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Indutrial processed products earn US$53.19 bil

Export earning from industrial processed products in September were estimated at US$6.2 billion, down 9 percent against August but up 17.1 percent from a year earlier.

According to the Ministry of Industry and Trade (MoIT), the total export volume in the nine months of 2012 reached US$53.19 billion, up 25.5 percent compared to the same period last year.

Items with high turnover growth were telephones and computers (77 percent), and electronics products and components (220 percent).

In the meantime, the group of garment and textile, wood products, footwear, crude oil, and aquatic products achieved slow growth, due to the impact of global economic downturn.

SOEs make up 70 percent of total bad debts

Bad debts owed by State-owned enterprises (SOEs) are currently estimated at VND200,000 billion (70 percent of the country’s total bad debts), with State groups and corporations accounting for around VND153,000 billion (53 percent).

The figures were released by Dr. Dinh Tuan Minh at a recent economic forum in southern Ba Ria-Vung Tau province.

According to a State Bank of Vietnam (SBV) report submitted to the National Assembly Standing Committee in September 2012, the bad debt ratio in the whole banking system stands at 10 percent.

The Ministry of Finance’s (MoF) project on SOEs restructuring shows that by the end of 2010, the total bad debts owed by 80 out of 96 State groups and corporations had reached VND827,860 billion or 1.6 times more than their capitalisation. Up to September last year, big SOEs owed more than VND415,000 billion on their bank credit, equivalent to 17 percent of the total bank debt ratio. The outstanding loans of 12 State groups hit VND218,740 billion.

The MoF’s project identifies the biggest debtors as State giants like the Vietnam Oil and Gas Group (PVN) owing VND72,300 billion, Electricity of Vietnam (EVN) Group (VND62,800 billion), and the Vietnam Coal and Mineral Group (Vinacomin) (VND19,600 billion).

Dr Minh said the bad debts of State groups and corporations account for 30-35 percent of total outstanding bank credit.

Dr. Minh cited the SBV’s figures, based on credit organisations’ reports in the first half of this year. He noted that bad debt had increased to 4.6 percent from 3.72 percent in 2011. He warned the real bad debt ratio might even hover around 8.6 percent.

The outstanding debts of credit organizations, Dr Minh said, experienced a sharp rise at the end of 2011, accounting for 11.9 percent of total outstanding loans, up 3.32 percent compared to the previous year, and these outstanding debts would transform into bad debts by the end of the year.

There is growing concern about the rising bad debt ratio in commercial banks which hit 13.36 percent during the last months of 2011. The National Financial Supervisory Committee reported that by the end of last year, the commercial banks made up 61 percent of the whole banking sector’s outstanding debts although only hold 50.64 percent share of the total credit market.

Dr. Minh stressed that the current economic downturn makes it especially difficult to settle bad debts through the sale of assets and State stakes at market prices because most SOEs are dependent on State subsidies to allow for debt removal, debt transference, or increases in capitalisation courtesy of the State budget.

In his opinion, tackling the bad debts of SOEs requires a drastic change in asset trading policy to ensure any chance of success.

He recommended that dealing with bad debts should be combined with promoting public-private partnerships (PPP), restructuring public investment, and reorganising credit organisations.

Dr. Minh argued that Vietnam should not remove SOEs’ bad debts but set up bad debt trading funds and proposed creating a centralised mechanism at the national level with a broad social consensus on guiding principles and strict regulations.

Foreign retailers expand network in Vietnam

Several foreign supermarket chains in Vietnam have opened new outlets in a bid to expand their market share in the country.

The French-run Big C has kicked off its shopping centre in the southern Binh Duong province, bringing the total number of its outlets to 19 nationwide. Located in MC Binh Duong Plaza building, Big C Binh Duong stocks up 40,000 items including dried and fresh food, garments, machines, home utensils, of which up to 95 percent is made in Vietnam.

Meanwhile, the Germany-based Metro Cash & Carry inaugurated its 18th wholesale outlet in the southern province of Kien Giang on October 3. The outlet provides over 25,000 domestically-originated items with a majority of seafood products from Kien Giang’s aquaculture granary.

It targets the local small and medium sized retail sellers, restaurants, hotels and other industry wholesalers. The establishment of the outlet helps create employment for 400 local residents.

Experts ponder gold hoarding

To help mobilise more gold from the public, the macro-economy must become more stable, urged several experts who spoke at a seminar organised by the International Business Knowledge Corporation and Viet Nam Gold Traders Association yesterday in HCM City.

