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BUSINESS IN BRIEF 28-2ASEAN- China railway begins operating

A railway that links the Association of Southwest Asian Nations (ASEAN) countries with southwest China’s Yunnan province became operational on February 23.

After seven years of construction, the railway has a total length of 141 km with a designated maximum speed of 120 km per hour. It goes through 35 tunnels and crosses 61 bridges, which together account for 54.95 percent of the total length of the line.

The railway is part of the eastern line of the planned Pan-Asia Railway network.

The eastern route starts in Kunming, capital of Yunnan and pass through the cities of Yuxi, Mengzi and Hekou in Yunnan to connect with Vietnam, Laos, Thailand and Singapore .

It is expected to boost land transportation and provide a more convenient passage for exchange and trade between China and ASEAN member countries.

Drought to be severe this year, meteorologist

Le Thanh Hai, deputy director of the National Hydro Meteorological Forecasting Center, on February 22 said that several areas in the central, central highland and southern regions are in danger of severe drought this year with little rain.

The rainy season will begin in April in the southern and central highland regions and August in the central region. As a result, several areas will have to suffer drought and water shortage in the next six months, he said.

Central provinces will be worst affected. Record drought in 1998 and 2002 might recur this year. Salt intrusion will occur earlier and broaden further inland.

Vietnam-Laos highway inaugurated

National Highway 2E linking Vietnam and Laos was officially inaugurated at the Panghok international border of Phongsaly province on February 23.

Addressing the ceremony, Vietnam’s Deputy Prime Minister Nguyen Xuan Phuc affirmed the traditional special friendship, solidarity and comprehensive cooperation relation between the two countries.

The highway has a strategic importance for both Vietnam and Laos , said Phuc, adding that it will further boost the exchanges between the two countries in general, and between Vietnam ’s northwestern provinces and Laos’ northern provinces in particular.

For his part, Lao Prime Minister Somsavat Lengsavad stressed the importance of the road as a priority in Laos’ socio-economic development.

Expressing his gratitude to the Vietnamese Party, Government and people for their help in building the highway, the Prime Minister said it will contribute to improving the infrastructure of Laos , and serve as Laos’ transit road to other countries in the region.

The highway, linking Khoa district in Phongsaly province of Laos to the Tay Trang border gate in Dien Bien province, stretches 68.2 kilometres. Total investment for road is US$43 million and it is the second project financed by the Vietnamese government on the land of Laos.

SBV affirms abundance of foreign currencies

Le Minh Hung, Deputy Governor of the State Bank of Vietnam, has confirmed that the liquidity of foreign currency in the domestic banking system is abundant, adding that the central bank is willing to intervene to stabilise the local market.

On February 22, Hung said last year the central bank bought 15 billion USD and continued to be the net buyer up until the Lunar New Year.

The same day, the State Bank said it is coordinating with the Ministry of Public Security to discover the source of the rumour that a leader of the BIDV had been arrested and would take appropriate measures to handle unlawful efforts to manipulate the foreign currency market.

The State Bank affirmed that it will continue a stable exchange rate policy.

Businesses close for post-Tet prayers

After 2012 proved to be a bad year for many businesses, many companies temporarily closed their offices after Tet to hold prayer ceremonies for better luck this year.

One company, specialising in electronics, MTV, closed their headquarters in Hanoi for a ceremony on the fifteenth of the new lunar year, with food, fruits and paper votive offerings for their altar. They also hired ‘sorcerer’ for the rituals, which involved hours of kneeling and prayers. All of the company’s management and staff attended.

They prayed for better business and higher profits this year.

The company’s accountant, Nguyen Thi Oanh, said, “My company recorded very modest revenues last year but still had to deal with high costs and mounting debt. Payment for the staff was deferred and we had to struggle to ensure their regular salaries, even without a Tet bonus.”

Fortune-tellers advised them to conduct a ceremony to pray for the entire business. Despite their financial difficulties and the high cost of the ceremony, over VND20 million (USD956.50), they felt compelled to go ahead with it to reassure their staff.

“In past years my family would return to my hometown in Thai Nguyen Province for Tet. However this year we decided to stay in Hanoi to hold hold this ceremony, upon the advice of a fortune-teller,” said Nguyen Manh Hung, director of Hung Anh Limited Company.

The company’s chief accountant and head of the marketing also had to leave their families during Tet to attend.

According to Hung, many other business people went to dozens of temples before the holiday to pray for better business, and he plans to follow suit. As a result, the offices will remain closed for much of the first month of the lunar year.

Hung Anh Limited is an established steel company that has also fallen on hard times, losing billions of VND last year, forcing them to cut their staff by nearly half.

Still, the company’s director, Nguyen Manh Hung, is preparing to join some partners for trips to the central region to prayer rituals. He intends to spend around VND150 million (USD7,173) for the ceremonies in total.

