malaysia or Myanmar, not Vietnam.”

At the conference, Economist Dr. Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management (CIEM) said, Vietnam’s budget deficit would be higher than the set target for 2012, and the same would likely be the case next year.

“Between January and August this year, budget revenues fulfilled 56% of the target. The Government hopes this will be covered by around USD20 billion from increased petroleum prices, but petroleum prices often change,” he said.

Meanwhile, another difficulty for the economy is how to gain people’s trust in the banking system. “After the recent scandal of Asia Commercial Joint Stock Bank (ACB), people have been rushing to withdraw their deposits,” Thanh emphasised.

Ben Tre promotes investment potential to Chinese companies

The Cuu Long (Mekong) Delta province of Ben Tre is willing to create the most favourable conditions for Chinese companies to invest in the province.

The provincial People’s Committee vice chairman Cao Van Trong delivered this statement during an investment-trade promotion workshop in Guangzhou on Sunday.

During the event, Trong also lauded Ben Tre’s advantages in terms of geographical location, favourable transport, young and skilled workforce and a transparent investment environment.

China now ranks ninth among foreign investors in the province, with nine projects capitalised at US$8.2 million. These projects mostly focus on processing coconut products. Two-way trade has increased significantly over the years, from $27.6 million in 2005 to $71.5 million in 2011.


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