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BUSINESS IN BRIEF 8-1Retail industry draws investors

Foreign and domestic retailers plan to open more shops and supermarkets in Viet Nam this year and beyond, buoyed by the potential market of 88 million population.

Big C plans to increase its supermarkets from 19 to 30 this year and Metro hopes to open 16 new supermarkets to make it 35 nation-wide, according to Sai Gon Dau Tu newspaper.

Significant investment plans by South Korean and Japanese retailers also showed confidence in the market’s potential.

South Korea’s Lotte Mart had secured investment capital of US$50 million for its plan to open 60 supermarkets in the country by 2020.

Japan’s Aeon retail group was due to open its 82ha shopping complex in HCM City, the $109 million “Celadon City”, early next year, another later in the year and one in Ha Noi a year later. The group planned to open 20 shopping centres nation-wide by 2020.
New player to Viet Nam, C.T Group opened its first S.Mart in Ha Noi in December.

Maximark representative Nguyen Phuong Thao said the retail industry was attractive because consumers still needed goods and services.

Association of Viet Nam Retailers general secretary Dinh Thi My Loan said difficulties anticipated would not discourage investors in the retail industry because of the potential in a population of roughly 90 million, most of which were young and preferred modern retail shops.

Loan said opportunities were significant because modern retail outlets currently accounted for only 20 per cent of the country’s potential. The figure was expected to increase to 45 per cent by 2020. The country currently has 636 supermarkets, 120 shopping centres and more than 1,000 convenience stores, but experts said this figure still did not meet demand.

Total retail sales last year surged 16 per cent against the previous year to VND2,324 trillion ($110.7 billion).

Southernmost province aims for $1 billion in exports this year

The southernmost province of Ca Mau targets export turnover of more than US$1 billion this year, a year-on-year increase of 10.5 per cent, according to its People’s Committee.

The province’s key exports will continue to be seafood, including shrimp and cuttlefish, to the key markets of the US, the EU, Japan, Australia, Canada, Russia, China and South Korea, as well as several countries and territories in Africa.

The province’s People’s Committee said it had helped the Ca Mau Association of Seafood Exporters and Producers develop new trade promotions, with the main aim of expanding and stabilising seafood export markets.

The province has also encouraged local companies to improve their competitiveness by upgrading technologies, a move that would increase output and improve the quality and value of their seafood.

In addition, the provincial government has guided local departments and agencies on ways to improve administrative procedures and offer support policies that would help local companies, including reduction of taxes and interest rates on loans.

According to local officials, these efforts were made in an effort to share the burden with local companies and help them have stable production and business in the new year.

The provincial government has also encouraged the adoption of aquaculture models in which farmers would apply advanced technologies to raise clean and high-quality shrimp for seafood processors in Ca Mau Province.

The province targets upgrading infrastructure, including irrigation, transportation and power systems, to develop shrimp breeding.

The People’s Committee said that more favourable conditions would be created to help fishermen catch an estimated 107,000 tonnes of fish this year.

Ca Mau Province has 37 seafood processors, with a production capacity of 180,000 tonnes per year. Of that figure, 160,000 tonnes are exported.

MoF to refund tax on plastic bags

The Ministry of Finance has recommended abolition of the environmental protection tax on plastic bags and a refund of last year’s payments as part of measures to help the beleaguered business community.

If approved by the Government, companies that paid VND30,000-50,000 (US$1.4-$2.3)per kilogramme on the bags from January 1 last year will get their money back.

A decree passed in 2011 slapped the tax on all plastic bags used to contain goods except pre-packaged items and plastic bags that met environmental criteria laid out by the Ministry of Natural Resources and Environment’s regulations.

With producers and consumers apparently unable to give up their addiction to plastic bags, the tax increased businesses’ costs, putting further pressure on them, especially those involved in exports, who are big users of the bags.

To avoid the tax, many exporters imported environment-friendly bags, thus also affecting the domestic packaging industry.

This ministry’s proposal as well as its other measures to resolve businesses’ difficulties and revive the market were put forth by the Government at a recent online conference with local administrations to discuss economic tasks and expenditure in 2013.

Finance ministry officials said if the proposal is approved it would be good for businesses and encourage them to address their other difficulties, enabling the Government to achieve its socio-economic targets.

Capital city plans transport projects

The capital has announced that the Department of Transport has been working on finalizing procedures to start construction on 16 transport infrastructure projects in the first quarter of 2013.

