Home » Business » BUSINESS IN BRIEF 5/12

Unregistered import firms may be closed

Several thousand Vietnamese businesses that currently import agricultural products and materials from foreign countries will have to stop their operations if they do not register quarantine and origin before the end of the year.

Only 13 out of 59 countries and territories exporting products to Viet Nam have completed the registration, according to statistics from the Ministry of Agriculture and Rural Development (MARD).

Head of the ministry’s Plant Protection Department Nguyen Xuan Hong said that Circular 13 stipulates that countries and territories exporting agricultural products and materials that come from plants into Viet Nam have to register plant quarantines in order to manage and control epidemics. The circular took effect in July.

Hong said 11 countries had officially finished their registration while two others – Laos and China – have been allowed to temporarily export to Viet Nam. This leaves a big number of unregistered exporters.

He said the ministry allowed countries with contracts signed before July 1st, 2011 to continue exporting to Viet Nam to help foreign businesses prepare for the application. However, several businesses took advantage of the policy to procrastinate over registering.

He added that there were several thousand businesses working with the unregistered countries in the fields of breeding foods, vegetables and wheat flour.

After one year of implementation of the circular, quarantine agencies checked 1,545 imported samples with an average of 140 ones each month. They discovered 12 samples containing harmful chemicals and plant protective chemicals, mainly in imported fruits and vegetables.

Deputy Minister Nguyen Thi Xuan Thu said government has not implemented check-ups for 46 unregistered countries and territories exporting agricultural products to Viet Nam.

Thu said countries without proper registration would have to stop exporting to Viet Nam.

“We would not be easy on imported goods in Viet Nam, given that our own exported products have been strictly investigated for everything from microorganisms to chemicals,” she said.

The ministry asked the Department of Agro-forestry and Aquaculture Quality Management to tell foreign exporters to complete their applications and help businesses exporting to Viet Nam.

More companies appreciate importance of IT to business

Despite current economic woes, the foreign-direct invested company YKK Viet Nam has decided to pour more money into IT solutions in order to expand its business.

The company, which has been making similar investments in recent years even though the economy has remained stagnant, sees IT as critical to its development.

“The money we pour into IT has risen by 10-30 per cent each year in recent years,” said Le Minh Long, the company’s IT Director told Viet Nam News. “We’ve invested in both hardware and software, depending on our business and projects.”

The company, which makes spare parts and accessories for the garment industry, has factories in the Amata Industrial Park in the southern province of Dong Nai.

YKK Viet Nam is a clear proof that companies outside Ha Noi and HCM City as well as small- and medium-sized enterprises nationwide are ready to pour money into IT infrastructure, even in times of economic hardship.

Many of these companies have begun to realise the key role of IT as a driver of business growth and sustainability.

They know that IT can help them manage their businesses and staff more effectively as well as improve services, particularly during an economic downturn.

“In the past, IT was seen as only a connection and data-processing tool,” said Do Thi Hoa, Country Marketing Manager of IBM Viet Nam.

“Now companies are beginning to view IT as key strategic investment to differentiate themselves from competitors, and they are working to maximise the efficiency of their IT operations to transform their business processes and the way they serve and interact with their customers,” she added.

A growing demand for IT transformation is occurring not only in big cities like HCM City and Ha Noi but also in companies in Binh Duong and Dong Nai provinces as well as Hai Phong.

The Umbrella Fashion Company Ltd and Asia Foods located in Binh Duong and VNPT in Hai Phong are a few of the companies that are beginning to see IT as critical to their success.

They are making such investments in order to have a powerful, flexible and cost-effective IT platform to improve internal collaboration as well as the online experience of customers.

“IT infrastructure solutions have provided YKK with a powerful and solid foundation that supports our business operations and future IT expansion demands,” Long said.

The Umbrella Fashion Company Ltd, for example, poured money into setting up a new website and buying software to create an online shop for customers.

Doan Quynh Nhi, company director, said that IT had brought the company many benefits, some of them intangible.

Not only does the new website save time for customers, but it has also helped her company sell more products in Viet Nam and abroad.

With demand for IT growing, many IT solution providers see these enterprises as the key segment in their geographical expansion strategies.

IBM Viet Nam, for example, has significantly expanded its presence to help companies outside Ha Noi and HCM City and SMEs nationwide by opening an office in Da Nang in May and working closely with local governments in Dong Nai and Binh Duong provinces as well as Hai Phong.

