BUSINESS IN BRIEF 22/5

May 22, 2012
Vietnam Net

Hydropower plant comes on line

The first turbine of the A Luoi Hydropower Plant in central Thua Thien-Hue Province began supplying electricity to the national grid today.

The VND3.2 trillion (US$155.5 million) plant, which has been under construction since 2007, has two turbines with a total capacity of 170MW.

The plant, the biggest of its kind in the province, is expected to produce nearly 690 million kWh a year. Central Hydropower Joint Stock Company is the investor.

The second turbine is also expected to become operational this year.

Plant project manager Power Transmission Company 2 said the company had overcome difficulties, including unfavourable weather and continual floods, to finish the project and erect the power lines from the plant to Hue City.

The 29km line, with 72 power poles, runs through mountainous areas, which posed difficulties in construction.

More than 100 households were relocated to make room for the plant's reservoir. It is expected to become a tourist attraction and improve living conditions in the area which was badly damaged during the American War.

Domestic aviation experts see potential in growing sector

Viet Nam's aviation sector is growing rapidly, according to Lai Xuan Thanh, deputy director general of the Civil Aviation Administration.

The speedy development was attributed to the increase of many foreign airlines that had opened new routes and enhanced the frequency of flights to Viet Nam, Thanh said.

He added the move was also based on belief in the country's aviation potential and incentives from the Government. The Civil Aviation Administration of Viet Nam (CAAV) reports that last year, the domestic airline sector grew by 14 per cent.

International Air Transport Association (IATA) Director General and CEO Giovanni Bisignani recently told Vnexpress.net online newspaper that he predicted the future of Vietnamese aviation to be positive. By 2014, the country would have become the third largest market for international passenger and cargo transport after China and Brazil.

He said the prediction was based on the 5 per cent average growth rate of the global aviation industry and that Vietnamese aviation would reach 10 per cent in 2015, by which time the country's GDP would expectedly have increased by 7 per cent on average.

By 2015, Viet Nam's aviation market will service between 34-36 million passengers and 52-59 million in 2019 while cargo transport increase between 850,000 to 930,000 tonnes in 2015 and 1.4 to 1.6 million tonnes in 2019.

In addition, the Ministry of Finance has decided to slash a number of service fees with the highest reduction at up to 50 per cent for the first airlines to open air routes to Viet Nam and for those that engage in operating air transport for the first time.

On May 3 this year, Finland Airlines (Finnair), a member of the Oneworld Alliance that operated more than 800 international flights to 149 countries and territories, officially declared its presence in Viet Nam.

Finnair mainly exploits routes between Europe and Asia. It has a fleet of more than 70 aircrafts, with an average life span of between 4-6 years.

Retteri Kostemaa, regional sales director for Singapore and Southeast Asia, said that it planned to open direct flights from Helsinki to Viet Nam in the near future.

Other airlines have continued to increase their flights and open new routes to Viet Nam, such as Cebu Pacific of the Philippines that launched its new flight from Manila to Ha Noi with a frequency of two per week.

In March, Saudi Airlines Cargo also deployed its services from HCM City to the Middle East and Frankfurt in Germany, with a frequency of two flights per week.

It is clear that opportunities for the country's aviation sector are vast, but it requires investors to have strong finances, human resources and experience.

Cotton output fails to meet demand

Although Viet Nam has had favourable soil and weather conditions for cotton cultivation, domestic production provides just 1.5 per cent of the total need for the textile and garment sector, according to Deputy Minister of Industry and Trade Ho Thi Kim Thoa.

Measures to boost domestic cotton farming were drawn in a 2010 Governmental decision that looked to cotton production development programmes for the next five years, with an orientation until 2020. However many of the measures had yet to be implemented, Thoa said at preliminary two-year review of the decision last Saturday.

While Viet Nam requires about 400,000 tonnes of cotton yearly to serve its textile and garment sector, the country's12,000ha of cotton farms produce only 5,000 tonnes.

Under the development programme, by 2015 the country aims to have 30,000ha of cotton producing 20,000 tonnes, and 76,000ha producing 60,000 tonnes by 2020. It also targets the expansion of cotton growing areas irrigated by stable water supplies rather than wholly dependent on rain water.

However, "it's difficult to achieve these goals," Thoa said.

She pointed out the legal regulations that cotton growers faced in accessing preferential bank loans as well as the limited funds for cotton breeding research and land for cultivation.

Head of the ministry's Light Industry Department Phan Chi Dung said that after the two years of implementation, the country had only two cotton farms in central Binh Thuan and Ninh Thuan provinces that applied modern irrigation systems.

The rest of the cotton areas were small-scale and relied on rain water.

"Low cotton prices and the increasing price of fertiliser worried farmers, mostly those from poor households, and slowed their investments in the crop," Dung said.

"It is necessary to establish a cotton price stabilisation fund, mentioned in the development programme already, to support growers in the case of prices decreasing too much and rendering growers unable to cover production costs."

He added that domestic textile and garment manufacturers would extract 2 per cent of their production costs to contribute to the fund.

More supports were also needed to improve human resources and scientific application in this field. Expanding cotton growing areas and improving cotton productivity would raise the competitiveness of Vietnamese cotton products and help growers prosper.

