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BUSINESS IN BRIEF 7-3SBV: It’s not time to import gold

The State Bank of Vietnam (SBV) on Thursday rejected the possibility of importing gold, saying that the gold amount in the nation’s foreign reserves is enough for the agency to intervene in the domestic market.

Speaking to the Daily on Thursday, a leader of the central bank said that SBV will arrange a pilot gold auction today but just among units of the agency. SBV will pilot the auction with registered organizations next week before launching official bidding.

However, SBV has to realize this scheme soon as it has to supply gold for the market to narrow down the gap between local and international gold prices. The gold amount supplied by SBV will not be high as gold demand on the market stays low.

Concerning risks in gold trading on the world market, the official said that SBV has gained experiences in connecting with the international market to regulate foreign reserves. Besides, the agency has had solutions to prevent risks.

Nguyen Cong Tuong, deputy sales manager of Saigon Jewelry Company (SJC), said that the gap between local and international gold prices dropped to only VND2.5 million for a tael on Thursday. Local people flocked to buy gold as the precious metal declined.

SJC on Thursday saw its selling volume four timers higher than that of buying, making SJC’s gold selling price rise from VND43.05 million in the morning to VND43.3 million per tael at the end of the afternoon and widening the international-domestic price gap to VND3 million. However, the yellow metal closed down by VND400,000 per tael against the previous day.

Watching recent developments on the gold market, an expert in the gold industry said that SBV’s first steps to stabilize the market have achieved positive results, narrowing down the difference between the world and local gold prices from a record of VND5 million to around VND3 million a tael. Compared to the same period of last year, people’s buying has sharply dipped.

After June 30 when all banks have completed the closing of their gold accounts, gold demand will drop back, further reducing the gap between local and international prices.

However, it is difficult to cut the gap to under VND1 million a tael. To realize this target, the nation must establish a gold exchange floor which will operate like the stock market under the supervision of the central bank.

Vietnam’s 36 mil. motorbikes by 2020

There will be 36 million motorbikes and 3.5 million automobiles in circulation nationwide by 2020, according to a plan for road traffic development passed by the Prime Minister on Monday.

The Prime Minister’s Decision 356 that approves the plan is aimed at controlling the growth of personal vehicles and satisfying the demand for high-quality cargo and passenger transport services.

By 2020, Vietnam will have 3.2-3.5 million automobiles, with cars making up 57%, passenger coaches 14% and trucks 29%, says the plan. Those autos inappropriate for traffic infrastructure will be gradually phased out.

The plan states that administrative, economic and technical measures will be adopted to restrict the number of motorbikes at 36 million by 2020.

There are currently 1.5 million automobiles and 35 million motorbikes in Vietnam.

Given the annual consumption of 120,000-150,000 units, the target of 3.2-3.5 million automobiles is obtainable. However, the motorbike numbers don’t add up. Around 3-3.5 million motorbikes are sold every year, meaning there may be an additional 20 million units by 2020.

However, it is also said that the local motorbike market will reach its saturation point of 4.5 million units per year, while the total designed capacity of manufacturers in Vietnam is about to exceed five million units.

VNA uses large aircraft for Myanmar

Vietnam Airlines will use the Airbus A321 to replace small aircraft Fokker 70 for the HCMC-Yangon route from March 31 due to an increasing transport demand.

With the use of Airbus A321, the number of seats on each HCMC-Yangon flight will be increased by 75%.

On this occasion, Vietnam Airlines is offering a 27% discount on fares with the lowest price of US$220, or VND4.62 million, for a return economy-class ticket. The price is exclusive of taxes and surcharges.

Discounted tickets are being sold from now until March 30 and applicable for flights departing from April 1-September 30.

Vietnam Airlines is currently the only carrier operating a direct HCMC-Yangon service which is available every Tuesday, Thursday and Sunday.

When Air Mekong resumes services unknown

Air Mekong, which begins suspending local services today, says it has yet to decide when to resume operation but still supports customers who have bought its tickets.

Speaking with the Daily on Thursday, Truong Thanh Vu, director of sales and services of Air Mekong, said his airline has yet to fix the new operational schedule, adding specific information will be announced later.

Similarly, an executive of the Civil Aviation Administration of Vietnam (CAAV) told the Daily that Air Mekong has yet to report to the authority when it resumes services.

Air Mekong said on its website that it still supports customers to extend flight schedules via call center, email and ticket agents during the stoppage.