Viet Nam targets 2014 for bio-fuel project green light

Viet Nam will start blending bio-fuels with petrol on a large scale to power road vehicles from 2014, as the Government seeks to push ahead with its commitment to establish green credentials.

According to a new roadmap issued by Government leader Nguyen Tan Dung, seven cities and provinces throughout the country including Ha Noi, central Da Nang City and HCM City will take the lead in the bio-fuel development programme, which will contribute to safeguarding the nation’s energy supplies and environment. The programme, to be applied for producers and suppliers of petrol for road vehicles, is planned to be rolled out nationwide by the end of 2015.

Viet Nam has built six ethanol production plants in key manioc growing areas in the central region, with a combined capacity of 550 million litres per year.

Three of these plants are owned by the Viet Nam National Oil and Gas Group (PVN).

It’s been reported that the plants are able to supply 300,000 cubic metres of ethanol per year, enough to blend 6 million cubic metres of E5 bio-fuel, which would cover 94 per cent of the country’s predicted petrol demand in 2014.

General Director of Saigon Petrol Dang Vinh Sang said the price of E5 was VND100 lower per litre than normal petrol A92. His company was experimentally selling bio-fuel at four stations.

Sang said the enterprises would not make losses if a lot of bio-fuel is sold, because they enjoy exemptions from the environment protection fee and special consumption tax on the volume of ethanol sold .

Sang said his group had enough labourers and facilities to expand the market for bio-fuel to about 1,000 agents from central Khanh Hoa Province to southernmost Ca Mau Province.

Viet Nam has boosted investment in developing bio-fuels in recent years, however one of the biggest difficulties has been attracting petrol agents to sell bio-fuel.

A Ha Noi petrol station owner, who wished to remain anonymous, said he would have to invest tens of millions of dong to build an E5 pumping pillar and a tank. But he indicated that he would be willing to do so if he received the State’s support.

Nguyen Van Thuong, a petrol station manager in Binh Thanh District, said his station has an E5 pumping pillar, but doesn’t sell much of the fuel. “There were a few cars or motorbikes that bought this kind of fuel, but I’m not sure if they know that it’s bio-fuel.”

A Viet Nam News survey taken at Ha Noi’s Tran Hung Dao Street petrol station, found that customers will use bio-fuel instead of traditional ones if its price is much lower and the safety of their vehicles’ engine is ensured.

Nguyen Manh Dung, a customer at the petrol station, said he has the right to weigh up the economical value and the engine’s durability when choosing between traditional fuels and bio-fuel.

“The different levels of the prices between traditional and bio-fuels is not much. Meanwhile, using normal fuels like A92 and A95 has become a habit for consumers. It’s not easy to change the habit,” said Dung.

Recently, the Ha Noi Science and Technology University found that E5 was safe for road vehicle engines and did not require a change to the vehicles’ composition or parts. The use of E5 would help improve the engine’s capacity and reduce HC and CO emissions.

To ensure continuous production, the PVN’s enterprises have to sell ethanol to some other countries including the Philippines, South Korea and China at a loss.

To turn the plan into a reality on time, the Government and its related agencies need to provide solutions for promoting demand and creating a step by step process to reduce losses for the producers and to safeguard the environment.

Nation toasts record tourism year

With 656,000 foreign arrivals in November, the total number of visitors to the country this year has risen to 6,036,000, the highest ever in a year.

The figure, 11.4 per cent up year-on-year, exceeds the previous record of 6,014,000 visitors last year, and is encouraging for Viet Nam’s tourism industry amid the global economic turmoil.

The figure includes 3.6 million tourists, an increase of 9.4 per cent, 1.06 million coming for business, and nearly 1.05 million coming to visit relatives, according to figures from the General Statistics Office.

The numbers of international visitors has increased steadily from 3.58 million in 2006 to 4.24 million in 2008 and 5.05 million in 2010.

The 17.1 per cent growth in the number of visitors coming for business indicates an increasing interest in the country’s business and investment environment.

The number of people coming to visit relatives grew 15.5 per cent. There are nearly 4 million ethnic Vietnamese living abroad and another 400,000 working around the world.

Including spending during these visits, remittances by Overseas Vietnamese are expected to amount to US$10-11 billion in 2012, exceeding the $9 billion remitted last year.

Spending by international visitors in 2012 is estimated at $6.7 billion, far in excess of the earlier record of $5.62 last year.

