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Bottlenecks in the property market

House prices beyond affordability of homebuyers and massive investment without orientation to the market’s digestion are seen as the major bottlenecks in the real estate market at present.

Several solutions have been put forward to deal with the problems of the property market, but the point is how to quickly put these solutions into practice, heard a discussion held by Nguoi Lao Dong newspaper in HCMC last Thursday.

Nguyen Phung Thieu, general director of Saigon-Gia Dinh Real Estate JSC, proposed property firms should review how many of their projects were facing problems and seek solutions for each project because not all projects needed rescue.

“Any business must accept losses, and the budget should not be used to bail out real estate,” said Thieu.

He suggested certain commercial condo projects should be turned into low-cost housing ones, which would solve a lot of problems.

However, the rescue of the property market should be aimed at homebuyers instead of businesses, Thieu stated, adding that the State should consider VAT exemptions and low-interest home loans for buyers.

Le Thuy Huong, general director of Truong Thinh Phat Joint-stock Company, pinpointed the key problem was inventory. Only when their products sell well can project owners pay building material suppliers, contractors and banks.

Now is the time for investors, contractors, material suppliers and banks to join forces to save themselves rather than relying on the State, she underscored.

Su Ngoc Khuong, investment director of Savills Vietnam, questioned why the market had not improved although property prices had been slashed and why reduced interest rates had yet to attract homebuyers and investors.

The problem is house prices in Vietnam are still too high compared to people’s incomes. In addition, citizens dare not take out home loans given the fact that lending rates are revised constantly, Khuong stressed.

Economic expert Dinh The Hien asked how many realty firms had conducted surveys to see what consumers actually need. In order to rescue the market, enterprises must accept losses, he stated.

Another problem is that information about the market is insufficient, making it difficult for businesses to predict the market trends.

Le Huu Nghia, director of Le Thanh Commercial Construction Co., wondered if the demand for apartments was actually high. Through a survey in HCMC’s Binh Tan District, Nghia found that homebuyers still preferred houses attached to land to apartments.

To reduce the cost of apartments, the State must adjust land rentals and land use fees to reasonable rates, said Le Hoang Chau, chairman of the HCMC Real Estate Association.

In regards to home loans, Truong Van Phuoc, general director of Eximbank, said that from now to June 30 next year, the bank would give VND5 trillion worth of home loans with an annual interest rate of 12% fixed for the first three years. From the fourth year onwards, the lending rate will be equal to the deposit rate for 12-month terms plus 2%.

Reports say inflation at 8% this year

Given the developments in the year to date and possibly influential factors in the final months, the whole-year inflation rate may be 8% as targeted, say the latest macro-economic reports of HSBC Vietnam and Vietcombank Securities Company.

The report of HSBC remarks the consumer price index (CPI) had risen 7% year-on-year by the end of October. After a sudden increase in September, the monthly inflation rate has eased from 2.1% to an average 1.3%.

“As inflation is forecast to pick up gradually towards the year’s end, we do not expect the central bank to further loosen the monetary policy and anticipate interest rates in the open market will remain stable at 8%,” says the report.

Meanwhile, as per the report of Vietcombank Securities Company (VCBS), the monthly CPI growth rate will be 1% mainly because of seasonal factors, while global prices of fuels and foodstuffs tend to fall slightly, power prices are stable and the chance of impact from money supply is low.

“If CPI in November and December increases 1% as we forecast, CPI of the entire year will grow 8%. Then, inflation expectation should remain low in 2013, which will facilitate economic growth next year and help the Government make polices for economic restructuring and development,” says the report.

In regards to economic growth, HSBC predicts GDP will grow 5%, while VCBS gives a figure of 5.2%, consistent with the forecast of 5-5.5% of the Government.

VCBS says the fiscal and monetary policies have not produced the desired results, as credit growth had only reached 2.27% as of end-October and aggregate demand is forecast to recover slowly in the final two months. However, the GDP growth predicted by VCBS is based on a rise in seasonal consumption.

Meanwhile, HSBC notes the growth that it forecasts is lower than the rate of around 7% in previous years.

The Government has realized the shortcomings of State-owned enterprises and its reform is going in a right direction. Still, there has been no specific remedy for State-owned enterprises, states the report of HSBC.

Observers are wondering what the Government will do to tackle red tape and improve the business environment in order to assist local farmers, producers and private investors as well as foreign investors wanting to do business in Vietnam.

In addition, how the coordination between central and local authorities will be tightened is also a matter of concern, says HSBC.

Web based meet boosts business

A pioneering web-based business meeting connected companies from

Viet Nam and Israel yesterday, as firms in Ha Noi and Tel Aviv shared overviews of their respective markets via the internet.