For instance, the unused tickets booked by customers on Thursday or earlier but still valid after on Thursday will have their schedules extended during the period of suspension plus three more months. The carrier also sent the announcement to its sale agents.

Regarding the rumor that Air Mekong owed fuel debt to Vietnam Air Petrol Company (Vinapco), Hoang Manh Tuan, general director of the local jet fuel supplier, said Air Mekong had already settled the debt and that the situation is still under control.

As per Air Mekong’s announcement, the private airline run six flights on Thursday, the last operational day, with the last service on Con Dao-HCMC run at 2:40 p.m. Air Mekong in early January announced to sell tickets until on Thursday.

Air Mekong officially launched its services in October, 2010 with four Bombardier CRJ-900 planes made in Canada. The firm operates on 13 local routes to nine destinations in Hanoi, HCMC, Vinh, Buon Ma Thuot, Pleiku, Dalat, Quy Nhon, Con Dao and Phu Quoc.

VN Development Bank to sustain 10 pct credit growth

The Vietnam Development Bank (VDB) will maintain an average credit growth rate of about 10 percent per year between now and 2020, according to the bank’s medium-term strategies approved late last week by Prime Minister Nguyen Tan Dung.

Such a growth rate will ensure financial safety and consolidate the sustainability and efficiency of a bank which does not target profits to implement Government policy tending.

Any profit will be used to guarantee the bank’s capacity to carry out investment and export lending policies and other tasks assigned by the Government to help fulfill the nation’s socio-economic development strategies and plans in different periods.

According to the approved plans, the VDB will build a roadmap to increase its charter capital to 20 trillion VND (952.38 million USD) in 2015 and 30 trillion VND (1.43 billion USD) in 2020, which is the equivalent to 10 percent of the total State lending for investments and export.

It with concentrate credits on areas including socio-economic infrastructure, supports industries, agriculture and rural areas, education, health care, environment protection, green technology ad protection, green technology and clean and recyclable energy.

The plans will also put a focus on lending to industries which generate high export value and sectors in need of Government support to ensure international commitments.

The bank will complete credit guarantee services for small and medium-sized enterprises to help them gain capital for production and business activities, while enhancing its financial capacity and fortifying risk management.

Dung urged the VDB to review its lending portfolios, borrowers and their projects so than it can restructure capital sources and assure “reasonable” credit growth, improve credit quality in customer assessing, capital disbursing and debt recovering phases, and seek effective measures to deal with bad debt.

He noted that the bank needs to reduce its bad debt ratio to 7 percent by 2015, 4-5 percent by 2020 and below 3 percent by 2030. He tasked the VDB with exploring the possibility of building a separate law to apply for policy banks, which are currently allowed to operate in accordance to the Law on State Budget and the Law on Credit Institutions.

The bank was also asked to reach a capital safety ratio of 10 percent and a total asset value of about 500 trillion VND (23.8 billion USD) by 2020.

Dong Nai leads in FDI attraction

The southern province of Dong Nai attracted 214 million USD in foreign direct investment (FDI) in the first two months of this year, accounting for 34 percent of the country’s total FDI.

Among the seven FDI projects granted new FDI licences, that of the Japanese corporation Terumo Medical in Long Duc Industrial Park is the largest, with 98.9 million USD in capital investment. The company specialises in manufacturing and distributing medical products and equipment.

Also in the period, local industrial zones attracted as many as seven domestic investment projects with total registered capital of 947 billion VND.

The achievement was attributable to the province’s renewing investment incentives, focusing on large-scale capital investment projects and on services, supporting and high-tech industries.

The province continues to improve investment environment and open dialogue with businesses to promptly deal with any arising difficulties.

According to the provincial Department of Planning and Investment, processing-manufacturing, property trading, and science-technology are drawing foreign investors’ attention.

Lai Chau tightens controls on mining

The People’s Committee of northern mountain Lai Chau Province has instructed district-level authorities to clamp down on illegal mining.

The move was made in response to the resumption of unauthorised exploitation of natural minerals in the province.

In September last year, a provincial interdisciplinary mission inspected and cleared illegal mining activities, particularly in hot spots such as Noong Heo commune, Sin Ho border district and along the Da River running through Muong Te border district.

However, illegal mining has resumed in many areas.

The inspections conducted in late January by the local Department of Natural Resources and Environment found that many local people were gold-mining in areas that had previously been closed by local authorities in Sin Ho district.

