BUSINESS IN BRIEF 24/6

Chandler Corp. pours $99 mln into Vietnam medical deal

Singapore-based international business group Chandler Corporation has acquired 80 per cent of Hoan My Medical Corporation, Vietnam’s largest hospital chain, for $99 million.

Chandler, founded by New Zealand-born entrepreneur Richard Chandler, announced last week that the investment in Hoan My complemented the healthcare businesses the company owns and operates in Indonesia and the Philippines, a move to make it a leading private healthcare provider in Asia.

The new investment came right after Fortis Healthcare, India’s largest hospital chain, sold all of its 65 per cent stake in Hoan My to Chandler for $80 million. Right after that, Chandler increased its holdings in Hoan My to 80 per cent.

Fortis in August 2011 bought 65 per cent of Hoan My stake at $64 million to become the majority stakeholder in the private hospital chain. Fortis added its name to the Vietnamese company, and now transferred its holdings to obtain a $16 million profit in less than two years.

Fortis was selling its investments in Vietnam and Hong Kong for between $380 million and $400 million, the Economic Times of India reported. It had received an unsolicited bid of $80 million from Chandler for Hoan My.

Chandler CEO David Walker said: “The acquisition of Hoan My is an important step toward realising the Chandler Corporation’s goal of becoming a leading Pan-Asian healthcare services provider. The Chandler Corporation builds and invests in great companies which create social value and drive national prosperity. Hoan My has done both in Vietnam for the past 16 years. Our investment reflects the value we place on healthcare.”

Hoan My is the first medical corporation to run a private hospital chain in Vietnam. The group now comprises five hospitals and four clinics in Ho Chi Minh City, Dalat, Danang, Can Tho and Ca Mau, annually providing affordable, quality healthcare to more than one million people in Vietnam’s emerging middle class.

Chandler is the newly-announced name of Richard Chandler Corporation, which has interests in the energy, consumer, financial services and healthcare sectors with operations in Asia, Africa, the Americas, Europe and the Middle-East. It is investing in some other Vietnamese companies, including FPT, a leading information and communication technology corporation in the country.

Garment sector dressed for success

The textile and garment sector is working to get itself in shape for brighter horizons.

The Ministry of Industry and Trade is drafting the textile-garment industry development planning to 2020, with vision towards 2030 for submission to the prime minister for approval.

This plan will see landmark changes compared to the previous plan approved by the government via Decision 36/2008/QD-TTg in 2008.

In the new planning, the sector envisages an export value of $31-$32 billion by 2020, which will double to $60-$65 billion by 2030 and hiking localisation rate to 60 and 80 per cent, respectively.

Under current planning, by 2015 the sector is set to report $18 billion in total export value and to $25 billion by 2020, and respective localisation rates were set at 60 and 70 per cent.

Deputy Minister of Industry and Trade Ho Thi Kim Thoa said the draft planning was built factoring in comments relevant to current planning and encompassing amendments amid the current development context.

In fact, its largest challenge is that most of production materials, machinery, equipment, chemicals and dyeing substances are imported.

Also, forecasts fail to keep pace with actual market situations and the capacity for product design and development remains below par.

Deputy head of Vietnam Textile Research Institute Dr. Nguyen Sy Phuong said current localisation rate had proven lagging far behind the demand for export production and was the sector’s core weakness.

For instance, locally-made cotton could only meet 3-4 per cent of actual demands.

Last year, Vietnam reaped $17 billion from textile garment export but the sector’s total import value came to $11.3 billion.

After five years implementing the development planning to 2015, with vision towards 2020, though the export growth has even surpassed projected levels, actual localisation rate was far behind the set target.

Thereby, reviewing current planning, from there drawing a new comprehensive one has been urgent.

Phuong said apart from setting suitable growth targets, it would be more important to work out measures to make these targets come true.