The issue of gold mobilisation has become a hot one as the deadline for issuance of short-term gold certificates by credit institutions falls on November 25.

Vo Tri Thanh, deputy director of the Central Institute of Economic Research and Management, said it was critical to decide how best to mobilise the large amount of gold held by the public.

Vietnamese residents hold between 500-1,000 tonnes of gold.

“Gold mobilisation is about solving problems such as macro-economic stability, investment flows and the guarantee of benefits for gold depositors,” he said.

However, the Government, which is keen to mobilise gold from the public stock, must have transparent policies, an efficient system to mobilise gold, and strict supervision and inspection schemes in place.

Nguyen The Hung, general director of Viet Nam Gold Trading and Investment Joint Stock Company, said that if even half of 500 tonnes of gold held by the public was mobilised, the State would have more than US$10 billion in foreign currency.

That would decrease loan pressure from international financial organisations, he added.

The aim of gold mobilisation is to increase the gold-reserve ratio of total foreign currency reserves, which would help the State Bank of Viet Nam ( SBV) become more active in market regulation. This in turn would prevent further price hikes in markets.

He said that to create public trust and reduce the hoarding of gold, the macro-economy must be stabilised and inflation tightly controlled.

A legal framework for gold mobilisation is also necessary, as well as better information for the public. This would help people feel more secure in depositing their large gold holdings.

He said the state should consider applying an interest rate on gold deposits to ensure benefits to the public.

However, Pham Do Chi, former expert at the International Monetary Fund, said the Government must thoroughly consider the consequences of gold mobilisation.

If huge amounts of gold are mobilised, the State must consider how to maximise the value of this source to help boost economic growth, he added.

Gold hoarding can have the effect of “rescuing” the economy, Chi said. When people keep gold, they feel more free in their spending and this could help businesses thrive during difficult economic times.

He said gold mobilisation should not be mandatory, and that the State should limit using gold as a means of payment so that the status of the Vietnamese dong remained stable.

The central bank uses gold to transfer into dollars and then into Vietnamese dong to lend at 9-10 per cent interest per annum, with the expectation that this gives a big boost to the economy. But this could be financially suicidal, some experts say.

“If the price of gold goes up strongly as predicted, how can the national banking system repay the gold bullion to depositors?” Chi said.

Experts said commercial banks would issue debentures and bonds to mobilise gold deposits from the public.

They also said that the State should find ways to narrow the gap of gold price between the domestic and global markets.

On June 24, the SBV issued Document No. 3854 to require credit institutions to terminate gold mobilising and lending.

Credit institutions are only permitted to issue short-term gold-denominated certificates in cases where the amount of gold-loan collection and gold inventory is not sufficient to make repayments. However, this will end on November 25 when the decision goes into effect.

All Customs to go on-line

All Customs departments will go on-line over the next three years, according to a Ministry of Finance plan to develop the information technology sector.

The new procedure is expected to speed up import, export and commercial activities for businesses and customs offices.

In the period, 85 per cent of all Customs declaration forms will be conducted via e-portal and the ministry will continue to expand on-line, import-export tax collection to the 33 customs departments nation-wide.

By the end of next year, at least 60 per cent of total import and export taxes will be collected through e-banking.

In addition, a customs-information system will also be set up.

In the first six months of 2012, e-customs procedures were used by 55,000 enterprises using a total of two million declaration forms.

The procedures are already reported to be bringing benefit to both businesses and customs offices, contributing to the reform of customs administration.

Vietnam’s real estate market faces fierce competition

The Hoang Anh Gia Lai Joint Stock Company (HAG) disclosed on October 5 that approximately 100 apartments had been subscribed by customers after only two days of their announcement to sell condominiums at the Thanh Binh complex at discount rates.

This is the second time since 2009 that HAG has launched a discount sale of apartments at very low rates. In 2009, the investors offered a discount of 40 percent, from US$2,300 per sq meter to $1,350 per sq meter at the Hoang Anh River View complex.

Other projects implemented by HAG were also forced to sell at discounted rates last year, namely, the An Tien project dropped 20 percent to sell at VND14.1 million per square meter; and the Hoang Anh River View project fell to VND18.1 million per square meter.
Hoàng Anh River View Apartment in 37 Nguyễn Văn Hưởng, Thảo Điền ward, district 2 (Photo: Internet)

Similar discount rates were offered in Phu Hoang Anh, Hoang Anh Gia Lai 3 with prices much lower than original sale price set by investors.