General Director of the Viet Nam National Textile and Garment Group Tran Quang Nghi said that provinces like Binh Thuan, Dak Lak and Quang Binh had designed a cotton development plan but local people still had doubts about the outlook of cotton production, let alone the complicated administrative procedures and limited access to bank loans.

He suggested that localities should designate land to set up a sample high-yield cotton field first for evidence of cotton farming's economic profit, and later expand the model.

He also asked for regulations that would allow the transfer of exhausted forest to cotton growing areas.

HCM City to revoke slow projects' licences

The HCM City Construction Department will ask the People's Committee to revoke previous land hand-over decisions and licences for several long-delayed projects.

The proposals were made after an inspection conducted by the department in the city's districts.

The inspection of 50 housing projects in three HCM City districts found that 16 of them had been delayed, even though they had been approved by the city between 2006 and 2009.

In District 7, plans for a shopping centre/apartment complex in Tan Kieng Ward are still on paper, while work on the Sai Gon Castle and Tan Thuan residential areas has yet to begin.

Six projects in District 9 have also been delayed. They include houses for Sai Gon Hi-Tech Park staff, the Phu Huu and Mega apartment buildings, and the Hai Au, Hai Phu and Kim Nam buildings.

Inspectors found seven delayed projects in District 12, including a dormitory at Sai Gon Tech College, the Kim Dai Duong apartment building and an apartment building in Tan Son Nhat Ward.

According to the department, investors' financial incapacity and problems in site-clearance compensation were the main reasons behind the delay.

Delayed projects getting cut in provinces

Many provinces are getting tough on slowing-moving foreign-invested projects to better ensure the quality of investment inflows, according to the Ministry of Planning and Investment.

The northern province of Bac Ninh last year withdrew investment licences from 16 delayed projects worth a combined US$48 million, while neighbouring Bac Giang Province reported that it had revoked licences from projects that covered a total area of more than 310ha.

The Bac Giang People's Committee said it was determined to withdraw investment certificates from foreign investors who intentionally delayed investment commitments.

The northern province of Vinh Phuc has also showed determination to tackle delayed foreign-invested projects. In the first quarter of this year, it cancelled 12 that spanned a total area of 17.2ha.

The two southern provinces of Ba Ria - Vung Tau and Binh Duong are also reported to have revoked investment certificates from 23 foreign-invested projects last year.

In the central region, Quang Nam Province also withdrew licences from eight projects worth about $108 million.

"Revoking licences from slow-moving and inefficient projects would ensure the quality of foreign investment flowing into the province rather than impacting on our investment climate," said Quang Nam Department of Planning and Investment director Tran Van Tri.

"In return, this will create opportunities for new investors who have sufficient financial capacity," he said, adding that reviewing the implementation of licensed projects remained the province's top priorities for this year.

Binh Dinh Province did likewise for four foreign-invested projects while urging foreign investors to start the construction of other key projects, involving in oil and gas and tourism sectors.

The biggest challenge for foreign direct investment attraction was that the registered capital of some $108 billion had yet to be disbursed, leading to thousands of delayed projects that could affect the image of Viet Nam's investment and business environment, Phan Huu Thang, director of the Viet Nam National University's Centre for Foreign Investment Studies, told Saigon Times Online newspaper. But 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, he said.

Bank credit growth slow despite rate cut

In the first quarter of the year, the State Bank of Viet Nam reported that the sector's volume of credit shrank by 1.96 per cent compared with the figure recorded at the end of last year.

Meanwhile, the National Financial Supervisory Committee predicted that by mid-April, credit grew by only 0.25 per cent, much lower than the expected figure of 1.5 per cent per month.

Despite the central bank's efforts to cut interest rates to increase lending, banks continued to have negative credit growth and still recorded minus1.71 per cent growth by mid April.

The banking sector has set a yearly target of achieving credit growth of 15-17 per cent in hopes of making a contribution to raising the country's Gross Domestic Product (GDP) growth rate to between 6 per cent and 6.6 per cent this year.

However, many independent experts said that even if banks achieved average credit growth rate of 2 per cent per month for the rest of the year, the entire banking sector's credit growth would reach maximum 14 per cent.

So the projected monthly credit growth rate of 2 per cent seemed to be unrealistic.

Many banks that were given a credit-growth quota of 17 per cent per year are unsure about what they need to do.

The Export-Import Joint Stock Commercial Bank (Eximbank), for example, always had to curb credit growth but now has a minus 5 per cent growth rate.

In addition, the Asia Commercial Joint Stock Bank's capital disbursement is quite slow, even though the bank's interest rates of loans given to good customers are only 15 or 16 per cent per annum.

Banking sector insiders also said that in an attempt to increase credit growth, many banks had tried to lower their lending interest rate to 15 per cent or even 14 per cent per year so that enterprises could access them.

However, banks still could not find qualified customers to lend.

Nguyen Huu Dang, general director of the HCM City Development Joint Stock Commercial Bank (HDBank), also said the bank's credit growth in the first quarter of the year shrank by 5 per cent.

The capital demand of enterprises, particularly those with feasible projects, has fallen significantly, and banks are reluctant to lend because of fear of bad debts, according to Dang.