Director of the provincial Department of Natural Resources and Environment Vu Van Luong said there was a high risk for of illegal mining in the province and admitted that small-scale illegal exploitation had been reported in some areas.

“An interdisciplinary inspection team, including the police and local department, will commence their work from March 10,” he said.

“Any illegal activities will be shut down,” he said.

In 2012, local authorities uncovered 11 illegal mines looking to exploit gold ore, rare earths and minerals. They also destroyed mining equipment and makeshift accommodation, and seized nearly 1,000 kilos of explosives.

Planners learn from mistakes

Ha Noi People’s Committee and relevant agencies would pay more attention to social infrastructure projects in the city’s new urban areas this year to better meet local residents’ basic needs, said vice chairwoman of the committee Nguyen Thi Bich Ngoc.

The lack of basic social infrastructure, including schools and hospitals, in newly developed urban areas resulted in inconvenience to residents in such areas and increased burdens on infrastructure in surrounding areas.

According to the city’s Construction Department, there are 152 approved new urban areas across the city, covering a total area of over 44,400ha, expected to be home to about 2 million people.

However, until now, only 10 of the new urban areas with area of 466ha are basically completed, including the New Urban Areas of Trung Yen, Nam Trung Yen in Cau Giay District, My Dinh 1 and My Dinh 2 in Tu Liem District.

Another 50 are having facilities constructed and the rest, 92 areas, are preparing for construction.

Moreover, according to the approved urban development plans of the 10 completed new urban areas, they should have 38 schools. However, only 27 schools have been completed, of which only four are public schools built with State funding.

The municipal People’s Committee pointed out that investors mostly pumped investment to housing and service projects, to get their money back quickly, rather than social infrastructure.

Poor performance in planning and managing new urban areas was also a contributor to the absence of schools or other social infrastructure in urban development projects.

For example, when approving new urban area developments, it was necessary to identify funding sources for such infrastructure: schools would be built with State-budget or private investment. The move could help to prevent the situation in which people move to live in a new urban areas but no school is available there for their children.

In some cases, investors in such social infrastructure projects delayed fulfilling their responsibilities but punishment was not strict enough.

Vice chairwoman Ngoc said that ensuring synchronous social infrastructure for people living in newly developed urban areas was to meet their legitimate needs, and urged drastic measures to tackle the shortage.

She asked the Construction Department to tighten inspections and supervise the implementation of such social projects in new urban areas, then timely propose punishments for violating investors.

She emphasised that the city would withdraw land-use rights of investors who were allocated land to carry out social infrastructure projects but the projects were behind schedules by over 12 months.

The city would also review and estimate populations in new urban areas and their demand, then update development plans, adding more items of social infrastructure if necessary, she said.

Economy forecast to face challenges

Challenges continue to face both the global and local economy, but opportunities do exist for businesses who know how to recognise and grasp them, economists declared at a seminar in HCM City on Friday.

“The Government has recently approved the general plan for restructuring the economy, which goes together with a change in the growth model over the next seven years. In the next three years the country will focus on restructuring public investment, the commercial banking system and State-owned corporations,” Dr. Tran Du Lich, a member of the National Assembly’s Economic Commission, told the seminar, organised by the Vietnam Economic Times.

“The implementation of Government policies during these years will help increase the total demand of society and many opportunities for individuals and enterprises will appear, if new business strategies have been prepared.

“There will be an adjustment process by which market share will be redistributed,allowing businesses to have more shares and increase investment at lower costs. As part of the market restructuring, which will probably happen before 2014, the labour market will grow, giving businesses a chance to develop and improve their human resources,” he predicted.

“Inflation rate is expected to reach between six and seven per cent and the Viet Nam dong to US dollar exchange rate is likely to fluctuate by two to three per cent this year. Companies should pay attention to this when forming annual business plans and considering medium-term targets,” Dr. Lich added.

Tran Thanh Hai, Deputy Head of the Import-Export Department under the Ministry of Industry and Trade commented that as the US, Japan and countries in Europe have launched programmes promoting demand, Viet Nam’s exports can exploit increased trading opportunities.

Foreign direct investment increased significantly in recent years in fields such as electronics, mobile phones, transport and machinery, and this is set to continue, according to Hai. He stressed the need for policies to be introduced supporting the consumption of farm produce, as large volume of rice, seafood and coffee can bring in a large income. He also called for the Government to help overcome capital shortages facing businesses and to boost export credit insurance, ensuring the quality of exported items is high so that demand grows further.

