Coffee export turnover drops sharply
Vietnam exported only 1.25 million tons of coffee with a total turnover of US$2.62 billion in the 2014-2015 crop, down 22 percent in volume and 20 percent in value over the previous crop.
The report was made by the Vietnam Coffee and Cocoa Association (VCCA) at a meeting in Hanoi yesterday to review the last coffee crop and seek solutions for the coming crop 2015-2016.
Data by the Ministry of Agriculture and Rural Development indicated the same situation. For the first 11 months this year, coffee posted the most reduction in export volume and turnover, falling 28 percent and 30 percent over the same period last year respectively.
VCCA attributed the reduction to weather change causing rain occurs during harvest time and drought hit coffee plants amid its growing phase, many coffee fields suffered irrigation water shortage and complete loss.
In addition, the cost of labor and fertilizer soared highly to hit coffee farming.
However, according to the latest forecast by the U.S. Department of Agriculture, Vietnam’s coffee export will increase 30 percent to reach the record high of 28.7 million bags in the 2015-2016 crop thanks to better weather.
Personnel changes at Eximbank ahead of AGM
The Vietnam Export Import Commercial Joint Stock Bank (Eximbank) has announced changes to its senior personnel and nominees for the management and supervisory boards in preparation for its annual general meeting on December 15.
Deputy Director Tran Tan Loc will become Acting General Director, replacing Mr. Pham Huu Phu, who has resigned.
Born in 1969, Mr. Loc has been working for Eximbank since 1994 and has held the position of Deputy Director since March 2007.
On December 10 Mr. Phu was nominated as a member of the management board by 10 per cent of shareholders but has requested the nomination be withdrawn.
Eximbank also released a full list of nominees for positions on the management board and supervisory board for the 2015-2020 term, which includes one representative from the State Bank of Vietnam (SBV), two foreigners representing strategic shareholders, and a former leader of NamABank.
The nominees include Mr. Cao Xuan Ninh, nominated by 11.28 per cent of shareholders with voting rights and from the SBV, Mr. Naoki Nishizawa from Sumitomo Mitsui Banking Corporation, voted by 10.05 per cent, Mr. Yasuhiro Saitoh, by 10.05 per cent, Mr. Dang Phuoc Dua, by 10.32 per cent, Mr. Ngo Thanh Tung, by 10.18 per cent, Mr. Pham Huu Phu, by 10.05 per cent, who has asked his nomination be withdrawn, Mr. Tran Ngo Phuc Vu, nominated by 10.51 per cent of shareholders, and Mr. Tran Ngoc Tam, by 11.722 per cent. Mr. Vu and Mr. Tam are former leaders of NamABank.
Nominees for the supervisory board include Mr. Tran Le Quyet, Ms. Pham Thi Mai Phuong, Mr. Tran Ngoc Dung, and Mr. Trinh Quoc Bao.
Local retailers in the race
The market share of foreign retailers in Vietnam has clearly been expanding in recent years but domestic retailers have been looking at ways of stemming the flow. Ms. Vu Thi Hau, Deputy Director of the Nhat Nam Joint Stock Company, which has invested in Fivimart, said the supermarket chain cooperating with foreign partners is the right step to take as after selling stakes to foreign investors it can introduce more goods at its supermarkets.
“Under pressure from foreign retailers, improving our competitive capacity is the first thing we must do, by expanding business networks, focusing on major cities, and cooperating with foreign partners,” said Mr. Nguyen Ngoc Thang, Deputy General Director of Saigon Co-op. It has come to cooperative agreements with partners to develop modern shopping malls, he added, and it hopes to promote Vietnamese goods among consumers.
Local retailers are giving due consideration to diversifying business models and retail forms, with Mr. Thang and Saigon Co-op planning to build a shopping center elsewhere in Southeast Asia within five years.
Speaking with VET on the sidelines of the Vietnam Retail Forum 2015 on December 9, Mr. Vaughan Ryan, Nielsen Vietnam Country Manager, said that he did not think domestic retailers were facing difficulties. “The position of Saigon Co-op and Vinmart in the retail market is the evidence of this,” he said. “There is also strong growth in online retailing.”
In evaluating the development of foreign retailers in Vietnam, he pointed out that only BigC has seen dramatic development, while Metro, for example, seems to losing its market share and Aeon, as a new player, has a lot to do to win customer belief. It’s therefore too early to assess the competitive capacity of foreign retailers. “Domestic retailers hold more advantages in competing with foreign retailers because the latter have higher operating costs and face difficulties in penetrating into the market despite having better management,” he said
The TPP is also a good opportunity for Vietnamese retailers to improve their competitive capacity. Mr. Ryan said the scale of Vietnam’s retail market is still much smaller than the size of the country’s population so there is space for domestic retailers such as Saigon Co-op and Vinmart to grow. To make the most of the opportunities, he said, domestic retailers must build modern retailing models and improve customer belief in the quality of their goods and services.
He doesn’t see shopping malls as being the way to gain market share. Convenience stores and small supermarkets are more still the more successful models.
