BUSINESS IN BRIEF 18/2

Milk market marks new price hike

Local dairy products on the local market entered another price hike a few days ago when owners of many stores adjusted their prices up by 5-7%.

Particularly, a set of four Vinamilk fresh milk boxes is now sold at VND26,000, rising VND2,000 per set. Yogurt is priced at VND19,000 a four-box set, against the previous level of VND17,000.

Meanwhile, a 900g can of the powder milk Dielac Anpha 123 is sold at VND174,000, marking up VND14,000 from the previous price.

Vietnam Dairy Products Company (Vinamilk) intended to apply the new prices to its products from January 23, or the first day of Lunar New Year, but not until February 1 did retailers adjust prices up. Vinamilk explained the price of input dairy material has increased by 20% and other materials up 40-60%.

In addition, the input costs of power and water as well as transport and fuel expenses have surged by 10-15% year-on-year. Therefore, the company has to raise prices to make up for production costs.

As for other brands, Moc Chau milk is now sold at VND24,000 a set of four 180ml boxes, and TH True Milk is priced VND27,000 per set, both increasing VND1,000 from their former prices.

FrieslandCampina Vietnam, producers of Dutch Lady, YoMost and Fristi, has also announced a 5% price hike applicable to some of its fresh milk and condensed milk products starting from Monday. Meanwhile, Nestle Vietnam expected to increase prices of its Lactogen product line by 10% in this month’s end, but will maintain the current prices of other products.

Earlier in December 2012, several foreign milk brands like Abbott, Enfa and Mead Johnson were also hiked by 9-19%.

Stock market: Potential for attracting foreign indirect investment

A slight increase in the number of foreign investors granted with transaction codes in January demonstrates their confidence in Vietnam’s economic stability.

Foreign investors currently own as much as US$6 billion in Vietnam’s stock market (77 percent in 20 largest stocks by market capitalization). According to the Vietnam Securities Depository (VSD), the number of new investors granted with transaction codes in January increased by 0.13 percent.

The foreign sector tends to move from small retail transactions to bigger ones and increase their investment in large profit-making businesses with a reputation for transparent management, says VSD.

Many foreign investment funds in Vietnam will hold shareholders’ meetings in 2012 and 2013 to decide if they will continue to invest in Vietnam or withdraw their capital from the market.

Economists believe that there will be just a few foreign investors who want to withdraw their capital from the market. Most of them wish for a change in their way of investment.

Louis Nguyen, CEO of the Saigon Asset Management, underlines the reason why foreign investors will continue to invest in the country as they expect to make a quick profit in 1 or 2 years. Vinacapital Group and Dragon Capital have announced their plans to invest US$100-150 million in the Vietnamese stock market.

Marc Djanhji, Research Manager of Bao Viet Securities Company (BVSC), predicts that only a small number of foreign investors will withdraw capital from Vietnam.

He says most of foreign investment funds tend to invest in a specific country, and the amount of capital withdrawn will be small (10-20 percent).

This will not seriously affect investment resources, Marc affirms.

However, it is crucial for Vietnam’s stock market to attract more foreign capital, especially in the face of economic difficulties.

Louis Nguyen proposes the Vietnamese Government take stronger action to contain inflation and reduce bank interest rates.

High inflation and bank interest rates will only keep foreign investors away from Vietnam, Nguyen says.

According to Dragon Capital CEO Dominic Scriven, synchronous measures are needed to maintain and increase foreign indirect investment. He says the promotion of equitization, listing, and information transparence will be able to attract foreign investors and increase businesses’ added value.

Le Dat Chi, head of the financial investment faculty of the HCM City Economics University, says capital investment funds themselves should reconsider their operation to make the best of both opportunities and challenges arising from such a newly-emerging market as Vietnam.

If the fund managers have accurate forecasts, they will be able to buy and re-sell securities at a profit.

Billions dollars for power plants, little for transmission system

While most investors have sunk all of their mobilized capital into building power-generating plants, little attention and funding has been paid to the establishment of the transmission system.

With this unbalanced investment, even when the electricity plants become operational, the power shortage will not be solved, since there is no wire system to transmit power to consumers, an official from the Electricity of Vietnam Group has warned.

PetroVietnam’s US$1-billion Vung Ang 1 power plant in the Ha Tinh-based Vung Ang Economic Zone, expected to be operational this year, is evidence of this issue.