Phu Quoc International Airport off the ground

Phu Quoc International Airport became operational in the Mekong Province of Kien Giang’s Phu Quoc District yesterday.

Built on 900ha in Duong To Commune with a total investment of VND16.2 trillion (US$775 million), Phu Quoc airport can accommodate 2.6 million passengers a year.

The airport, which has a 3,000m by 45m runway is capable of receiving Boeing 777s, Boeing 747-400s and similar aircraft.

The international airport replaces the local airport in Duong Dong Town on Phu Quoc Island.

Airport director Dao Viet Dung said that in addition to existing flights, the new airport would accommodate five daily flights from December 12. It will use Airbus A321s of the Ha Noi-Phu Quoc route to be operated by Viet Nam Airlines.

On the same day, low-cost carrier VietJet Air will launch its HCM City-Phu Quoc route with one flight per day.

SMEs urged to update products

Vietnamese small-and-medium-sized enterprises are in desperate need of a product overhaul to become more competitive in the domestic market.

That is the view of Pham Thi Thu Hang, vice general secretary of the Viet Nam Chamber of Commerce and Industry (VCCI), who feels firms have reached a sink-or-swim crossroads.

The task has become more urgent due to local markets becoming dominated by large numbers of smuggled goods.

But according to a nationwide survey of over 2,500 private enterprises conducted last year by the Viet Nam Central Institute of Economic Management (CIEM), only 11 per cent of enterprises had diversified and renovated their products in the last two years.

This represents a decline from the last survey in 2009 when the corresponding figure was over 16 per cent.

Up to 40 per cent of the enterprises surveyed said they had been unable to improve or change their products in the last four years.

Hang said the declining rate of enterprises’ product updates was alarming.

“If this trend continues, it’s likely that many small-and-medium-sized enterprises (SMEs) will be forced out of the market,” she said, noting that in the first nine months of this year, over 42,000 enterprises across the country stopped operations and dissolved.

The survey also found that in the last two years, the average rate of market exits among SMEs has been nearly ten per cent.

Two years ago, nearly 12 per cent of enterprises surveyed thought the economic crisis would create opportunities for enterprises. However, according to the survey of 2011, only 5.6 per cent believed the crisis had a positive impact on their operation.

CIEM Vice Director Vu Xuan Nguyet Hong said SMEs, which account for nearly 97 per cent of total enterprises in Viet Nam, were becoming the core of the country’s socio-economic development.

In the last 15 years, CIEM has conducted seven surveys on SMEs, providing evidence of the changing Vietnamese business environment every two years.

Ninh Binh chosen to become No 1

The northern province of Ninh Binh should continue to perfect its investment policies, foster administrative reforms and improve infrastructure facilities in order to attract more investment capital.

Deputy Prime Minister Vu Van Ninh delivered this message during the Ninh Binh Investment Promotion Conference organised yesterday in the province.

Improving the quality of human resources and resolving difficulties facing investors in a timely fashion are also necessary, the Deputy PM said.

He suggested that the province pay more attention to promotion campaigns further advertising its huge potential as a tourist destination while introducing appropriate policies to enable it to become the key tourism centre of the Red River Delta region and the country as a whole in the next three years.

“Ninh Binh is providing foreign and domestic investors with huge opportunities in various sectors such as tourism, manufacturing, electronics, hi-tech industries, agriculture, seafood and animal husbandry,” said the provincial Party Committee’s Secretary Bui Van Nam.

“We invite and are ready to co-operate with all investors who are interested in the potential and advantages of Ninh Binh, the land of the ancient Hoa Lu capital. We are willing to create a favourable investment environment for both domestic and foreign enterprises,” he said.

Nam added that he hoped the conference would provide a good chance for State authorities and ministries to work with domestic and foreign investors to learn about Ninh Binh’ socio-economic development issues and its untapped investment opportunities, as well as to propose measures for sustainable development that could help the province attract maximum resources for its socio-economic development.

Over the years, Ninh Binh has gained a stable annual economic growth rate of above 10 per cent, especially during 2006-10, when the province’s GDP expanded 16.5 per cent per year, according to the provincial People’s Committee chairman Bui Van Thang.

The province has since developed its industry and tourism sectors and created a sound economic structure, Thang said, adding that the ratio of industry-construction accounts for 49 per cent of the provincial GDP while agro-forestry-fishery makes up 15 per cent and the service sector contributes 36 per cent.