Accordingly, to tackle the sector’s major shortcomings as heavy reliance on import and low localisation rate there must be policies and mechanisms to encourage firms to open shop and spur investment into specific textile-garment complexes to maximise usage efficiency.

Besides, as textile-garment is a labour intensive industry stable and quality human resources are a key factor to each firm and the whole sector growth perspective.

“Through placing factories in rural and remote areas together with stronger investments, textile and garment firms would find it easier to meet manpower needs,” Thoa underscored.

Cooking oil products fry local competitors

Regional cooking oil products are overwhelming the domestic market due to competitive pricing and import duty exemptions.

Imported cooking oil brands are widely visible in supermarket shelves in Hanoi, Ho Chi Minh City and other cities across Vietnam at price levels almost similar to those of locally made products.

For instance, Malaysia’s Sailing Boat brand fetches VND43,000-VND45,000 ($2) per litre (including soy bean, palm and mustard green oil), the Omely brand oil from Indonesia charges VND38,000 ($1.8)) per one litre bottle and Thai’s Cook brand soya bean oil costs VND48,000 ($2.2) per one litre bottle.

The prices of refined soy bean and palm oil imported through border gates in 2012 only averaged VND13,000 and VND17,200 (62-80 US cents) per litre respectively, according to Ho Chi Minh City-based border gate customs bodies.

The level is only from 2 to 5 per cent higher than that of locally produced items.

A Ministry of Industry and Trade (MoIT) Department of Competition Management survey highlighted an abrupt growth in the volume of imported vegetable oil into Vietnam.

Accordingly, around 604,375 tonnes of vegetable oil made forays into Vietnam last year against 350,878 tonnes in 2010.

The market share of local edible oil producers plummeted from 52 per cent in 2009 to just 10 per cent in 2012 due to growing presence of foreign imported products.

Do Ngoc Khai, director at the largest edible oil producer in Vietnam Vocarimex said local businesses were in a fix after edible oil’s import duty fell to zero per cent from early 2012 and Vocarimex was not exempted.

In the context imported edible oil poses a real threat to domestic production and responsive to domestic edible oil producers’ proposals the MoIT has issued a decision on temporary imposition of 5 per cent import duty on soy bean and palm oil imported into Vietnam. The decision took effect from May 7, 2013 and slated to remain into force not more than 200 days.

Industry experts, however, admitted the 200 day period would not change the landscape since local firms would not be in a position to immediately ameliorate their competitiveness as 90 per cent of the production materials are imported and factories are still in the machinery depreciation phase.

This year is forecast to remain tough for local vegetable oil producers because imported product remains in upward trend despite the protective measure 5 per cent import duty.

Coal exports likely to fall this year

Vietnam is expected to export a maximum of 10.5 million tonnes of coal in 2013, a year-on-year decrease of 5 million tonnes, with consumption of Vietnamese coal also falling from 43 million tonnes to 39 million.

The figures were released by Nguyen Van Bien, Deputy General Director of the Vietnam National Coal and Mineral Industries Corporation (Vinacomin), on June 18. He attributed the decline to the slow growth in the world economy and low selling prices

Meanwhile, coal supply in China, whose production and consumption account for over 50 percent of the world market, is surpassing its demand, causing pressure for price decreases in the global coal market.

Bien said that after paying the current 10 percent export tax, Vietnam’s earnings from coal exports were only enough to cover its production expenses and it was unable to turn a profit. A further three percent rise in the tax, effective from July 7, is set to make things even more difficult for the country’s coal industry.

In the last half of 2013, Vinacomin will prioritise ensuring jobs for its employees, reducing output for some affiliates and discovering new mining areas to exploit.

It will also focus on stabilising production, ensuring financial safety and energy security and satisfying domestic demand.-

Hanoi modernizes post, telecom infrastructure

Ha Noi has decided to invest VND7,884 billion (US$375 million) in post and telecom development in a bid to secure a leading position in the field in Viet Nam in 2020.