Many enterprises do not want to borrow capital because they cannot cope with rising inventories. And others have had to cut their product prices and suffer losses. Even so, sales remain low.

The director of a plastics company in HCM City, who declined to be named, said that, even when the interest rate of bank loans was cut to 10 per cent per year, the company did want to borrow because it feared that it couldn't pay back its debt.

Market analysts said the major problem was not interest rates but consumption. Because of low sales, companies were delaying any plans for investment, production or trading.

To utilise their available capital and generate profit, many banks have recently bought treasury bills which have a modest interest rate but are safe.

But that may only be a short-term solution because the central bank has just decided to reduce the number of treasury bill transactions from one a day to one a week.

Stockpiles on the up

Many kinds of commodities, from expensive to cheap products, from food to household appliances, are piling up in warehouses because of slow consumption rates.

At the same time, enterprises cannot recover capital to continue their production and reinvestment activities.

According to sector insiders, the market's textile and garment purchasing power has fallen by 50 per cent, compared with the same period last year.

Dang Quynh Trang, general director of the Viet Thy Fashion Company, said her company had to cut the price of several kinds of products by 50 – 70 per cent to settle the growing unsold inventory.

Many other apparel companies, which have enough stock on hand for the rest of the year, are holding big sale promotions such as "buy one, get one" to increase sales.

Do Long, general director of the Binh Tan Consumer Goods Manufacturing Company, said the volume of the company's footwear that had been sold in the first quarter of the year dropped by 25 per cent.

Enterprises' inventories are usually maintained at under 20 per cent, but Bita's products in stock increased 35 per cent by April, according to Long.

In the last four months, Ha Tien Cement Company No1 sold only 1.2 million tonnes of cement, a year-on-year decrease of 12 per cent.

Many electronics trade centres in HCM City also revealed that their turnover in the first four months dropped by 15-20 per cent.

Inventories of soft drinks, processed food and cosmetics at Citimart and Maximark supermarkets have climbed as well. They are valued at tens of billions of dong.

In addition to consumer goods, other essential commodities such as fertiliser, cement and plant-protection products also have inventories that have increased 39-63 per cent.

According to the General Statistics Department, the country's unsold inventory index by April had increased by 32 per cent compared with the same period last year.

Industries that have the largest inventory volumes include casting, fruit and vegetable processing, fertiliser, cement, auto and motorbike, fisheries, and garments and textiles.

To cope with the rising inventory and have cash to maintain operations, several enterprise are using their products instead of cash to pay debts, although they have had to suffer certain losses. Some have had to barter away their products at much low prices.

Le Thi Thuy, director of the MM Event and Telecommunications Company in District 2, said her company had just received three trucks of confectioneries and snacks worth VND120 million (US$5,710) from a big enterprise which would have normally paid their bill of VND100 million ($4,760) in cash.

"Because the enterprise could not sell their products, they had no money to pay us and had to use the products instead," Thuy explained.

To get capital to pay salaries, she said her company had to ask staff to take part in selling the confectioneries and snacks. They collected only VND65 million ($3,100).

Both companies knew that they would suffer losses, but they had no other choice.

Foreigners return to real estate

While domestic investors are seeking ways to flee from real estate projects, a prime cause of bad debts at banks, many foreign enterprises have begun new high-value investment activities.

Several sources also forecast that foreign direct investment pumped into the real estate sector would see positive changes this year.

For the first four months of the year, foreign investors injected $1.57 billion into real estate projects in Viet Nam.

One of them was the Binh Duong Garden City joint-venture, with investment capital of $1.2 billion.

The project, whose construction work began in March, covers an area of 71 ha of prime land in the centre of Binh Duong New City project. It was developed under an alliance between Viet Nam's Becamex IDC and Japan Tokyu Corporation.

A report from Dau Tu newspaper also says that Korea Development Bank (KDB) has decided to pump $200 million into the first phase of construction of the centre of the Tay Ho Tay urban area in Ha Noi, with Daewoo E&C being the project owner.

The capital mobilised from the KDB would enable Daewoon E&C to begin the project by the end of this year.

The first phase of the Ho Tram Strip Project in Ba Ria-Vung Tau Province will be put into operation in February 2013.

The project, funded by Canada's Asian Coast Development Limited Company, has total investment capital of $4.23 billion and covers 164 ha with five-star standard facilities.

In addition to directly investing in real estate projects in Viet Nam, some foreign enterprises are seeking ways to penetrate the domestic real estate market under the mergers and acquisitions (M&A) form.

According to some foreign investors, real estate prices in the Vietnamese market are at a low level, thus creating opportunities for those who want to buy unfinished property projects whose owners have met financial difficulties.

Malaysia's leading property developer, S P Setia Berhad, who owns Ecolakes My Phuoc and Eco Xuan in Binh Duong Province, for instance, has plans to extend investments into real estate projects under the M&A form in Ha Noi and HCM City.

Profits plunge for construction company

Construction company Licogi 16 (LCG) posted a net profit of VND4 billion (US$190,400) in the first quarter, equal to just 8 per cent of the level in the same period last year. The decline in profit was due to the drop in revenues from around VND420 billion ($20 million) to just VND209 billion ($9.9 milion) and financing costs soaring 74 per cent to VND29 billion ($1.4 million).