The projects include Tran Phu-Kim Ma, Ha Duc Bridge, Gom Bridge,Dam Mo bridge, Hong Phu bridge, among others.

The department is also scheduled to finish and allow vehicles to travel on Yen Vi Bridge, Cat

Linh-La Thanh-Lang road, and finish the pedestrian bridge crossing North Thang Long Industrial Zone before the Lunar New Year, which begins before mid-February.

In 2013, the Department would also focus on various urban transport projects under commitments with the World Bank, and several sections of National Highway 1A.

Nguyen Van Khoi, deputy chairman of Ha Noi People’s Committee, has also requested all relevant agencies to work with the Transport Department on solving arising construction problems.

Viettel, ABBANK roll out mobile banking service

Mobile operator Viettel and the An Binh Commercial Joint Stock Bank (ABBank) have co-operated to introduce BankPlus, a service that enables customers to conduct banking transactions on their phones.

When BankPlus is activated, phone users can transfer up to VND200 million (US$9,600) per day to other ABBANK accounts, look up their account balance and transaction history and pay Viettel’s elecommunications service charges.

The service is available on all models of mobile phones and requires no additional application installation.

Handicrafts to penetrate Japanese market

A group from the ASEAN-Japan Promotion Centre on Trade, Investment and Tourism will visit HCM City and nothern Ninh Binh province from January 13 to 19.

It aims to support local handicraft and fine-arts enterprises in improving the quality of their products to meet the demands of Japanese consumers and penetrate the Japanese market.-

State targets memorable Tet

Many billions of dong are expected to be spent by the Government during Tet (the Lunar New Year holiday) to stabilise prices and offer gifts to disadvantaged people and war heroes.

More than VND393 billion (US$18.7 million) will be given to people and organisations who played a key role in the country’s revolution.

Heroic Vietnamese mothers, volunteers and war invalids and dioxin victims will each be given between $ 9-19 as Tet gifts.

Le Van Noi, an war invalid in northern Nam Dinh Province said this amount of money will not make much difference to many other people during the holiday. However, with this gift, his family can afford to buy meat and rice to make Chung cakes, which was just a dream for them last Tet.

He added that the gift will also encourage people to work harder in their daily life to escape poverty.

Coupled with State financial assistance, localities nationwide are also making their efforts to stabilise prices and assist disadvantaged people in time for Tet.

The Trade Union of industrial and processing parks in HCM City is giving 6,000 bus tickets to people hailing from the northern and central regions. The union will also visit and present gifts to thousands of people who recently lost their jobs and those who are in hospital. Companies in Industrial Zones have promised to provide gifts for 15,000 workers worth over VND3.1 billion ($150,000) and organise New Year Eve parties at a cost of VND2.7 billion ($128,570).

Nguyen Thi Thu Ha, deputy secretary of HCM City’s Party Committee said: “To ensure workers’ rights are safeguarded, relevant authorities must assess companies to see if they will be able to pay salaries and bonuses for Tet, and draft plans to support workers if needed.”

The Red Cross will give gifts worth VND10 billion ($480,000) to 25,000 poor people, Agent Orange victims, victims of natural disasters and Vietnamese citizens living in Cambodia.

The City’s Students Support Centre will help disadvantaged students to the tune of VND2.5 billion ($120,000), including bus tickets to the value of VND1 billion.

Nguyen Dong Hung, a student from a remote rural area in central Nghe An Province said he had tried his best to be a good student and get the chance to obtain a ticket home for the holiday.

“Spending millions of dong for transportation is a luxury so I have been far away from home for the last two Lunar New year holidays.”

Mobile sales teams will take essential goods to dormitories and industrial and processing parks as part of the city’s price stabilisation programme to benefit workers and students.

Meanwhile, Da Nang City has given 2,000 free coach tickets, worth VND400 million ($19,000) to poor students allowing them to return home to central provinces and the Central Highlands during the holiday. Some 3,000 Chung cakes will be granted to cleaners and disadvantaged people in the city and gifts worth a total of VND70 million ($3,300) will be presented to 300 poor students in Hai Chau District. The city also plans to hold art performances and health check-ups for workers in industrial zones and children in social centres.

Hai Phong City has given VND10 billion ($476,000) to enterprises in order to stabilise food prices for necessities such as rice, meat and poultry.