The event, the first of its kind, was co-organised by the Ministry of Industry and Trade (MOIT) in conjunction with the Federation of Israeli Chambers of Commerce.

The meeting provided businesses from both countries with the chance to forge links and grasp a better understanding of market demand.

During the video conference, the organisers expressed their willingness to create favourable conditions to foster trade cooperation between the two countries and stimulate growth.

More than 40 businesses operating in various fields such as textile and garments, footwear, fisheries, food, agricultural products and food processing, logistics, healthcare and machinery took part in the event.

According to statistics, two-way trade between Viet Nam and Israel has grown rapidly in recent years. In 2011, it reached US$375.4 million and hit $320.8 million in the first 9 months of 2012 alone, increasing 51 per cent year-on-year. Of the 2012 figure, Viet Nam earned $217.7 million in export revenues to Israel, double its returns over the same period last year.

Agricultural trade fair announced

An international agricultural trade fair will take place at the Can Tho International Fair and Exhibition Centre from November 15-21, organisers said last Friday.

The fair is expected to feature 500 pavilions, where foreign and domestic producers, traders and service providers in the agricultural and support industry sectors can showcase their agricultural material and machine products.

During the week-long event, there will be conferences and trade promotion activities offering advice in production, harvest and food preservation for farmers, as well as an overview of the labour market and job training for labourers in rural areas.-

Japanese giant open for business

Japanese-funded Tiger Viet Nam Co Ltd opened the doors of its new US$12 million home electric appliance plant in Viet Nam’s southern province of Dong Nai last Friday.

Located in the Amata industrial park, Tiger Viet Nam’s first facility in the country will produce products such as thermos flasks and rice cookers.

A company representative said the decision to build a plant in Viet Nam signifies its identification of Viet Nam as a strategic market for growing production and sales in coming years.

Founded 90 years ago, Tiger is now a large-scale home electric appliance group in Japan. Its products are sold in 60 countries, with key markets in Asia and North America.-

Viet Nam to host finance conference

Ha Noi will be the venue for an international conference to discuss financial markets stability in East Asia later this month.

The conference, which runs from November 27-28, will be the first of its kind to be held in Viet Nam. It is expected to bring together 500 domestic and foreign delegates from 14 economies in East Asia and around the world.

Entitled “Financial stability frameworks and supervision in changing environments,” the event will enable delegates to share experiences, strengthen co-operation and establish joint action plans towards stabilising financial markets in the region. The establishment of an East Asia financial stability forum is due to be tabled for discussion and approval at the event.

The conference is jointly organised by the National Financial Supervisory Committee, the Office of Government, the State Bank of Viet Nam and the Finance Ministry.

Dong Phu Rubber to pay 15 per cent cash dividend

Dong Phu Rubber Co (DPR) will pay a cash dividend of VND1,500 per share on November 27, the Viet Nam Securities Depository Centre has announced. DPR will conclude the list of shareholders participating in this payout by November 14.

 Developer to sell 3.6 million treasury shares

Development Investment Construction Co (DIG) will sell over 3.6 million treasury shares by the end of this year. Transactions will be carried out through negotiation or order matching on the HCM City Stock Exchange. DIG rose 1.7 per cent to VND11,900 per share on the HCM City bourse yesterday.

 Construction firm suffers profit collapse

Construction company Tasco (HUT) has posted a net profit of just VND30.4 billion (US$1.5 million) in the first nine months of this year, down 44.7 per cent from the same period last year. Third-quarter profit alone fell 39 per cent to just VND4.3 billion ($205,700).

The company attributed the lower profits to rising financial and operating costs. Through the end of September, HUT’s financing costs had jumped 105.6 per cent year-on-year to VND2.7 billion ($130,000), of which costs incurred in the third quarter alone reached VND2.5 billion ($119,047). Operating costs also rose 38 per cent in the first nine months to VND23.8 billion ($1.13 million).
Food processor clobbered by hefty tax bill

Food and beverage giant Interfood (IFS) will have to pay almost VND12 billion (US$574,000) in penalties and back taxes for 2007-09 following a decision by the Dong Nai Tax Department, the company announced. The back taxes total early VND6.8 billion ($323,800), while the penalty is VND5 billion ($238,000).

Overseas investment takes a dive

Overseas investment has fallen by 30 per cent compared to the first ten months of last year, despite new investment licences having been granted for nearly 70 projects by the end of October 2012.

According to the Ministry of Planning and Investment, the new project licences account for US$1.369 billion in registered capital, with three more being approved compared to 2011.

Despite this, overall registered investment capital has dropped by $664 million, the ministry said.

New overseas investment mostly went towards agriculture, wholesale and retail, processing and designing, mineral exploration, food and services sectors, it noted.

During the period, fourteen operating projects were also allowed to raise their investment capital by $96 million.