Software giant posts positive earnings in Q1

Software giant FPT posted a profit of over VND755 billion (US$36 million) in the first quarter, a year-on-year increase of 14 per cent and 98 per cent of its target for the entire year. While FPT said its revenue in the first four months reached exceeded VND7.8 trillion ($372 million), its net profit stood at VND453 billion ($21.5 million), an increase of 21 per cent. The corporation's earnings per share reached VND2,099. FPT reports that its core line of business continues to grow significantly, and its shareholders recently approve a 45-per-cent dividend on 2011 profits.

Revenues on the up at Phu My Fertilisers

Phu My Fertilisers (DPM) posted a net profit in the first quarter of VND937 billion (US$44.6 million), an increase of 46 per cent over the same period last year. Earnings per share in the period reached nearly VND2,500. DPM had cash on hand at the end of the quarter of over VND4 trillion ($190 million), declining by VND1.53 trillion from earlier in the year, while inventories rose from a value of VND944 billion ($45 million) to VND1.16 trillion.-

Coffee processor prepares to issue shares

Coffee processor Thai Hoa Group (THV) plans to offer nearly 42.25 million shares to strategic partners at VND6,000 per share. The funds raised will be allocated to the company's working capital. THV will also increase its charter capital to VND1 trillion (US$47.6 million) this year and projects earnings this year of VND1.5 trillion ($71.4 million) and a profit of about VND25 billion ($1.2 million).-

Government bond auction achieves success

A total of VND1.4 trillion (US$66.6 million) worth of Government bonds found buyers during Wednesday's auction. Three-year bonds fetched a yield of 9.5 per cent per year, five-year bonds were bought at a yield of 9.8 per cent. The Viet Nam Development Bank has hosted four bond auctions so far this year, raising VND14.4 trillion ($685.7 million).-

Exporters need Gov’t support

It is high time that the Government lent a hand to businesses to help them ride out the economic slowdown and shore up production. 

The view was shared by economic experts at a forum on export opportunities and prospects in 2012 held in Ho Chi Minh City on May 18.

Dr Vo Tri Thanh, deputy director of the Central Institute for Economic Management (CIEM), noted that despite the global economic slowdown, Vietnam’s exports in the past four months have sustained impressive growth of 22 percent thanks to their highly competitive advantages. Foreigners use Vietnamese products because they are essential consumer goods and offered at low prices.

Thanh was even confident that with the four-month export growth of 22 percent, Vietnam will probably achieve its set target of obtaining an annual export growth rate of 12-13 percent this year.

However, he reminded export businesses to improve their competitive capacity, citing that foreign direct investment businesses secured export growth of up to 36 percent, while domestic businesses posted 4.4 percent in the first four months. 

Tran Xuan Gia, former Minister of Planning and Investment, raised concerns over the ailing economy, saying it is showing signs of steep deceleration despite low inflation, high export growth and stable foreign reserves.

According to his explanation, social investment capital in the first quarter of this year was much lower than in the same period last year. Business demand for bank loans is decreasing considerably due to stagnant production. The purchasing power of the market is also falling, and the number of businesses have been dissolved or suspended is increasing dramatically.  

In addition, he said a sharp fall in import surplus is putting pressure on exports for 2013 and in the following years. He quoted the latest statistics as saying the four-month trade deficit at just US$176 million, or 0.53 percent of exports, is rather low, indicating stagnation in investment and production.

Gia suggested that the government take immediate action to halt economic deceleration – an important prerequisite to stabilising the macroeconomy and containing inflation.

Saving businesses means saving the economy, Gia declared at the forum, adding that the government should act immediately to support businesses. But he also said businesses should act first by restructuring themselves before the government helps them out.

Gia welcomed the government’s decision to announce tax support for businesses, yet suggested that the government particularly focus on helping businesses reduce production costs by removing age-old fees, exempting or slashing others, and delaying new ones.

To this end, according to the former investment minister, the government should review all direct and indirect fees imposed on businesses and individuals to come up with the proper decisions.

Other experts recommended that the government should restructure business debts, or even guarantee their bad debts to ease business demand for bank loans.

They pointed out that although the government has lowered the interest rates, the rates still remain high, making it impossible for businesses to take out loans.

Bank representatives said that commercial banks want to lend to businesses to make a profit, but at the moment many do not, even though they have an adequate supply of capital at hand. They said like other businesses, they need to tackle their own bad debts first before opening the door to producers.

The crux of the matter is to address the issue of bad debts as soon as possible to iron out snags for processors and exporters, said the experts.

European businesses increase investment in Vietnam

Despite difficulties caused by the economic slowdown and inflation, an increasing number of European businesses are seeking opportunities to expand operations in Vietnam in 2012.

This is the overall result of a business climate survey conducted by the European Chamber of Commerce in Vietnam (EuroCham) in April-May 2012.

The majority of the surveyed European companies are looking to maintain and increase their investments in Vietnam. 

Thirty-eight percent of respondents said they are planning to raise their investment in the country, up two percent from the previous survey. Thirty-four percent of the surveyed businesses said they want to maintain their level of investment.