Southern provinces such as Binh Thuan and Ca Mau have also given financial assistance or favourable interest rates to enterprises storing food for the Tet market.

Growth compatible with targets

Enhancing macro-economic stability with lower inflation and higher growth remains the focus of this year’s socio-economic development tasks, says the Ministry of Planning and Investment.

At a press conference in Ha Noi yesterday, the ministry reported that last year saw improvements in the macro-economy with inflation under control, gross domestic product growth maintained at a reasonable 5.25 per cent (if the base year was 2010), and social security and welfare ensured.

The budget overspending rate was reduced to 4.8 per cent of GDP last year, compared to 4.9 per cent in 2011.

Although some of last year’s economic indicators failed to meet goals, including GDP growth and the index of industrial production, the economic growth rate was compatible with the nation’s target to stabilise the macro-economy and curb inflation, the ministry said.

This year, the nation’s gross domestic product growth rate was expected to be 5.5 per cent and the consumer price index 6 per cent, while export turnover was tipped to increase by 10 per cent.

Budget overspending was expected to be below 4.8 per cent of GDP and the total investment for social development would be around 30 per cent of GDP.

Removing difficulties and promoting business and production would be among other measure to achieve the goals.

Results of the ministry’s survey showed the nation’s structural shift in economy towards the service sector, with units operating in the sector increasing by 31.6 per cent in quantity and 40.4 per cent in labour compared to the survey in 2007.

Viet Nam would complete legal frameworks and policies to improve the country’s investment environment and attract more foreign direct investment while enhancing management of FDI flows to improve its efficiency, Minister Bui Quang Vinh said.

The ministry’s statistics showed that as of December 15 last year there were 98 countries and territories investing in Viet Nam with 14,489 valid projects and total registered capital reaching $213.6 billion.

Last year alone, the total registered capital hit $13.01 billion, equal to 84.7 per cent of the previous year while disbursed capital was $10.46 billion, equal to 95.1 per cent of the 2011 figure.

Japan was the biggest investor in Viet Nam with the country’s registered capital in Viet Nam accounting for 13.6 per cent of the total figure, followed by Taiwan, Korea and Singapore.

The FDI sector’s exports (including crude oil) was $73.4 billion, accounting for 64 per cent of the country’s total export turnover.

Last year, Viet Nam ran a trade surplus of $284 million, equal to 0.2 per cent of total import-export turnover.

According to the General Statistics Office, the trade surplus reflected that domestic enterprises were in difficulty with decreasing demand of imports while exports of the foreign direct investment sector saw increases, which indicated this would continue to affect economic growth in coming years.

The ministry said foreign investment into the country was not expected to recover strongly for several years, and estimated the FDI registered capital this year would be around $13-14 billion and the disbursed capital would be $10-11 billion this year.

Garment makers optimistic for 2013

Despite predictions that the domestic economy would continue to face difficulties, garment companies remain optimistic about growth this year.

The HCM City-based Century Synthetic Fibre Joint Stock Co (CSF), one of the country’s large garment enterprises, recently approved its business plan for 2013, targeting a significant boost in revenue.

“We would strive to make VND1.6 trillion (US$78 million) in revenue this year compared to last year’s figure of VND995 billion,” CSF chairman Dang Trieu Hoa told online Dau Tu newspaper.

“This year will be an important time for our company as we will put the second phase of our fibre plant in Trang Bang Industrial Zone into operation,” he said.

That will help increase our annual production capacity to 35,000 tonnes.”

He added that this would increase the company’s revenue by VND450 billion ($21.9 million).

Meanwhile, Dong Nai Garment Corp (Donag-amex) has announced that its Dong Phuoc garment factory would open after Tet.

“We will soon import $500,000 worth of equipment to speed up production and fill orders booked up to June ,” Donagamex general director Bui The Kich told the newspaper.

Although having high hopes for the company’s growth this year, Kich said his company had set a modest goal, expecting to earn only VND75 billion ($3.66 million), VND5 billion more than in 2012.

Last year, Donagamex experienced a 12 per-cent revenue increase to VND70 billion ($3.41 million).

Vice chairwoman of the Viet Nam National Textile and Apparel Association Dang Thi Phuong Dung, said world economic fluctuations forced Viet Nam’s garment sector to reduce its export target from $19–19.5 billion down to $17.5 billion.