Moreover, on October 3, HAG put up a new apartment project in HCMC’s District 7 for sale at prices that were 30 to 50 percent lower than those of similar projects in the area.

The Hoang Anh Thanh Binh condo project consists of three blocks of around 1,000 apartments of two bedrooms each over 73 square meters.

In addition to the discount, customers who buy a Thanh Binh condominium will also enjoy flexible payment methods.

“Customers have to pay 30 percent of the contract value in advance, 40 percent in the next 30 months, and 25 percent when receiving the apartment,” one customer told reporters, adding that the remaining 5 percent will be cleared when the apartment possession is handed over to the buyer.

Buyers will also be able to borrow 70 percent of the first payment amount or 30 percent of the contract value, without proof of income.
Meanwhile, HAG continues to deny that they are dumping the apartments on the market.

“HAG did not slash prices out of financial difficulties,” chairman Doan Nguyen Duc told reporters, rejecting dumping accusations.

The selling price was calculated based on the current realty market and customers’ financial ability, the chairman confirmed.

Le Hung, Director of Housing Development Corporation under HAG, said that the investors’ discount is good for the market, but also good for themselves. “Moreover, we accept that we will gain lower profits but will also be able to quickly recycle investment, instead of waiting for prices to recover,” he added.

However, other real estate investors do not agree. Vo Thuy Anh, Deputy Director General of Novaland Company, owner of Sunrise City project said, “When HAG announced their discount prices nearby, we naturally were affected. Psychological comparison from customers is inevitable. An apartment at the Thanh Binh project is now available at VND20 million a square meter, a very low rate.”

“It is impossible for apartment prices to remain as high as they were during prime market years ago,” she said.

Le Quoc Duy, Director of Hoa Binh Real Estate Trading Company, said, “Some clients who are negotiating to buy Hoa Binh apartments stopped the purchase after news of HAG’s offer.”

It has become trendy for property firms in Hanoi and Ho Chi Minh City to slash apartment prices by up to one third in the hope of recovering some of the investment in these troubled times.

It is clear that, the Vietnam real estate market is entering the fierce competition period, said Vo Thuy Anh,  this was the time of “strong screening”, while real US based estate market research firm Savills warned that “the market is abolishing  all investors of financial incapacity. “.

Vietnamese have vast amounts of stashed gold

Economic and financial experts met at a seminar on Thursday, hosted by Vietnam Gold Traders Association, to discuss ways to mobilize vast amounts of gold stashed and hoarded away for a rainy day by Vietnamese people.

According to delegates at the seminar, gold reserves are estimated to be almost 400-500 tons, calculated on basis of the total gold volume exported and imported over the last few years.

If the calculation were to cover the gold hoarded by citizens over the last century, the volume may reach thousands of tons, equivalent to US$50-60 billion or half of Vietnam’s GDP.

Dr. Nguyen The Hung, director general of Vietnam Gold Company, said that if only half this gold amount is circulated by the citizens, the Government will be able to reduce loan amount taken from international credit institutions and for which the State Bank can regulate the market in case of price fluctuation.

Luong Van Tu, former head of WTO Accession Team, said that Vietnamese citizens regard gold as a valuable future investment. If the State wants to mobilize this gold, they must offer a very sound and secure policy to persuade people to bring out their deposits out into the open, and convince them of easy withdrawal, as and when needed.

Besides, interest rate on this gold deposit must be attractive enough to persuade gold resource holders to reveal their hidden assets, said Mr. Tu.

Dairy firms milk consumers for another 5-7%

Dairy firms have announced an increase in the price of milk and sweetened condensed milk by 5-7 per cent beginning this month, according to Vu Minh Phu, chairman of the Ha Noi Supermarket Association.

The price rise was due to higher costs for raw materials, production, labour and transport. Milk raw materials had increased by 5 per cent compared to last year, Phu said.

Since September 24, Abbott has increased the price of Gain IQ, Similac Gain IQ and Grow Vanilla powdered milk by 5-10 per cent.

FrieslandCampina Viet Nam recently increased the price of milk and sweetened condensed milk, including brands Dutch Lady and Ovaltine, by 3.8-5 per cent.