Meanwhile, nearly one third of respondents (28 percent) are considering a reduction in their investment in the country, showing that they are still cautious about the outlook of the Vietnamese market.

The survey reveals that there is an upward trend in the outlook on revenue/orders. About 58 percent of the respondents expected an increase in revenue in the medium term, a solid rise from 47 percent in the last quarter.

Fewer companies (18 percent) expected their number of orders to remain constant compared to the last quarter where this view was shared by 27 percent of respondents.

However, up to 57 percent of respondents are still worried about inflation which they said is a major concern or even threat to their business operations in the country.

In addition, 26 percent of respondents had a pessimistic outlook for their business in the second half of this year, and none of the respondents described their current business situation as ‘excellent’.

The surveyed European businesses also said that the minimum wage increase, starting in May, also has little effect on their operations. Up to 45 percent of respondents stated that it did not affect them at all, while 39 percent expected the impact to be ‘minor’. Only 16 percent expected a ‘major’ or ‘threatening’ impact of the pay rise.

Mushroom exports to top US$200 million by 2015

Vietnam has set a target to expand mushroom cultivation and to earn US$150-200 million from exports by 2015, according to the Cultivation Department under the Ministry of Agriculture and Rural Development.

Mushroom exports were worth US$90 million last year, said Pham Van Du, the department’s deputy director, at a conference in HCM City on May 18.

Vietnam produces about 250,000 tonnes of mushrooms a year, with more than half of that sold in domestic markets as fresh produce.

With abundant straw, saw dust and sugarcane, which can reach 40 million tonnes per year, Vietnam has great potential for developing the mushroom sector.

If only 10 percent of the available mushroom growing materials were used, about 1 million tonnes of mushrooms will be produced, bringing in about US$1 billion annually from mushroom exports, Du said.

Foreign demand for mushrooms is increasing rapidly because of the perceived health value from mushrooms. In addition, mushroom export prices have gone up year by year.

Because mushroom cultivation is still scattered and on a small scale, Vietnam cannot meet larger export orders or long-term export contracts, according to the department.

Nguyen Quang Trung, director of the Soc Trang-based Tu Thao Mushroom Export Process Company, said the company has met only 30 percent of export orders due to lack of a long-term supply source.

Many conference participants agreed that mushroom production is an economically effective sector.

In addition, using straw in mushroom production has helped reduce the burning of straw, thus contributing to environmental protection.

Participants said to develop a sustainable sector, localities should invest more money in producing high-quality strains, form commercial production areas and build industrial mushroom processing facilities.

Vietnamese farmers are producing about 16 kinds of mushrooms, including straw, button, oyster, wood ear and reishi.

Mushrooms are mainly cultivated in southern provinces, including Dong Thap, Soc Trang, Tra Vinh, Can Tho and Dong Nai. Mushroom cultivation in some Asian countries and territories, including the Republic of Korea, Japan and Taiwan, has been industrialized and become an important economic sector.

Haiphong leads in attracting FDI

Over the past four months, Haiphong attracted US$926.33 million of foreign direct investment (FDI) capital, up 3.5 times compared to the same period last year, nearly achieving this year’s target of US$1 billion.

With such achievement, the city leads other cities and provinces in attracting FDI, according to economic experts.

Large investments have been poured into the city’s industrial zones (IZs), according to the Haiphong Economic Zone Authority (HEZA).

Eleven new projects were granted licenses with total capitalization of US$874.59 million. Nine operational projects had additional funding estimated at US$51.74 million. Most of projects in Dinh Vu and VSIP Haiphong industrial zones belong to Japanese investors.

In addition, Haiphong’s IZs attracted nearly VND1,700 billion of domestic investment capital, double last year’s figure.  

The Haiphong Statistics Office said that the largest amount of FDI was poured into processing industries, which occupy 52 percent of total investment capital. It was followed by asset businesses and consultancy services (21 percent), culture-sport (16 percent), and hotels and restaurants (10 percent).

Currently, Japan tops the list of 28 countries and territories investing into the city, with a total of 80 projects worth US$1.5 billion.

Plastics exports target US$400 million in Q2

Vietnam’s exports of plastic products are predicted to reach US$400 million in the second quarter this year, according to the Vietnam Plastics Association (VPA).  

VPA Deputy Chairman Ho Duc Lam said the country’s total plastics export value may hit US$1.7 billion in 2012, up 25-28 percent over last year.

Importers highly appreciated Vietnamese plastic products, and have already placed orders until the end of August.

Followed by the US, with over US$15.5 million in import value, Japan is now Vietnam’s largest plastics import market, mostly importing plastic bags, packing products and industrial plastics.

Last year, Vietnamese plastic products were listed among the top ten exports to Malaysia, a promising market which is expected to contribute more than US$17 million to Vietnam’s total export earning in the second quarter.

HCM City to host Malaysia-Vietnam IT forum

A Malaysia-Vietnam information technology forum will be held at the Quang Trung Software City (QTSC) in Ho Chi Minh City on May 24.