She said the garment sector successfully fulfilled its set export target thanks to “great efforts” by domestic firms in sharpening competitiveness and lowering production costs.

Garment export earnings in 2012 enjoyed a year-on-year increase of 7–7.5 per cent, a significant effort in the current challenging context, Dung said.

Southern trade bloc does well

A trade-cooperation programme begun one year ago between HCM City and the country’s southern provinces as well as the city of Can Tho has succeeded in improving links between businesses in several industries.

Le Ngoc Dao, deputy director of the city’s Department of Industry and Trade, said that, through the programme, the city had invested in 75 projects valued at a total of VND7 trillion (US$333 million) in production, animal husbandry and distribution sectors.

Speaking at a seminar to review the programme in HCM City on Thursday, Dao said that companies participating in the city’s price-stabilisation programme for essential goods had signed many contracts to purchase and guarantee outlets for products made in the southern provinces and Can Tho. The contracts are valued at more than VND5.3 trillion a year.

Mai Thi Anh Tuyet, director of An Giang Province’s Department of Industry and Trade, said the city had offered assistance in trade and services management and development.

It has also learned how to carry out its own price-stabilisation programme with the help of HCM City staff, she said.

During the seminar, Nguyen Van Diep, chairman of Vinh Long Province’s People’s Committee, pointed out that the programme also had some limitations.

He said the southern provinces as well as Can Tho need to identify what kind of goods are most needed by companies in HCM City.

About 50 per cent of this southern region’s commodity output, including agricultural, aquatic and animal husbandry products, food and foodstuff, are sold to HCM City, according to figures from these localities.

Bui Hanh Thu, deputy general director of the supermarket chain Saigon Co.op, said the provinces as well as Can Tho should also strive to improve food safety of their agricultural and animal husbandry products.

Nguyen Thi Hong, deputy chairwoman of the HCM City People’s Committee, said the committee this year would assign the city’s Department of Industry and Trade to more clearly identify the strengths of each southern province and invest in these areas.

HCM City also plans to work with Can Tho and the southern provinces to promote trade at home and abroad, according to Hong, who directs the implementation of the trade cooperation programme.

The city will also help the provinces create brand names for specialty products in each locality in the southern region. The region’s tourism industry will also receive assistance from HCM City.

Other goals include the prevention and control of fake products and trade fraud as well as the development of hygienic products.

Mergers, acquisitions expected to boom this year

Mergers and acquisitions are expected to boom this year in the consumer goods and real estate sector, say experts.

Big foreign investors had a keen eye on M&As in consumer goods in Viet Nam, with their investments in dairy giant Vinamilk (VNM), food processor Masan Group (MSN), confectionery Kinh Do Corp (KDC) or Golden Gate (who owns famous restaurant chains like Ashima, Kichi Kichi, Sumo BBQ) all huge financial successes.

According to many experts, the strong growth of M&A deals in Viet Nam was a normal phenomenon. Many Vietnamese firms had revealed their weaknesses during the economic crisis. They had potential but lacked management experience and development strategy. The companies were the best M&A targets for foreign investors, who sought good deals at cheap prices, the experts said.

Hoang Tung, founder and manager of Pizza Home Company, predicted more M&A deals would be carried out in the field of consumer goods this year.

“It always takes time to develop a distribution system in the consumer goods sector and M&As were an effective way to own one,” Tung said, noting that famous brands like Burger King, Subway, Domino’s, Starbucks and McDonald’s planned to enter the Vietnamese market.

Meanwhile, with large inventories accompanied by poor liquidity and the Government planning to extend loans to home buyers only but not to real estate companies this year, weak domestic property companies would likely have to sell properties to external partners to survive.

HCM City Real Estate Association’s chairman Le Hoang Chau said Viet Nam’s real estate market was on the investment list of many foreign corporations since last year and they could disburse their capital this year.

However, Andy Ho, managing director and head of investment at VinaCapital, had a different idea. He said M&A investors should not buy each project but instead buy all the company’s assets via the stock market, reports Phap luat thanh pho Ho Chi Minh.

“With the current dismal developments on the stock market, shares of real estate companies were being traded under their actual value (including their projects),” Ho said.

In November, VinaCapital offered for sale a 50 per cent stake in the Ha Noi-based five-star hotel Metropole. This promised to be a notable deal in the property market this year.

The last days of last year saw a big deal in the banking sector with the Japanese Bank of Tokyo Mitsubishi UFJ paying $743 million to buy a 20 per cent stake in Vietinbank (CTG).