Nguyen Manh Hung, CEO of the National Power Transmission Corporation (NPT), has recently cautioned that the plant is likely to be left unused upon its scheduled completion, due to the lack of a transmission system.

PVN had promised to support NPT in completing infrastructure serving for the plant, but NPT still had to carry out most of the work by itself, said Hung.

“This scenario, if does occur, will result in huge damages for the economy with the severe power shortage,” he warned.

“The investors will also be affected, since they cannot sell electricity despite their huge investment into the establishment of the plant.”

Hung added that even the capital city of Hanoi cannot avoid the power shortage.

The capital may face power cuts this summer if the power transmission projects under construction fail to reach completion on time, he said.

According to an official from the General Department of Energy under the Ministry of Industry and Trade, the project to build the 220kV power wire system to connect with the Van Tri power station has been delayed due to low progress of site clearance.

“Many power sources such as the Hoa Binh, Son La hydropower plants are ready to prioritize supply for Hanoi, but can do nothing if the transmission project is not completed,” he said.

Like other infrastructure projects, the power projects are also challenged by financial problems.

An EVN report shows that last year it invested a total of VND63 trillion ($3 billion) in power projects, but that a third of the sum was intended to clear debts and bank loans.

Though many major state-run enterprises in the coal, and oil and gas sectors have invested in the power industry, EVN is the only player when it comes to setting up transmission systems.

However, the power monopoly also assigned all of the investment, maintenance and operation tasks of the system to NPT, which is suffering financial turbulence.

“NTP is in an alarming financial state. It is meaningless when you invest in the power generating plants, but neglect the transmission system,” said Hung at a meeting in 2010.

Last year, the CEO also confirmed the enterprise’s “negative financial state,” saying NTP is only paid VND80 for a kWh, while the global price is around VND200 a kWh.

Hung said since the company cannot earn profits with such low payments, it has to borrow from the bank for most of the investments.

“However, most banks refuse to provide loans for us, even when the Prime Minister ordered them to help.”

EVN has recently proposed six urgent projects to solve the power shortage in the southern region, but there have yet to be any sources of capital, he said.

“Investment in power transmission should be considered infrastructure investment, and thus should be prioritized,” he demanded.

For his part, To Quoc Tru, director of the Center for Energy Consultancy under the Vietnam Energy Association, said the transmission system can currently meet only 50 percent of the total generated power.

“The industry should have invested in the power plants and power transmission systems simultaneously, rather than putting them under separate investment,” stated Tru.

“The government should have a solution to maintain a source of capital for NPT.”

Ba Ria-Vung Tau calls for investment in support industry

The southern province of Ba Ria-Vung Tau is calling for investment in logistics and support industry to take full advantage of sea ports.

The Vice Chairman of the Ba Ria-Vung Tau provincial People’s Committee, Ho Van Nien, says the focus of investment will be on two areas with the aim of exploiting into the strength of sea ports, human resources and natural resources, and producing highly competitive industrial products to restructure the provincial economy.

The province has set a target of attracting around US$500 million in foreign direct investment (FDI) in 2012, equivalent to more than half of 2011’s figure.

Vietnamese goods succeed in Cambodian market

Vietnamese goods have won favour in the Cambodian market for their quality and reasonable prices, said Phan Van Chinh, Director of the Import-Export Department under the Ministry of Industry and Trade.

He further said that 2012 is expected to open up many opportunities for Vietnamese enterprises to boost exports as the Cambodian economy is recovering quickly and the investment environment is more favourable.

In 2011, Vietnam was among Cambodia ’s leading trade partners, with 2.4 billion USD exports to Cambodia , up 53 percent. Two-way trade turnover between the two countries reached 2.8 billion USD.

Vietnam also led other ASEAN nations investing in Cambodia in 2011, with 631 million USD out of the total of 880 million USD from the bloc, according to statistics of the Cambodian Development Council (CDC).

Vietnam has 50 projects in the neibouring country, focusing on rubber plantations and processing, telecoms, tourism, garment and mining.

Many Vietnamese banks have opened branches in Cambodia , effectively supporting Vietnamese investors in this country. They are Agribank, BIDV, Sacombank , MB bank and SHB bank.

Fine arts and handicrafts to get trade boost

A special programme to promote fine arts and crafts exports from Cambodia, Laos Myanmar and Vietnam to Japan will be held in late February.