Mr. Richard Leech, Executive Director of CBRE Vietnam, said that Vietnamese retailers quickly keep up with foreign retailers in the market. Domestic retailers need to enhance their competitive capacity to provide services of international standard and improve their management abilities and marketing strategies. “Vietnamese retailers can totally satisfy international standards in retailing,” he added. “Some sectors are already controlled by domestic retailers, such as middle and high-class fashion.”
Weak support industries leads to trade deficit
Vietnamese industry still remains dependent on imported equipment and spare parts, driving up the trade deficit, while local firms remain incapable of fulfilling their support industry role.
The Ministry of Industry and Trade reported that exports in the first 11 months of 2015 reached USD148.7bn, an increase of 8.3 percent on last year while imports were valued at USD152.5bn, up 13.7 percent on last year.
A report by HSBC bank published in November pointed out that the trade deficit this year may reach USD6bn, increase by USD600m compared to the previous year. FDI companies as well as local firms depend a lot on imported equipment since Vietnam’s support industry sector remains weak. The textile industry is Vietnam’s major export industry, but 80 percent of materials from garments to buttons are still imported.
General Statistic Office spokesperson Bui Trinh said, “We need stronger and clearer policies to develop support industries. Especially given the commitments we’re supposed to meet in the Trans-Pacific Partnership, free trade agreements and other trade deals.”
Foreign-invested firms accounted for 68.2 percent of the country’s exports underlining the inability of local firms to participate in global value chains.
In order to develop the local support industry sector, the prime minister approved the Japan – Vietnam Co-operation Framework. The Hanoi Support Industry Business Association and the Hanoi Southern Support Industrial Park have been preparing a plan to improve local support industries with Japanese partners.
Over VND175 trillion invested in Mekong Delta’s infrastructure
Over VND175.5 trillion (US$7.7 billion) has been invested in transport infrastructure projects in the Mekong Delta region in the 2010-2015 period with a large amount of capital spent on road projects.
The information was announced by the Ministry of Transport in its recent report at the conference on December 10 that reviewed the five-year investment plan in developing transport infrastructure of the Mekong Delta region.
During the period, over VND129 trillion (US$5.67 billion) was poured into 58 road projects with 34 projects completed and put into operation and 24 remaining others expected to be finished between 2016 and 2018. In the meantime, over VND6.8 trillion (US$299.2 million) was spent on inland waterway projects.
Regarding the marine sector, the construction of An Thoi seaport in Phu Quoc, Kien Giang province was completed with a total investment of VND198 billion (US$8.7 million) sourced from the government fund and several other projects are currently underway. In addition, four aviation projects worth over VND5.3 trillion (US$233.2 million) have been completed.
In the period, nearly VND24.3 trillion (US$1.1 billion) was invested in upgrading approximately 44,000km of roads in rural areas in addition to upgrading and building more than 19,800 bridges in rural areas in accordance with the government project on rural development.
Speaking at the conference, Deputy Prime Minister Vu Van Ninh asked relevant ministries and sectors to outline a synchronous plan for transport infrastructure in the region in order to reduce transport costs and increase competitiveness for agricultural products.
According to the Transport Ministry, the Mekong Delta region will need around VND87 trillion (US$3.8 billion) to invest in transport projects in the 2016-2020 period including roughly VND64 trillion (US$2.8 billion) for road projects.
HCMC: Overseas remittance may touch US$5.5 billion
The amount of overseas remittance to Ho Chi Minh City was estimated to hit around US$5.5 billion, up 10% against 2014 and higher than an initial forecast of US$5.2 billion, according to the municipal People’s Committee.
HCM City absorbed a third of total overseas remittance sent to Viet Nam which would be around US$13-14 billion in 2015.
Statistics showed that over 4.5 million Vietnamese are living in over 100 countries and territories around the world. In addition, half a million guest workers are working chiefly in Malaysia, Japan and the Republic of Korea. They are important senders of overseas remittance.
According to a data of the Central Institute for Economic Management (CIEM), Viet Nam’s overseas remittance has grown over 38% yearly since 1991.
Flights forecast to surge 20% this year
Vietnam Air Traffic Management Corporation (VATM) has projected that the number of flights to and from airports in Vietnam this year will leap nearly 20% over last year despite many unfavorable weather patterns and upgrades at a number of airports.
VATM said the annual rise in previous years was 8% and that such growth momentum would continue in the coming years.
The corporation noted that air traffic at major airports like Noi Bai in Hanoi and Tan Son Nhat in HCMC will soar in the run up to the upcoming Lunar New Year holiday (Tet), which falls on early February.
Tan Son Nhat airport, where a welcome ceremony was held on December 8 for the 600,000th flight in Vietnam this year, is forecast to handle 660 daily takeoffs and landings on average during the peak air travel period of Tet, a 10% rise against the same period of last Tet.
According to data of the Civil Aviation Authority of Vietnam, airports in Vietnam handled around 51.8 million passengers and 795,000 tons of cargo in the first 10 months of this year, up 23.4% and 9% year-on-year respectively.
Vietnamese airlines transported 25.6 million passengers, up 26.9% year-on-year, and 198,000 tons of cargo, up 5.1%.
Of the total figure, 14.6 million passengers were carried by Vietnam Airlines (up 9.3% year-on-year), nearly 3.2 million passengers by Jetstar Pacific Airlines (up 54.5%), 7.4 million passengers by Vietjet (up 66.1%) and 330,000 passengers by VASCO (up 43.7%).