Financial sectors also drew foreign interest but M&As in this sector were forecast to be more difficult due to legal obstacles, which had to follow the restructuring road map and be approved by the Government.

Dong Nai livestock zones lack power, roads

Most animal husbandry zones in southern Dong Nai Province, the country’s livestock hub, lack infrastructure and many household farms do not have enough money to move into the zones, according to local officials.

In 2008, the province’s People’s Committee approved a plan to develop 139 animal husbandry zones with a total area of nearly 16,000ha since nearly half of all livestock farms were small and scattered.

Dong Nai, which has around 1.2 million pigs and 10 million chickens, became the country’s first province to create such zones.

But so far there are only 370 farms operating in 48 of the 139 zones, according to the Department of Agriculture and Rural Development.

Of them only 41 are new farms, with the others existing since before the establishment of the zones.

A further 1,500 farms, not including household-run farms, are situated outside the zones.

Nguyen Van Hung, who has a pig farm with more than 1,000 animals in a zone in Thong Nhat District’s Quang Trung Commune, has had to use his ploughing machine to generate power for his farm for the past three years because the zone does not have electricity.

“Many household livestock farmers felt glad when the plan was approved,” he said, “but since there is no power many have not been interested in setting up farms.”

The zones are located far from residential areas and roads leading to them have not been built in time.

More than half of the zones do not have roads or power, a factor that has prevented authorities from attracting household farms.

Cost has also been a factor. Setting up a farm in these zones requires a large amount of money, something that is difficult for household farmers to raise.

The department estimates that an investment of around VND20 billion (almost US$1 million) is needed to set up a farm with 10,000 pigs, and VND 7.5 billion for 50,000 chickens.

There are no incentives or support policies for farmers seeking to move into one of the zones.

Nguyen Van Thuan of Gia Rai town said while the concept of creating such zones was sound, household farmers cannot afford the cost of moving into them.

The price of land in the zones is also a dissuading factor for many. It now costs more than VND500 million a hectare, 20-30 per cent up since the zoning plan was approved, Thuan said.

He raises pigs in a residential area and will be forced to move to one of the zones. Thuan worried while asking: “My family survives on our 200 pigs. If my family stops raising them, how will we live?”

Phan Minh Bau, the department’s deputy director, admitted there are problems with the development of the zones, saying progress is still slow and not properly co-ordinated.

His department would urge the People’s Committee to improve infrastructure in the zones and adopt policies to support farms to move into them, he revealed.

It would also seek investment from other sources, including domestic and foreign investors.

Of the 139 zones, Dong Nai has chosen the 108ha Tay Bach Lam zone in Thong Nhat District’s Gia Tan 2 Commune as a model.

Tay Bach Lam functions efficiently as do farms there.

Tran Van Luong, for instance, earns a profit of VND1.5 billion a year from his farm which has 15,000 chickens and 1,000 pigs since moving in four years ago.

The other 27 farms in Tay Bach Lam too earn an average annual profit of more than VND1 billion.

Luong said: “[Having] concentrated animal husbandry zones is the right policy. The 28 farms in Tay Bach Lam have received assistance from authorities.”

District officials have assisted by providing farming techniques and setting up the Tay Bach Lam animal husbandry co-operation group in the zone, he said.

The occupants have supported each other by sharing farming techniques and even funds, and the zone has had no disease outbreaks in the four years since it was set up, he said.

“Its environment is well protected,” he added.

Homegrown chickens rule roost

Safe, quarantined chickens bred and grown in Viet Nam have gone on sale in Ha Noi to combat the sale of diseased and rejected birds smuggled in from China by the truckload.

Recent reports revealed that much of the smuggled poultry was found to contain banned anti-biotics and bird flu was the last straw for many Vietnamsese shoppers, who stopped buying or eating chickens.

Yen The quarantined chickens from northern Bac Giang Province have been on sale in capital city markets since the beginning of the month.

The chickens, stamp-ed with a quantine mark, are from Bac Giang’s Yen The District. They were granted the trademark “Ga doi Yen The” (Yen The chicken) in 2011 by the National Office of Intellectual Property.

Bac Giang Province is now supplying 20-25 tonnes of the chicken to the capital each day, but it is estimated that when demand grows again, up to 120 tonnes of chicken will be needed.