The event is jointly organized by the Vietnam Trade Promotion Agency (Vietrade), the ASEAN Promotion Centre on Trade, Investment, and Tourism and the ASEAN Japan Centre.

Japanese experts will give businesses advice on product development and some will be chosen by Vietrade to participate in the Handicrafts International Fair in Indonesia and Japan.

Power utility found with unsettled loss of $723 mln

State-owned utility Electricity of Vietnam (EVN) has an unsettled loss of VND15 trillion (US$723.2 million) due to exchange rate fluctuations, the State Audit has said.

EVN’s losses in 2011 were caused by unfavorable production conditions as it purchased power at high prices and sold it below costs, coupled with lax management of investment and finance, Le Minh Khai, deputy head of the State Audit, told the media last Thursday.

There is also a potential loss of VND12 trillion ($578.6 million) at EVN if coal and gas prices are properly calculated in accordance with market prices and sufficiently included in production costs.

EVN raised electricity prices by 5 percent in last December, the second hike in 2011. The average power tariff is now VND1,304 per kilowatt-hour.

The group will restructure its business this year and withdraw its investments in real estate, stock and banking sectors.

EVN targets a total electricity generation of 118.5 billion kilowatt-hours in 2012, including 67.62 billion kilowatt-hours purchased from providers outside the group.

It posted losses of VND10.16 trillion in 2010.

Currently, local gas and coal suppliers are complaining about prices of their commodities sold to EVN being lower than production costs.

Khai said the Government had listened to the proposals of the State Audit for handling EVN, such as transferring EVN Telecom to another telecom service provider.

Regarding the audit on fuel prices, Khai noted one of the key tasks of the State Audit this year would be to audit the 2011 financial statement of Vietnam National Petroleum Corporation (Petrolimex).

“Though Petrolimex has been equitized, the State still holds a 95 percent stake in this firm,” he said. “We will thus focus on inspecting the management and allocation of the State capital and assets at this enterprise to timely give out assessments and risk warnings.”

The State Audit last year looked into the fuel price stabilization fund of Petrolimex, together with 10 other fuel trading companies.

The latest audit on Petrolimex’s financial statement took place several years ago.

Exports to Africa, Asia set to increase

Many key Vietnamese exports such as aquatic products, coffee, pepper and garments, are securing a foothold in the African, western and south Asian markets.

Industrial and electronic products (mobile phones and computers) are also selling well in these regions.

Ly Quoc Hung, Head of the African, Western and Southern Asian Markets Department under the Ministry of Industry and Trade (MoIT) says that as many as 2,000 businesses shipped commodities to these markets in 2010, up 5 percent from 2009.

Apart from exporting, many Vietnamese businesses are seeking investment opportunities in these regions. Recently, the Truong Thanh Furniture Corporation struck a deal worth US$30 million to process timber in South Africa.

The Vietnamese military-run telecom provider Viettel, received a licence to launch a mobile phone network in Mozambique, and FPT Group signed a memorandum of understanding on cooperation with Nigeria’s 21st Century Technologies Company in telecommunications, education and equipment production.

MoIT statistics showed that two-way trade between Vietnam and these regions last year hit nearly US$14.5 billion, of which Vietnam earned US$3.5 billion from exports to Africa alone, up nearly 200 percent from 2010.

During the period, Vietnam’s exports to the Middle East amounted to US$2.4 billion, a rise of 45.4 percent and exports to Southern Asia reached US$2.1 billion, up over 46 percent.

According to experts, Vietnamese export businesses will enjoy more favourable conditions in the near future, after the Government adopted an export and import strategy for the 2011-2020 period and the vision towards 2030. The strategy includes measures to speed up production, develop markets, build financial policies to develop exports, logistics infrastructure and human resource and increase competitiveness of businesses and strengthen the role of industry associations.

Additionally, the current MoIT project to develop export businesses’ capacity to promote exports to Africa and an action plan on strengthening relations with the Middle East until 2015 will create new opportunities for Vietnamese goods to Africa, western and southern Asia in the near future.

Thai Royal Foods to build another plant in Vietnam

Leading Thai canned fish producer Royal Foods Company has planned to invest in another factory worth US$19.3 million in Vietnam.

This second factory will be located in Vinh city, central Nghe An province, with a production capacity of 100 tonnes of canned sardine and mackerel per day, said Mongkol Bantharungroj, Vice President and CEO of Thai Corp International, Royal Foods’ partner in Vietnam.

