Home » Business » BUSINESS IN BRIEF 29/10

Growing capital feels the thirst

Ongoing urban expansion and growth in the capital has necessitated the diversification of water sources from its long-term sole dependence on underground water.

A prospective alternative source could be the so-called “surface water” – water collected from a network of nearby rivers, as stated in a Prime Ministerial decision on water resources planning towards 2030 for the city.

According to forecasts by the municipal People’s Committee, total water consumption per day would be about 1.2 to 1.5 million cubic metres in 2020, 1.9 to 2.3 million cubic metres in 2030 and 2.6 to 3.1 million cubic metres in 2050.

Ha Noi is endowed with abundant surface water which has been extracted for use since the French occupation around a century ago. However, perpetual extraction of underground water to cater for growing demand had resulted in negative impacts including depletion and quality deterioration.

The situation would only become worse if underground water continued to be the major source, senior scientists warned.

Director of Viet Nam’s Environmental Science and Development Institute Le Trinh said that rapid urbanisation had increasingly disrupted the cycle of underground water.

“Normally, underground water is replenished by rainfall, but the urban area has been quickly filled with concrete buildings that in turn prevent a remarkable amount of rainfall from returning to underground aquifers. Instead, it goes into the sewers,” he explained.

Trinh said if water was extracted at a faster rate than it was recharged, it would result in a lower level of underground water. Once it fell to a certain threshold, it would allow pollutants to enter the aquifers and the pollution would then be irreversible.

Some evidence of these incidents have been recorded.

According to a report led by Professor Tran Duc Ha of the University of Civil Engineering conducted in 2010, about 20 per cent of the wells had degraded and needed replacing. Some aquifers in low-lying areas in the south-eastern part of the city had already been contaminated with nitrate.

Tong Ngoc Thanh, director of the Northern Water Resources Planning and Survey Union, confirmed this but said the level was under control and contaminated water could still be treated with technology.

But Trinh insisted that if underground water was extracted at a huge volume, the negative impacts would be all the more prominent.

“The long-term impacts would be land subsidence on a large scale as has been demonstrated in Bangkok,” he said.

Ha Noi has 20 factories and 15 stations that pump water from more than 280 wells, the majority of which are in the southern part of the Hong (Red) River. The current capacity of the whole water supply system is only 730 to 800 million cubic metres per day, well short of the forecast demand of 1.2-1.6 million cubic metres per day in 2020.

“That figure does not include the amount lost to leakage that could be as high as 30 per cent of the total water being transported within the pipe system,” Trinh said.

The scientist, who is also the chairman of the Viet Nam Association for Environmental Impact Assessment, said that the need to find alternative sources of water therefore was imperative and a network of nearby rivers appeared to be a promising source.

He said the big rivers including the Hong and Da rivers had a relatively high volume of water which could provide a steady supply. What was more important was that the pollution in those rivers could be easily treated.

The Da River Water Plant is the first and only plant in Ha Noi so far to exploit water from a river. It is operating at a capacity of 300,000 cubic metres per day and is set to double that.

While it may take time to develop a fully-fledged system of plants that deal with surface water, we may tap into new sources of underground water, recently found at depths of 197 to 447 metres in the southern part of the city.

The Northern Water Resources Planning and Survey Union, in a ten-year project, has located a new Neogen aquifer which holds a huge volume of water of high purity. Its volume is estimated to be so big it may be possible to extract up to 1.64 million cubic metres per day.

“If there are economically viable measures to tap into this huge source, it will make a remarkable contribution to the city’s total water supply,” the union’s chairman Thanh said.

State bank proposes special consumption tax on gold    

The State Bank of Vietnam (SBV) has proposed the Ministry of Finance levy a special consumption tax on gold, said a banking official.

Speaking with DTiNews, SBV Deputy Governor Le Minh Hung said the move of the bank’s management over the gold market is to prevent it from affecting the macro-economy, stabilise the foreign exchange rate, and make the precious metal less attractive to the public.

He added that individuals and organisations that trade gold in other countries currently have to pay value-added and special consumption taxes.

The tax was put on the table as the government currently is discouraging the public from keeping gold as an asset. Gold is now only subject to a 10% export duty, while unprocessed gold is imported at a zero percent tariff.

Hung said the government was not involved in stabilising gold prices as people are not allowed to keep gold and gold is not included in commodity basket for the consumer price index calculation.

People is now benefiting from the huge VND3 million (USD142.8) difference between domestic and global gold prices, which negatively affects credit institutions which have savings in gold, he added.