As of October, Vietnamese businesses have pumped $15 billion into 737 overseas projects this year. The wholesale and retail sectors attracted the highest number of projects at 133. It was followed by processing and designing (122 projects), agro-forestry-fishery (98 projects) and mining (96 projects).

In terms of investment, Laos remained the most attractive destination for Vietnamese businesses, accounting for 222 projects as of September. Cambodia ranked second with 127 projects, following by the US, Singapore and South Korea.

Mergers forged in tense steel industry

Vietnamese steel companies are racing towards mergers and acquisitions to cope with a scary market.

Bac Viet Steel, Vietnam Italy Steel, Song Da Steel, Phuc Tien Trade Manufacture and Tien Len Steel Corporation are among the domestic firms looking to restructure to gain a competitive edge in a bitter tough market.

Bac Viet Steel Company took the lead by recently announcing a plan to team up with four Japanese companies to set up a joint venture in Bac Ninh province’s Que Vo Industrial Park.

The venture with investment capital of $258 million will see Nippon Steel & Sumikin Metal Products hold a 48 per cent stake, while Sumitomo Corporation, Sumisho Tekko Hanbai and Kyoei Steel will hold 22, 3 and 3 per cent, respectively. The remaining 24 per cent belongs to Bac Viet Company

The restructuring will help Bac Viet Steel become one of the biggest steel producers in Vietnam.

Pham Chi Cuong, chairman of Vietnam Steel Association (VSA), said Vietnam’s steel enterprises faced tough times and industry restructuring was the only way the keep this hyper-competitive industry from buckling. “Mergers and acquisitions (M&A) are considered the most effective form for restructuring the steel sector,” he said.

Economic conditions, Cuong added, provided opportunities for foreign partners who have financial resources and a long-term outlook to enter Vietnam’s steel sector and helped their new domestic partners gain a competitive edge.

The steel volume per capita in Vietnam reached about 130 kilogrammes and the figure must be 200-300kg if the country wanted to be considered an industrial nation.

Vietnam Italy Steel is heading down a different road by merging with Song Da Steel as it has approved a plan to issue 19,220,577 new shares and swap shares with Song Da Steel, as a part of a merger plan.

Under terms of the deal, Vietnam Italy Steel will hold 100 per cent of Song Da shares and the swap ratio will be 1-for-1.13, meaning that every 1.13 Song Da shares will be converted into one Vietnam Italy Steel share.

“In our opinion, the merger will help Vietnam Italy Steel establish an integrated steel-making process from scrap steels to billets and then to finished steel products,” said a Ho Chi Minh City Securities Corporation steel analyst. “And it will still like to raise its steel rolling capacity to 450,000 tonnes per year in future.”

Domestic steel-makers Phuc Tien Trade and Tien Len Steel Corporation are also planning to merge, with Tien Len Steel to issue additional shares to swap for Phuc Tien Trade shares, according to Phuc Tien’s plan in 2012. Under that, Phuc Tien Trade will become a wholly-owned subsidiary of Tien Len Steel.

With exports to EU falling, textile makers are hurting

Export orders from European Union (EU) countries are on a downward trend that worried many local garment makers.

In 2012, orders for exports to the EU of Luc Nam Garment Factory, under Bac Giang Garment Joint Stock Company, dropped by 10 per cent compared to 2011. Nguyen Van Thien, director of the factory, said that the company had been deprived of $300,000-400,000 due to the decline in export orders from the EU market.

Vietnam’s garment export companies have longtime customers in the EU market, but they have all been hard hit by the economic crisis in the European region.

This situation lasted from early 2012 to now, and tended to decline further in recent months.

Textile and garment orders from the EU in September 2012 fell by 8 per cent against August.
Based on statistics by the Vietnam Textile and Apparel Association (VITAS), exports turnover of textile and garment to the EU in the past 10 months totalled to $2.1 billion, down 5 per cent compared to the same period in 2011. This has not only affected the completion of the export target for 2012, but also threatened enterprises over the possibility of a further decline in the number of orders in 2013.

With the US and the EU as its key export markets, TNG Investment and Trading JSC (TNG) had their export orders reduced by 12 per cent over the same period of last year. This led to a reduction of 18.2 per cent in its turnover for the first nine months of 2012.

Nguyen Van Thoi, general director of TNG, said that compared to other companies, TNG retained a good export performance, but as the purchasing power in the EU and the US had declined sharply, the firm’s revenue was affected.

Moreover, the European economic crisis has made the euro depreciate and fluctuate continuously. While Vietnam’s textile and garment products exported to the EU generated revenue in euro, most Vietnamese businesses used the dollar to pay for imported raw materials from places like mainland China, Thailand, Taiwan. The difference and loss in the exchange rates of these payments narrowed profits for many Vietnamese garment exporters.