Deepak Mishra, Chief Economist of World Bank in Viet Nam, sounded a note of caution to the conference, warning that a high level of basic inflation could severely hinder the nation’s economy.

He warned that a premature loosening of fiscal policies might prompt resurgence in inflation.

The WB’s chief economist also mentioned the worsening asset quality in credit institutions as another challenge. Public debt could rise sharply if liabilities in the banking sector and State-owned enterprises are realised, he said. He warned that despite the need for caution, a delayed and inadequate course of structural reform would result in slow economic growth, especially if the bad debt crisis is not solved and continues to hamper credit flow and limit the available capital for new businesses.

He said that a mechanism is needed to combat this issue, and suggested the establishment of a debt trading company that requires clear identification from all of its financial sources and follows the principles of transfer pricing.

He also urged the consolidation of the banking sector by investing further in risk management and allowing foreign banks to take control of domestic ones.

Bank to sustain 10% credit growth

The Viet Nam Development Bank (VDB) will reach an average credit growth rate of about 10 per cent per year between now and 2020, according to the bank’s medium-term strategies approved late last week by Prime Minister Nguyen Tan Dung.

Such a growth rate will ensure financial safety and consolidate the sustainability and efficiency of a bank which does not target profits to implement Government policy lending.

Any profit will be used to guarantee the bank’s capacity to carry out investment and export lending policies and other tasks assigned by the Government to help fulfill the nation’s socio-economic development strategies and plans in different periods.

According to the approved plans, the VDB will build a roadmap to increase its charter capital to VND20 trillion (US$952.38 million) in 2015 and VND30 trillion ($1.43 billion) in 2020, which is the equivalent to 10 per cent of the total State lending for investments and exports.

It will concentrate credits into areas including socio-economic infrastructure, support industries, agriculture and rural areas, education, healthcare, environment protection, green technology and clean and recyclable energy.

The plans will also put a focus onto lending into industries which generate high export values and sectors in need of Government support to ensure international commitments.

The bank will complete credit guarantee services for small and medium-sized enterprises to help them gain capital for production and business activities, while enhancing its financial capacity and fortifying risk management.

Dung urged the VDB to review its lending portfolios, borrowers and their projects so that it can restructure capital sources and assure “reasonable” credit growth, improve credit quality in customer assessing, capital disbursing and debt recovering phases, and seek effective measures to deal with bad debts.

He noted that the bank needed to reduce its bad debt ratio to 7 per cent by 2015, 4-5 per cent by 2020 and below 3 per cent by 2030.

He tasked the VDB with exploring the possibility of building a separate law to apply for policy banks, which are currently allowed to operate in accordance to the Law on State Budget and the Law on Credit Institutions.

The bank was also asked to reach a capital safety ratio of 10 per cent and a total asset value of about VND500 trillion ($23.8 billion) by 2020.

Agriculture products attract export orders

The Year of the Snake has apparently provided a propitious beginning for the nation’s agricultural sector with new export orders for key products like coffee, cashew, and pepper at good prices.

Do Ha Nam, chairman of the Viet Nam Pepper Association said the world economy is showing signs of recovery. He said this could be seen in the increased prices of domestic as well as foreign agricultural products.

For instance, pepper, which has just entered the start of season in the country has higher prices than the same period last year, reaching VND122,000-123,000 (US$5.86-5.91) per kilo.

A big advantage for Viet Nam’s pepper industry in the period immediately following the Lunar New Year is that foreign producers such as Brazil, Indonesia and Sri Lanka are facing a scarcity of the spice, while a new business has just started in Viet Nam. It is likely, therefore, that international customers would increasingly seek supplies from Viet Nam.

Nguyen Duc Thanh, Chairman of the Viet Nam Cashew Association, said that shortly after Tet, members have signed orders to ship nearly 300 cashew containers, double the volume of the same period last year.

Thanh also noted that the price of cashew kernel has tended to increase slightly over the fourth quarter of last year. Since the beginning of this month, transactions in the EU, North American and Australian markets have increased in volume and price.

Cashew kernel stockpiles in exporting countries have been decreasing, so prices would continue to improve in the coming months at the above markets, especially when traditional festivals in these countries are about to begin.

Similarly, Nguyen Nam Hai, general director of Vinacafe said many of the coffee group’s affiliates had signed more orders than usual early in the New Lunar Year.