“People deposit their gold when prices are low; and now that prices have increased depositors will enjoy profits, while the situation is reversed for banks,” the official explained.

Over the past six months, credit organisations bought roughly 60 tonnes of gold. They still need an additional 20 tonnes of gold to repay depositors by November 25, when gold depositing is scheduled to be stopped. It would take them two months for accumulate enough gold.

Cao Sy Kiem, Former Governor of the State Bank of Vietnam, said gold market management includes different issues such as import and export, business and criteria for gold bar storage, therefore agencies should have specific instructions if taxes are applied.

FDI in major sectors keep growing, despite fall in total  

Foreign direct investment in the first 10 months hit $10.5 million, a 25 percent reduction compared to the same period last year, said the Foreign Investment Agency under the Ministry of Planning and Investment.

However, despite the decline in total, FDI in some main economic sectors was still growing strongly, the agency said.

The processing industry and manufacturing had attracted the most FDI, recording over $6.9 billion, which accounted for about 66 percent of the total registered capital so far, a 19 percent increase compared to the same period last year.

Real estate saw a total registered capital of $1.84 billion, accounting for 17 percent of the total registered capital, a four-fold increase over last year’s figure.

Other areas, including wholesale, retail and  repairs and maintenance, attracted over $456 million, twice as many as last year, accounting for 4.3 percent of the total registered capital.

The 10 months also saw an increase in FDI disbursements of up to $9 billion, which was similar to last year’s period.

The agency reported that Japan had registered by far the highest FDI at $4.9 billion, accounting for nearly half of the total registered, followed by South Korea and Samoa with $937 million and $900 million respectively.

The southern province of Binh Duong has attracted the most FDI with $2.17 billion, closely followed by HCM City and Hai Phong with $1.12 billion and 1.08 billion respectively.

 Banks fail to meet rising demand for dollar  

The annual year-end spike in demand for foreign currency has set in, but it is unlikely that foreign currency loans by banks will expand sharply as a result.

Companies usually require foreign currency at this time of the year, the peak business season due to a clutch of festivals, to pay for imported goods and services.

The stable exchange rates, and massive differences between interest rates on dong and loans in the greenback have also added to the demand for dollar loans.

Independent analysts said the forex rate would not fluctuate by more than 2 percent during the whole year.

Meanwhile, though interest rates on dong loans have been cut significantly, they remain twice as costly as dollar loans.

The lowest interest rates on dong loans are between 10 and 12 percent, while on US dollars it is only 5-6 percent.

Pham Thien Long, deputy director of HDBank, explained that the demand for foreign currency rose at the year-end due to the cyclical nature of demand for imports.

Dau Tu (Investment Review) newspaper quoted Pham Linh, deputy general director of the Orient Commercial Joint Stock Bank (OCB), as saying his bank offers dollar loans at 6-6.5 percent to firms exporting agricultural products.

But banks are unlikely to meet the high demand, analysts said.

They pointed to Circular No 03/2012/TT-NHNN that took effect on May 2 which allows banks to lend foreign currency loans to pay for goods and service imported only to those able to repay from their foreign exchange revenues.

Thus, firms that did not have legitimate revenues in foreign currency from production or business activities cannot get loans in foreign currency, they said.

This has prevented a large number of companies from getting forex loans, they added.

Argentinian delegation to seek new opportunities in Viet Nam

Two hundred Argentine enterprises will visit Viet Nam next week, according to a government official from Argentina.

Carlos Bianco, Argentine undersecretary for Investment Development and Trade Promotion, told local press on Thursday that the visit would be headed by the country’s foreign trade secretary, national integration secretary, commerce secretary, and undersecretary for investment development and trade promotion.

“Company representatives are scheduled to arrive in HCM City on October 28, and will meet Vietnamese partners on October 29-30,” he said.

Visiting businesses are involved in various industries, including food and beverages, automobiles, machinery and construction equipment, agriculture, garments and textiles, and pharmaceuticals.

Bianco said the delegation chose Viet Nam because of its high growth rate and dynamic economy.

He also expected many long-term cooperation agreements to be signed between Vietnamese and Argentine partners during the visit next week.

More than 380 Vietnamese businesses have registered to take part in business-to-business meetings during the delegation’s visit next week.

Viet Nam is Argentina’s 47th exporter. The country’s key products exported to Argentina are footwear and accessories, rubber, garments, mechanical equipment and electronic products. Its primary Argentine imports are soy beans, plants and animal fats, cereals, leather and fuels.

Work starts on second MGM tower

The Canadian Asian Coast Development Limited Company (ACDL) yesterday started construction on the second tower of the MGM Grand building at Ho Tram Beach.