Alice Baey, global purchasing manager of Group Casino – one of the leading worldwide retail companies, said the economic crisis in Europe had made obvious impact on the sales of textile products. “In much of the EU, retailers tend to try to sell the existing inventory and limit the amount of newly imported goods.” Baey also noted that the purchasing power in the EU had significantly lowered.

According to Thien, apart from EU customers losing interests in new orders with the Vietnamese companies, the export prices at which these firms managed to sign contracts have not improved, while domestic production costs such as electricity, water and labour have all increased.n

In this context, Luc Nam Garment Factory had restructured its export markets to make sure its export target is unaffected. The factory paid special attention to customers from Japan, the U.S and especially Korea. Thanks to this restructuring plan, its export turnover target of between $10-11 million has been fulfilled.

Despite obvious difficulties in the EU, several textile exporters express hope that the world economy as well as the EU will stabilize in the last few months of 2012, leading to the improvement of order numbers for next year.

Vehicle dispute leaves firms on a collision course

Wholly Taiwanese-backed Chailease International Leasing and a private Vietnamese company are embroiled in a legal dispute related to a finance lease agreement for five vehicles.

Red Star Transport and Forwarding Company Limited on October 23 filed suit against Chailease Vietnam in the Economic Court of Ho Chi Minh City People’s Court. Chailease Vietnam is a subsidiary of Chailease Finance, the largest leasing company in Taiwan with market share more than 40 per cent.

In the disputed transaction, Chailease served as an intermediary to enable Red Star to lease five vehicles from foreign-backed Chien You Vietnam.

According to Red Star, Red Star intended to purchase five trailers totally worth VND815 million ($39,182) in November 2008. But due to tight finances, it opted instead to sign a finance lease agreement with Chailease Vietnam.

VIR could not contact Red Star executives last week for comments, but the firm’s general director Pham The Hung was quoted by local press as saying Chailease Vietnam had paid Chien You only VND267 million ($12,836) to support Red Star although the due payment was VND615 million ($29,567).

“Besides, because of Red Star’s late payments, Chailease Vietnam self-willingly terminated the contract and sold two trailers for debt amortisation, which contributed to bringing Red Star to the edge of bankruptcy,” Hung claimed.

Hoang Hoa Thom, a representative of Chailease Vietnam’s legal and collection department, rejected Red Star’s arguments. Thom said according to the contract among Chien You Vietnam as the seller, Chailease Vietnam as the buyer and Red Star as the end-user, the total value of the transaction was VND1.025 billion ($49,288), not VND815 million as Hung of Red Star told local press. Of the larger amount, Red Star was expected to pay VND410 million and Chailease to pay VND615 million.

Thom said because Red Star had been late in payment for seven months, Chailease Vietnam had to terminate the finance lease agreement and asked for the company to render the leased assets as regulated in the contract.

“Chailease Vietnam also reclaimed two among five trailers but in fact, these two trailers did not have much existing-use value due to being not in use for a long time. Therefore, it is unreasonable to conclude that Chailease’s asset disposal made Red Star go into bankruptcy,” she said.

Thom told VIR that Chailease Vietnam had required Red Star many times to render the assets, but this firm intentionally ignored the requests and did not cooperate. “Red Star could not pay but it also did not want to render the leased asset. So, after Chailease is successful in asset disposal and debt collection, Red Star felt unsatisfied and sued in order to lower our prestige,” she added.

Chailease Vietnam is a 100 per cent Taiwanese-invested leasing company with charter capital $10 million and operates in finance leasing as its core business, mainly vehicles and machines.

Hanoi to secure an international container port

The Ministry of Construction has agreed to a proposal for the planning and building of an international container port in Gia Lam District, Hanoi.

The Ministry of Construction said that Phu Dong International Container Port is located along the banks of the Duong River in Co Bi and Dang Xa communes and is suitable for the transport planning orientation (waterway port) of the general planning of Hanoi until 2030 and a vision to 2050 approved by Prime Minister Nguyen Tan Dung.

The project, invested by the Northern Riverway Corporation and Hai Phong Port, covers about 30 hectares with a purpose of constructing a container loading port on the Duong River.

The total basic investment capital of the project is more than VND100 billion.

Vinacafe Bien Hoa looks for a market caffeine high

Two of the leading companies in Vietnam’s growing coffee industry, Vinacafe Bien Ha and Trung Nguyen, are planning robust expansions as competition intensifies over the growing domestic and international coffee markets.

Both companies claim leadership in the production of instant coffee and boast of bigger ambitions ahead. While Trung Nguyen is touting its progress in exporting instant coffee to the growing Chinese market and elsewhere, Vinacafe -now part of the Masan Group empire – is talking more about the domestic market.