He said there was some good news for Viet Nam’s coffee industry. Currently, the total stockpile in coffee exporting countries in the world had decreased by 17.1 per cent compared to last season.

According to the International Coffee Organisation, Robusta coffee production has fallen sharply in the 2012-2013 crop because of inclement weather. So, after the Lunar New Year, farmers are thinking of stocking their coffee to sell later in the year at better prices.

These factors could see Viet Nam’s Robusta coffee prices rise further.

According to the Ministry of Agriculture and Rural Development, export turnover of argo-forestry and fisheries in January reached $2.17 billion, an impressive increase of 39.7 per cent over the same period last year.

Car makers want registration fees cut

The Viet Nam Automobile Manufacturers Association (VAMA) has asked the Government to reduce new car registration fees from the current 15-20 per cent to 5-10 per cent.

In addition, the association proposed standardising the fee for providing car number plates to VND2 million (US$96) in order to help auto makers overcome their current difficulties.

It also asked the government to keep the validity of Circular 20, which blocks further car importers and dealers from joining the market in a bid to boost local production.

VAMA’s recent proposal came as the Ministry of Finance moved to reduce registration fees for new cars, which is likely to come into effect on March 15.

Despite a seasonal increase of 75 per cent year-on-year in January 2013 when 7,363 cars were sold, automobile sales in Viet Nam fell by a record 37 per cent in 2012.

VAMA said the plunge could be attributed to the economic recession.

Vehicle sales for the 12 months of 2012 totalled just 93,000 units, according to the association, which represents the country’s 18 car makers.

The association said the decline was worsened by a series of fees and taxes introduced which have dissuaded potential buyers from making a purchase.

The Government recently issued a resolution to help struggling businesses and stimulate the slowing economy by cushioning the blow of planned motoring fees.

The 02/NQ-CP resolution will reduce the new car registration fee to 10 per cent of its total value and 2 per cent for second hand cars across the country.

Meanwhile, it will cancel the implementation of car ownership fees which would have seen each car owner pay VND20-50 million ($957-2,392) per year, in an attempt to restrict rising car numbers which are responsible for chronic traffic congestion.

In March last year, VAMA asked the Government to postpone the implementation of a series of car fees initiated by the Ministry of Industry and Trade, saying the Government should first issue a policy to develop and diversify the transportation network.

If the proposed fees are applied, they say it will be impossible to achieve the Government’s auto development plan by 2020, which is regarded as a pillar of the country’s economy.

In that case, Viet Nam will have to spend approximately $12 billion per year on car imports, which will negatively affect the trade balance.

Manufacturing back in the red

After adjusting for seasonal factors, including the Tet holidays, the HSBC Vietnam Manufacturing PMI posted 48.3 in February, down from 50.1 in January.

The PMI therefore posted a reading below the neutral 50 mark – to signal contraction – for the second time in the past three months. Although the rate of deterioration indicated was only modest, it was nonetheless the sharpest since August last year.

Manufacturing production and new orders both fell during February, amid reports of weak client demand.

There were also reports that order levels had fallen as a result of excess inventory holdings at a number of customers. The level of new work declined from both domestic and export markets.

Incoming new export business fell for the tenth successive month, but the rate of reduction eased to a six-month low.

The recent subdued performance of the manufacturing sector filtered through to the labour market, with manufacturing job losses reported for the first time in five months.

Although the rate of reduction was only moderate overall, it was nonetheless the sharpest signal since July 2012. Companies also linked lower staffing requirements to cost control efforts.

Excess capacity persisted in the country’s manufacturing sector, as highlighted by a further decline in backlogs of work during February. The level of outstanding business has now fallen in each of the past 11 months.

February data signaled an increase in average purchasing costs for the second successive month. Companies reported paying higher prices for a range of raw materials, including metals and some food products.

Subsequently, manufacturers adjusted their selling prices higher to reflect part of the increase in costs. Factory gate prices rose for the first time in ten months.

Manufacturers exhibited a cost-cautious approach towards stock-holding and purchasing decisions during February. Lower production requirements led to a slight decrease in input buying volumes, the first reduction for four months.

Meanwhile, inventories of purchases and finished products both fell sharply during the latest survey period, with rates of depletion in both cases the fastest since data collection began in April 2011.

Average vendor performance deteriorated slightly as well, reflecting shortages of certain raw materials at vendors.