It is expected to begin construction this August and become operational by the end of next year.

Royal Foods built its first canned fish processing factory in the southern province of Tien Giang in 2007.

Indonesian companies eye opportunities in Vietnam

Indonesian companies are actively seeking new overseas markets in Vietnam, Cambodia and China to expand their business activities, said chairman of the Indonesian Employers’ Association (APINDO), Sofjan Wanandi.

Indonesia’s investment in foreign countries increased threefold from US$2.7 billion in 2010 to US$7.7 billion in 2011, primarily in Asian, American and African countries.

APINDO Vice Chairman Hariyadi Sukamdan said that Indonesian businesses have strengthened their African investments, especially in oil and gas and mining.

Both the chairman and vice chairman noted that Indonesia is increasing its investment in foreign countries because of obstacles to domestic investment such as high production costs and poor infrastructure.

Rubber trading bounces back after lull

Rubber trading rebounded significantly for the past few weeks after a long period of stagnation thanks to rising demand and restricted supply on the global market, industry insiders have said.

Rubber exports to China via the Mong Cai Border Gate were rising significantly, reaching roughly 500-600 tonnes per day on average, said Le Van Xung of the Binh Long Rubber Company. Several days even saw 1,000 tonnes of rubber traded daily, he said.

The growing trade volume had helped raise rubber export prices, with a tonne currently selling for 23,000 yuan (US$3,651), up 3,000 yuan ($476) against January, Xung said.

According to the Association of Natural Rubber Producing Countries (ANRPC), demand for natural rubber in China is rising sharply as it needs to import more to offset a decreasing supply. China's rubber reserve in the Shanghai Commodity Exchange has reduced 6 per cent against mid-January. Meanwhile, the market is expected to consume roughly 3.61 million tonnes of rubber this year, up 3 per cent over last year.

The Viet Nam Rubber Association (VRA) said that the price hike had been seen not only in China but also in other markets since the end of Tet (Lunar New Year). In the world market, a tonne of SVR 3L rubber reached US$3,450 on January 31, up $180 against January 3.

The price hike in the global market has also contributed to a surge in rubber prices in the domestic market. On February 7, a tonne of SVR 3L rubber was traded at VND76.5 million on the Sai Gon Thuong Tin Commodity Exchange (SACOM-STE), up nearly VND10 million against late January.

The VRA attributed the price hike to impacts from the global market, saying that the world's three leading rubber exporters— Thailand, Indonesia and Malaysia— were dealing with reduced crop yields due to unfavourable weather, leading to a decline in the market.

A disbursement of 17 billion baht ($534 million) from the Thai government and businesses to buy rubber for reserve has also helped push up prices.

Besides an upward trend in global oil prices, rubber demand has also been pushed up thanks to rising car purchases in the US in the wake of a fall in the country's unemployment rate.

According to the latest ANRPC forecast, natural rubber production in major producing countries will reach 10.45 million tonnes this year, up only 3.2 per cent against last year. The increase is lower than last year's 5.7 per cent.

Therefore, the price for natural rubber would be on a continous increase at least until May as Thailand, Indonesia and Malaysia continued to reduce rubber output due to unfavourable weather, ANRPC said.

Restructure of State firms aims for sustainability

In restructuring State-owned enterprises (SoEs), future growth and efficiency gains must be pillars behind ensuring that the entity remains financially sustainable, said attendees at a conference held in Ha Noi yesterday.

Addressing the conference on global lessons for restructuring financial groups, co-organised by the Ministry of Finance and Bao Viet Holdings, Finance Minister Vuong Dinh Hue said that this year's priority for the Government was to restructure the economy.

"We want to improve the efficiency of public investments, the competitiveness and effectiveness of SoEs and the financial system. This supports a key role of the public sector, in which SoEs play an important part in contributing to the sustainable development of the economy," said Hue.

He added that restructuring, especially in corporate governance and cost reduction, would be very important for SoEs to improve competitiveness in the context of economic difficulties.

Adel Meer, the International Financial Company (IFC)'s principal investment officer in the Mekong and Thailand, said besides constant improvement of corporate governance, staff training, recruitment and retention were key in managing successful companies, especially those going through a transformation.

Adel said that effective risk management was also the cornerstone for any successful company.