The work, 127 kilometres from HCM City in the Xuyen Moc District of the coastal Ba Ria–Vung Tau province, was initially planned for next year. However, with the rapid construction of the first tower, further development has been accelerated.

The project, which will become Viet Nam’s first large scale integrated luxury beach resort and entertainment destination, will be the largest tourism complex in the country and among the largest in Southeast Asia.

The first tower received investment of US$500 million and is expected to be open to the public in February next year. It includes 541 luxury guest rooms, world-class amenities, a conference and convention centre, a luxurious spa, restaurants, retail shopping areas and a spectacular gaming area consisting of 90 live table games, 500 electronic games and exquisite VIP facilities. The second tower will incorporate a further 549 guest rooms when complete.

Covering an area of 164ha, the $4.2 billion project will comprise 1,100 five-star hotel rooms including suites and villas, a casino and a golf course.

The company’s Chief Executive Officer, Lloyd Nathan, said they chose the province as their investment destination because of its beautiful landscape, favourable business environment and improving infrastructure.

He said the project’s first phase has provided 4,000 construction and 2,000 operational jobs for local people.

MGM Resorts International is one of the world’s leading companies, with highly desirable brands in gaming, hospitality and entertainment.

With over 60,000 employees, MGM Resorts International generated $ 6 billion of revenue in 2009 from the 15 properties it owns and operates in Nevada, Mississippi and Michigan, and four other properties in Nevada, New Jersey, Illinois and Macau in which it has a 50 per cent stake.

In November 2008, ACDL entered into an agreement with MGM Resorts International to provide pre-opening services and to manage and operate the first of ACDL’s five resorts under the MGM Grand brand.

Petrol firm ordered to return low-quality fuel

The Ministry of Science and Technology has ordered Thanh Le Import-Export Trading Company and PV Oil to re-export batches of substandard petrol.

More than 7,600 tonnes of petrol A92, imported from Singapore by the company was found to contain sec-butyl acetate – a disallowed additive in Viet Nam.

A batch of A95 petrol of PV Oil was also found to contain the same additive.

Under current technical regulations, petrol additives must be registered and approved by the ministry and proved safe to health, environment and engines.-

SHTP attracts two more high-value projects

The management board of the Saigon High Tech Park (SHTP) on Wednesday handed investment certificates to two new projects in the park with total pledges of nearly US$20 million.

One of the two projects is Saigon Amura Precision Industry Co. of Saigon Industry Corporation specializing in designing and manufacturing mechanical products for the firm’s subsidiaries and hi-tech investors at home and abroad.

According to the management board, the project will cost about US$9.7 million in total investment and will be developed on a total area of over one hectare in SHTP.

The other scheme is a coronary artery stent plant invested by United Healthcare with total investment of roughly US$10 million.

The facility will provide products in line with American standards helping replace import products in the country. The investor also has plans to ship products of the factory overseas in the future.

In the first phase of the scheme from 2014 to 2015, the company will produce 12,000 products annually for cardiovascular illness treatment with an estimated US$5.5 million in sales per annum. In the second phase from 2015 to 2062, it will make 47,000 units a year, including blood vessel stents and other medical tools and equipment, and targets to achieve sales of about US$12.5 million yearly.

At the ceremony, the board also signed a memorandum of understanding (MOU) with the U.S.-based Illinois University regarding nanotechnology. The MOU is the foundation for the two sides to join hands in studying nanotechnology and apply the technology in energy, lighting, water, environment, electronics, medical area and safety.

At the same time, the SHTP training center also clinched a cooperation agreement with Microsoft IT Academy. As such, students of the center will be entitled to training based on Microsoft textbooks and technology and they will get certificates from Microsoft after graduating.

The park attracted 63 projects with total investment capital of US$2.22 billion after ten years of establishment, Le Hoai Quoc, director of the management board, told the tenth-birthday ceremony on Wednesday.

There have been 30 projects operational in the park so far, with total fund disbursed reaching some 40%. The disbursed rate of projects in SHTP is rather high compared to the average level of the whole country, Quoc noted.

Export revenue of hi-tech products of SHTP doubles year-on-year over the past five years.

For instance, export sales of the entire park was US$53.9 million in 2007, US$131 million in 2008, US$259 million in 2009, US$501 million in 2010 and US$1 billion in 2011. Export value of the park is forecast to hit around US$2 billion this year.

With such a strong growth, production sales of the whole hi-tech area might exceed US$5 billion in 2014, meaning its accumulated production value will reach US$3.61 billion, with US$3.57 billion in exports.