Smaller players in the business community seem to be on the same trend. Nguyen Thi An, who owns a medium sized stall in Hanoi’s Truong Dinh Market, has also decided to hold a large prayer ceremony in hopes it will bring better fortune in the coming year.

“Sales were really slow last year, even during Tet. I’ve decided to reopen my stall on the sixth of the lunar year and hire a sorcerer. I intend to spend VND10 million (USD478.20). My family relies on this business and I am paying for two children at university,” An stated.

She said that many other traders in this market have been doing the same.

Companies face fines for late salary payment

Firms will be fined between VND20 million (USD952) and VND50 million (USD2,380) million for late wage payments, according to a Ministry of Labour, Invalids and Social Affairs draft decree.

The draft decree stipulates that enterprise will have to compensate workers for late wage payment. The level of compensation will relate to the interest of the total salaries deposited at banks during the period.

Under the decree, a fine of VND20-50 million will be issued for companies which pay lower salaries than the regulated minimum regional levels.

Employers will also have to refund the differential salary for employees and pay them at least five months of salary at minimum regional levels.

In cases where a company completely lacks a salary scale and payroll they will be fined from VND10 million (USD476) to VND25 million (USD1,190).

A fine of between VND5 million (USD238) and VND7 million (USD333) will be imposed on companies which pay salaries for their extra working hours and night shifts lower than regulated levels.

Businesses will be fined VND15-30 million (USD714.2-142.8) for not paying sufficient salaries to its workers when they legally conclude their employment.

SMBC pledges continued support for Eximbank

Sumimoto Mitsui Banking Corporation (SMBC) will continue giving supports to Vietnam Export Import Commercial Joint Stock Bank (Eximbank) in many fields, especially in risk management, said Hiroshi Minoura, a board member and deputy general director of SMBC, at the ceremony to mark the five-year strategic partnership between the two lenders.

Minoura told the function in HCMC on Friday that Vietnam’s banking system is experiencing many difficulties, including soaring bad debts, prompting all banks to pay attention to risk management. Therefore, SMBC, a large Japanese bank, will assist Eximbank in this field to prevent adverse impacts of bad debts on the local lender’s operations.

During five years of strategic cooperation, SMBC has advised and suggested Eximbank to improve planning capacity and risk management system in line with international standards. Accordingly, Eximbank has improved its credit policy and concentrated credit management model and strengthened risk management in lending, capital, gold and currency business areas, Minoura said.

Minoura noted that SMBC and Eximbank would have to compete with many strong rivals from Japan in the coming time after Mizuho Corporate Bank acquired a 15% stake in Vietcombank in January, 2012 and Tokyo Mitsubishi UFJ Bank has held a 20% stake in Vietinbank. However, the senior executive expected that the five-year partnership and other advantages in strong relationship, effort and determination of staff will help the SMBC-Eximbank alliance to provide better services than latecomers.

To further improve competitiveness, SMBC will assist Eximbank in boosting retail banking as it has done over the past time. Specifically, SMBC has helped Eximbank in attracting Japanese customers in Vietnam to expand its customer base, and setting up retail banking plans in medium and long term.

SMBC will also send experts to Vietnam to deploy projects with Eximbank such as developing new product packages, bolstering card business, boosting automobile loan programs and improving product quality management to meet diversified demands of customers.

Recalling on the establishment of this alliance, Minoura said that Asia-Pacific was the core location in SMBC’s business strategy with Vietnam being an important market. Therefore, SMBC had to look for a partner that could absorb its techniques to keep developing as a private commercial bank and contribute to development of Vietnam economy. “And we have found a qualified partner, Eximbank,” Minoura said.

Over the past years, SMBC has supported Eximbank in accessing international capital sources at reasonable costs and boosting liquidity with inter-bank lending limit, trade finance and guarantee. Besides, SMBC has helped Eximbank select and apply advanced information technology and train its staff. Thanks to such supports, Eximbank has made a great growth rate in both scale and operation quality.

“From a bank having a charter capital of VND2.8 trillion and total assets of VND33 trillion in 2007, Eximbank has spurred its chartered capital to over VND12.3 trillion and total assets of over VND170 trillion at the end of 2012,” said Eximbank general director Truong Van Phuoc.

Japanese Consul General in HCMC Harumitsu Hida expected that thanks to this partnership, Eximbank will continue speeding up banking corporate management to become a bank that will not only expand retail banking in the country but also contribute to the development of commercial relationship between the two nations through financing Vietnamese and Japanese enterprises in the import and export sector.

Hida said Japanese firms are enhancing their presence in the city. As of February, the Japanese Enterprises Association had 617 members, a strong rise compared to the same period of last year. Japan took the lead in foreign investment capital in Vietnam last year with around US$5.1 billion. This is a chance for Vietnam in general and the banking network in particular.