The Ha Noi Department of Information and Communications on June 17 officially issued the Post and Telecom Development Plan by 2020 with a vision towards 2030.

Under the plan, by 2020, the local sector will diversify post and telecom services with good quality and a high level of safety and security to be able to compete with that of regional countries in terms of cost.

The city will apply modern technologies, maintain 3G infrastructure development, and invest in 4G technology for achieving the set goals.

By 2020, the plan aims to achieve the goals of 212 mobile subscribers per 100 people; 25 subscribers of internet broadband per 100 people; and 80-90% of urban areas and 50-60% of suburb areas using underground cables and lines.

To fulfill the above targets, six projects on digital development, underground wire, cable and technical pipeline works; application of new technologies; improvement of infrastructure for fixed phone, mobile and Internet networks will be implemented.

Steel sector needs healthier business climate

There is growing concern that underhanded and unhealthy competition by many businesses to clear their excessive stocks is damaging the steel industry.

The Vietnam Steel Association (VSA) says around 400,000 tonnes of steel were consumed in May, just equal to the previous month’s figure, leaving the inventory level at a record high of nearly 350,000 tonnes.

One reason cited by the VSA is that local businesses have yet to adjust production levels in line with market fluctuations.

Other reasons include low domestic consumption, sluggishness in the real estate market and modest public investment.

In addition, there are risks inherent in the possibility of steel product on which may reach 1.5 million tonne this year.

Against all odds, steel businesses are planning to suspend or cut their production down to 50 percent to redress the balance between supply and demand.

The VSA says, more 30 steel producers have already decided to lower selling prices, but it warns consumers to be careful about the quality of steel on the domestic market in the face of businesses against cheap products imported from China.

The VSA has asked its members to help control market prices by reducing stocks and expanding export business.

Domestic steel producers, it says, must meet national quality for the state standards in the fossil place want to compete against imported steel successfully.

Last but not least is the urgent need to reduce the value added tax rate from 10 percent to 5 percent, and interest rates on bank loans, as part of the incentive policies.

Vietnam to host Asia-Pacific Conference APK 2014

The German Industry and Commerce Vietnam (GIC) has announced that the Asia-Pacific Conference of German businesses (APK) 2014 will be held in Ho Chi Minh City from November 21-22 next year.

This is an important meeting for the German business network, aiming to promote trade exchanges between businesses, economic experts and politicians in the region.

GIC said that Vietnam’s strong economic growth in recent years has been the “highlight” of German economists. The country’s total exports to Germany increased by 9.9 percent in 2012, while German imports to Vietnam rose by 27.7 percent in the same year.

As an important partner of Germany in the region, Vietnam will host the APK 2014 for the first time.

The event offers an opportunity for German businesses to seek investment opportunities in Vietnam and share experiences with domestic businesses, in addition to boosting bilateral trade between the two countries.

HCM City to host Shape the World Conference

The fifth Shape the World Conference themed “What is Vietnam’s Brand of Leadership” will open in Ho Chi Minh City on August 15.

At the conference, business leaders and representatives from State agencies and social organisations will discuss, and propose measures for businesses to overcome challenges in the context of economic fluctuations as well as raising Vietnamese businesses’ prestige in the international arena.

Economic experts and leaders of big domestic and foreign economic groups will present issues related to business performance, such as the role of building trademarks and initiatives and practical solutions for human resource development.

The conference will focus on developing strategies and customs to promote cooperation and joint ownership rights for Vietnamese small-and-medium-sized enterprises, renovating management methods and business approaches and narrowing gaps between producers and customers.

Lawrence Chong, General Director of the Singapore Consulus, said since 2005, the Shape the World Conference has been a platform for Asian and Vietnamese business leaders to restructure their business models and seek suitable partners to achieve sustainable profits.

Smuggled sturgeon from China under scrutiny

After media reports of sturgeon being smuggled from China into Vietnam and further transported from North to South by air, the Ministry of Agriculture and Rural Development ordered its subdivisions to tighten control over smuggling and its transportation methods.