Seafood industry eyes US$10.5 billion in 2020 export

The local seafood industry is striving for an export turnover of US$10-10.5 billion by 2020, said Duong Phuong Thao, deputy head of the Export-Import Department under the Ministry of Industry and Trade.

In the coming time, the seafood industry wants to boost exports in a sustainable way, improve competitiveness and keep the country in the list of the world’s top ten seafood exporters, said Thao a workshop on solutions for sustainable development of seafood production and export held in Can Tho on Wednesday.

Specifically, the industry aims at US$7.5 billion in export revenue by 2015, or US$1.3 billion higher than 2011. The targeted export growth rate in the 2012-2015 period is 8% per year.

By 2020, the industry sets a goal to export US$10-10.5 billion worth of seafood, with the annual growth rate of 7% in 2015-2020.

However, experts deemed this target hard to obtain.

Participants in the workshop said that after a period of strong growth, seafood output did not increase in recent two years. Therefore, it would be difficult to achieve volume-driven export growth in the coming period.

Meanwhile, in-depth cultivation methods to create added value for aqua-products have not been applied.

“To obtain these export turnover targets (US$7.5 billion by 2015 and US$10-10.5 billion by 2020), we cannot rely on output increase anymore. It’s time to raise the proportion of value-added products, which should reach 60% in 2015,” Thao said.

Nonetheless, this will be a difficult job, said Deputy Minister of Agriculture and Rural Development Vu Van Tam, explaining that Vietnam still mainly exports crude products (fish fillets), while value-added products, such as collagen extracted from aqua-products, make up just a tiny portion.

Duong Long Tri, director of the seafood information center under the General Directorate of Fisheries, said the general directorate had suggested several measures for sustainable development of the seafood industry. They include re-planning of tra fish and shrimp farming zones, applying advanced technology in fishing, and developing logistics services, among others.

However, participants in the workshop deemed it very hard to achieve sustainability in seafood production as long as traders keep undercutting each other, thus lowering export prices and pushing down buying prices.

Many seafood exporters have reduced their selling prices to quickly gain money for bank debt repayment. This not only drags down seafood export value but also bring losses to farmers, who are forced to sell their products at prices below production costs.

It is also the cause of supply-demand imbalance, leading to a lack of sustainability in seafood production, processing and export.

For instance, when farmers have products available, traders push down prices, bringing losses to farmers. As a result, farmers quit their farms, affecting material supply for processing and export.

“School Meal” Project Launched

On October 11, the HCMC Department of Education and Training, the HCMC Nutrition Center and Ajinomoto Vietnam Company officially launched the “School Meal” project for elementary boarding schools in the city at the recent conference

The project, which is aimed to improve nutrition quality and raise the health awareness among pupils of elementary boarding schools in HCMC, consists of three key parts. They are: setting up a reasonable nutritional scheme via a set of standardized menus to help pupils have good health and stature; educating pupils about the awareness of nutrition via the “Three minutes to change acknowledgment” program; and standardizing the model of school kitchens and dining rooms following Japanese standards, including educating pupils about the awareness of self-service.

A set of standardized menus that are both nutritious and delicious is helpful for elementary boarding schools that have encountered difficulties in mapping out rich, tasty and balanced meals. Reality shows that most school meals are seriously short of dietary fiber and vitamins. The project not only eases the burden of planning nutritious meals from the elementary boarding schools in the city, but also prevents malnutrition and obesity.

The project has offered samples at some elementary schools around HCMC and collected feedback from the schools’ teachers and leaders to complete a set of standardized menus that ensure both nutritious and delicious quality. A training course on nutrition for teachers and cooks at boarding schools will be held late this month.

The “School Meal” project initiated by Ajinomoto Vietnam Company is the first of its kind to be carried out in HCMC in coordination with the HCMC Department of Education and Training and the HCMC Nutrition Center. The project will be implemented in Danang, Hanoi and other cities and provinces nationwide.

Ajinomoto Vietnam Company is an affiliate of the Ajinomoto Group, a hundred-year-plus Japanese group well-known for nutrition and health research. Aside from its core business, Ajinomoto Vietnam Company always focuses on community activities. The “School Meal” project is the first project related to nutrition in schools deployed in Vietnam by Ajinomoto Vietnam Company besides many other social activities like presenting scholarships for underprivileged students and building houses for families in need across the country.

Massive debts leave cement plants stuck in a hard place

Four cement plants – Dong Banh, Cam Pha, Thai Nguyen and Ha Long – owe billions of dong to several banks, but it is unclear who will repay the debts.