The company will try to maintain the same prices on several kinds of products, according to Nguyen Ngoc Kinh Luan, representative of Friesland Campina.

Luan added that his company had to change the prices of milk products to adapt to the market.

Nguyen Anh Tuan, deputy head of the Department of Price Management, said no dairy firm had asked his department to approve the increase of prices for their milk products this month.

However, under the law, only powdered milk products for children under six months of age require approval.

The prices of other products depend on the respective companies.

Many milk agents said powdered milk prices had increased by 5-10 percent because of limited supply, with many distributors out of stock of items.

Tran Thi Minh, an owner of a company for milk-trading agents in District 12, said the discount on milk products of 5-7 per cent to agents had been eliminated, and retailers would have to pass along the price increase to customers.

Market experts said they were concerned that prices would rise in the near future because of higher gold prices, raw materials and bank interest rates.

‘Rag traders’ seek more aid

The textile and garment industry has petitioned the Customs to continue its 275-day grace period for paying import duties.

Enterprises were struggling to avoid losses as input costs kept rising, said Viet Nam Textile and Apparel Association (Vitas) general secretary Dang Phuong Dung.

Dung said the removal of the grace period would add to company burdens. She estimated that garment companies would have to find a total of US$800 million a year to pay taxes and would get tax refunds much later.

She said that two recent drafts suggested by the General Department of Customs and the Ministry of Finance for the revised Import and Export Tax Law and Tax Management Law were challenging Vietnamese enterprises.

One such draft requires enterprises to pay tax before customs clearance, or provide a guarantee from a credit bank before they can secure the 275-day grace period on duty payment. The other draft proposed by the ministry bans the grace period altogether.

Dung argued that “if the proposal is rejected, Vietnamese manufacturers are likely to encounter financial troubles which could mean they have to limit operations to subtract products rather than creating finished ones. As a result, more work will be required in order to make a normal profit.”

Enterprises would be discouraged from implementing free-on-board (FOB) contracts, under which enterprises get involved directly in importing materials, design and distribution, and return to doing outwork for foreign companies.

Vinatex Group deputy director Duong Thi Ngoc Dung said if the grace period on duty payments was removed, the export prices of textile and garment products would have to be increased from 8 to 16 per cent, making the export trade more difficult. She said garment exports were showing signs of slowing down in major markets such as Europe, the United States and Japan because of declining demand, although export turnover hit more than $10 billion in the first nine months of the year.

This was an increase of 7 per cent compared to last year, but still below expectations, Dung said.

Recently, the association called for exemption from value-added tax for three to six months to accelerate domestic and export consumption.

Nguyen Anh Ngoc, CEO of Sai Dong Garment Co, said FOB contracts required manufacturers to buy materials, create design and sell finished products to targeted foreign importers by a set deadline. “The company can meet more demand by doing all this themselves, meaning employees earn more because they have more work to do,” he added

Ngoc agreed that the grace period was necessary for textile enterprises.

“We are unable to immediately pay the high value added tax (VAT) which is up to 10 per cent”, said Ngoc “This tax could be better used for implementing FOB contracts.”

Dung also questioned the credit bank guarantee compromise, asking how an enterprise can secure such guarantees when new shipments are constantly arriving.

She hoped the proposal of the 275-day grace period on duty payment would be soon approved by the government.

HCM City looks at suspended property projects   

Several property development projects suspended in recent years had negative impacts on the living conditions of residents around them, the sixth meeting of the HCM City People’s Council was told yesterday.

Speaking at the opening session, Nguyen Thi Quyet Tam, deputy secretary of HCM City’s Party Committee and chairwoman of the Council, said the establishment, implementation and management of the city’s urban development programme had affected the population in many ways.

During the two-day meeting of the People’s Council, delegates will discuss ways to allievate this negative impact and help stabilise people’s lives.

They will also consider the feasibility and progress of certain projects as well as adjustments to urban-planning scheme until 2025, which has been approved by the Government.

The 1/2000 ratio programming map and the regulations for management of the existing city’s centre will also be on the agenda.

According to figures released by HCM City People’s Committee, the city is forecast to have about 10 million people by 2025, plus some 2.5 million non-residents with temporary stays of under six months.

The city’s total population would be 7-7.4 million residents in inner districts and 2.6-3 million in suburban districts.

With such a population, the city is expected allocate 90,000-100,000 hectares for construction, with 49,000 hectares in inner districts, and 40,000 to 50,000 hectares in suburban districts.