There have been remarkable changes in terms of market share for passenger transport and competition on the domestic market. Vietnam Airlines currently holds a share of 47.6%, Jetstar Pacific 14.9% and Vietjet 35.7% while their respective shares were 56.6%, 13% and 28.8% last year.
As of October, local airlines had had a combined fleet of 127 aircraft with an average age of 5.6 years and 51 of them (40.2%) owned by local carriers.
The International Air Transport Association (IATA) forecast Vietnam would be one of the seven fastest-growing aviation markets in the period from 2014 to 2017 with international passenger transport growing by 6.9% and cargo transport by 6.6% per year.
The domestic aviation market is expected to continue two-digit growth in the coming years.
SBV lowers reserve ratio
The State Bank of Vietnam (SBV) has decided to lower the reserve ratio at those banks involved in the ongoing restructuring plan for the banking system, paving the way for a measured return to an expansionary monetary policy.
The lower reserve ratio allows commercial banks to hold less cash and thus increase lending to customers.
According to Circular 23/2015/TT-NHNN signed by deputy governor Nguyen Thi Hong last week, the SBV will consider cutting the reserve ratio, on a case-by-case basis, for those banks carrying out their own restructuring plans or participating in the restructuring of other weak credit institutions
Circular 23 will come into force on January 28, 2016.
The reserve ratio for call and less-than-12-month deposits in the Vietnam dong is currently 3%, and deposits of 12 months or longer 1%. The respective figures for deposits in foreign currency are 8% and 6%.
Meanwhile, the ratio applicable to Vietnam Bank for Agriculture and Rural Development (Agribank) is 1% for all tenors.
If a bank mobilizes VND100 from a six-month deposit, it has to hold VND3 in its reserve and can use VND97 to lend or improve liquidity. If the deposit comes with a tenor of over 12 months, the lender should hold VND1 in their reserve.
At present, the local banking system reports an estimated total mobilization of around VND4,000 trillion (US$178 billion), mostly from less-than-12-month deposits. So, total reserves at banks are put at VND100-120 trillion.
However, the circular only allows for a flexible reserve ratio at a certain number of banks.
The lower ratio helps banks reduce borrowing cost and thus cut interest rates to step up lending. This monetary loosening policy is a measured one.
The circular will benefit weak banks being put under special surveillance by the central bank. Under current rules, the State Bank governor will consider imposing special surveillance on a credit institution facing insolvency or bankruptcy or those that seriously violate law.
Second, the lower ratio for banks that carry out restructuring plans or participate in the restructuring of ailing lenders will help them cut borrowing cost, improve earnings and lower interest rates for loans. The rule also encourages healthy banks to join the restructuring of weak banks, thus speeding up the banking sector restructuring plan. Most banks have shown positive responses to the new circular, especially Vietcombank, VietinBank and BIDV, which have been picked to support weak lenders.
According to Vietcombank’s consolidated financial statement in the third quarter, its deposits totaled VND487.7 trillion. If Vietcombank is allowed to cut its reserve ratio from 3% to 2% (for all dong deposits) for participating in the restructuring of Construction Bank, it would have an extra VND4.8 trillion for lending.
Vietnam poised to attract more S.Korean investment
South Korea is now the biggest investor in Vietnam and more Korean investors will come to capitalize on expanding ties between the two countries, heard a recent dialogue between Korean firms and State agencies.
Park Noh Wan, Consul General of the Republic of Korea in HCMC, told the Business Dialogue 2015 in Vietnam in HCMC on Tuesday that Vietnam has attracted more investment capital from Korean businesses than other ASEAN nations.
The trend will continue in the coming years as a result of a bilateral free trade agreement (FTA) between Vietnam and Korea and Vietnam’s participation in the Trans-Pacific Partnership (TPP) trade pact.
Korea’s parliament has ratified the FTA last week, about six months after the pact was signed by trade ministers of the two countries.
Park said Korean enterprises have invested in multiple sectors in Vietnam, from apparel and footwear to electronics and information technology, and contributed much to industrial growth in this country.
Korean companies have registered some US$18 billion for 240 electronics projects, including US$16 billion for complexes of Samsung and LG, according to data of the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.
Young-Jun Cho at the Korea Chamber of Commerce and Industry (KCCI) told the Daily on the sidelines of the event that many Korean companies have shown interest in Vietnam thanks to the ASEAN nation’s deeper international integration and the Vietnam-South Korea FTA.
He forecast that Korean investments in electronics, logistics and retail sectors would jump and that Vietnam’s southern region will lure more investors who are suppliers of big enterprises like Samsung, Lotte and E-Mart.
Nguyen Noi, deputy head of FIA, said Korean firms have pledged over US$43.63 billion for 4,777 projects in Vietnam. Korea is followed by Japan with 2,788 projects worth US$38.7 billion.
“Korea and Japan will continue to be among the top investors in Vietnam in the next 2-3 years,” Noi said.
He said the Vietnam-South Korea FTA will support Vietnam to improve the business environment and woo more Korean investors to come.