SMBC and Eximbank agreed to enter into the Strategic Alliance Agreement in 2007. SMBC now holds a 15% stake in the local bank.

Speaking to the Daily, Eximbank chairman Le Hung Dung said that SMBC wanted to raise its ownership but foreign ownership in Eximbank has reached the ceiling level.

SMBC currently is the biggest shareholder in Eximbank, followed by Vietcombank with 8.19% and VOF Fund of VinaCapital with 5.02%.

Entrepreneurs regain optimism

Despite many gloomy forecasts for the economy in 2013, local entrepreneurs are no longer pessimistic and are well prepared to cope with any future storm, according to a survey of top companies in the country.

For the first time since early 2011, optimistic businessmen have outnumbered pessimistic ones, shows findings of a survey conducted by Vietnam Report in January among leaders of the top 500 companies in Vietnam, with 225 survey sheets collected.

Having on hand their preliminary business results, the macroeconomic indicators for 2012 and the plans for 2013, over 62% of the respondents expected their revenue would increase this year. Meanwhile, less than 15% of those surveyed worried that their revenue would decline.

More than half of respondents planned to hire more employees in 2013, which is also a good sign, the report remarks. If their recruitment plans were implemented, the number of jobless laborers would be reduced and the social security burden would be eased.

This is a monumental change compared to the last survey in November, with up to 75% of the respondents predicting their business situation would remain bleak or worsen with only 25% believing in better business in 2013.

Four consecutive surveys since mid-2011 have recorded a pessimistic mentality of entrepreneurs at the country’s largest enterprises.

According to the latest survey, business owners considered inflation, global economic volatility, changes in macroeconomic policies of the Government and higher input costs as the major factors likely to affect their business performance.

Other factors such as the ability to protect intellectual property and customer data, the speed of technological innovation or changes in consumer behavior were predicted to not greatly impact business activities this year.

The main reason for this attitude transformation of the business community lies in the relative macroeconomic stability in 2012. Although economic growth and demand remained low, the policy environment and the business environment seemed more predictable.

In addition, many large enterprises in Vietnam, having gone through so many difficulties and crises in the past two years, drew up contingency plans to deal with the possibility of a worsening economic situation in the next few years.

“This suggests the Government should resolutely continue to place macroeconomic stability on priority, boost economic restructuring and improve investment efficiency,” says the report.

“Hasty moves with an aim to rescue this market or that market, or an increase of public investment to stimulate economic growth, accompanied by a risk of macroeconomic instability and rising inflation, will be a bitter medicine for the rekindled confidence of the business community.”

Vietnam scores poorly in budget transparency

Vietnam scores only 19 points on a 100 point scale in the 2012 Open Budget Index (OBI 2012), much lower than many other nations in the region, showing a lack of transparency in the country’s budget system.

According to the OBI 2012 survey conducted among 100 nations worldwide published on Thursday, Vietnam is one of the 36 countries with the lowest rankings. The country is still far behind Indonesia with 62 points, the Philippines with 50 points, and Thailand with 36 points.

The Center for Development and Integration (CDI), a non-governmental organization in Vietnam chosen for the survey, said the draft State budget of Vietnam had not been revealed to the public before it was passed by the National Assembly (NA).

Meanwhile, 79 other countries among the 100 surveyed have publicized their draft budgets following the guideline of the International Monetary Fund (IMF) on financial transparency issued in 2007. IMF’s guideline says that citizens must be allowed to join public hearings at the NA before the NA passes the budget.

From next Monday to Wednesday, a conference will take place in Indonesia, the incumbent ASEAN co-chair, to announce the results of the regional nations and seek solutions to boost budget transparency, management efficiency and citizens’ accessibility to the issues regarding the government budget. A deputy minister of finance of Vietnam will attend this conference.

OBI has been published every two years since 2006, when Vietnam got a mere three points. Its score rose to ten points in 2008, 14 points in 2010 and 19 points in 2012, but the country remains at the bottom of the index.

Ta Thanh Thuy from CDI told the Daily that Vietnam would advance further in the international commitments on transparency if strictly observing the regulations on budget transparency.

Article 69 of the 1992 Constitution recognizes citizens’ right to information, and Article 13 of the State Budget Law stipulates that estimates, settlements and audit results of the central and local budgets must be publicized. Other laws such as the Anti-Corruption Law warrant transparent disclosure, Thuy remarked.

She said: “If the ministries involved in the budget planning stick to these laws, the draft budget should be unveiled to the public, so citizens could discuss and give their opinions to the NA before the NA passes the budget every year.”

OBI 2012 is conducted by the U.S.-based non-governmental organizations International Budget Partnership (IBP) and Open Government Partnership (OGP).