Of the 882 housing projects that have been licensed in the city, investors have completed land hand-overs, site-clearance compensation and infrastructure development for 785 projects.

More than 50 per cent of the compensation needed for site clearance has been completed for 45 projects. Fifty-two projects have completed less than 50 per cent of the compensation for site clearance.

Most of the 1,143 property projects to develop warehouses, office buildings and business centres have completed compensation for site clearance. According to the city People’s Committee, most delays in compensation for site clearance are projects that are funded from the State budget.

Ports key to nation’s future    

Vietnam needs a long-term port system vision in order to maximise its coastline advantage and reach the government target of sea commerce accounting for more than half of GDP by 2020.

But as the economy struggles, newly-built ports are incurring major losses, partly due to weak management on the development side, experts told a recent conference held to assess the development, construction and management of Vietnamese seaports.

Do Hong Thai, deputy head of Vietnam Maritime Administration, said the country’s seaport development has made positive contributions to other economic sectors and economic integration efforts.

According to official statistics, the country has 30 operating seaports with 166 wharfs and 350 quays totalling 45,000m in length with the capacity to handle 350-370 million tonnes of goods per year.

However, insufficient investment and inefficent use of ports in the north have made those in Hai Phong City overloaded. Meanwhile, the Cai Mep-Thi Vai port complex in Ho Chi Minh City struggles to find reliable sources of goods.

In the central area, besides Quy Nhon, most seaports are operating under capacity and some cannot cater for high-capacity vessels.

Ngo Minh Tuan, deputy general director of Tan Cang Sai Gon, said most of the container ports in the Cai Mep-Thi Vai area incurred losses ranging from US$6-7 million to $20-30 million in 2011 and the first few months of 2012.

Even in areas where modern ports have been built, transport infrastructure is not up to scratch. Most of the major ports are located near residential areas, making it difficult to create linking roads with the ports.

Thai admitted the country is suffering from a weak infrastructure system that cannot meet the growing demand of logistics, due to a lack of a long-term development vision in land allocation and licence grants.

There has also been unhealthy competition among investors and those who exploit the ports.

Nguyen Hong Truong, deputy minister of Ministry of Transport, said weaknesses in developing both the hard and soft infrastructures were major hindrances.

Transport Deputy Minister Nguyen Van Cong said the ministry would complete an assessment of the seaport system, as well as a review of unimplemented construction projects.

The ministry is also working with localities to examine and inspect the implementation of projects accordingly to approved zoning plans and could withdraw investment licences for projects that have not met deadlines.

According to Cong, the Ministry would also ask the Government for the allocation of resources to invest on major port projects of regional stature that have a breakthrough effect. Other ports can be built using the mobilisation of private resources.

The Ministry would also work to assess and revise a legal framework that would make it easier for businesses to operate, increase the level of connectivity between transportation links and ports, as well as making efforts to attract more goods through a better-coordinated distributing system.

HCM City: Bad quality chicken imported for sales   

A number of businesses in HCM City have imported bad quality chicken from South Korea to sell to supermarkets and restaurants.

The chicken is usually used for animal feed processing, so lacks any nutritional value. However, in some markets and supermarkets in the city, this product is sold at high prices compared to domestic chicken.

A staff member at a supermarket on Hoang Van Thu Street, Tan Binh District, said her supermarket deliberately up-sold South Korean chicken.

Coming to another nearby counter the seller said, “All the fried chicken here is from South Korea.”

A South Korea fried chicken is sold at VND61,900 (USD2.9) at supermarkets while the usual price for a boiled domestic chicken is VND74,000. Most of the chicken sold in the city does not have any clear point of origin.

This kind of chicken is also massively sold at local markets like Pham Van Hai in Tan Binh District and Ba Chieu in Binh Thanh District.

In reality, for years, Vietnam has imported bad-quality foreign food products such as pig viscera and chicken necks, legs and wings and recently South Korean-imported chicken. These products are often used for animal feed processing in abroad.

Bad-quality chicken has been imported into Vietnam as local people prefer tougher chicken than industrially raised domestically produced varieties.

Nguyen Thanh Son, Deputy Head of the Husbandry Department under the Ministry of Agriculture and Rural Development, said bad-quality chicken has been imported from South Korea legally.

He added that, South Korean chicken has come to Vietnam since late August; however, no specific statistics had been released to date.