Despite gaining encouraging economic results over the past few years, Ninh Binh is still encountering several challenges, Thang said.

He outlined the influence of the global financial crisis and the domestic economic downturn, which had a significant impact on the attraction of investing in the province, and resulted in insufficient infrastructure and a lack of skilled labour.

Speaking at the conference yesterday, Minister of Culture, Sports and Tourism Hoang Tuan Anh spoke highly of the provincial advantages and potentials in the tourism sector.

He suggested the provincial authorities draw up an effective development scheme for the sector to ensure it grows sustainably, and concentrate on improving the quality of human resources for the sector.

He also emphasised the importance of establishing a fund used for domestic and overseas promotion activities.

During the event, the province granted investment licences to seven projects with a value totalling over VND9.1 trillion (US$433 million). These projects cover the sub-sectors of steel, seaport expansion, agriculture processing, tourism and real estate as well as hotels.

Five Memorandum of Understanding agreements were made between local authorities and investors in trade promotion, beer, housing and real estate.

“Ninh Binh’s large land area for production, convenient transport, abundant personnel resources and provincial investment incentives have persuaded our company to develop our project here,” said Harima Naoki, general director of Kyoei Steel Viet Nam Co, which received a licence to build a VND3.87 trillion ($185.7 million) steel complex in the province yesterday.

Yesterday the province also published a list of 20 projects calling for investment during the 2012-2015 period.

Nine of these are industrial production developments, eight involve agricultural and urban technical infrastructure, while the remainder are tourism and service projects.

During the first nine months of this year, the province granted licenses to 14 projects including four that are receiving foreign investment and pledging about VND4.22 trillion ($202.5 million), according to the provincial Department of Planning and Investment’s statistics.

The latest additions has brought the number of licensed projects in the province up to 451, worth a combined value of VND82.18 trillion ($4 billion). Of this total, 28 are foreign-invested and worth $954 million.

Ninh Binh has launched multiple investment incentives and has reformed administrative procedures targeting a one-stop mechanism to facilitate investors.

Khanh Hoa told to make most of tourism potential

Party General Secretary Nguyen Phu Trong has urged central Khanh Hoa province to make the most of its potential for a tourism, services and maritime-based econ-omy in a sustainable manner.

At a working session between the provincial Standing Party Committee and the Political Bureau held yesterday to discuss the province’s 2020 development plan, Trong said Khanh Hoa possesses favourable conditions to enhance links with south central coastal provinces, as well as with Da Nang, the Central Highlands and HCM City .

He said the province needs to help boost the economy in combination with socio-political, defence and diplomacy development.

Regarding orientations for future growth, Trong requested the province to finalise their 2020 plan, with a vision to 2030, to ensure it matches the region and country’s master plan. He also called for it to align with the Resolution of the 11th National Party Congress and plans approved by the Government.

At the session, the Politburo agreed to turn Khanh Hoa into a centrally-governed urban entity in the future, making it an economic, cultural, tourism and science-technology centre with a high-quality workforce and key defence-security area for the south central region, the Central Highlands and the country.

In order to fulfil such goals, the province needs to pay attention to developing industry, agriculture and aquaculture; improve health care services, education and human resources training; generate jobs and reduce poverty; protect the ecological environment; preserve national cultural identities; uphold great national unity and increase the leadership and strength of Party organisations, the Politburo said.

They consented to building the Van Phong exclusive economic and administrative zone, utilising Cam Ranh port in the civil-military and economic defence combination, bringing the maritime-based economy into full play, paying attention to the development of Truong Sa island district, as well as safeguarding national sovereignty over the sea and islands.

The Politburo agreed to provisionally transform universities and colleges in the province into interdisciplinary, quality centres of education.

They also gave opinions on financial mechanisms, impending projects and the holding of the 2016 Asian beach sports festival in the locality.

Khanh Hoa now ranks fourth in terms of contributions to gross domestic product and fifth in State budget collection.

The locality is blessed with a favourable geographical location, natural conditions and mineral resources.

Role of human resources changing

Human resources (HR) management assumes greater importance in times of economic difficulties and becomes key to a company’s competitiveness and survival, experts said at seminar yesterday.

Addressing a year-end seminar organised by Talentnet Corporation, a leading HR service provider in Viet Nam, Tieu Yen Trinh, its general director, said that historically, the HR department has been viewed as an administrative overhead.