"For a financial institution which tends to be highly leveraged, market oriented and subject to increased scrutiny from both regulators and stakeholders, this pillar of the organisation is probably the most important to strengthen," he said.

He added that restructured SoEs must also look at ways in which operations may be streamlined, costs minimised and operational capacity expanded.

At the conference, managing partner of McKinsey & Company Vietnam Marco Breu said that the country was facing a productivity challenge to be able to gain sustainable growth.

To overcome the challenge, Marco said that productivity improvements by the SoE sector were inevitable and critical, especially in the context of more limited access of capital and increasing competition.

Viet Nam had been one of the fastest growing economies in Asia over the past years. H owever, looking at the current pace of productivity growth and continued sector allocation, the country's economic growth might slow down to 4.6 per cent yearly, he said.

"A productivity revolution will be necessary to sustain the current pace of economic growth," he added.

Macro believed that increasing the capital efficiency of SoEs could contribute significantly to the country's overall capital efficiency.

State-owned groups and corporations will be taking measures to reduce their management budgets by 5-10 per cent from now until the end of the first quarter, Finance Minister Vuong Dinh Hue said.

Signing a pledge based on the management of budget reduction yesterday, Bao Viet Holdings has become the first corporation to implement such an activity, aimed at meeting a Government directive on enhancing the business effectiveness of SoEs.

"The reduction management budget can save Bao Viet Holdings roughly VND145 billion (US$6.9 million)," Hue estimated.

He said that Vinatex, Electricity of Viet Nam, Vinalines and Petrolimex would also make the move next week.

Tax-exempt construction materials

The Ministry of Finance issued Circular No 11/2012/TT-BTC on February 4 guiding tax exemptions applicable for construction materials which are taken from the domestic market to tax-free zones for construction, repair or maintenance of technical infrastructure or common infrastructure in the tax-free zone. Such construction materials must be registered with customs authorities. The declarer shall be the investor in the infrastructure in the tax-free zone. In case the investor does not directly export tax-exempt goods but a primary contractor or sub-contractor does, the contractor shall use the list of tax-free exporting goods registered by the investor for the registration of tax-free goods declared with customs authorities.

This circular takes effect on March 20.

New rules on IPOs of State firms

The Ministry of Finance issued Circular No 196/2011/TT-BTC on December 26, guiding the initial sale of shares and use of funds raised from the equitisation of wholly State-owned enterprises.

The circular prohibits the following persons from bidding for or buying shares in an initial public offering: members of the board of equitisation, intermediary financial institutions and their employees involving in consulting, appraisal, or auditing of the enterprise; organisations involved the auction of shares and their employees; and subsidiaries or affiliated companies of a group or corporation. The enterprise may hold the sale of shares by public auction, direct negotiation or underwriting.

This circular takes effect today.

Car firms skid on oily economic roads

Car importers are in a spin. The International Auto Trading Investment Joint Stock Company was founded in December 2007 to trade in automobiles.

However, the firm stopped operating from January 2012 on the back of poor performance after getting shareholders approval to go dismantled.

Managing director Ho Khac Hung at Tay Bac Auto Joint Stock Company said a number of firms trading in completely built-up unit (CBU) imports either withdrew ‘in silence’ or temporarily halted operations in the past six months.

Their retreat came in the face of the Ministry of Industry and Trade’s Circular 20/TT-BCT stringent requirements on less than nine seat car imports, which came into force from late June 2011.

Reality shows that the trading of used cars also proved less effective since scores of commercial firms jumped into imports of several best-selling used car models on the back of Circular 20’s tight regulations on new car imports.

“There is no option other than halting business or shutting up shop if firms simply rely on car trading,” said Hung.

Big names in the car industry also face challenges in boosting sales figures.

Vietnam Automobile Manufacturers’ Association (VAMA) statistics showed that 4,274 cars were sold out in January 2012, with the sales volume of VAMA member units declining 60 per cent compared to the same period in 2011 as well as to December 2011. Sales of multi-purpose vehicles, sedans and commercial cars slid 67 per cent, 56 per cent and 59 per cent in volume, respectively.

Though the auto market is in the doldrums, car firms have reportedly raced to roll out new models to fuel demands.

For example, Toyota Vietnam is promoting sales of used cars, which is considered a potential market segment in Vietnam.

Accordingly, the Japan-backed firm will develop a chain of Toyota used car trading centres across the country.