Investors pledge nearly VND6 trillion for Nghe An

Six investors committed to invest around VND5.92 trillion in Nghe An on the occasion of the investors’ meeting held by the province and Bank for Investment and Development of Vietnam (BIDV) last Saturday.

At the meeting, leaders of Nghe An Province and investors signed agreements on the six investment projects for infrastructure development, mining, eco-city and supermarket construction.

On this occasion, BIDV inked a financing agreement to give loans totaling VND4.12 trillion to the three projects of Civil Engineering Construction JSC (Cienco 4), Thanh Thanh Dat Co. Ltd. and Dong A JSC. The project of Cienco 4 for expansion and upgrade of National Highway L1A from Dien Chau in Nghe An to Nghi Son in Thanh Hoa will receive the biggest sum.

At the event, the Dong Nam Nghe An Economic Zone Authority awarded an investment certificate to Royal Food Thailand, which will invest VND840 billion in the province. Moreover, several memorandums of understanding were signed between investors and their partners.

The meeting were attended by about 600 investors, who wanted to update information on the potentials of Nghe An, the province’s preferential policies for investors and the efficiency of the province-based projects.

This year marks the fifth time such a meeting has been held. Through the meetings in the past four years, Nghe An lured 43 projects, including 40 locally-invested projects and three foreign direct investment (FDI) ones, with total capital of over VND54.4 trillion, focusing on industry, trade, property, tourism, education and livestock farming.

Most projects and agreements have been properly implemented. A number of projects have been completed and achieved high efficiency, greatly contributing to socioeconomic development in the province.

Ho Duc Phoc, chairman of Nghe An, highly appreciated the enormous contributions of businessmen and investors to the province.

However, Nghe An is still in need of large-scale projects that can create breakthroughs and lay a foundation for the province’s development and budget revenue growth. Phoc hoped investors would set up large projects with important socioeconomic effects in the future, especially the eco-friendly hi-tech projects.

Nghe An is developing and upgrading infrastructure at seaports, industrial parks and border gates to offer investors the best conditions. In addition, the province is boosting administrative reform, highly-qualified human resource training and material source planning, said the chairman.

There are now 594 valid investment projects in Nghe An, including 557 locally-invested projects with total capital of over VND168.8 trillion and 37 FDI projects worth more than US$2.07 billion from ten nations and territories.

Seafood expected to help reach export goal

The Vietnam Association of Seafood Exporters and Producers (VASEP) expected that seafood exports would help the industry obtain this year’s revenue target of US$6.5 billion as many challenges in aquatic farming sectors are foreseen.

Farmed tra fish and shrimp exports have fetched the biggest foreign currency revenue for the country with the U.S., Japan and Europe being the largest importers. However, shrimp exports have faced technical barriers in Japan while exports to other markets have seen problems with anti-subsidy lawsuits and economic recession.

Last year, Vietnam’s shrimp export revenue to Europe stood at nearly US$318 million, a 24.5% year-on-year decline.

VASEP has predicted many difficulties in this market this year as Europe is still in a crisis. For tra fish, there would be tough competition among enterprises as they will have to lower selling prices to pay bank debts.

According to the Vietnam News Agency, VASEP estimates seafood export value at around US$1.1 billion in the first quarter, down 13% against the previous year, as local supply has dwindled and export prices declined.

Tra fish export value is expected at around US$230-250 million, a 40% year-on-year drop, due to falling export volumes to big markets such as the U.S and the European Union.

Meanwhile, farmed shrimp output is projected to fall by 20-30% in this quarter, causing a huge pressure on material shrimp supply. Challenges in import markets may drag shrimp export value by 18-20% to US$360 million.

However, VASEP told the Daily that seafood products have still posted up export growth and are consumed strongly on Asian markets. Last year, Asia purchased nearly 70% of seafood from Vietnam with South Korea, Japan and ASEAN nations being strong importers of tuna and octopus products.

Paddy prices fluctuate at start of storage plan

While the low-grade paddy IR 50404 was slightly marking up, prices of the high-grade and fragrant varieties went down on Thursday as the program for buying one million tons of rice for temporary storage entered its second day.

In Tien Giang and Long An, the fresh IR 50404 harvested by combine harvesters sold at the fields for VND4,250-4,350 per kilo, up VND50-150 compared to the levels before the stockpiling program kicked off.

In Dong Thap and An Giang, fresh IR 50404 prices rose to VND4,350-4,400 a kilo, versus VND4,250-4,300 on a few days ago.

However, Tran Van Bay, a rice trader at Ba Dac Market in Tien Giang’s Cai Be District, said the increases only took paddy prices back to the pre-Tet levels.

While IR 50404 prices inched higher, prices of fragrant and high-grade paddy categories declined. In Tien Giang and Long An, traders bought the fresh fragrant paddy OM 4900 for VND4,400-4,500 per kilo, down VND100-200 against the pre-holiday levels, only VND100-200 higher than IR 50404.