The operators of Dong Banh Plant in northern border Lang Son Province spent VND1.505 trillion (US$71.8 million) to build the facility. But they were forced to close it in the first quarter of 2012 after two years in operation, reporting losses of nearly VND197 billion ($9.4 million).

The company must repay both the principal loan and any accumulated interest in the next five years, which could total as much as VND600 billion ($28.6 million).

The Ministry of Finance must come forward and pay the initial loan of $3.5 million because the Government acted as a guarantor to the ANZ Bank, since the plant was financially incapable of doing so.

The three other plants are in equally bad situations.

As of March, Ha Long Cement Plant in northern Quang Ninh Province had incurred debts of about VND1.215 trillion ($57.8 million). The operators borrowed heavily to come up with the VND5.196 trillion ($247.5 million) necessary to start work on the plant.

Although the company borrowed VND2 trillion ($95.24 million) at the end of the first quarter to pay its debts, the company’s liabilities for the period of 2012-15 still amounted to VND1.2 trillion ($57.2 million).

Thai Nguyen Cement Plant in northern Thai Nguyen Province (in which $185 million had been invested) suffered losses of VND77 billion ($3.76 million) after one year and was still running at below 60 per cent of its capacity, although it must operate at 80 per cent at least to earn a profit. Last year, the ministry also paid 4.2 million euros to a foreign bank as a guarantee for the factory’s loan.

Cam Pha Plant also saw losses of VND1.259 trillion ($60 million) after three years of operation. But relieving the debt has been a headache for the Viet Nam Construction and Import-Export Corporation, the company that owns the plant.

All four cement plants are currently owned by State-owned groups and enjoy preferential support from the Government in loan interest rates and guarantee for foreign loans.

Lawyer Vu Xuan Tien told Lao Dong (Labour) newspaper that it should be made clear who evaluated the feasibility of the projects so that they can be held accountable.

He pointed out that normally, a project would be implemented only when its break-even point was at 60 per cent of its design capacity or lower. But the Thai Nguyen plant had to operate at least 80 per cent to break even.

Tien wondered why such projects were still considered “feasible” and even guaranteed by the Government.

One of the reasons the companies suffered such significant losses was because they borrowed too much, and the debt became a heavy burden when they were unable to repay it. According to the ministry’s report, many projects went ahead even though the investors did not make sure they possessed a minimum net worth of 20 per cent of the total investment as regulated in Governement Decree 75/2011/ND-CP. For example, Thai Nguyen plant was reported to have borrowed up to 93 per cent of its total investment.

According to the Viet Nam National Cement Association, the cement industry was also encountering a lot of difficulties in clearing inventories, as the real estate market remained gloomy with few signs for recovery.

The cement inventory was 0.63 million tonnes at the end of August.

Meanwhile, six other cement plants with an annual capacity of 6.72 million tonnes would go operational next year, according to the association.

Exports a bright spot amid economic gloom

Export continues to be a bright spot in the Vietnamese economy despite several difficulties caused by the ongoing economic slump, a report carried by the Sai Gon Giai Phong newspaper said last week.

It cited statistics from the General Customs Office as saying the country’s total import export turnover in the first 15 days of October was US$9.79 billion, achieving a total of $180 billion, a 12.3 per cent year-on-year increase.

Of this figure, exports accounted for $88.2 billion, up 18.5 per cent year-on-year.

According to the Ministry of Industry and Trade, export turnover can reach $113 billion by the end of this year, up 16.6 per cent ove the last year, and exceed the target set by the National Assembly.

Export leaders include: the textile and garment industry with $11.7 billion as of October 15, up 7.3 per cent year-on-year; telephones and accessories with $9.2 billion, up 102 per cent; crude oil with $6.6 billion, up 14 per cent; computers, electronic products and accessories with $5.7 billion, up 82.8 per cent; and vehicles and accessories with $3.5 billion, up 95 per cent.

Exports were dominated by foreign-invested enterprises that achieved a turnover of $48 billion, up 36 per cent year-on-year, accounting for 55 per cent of the nation’s total exports.

Though exports have the potential to exceed the target this year, representatives of many major sectors say tough times are ahead.

The cashew industry, for instance, which achieved an export turnover of $1 billion in the first nine months of the year, is already struggling.

Nguyen Duc Thanh, chairman of the Viet Nam Cashew Association, said production has fallen short of expectations by 30 per cent and prices have slumped by 30 per cent over last year.

Many of almost 300 enterprises and a thousand processing factories in the industry have already gone bankrupt this year, he said.