According to the department, illegally-imported chicken and bad-quality poultry pose a threat to the domestic husbandry industry. Breeders lose from VND5,000-7,000 per kilo. This has discouraged them, and would lead to food shortage for Tet.

Diep Kinh Tan, Deputy Minister of Agriculture and Rural Development said “Companies massively imported meat and viscera, however, after technical requirements were set for protein content and nutrition, these imports sharply declined.”

He said that the Ministry of Agriculture and Rural Development would instruct agencies to draft technical standards for imported chicken and also control imports from South Korea.

Export processing zones attract investors

More than 140 investors from 15 countries with projects worth a total of US$700 million have set up business in Linh Trung Export Processing Zone I, II, and III in the last 20 years.

More than 92,000 jobs have been generated, according to speakers at a ceremony held in HCM City on Sunday to celebrate the 20th anniversary of the establishment of the zone.

The Sepzone Linh Trung has developed three sections with a total area of 326 hectares. Export turnover of the tenants in Linh Trung EPZs has been on a steady rise, significantly contributing to economic development in HCM City and Viet Nam. Total annual import-export turnover has reached $3.2 billion.

Metro opens doors at new Rach Gia store

METRO Cash&Carry opened a new wholesale centre in southern Kien Giang Province’s Rach Gia City on Wednesday.

With an investment of US$15.7 million, the 4,200 sq.m Metro Cash&Carry Rach Gia, the German group’s 18th wholesale outlet in Viet Nam, sells more than 25,000 food and non-food items. It has also generated 400 new jobs for the local community. The centre’s targeted customer groups such as small and mid-sized retailers, hotels, restaurants, caterers, service companies and offices.

Trade deficit of local firms put at US$8.6 billion

Foreign-invested enterprises (FIEs) enjoyed a trade surplus of US$2.28 billion in the first nine months of 2012, while local firms had a trade deficit of nearly US$8.6 billion.

The total export turnover of Vietnam by the end of September is estimated at US$83.79 billion, rising 19% against the same period last year. FIEs exported over US$46 billion worth of products, excluding crude oil, up 37.9% year-on-year, while their local counterparts recorded a 0.6% drop in export turnover.

The country suffered a big trade deficit of over US$6.3 billion in the first nine months of the year. However, if revenue from crude oil is included, Vietnam gains a trade surplus of US$34 million, said the Ministry of Industry and Trade.

FIEs continued to generate the biggest export value. The proportion of their exports in the total export turnover kept rising, with new export items such as cell phones, cameras and video recorders contributing more than US$5.4 billion.

Import of products in the restriction list and those subject to strict control went down, while import of essential items increased further to meet the production demand.

While imports of FIEs kept surging, hitting US$43.86 billion, local enterprises recorded an import decline, pointing to poor adaptability and competitiveness of local firms in the current global economic recession.

The trade ministry noted trade deficit in the context of troubled economy and production slowdown should receive due attention so that appropriate policies would be introduced to boost production,

Given the export turnover of US$83.79 billion in the first nine months and the trend of strong export growth at year-end, the ministry forecast exports would reach some US$113 billion by the end of the year. Earlier, the country set an export growth target of 12% for this year, or a total export revenue of US$109.5 billion by the year’s end.

Furniture expo opens in HCM City

The annual Furniture and Handicrafts Expo held by HCM City opened yesterday with the participation by around 100 companies displaying their products on 300 stalls.

The four-day event targets at offering a venue for domestic businesses to find international buyers.

In the first nine months, Viet Nam’s furniture export reached US$3.37 billion, up around 20 per cent from the same period in 2011. A seminar on early warning system on anti-dumping law suits against interior furniture will take place to guide local businesses to access the system and utilise tools and information to protect themselves.

Luxury items still have chances despite economic slump

Given the current economic slowdown, sales of luxury products in Vietnam are declining but traders of well-known brands will continue their network expansion at home to wait for a better time.

The idea was shared by experts and brand trading companies on the sidelines of the seminar “2012 Supply Chain” held by Vietnam Supply Chain in HCMC on Wednesday.

Ralf Matthaes, managing director of the market research firm TNS Vietnam, said the on-going economic difficulties have adversely impacted sales of high-end products.

However, as the local market for high-end commodities is still young in terms of scale and sales, its potential is still very huge, he said. Therefore, popular brands which are already present or have yet to enter Vietnam will continue to establish their presence in the market in the near future, he said.