“To ensure quality is maintained, Bac Giang authorities required the Yen The district’s People’s Committee and relevant agencies to supervise the quarantining and stamping of chickens at each farm,” said chairman of the provincial People’s Committee Bui Van Hai.

“The province provides Ha Noi with data relating to the chicken farms and involved businesses as well as adopting measures to prevent fake Yen The chicken hitting the market,” he said.

Hai added that the province planned to set up an office in Ha Noi to help establish a sustainable supply network.

The total number of poultry raised in Bac Giang is about 37 million at present. Yen The district alone produces 13-15 million fowls each year with an annual output of 17,000 tonnes of chicken. The business involves more than 3,000 local households.

Director General of the Ha Noi Trade Corporation (Hapro) Vu Thanh Son said the company had ordered 300 tonnes of poultry to meet increasing demand in the lead-up to Tet.

Shoppers have been warned that there are still large quantities of smuggled poultry in the market and more is expected during the festive season.

Dung Quat oil refinery targets 6.5 million tonnes of products

The Dung Quat oil refinery plans to produce 6.5 million tonnes, a quantity that would earn VND120 trillion and contribute VND16.8 trillion to the 2013 State budget.

This is the highest production goal set by the refinery since it officially entered operation in early 2009.

Dinh Van Ngoc, Director General of the Binh Son Refining and Petrochemical Company—the umbrella entity of the Dung Quat refinery—said his company has significantly contributed to Quang Ngai province’s budget revenue and ensuring social welfare in many of the province’s localities.

By the end of 2012, the company and refinery had contributed more than VND45 trillion to the State Budget, much higher than their total investment capital of VND43 trillion.

Despite encountering many difficulties last year , the Dung Quat oil refinery achieved a production of 5.5 million tonnes—nearly 91 percent of its initial 2012 target—and added over VND15 trillion to the State budget.

Khanh Hoa’s seafood exports aim for US$406 million

The south-central province of Khanh Hoa province plans to increase total seafood export to over 63,000 tonnes, worth US$ 406 million in 2015.

The provincial People’s Committee has approved a programme to develop sustainable and highly competitive aquatic products.

Accordingly, local businesses will invest in improving the quality of products, enabling all local aquatic products to meet national standards for food safety and environmental protection, as well as export markets’ requirements on products’ origin.

Khanh Hoa seafood sector will maintain traditional markets, especially the three key markets – Japan, the US and EU, while penetrating new promising markets such as ASEAN, the Republic of Korea, China, the Middle East, and South America.

More than 54,000 businesses dissolved in 2012

Nearly 70,000 businesses were newly established in 2012,but more than 54,000 existing businesses were dissolved during the year.

As of late December 2012, over 475,000 businesses are currently operating,

The information was announced at a January 4 press conference by Le Quang Manh, Head of the Business Registration Management Agency under the Ministry of Planning and Investment (MoPI).

The MoPI General Statistics Office (GSO) reported that as of July 1 2012, Vietnam had nearly 5.2 million economic and administrative units—an increase of 27.7 percent on 2007.

The average number of workers in individual units hit 22.5 people, 38.6 percent higher than in  2007.

GSO Deputy Head Tran Thi Hang said that despite the data revealing an expansionary trend, the units’ growth rates are slower than over the 2002–2007 period.  By January 1, 2012, the country had nearly 342,000 existing enterprises, 2.7 times higher than in 2007, of which 313,000 are currently operating. They employed 10.9 million workers, up 65 percent compared to 2007.

The survey also illustrated the economy’s gradual structural shift towards the service sector, the unequal growth of economic and administrative units depending on their areas of operation, and the continuing trend of developed socialisation, especially in education and healthcare.

M&A deals expected to grow in 2013

Experts are predicting mergers and acquisitions (M&As) in the consumer goods and real estate sectors will boom during 2013.

Big foreign investors are closely monitoring M&As in Vietnamese consumer goods M&As following the dramatic financial successes of investments in dairy giant Vinamilk (VNM), food processor Masan Group (MSN), confectionery producer Kinh Do Corp (KDC), and Golden Gate (owner of famous restaurant chains like Ashima, Kichi Kichi, and Sumo BBQ).

According to many experts, the strong growth of M&A deals in Vietnam is not unusual. The weaknesses of many Vietnamese firms have been exposed by the economic crisis. They have potential but lack management experience and development strategy. These companies are attractive M&A targets for foreign investors looking to exploit generally low prices, experts said.