Truong Dinh Hoe, general secretary of the Viet Nam Association of Seafood Exporters and Producers (VASEP), said seafood exports reached $4.5 billion in the first nine months and is expected to reach $6.5 billion this year.

But the global economic slowdown and stiff competition from India and Thailand was making things very difficult for Vietnamese enterprises, he said.

Furthermore, domestic enterprises had to contend with difficulties in accessing credit as well as increasing raw material costs and transportation fees.

 Foreign exhange rate maintains stability

(VNS) The State Bank of Viet Nam has kept the dong-dollar exchange rate at below VND20,828 for nearly 11 months, and it is predicted to remain stable for the rest of the year.

The rates listed at banks have also been around VND20,800 for buying and 20,830 for selling except for a slight increase in September because of a spurt in gold prices.

The stable foreign exchange rates are testimony that the SBV’s monetary policies have sustained investors’ confidence in the dong.

The stability is also attributed to the close oversight of the market by the central bank since late 2011.

The SBV governor had promised late last year to keep the exchange rate fluctuating within 2-3 per cent this year as part of a drive to limit dollarisation and forex speculation.

The central bank’s policy of keeping interest rates on dong deposits higher than on dollar deposits has strengthened the local currency against the greenback.

It has helped limit speculation and keep dollars circulating freely in the market, thus improving the country’s foreign currency reserves.

The central bank has also actively bought foreign exchange to strengthen the reserves.

As a result, they have risen to US$22 – 23 billion, equivalent to 11.5 weeks of imports, up from being just enough for nine weeks of imports in June.

Thanks to the higher reserves, the central bank is able to step in with timely open market operations (OMO) to maintain market liquidity.

Besides, the gold market has been revamped and placed under a strict control mechanism, sharply reducing speculation and significantly easing pressure on the forex rate.

The forex stability is also owed to plentiful inflow of foreign currency through direct foreign investment and inward remittances.

In the first nine months, $8.1 billion was brought in by foreign companies, while the remittances are estimated at around $10 billion.

Finally, the US Government’s policy to keep the dollar weak through “quantitative easing” has also helped stabilise the exchange rate in Viet Nam.

Property prices plunge

Recently the real estate market witnessed a relentless fall in prices, with the prices of many apartments coming down from VND30-40 million per square metre to just VND10 million.

Hoang Anh Gia Lai Joint Stock Company typifies this trend. In May it suddenly cut prices at some its projects by 50 per cent, taking many people by surprise.

But now this practice has taken hold and has been adopted at many property projects in major cities like Ha Noi and HCM City and in the central region where prices were cut by 50 and even 70-80 per cent.

But the price cuts and other measures adopted by property firms like reducing apartment sizes and providing financial support to revive the market have been in vain because of lack of confidence among investors.

Many of the firms have realised that the confidence crisis is much worse than the other problems they face.

Homebuyers have lost their confidence primarily because many builders failed to finish their projects and hand over apartments in time due to lack of funds.

In many cases the delays have been indefinite, while in others it has been a dead loss for the buyers after builders defaulted.

As a result, freebies and price cuts have only helped up to a point, and only developers gaining customers’ trust have been able to sell.

Homebuyers always want to know if they can get their houses on schedule, and if they have to pay newly arising expenses.

A survey of prospective buyers after some developers cut prices by 50 per cent found that the former are only interested in projects to be finished within one or two years.

Everyone wants to ensure that an apartment they buy will be finished.

Trade deficit ignites fears

Viet Nam enjoyed a trade surplus of $34 million in the first nine months of this year, a huge improvement from the $8.1 billion deficit at the same time last year.

The Ministry of Industry and Trade expects exports to top $113 billion this year and imports to cost $114 billion, meaning the trade deficit will be only $1 billion.

The Government has announced an import-export strategy for the 2011-20 period under which exports and imports are projected to grow by 11 – 12 per cent and 10 – 11 per cent per year respectively.

The programme also seeks to gradually lower the trade deficit, balancing trade by 2020 and achieving a surplus by 2030.

This means that if the country’s import and export values are maintained the country’s goal of balancing imports and exports set for the period of 2011 and 2020 will be realised eight years earlier.

But delve a little deeper, and the trade figures this year, especially the elimination of the deficit, is not a positive thing.

This is because Viet Nam still relies heavily on imports in most areas like manufacturing, construction, traffic, transportation, and even agriculture.

Thus, a shrinking of imports like now indicates possible problems.

Thousands of companies have had to cut back on or stop production due to rising inventories. So their demand for raw materials has reduced.