“But the role of the HR department is changing nowadays,” she said.

HR practitioners cannot focus only on manpower management, they must also understand and engage in the business operations of their companies before they can map out appropriate HR strategies to serve their companies’ development.

Change management, talent management as well as the ability to create a good working environment are among the skills that CEOs expect from HR staffers, she said.

“If we look at the market, enterprises investing in people and in HR management usually achieve great success,” Trinh said.

Good HR management has therefore become indispensable for a company’s development, she told the seminar that marked the company’s fifth-year anniversary.

She noted that local companies were paying more attention to making their HR management more professional.

“I believe that in the coming time, HR management systems at local companies will match that of the region and the world,” she said.

Ajit Nambiar, APAC head of Compensation and Benefits for Google Inc, shared with seminar participants insights and information about his company’s policies and approaches to recruiting, developing and retaining talent.

About 1,000 representatives of local and foreign companies attended the seminar.

Firms fail to exploit internet marketing

Fifteen years since it reached these shores, the internet has revolutionised Vietnamese lives. Online enterprises have boomed, but many Vietnamese businesses are lagging behind and still do not take full advantage of internet marketing to leverage economic development, said To Hoai Nam, deputy chairman of the Association for Small–Medium-sized Enterprises (SMEs).

Nam was speaking at an internet marketing seminar in Ha Noi this week, which was co-hosted by the Viet Nam Internet Association (VIA) and Russian New Horizon Internet (NHI) which owns the Wada.vn Vietnamese search engine. At the seminar, industry experts said most Vietnamese businesses were still reluctant to add internet marketing to their business strategies.

According to experts, Viet Nam has a strong technology infrastructure, with one-third of the population regularly using the internet. In addition, one in nine citizens use social networking, while one in every five cell phone owners uses a smartphone. Accordingly, there is a clear opportunity for businesses to take full advantage of the internet.

Lukasz Roszczyc, managing director of Leo Burnett Viet Nam said that instead of renting expensive premises, businesses can now open online stores and take advantage of the internet to promote their products. However, Vietnamese businesses currently allocate only 0.5 per cent of their total advertising spend to online marketing.

But while businesses remain rigid, consumer behaviour is gradually changing. In the past, buyers would often buy impulsively and immediately, whereas today, they can use the internet to chat or share opinions on the product before deciding to make a purchase, said Nam. Therefore, if businesses make good use of internet marketing, it will be far more effective than traditional methods, said Nam.

A big question raised by businesses, was whether embracing online marketing would translate into success for their business, as well as saving them money.

“This is vital amid the current economic difficulties and the fact most Vietnamese enterprises are small and medium-sized ones,” he said.

Ms. Aigerim Zhangozina, managing director of wada.vn said, she hoped wada.vn would become an optimal and useful Vietnamese search engine. In addition, it would also bring Vietnamese businesses a new and cost effective route into internet marketing.

According to Tuan Ha, CEO of Vinalink company, most small and medium-sized enterprises in Viet Nam do not know about internet marketing because they have not been well trained, adding that businesses who do use internet marketing can reduce advertising costs by 90 per cent.

Ha gave some examples of the successful application of internet marketing in Viet Nam by firms such as Tran Anh company, The Gioi Di Dong company, Lazada.vn and Giaytot.vn.

According to experts, Vietnamese consumer habits remain geared towards in store buying over shopping online. Therefore, businesses should work closely with stores if they want to sell products online and must show relevant legal documents to prove they are genuine agents.

Nguyen Viet The, General Secretary of the VIA, said Vietnamese businesses must be fully aware of the importance of online business, so they can apply it in a professional manner. By doing so, internet marketing in Viet Nam could become a lever to help businesses expand as the internet has become an indispensable tool in a large number of homes.

Coffee growers fight FDI business

Domestic coffee producers have called for more support to improve the quality of coffee to enable them to remain competitive with foreign-direct-investment (FDI) enterprises.

Director of Trung Nguyen Coffee Group, Dang Le Nguyen Vu, said the number of FDI enterprises joining Viet Nam’s coffee market should be controlled to prevent the possibility of them dominating the domestic market and preventing local producers from building up a Vietnamese coffee brand, according to Dau Tu (Investment) newspaper.

According to Ministry of Agriculture and Rural Development statistics, FDI enterprises’ market share increased to more than 50 per cent last year, rising by 40 per cent in just two years.