Commenting on the Vietnam Manufacturing PMI survey, Trinh Nguyen, Asia Economist at HSBC said: “The declines of output and new orders suggest that the recovery process is still very bumpy. While the Lunar New Year is partly to blame, the on-going deleveraging process continues to dampen domestic demand.

“While the slowdown in the rate of decline of external demand suggests that the worst might be over, the contraction of employment points to continued weakness domestically.

Bac Giang outlines plan to lure investors

The northern province of Bac Giang aims to attract new investment totalling VND10 trillion (US$488 million) in 2013, with VND5.5 trillion ($268.3 million) to come from foreign investors.

The provincial People’s Committee would encourage investment in projects that are environmentally friendly, apply advanced technology and have high added value.

The People’s Committee vice chairman Lai Thanh Son said projects in agriculture, rural development and infrastructure construction would be particularly welcomed.

To reach the target, Bac Giang would continue advertising its investment climate and opportunities on both domestic and overseas markets, he said.

In addition to hastening administrative reforms in business registration and investment licence approval and land leasing, the province also vowed to support investors in land clearance and compensation, he said.

Since the beginning of this year, the province has attracted six new projects, worth a combined $9.8 million, according to figures from the provincial Department of Planning and Investment.

These latest additions have brought the number of projects registered in the province to a total of 694, worth $3.38 billion. Of these, 108 projects worth $1.8 billion were foreign-invested.

Among the largest projects are a $1.1 billion touchscreen production facility to be built by Taiwan’s Wintek Viet Nam Co, a $30 million coffee processing facility being developed by the Trung Nguyen Group, and a modern slaughterhouse complex costing $32 million.

All of these projects were expected to contribute to economic restructuring, enhance industrial production value, increase tax revenues, and generate jobs for local people, the department said.

Land price controls found wanting

Viet Nam needs to streamline the revised Land Law to better manage land prices, according to Dang Hung Vo, former Deputy Minister for Natural Resources and Environment.

He said that land price evaluation played a very important role in land management, however current regulations for calculating land prices for compensation and relocation were not in line with market prices.

In fact, the State’s land price framework often only amounted to between 10-70 per cent of market prices.

According to Vo, a separate institution should be established to oversee land price evaluation and handle complaints at central and provincial levels. He believes the independent institution would help ensure transparency in land price evaluation, in turn reducing price-related complaints.

Vo called for the land law revisions to include regulations ensuring appropriate land price evaluations using the market mechanism, as well as agreements from relevant parties.

In addition, he said the revision should create a legal framework for the operation of land price consultancy services, saying that the land price evaluation requires field experts and should not be assigned to local administrative bodies. The draft amendments to the Land Law have been made public and are currently open for comment.

According to deputy director of the General Department of Land Administration Do Trung Chinh, the draft added four standard measures to evaluate land prices, together with regulations on supervising the land price framework.

Real estate opportunities attracts interest

Merger and acquisition (M&A) deals in the real estate industry were forecast to continue thriving this year, according to industry insiders.

Chairman of the Thu Duc Housing Development Co Le Chi Hieu said buyers with cash in hand would have major opportunities this year as there would be many real estate firms eager to divest or transfer their projects this year.

Echoing Hieu, chairman of the Dat Xanh Real Estate Construction and Service Co Luong Tri Thin also forecast that this year would be a ‘historic time of M&A deals in real estate’ for investors who have long-term strategies.

Thin said that last year, many real estate firms faced financial difficulties and were forced to transfer their projects this year, creating a major opportunity for buyers to select good projects at low prices.

Thin predicted that potential buyers could come from Asian countries including Singapore, Japan and Malaysia, as they are eager to further get involved in the Viet Nam market.

Chairman of the HCM City Real Estate Association Le Hoang Chau said the country’s real estate market has been on the potential investment list of many foreign corporations since last year.

“2013 could see the beginnings of capital disbursement,” he said.

Industry insiders said buyers had many choices this year, adding that besides Vietnamese developers’ projects, there are also available supply sources from investment funds which want to profit from 3-5 year invested projects.

They said that M&A deals in apartment building projects would be mainly around those priced less than VND17 million (US$813) per square metre and nearly completed.

However, it would be harder for sellers of large-sized urban projects whose infrastructure and transport links haven’t yet been completed.

According to Q4 financial reports of listed real estate firms, the transfer of real estate projects contributed significantly to their profits in the last quarter last year.

The Dat Xanh Real Estate Construction and Service Co, for example, last year invested in eight real estate projects up to December 31, as its profits surged to more than 30 per cent thanks to the deals.