According to the Government, as of September 1 unsold products at processing and manufacturing enterprises had increased by a fifth compared to the same period last year.

Among the worst affected industries were cement, steel (up 40 per cent), animal feed, seafood, garment and textile, fertiliser, electric cables, and motorbikes.

Consequently, import of 20 items for feedstock has declined strongly. They include urea fertiliser (down by 61 per cent), animal fats (78) per cent, cotton (79) and steel ingots (48).

All this points to the fact that balanced trade is a danger signal that points to a decelerating economy.

In any case, the official import figures do not include the massive smuggling that goes on over land, water, and air, and is becoming increasingly sophisticated.

Smugglers bring in everything from toothpicks to medicines and poisonous chemicals into the country.

Ministry to monitor dietary supplements

The mushrooming production, import and trade of dietary supplements should be managed to avoid potential threats to users, an industry conference heard in Ha Noi last Saturday.

According to director of Food Safety and Hygiene Department under the Ministry of Health Tran Quang Trung, as many as 50 per cent of adults in urban areas, particularly in Ha Noi and HCM City, take food supplements.

Referring to the high number of users, Trung said: “But most of them are not given sufficient and official information on the effects of these foods on human health.”

He admitted the management on functional food is still lacking appropriate regulations, resulting in a chaotic market flooded with both legitimate and fake products.

“Take Korean Gingsen as an example, there are hundreds of brands with similar labelling and buyers cannot recognise the difference between real and fake products,” Trung stressed.

Chairman of the Viet Nam Association of Dietary Supplements Tran Dang said the product has been one of the fastest growing sectors in the past decade.

While there were just 60 kinds of products provided by 15 importers in Viet Nam in 2000, 3,700 dietary supplements were available by the end of 2010 with 1,626 producers and importers.

Dang added that the ratio between import and local produce has changed from 65 per cent import in 2007, to 35 per cent now.

However, according to pharmacy expert and former Deputy Health Minister Le Van Truyen, most functional foods available in the local market are not clinically tested.

Meanwhile, functional food producers and traders were accused of inflating the importance of the supplements, resulting in harm for users and even deaths, according to chairman of Viet Nam Consumers Protection Association Nguyen Manh Hung.

Speaking at the conference, Health Deputy Minister Nguyen Thanh Long asked relevant authorities to regulate the functional food industry.

Long also confirmed that the Ministry will issue regulations on labelling, provision of usage information, clinical examinations and post-production quality checks.

“We should put people’s health as our foremost priority,” Long said.

Firms to get VAT extension

Some small fry and labour-intensive businesses will continue enjoying a three-month value added tax extension.

The Ministry of Finance has just released Document 175/2012/TT-BTC to guide additional three month extension of value added tax (VAT) for enterprises, which should have been paid in June. This is to be included in Resolution 13/NQ-CP dated May 10, 2012 as part of solutions for easing firms’ difficulties.

Accordingly, instead of VAT payments for June, 2012 in January, 2013 as stipulated in Resolution 13, these enterprises will have until April, 2013 to pay this tax. The VAT payments for April and May, 2012 will still be paid in January, 2013 as previously regulated.

Under Resolution 13, extension of tax payment was applied for small and medium-sized enterprises (excluding enterprises operating in the field of lottery, securities, finance, banking, insurance, and production of commodities and services subjected to special consumption tax); and labor-intensive enterprises engaging in production and processing of agriculture, forestry and aquaculture products; garments; footwear, electronic equipment; socio-economic infrastructure works.

Deputy Minister of Finance Vu Thi Mai said this policy would partly help enterprises decrease difficulties in sourcing capital to stabilise their business and production in amid a difficult economy.

The extension is expected to benefit 200,000 businesses, thus allowing businesses to have VND11 trillion ($528 million) worth of capital to serve their production and business needs.

One-door mechanism proposed for agriculture park

There needs to be a one-door mechanism to help a Hi-Tech Agriculture Park attract investments, according to the park’s authority.

Speaking at a seminar on hi-tech agriculture in HCMC on Thursday, Tu Minh Thien, deputy head of the authority, said that with the one-door mechanism, the park authority could approve and issue investment licenses for suitable projects just as what industrial parks and export processing zones do.

“Currently, to get an investment license, investors must work with various departments and agencies, and this has hindered the attraction of investments into the Hi-Tech Agriculture Park,” Thien said at the seminar as part of the exhibition Hi-Tech Agro 2012 taking place in the city on October 24-28.

Covering over 56 hectares in the outlying district of Cu Chi, the Hi-Tech Agriculture Park is home to 14 projects with total investment capital of VND460 billion.