Vietnam will create favorable conditions for Korean businesses and encourage big firms to join the restructuring of State-owned enterprises (SOEs).
Two-way trade between the two nations have grown sharply over the past two decades, from US$500 million in 1992 to US$28.8 billion last year, up 57 times. In 2014, South Korea was the third biggest trade partner of Vietnam after China and the U.S.
Bilateral trade between Vietnam and South Korea has surpassed US$30 billion, 60 times higher than when the two countries established diplomatic relations in 1992.
Ben Thanh Tourist has new general director
The government of HCMC has picked Vu Dinh Quan, 39, as general director of the BenThanh Tourist, replacing his predecessor Hoang Tam Hoa.
Quan served as deputy general director and board member of BenThanh Tourist which was changed into a joint stock company this year.
According to BenThanh Tourist, the company served 186,233 visitors and obtained revenue of over VND359 billion last year.
This year the company is expected to attain VND660 billion in revenue, up 84% against last year, and see a 40% pickup in guests.
FPT, Fujitsu develop smart agri-models
Vietnamese firm FPT and its Japanese partner Fujitsu have completed a smart agricultural center in Hanoi with an aim to develop modern agricultural production models for the country.
The FPT-Fujitsu Akisai farm and vegetable factory is the initial fruit of a smart agricultural cooperation project announced late last year by FPT and Fujitsu. As part of the project, FPT is coordinating with Fujitsu to develop modern agricultural production models for application in Vietnam.
FPT said Fujitsu’s information technology (IT) solutions and experiences in agriculture will be applied to grow tomatoes and lettuce in the 400-square-meter centers.
Mitsutoshi Hirono, senior vice president and head of innovation business at Fujitsu, said the Akisai solutions have helped increase tomato output in Japan from 20 tons to 50 tons a hectare and raised farmers’ income by three times.
The two companies will apply the greenhouse and vegetable factory models to grow agricultural products with high added value. These models allow farmers to manage and monitor their farms monitored via an IT system.
Sensors will be used for the greenhouse and vegetable factory models to collect all necessary information about temperature, humidity and rainfall, among others, to help farmers make timely adjustments.
Truong Gia Binh, chairman of FPT, said the Japanese IT solutions are applied for the first time in Vietnam. In the coming time, FPT will cooperate with other IT solution providers to help develop a strong agricultural sector in this country.
Vietnam is looking for solutions to solve problems with food safety and pesticide overuse for agricultural products. With the project, FPT and Fujitsu expect that the Government and local enterprises to support them to develop smart production models for the local agricultural sector.
State budget impacted by oil price plunge
Experts said the world oil price drop would leave greater impact the State budget, and relevant agencies would have to re-calculate budget collections for next year.
The current global oil price is equivalent to 62.75% of what Vietnam Oil and Gas Group (PetroVietnam) has estimated for 2016.
A further oil price decline is looming large as members of the Organization of the Petroleum Exporting Countries (OPEC) did not reach an agreement on output cuts at a meeting on Monday despite oversupply.
The oil price slide of 29% since the beginning of the year and 17% in the fourth quarter compared to early 2015 has led to revenue contractions in oil exporting countries.
In late-September when oil was around US$50 per barrel, PetroVietnam (PVN) predicted the 2015 price would average US$56.7 per barrel. The reduction by over US$43 per barrel compared to earlier projections would cause a loss of VND63 trillion (US$2.8 billion) from crude oil and relevant domestic sources for the State budget. Meanwhile, PVN would suffer lost revenue of VND163 trillion (US$7.25 billion).
But with the price below US$40 per barrel, the average price of the last quarter of 2015 will no longer stand at US$50 per barrel as projected.
The fresh oil price slump would hit PVN’s forecast for next year.
Earlier, PVN told the Government and the National Assembly that there would be three oil price scenarios of US$70, US$65 and US$60 per barrel for next year. Then, the legislature passed the 2016 State budget target based on the lowest forecast of US$60 per barrel.
If the world oil price dips further, say US$20 per barrel as predicted by Goldman Sachs in November, it would deliver a blow to the nation’s 2016 budget collections.
Japanese firms gauge agriculture sector
Representatives of 32 Japanese companies are in Vietnam for a six-day visit to explore business opportunities and find partners in the agricultural sector, according to the Japan External Trade Organization (JETRO).
As part of the program lasting until this Saturday, the delegation will sound out prospects in agriculture in Hanoi, Ha Nam, Thai Binh, Can Tho, HCMC and Lam Dong. They will make field trips to major farms and meet leaders of provinces and cities and domestic enterprises active in the agricultural sector.
The visiting Japanese enterprises are suppliers of fertilizer, seeds and agricultural machinery; goods buyers and investors in the agricultural sector. They are looking to gain an insight into Vietnam’s agriculture and search for good business partners, according to JETRO.
Atsusuke Kawada, chief representative of JETRO in Hanoi, said in a statement that the Vietnamese Government is pinning high hopes that Japanese firms can provide agricultural machines and technologies for Vietnam to add value to its farm products.
Japanese investment in Vietnam’s agricultural sector has been on the rise in recent years, especially in high-tech agriculture. Japanese investors said Vietnam has suitable soil and climate conditions for agricultural production and a convenient geographic location for connecting to large markets in ASEAN and China.