“We have ambitious plans to hold up to 80 per cent of the instant coffee market and 51 per cent of the roasted ground coffee market in Vietnam by 2016,” said Vinacafe Bien Hoa deputy CEO Nguyen Thanh Tung.

The early performance of its new flavoured instant coffee brand, called Wake-up, has been a source of encouragement. The southern Dong Nai province-based company’s 2016 vision envisages it among the top three largest listed companies in Vietnam’s food and beverage industry, he added.

Coffee has become a major engine of Vietnam’s economic growth over the past 15 years, as the country transformed from a minor exporter raw coffee beans into a powerhouse that rivals Brazil for global leadership. With companies like Trung Nguyen and Vinacafe leading the way, Vietnam has moved up the industry’s value chain by roasting and grinding coffee for both domestic and foreign markets. Vietnam’s strong, harsh “Robusta” beans are especially suited for instant coffee.

For Vinacafe, a major step for the ambition is to put online its third instant coffee plant in the first quarter next year, designed to produce 3,200 tonnes of unflavoured instant coffee a year.

“Together with 1,200 tonnes of unflavoured instant coffee from our two operating plants, we will provide 4,400 tonnes a year in all,” said Tung.

The third plant is located in the province’s Long Thanh District, with construction starting in 2011. “And we consider 2012 a year of big investments, calling for investors.”

Last October, Masan Consumer bought a 50.25 per cent stake in the company. Vinacafe Corporation, the parent company of all Vinacafe firms in Vietnam, holds 37.3 per cent of the Bien Hoa member, and other shareholders own the balance.

Tung said Vietnam’s coffee consumption in 2011 was estimated at VND11 trillion ($529 million), with VND4 trillion (over $192 million) from instant coffee and VND7 trillion ($336.6 million) from roasted and ground coffee.

Pepper supply lags behind demand

Pepper exports are set to fall sharply in November and December since there is little of the crop left to ship this year, according to the Viet Nam Pepper Association.

Around 110,000 tonnes of the spice were harvested this year, virtually unchanged from last year, and 10,000-15,000 tonnes have been imported for re-export.

In the year-to-date 99,000 tonnes were exported, a decrease of 14.4 per cent in volume. With domestic demand of 5,000 tonnes and an equivalent border trade, only around 10,000 tonnes are left in stock.

Last year exports were higher because of stocks left over from 2010.

Globally too, pepper output has not changed much this year, but average prices have been higher, the association said.

The VPA expects prices to be volatile both at home and internationally for the rest of the year.

VPA chairman Do Ha Nam said Viet Nam’s pepper output could increase in the coming years, and enterprises should therefore invest more in processing and diversification of products to add value.

Local businesses should enhance linkages among themselves, exchange information, and improve management to create healthy competition and develop the industry, he added.

Pepper is grown mainly in six provinces – Binh Phuoc, Gia Lai, Dak Nong, Dong Nai, Ba Ria-Vung Tau, and Dak Lak.

After global pepper prices began to rise since last year, many farmers have expanded the area under the spice, especially in Dak Nong, Dak Lak, and Gia Lai.

But with many pepper-growing areas are plagued by crop diseases and unfavourable weather, helping farmers combat diseases is an urgent task to secure the industry’s long-term development.

The country exports the spice to 80 countries and territories. The EU and Asia are the main buyers, accounting for 39.2 per cent and 36.6 per cent of exports respectively.

South Korean businesses praised for being socially responsible

Viet Nam’s Ministry of Planning and Investment and South Korea’s Ministry of Knowledge Economy granted an award for Corporate Social Responsibility to eight Korean companies operating in Viet Nam at a ceremony in Ha Noi yesterday.

Both governments praised the Korean enterprises for their efforts to improve working conditions, support employees who suffer accidents at work, conserve water and electricity and protect the environment.

The firms range from construction companies to insurance agencies.

The chief representative of Posco Viet Nam, one of the awardees, said his company took pride in the award and was fully committed to continue carrying out its social responsibilities.

The awards ceremony is one of several activities celebrating the 20th anniversary of Viet Nam – South Korea diplomatic relations. This is the second time these prizes were given to Korean enterprises.

The South Korean Trade and Investment Promotion Department also held an exhibition featuring more than 40 Korean producers and importers in the fields of electronics, household appliances, cosmetics and food.

The exhibition also attracted 200 businesses from Viet Nam, Malaysia, the Philippines, Cambodia and Thailand.

By September, total investment from South Korea reached US$24 billion in more than 3,000 projects. South Korea is the second biggest investor in the country.

Shenzhen businesses keen on investing in Vietnam

The Vietnam Consulate General in China’s Guangzhou province, in coordination with the Shenzhen Municipal Trade, Economic and Information Commission gave a presentation on Vietnam’s investment environment on November 6.