The event, to be co-hosted by the Malaysia Trade Section (MATRADE) and QTSC, will create opportunities for the two countries’ IT businesses to share information on products, services and solutions to increase investment in the IT sector, and to establish partnerships.

Ahmad Shanizam Ab.Ghani, an MATRADE officer, quoted the 2011 statistics as saying Malaysia is Vietnam’s 9th biggest investor, pouring more than US$9 billion into the country, but IT projects were valued at just US$6 million.

At the forum, he said, Malaysia businesses will share experience in developing the e-government model, seeking sectoral management solutions, and expanding operations in Malaysia.

Part of the forum will be a meeting between 27 IT Malaysian companies and 30 Vietnamese businesses specialising in database, telecom and financial services, pharmaceutical and hospital services, and health care.   
Malaysian businesses are scheduled to work with big IT Vietnamese groups.

Vietnamese products promoted in Germany

The Europe Market Department under the Ministry of Industry and Trade (MoIT) will go on a fact finding tour and conduct a number of activities during Vietnam Week in Germany from May 26-June 1.

The event aims to promote Vietnamese products in the German and EU markets.

The Head of the Europe Market Department, Dang Hoai Hai, said Germany is the leading economy in Europe setting very strict conditions for goods to be imported into the country.

To penetrate and sell well in Germany, Vietnamese products must meet the requirements set by the EU, said Hai.

Germany is now Vietnam’s largest export market in Europe and Vietnam is a new and attractive emerging market for German investors, he added.

However, the fact is that only a few Vietnamese farm products, such as fruit and coffee, can be found in the Metro supermarket chain where a wide range of Vietnamese handicrafts, ceramics, garments and textiles are available, Hai said.

At a November 2011 meeting in Düsseldorf, representatives from the MoIT and the Metro Cash & Carry Group discussed the possibility of Vietnamese farm products to enter the Germany market. The Vietnamese experts also visited many supermarkets under the umbrella of the Group to choose suitable products to display at the Vietnam Week.

PVN exploits oil and gas in Azerbaijan

The Vietnam National Oil and Gas Group (PVN) has entered a partnership with the State Oil Co. (ATPG) of Azerbaijan to explore oil in Azerbaijan’s onshore block.

The agreement was signed in the Azerbaijan capital of Baku on May 18, the Azeri producer, Socar, said on its website.

Under the agreement Socar and PVN will jointly restore, explore and develop the Muradxanli-Cafarli-Zardab block.

The block, discovered in 1971, is estimated to contain 1.8 million metric tonnes of oil and 36 million cubic meters of natural gas, according to Socar.

Azerbaijan, the third-largest oil producer in the former Soviet Union after Russia and Kazakhstan, pumped 45.6 million tonnes of oil and 25.8 billion cubic meters of gas last year.

Vietinbank bonds sell well on Singapore Exchange

The Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) successfully sold out its international bonds worth US$250 million on the Singapore Exchange (SXG) on May 18.
 
According to the bank, 40 percent of the bonds (coded CTG VN May 2017) were sold to investors from Asia, 37 percent to those from Europe and 23 percent went to the US.

Fund and asset managers acquired 48 percent of the bonds, while 28 percent were bought by investment banks, 14 percent by commercial banks, eight percent went to public organisations and the remaining two percent to other businesses.

Vietinbank said that the benefit of the bond issuance is in line with the market situation and the bank’s potential for development while ensuring the efficiency of its credit investment.

Earlier issuances of Vietinbank bonds were highly praised by many international banks, financial magazines and investors, and received positive signs in the markets, thus opening the door for other Vietnamese businesses to join the global market through similar transactions.

Vietnam delivers ship to Mexico

The Vietnamese Song Thu Company, in co-ordination with the Damen Shipyards Group from the Netherlands, handed over the FCS 5009 ship to Mexico’s Naviera Intergral Company in Danang city on May 18.

The ship, renamed the M.V. Dona Lourdes after the transfer, is 50 metres long and nine metres wide, with a cargo capacity of 6,000CV and capable of travelling up to 31 nautical miles per hour.

The vessel was built especially to carry crew members, experts and technicians to serve oil exploitation at sea.

Former US ambassador seeks business opportunity in Vietnam

The former US ambassador to Vietnam, Michael Michalak, plans to establish an investment consultancy company in Vietnam in the near future.

Speaking with Thanh Nien (Youth) daily newspaper in Hanoi on May 18, the ambassador, who served a term from October 2007 to February 2011, said he and his wife have returned to the capital because both of them feel a strong attachment to Vietnam.

On May 27, Michalak will be a key speaker at a seminar on development during a period of crisis, which is being co-organized by the American Chamber of Commerce in Vietnam (AmCham) and other partners.

He will hold direct exchanges with Vietnamese businesses to talk about the current situation and development trends in the Vietnamese economy, in addition to discussing lessons learned that are specifically applicable for Vietnamese enterprises.

Tallest observatory inaugurated

Keangnam Vina Limited Company on May 18 inaugurated the 72-storey Hanoi Landmark building and the Sky Landmark observatory atop the building, the tallest in Vietnam.  

Located at the heart of Hanoi’s Cau Giay district, the observatory is an ideal place to observe the capital city at an altitude of 346m. It is also expected to become an attractive destination for tourists from both at home and abroad.