Mekong Sub-region cities promote tourism

Four cities in the Mekong Sub-region including Phnom Penh, Vientiane, Yangon and HCMC will jointly promote tourism in Japan and South Korea.

According to the HCMC Department of Culture, Sports and Tourism, this activity is one of the main issues to be discussed at a meeting of the four cities taking place in HCMC on March 20-22.

Together with the tourism promotion program, the cities will discuss programs about student exchange and connecting enterprises, banks and other suppliers to create opportunities for tourism development.

The first joint tourism promotion program will take place in Japan this May and in South Korea next year. Meanwhile, the student exchange program will be held this July.

The meeting in HCMC next month aims to carry out the joint statement of the cities’ mayors on tourism development cooperation. The statement was signed last September at the International Travel Expo in HCMC (ITE HCMC 2012).

Multi-storey car parks in HCMC to start service in 2013

While the four underground parking projects in HCMC remain on hold, two multi-storey parking lots worth tens of millions of U.S. dollars will start service in 2013.

Saigon Transportation Mechanical Corp. (Samco) will put into use a 10-storey car park at 121-139 Co Giang Street in District 1 in the fourth quarter.

Meanwhile, a five-storey parking center developed by Tien Tien Mechanics, Construction & Trading Co. Ltd. at 71 Che Lan Vien Street in Tan Phu District will start operation before April 30.

Le Van Pha, deputy general director of Samco, told the Daily that the 10-storey parking project worth VND500 billion on Co Giang Street was 20% complete and would come on stream in the fourth quarter this year.

In addition to nearly 25,000 square meters of car parking space from the second to ninth floors, the facility has a 5,000-square-meter basement for motorbike parking, he said.

Meanwhile, Nguyen Van Tien, chairman of Tien Tien Co., said the car park on Che Lan Vien Street will be put into operation before April 30. The US$20 million project has a capacity of 1,500 cars and 1,500 motorcycles.

Apart from the above large-scale multi-storey parking projects, there are several projects of this kind at high-rise buildings in downtown HCMC with a smaller scale.

HCM City seeks more space for waste treatment at Da Phuoc

Vietnam Waste Solutions (VWS) said its power plant operating on gas emissions from waste burial will be completed and put into operation early next year.

If unexpected things happen, the plant will start generating electricity in the middle of next year, said VWS general director David Duong. This means the power plant will begin operation later than originally scheduled, which is late 2013.

Duong ascribed the delay to the procedures for seeking supports from the clean development mechanism (CDM) from international organizations. Recently, VWS has received a funding approval from the United Nations.

Another reason for the delay is power price negotiation.

Duong suggested a selling price of 9.5 U.S. cents per kWh, equal to the cost of production, but the bid price was only seven cents per kWh. Therefore, the long negotiation process has recently been concluded.

The plant producing electricity from landfill gas worth some US$50-60 million is designed with a total capacity of 12 MW. In the first phase, VWS will install four generators with a combined capacity of 4 MW, said Duong.

Currently, VWS receives 3,000 tons of garbage in HCMC every day for treatment at a price of around US$17 per ton. The garbage is buried to create landfill gas for operation of the power plant.

VWS is asking HCMC to allow it to receive an additional 1,000 tons of garbage at a price of US$12 per ton to run its compost factory.

The compost factory with a daily capacity of 300 tons worth more than US$7 million is operating perfunctorily due to the lack of garbage.

At present, HCMC disposes of some 6,000 tons of garbage per day. The volume is rising 10% every year.

* The HCMC government is seeking approval from the Prime Minister for reallocation of land for industrial and hazardous waste treatment at the two waste treatment complexes Phuoc Hiep and Da Phuoc.

According to the petition sent to the Prime Minister last Tuesday, HCMC asks for an additional space of about 22 hectares for industrial and hazardous waste treatment at Da Phuoc Waste Treatment Complex.

Meanwhile, the city suggests reducing the area for industrial and hazardous waste treatment at Phuoc Hiep Waste Treatment Complex from 100 hectares to 86 hectares.

As planned by the municipal government, industrial and hazardous waste from the industrial parks Tay Bac, Tan Thoi Hiep and Tan Phu Trung and the small-scale industrial zones Hoa Phu and Tan Quy will be transferred to Phuoc Hiep Waste Treatment Complex in Cu Chi District for treatment.

Meanwhile, Da Phuoc Waste Treatment Complex in Binh Chanh District will be a place for treatment of industrial and hazardous waste from the city’s southern industrial parks such as Cat Lai and Hiep Phuoc, as well as Tan Thuan Export Processing Zone and Hiep Phuoc Port.