It was the same with Nam Bay Bay Investment Co as the company’s turnover from land-use rights transfers increased from VND22 billion ($1 million) in 2011 to VND33 billion ($1.6 million) last year, helping the company double its turnover to VND184.2 billion ($8.8 million).

Index looks back on first year

As March has begun, the VN30 Index concluded its first year of operations.

The index, which tracks the performance of the HCM City Stock Exchange’s 30 leading shares, had a growth rate of around 26 per cent last year – one of the highest in the world.

According to the exchange, this growth was 1.43 times higher than the increase in the benchmark VN-Index.

As of January 31, the VN30 hit over VND578 trillion (US$27.5 billion) in capitalisation, accounting for nearly 74 per cent of the exchange’s value.

After only one year, the index is already widely respected for its indications of blue chips’ movements, as well as trends in the stock market as a whole.

“Investors have praised the quality of listed stocks in the VN30, over half of which grew more than the market average,” said the exchange’s president Tran Dac Sinh. “The International Finance Corporation gave VN30’s shares higher scorecards last year.”

The index helped enterprises enhance their liquidity, transparency and business performance and increase intangible assets, he said.

It also attracted foreign investors, as most of the funds operating within the country chose to invest in VN30’s selected stocks.

“We plan to create our first exchange-traded product based on the index,” Sinh said.

In addition, the market needed more indices to serve different demands, said Professor Tran Hoang Ngan, president of the VN30 committee. He recommended broader indices, such as those for specific sectors or groups of companies with common characteristics.

“Many investors care about small-cap stocks. The exchange could create an index for them,” said Dragon Capital’s portfolio manager Le Yen Quynh.

By the end of last year, the legal framework for the restructuring of the market was nearly complete.

“We will continue to work with the HCM City and Ha Noi stock exchanges in raising listing standards and strengthening corporate governance,” said Vu Bang, chairman of the State Securities Commission.

“Many listed companies have the opportunity to be selected for the VN30,” he added.

Brokerage profits receive boost from affiliates

Saigon Securities Inc (SSI) posted a net profit of VND464.3 billion (US$22.1 million) last year, six times higher than in 2011, in which profits from associated companies contributed more than VND106 billion ($5 million).

As of December 31, SSI had nine associated companies, including two new firms in 2012 – Electronics Communications Technology Investment Development Corp (ELC) and Transforwarding Warehousing Co (TMS) – in which SSI was holding 20 per cent.

Government bond issue raises $700 million

Over VND14.7 trillion (US$700 million) worth of Government bonds were purchased in February.

Sales of bonds issued by the Viet Nam Bank for Social Policies reached VND200 billion ($9.5 million) with a yield of 9.79 per cent; State Treasury bonds hit nearly VND13.8 trillion ($657.1 million), yielding between 8.3-9.15 per cent; and the Viet Nam Development Bank raised VND745 billion ($35.4 million) from bonds, with yields of 9.4-9.5 per cent.

First open-ended bond investment fund licensed

VietFund Management’s bond investment fund VFMVFB has been granted a licence to offer fund certificates. VFMVFB is Viet Nam’s first open-ended fund. Bonds are set to account for 80 per cent of its portfolio.

HCM City Securities Co has been selected as the distribution agent of fund certificates for VFMVFB, and Deutsche Bank AG’s HCM City branch will be supervising and providing custody services for the fund.

Construction firm may be delisted after losses exceed capital

Vinaconex Infrastructure Development and Investment Co (VCH) made a profit of VND1.14 billion (US$54,200) in the fourth quarter of last year, but reported an annual loss of VND29 billion ($1.3 milion).

The company also lost over VND36 billion ($1.7 million) a year earlier. The total loss in 2011 and 2012 was 63 per cent higher than its charter capital of VND40 billion ($1.9 million).

Under current regulations, if the audited financial statement for 2012 does not show a positive difference, the company will be delisted.

Building contractor’s shares put under trading limits

The Ha Noi Stock Exchange has put shares of construction firm Cotec (CIC) under control and will limit trading from next Monday.

The company continued violating regulations regarding periodical information disclosure, the exchange said.

Trading of CIC shares will be limited to Friday only until the company can provide the necessary financial statements.

Ha Noi’s real estate trading floors have tough year

More than half of the real estate trading floors in Ha Noi halted operations or did not have any successful transactions in 2012, according to the city Department of Construction’s report.