The General Director of Keangnam Vina, Ha Jong Suk, said 72 Sky Landmark observatory is similar to those in buildings in Seoul, Tokyo and the Empire State building in New York City. In addition to offering visitors a panoramic view of Hanoi from the top, the observatory is also equipped with a multi-purpose space including a showroom,  5D movie theater, 3D painting, art galleries, bars, and souvenir kiosks.

Hanoi Landmark Tower is designed as a hotel, commercial center, office, and apartment complex with a total area of 609,673 square metres. The project consists of two 50-storey apartment buildings connected to a 72-storey commercial, office and serviced apartment tower.

Starbay ready to launch mega Phu Quoc tourism venture

Starbay Holdings is ready to nail down construction of its $1.6 billion Phu Quoc Island project this year.

The 520 hectare project, licenced in 2008, is one of Vietnam’s largest resort developments with nine hotels, a golf course, numerous residential villas and condominiums, spas, shopping, food and beverage, sporting and entertainment facilities facing onto pristine beach front land.

Its major shareholder Hongkong-based Millennium Group chief executive Martin Kaye, in an email sent to VIR last week, said shareholders had provided the funds to complete outstanding planning and resettlement, as well as phase one’s construction.

“We are certainly not holding up matters. Indeed none of the 15 neighbouring projects in the Cua Can to Ganh Dau area in Phu Quoc have commenced construction as of today. Of these projects, some are ahead and others behind us in securing the necessary statutory approvals. As we are far larger than most others – it surely takes more time to get all approvals,” said Kaye.

However, he said Starbay Holdings would not deploy some funds until shareholders had clarity on all outstanding matters, with only two key outstanding negotiations to be completed.

“These are quite complicated and critical involving new zoning issues and land pricing, both needing to comply with the Investment law and will require alterations to documents receiving approval some time ago.

“We believe all outstanding negotiations can and should be resolved imminently and we are optimistic and determined that we keep to our timeline and can break ground on our phase one by the year’s end,” said Kaye.

The first phase is likely to take three years and the project will target Vietnamese and international tourists.

“Whilst we await these responses, we are also carefully monitoring the other key factors to ensure a successful project. We are encouraged by the recent progress on road development on the island and also the announcements regarding power, water and sewage contracts and we look forward to seeing the projected timelines, completion dates,” said Kaye.

Kaye said: “Starbay shareholders consist of investors from Canada, UK, Hongkong and Germany and we have spent 4 years carefully planning and attaining all the necessary approvals and we will spend another 15 years building our large project. We are all long term investors and have from the very early days committed to the success of Phu Quoc island. Our objective is to ensure good investment returns which shall ensure we continue to invest in Phu Quoc, making it a truly regional resort destination competing with Phuket, Bali and Hainan.”

“We are confident we can complete all the outstanding issues in a timely fashion to match the completion of these infrastructure components for our site, and also the island, and indeed launch our first phase in good time,” he added.

Black mark against MeiSheng

A Taiwanese textile firm’s dying workshop has been shut down due to its soiling of southern Ba Ria-Vung Tau province.

A Department of Natural Resources and Environment’s Inspectorate Section source told VIR MeiSheng Textiles Vietnam Company had reached D day.

“MeiSheng has seriously polluted the environment. We have several times imposed fines on it, but its polluting continued. MeiSheng is the only foreign firm to damage the environment in the area. Its dying workshop will be able to resume normal operations after the installation of its new waste water treatment system is approved,” the source said.

Based in Chau Duc district’s Ngai Giao town and beginning operations in April 2008, the firm two months ago was found to be dumping untreated waste into the environment, contaminating the nearby Da Den lake, which provides 90 per cent of living water for local inhabitants.

Local media reported that in July 2010 the firm’s illegally-made waste water conducting system cracked, with waste water poisoning the environment. In September 2010, it was hit with fines totaling VND335 million ($16,100) and forced by local authorities to rebuild its waste water treatment system.

“However, the construction of such a system remains uncompleted, because the waste water system is 9.2 kilometres long, which is too long,” said Tran Anh Duc, head of the provincial Department of Environmental Protection’s Environment Control Section.

In March 2012, MeiSheng was discovered having 1,250 workers operating in a substandard environment with much noise and dust. Moreover, the firm was also found to be using 15 foreign employees without work permits, local media reported.

Firms bend over to enter rubber world

Major Vietnamese companies are bending over backwards to set up rubber cultivation plans in neighbouring Cambodia.

Vietnam Rubber Group (VRG), which includes more than 100 members, Hoang Anh Gia Lai Group and Ho Chi Minh City-based Gemadept Corporation are among big Vietnamese companies heading west.

State-run VRG’s five-year business plan for 2011 through 2015, approved by Prime Minister Nguyen Tan Dung earlier this month, includes growing 200,000 hectares of the trees, with 60,000ha at home and 140,000ha in foreign countries, mainly Cambodia and Laos. By 2015, the group’s total rubber area would be 500,000ha.

VRG began rubber cultivation in Cambodia in 2007. As of last August, the group received 132,500ha for growing rubber and is implementing VND14 trillion ($673 million) worth of 15 projects covering 51,000ha. While, the projects have not generated profits, each project will include a latex processing plant, with capacity gradually increasing to keep pace with the rise of harvested latex.