Hoang Tung, founder and manager of Pizza Home Company, concurs more M&A deals will manifest in the consumer goods sector this year.

“It always takes time to develop a distribution system in the consumer goods sector and M&As are an effective shortcut,” Tung said, noting famous brands like Burger King, Subway, Domino’s, Starbucks, and McDonald’s all have plans to enter the Vietnamese market.

With large inventories exacerbated by poor liquidity, and the Government plans to restrict real estate companies from loans extended to homebuyers, weak domestic property companies intent on survival could be forced into selling properties to external partners.

HCM City Real Estate Association Chairman Le Hoang Chau said Vietnam’s real estate market has been on the potential investment list of many foreign corporations since early 2012 year and 2013 could see the beginnings of capital disbursement.

Andy Ho, managing director and head of investment at VinaCapital, has a different view. The Phap Luat Thanh Pho Ho Chi Minh newspaper reports he advises M&A investors to refrain from purchasing individual projects and instead buy all the targeted companies’ assets via the stock market.

“Considering the stock market’s current dismal atmosphere, real estate company shares were being traded under their actual value (including their projects),” Ho said.

In November, VinaCapital put a 50 percent stake in the Hanoi-based five-star hotel Metropole up for sale. It promises to be a notable deal in the property market this year.

The last days of 2012 saw a major development in the banking sector, with the Japanese Bank of Tokyo Mitsubishi UFJ paying US$743 million for a 20 percent stake in Vietinbank (CTG).

The financial sector also attracts some foreign interest but M&As are more onerous because of mandatory restructuring commitments and the required Government approval.

M&A deals expected to grow in 2013

Experts are predicting mergers and acquisitions (M&As) in the consumer goods and real estate sectors will boom during 2013.

Big foreign investors are closely monitoring M&As in Vietnamese consumer goods M&As following the dramatic financial successes of investments in dairy giant Vinamilk (VNM), food processor Masan Group (MSN), confectionery producer Kinh Do Corp (KDC), and Golden Gate (owner of famous restaurant chains like Ashima, Kichi Kichi, and Sumo BBQ).

According to many experts, the strong growth of M&A deals in Vietnam is not unusual. The weaknesses of many Vietnamese firms have been exposed by the economic crisis. They have potential but lack management experience and development strategy. These companies are attractive M&A targets for foreign investors looking to exploit generally low prices, experts said.

Hoang Tung, founder and manager of Pizza Home Company, concurs more M&A deals will manifest in the consumer goods sector this year.

“It always takes time to develop a distribution system in the consumer goods sector and M&As are an effective shortcut,” Tung said, noting famous brands like Burger King, Subway, Domino’s, Starbucks, and McDonald’s all have plans to enter the Vietnamese market.

With large inventories exacerbated by poor liquidity, and the Government plans to restrict real estate companies from loans extended to homebuyers, weak domestic property companies intent on survival could be forced into selling properties to external partners.

HCM City Real Estate Association Chairman Le Hoang Chau said Vietnam’s real estate market has been on the potential investment list of many foreign corporations since early 2012 year and 2013 could see the beginnings of capital disbursement.

Andy Ho, managing director and head of investment at VinaCapital, has a different view. The Phap Luat Thanh Pho Ho Chi Minh newspaper reports he advises M&A investors to refrain from purchasing individual projects and instead buy all the targeted companies’ assets via the stock market.

“Considering the stock market’s current dismal atmosphere, real estate company shares were being traded under their actual value (including their projects),” Ho said.

In November, VinaCapital put a 50 percent stake in the Hanoi-based five-star hotel Metropole up for sale. It promises to be a notable deal in the property market this year.

The last days of 2012 saw a major development in the banking sector, with the Japanese Bank of Tokyo Mitsubishi UFJ paying US$743 million for a 20 percent stake in Vietinbank (CTG).

The financial sector also attracts some foreign interest but M&As are more onerous because of mandatory restructuring commitments and the required Government approval.

Overseas investment aims for US$1-1.5 billion in 2013

The Head of the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency Do Nhat Hoang has announced Vietnam’s investment abroad is expected to reach US$1­1.5 billion in 2013.

The information was unveiled at a press conference in Hanoi on January 4.

The MPI said Vietnam currently has 712 valid investment projects in 60 nations and territories capitalised at US$12.4 billion.