Loopholes in quarantine procedures have been overlooked and smuggling of sturgeon into Vietnam through the Chinese borders has been on for a long time.

Nguyen Nhat Huy, a sturgeon agent in Ho Chi Minh City, said that the City is an important market for the fish. He sells 10 tons of sturgeon a month, but after media reported adversely, the volume dropped with customers doubting the origin of the fish.

Le Anh Duc, Chairman of Vietnam Sturgeon Group, said to main markets in Ho Chi Minh City, Hanoi and some Southern cities, traders have to transport by air; hence quarantine stations in airports will prove effective.

Local breeders don’t feel threatened by Chinese sturgeon as long as there are clear markings of origin on the fish.

Many furniture stores shut down

Quite a few furniture stores in HCMC have been shut down or inactive recently, with Klassy Ba Chieu Furniture Supermarket the most prominent case.

Located at the corner of Bach Dang and Le Quang Dinh streets in Binh Thanh District, Klassy Ba Chieu is part of the Klassy furniture supermarket chain run by Thuy Duong Investment JSC. The 2,000-square-meter store was opened in 2011.

On the first days after it had been shut down, a sign reading “Close for Repair” could be seen in front of the supermarket. Customers were instructed to go to a supermarket of the same chain on Huynh Tan Phat Street in District 7 instead. A few days later, the sign was removed.

Prior to its shutdown in early June, the supermarket had been struggling with a meager number of customers although it had constantly launched sales promotion programs.

Vu Tien Thap, CEO of D’furni, a furniture wholesaler, said Klassy Ba Chieu was not the only furniture outlet that had been closed. Stores of a smaller scale, which are sales agents of his company, have reached the same end because constant losses and poor sales made them no longer able to pay land rent and wages.

“In 2012, our sales for regular customers, namely sales agents and furniture retailers, dropped by 40% over the preceding year. The situation has been even worse since the beginning of 2013,” he said.

Steelmakers object to power price discrimination

Steelmakers have voiced their concerns about the possibility of the power price for them being hiked higher than the common tariff this year, and blasted authorities for the inconsistent policies towards them.

Tran Tuan Duong, general director of Hoa Phat Group, a strong steelmaker known for various quality steel products, told the Daily that slapping a higher power tariff on steel makers than other local industries is very inappropriate.

“What is inappropriate is that previously incentives were offered for steelmakers, but now comes the discrimination. The Government has offered special incentives for steelmakers since 2006,” he said.

As covered on the Daily, the Ministry of Industry and Trade has prepared a draft rule raising power prices for the cement and steel industries effective from early next month.

“Under Decree 108 of the Government effective from 2006, steel production is subject to special incentives,” Duong said.

The Vietnam Steel Association has also lodged its protest against the tentative power price hike.

In a petition sent last Friday to Deputy Prime Minister Hoang Trung Hai, the Government’s Office and the Ministry of Industry and Trade, the association urged the authorities to rethink the power price hike scheme.

Over the past few years, given the incentives offered by the Government, many enterprises have invested in furnaces to produce steel billets in an effort to lessen the country’s reliance on steel imports and to stabilize domestic steel prices. Currently, production of steel billet at seven million tons is sufficient for local demand, according to the association.

Dinh Huy Tam, general secretary of the association, also blasted the abrupt changes in the country’s investment policies toward steel production.

“Inconsistent policies towards the steel industry – changing from incentives previously to discrimination now – will surely discourage investors, especially large-scale projects,” he said.

In its aforesaid petition, the association said it advocated for the full power price instead of a subsidized tariff for the steel industry, but disagreed with the discrimination. With the full power price to be introduced, only strong steelmakers will survive while ailing ones should be eliminated, according to the association.