Rice exports likely to fall this year

Experts have estimated that Viet Nam would export 6.5 million tonnes of rice this year, 9.72 per cent down against last year because of challenges faced by the domestic and world markets.

Huynh Minh Hue, general secretary of the Viet Nam Food Association (VFA), said the country had exported 322,422 tonnes of rice from the start of the year until February 9. The total export volume of rice for the first half of the year is expected to reach 3.5 million tonnes.

For the whole year, Viet Nam is expected to earn US$3 billion from rice exports, a year-on-year reduction of 9.72 per cent in volume and 18.92 per cent in value.

The domestic rice market would undergo a tough time this year due to increased domestic rice output and upped world rice stocks that had climbed to a record high of 100 million tonnes against global rice trading activities that had been reduced by 5-8 per cent, Hue said.

He added that Viet Nam would ship 1.25 million tonnes of rice until the third quarter of this year based on export contracts signed last year.

The biggest problem was the slow export of rice, Hue explained.

In January, the country exported 280,000 tonnes of rice, 42 per cent down against the same period of last year.

Hue said the most important thing was the promotion of rice exports to reduce large stockpiles and the preparation for rice purchases during the coming harvest in March and April.

To promote rice exports, the country must offer competitive prices, quality and other export conditions, he stressed.

The VFA planned to promote exports of high-grade rice and limit low-grade rice that could not compete in price with Indian and Pakistani products, he noted.

Export prices of Indian and Pakistani low-grade rice currently stands at $350 per tonne while Vietnamese low-grade rice is on sale for $390 per tonne to ensure farmers' profit.

The VFA has also set up reasonable floor prices for export rice to promote high quality. It expected to increase the purchase of rice after the winter-spring harvest.

The Ministry of Industry and Trade recently expanded the deadline for meeting conditions related to rice export activities under Decree 109 by October 1, 2012.

However, enterprises are likely to struggle in meeting such conditions due to the lack of capital.

Vu Thi Thu Hanh, director of the Ngu Coc Viet Company, said they needed VND30-40 billion in investment for rice processing facilities and machines at a high interest rate.

No enterprises had however dared invest because of uncertainty about the future of rice exports, she said.

Other large companies such as Tien Giang Food were also likely to struggle in meeting the necessary criteria as set out by Decree 109, said Le Thanh Khiem, company deputy director.

Danang tourism fares well on strong Chinese arrivals

The number of tourists from China to Danang City has been on the uptrend over the past years as the central coastal city’s biggest visitor-generating market, with some local firms recording a growth rate of up to 200% last year.

Danang enjoys more opportunities to further tap the Chinese market following new rules effective from early this month allowing Chinese visitors on the cruise ship SuperStar Aquarius of StarCruises to come to Halong and Danang by laissez-passers instead of passports like now.

“We believe the number of Chinese visitors will strongly rise, so we are in preparation for supporting travel agencies to serve them,” said Tran Chi Cuong, head of the Travel Department under Danang City’s Department of Culture, Sports and Tourism.

“China last year overtook two traditional visitor-generating markets of Japan and South Korea of Danang to become the largest one,” Cuong said.

The vigorous growth of Chinese arrivals in Danang not only brings benefits to this coastal city but also bolsters the growth of its two nearby destinations, namely Quang Nam and Thua Thien Hue provinces.

According to local tour operators, visitors traveling by air tend to book three- to -five day-long tours to stay overnight at Danang before leaving for Quang Nam and Thua Thien Hue. Meanwhile, cruise ship passengers only drop by Danang for a one day visit at Tien Sa Port before arriving at Chan May Port in Thua Thien Hue.

Saigontourist Travel Services Co. from this month to early next month will welcome seven trips of SuperStar Aquarius with a total of more than 15,000 passengers and cruisers, mostly from China, to Hue.

The same situation is seen at Vitours, which enjoyed an upsurge of over 200% in Chinese visitors it catered to in 2011.

The growth rate of the European market as one of the company’s important markets has dipped due to economic downturn, but the sharp development of the Chinese market has helped the travel agency maintain its operation and even achieve the above staggering growth.

During 2011, Vitours welcomed about six chartered flights each week from Kunming, Guangzhou, and Taipei among others. The travel firm currently serves chartered flights from Beijing, Shanghai and Guangzhou only, but will serve more flights from other regions in the coming time.