In 2012, Vietnam added 75 new projects in 28 nations and territories with a total registered capital of US$1.3 billion.

These projects have helped Vietnamese businesses earn profits of around US$430 million, mostly in oil and gas exploration, telecommunications, and rubber.

Mr Hoang noted the majority of Vietnam’s investment projects abroad are in Laos, Cambodia, and Myanmar—especially in the fields of oil and gas, telecommunications, and industrial plants. They have helped generate thousands of jobs for both Vietnamese people and locals.

Legal framework disparities and the slow progress of some investment projects remain a concern.

The Foreign Investment Agency has devised some solutions to revamp overseas investment regulations

Overseas investment aims for US$1-1.5 billion in 2013

The Head of the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency Do Nhat Hoang has announced Vietnam’s investment abroad is expected to reach US$1­1.5 billion in 2013.

The information was unveiled at a press conference in Hanoi on January 4.

The MPI said Vietnam currently has 712 valid investment projects in 60 nations and territories capitalised at US$12.4 billion.

In 2012, Vietnam added 75 new projects in 28 nations and territories with a total registered capital of US$1.3 billion.

These projects have helped Vietnamese businesses earn profits of around US$430 million, mostly in oil and gas exploration, telecommunications, and rubber.

Mr Hoang noted the majority of Vietnam’s investment projects abroad are in Laos, Cambodia, and Myanmar—especially in the fields of oil and gas, telecommunications, and industrial plants. They have helped generate thousands of jobs for both Vietnamese people and locals.

Legal framework disparities and the slow progress of some investment projects remain a concern.

The Foreign Investment Agency has devised some solutions to revamp overseas investment regulations

Vietnam to attract US$14 bln FDI capital in 2013

Vietnam aims to attract US$13-14 billion in foreign direct investment (FDI) and disburse US$10.5-11 billion this year, equivalent to 2012’s figures.

The Foreign Investment Agency (FIA), under the Ministry of Planning and Investment, released the figures in Hanoi on January 4.

FIA director Do Nhat Hoang said to maximise FDI capital in 2013, it is necessary to increase the quality and efficiency of the planning work, boost coordination between state and local management agencies—especially in regards to investment project problem solving—and reduce the barriers facing foreign investors.

By December 15, 2012, 98 countries and territories had invested in 14,489 Vietnamese projects with a total registered investment capital of US$213.6 billion.

Japan was the largest investor in Vietnam, accounting for 13.6 percent of the total registered capital.

In 2012, Vietnam licensed 1,100 new projects and approved 435 existing projects registering to increase capital, bringing the total value of the newly-licensed and added capital to US$13 billion, equivalent to 84.7 percent of last year’s total.

The processing industry took the lead, attracting US$9.1 billion.

By December 20, 2012, Vietnam itself had invested in 712 projects across 60 countries and territories, capitalized at US$12.4 billion.

75 projects were granted new licenses in 2012 alone, translating into with a total registered capital of US$1.3 billion in 28 countries and territories.

Vietnam plans to invest about US$1–1.5 billion in foreign countries during 2013.

First direct flight leaves Hanoi for Phnom Penh

Cambodia Angkor Air (CA Air) on January 6 inaugurated the first non-stop flight route between Phnom Penh and Hanoi in a bid to meet the increasing transport needs of the two countries.

The daily route is run by the commercial passenger jet Airbus 321, which will make the 1,000km journey between the two capitals in about one hour.

The direct flight will help boost the social and economic relations between the two countries, according to CA Air’s CEO Trinh Hong Quang.

Quang said the new route is part of the airline’s master plan to expand its networks. Other new routes include Siem Reap-Bangkok, Siem Reap-Hano and Phnom Penh-Bangkok.

Direct flights to Hong Kong, Seoul and Singapore are under consideration, Quang added.

Flights between Phnom Penh and HCM City are increasing in frequency.

The Phnom Penh based airline, a 51/49 joint venture between the Cambodian Government and Vietnam’s flag carrier Vietnam Airlines, currently has 11 flight routes including three domestic flights and eight international flights.

After three years of operation, CA Air, which possess five aircraft including three A320 jets, has registered 5,570 safe flights.

It carried 325,000 passengers in 2012, up 6 percent compared to the previous year with a set occupancy rate of 68 percent.

CA Air plans to have 10,500 flights and carry 754,000 passengers in 2013.

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

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