According to Matthaes, the local luxury items market is not big as thought by many people.

There are just about 1.5 million consumers able to afford costly products, and this number makes up just a small fraction of the total population residing in urban areas.

Those home-made brands termed as luxury products in Vietnam number a maximum 100 only. But with imported items counted, the number of such brand names available at home would be several thousands.

Currently, trading high-end commodities in the local market still encounters barriers such as high tariff, retail space rental and labor costs despite the small scale of the market.

Despite these challenges, traders are still pinning high hopes on the local market as the average income of Vietnamese people has jumped several times over the years. Meanwhile, the demand for foreign luxury items among the rich in Vietnam is surging.

There will be many brands rushing to Vietnam to meet the rising demand in the coming time, and the fact that when they will come is just a matter of time, Matthaes asserted.

Small VN market deters large funds

Viet Nam’s stock market has opened the door to operation of open-end funds and exchange-traded funds – tools that are expected to help boost development of the market – but the miniscule scale of the domestic market is still viewed as unlikely to attract large-scale funds.

High tax rates on fund income – currently 25 per cent – also do not encourage foreign investors to establish investment funds in Viet Nam.

Foreign investment funds usually have an initial capital of at least US$50-100 million, an amount that they would be hard-pressed to invest on the Vietnamese market given the low liquidity of shares, said a fund manager who asked to remain anonymous.

The funds often pick up large-cap shares in which to invest, shares which satisfy their investment criteria of market capitalisation and liquidity, in addition to other criteria based on industry, earnings, profit and corporate management.

“It’s difficult to find a company satisfying all of a fund’s criteria, since most listed companies are small- and medium-sized enterprises,” he said. “Meanwhile, large companies often operate in specific industries such as banking and real estate.”

While the market capitalisation of shares on the HCM City Stock Exchange is estimated at about VND628 trillion (nearly $30 billion), the average daily trading value on the exchange has only been around VND400-600 billion ($19-28.6 million) in recent days.

PV Gas (GAS), the leading stock on the southern bourse by capitalisation with its 1.9 million outstanding shares worth an estimated VND74 trillion ($3.5 billion), regularly sees only about 3.25 per cent of that total volume of shares traded freely on the exchange. The remainder are owned by the State.

In the past month, GAS shares reached an average daily volume of less than 200,000 shares, with September 14 seeing the highest volume, with 800,000 shares changing hands.

Other blue chips, including insurer Bao Viet Holdings (BVH), steelmaker Hoa Phat Group (HPG), food processor Masan Group (MSN), dairy giant Vinamilk (VNM), software producer FPT, and real estate developer VinGroup (VIC), all often witness low trading volumes.

Viet Nam now faces stiff competition from other emerging markets in the region, including Indonesia, Myanmar and Cambodia. Market analysts also worry that Viet Nam’s prolonged bear market conditions will create difficulties for funds to liquidate holdings and have an impact on the attractiveness of the Vietnamese stock market to foreign investors.

Harvey Nash Vietnam joins hand with FSoft

Harvey Nash Vietnam has signed a cooperation agreement with FPT Software Joint Stock Company (Fsoft) to carry out information technology projects.

Ton That Nam Tran from Harvey Nash Vietnam said that the firm and Fsoft would conduct projects in three fields, including mobility, cloud computing and big data for foreign markets from now until 2015.

“Fsoft has plans to invest in the United Kingdom. Therefore, Harvey Nash Vietnam will support Fsoft in studying the market and selling software services in this market,” said Tran at the signing on Tuesday.

Since 2000, the two firms have carried out around 400 projects on software, enterprises resource planning (ERP) and business process outsourcing (BPO).

Regarding the software outsourcing, Harvey Nash Vietnam has obtained a high growth of around 30-40% per year in its main markets such as Australia, the United Kingdom, Germany, the U.S. and Southeast Asia.

Da Nang to develop trawler fleet

The central city’s People’s Committee has approved an eight-year, deep-sea fishing production project worth VND1.1 trillion (US$52 million).

The project is aimed at increasing productivity and providing bigger and better high-capacity vessels equipped with the latest technology.

This includes the development of a fleet of 400 trawlers by 2020, most equipped with global positioning and fish-detection systems.

The central city, which has 15,000sq.km of fishing grounds, has a fleet of 2,300 fishing boats, of which 699 are deep-sea trawlers.


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