More chances are awaiting Vietnam and Japan to step up cooperation as the two countries have joined a number of regional and global bilateral and multilateral free trade agreements (FTA) including AFTA and the Trans-Pacific Partnership (TPP).
Compared to the Vietnam-Japan Economic Partnership Agreement, the TPP helps open up the market further for farm, seafood and wooden products. This will be a good opportunity for Vietnam to expand exports and Japanese companies to invest in agriculture to make the most of tariff cuts and exemptions and further promote Japanese technologies to Vietnamese businesses.
Exporters can get short-term FX loans only
Next year companies in need of capital to make products for export can take out short-term foreign exchange loans only as specified in a new circular of the State Bank of Vietnam.
The fresh rule is different from what was said in a draft circular the central bank passed around for comment in August this year. According to the draft, firms could get medium- and long-term loans in foreign currency.
However, Circular 24/2015/TT-NHNN that came out on Tuesday allows enterprises that produce goods for export to seek short-term FX loans from local banks and foreign bank branches provided that they have FX revenue to repay loans. They will have to sell foreign currency via spot transactions to banks upon loan repayment.
This regulation will come into force from January 1 to December 31, 2016. Similarly, Circular 43 is valid until December 31, 2015.
The difference between circulars 24 and 43 is that based on Circular 43, fuel wholesalers can borrow short-term FX loans and this regulation is effective for one year. Fuel wholesalers have to seek approval on a yearly basis while Circular 24 has no mention of this.
A banker told the Daily earlier that the SBV pledged to take some additional measures to stabilize the forex market. The central bank may reduce the forex position at banks to 20% and further cut interest rates for dollar deposits.
The U.S. dollar deposit rate for individuals was slashed to 0.25% per annum and that for organizations fell to 0% in late September. In addition, the SBV is tightening controls on foreign currency trading to ease pressure from dollar demand.
Annual interest rates for dollar loans have hovered in a range of 3% and 6.5%. Of which, rates for short-term loans have stood at 3-5.3% per year and those for medium- and long-term loans at 5.5-6.5% per annum. Meanwhile, interest rates for short-tem loans in the Vietnam dong have reached 6.8-9% per annum and for medium-and long-term loans 9.3-11% per year.
Enterprises can borrow in U.S. dollar to enjoy lower interest rates but they prefer loans in the domestic currency due to foreign exchange risks.
Experts: Realty market to improve next year
Experts said the real estate market will improve next year based on the business performance of enterprises in the sector this year.
Experts said the market would be buoyed by increasing demand and new liberal laws like the 2014 Law on Real Estate Business and the 2014 Housing Law.
Hung Thinh Real Estate Exchange Joint Stock Company (Hung Thinh Land) said it has sold around 4,500 apartments this year, nearly meeting the target of 5,000 for all of 2015.
Hung Thinh Land general director Nguyen Nam Hien said more customers have searched for medium-end apartments at good prices. Next year, the company will expand operation to distribute more products developed by its parent company Hung Thinh Corp.
Surveys by big real estate exchanges in HCMC showed these exchanges hoped to sell 1,000 to 3,000 apartments and land lots each this year. Many property firms have set ambitious targets for next year.
For example, Green Land Group plans to provide the market with 4,000-6,000 apartments per year apart from urban land lots and villas towards 2020.
Le Hoang Chau, chairman of the HCMC Real Estate Association (HoREA), said the recovery of the property market started in late 2013 and will continue next year.
Chau said prices at many property projects in HCMC have edged 5-15% higher this year but stressed there are no signs of a real estate bubble in the near term.
Speaking at a conference on the real estate market in 2016, former Deputy Minister of Natural Resources and Environment Dang Hung Vo said there have been more positive signs for the local market, which is evident in more successful transactions, falling inventories and increased disbursements of loans for housing projects.
Confidence in the market has gradually improved, Vo said, adding the market will keep recovering next year.
He said when a real estate bubble occurred in previous years, housing prices skyrocketed at least 1% per day. However, in the coming years, the market will not experience such price rallies thanks to the new legal documents and higher market transparency.
Ministry wants govt loan guarantees for SOEs limited
The Ministry of Transport proposed the Government limit guarantees for loans taken out by State-owned enterprises (SOEs) due to the weak management and supervision of spending at those entities.
The ministry made the proposal at a review meeting on the restructuring of SOEs in 2011-2015 and tasks for the next five years in Hanoi on December 9 based on lessons drawn out from the cases of Vietnam Shipbuilding Industry Group (Vinashin) and Vietnam National Shipping Lines (Vinalines).
The ministry’s Steering Committee for Enterprise Reform and Development said government-guaranteed loans should be based on project targets, regardless of types of ownership, instead of enterprises to ensure fair treatment and support the development of all economic sectors.
In the past years, the ministry had to deal with huge debt owed by Vinashin and Vinalines as these two big SOEs racked up huge losses.
As reported by the steering committee, before 2011, some enterprises made haphazard investments and expanded rapidly. Their corporate governance did not go in line with growth and their resources were limited. Many enterprises faced serious financial problems in the wake of the world’s economic crisis.
Vinashin became insolvent while Vinalines was unable to pay its huge debt.