This measure will cut half the waste transport cost and minimize the risk of environmental accidents during the transport of industrial and hazardous waste to treatment facilities, says the HCMC government.

Nguyen Trung Viet, head of the Solid Waste Management Office under the HCMC Department of Natural Resources and Environment, told the Daily that the daily volume of hazardous waste in the city had risen to 700 tons, twice as much as the figure registered by enterprises. Because of limited capacity, the city-based waste treatment facilities are often overloaded.

Phuc Khang Building inaugurated in District 3

Phuc Khang Investment and Construction Corp. last Tuesday inaugurated its office project named Phuc Khang Building on Ngo Thoi Nhiem Street in HCMC’s District 3 after one year of construction.

Phuc Khang said it had spent some VND80 billion developing the eight-storey office building with around 12,000 square meters of office space, supplying workplace for the corporation and its member companies.

In 2013, Phuc Khang will sign a cooperation agreement with Thang Long Real Estate Corp. to carry out a project called Sunflower City Nhon Trach in Dong Nai. In addition to offering new products, the two investors will develop the “specialist street” to meet the housing demand of specialists, with a preferential payment method available in four years.

Moreover, Phuc Khang will clinch a comprehensive cooperation deal with two partners, An Gia Real Estate Development and Investment Corp. and Danh Khoi Real Estate Trading and Service Co Ltd., to form a new company named Phuc An Khoi, or PAK Land. PAK Land will focus on investment and development and launch a number of new products into the market.

Property project in Can Tho recalled

The government of Can Tho City has signed a decision to recall the investment certificate of the residential project of Nam Song Hau Urban Development Co. Ltd. in Cai Rang District.

According to Vo Thanh Thong, vice chairman of the city, the project has long been delayed.

The project has a total area of over 60 hectares at an ideal location, which is in South Can Tho new urban area, on the side of the Hau River and opposite to Ninh Kieu Wharf.

Under the license issued in January 2011, this is a high-end residential project. In addition to town houses and villas, the project consists of hotel, financial center and resort.

Having an investment of US$30 million, the investor pledged to construct a bridge connecting Cai Rang and Ninh Kieu districts. However, the project has been almost on hold for two years over site clearance and compensation problems.

CareerBuilder acquires VON stake from DFJ VinaCapital

DFJ VinaCapital, a subsidiary of VinaCapital, has transferred its entire stake in VON JSC, the owner of job search site Kiemviec.com and HR Vietnam, to U.S.-based manpower solutions provider CareerBuilder.

Both sides announced the deal in a press briefing in HCMC on Thursday but they didn’t disclose the specific value of the deal.

At the press briefing, Hunter Arnold, president of CareerBuilder Asia-Pacific, said the high economic growth in the past ten years, at 6-8%, along with the rising number of Internet users, at 33% of the population at present, has made the Vietnamese online job market more attractive.

“The fact that CareerBuilder has become VON’s strategic partner will help accelerate our penetration into the domestic market and this is also an important step to expand our market share in Asia,” Arnold said. He expressed strong hopes on high growth potential of CareerBuilder in the market thanks to the combination of VON’s profound understanding of local employers’ demand and CareerBuilder’s advanced technology and services.

Speaking to local reporters, Paul Nguyen, general director of KiemViec.com and HR Vietnam, noted that it is difficult for enterprises to go it alone in the market at a time of increased global economic integration.

“With the present trend of economic openness, we need to accept global competition, and it is very hard for us to survive alone and compete with global economic giants with strong financial and technological capabilities and rich experiences. To some extent, we have no other choice but to merge with larger partners.”

KiemViec.com is one of the largest recruitment websites at home with more than one million members, attracting over 400,000 Internet users every month, Nguyen said. HR Vietnam meanwhile focuses on hunter personnel services and manpower solutions for employers, he clarified.

CareerBuilder, which specializes in seeking and luring talented candidates for employers, has been active in 22 markets outside the U.S. CareerBuilder’s network consists of 10,000 webs with 140 papers and broadband web portals like MSN and AOL of Gannett Co. and Tribune and The McClatchy companies.

DFJ VinaCapital is one of the first local venture funds under the umbrella of VinaCapital. It is also a member of the venture investment fund Draper Fisher Jurvetson (DFJ) having ties with over 600 companies around the world. VinaCapital has invested in more than 200 businesses so far.

WB expands finance line to VND350 bil. for VIB

The World Bank has officially expanded the finance line to VND350 billion for Vietnam International Bank (VIB) under the rural financing project (RDF), following the local lender’s success in participating in this program.

Joining RDF since 2003, VIB has so far disbursed a total of VND436 billion from the project’s capital, and has thus been evaluated as one of the financial institutions that use RDF capital most excellently.

An executive of VIB said in a statement that the success has led to the World Bank’s decision to expand the finance line to VIB.