The presentation attracted a large number of businesses and groups from Shenzhen City and Guangdong province, especially those specializing in electronics, high technology, and green energy.

Many Chinese businesses inquired about Vietnam’s investment policy, tariffs on imports, labour forces and skills, profit transfer outside of Vietnam and other factors, such as children’s education, healthcare services and social environment.

Consul General To Quoc Tuan answered all their questions. He said Vietnam has been actively integrating into the world to promote economic development and will give priority to mobilizing all domestic resources for completion of market economy mechanism, improving the quality of human resources and developing comprehensive and modern infrastructure.

Currently, Vietnam encourages businesses to invest in environmentally friendly and high-tech projects, Tuan said.

He pledged to coordinate with domestic relevant agencies to create the best possible conditions for Chinese businesses to invest in the country.

Vietnam, Italy co-operatives strengthen linkage

The Vietnam Co-operative Alliance (VCA) delegation led by its chairman Dao Xuan Can has paid a working visit to Italy from November 3-7.

During their stay in Italy, the VCA signed a memorandum of understanding (MoU) with the Alliance of Italian Co-operatives (Legacoop) and held a roundtable discussion on commodities production and distribution cooperation between Italy and Vietnam.

The VCA and LegaCoop agreed to share experience in establishing and developing co-operative systems, improving the quality of human resources training and facilitating trade exchange.

The two sides also agreed to set up working groups to discuss in detail and devise specific plans for cooperation in the near future.

Dao Xuan Can said the VCA and Legacoop will join efforts to help bring two-way trade turnover from US$2.5 billion in 2011 to a higher level.

They exchanged experience in developing co-operatives, especially agricultural co-operative, and discussed measures to boost goods exchange, through “Vietnamese goods week in Italy” in 2013 and distributing Italian goods in Vietnam and other countries in the region.

Seminar on sustainable growth in Vietnam

A seminar was held in Hanoi on November 6 to discuss cooperation for international economic development and opportunities for sustainable growth in Vietnam.

The event was co-organised by the Vietnam Union of Friendship Organisations (VUFO) and German fund Hans Seidel Stiftung.

The event provided an opportunity for Vietnamese scholars and economists to share Germany’s experience in economic development. It has also contributed to strengthening and promoting relations between Vietnam and Germany.

Delegates focused on issues related to the use of new energy, non-governmental organizations’ support for poverty reduction, socio-economic development in a sustainably manner and non-financial cooperation.

Firms flee collapsing real estate market

Businesses are making a rapid retreat from the property market as they seek to avert potential losses from its bleak outlook.

A number of firms and enterprises have withdrawn capital from the market, while adjusting business strategies to focus on more optimistic growth areas.

The Viet Nam Construction and Import-Export Corp (Vinaconex) last month announced it had completed selling its entire 25 per cent stake (3.75 million shares), in urban developer Vinaconex – Hoang Thanh.

The stake, thought to be worth VND$1.5 trillion (US$71.43 million), could have grave implications for the ParkCity urban project in Ha Noi, where Vinaconex – Hoang Thanh Co was one of the investors. The project is said to have seen almost no development since construction began two years ago.

At an investor meeting last month, VinaCapital officials said its property investment fund, VinaLand, wouldn’t make new investments in the coming time but would concentrate on developing current projects, improving profits and repaying capital to investors.

This fund had already withdrawn capital from 10 projects, worth a combined total of over $357.6 million, Lao Dong (Labour) reported.

Other major companies which have completely retired from the real estate playground include Baker Kinh Do and steel maker Hoa Sen, according to the newspaper.

Hoang Anh Gia Lai chairman Doan Nguyen Duc said the real estate sector no longer produced the huge profits seen during its 2006-07 boom years.

“The question now is whether enterprises can survive,” said a property business owner in HCM City. “Most would be happy to gain one-tenth of the profits they earned in the past.”

Many business leaders said property companies should now save themselves by restructuring products and reducing prices.

According to Lao Dong, Hoang Anh Gia Lai has cut prices for apartments at the Thanh Binh project in HCM City’s District 1 by one-third to a half. Meanwhile, the Hoa Binh Real Estate Trading Floor has lowered prices for Babylon apartments, which previously cost VND14.9 million ($709) per square metre.

Hoang Anh Sai Gon Real Estate Co Ltd has also offered cheaper prices for Quang Thai apartments, which before were being sold at around VND1 billion ($47,600) per unit.

The majority of people seeking accommodation are still unable to afford these kinds of properties, the newspaper said, raising the question: Should the country rescue the property market now?

“Let market prices continue to fall until supply meets demand, just then we will have a healthy property market,” it mused.