VGR general director Tran Ngoc Thuan said financial difficulties and expensive inputs in 2011 slowed the group’s planting progress in Cambodia and Laos. But, it is striving to complete its 100,000ha rubber planting plan in Cambodia under an agreement between the two governments.
Additionally, VRG plans to ask for another 100,000ha of land to grow the trees in the next phase in Cambodia.

Unlike VRG, freight company Gemadept is a newcomer in the field. But, it launched a rubber plantation project in Cambodia covering 30,000ha last year in upland Mondulkiri province, bordering Vietnam’s Binh Phuoc province. The 25-year project needs $150 million and this year’s investment is about $14.5 million for Gemadept to clear off 7,000-8,000ha of land and plant 4,000-5,000ha of rubber trees, after 500ha was cultivated last year. Gemadept has set up three subsidiaries for its Cambodia rubber project.

Gemadept chief Do Van Minh said the trees would start providing latex in 2016 and with 30,000ha available for harvest, the company could obtain up to $150 million per year, with the latex price being $3,000-4,000 per tonne. Minh said even if Gemadept had no more capital for further investment after two years, it could sell the whole project to Chinese or Malaysian or Singaporean companies, who are hunting projects in Cambodia.

Gemadept project execution chief Nguyen Thanh Tinh said Cambodia’s rubber plantations would be more profitable than Vietnam’s.

Hoang Anh Gia Lai, meanwhile, plans to set up a corporation to manage all rubber projects in Cambodia, Laos and Vietnam. The multi-business group plans to list its rubber corporation’s shares on Vietnam’s stock market in 2014 and the Singapore Stock Exchange in 2015.

HAGL expects to complete the planned cultivation of 51,000ha of rubber in Cambodia, Laos and Vietnam by the end of this or next year. It had grown on 35,740ha by the end of 2011.

HAGL chairman Doan Nguyen Duc said rubber tree profits were higher than those from real estate. When all 51,000ha providing latex, HAGL can harvest around 127,500 tonnes of dried latex each year and export would bringing in about $382.5 million in revenue.

The Ministry of Agriculture and Rural Development’s Centre for Informatics and Statistics said Vietnam could hit a rubber export volume of 930,000 tonnes this year, up 14 per cent against last year.

War against software piracy turning heads on global stage

Vietnam is the best world performer in software piracy reduction. The positive results shown by the decrease in the software piracy rate is testament of great efforts expanded by the government.
- Tarun Sawney Senior director BSA’s Anti-piracy Division in the Asia-Pacific region.

Vietnam is making personal computer software pirates walk the plank. US-based Business Software Alliance (BSA), the leading global advocate for the software industry, last week announced its ninth annual Global Software Piracy Study 2011 in Hanoi.

The study showed that Vietnam recorded a personal computer software piracy rate of 81 per cent in 2011, a two point reduction in two years in a row, compared to 83 per cent in 2010 and 85 per cent in 2009. The commercial value of piracy in 2011 was $395 million, down 4 per cent in value from the previous year’s $412 million.

Vietnam in 2011 ranked 22nd out of 116 national and regional economies surveyed in the study in terms of software piracy.

“Vietnam is the best world performer in software piracy reduction. The positive results shown by the decrease in the software piracy rate is testament of great efforts expanded by the government.

“But admittedly there is still much work to be done and Vietnam faces a stiff challenge in reducing the level of its piracy rate to even the average levels found in the region or the world, at 60 and 42 per cent, respectively. However, I am confident that Vietnam is on the right track,” said Tarun Sawney, senior director BSA’s Anti-piracy Division in the Asia-Pacific region.

Ha Than, chief executive officer of Lac Viet Computing Corporation, said concerted public education and vigorous law enforcement was paying dividends.

“Coming from the local software industry scene where we invest millions of dollars into developing cutting-edge software solutions, we really need all the help from the government to ensure a brighter future for ourselves,” Than said.

According to the study, the global commercial value of pirated software rose from $58.8 billion in 2010 to $63.4 billion in 2011. Some 36 per cent of admitted software pirates in Asia-Pacific surveyed in the study said they acquired software illegally “all of the time”, “most of the time” or “occasionally,” while 27 per cent said they “rarely” did so.

The study also found that software pirates in Asia-Pacific were predominantly male, with 32 per cent aged between 18-24.

Plastics exports target $400 million in Q2

Vietnam’s exports of plastic products are predicted to reach $400 million in the second quarter this year, according to the Vietnam Plastics Association (VPA).

VPA deputy chairman Ho Duc Lam said the country’s total plastics export value may hit $1.7 billion in 2012, up 25-28 per cent over last year.

Importers highly appreciated Vietnamese plastic products, and have already placed orders until the end of August.

Followed by the US, with over $15.5 million in import value, Japan is now Vietnam’s largest plastics import market, mostly importing plastic bags, packing products and industrial plastics.

Last year, Vietnamese plastic products were listed among the top ten exports to Malaysia, a promising market which is expected to contribute more than $17 million to Vietnam’s total export earning in the second quarter.