Currently, half of the top ten coffee exporters in Viet Nam are FDI enterprises.

Director of Dak Lak company Simexco, Le Duc Thong, said that Viet Nam mainly exported raw coffee beans of low value.

According to Vu, the coffee industry should focus on enhancing the quality of coffee while reducing the plantation costs for farmers. Substandard coffee should not be allowed to be exported as Viet Nam tries to cement its reputation as among the best robusta exporters in the world.

He called for the introduction of policies encouraging farmers to ensure the adequacy of their supply sources of coffee. He also said that the coffee industry must shift towards exporting processed beans rather than raw beans in order to add more value to the bean, pointing out that in this way Viet Nam could earn US$20 billion per year in the coming 10-15 years from coffee export, rather than the $3 billion that it makes now.

Vu called for the Government to support local enterprises with strong brands to help them expand to the world market.

Tax on jet-plane fuel cut from 12 to 7 per cent

The import tax of jet fuel has been slashed from 12 to 7 per cent as of yesterday, the Ministry of Finance has announced.

Together with the cut, the ministry will also review import taxes on the product the next time prices fluctuate in the world market.

Accordingly, the tax rate of 7 per cent will be imposed in cases when a barrel of jet fuel is priced at more than US$105 in the world market.

When the fuel price drops to $95-105 per barrel, the import tax will be 9 per cent. The tax will continuously rise to 20, 30 and 40 per cent when the fuel price declines to $85-95, $70-85 and under $70, respectively. The import tax will not exceed 40 per cent in any case.

The ministry expects the issuance to help jet fuel traders and airlines take the initiative when forming their business performance plans.

Besides the import tax, jet fuel is currently also levied with an environment protection tax of VND1,000 a litre and a value added tax (VAT) of 10 per cent.

Domestic airlines recently asked the finance ministry to suspend the collection of VAT and environment taxes on jet fuel if oil prices rise to $118 a barrel or more.

They claimed to be facing difficulty due to the economic slowdown and rising input costs.

However, the ministry rejected the proposal, saying that collecting VAT and environment protection tax was subject to the rules of the National Assembly’s Standing Committee. Therefore, the involved companies are required to adhere to the tax payment in line with the law.

New guide on invoice printing by enterprises

The Ministry of Finance has recently disclosed a draft circular to guide Decree No. 51/2010/ND-CP on goods sale and service provision invoices.

Accordingly, enterprises and non-business units with tax identification numbers that are allowed to make and print invoices by themselves include: (i) lawfully established enterprises operating in industrial parks, economic zones, export processing zones and hi-tech parks; (ii) public non-business units engaged in production and business activities in accordance with law; (iii) and enterprises with a contributed charter capital of VND1 billion or more.

Businesses other than those mentioned above may issue their own invoices for goods sale and service provision on the conditions that they fully satisfy a number of requirements such as having tax identification numbers, earning turnover from goods sale or service provision, and having equipment to make and print invoices upon goods sale or service provision. Besides, they must have neither committed, nor been fined VND50 million or more for tax-related violations.

The Vietnamese version of the draft is now available at the Ministry of Finance’s website www.mof.gov.vn.

New backers for steel factory

After six years and numerous delays, the Guang Lian Dung Quat steel factory project has finally been given the green light after new investors stepped forward.

The joint venture between Taiwan’s E-United Group and Japanese steel group JFE after the current arrangement was finalised, with adjustments made to the capacity and investment of the steel plant

Early this week Nobuyuki Nada, JFE deputy general director, gave the latest update on the project to the authorities of central Quang Ngai Province.

Under the adjusted project, the plant will boast a total investment of US$4.5 billion and an annual capacity of 7 million tonnes of steel, powered by blast furnace technology and 7,000 workers.

The plant’s main products include thin steel, as well as steel used in construction, automotives and for piping. The main raw material will be iron ore imported from Australia.

The plant’s construction, on an area of 504ha in the Dung Quat Economic Zone, Quang Ngai Province, will be underway by June 2014.

Quang Ngai Province’s authorities believe the participation of JFE, the second-largest steel producer in Japan, will bring efficiency, quality and environmental awareness to the project.

Originally licensed in 2006, the project was started by Tycoons Group (Taiwan) with a registered capital of more than $1 billion. Then, E-United Group (Taiwan) collaborated with Tycoons and raised the capital to $3 billion.