Many other enterprises made big losses as well.
While restructuring SOEs under the transport ministry, the committee realized that the Government has continued providing guarantees for SOEs and parent firms have guaranteed loans for their subsidiaries. This has made it hard to proceed with the equitization of SOEs.
The ministry said as the current management and monitoring of credit transactions is neither strict nor consistent, it is difficult to supervise cash flows at SOEs.
Minister and Chairman of the Government Office Nguyen Van Nen said at the Government’s regular media conference last month that as of the end of last year total debts of State groups and corporations had amounted to VND1,570 trillion, or 1.41 times over their equity. Though some enterprises have still managed to pay debt, others have not been able to pay, forcing the Government to pay on their behalf.
The Ministry of Finance is drafting a decree on government guarantees, which does not entitle SOEs to loan guarantees. Only urgent projects approved by the National Assembly and the Government each year, and cost-effective projects can have access to government guarantees.
Currently, government-guaranteed debt accounts for 19% of the country’s public debt and 11.4% of gross domestic product (GDP).
The Government approved the Ministry of Transport to equitize 70 enterprises from 2011 to 2015 and retain 22 enterprises with 100% State ownership after 2015. However, 137 enterprises under the umbrella of the ministry have gone public in the past five years.
Forum boosts Vietnam-Indonesia business cooperation
A forum was held in Hanoi on December 11 for Vietnamese and Indonesian enterprises to forge stronger partnerships towards the 10 billion USD trade value set for 2018.
Jointly organised by the Vietnam Chamber of Commercial and Industry (VCCI) and the Embassy of Indonesia in Vietnam, it helped the businesspeople to understand more about the respective country’s investment and trade needs, especially when the ASEAN Economic Community is formed by the year-end and Indonesia is the biggest market in ASEAN.
Addressing the event, VCCI Vice President Doan Duy Khuong recalled that during the 60 th anniversary of the two countries’ diplomatic ties, the business circles expressed their wishes to be provided with more favourable conditions to step up investment and trade, in particular in core areas.
Pratito Soeharyo from the Indonesia Investment Coordinating Board said Indonesia has a particular interest in the Vietnamese market, stemming from its economic integration.
A majority of the Indonesian business delegation to the event are operating in education, mining, construction, and construction materials, garment and textiles, support industry, among others.
According to the Ministry of Industry and Trade, two-way trade between Vietnam and Indonesia reached 5.4 billion USD in 2014.
Over the first nine months this year, the figure posted at nearly 3.5 billion USD, up 6 percent from the same period last year.
The two nations target to raise it to 10 billion USD by 2018.
M.I.K Land to develop Mövenpick Resort Phu Quoc
M.I.K Land Company signed a management contract on December 8 with Mövenpick Hotels & Resort, a Swiss hospitality group, for an integrated resort on Phu Quoc Island. M.I.K Land will become the exclusive unit developing the project while Mövenpick will be responsible for management and consulting.
“Mövenpick Resort Phu Quoc will create new standards for hotels and resorts in Vietnam and bring the island onto the international tourism map,” said Deputy General Director of M.I.K Land, Mr. Le Thi Hai Chau. “We chose the group to cooperate with based on its reputation, with extensive experience in the hotel business and its rapid expansion in the Asian hotel market.”
The resort is expected to be operational by 2017 on an area of about 50 ha, with around 250 rooms, 100 apartments, and 50 villas. Additional facilities include a retail area called “Swiss Village”, a water park and a pool, a spa, a 1,000 sq m conference center, a theater, an outdoor cooking school, beach clubs, children’s play areas, a water sports center, a fitness area, and adventure activities. The resort will have a vocational hospitality school with fully-equipped accommodation for students.
“This attractive project will be a key project in Vietnam and is considered the first step of the group to expand its management of large-scale resorts across the region,” said CEO of Mövenpick Hotels & Resorts, Mr. Jean Gabriel Peres.
On the same day M.I.K Land also signed a strategic cooperation agreement with two leading groups in construction and design consultancy – the Hoa Binh Construction Group and Baumschlager Eberle Vietnam – to implement projects of MIK Land in Vietnam.
Malaysia leads in ASEAN investment
Seven ASEAN countries invested in Vietnam during the first eleven months of 2015 – Malaysia, Singapore, Thailand, Brunei, Indonesia, the Philippines, and Laos, according to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment. There were a total of 197 new and expanded projects, with capital totaling $4 billion.
Malaysia topped the list, with 22 newly-registered projects and 16 adding capital to existing projects, of $2.4 billion and $91 million, respectively.
Singapore had the most new projects, worth more than $1 billion.
The field that attracted the most projects from ASEAN investors was manufacturing and processing, with 38 per cent of the total number of projects and 40 per cent of total capital, followed by textiles. The common feature of projects in textiles was that they were mostly of small scale, at around $6 million each on average, and were primarily found in Ho Chi Minh City and nearby Dong Nai, Binh Duong, and Long An provinces.
Real estate was also popular among ASEAN investors, with projects averaging around $167 million each, mostly in Ho Chi Minh City and Hanoi.
Phu Tho Tourist to launch IPO
Phu Tho Tourist Company will sell 30.26 million shares in its initial public offering on December 31.