The report, which focused on 94 trading floors in the city, showed that last year saw 1,833 successful real estate transactions with a total value of VND6.198 trillion (US$296.6 million).

According to the construction ministry’s report, prices of apartments last year decreased by 5-10 per cent over 2011, especially those in Ha Dong and Thanh Tri districts, while land prices were 15-20 per cent lower.

State has right to inspect multi-storey building

The State will have the right to inspect and approve houses of more than seven floors and apartment buildings of more than four floors, according to Decree 15, which goes into effect on April 15.

The new decree replaces Decree 209/2004 and aims to tighten State control on construction management, saving money and improving quality.

Accordingly, investors must report completed works to the relevant State management agencies 10 to 20 days prior to the inspection date.-

Ha Noi tipped to collect $95m from land transfers

Ha Noi planned to collect VND2 trillion (US$95.24 million) from land rights transfers this year.

An estimated 20,544 hectares are expected to be auctioned, including 20 projects with completed infrastructure that will be sold in the first and second quarters as well as another 10 projects available in the year’s second half.

The city’s People’s Committee asked relevant authorities to focus on auctioning projects over 5,000 square metres in areas with completed infrastructure.

Da Nang plans $30 million pedestrian bridge over Han

The central city of Da Nang plans to build a US$30 million pedestrian bridge over the Han River.

The municipal construction department said that the bridge would be built primarily for pedestrians and cyclists to enjoy a view of the city.

Sun Group Viet Nam, the project’s investor, said it had sent 16 designs for the bridge to the department for evaluation.

Vinaconex proposes social housing conversion

The Viet Nam Construction and Import-Export Joint Stock Corporation 2 (Vinaconex 2) proposed converting a building in the Kim Van-Kim Lu New Urban Area in Ha Noi into social housing.

Construction on the 32-floor building, which covers an area of 3,000 square metres, would start in this year’s third quarter. The building would be put into use by the end of 2015.

Vinaconex 2 is one of 20 investors proposing to change already planned commercial projects into social housing.

The Ministry of Construction said that a circular on the procedure for such conversions would be issued soon.

The Government is encouraging investors to focus on social housing projects in order to stimulate the real estate market.-

Binh Duong attracts FDI capital bounty

The southern province of Binh Duong has attracted US$579 million in foreign direct investment with 36 new projects since the start of the year.

Furthermore, by late last month, many more business delegations from Japan and South Korea had worked with the provincial administration to explore the investment environment.

Le Thanh Cung, chairman of the Binh Duong People’s Committee made a brief introduction about the province’s economic development and industrial zones, as well as the new urban areas being built and those which are ready to receive investment projects.-

Forests a priority in Tien Giang

Land erosion and forest degradation across coastal areas in the Cuu Long (Mekong) Delta province of Tien Giang have reached alarming levels, increasing the risk of flooding.

Participants at a seminar held in Tien Giang on Thursday concluded that sustainable measures must be found to resolve the situation which has become progressively worse in recent years.

The combination of water flows near the coast, strong winds and waves has played a major role in the increase of land erosion and forest degradation.

Meanwhile, the impact of climate change and rising sea levels is worsening the situation.

Tien Giang has more than 1,500ha of protection forests along coastal lines, according to the province’s Department of Agriculture and Rural Development.

Of the figure, the Go Cong Dong protection forest, which directly shields the Go Cong sea dyke, accounts for nearly 700ha.

Protection forests along the Go Cong sea dyke have been severely eroded over the past 10 years and the province has not found effective measures to tackle the problem.

In some sections of the dyke, protection forests have been receding inland by 8-10 metres a year.

The width of protection forests along the Go Cong sea dyke is now very thin, ranging between 30-300 metres.

In places where protection forests are severely degraded, the dyke directly faces the sea and is at high risk of bursting, especially during storms and periods of low pressure.

In places where the dykes are exposed to the sea, the province has reinforced the dyke body and crest, but this is only a temporary measure.

Participants at the seminar proposed several ideas to protect sea coasts and create alluvial grounds for developing mangrove forests.

To mitigate the loss of forests, Tien Giang has set up plans for classifying different types of forests and developing each variety from now to 2020.

The development of protection forests will ensure requirements for wave and erosion prevention, as well as helping to diversify biology systems.

The province will plant new forests on vacant coastal areas and alluvial grounds, while encouraging all economic sectors to invest in forest development.

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

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