“In 2011, we had more than 30,000 Chinese visitors, up over 200% year-on-year, and this year’s growth rate will be lower, but still high at an estimated 50%,” Vitours’ director Cao Tri Dung told the Daily.

Cuong of the tourism department of Danang City attributed the aforementioned impressive performance at local businesses to numerous promotion programs by the city and travel firms in China in recent times. Notably, great efforts of local tour operators and hotels in developing the Chinese market has been the most active factor, Cuong stressed.

JICA says Vietnam yet to control construction quality

Vietnam has not properly controlled the quality of construction projects, according to the Japan International Cooperation Agency (JICA) in a meeting last week with the Ministry of Construction.

Speaking at the meeting, Deputy Minister Nguyen Thanh Nghi said that the construction activities in Vietnam have increased strongly in number, scale and complexity.

There were nearly 50,000 construction works nationwide, with civil projects accounting for 51%, while traffic, industrial, irrigation-hydropower and infrastructure projects make up 19%, 11%, 9% and 10% respectively.

With such a high number, Vietnam has now been unable to control the quality of construction works tightly, especially ones in the private sector as the supervision of construction does not work efficiently, said Kato Tsuneo, head of JICA’s consulting team.

He said that the roles between project investors and management units should be separated clearly so that the monitoring of projects can be more efficient.

Tran Chung, a cooperation expert, said that Vietnam should pay more attention to the consulting and supervising teams as they directly involve in the supervision of the project quality. Currently, the wage for such teams in Vietnam is much lower compared to their responsibilities, he added.

To improve the supervision, Nakasuka Satoshi from JICA said that Vietnam should improve the testing system for supervising engineers as they needed to be trained well and undergo many national-level qualification tests.

Provinces tougher on foot-dragging projects

Many provinces this year focus on accelerating the capital disbursement of licensed projects while determining to cancel out delayed, inefficient and unfeasible projects.

Ba Ria-Vung Tau has set a modest target of US$500 million in foreign direct investment (FDI) attraction this year, or a half of last year’s result. The province’s vice chairman Ho Van Nien said the locality would pay more attention to the disbursement of US$27 billion at 298 projects licensed in the past few years than the number of fresh projects and the registered capital.

This explains why Ba Ria-Vung Tau last year decided to revoke investment certificates of 24 projects due to slow progress or no deployment. The procedures for license revocation will be carried out this year.

The province is reviewing the licensed projects with slow deployment to support investors to timely roll out the projects. In case the investors have no plan for deployment or lack financial capability to implement the projects, the province’s authorities will withdraw licenses and transfer projects to other investors.

Meanwhile, Long An Province is imposing strict measures on the projects agreed in principle to develop industrial clusters and residential zones in the province.

Nguyen Minh Ha, director of the provincial department of planning and investment, said his agency will propose the province’s government to eliminate unviable projects or transfer those projects to more competent investors

The department’s report shows that 22 projects in the province were withdrawn last year, with the total area of over 1,600 hectares.

The highland province of Lam Dong has become tougher on delayed projects. The latest data show that the province last year decided to cancel out 45 local and foreign-invested projects, worth VND10 trillion and US$30 million in investment capital. Besides, over 40 other projects will likely have licenses revoked in the coming time.

Most of the cancelled projects are small and medium-scale hydropower projects, and projects invested in tourism, agriculture and forestry.

Similarly, HCMC has officially withdrawn investment certificate of the billion-dollar Thu Thiem software park project in District 2 to call for other capable investors to carry out the project.

With resolution to restore the order in investment attraction, other localities like Binh Thuan, Danang and Bac Ninh have also become stricter to investors in order to steadily get rid of unfeasible projects and incompetent investors.

These localities themselves do not want to revoke certificates of licensed projects since the procedures are cumbersome. However, they are left with no choice because inefficient projects will leave negative impact on the economy.

Phan Huu Thang, director of Foreign Investment Research Center of National University-Hanoi, said the biggest challenge for FDI attraction is that the registered capital of some US$108 billion has yet to be disbursed, leading to multiple delayed projects causing waste of land, product shortage and affecting the image of Vietnam’s investment and business environment.

Still, if the country managed to accelerate the disbursement of this capital source, it would provide a good chance to promote and call for new investment, noted Thang, ex-director of the Foreign Investment Agency under the Ministry of Planning and Investment.