Phu Tho Tourist operates the well-known Dam Sen Cultural Park in HCM City.-Photo PTT
The company, which is operating and managing Dam Sen Cultural Park in HCM City, will offer the shares for a starting price of VND12,000 ($0.53) each.
Under the plan, the state will hold 49 per cent of the charter capital, or VND581.55 billion ($25.8 million), while the company will issue additional shares to raise capital. The company will offer to strategic shareholders 28.26 million shares, or 23.81 per cent, and two million shares, or 1.69 per cent of the stake, to employees.
Though Phu Tho Tourist did not announce its strategic shareholder list, Sacombank disclosed its intention in early October to partner with the company.
As a subsidiary of Saigon Tourist Travel, the company, established in 1989 in HCM City, is involved in entertainment services, food restaurants, hotels and other businesses.
Currently, it manages Dam Sen Cultural Park, Vam Sat mangrove forest ecotourism, Dam Sen tourism service centre and Orchid Restaurant, besides Dam Sen Restaurant, Ngoc Lan Hotel, Phu Tho Hotel and Sen Plaza wellness and leisure centre.
In recent years, the company has earned VND450 billion ($19.9 million) in revenue and VND100 billion ($4.4 million) in after-tax profit.
After equitisation, PhuTho Tourist aims to achieve exponential growth, with sales in 2019 expected to reach VND1.11 trillion ($49.2 million) and after-tax profit of VND370 billion ($16.4 million).
Phu Tho also plans to buy more stakes to own up to 45 per cent in another Dam Sen water park. It will also have 30 per cent investment in the Saigon Sports Hotel Complex and other projects.
Viet Nam Property Awards 2016 returns for a second year
Building on the success of its debut event in 2015, Viet Nam’s most recognised and respected real estate awards will feature the leading developers and developments from around the country.
Supported by platinum sponsor Hansgrohe, a leading global manufacturer of innovative and designer bathroom products, the Viet Nam Property Awards began welcoming nominations from developers and the general public starting from November 23.
The final shortlist will be unveiled on May 9, and the winners rewarded at a glittering black-tie awards gala at the InterContinental Asiana Saigon on Friday on June 10.
All eyes are on Viet Nam’s recovering real estate sector, which has languished for several years.
After the implementation of the Law on Residential Housing in July, analysts said they were optimistic about the continued growth of the industry. They cited the country’s strong economy and the rise of a younger middle-class with higher spending power.
“The Viet Nam Property Awards showcases the very best in the country’s real estate sector, whether a project is from an established developer or an up-and-coming firm, and we’re delighted to continue what we started here,” said Terry Blackburn, CEO of Ensign Media, publisher of Property Report, Asia’s industry-leading luxury real estate, architecture and design publication.
A total of 30 trophies will be handed out in 2016. Categories cover a range of segments, including condominium, housing/villa, hotel, office, and retail.
Viet Nam Property Awards entry is free, and participants will have until April 1 to submit entries in the Developer, Development and Design categories.
All successful entries will be supervised by BDO, one of the world’s largest accounting and auditing firms, and the trusted awards supervisor of the Asia Property Awards, which, in its 11th year, is widely recognised for its fairness and transparency.
Outside of the award categories, the editors of Property Report will be presenting one additional award to the Real Estate Personality of Year, whose influence and achievements resonate across Viet Nam.
Nearly 3,100 enterprises join single window system
Up to 3,088 enterprises participated in the National Single Window (NSW) system, where they underwent 31,157 procedures, as of late November.
The NSW provides 22 procedures from eight ministries namely the Ministry of Transport, the Ministry of Industry and Trade, the Ministry of Agriculture and Rural Development, the Ministry of Natural Resources and Environment, the Ministry of Health, the Ministry of Science and Technology, the Ministry of Information and Communications, the Ministry of Culture, Sports, and Tourism (excluding the Ministry of Finance).
The Ministry of Transport had the highest number of participants with 2,762 enterprises which account for over 89.4% of total enterprises and handled 25,642 dossiers (or nearly 82.3%).
Earlier, PM Nguyen Tan Dung on September 8 launched Viet Nam’s National Single Window Mechanism and integrated it with the ASEAN Single Window customs system. The NSW was implemented in three phases to connect nine ministries to the system. As of August 27, nearly 1,940 businesses conducted declaration procedures on the NSW.
Binh Duong grants license to US$1 billion project
The Southern province of Binh Duong on December 4 granted an investment license to a paper plant project of Taiwan-based Cheng Loong Corporation.
Chairman of Binh Duong provincial People’ s Committee (R) grants investment licence to Cheng Loong Corporation Chairman Su Yun Cheng. Photo: VNA
The US$1 billion plant, covering an area of 80ha, will be located at Ascendas-Protrade Singapore Tech Park in Ben Cat district.
It is designed to generate one million tons of industrial paper and 50,000 tons of household paper annually.
The first phase of the project is scheduled to begin in December and is expected to be operational by January 2018.
Credit growth to fetch 17% in 2015
Credit growth was estimated at 14.5-15% in the first 11 months and was forecast at 17% for the whole year, according to the State Bank of Viet Nam (SBV).