The groundbreaking ceremony was held in late October 2007, but until now its foundations have remained unfinished because site clearance was delayed and the investors adjusted the design and technology as the global economic downturn took its toll.

Early this year, JFE decided to co-operate with E-United Group on the project and contributed capital to the now $4.5 billion project in the Dung Quat Economic Zone.

Housing market must lift quality

The real-estate market could remain frozen unless the quality of housing projects was lifted to regain trust of consumers.

This is the view of economist Dinh The Hien who said the biggest problems in the market were no longer high prices or supply-demand imbalances, but the loss of customer trust.

He said many projects had been labelled top class to push up prices, but in reality, the quality of the buildings and the services offered were often average. Many other projects frustrated buyers because they took so long to complete.

In HCM City, housing demand remained high and with a monthly income of VND10 million (US$498), many could afford a house or an apartment.

According to Hien, price of an average apartment was now about VND11 million per square metre ($530), middle-grade VND16 million ($762), and high-grade VND28.56 million ($1,360).

“Investors cannot lower prices any more in the current situation,” he said.

According to the director of Le Thanh Company, Le Huu Nghia, selling prices were often lower than costs. “Prices are not high, but average incomes are low,” he said.

The Real Estate Association has asked the Government to assist with land-use fees and corporate income taxes – and to simplify administrative procedures to encourage property owners to reduce prices further.

Director of the Department of Housing and Real Estate Management Nguyen Manh Ha said the ministry would halt real-estate projects that had little chance of succeeding.

The ministry also called for the establishment of a housing savings fund to enable low-income people to buy houses.

Hien forecast that the market might recover in the second or third quarters of next year.

Investment expert Tran Le Khanh predicted there would be a scarcity of high-grade apartments in a few years because low prices and huge investment capital together with long capital recovery discouraged investors.

Statistics show that there are 25,870 square metre of vacant offices and shopping centres, 21,645 vacant apartments, more than 1.6 million square metres of housing land and other unused properties in 44 provinces, worth a total of about VND40.75 trillion ($194 million).

VinaCapital to sell 50% stake in the Metropole

Asset management firm Vinacapital is offering its 50 per cent in the Ha Noi Metropole hotel for sale.

The fund has appointed property services provider Jones Lang LaSalle to market its stake in the 360-room hotel, which is well known for its French colonial design.

VinaCapital managing director Andy Ho said the 50 per cent stake has a book value of US$59 million, but he did not reveal his offering price. The other 50 per cent is owned by the State.

“Divestment is one of our strategies to bring profits for the fund in the long term,” said Ho. “For Metropole as well as other properties of ours, we usually refer to consultants, including Jones Lang LaSalle, on the value, and if it is a good price, we will sell.

Investments by the VinaCapital Viet Nam Opportunity Fund (VOF), including the one in Metropole, have attracted interest from investors both in and outside Viet Nam and our selling decision is based on the deal value, not the market situation,” he said, responding to a question about selling the stake during a difficult time in the real estate market.

The Metropole investment is the second largest one by VOF, which has a total net asset value (unaudited) of $725 million, with the first one with Vinamilk.

The fund’s portfolio covers private equity, privatisation of State-owned enterprises, and real estate and private placements in listed and OTC-traded companies.

Property developers still keen on Viet Nam

Property developers from Japan, Malaysia and Singapore still eye Viet Nam’s real estate market with interest, despite global difficulties and the whirlwind of disinvestment in many FDI projects, as they still believe a recovery is imminent.

With the property market decidedly cold, Becamex Tokyu Co Ltd earlier this month broke ground at the site of the Sora Gardens 1 apartments, the first project of the joint venture’s Tokyu Binh Duong Garden City.

Sora Garden 1 is a 24-storey building, one of three luxury apartment blocks to be built in the development which lies 30km to the north of HCM City. The 1,500 apartments will range in size from 70sq.m to 100sq.m, while the luxury houses and apartments are aimed at middle to high-income customers.

Becamex Tokyu began work on the US$1.2 billion project in March this year, marking the first time a Japanese firm has been involved in a Vietnamese urban development.

According to Toshiyuki Hoshino, general director of Becamex Tokyu, this is his group’s first venture into the local real estate market. Through the project, the group would transfer its technology and experiences of urban development to the local market, he added.

“The domestic property market is currently in strife but remains a young market with high development potential,” Hoshino told Vnexpress online newspaper, adding that his firm was deploying its long-term business strategy in Viet Nam.