Most projects there are active in the sectors of biotechnology, farm produce processing and technology transfer.

Thien said that the park would expand its scale and invest in hi-tech cow farming in Cu Chi District, fisheries farming in Can Gio District, and poultry breeding in Binh Chanh District.

Dishes of 25 countries to be introduced in city

Around 50 restaurants and hotels will introduce international dishes to diners in HCMC from December 12 to 26 as part of the city’s annual food festival.

According to the HCMC Department of Culture, Sports and Tourism, at the food festival Tastes of the World, there will be 80 international food stalls at September 23 Park in HCMC’s District 1. The festival will also feature cooking demonstrations, art performances and traditional games reflecting the cultural identities of countries.

Highlights of this year’s food festival are the food cooking and introductions of international cuisine on the nights of December 12 and 15, special activities of chefs of five-star hotels and a bartender competition.

Following the food festival is the Sweet Festival which will also take place at the park on January 25-28. Around 65 confectionery firms will participate in this festival held for the first time in HCMC. Participating firms will introduce products, materials, equipment and supporting services of the confectionery industry to visitors.

Seafood processor denies Thai bid

Thailand’s largest shrimp exporter, Charoen Pokpand Foods (CP Foods), expects to buy a 40-per-cent stake in Minh Phu Seafood (MPC) at US$2.16 per share, according to the website IntraFish.com, but the Vietnamese seafood processor has denied the report.

IntraFish, a seafood industry site based in Norway, noted that the total value of the deal might reach $60 million, with CP Foods to buy shares from institutional investors as well as through a new issuance. The reported purchase price was considerably higher than MPC’s current trading price, which was VND35,100 ($1.60) per share at the close of market trading yesterday.

IntraFish.com also said other investors from Japan and the Middle East were also circling Minh Phu.

A Bangkok-based analyst noted it would be a very hot deal, as CP Foods would be able to “bypass possible higher tariffs under a proposed change in the Generalised System of Preferences.”

The acquisition could also facilitate CP Foods to increase shrimp farming and processing in Viet Nam without building new infrastructure, the analyst said

However, Minh Phu spokeman Nguyen Xuan Toan denied the report yesterday, calling it mere rumour.

The company was still focusing on a plan to sell 30 million new shares through public auction and increase charter capital to VND1 trillion ($47.6 million), Toan said. However, he noted, due to the complexity of issues surrounding the offer, it has been delayed until next year.

Minh Phu currently has a concentrated ownership structure, with major shareholders holding almost 80 per cent. In particular, company chairman Le Van Quang and his family hold over 60 per cent of the outstanding shares in the company.

Pepsi, Suntory to form local alliance

Beverage company PepsiCo Viet Nam and Japan’s Suntory Holdings Limited announced an agreement to form a strategic alliance earlier this week.

Under the terms of the agreement, Suntory will acquire a 51 per cent stake in PepsiCo Viet Nam’s beverage business, with PepsiCo keeping control of the other 49 per cent. Both companies will hold key roles in the management team of the new joint venture, which will serve as the producer of drinks for both companies in Viet Nam.

The new alliance is expected to build on PepsiCo’s existing position in Viet Nam and to create new growth opportunities for both partners in the market.

PepsiCo will retain marketing and innovation responsibilities for its portfolio of iconic beverages in Viet Nam, including the brands Pepsi-Cola, 7-UP, Sting, Mirinda, Tropicana Twister, Lipton and Aquafina. Suntory in turn has committed to sharing its strong brand and long history of successfully developing beverages for the Asian market.

Henry Park, CEO of Suntory Beverage & Food Asia Pte Ltd, a wholly owned subsidiary of Suntory Holdings Limited, said: “Suntory has been actively expanding its business foundation to consolidate its position in growing South-East Asian markets. This alliance is one of our strategic initiatives to pursue further growth in the region.”

Umran Beba, President of PepsiCo Asia Pacific said: “Viet Nam is a highly attractive growth market…We’re focused on expanding our food and beverage business in Viet Nam through continued investment across our portfolio, and our beverage alliance with Suntory is an important part of our strategy.”

This transaction is subject to the completion of legal processes.

Since entering the market in 1994, PepsiCo has undertaken an investment programme of more than US$500 million and now has five beverage manufacturing plants in Viet Nam. The country is a high priority market in PepsiCo’s aggressive emerging and developing market growth plans.

PepsiCo will continue to independently operate its foods business in Viet Nam, and intends to continue investing in agriculture, innovation and distribution to grow its business interests across the country.

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