“The finance line expansion to VND350 billion under RDF reflects the high appreciation and recognition of WB and BIDV – the contact bank for RDF in Vietnam, for the results achieved by VIB,” said Richard Harris, head of Retail Banking of VIB.

He added that with this new finance line, VIB will look for and invest in feasible projects in order to contribute to developing rural areas and creating jobs for laborers in these areas.

Beneficiaries of the projects financed by VIB are households and individuals in rural areas. Such projects are evaluated to be efficient and transparent, and are frequently visited by WB’s representatives.

Life insurance industry sets modest goal

The life insurance industry having just passed a tough year practicing prudence is setting a realistic growth target for this year.

The industry aims to achieve premiums of over VND19.7 trillion in 2013, a growth of 10% year-on-year. Last year, the industry obtained VND18 trillion, up 12% from 2011, which is considered a success in an extremely tough year for the industry players.

The growth target for this year is much lower than the average 17% that the life insurance industry has achieved in recent years. However, the market is expected to continue to be vibrant, while competition will get more intense with 14 companies active in this sector and only 5% of the population holding life insurance policies.

The market is witnessing unhealthy competition, with a fierce battle for employees and the reduction of insurance premiums to win customers, especially in the current tough times. However, Vietnam remains a fertile ground for those who know how to exploit the market.

The general director of a company in the industry told the Daily that by the end of this year, the market would have a total of 17 players, as a number of companies are applying for licenses.

Recently, PVI Sun Life, a joint venture between PetroVietnam Insurance Corp. (PVI) and Sun Life Financial of Canada, with chartered capital of VND1 trillion, has received a license and will likely start its operation next month.

Italian insurance company Generali has just raised its chartered capital from VND720 billion to VND800 billion. Meanwhile, Sumitomo Life has become a strategic partner of Bao Viet through the acquisition of an 18% stake from HSBC.

Meanwhile, Korean Life has changed its name to Hanwha Life to match its new ambitions.

Hanwha was one of the few companies beating their targets in 2012, earning VND168 billion in premium revenue. The South Korean insurance company aims at VND300 billion this year, and sets a more ambitious goal for 2016, which is VND1 trillion.

These moves will make the competition more intense. Previously, the market has seen many players exit, such as New York Life of the U.S. and Allizans of France.

A long-term view in the market is extremely important, and it is necessary to focus on the insurance products that should be designed for protection rather than investment, according to Stephen Clark, CEO of AIA Vietnam.

The view is a result of research done by AIA in collaboration with Nielsen in order to better understand their customers and agents.

Industry players are united in the belief that the local life insurance market is still full of huge potential because 95% of the population is not insured. However, the players know that there will be many challenges as the economic situation is expected to remain difficult this year.

Investors to turn more cautious, say brokers

Although both indices rebounded on reassurance by authorities to investigate rumors last Friday, securities firms predicted that the markets would witness seesaw trading and low liquidity this week as investor sentiment has turned cautious after a volatile week.

The panic that caused last Thursday’s massive sell-off was well soothed by assurances that the rumors that spread in the market were ungrounded. Related agencies also announced they had begun an investigation into the spread of the rumors detrimental to the stock market.

With such calming actions, the VN-Index had a strong rebound right after the opening bell on Friday, gaining over 1%. However, the index fell back into losing territory in the latter half of the morning session on fear of margin related sales.

The VN-Index finally settled at 477.69, gaining 0.96 point, or 0.2%, from the session earlier whereas the HNX-Index advanced 1.06% to 64.12.

Viet Capital Securities Company observed that following the pattern from 2007 to 2012, in the first week after the Lunar New Year holiday, the VN-Index retreated 3% after the opening day closing in the red.

However, trading value and volume on the southern exchange improved significantly by 27% and 51% respectively. Foreigners over the week also turned from net sellers into net buyers with a value of VND225 billion.

On the northern bourse, the HNX-Index lost 4% last week but trading volume and value also increased 66% and 69% respectively. Foreigners’ activities, however, improved 442% week-on-week in net inflows.

Viet Dragon Securities Company said that foreign trading will play a key role in supporting the market this week as ETFs (exchange traded funds) will review portfolios this week. The market may see further correction but the downtrend might be shallow and short-lived. Of course, both indices still have opportunities to recover.

HCMC Securities Corp. (HSC) said that strong denial by Bank for Investment and Development of Vietnam (BIDV) following Thursday’s unsupported rumors was sufficient to stabilize the markets but buyers remained a bit shy.

No doubt investors want to wait out the weekend to say if there is any other news flow before making any decisions. Even so the psychology of the market has changed somewhat over the past few days with the return of a few jitters. These range from concern over a possible petrol price hike in near term to ongoing worries over possible moves to restructure the bank­ing system, it commented.