“Many investors have fled the market but my company is committed to long-term urban development and believes the rapid population and urbanisation growth will lead to a roaring property market recovery,” he said.

By the end of July, Singapore had more than 550 projects with a total accumulated capital of $6.8 billion invested in HCM City. In real estate development alone, Keppel Land of Singapore boasts 18 licensed projects in Viet Nam with a total capital of $2 billion.

The group has partnered with Tien Phuoc and Phu Hung companies, as well as the HCM City People’s Committee to develop housing projects.

Linson Lim, President of Keppel Land, told the newspaper that he believed in the long-term growth potential of Viet Nam and would continue to launch new housing products between 2013-15.

Despite the crisis, the basic foundations of Viet Nam’s housing market remain unchanged.

As well as Japan, Singapore and Malaysian investors are still interested in the Vietnamese market. In October, Saigon Thuong Tin Tan Thang Investment Real Estate Joint Stock Company (TTJSC) started marketing its large Celadon City project in HCM City’s Tan Phu District, over a year after the project got off the ground.

Chow Chee Fan, general director of TTJSC, said the local property market was still in difficulty but the company kept investing to develop the project over the long term.

He said: “We are here for a long term investment, so whether the market is up or down we will continue the project development.”

VUD signs agreement to market Gamuda project

Gamuda Land Vietnam LLC this week signed a partnership agreement with VUD Land Company at Gamuda City, to become an official sales agency for the Gamuda Gardens project in phase 1.

On the same day, Gamuda Land exchanged documents with VID Public Bank to offer a special financing package for any purchase of properties including detached house, semi-detached house and terraced house in Gamuda Gardens.

Under the theme “Gamuda Gardens – A homely haven”, the unveiling of Yen So Park and Gamuda Gardens show-unit attracted more than 200 guests’ demonstrating interest and intentions to buy a modern residential unit.

VUD Land Company has been accredited to be a sales representative for many upscale projects previously and is delighted to be involved with this landmark development.

Work starts on $46.4m Ninh Thuan golf resort

Work on a VND975 billion golf resort and tourism project got underway on Thursday in central Ninh Thuan province, led by the Global ICC Joint Stock Co.

The project, dubbed the Ganesa Ecotourism and Ganesa Golf Club&Resort, covers a total area of 250ha and will be built in two phases.

From 2012 to 2013 (first phase), Ganesa Resort and functional subdivision will cover a total area of 121.28ha with an investment of VND725 billion ($34.52 million)

The second phase, from 2013 to 2015, will see the construction of the Ganesa Golf Club&Resort with 18 holes with a total area of 124.22ha and capital of VND250 billion ($11.9 million).

Sumitomo Osaka Cement powers up battery plant

Sumitomo Osaka Cement Co Ltd (SOC) cut the ribbon on its first battery material plant in Yen My District, northern Hung Yen Province yesterday.

The JPY5 billion (US$62.5 million) invested plant is specialised in manufacturing cathode materials for lithium ion batteries, an essential material in the energy revolution.

“The new plant in Viet Nam will provide a solid foundation to expand our lithium-ion battery cathode material business throughout the region and wider world,” said General Director of SOC Viet Nam Yoshihiko Sumitani.

“We are now able to take advantage of Viet Nam’s talents and raw materials for our plant operation and in turn we will transfer our technology, knowledge and experience to the country’s staff,” Sumitani added. Located in a 56,000-quare-metre area in the Thang Long Industrial Park II, the plant was designed to produce 2,000 tonnes of product per year. The productivity could be increased to 10,000 tonnes per year, depending on market demands.

Vietinbank backs EVN thermo-power plant

Vietinbank, one of the leading commercial banks in Viet Nam, will provide finance to Electricity of Viet Nam (EVN) for construction of the Duyen Hai No.3 thermo-power plant project.

A credit agreement was completed between the two parties in Ha Noi on Thursday, stipulating that the VND6.2 trillion (US$291 million) loan will be repaid over 120-months, with a 48-month grace period.

The loan will be used to pay for 15 per cent of the Duyen Hai project’s total value in advance, implemented under an Engineering, Procurement and Construction (EPC) agreement.

Located in southern Tra Vinh province, the 1,200 megawatt Duyen Hai No.3 coal-fired power plant is expected to connect to the national grid by 2015.

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