Stabilising animal feed prices

While the prices of food keep falling with no signs of abating, those of livestock feed and input materials are likely to rise further, already at an average growth of 3-4 percent.

According to the Industry and Trade Information Centre under the Ministry of Industry and Trade, as domestic livestock feed production can only meet 40 percent of the total demand, Vietnam depends on the operation of import businesses and 50 foreign-invested plants.

They have to import around 75 percent, sometimes even up to 90 percent, of total input materials from major suppliers like China, Argentina, Italy and the US.

The United Nations Food and Agriculture Oganisation (FAO) predicts that the world prices will surge in the remaining months of this year due to their strict controls on exports.

For example, Argentina’s corn reserves are estimated at 1.44 million tonnes by the end of this year, down by nearly half compared to the 2.69 million tonnes recorded earlier this year. Japan tops the list of countries facing corn shortages (15 million tonnes), followed by Mexico (11.6 million tonnes), the Republic of Korea (7.63 million tonnes) and Southeast Asia (5.42 million tonnes).

As these countries will also have to import input materials, there will be serious shortages in the world market. This year’s soybean output is estimated at 237.09 million tonnes but total demand is 254.46 million tonnes.

The supply of fish powder from Peru – the world’s leading producer – is running low because of unfavourable weather conditions.

The Vietnam Animal Feed Association says the price of input materials and livestock feed in Vietnam is 20 percent higher than in other countries.

There is no doubt that the soaring prices of input materials will affect livestock feed production in Vietnam.

Some experts propose stabilizing prices in the region to help the sector through a difficult time while investing more in research projects to raise the output of subsidiary crops for animal feed processing.

The State, as they argue, should simplify procedures for value added tax refund on cassava, soybean, corn and other farm produce so that businesses can cut out the middleman and buy materials directly from farmers. It should also support farmers in improving storage facilities.

Duong Duy Dong from the Ho Chi Minh City Agriculture and Forestry University says, in order to help reduce corn and wheat imports, Vietnam needs to have long-term planning to ensure a good balance between supply and demand for livestock feed in the next five to ten years.

Ministry bolsters price control effort as Tet nears

Minister of Finance Vuong Dinh Hue recently issued Directive 04/CT-BTC to intensify price management and stabilisation as the year comes to a close and Lunar New Year (Tet) approaches.

Accordingly, relevant organisations and authorities must watch market price fluctuations closely while ensuring the balance of supply and demand for essential goods such as food, sugar, medicines, petrol and oil, gas, fertilisers and travelling services.

In localities where price stabilisation was already carried out, supervision would be tightened to ensure compliance with the Government’s regulations.

Price-stabilised goods would also be sold in rural and remote areas together with promotional activities to stimulate consumption and increase purchasing power.

According to the directive, the adjustment of prices must have a detailed roadmap including an assessment of any possible impacts on production and residents’ lives.

Currently, 36 provinces and cities throughout the country have implemented the Government’s price stabilisation programme with about 6,400 points of sale.

Price-stabilised products have a price 5-10 per cent lower than the market price, which helps prevent price surges, especially as Tet draws near.

Who owns patents to State-financed inventions?

Under the Law on Intellectual Property, the following organisations and individuals have the right to patent an invention: the individual who created the invention by his or her own efforts and expense, and organisations or individuals who have provided the inventor with funds and materials in the course of employment or from the State budget, unless otherwise agreed upon by the parties.

Government Decree No103/2006/ND-CP further provides that, when an invention is created on the basis of full financial, material and technical investment by the State, the right to register the patent on such invention belongs to the State, with the organisation or state agency assigned by the State to act as the “investor” representing the State in exercising that right. If the invention has been created on the basis of capital contributions by the State (either in funds or material and technical facilities), part of the right to patent such invention belongs to the State in proportion to its capital contribution.

When an invention is created on the basis of research and development co-operation between a state agency or organisation and another organisation or individual, unless it is otherwise provided for in the research and development co-operation agreement, part of the right to registration of such invention belongs to the State in proportion to such state agency’s or organisation’s contribution to the co-operation. The state agency or organisation which takes part in the research and development co-operation represents the State in exercising that right to registration.

The term “investor” in this context is not defined in the Law on Science and Technology, the Law on Technology Transfer or the Law on Intellectual Property. So, it is necessary to clarify the term “investor” as subjects or projects of scientific research and technological development which use funds and material and technical facilities from the State budget.

In practice, the agencies distributing the budget have been viewed as the agencies assigned by the State to act as the investor and represent the interests of the State. As a result, these agencies are the owners of the research results. They include ministries, universities, and research institutes. If this understanding is affirmed, these agencies are responsible for representing the State in registering inventions created using funds and materials and technical facilities from the State budget.