“Hence we may need to see some further consolidation in order to bed down gains made over the past two months. We would continue to advise buying on weakness but without any urgency,” HSC added.

Keyword ad sector posts strong growth

Keyword advertising revenues of search engines have shot up in Vietnam since this form of advertising appeared in the local market about five years ago.

Despite the presence of several search engines in Vietnam, Google still holds the lion’s share of the keyword ad market with over 30 million Internet users. Google posted an estimated US$25 million of ad sales in Vietnam in 2012.

Speaking with the Daily, Nguyen Khanh Trinh, director of CleverAds JSC which is one of local partners of Google, reported his firm’s revenue at around US$4 million last year. He noted that CleverAds only obtained US$1.7 million in sales in 2011.

Vietnam now is the third largest market of Google in terms of revenue after Singapore and Thailand.

The current difficult economic conditions might badly affect ad sales of newspapers as customers will resort to ad channels of higher efficiency, Trinh said. That’s why ad sales of search engines are on the rise, he explained.

Unlike ads on newspapers, e-papers and web portals, keyword search ad helps advertisers approach potential customers in a right way, with ad sales calculated based on the number of people accessing information. Each click of the mouse will generate VND1,800-2,000 for businesses in the industry.

Foreseeing the attractiveness of the local keyword search ad market, many foreign investors have recently poured money into search engines.

For instance, New Horizon Internet JSC with Russian involvement already launched search engine Wada.vn a few months ago. Nguyen Tien Thinh, director of the firm, said that his company had invested a total of more than VND200 billion into Wada as of end-2012 and that the figure will be higher in the next few years.

Thinh told the Daily that New Horizon Internet now is pouring money into search engines given the market’s high potentials. Wada is not directly competing with Google, he said.

Over 3.11 million motorcycles sold last year

The volume of motorcycles consumed nationwide last year amounted to 3.11 million, down 6.6% from the previous year, which is the first year the domestic market has seen a decline.

According to Honda Vietnam, holder of the biggest motorcycle market share, although motorcycle makers launched several new products as well as promotion programs and supports last year, the consumption volume still declined due to economic difficulties.

Masayuki Igarashi, general director of Honda Vietnam, said that despite new products and supports for customers, Honda Vietnam sold only 1.97 million motorcycles last year, falling by 4% from 2011. The sales results of other motorcycle producers in Vietnam also declined last year, he added.

Economic difficulties, low consumption plus increasing taxes and fees have made many manufacturers cut the production volume.

Specifically, Honda Vietnam had to adjust its production plan in the middle of last year from around 2.3 million to 1.93 million motorcycles.

According to manufacturers, the total designed production capacity of motorcycles in Vietnam has now reached around five million units per year while the consumption volume is 3-3.5 million per year. With the excessive production capacity, they have had to seek overseas markets.

In addition to exporting motorcycles and components to traditional markets like Thailand, Malaysia, the Philippines, Laos, Cambodia and Pakistan, Honda also exports scooters to the Italian market and will boost the export to other developed countries, according to Igarashi.

If the market grows well, it is likely that Honda Vietnam will put into operation the plant No. 3 which is under construction in the northern province of Ha Nam with an initial capacity of 500,000 units per year.

Lack of guidance makes State support solutions unworkable

Given the absence of specific guidelines from ministries and agencies, the Government’s solutions provided in resolutions 1 and 2 to support troubled businesses, tackle mounting bad debt and subsidize interest rates for certain homebuyers have yet to materialize as planned.

Minister of Planning and Investment Bui Quang Vinh told representatives of ministries and agencies on Tuesday that there are still many contents in the two resolutions that related authorities have not provided guidance for.

Vinh noted the solutions aimed at propping up struggling businesses and the market reflect the reality and are in the right direction.

However, only the State Bank of Vietnam (SBV) issued Directive 1 on organizing and carrying out monetary policy and ensuring the safety and efficiency of the banking sector’s 2013 operations late last month, he said. With the directive, the banking sector regulator “considers setting aside a reasonable volume of capital for lending to low-cost home purchasers and enterprises that change their projects into low-cost housing ones as instructed by the Government.”

The Government in Resolution 2 clarifies that SBV will set aside VND20 trillion to VND40 trillion via recapitalization with affordable lending rates and a maximum period of ten years to assist local banks in lending to those eligible. This means that without the measure and other involved instructions, it is impossible to cope with the current difficulties of the property market.

Besides, the fee reduction plan that Vinh mentioned before is not yet done. The Government has asked competent authorities to lower registration fee for cars under ten seats and secondhand vehicles nationwide with a sum of no more than 2% but the decree on registration fee drafted by the Ministry of Finance is still incomplete as of now.

Ngo Huu Loi, director of the Tax Policy Department under the finance ministry, meanwhile, said that the rule is going to come out as soon as next week.

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

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