The SBV reported that the norm on credit growth has been fundamentally fulfilled.
The credit flow contributed to spurring GDP growth rate to 6.5%.
From 2006-2010, credit growth surged 30% but GDP fluctuated at 7%. The pumping of banking capital halved but economic growth rate was maintained.
The capital flow served production and ensure practical and sustainable economic growth instead of going to vulnerable and bubble sectors such as real estate and securities.
Electricity output surges 8.78% in eleven months
Electricity of Vietnam (EVN) reported that it produced and bought nearly 61.7 billion kWh from January to November of 2015, up 8.78% against the same period last year.
During the 11 months of 2015, total commercial electricity output was estimated at 131.33 billion kWh, a year-on-year rise of 11.73%.
The electricity amount supplied for industry and construction rose by 10.94%, while that for trade increased by 22.96%, for agriculture by 23.95%, and for management and consumption up 10.93%.
The group accelerated the pace of key power plant projects in November, including the successful commercial operations of the O Mon 1 Thermoelectricity Plant’s No 1 turbine rotor, and Mong Duong 1’s Thermoelectricity Plant’s No 2 turbine rotor; and the completion of Ban Chat Hydropower Plant.
Other key projects such as the thermoelectricity plants of Duyen Hai 3, Vinh Tan 4, and Thai Binh, and hydropower plants of Huoi Quang, Lai chau and Song Bung 2 were on schedule.
The EVN confirmed it would ensure sufficient electricity in December. The power system will make maximum use of hydropower reservoirs, as well as coal thermal power and gas turbine plants.
Forum promotes Vietnam-Switzerland trade ties
Potential areas for cooperation between Vietnamese and Swiss businesses were discussed at a forum in Geneva on December 7.
The Vietnam-Switzerland Business and Investment Promotion Forum was co-organised by Vietnam’s Permanent Mission to the UN, the World Trade Organisation (WTO) and other international organisations in Geneva.
It aims to create a network of cooperation between Vietnamese businesses and their Swiss counterparts, as well as other organisations.
Trade between Vietnam and Switzerland has reached 633 million USD in recent years. In the first ten months of this year, Vietnam exported 184 million USD worth of goods to Switzerland while importing 340 million USD from the European country.
In 2014, Switzerland ranked 18th among 101 countries and territories investing in Vietnam, with 102 projects valued at more than 2 billion USD.
A number of Swiss firms such as Holcim, Nestle, Generalli Insurance, ABB and Syngenta have gained a reputation in the Southeast Asian nation.
Many well-known Swiss universities specialising in the fields of tourism and finance have also lured a crowd of Vietnamese students.
Participants at the event shared their experiences in running businesses in the context of global economic integration and competitiveness.
Paul Wessendorp , chief of the Investment Promotion Section under the UN Conference on Trade and Development (UNCTAD) , lauded the remarkable progress Vietnam has made in shifting towards a market economy.
The country’s encouragement for private companies, openness to foreign investors and a host of reforms have helped boost its industrial development, diversify the economy and ingrate more deeply into the world economy, he said.
Highlighting Vietnam’s engagement in the Trans-Pacific Partnership (TPP) agreement, Paul Wessendorp said Vietnam is one of the leading nations in Asia in terms of publicising its investment procedures in detail and transparently.
Other UNCTAD experts gave their opinions on the Vietnamese market, focusing on issues regarding foreign direct investment, small and medium-sized enterprises and e-commerce in the country.
Vietnamese Deputy Minister of Justice Nguyen Khanh Ngoc highlighted his country’s efforts to improve the investment environment and provide legal support for businesses operating in the market.
The event also heard reports on trade and investment opportunities in the two countries.
Established in 1984, the Vietnamese Permanent Mission to the UN is tasked with promoting trade links between Vietnam and Switzerland.-
SSC to detail its five key market policies
The State Securities Commission (SSC) plans to issue legal documents this month to assist in the implementation of its five primary policy orientations for development of Vietnam’s stock market.
This statement was made by Nguyen Son, head of SSC’s Development Market at a bilateral cooperation seminar between creditors and entrepreneurs of Vietnam and the Republic of Korea late last week.
The first orientation is aimed at increasing the supply of products on the securities markets through the acceleration of the State-owned enterprise restructuring, divestments of State capital from big companies and introduction of structured products like derivatives (index futures and bond futures), and covered warrants, in addition to non-voting depository receipts (NVDRs) or global depository receipts (GDRs).
The second policy focuses on stimulation of market demand and the encouragement of capital inflows in the market, together with the task of upgrading Vietnam’s stock market to the emerging market status in the MSCI’s ranking.
Son said Vietnam had satisfied some criteria of the MSCI, the world leading index construction provider, and the ranking promotion would happen in the near future. He also added that some legal documents would be soon issued to implement Decree 60 which increases foreign holdings in domestically listed companies.
The legal framework for information disclosure of public companies and development of professional investment institutions (exchange-traded funds, pension funds, investment-linked insurance products and investor protection funds) would be further developed.
The third group of policy is to speed up the market restructuring, including consolidation and dissolution of weak securities companies, permission of higher foreign ownership (between 50 percent and 100 percent) in domestic securities firms, and restructuring the two stock exchanges.