This practice is consistent with the provision in the Law on Technology Transfer which states, “Unless otherwise provided for by law, the State shall transfer the right to own a technology created from State budget-funded research and development to the organisation in charge of research and development of that technology.”

Nevertheless, a more specific regulation, such as a Government decree or a circular of the Ministry of Science and Technology, needs to more clearly enshrine this understanding in the laws and regulations pertaining to patents. Many countries have entirely different procedures in place to deal with the problem of ownership of inventions created with State budget funds. In the US, the Bayh-Dole Act of 1980 is a typical case. Under that law, “universities and small enterprises have the right to own any patent which is the result of research funded by any federal agencies.”

Agencies which use State budget resources to invest in research and development may also contract with a private enterprise or university to conduct research. If, in so doing, this subject creates a technical solution which can be registered as an invention, who has the right to own the patent? This situation can be distinguished from cases in which the right to a patent is assigned to a university or research institute. The law is not yet clear on this issue.

Vesting the right to patent an invention developed with funds, materials and technical facilities paid for by the State budget in universities and research institutes without strict regulations to ensure that this vesting serves State and public interests is a shortcoming in the law. Once these universities, research institutes or enterprises are granted ownership of a patent, they have the lawful right to use, permit others to use, exclude others from using, and otherwise profit from such invention.

The Bayh-Dole Act gets around this problem by creating this exception: “In case of ineffective use or it becoming necessary to public health or safety, the government reserves the right to request compulsory or exclusive license to use the invention.”

Trade fair promotes investment in Cambodia

A trade fair will be held in HCM City from November 21-25 aiming to increase the volume of Vietnamese goods in the Cambodian market and expand Vietnam’s market share.

A seminar is also scheduled during the fair to promote investment in the northwestern region of Cambodia.

This was announced by the HCM City Investment and Trade Promotion Centre (ITPC) on November 6.

The fair will feature nearly 200 pavilions displaying products from 150 businesses operating in agriculture, processed foods, household plastics, interior decoration, garments and textiles, cosmetics, electronics and construction materials.

A “Common House” space at the fair will include an exhibition on the economic, political, cultural, and social achievements of Vietnam and Cambodia, as well as their longstanding friendship and solidarity.

Huynh Tan Phong, ITPC Deputy Director said the event offers an opportunity for businesses to learn more about the investment environment in Cambodia. In addition, business representatives will visit trade centres and wholesale markets in six northeastern Cambodian provinces to conduct a market survey and study consumer demands.

The organizing board and donors will also present gifts to poor and disadvantaged people in Cambodia to mark the occasion.

South Korea products take centre stage in Ha Noi

An exhibition to showcase South Korean products kicked off yesterday in Ha Noi’s Keangnam Tower on the occasion of 20 years of diplomatic ties between Viet Nam and South Korea.

The two-day event organised by the Ministry of Knowledge Economy and Korea Trade Investment Promotion Agency (KOTRA) introduced products from more than 40 South Korean enterprises from the information and technology, electronics, cosmetics, foodstuff and household sectors. It also attracted over 200 Vietnamese partners looking for co-operation opportunities.-

Air Mekong to boost flights ahead of lunar new year

Mekong Aviation JSC (Air Mekong) would put on an additional 270 flights equivalent to 25,000 seats on some domestic routes during the upcoming Tet holiday, the carrier announced on Monday.

From January 25 to February 24, there will be an extra 17,000 seats on flights from HCM City to Buon Me Thuot, Quy Nhon and Pleiku, and from Buon Me Thuot to Vinh City. During Tet, there will be from two to four more daily flights to each Central Highlands destination.

The airline also announced an extra 8,000 seats on flights from HCM City and Ha Noi to Con Dao and Phu Quoc islands from February 10-20.-

Bank launches telecom charge collection system

Sai Gon-Ha Noi Commercial Bank (SHB) has launched a service to collect telephone charges from Vinafone and VNPT subscribers.

Customers will be able to pay their bills directly into the bank rather than wait for VNPT representatives to collect the money, avoiding service interruptions due to late payment. At the same time, customers can also use SHB’s other utility services if they meet the bank’s criteria.

Payments can be made directly or via internet and SMS banking.

Japan grants teachers mass insurance cards

Koichiro Watanabe, president of the Dai-ichi Life Japan Corporation yesterday granted a cheque of 500 mass insurance cards worth VND10 billion to needy pre-school teachers nationwide, during his visit to Viet Nam.

Pre-school teachers will benefit by VND20 million (US$1,000) each during the whole 7-year period without going through any underwriting process.

The mass insurance (An Nghiep Chu Toan) product of Dai-ichi Life Viet Nam is designed with various comprehensive protection benefits to meet the requirements of these low income groups.


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