If the power sector has sufficient reasons to raise power prices, it will earn the steel association’s support, but the steel industry must be given equal treatment like other industries, the association said.

The association also warned that the imposition of a higher power price on steelmakers will make local companies less competitive, especially at a time steel products from China and other neighboring countries are still threatening local production.

The association also noted that the licensing of so many steel projects, especially those using backward technologies, has placed a heavy burden on the electricity industry. However, the authorities are to blame for this situation, not the investors themselves, especially those using advanced technologies.

Vietnam has over the past few years imported around US$7-8 billion worth of steel products and steel materials per annum, and exported some US$2 billion worth. If the power price is to be raised as suggested, local steelmakers will see their competitiveness eroded and cannot export products, said the association.

Issuing banks shifting to chip cards amid security concerns

Many issuing banks have been joining the chorus of introducing chip cards and at the same time walking away from magnetic stripe cards to improve security amid growing card information thefts.

Le Huynh Ha, head of the ATM service department of the Bank for Foreign Trade of Vietnam (Vietcombank), said the bank has changed all international magnetic cards into chip ones to protect cardholders as well as itself.

The chip card contains encrypted information only, which can increase security for users. Therefore, chip cards are the safest choice for cardholders at the moment.

A source from MasterCard said this international card organization is encouraging local banks to switch to chip cards and laid out a roadmap for conversion to strengthen information security.

Most new card issuers use chip cards. However, many large banks that entered the card market in the early stages have shown some hesitation to join the process as it will cost a lot of money to replace bulk volumes of magnetic cards, the representative said.

Ha of Vietcombank said card change should go hand in hand with the upgrade of old automated teller machines (ATMs). Some 10% of ATMs in the banking system cannot read chip cards while it is costly to buy new machines.

However, the MasterCard source said that despite the big initial spending, banks using chip cards would be able to avoid compensations for card information thefts while making their card services more reliable.

Many banks in Vietnam have developed MasterCard payment chip cards such as HSBC, Citibank, Eximbank, Vietcombank, VIB, VPBank, Maritime Bank and SCB.

A card expert said many card-related crimes had been detected although banks have applied various preventive measures such as hidden logos, stamps and one-time code (OTC). It is risky to transact with online stores since there are websites designed to steal card information only.

Ha said customers should choose reliable websites such as Amazon to minimize information risks.

Holders of international payment cards are more vulnerable than those of domestic cards that have a limited overdraft and whose stolen information can be easily detected at home.

Up to now, only some banks have bought insurance for credit cards. In fact, just a few credit card crimes have been reported so far, he said.

More Indonesian SOEs to invest in Vietnam

More Indonesian state-owned enterprises (SOEs) will come to Vietnam in the near future to make investment and establish partnerships with local businesses, said Mayerfas, the Indonesian Ambassador to Vietnam.

In the last two years, many Indonesian firms, including a lot of state-owned ones, have visited Vietnam to look for investment opportunities.

Last year, cement producer PT Semen Gresik acquired a stake in Thang Long Cement Company, making it the first Indonesian SOE to invest abroad.

Some Indonesian SOEs are in talks over investment in Vietnam, like pharmaceutical company Kimia Farma, electronics firm LEN and Bank Mandiri, one of the largest banks in Indonesia, said Mayerfas on the sidelines of the Indonesia-Vietnam Trade, Tourism and Investment Forum in HCMC on Thursday.

At the event Indonesian state-owned telecom firm PT Telekomunikasi Indonesia International (Telin) signed a strategic partnership agreement on telecom infrastructure with CMC Telecom Infrastructure of Vietnam.

Indonesian investors show an interest in industrial processing-manufacturing, construction, pharmaceuticals, agro-processing, food processing, cement, oil and gas, tourism and education.

Meanwhile, the areas in which Vietnam can find many opportunities for investment in Indonesia are mining, energy, fishing, agriculture and tourism.

Le Phuoc Vu, chairman of Hoa Sen Group, said the board of Hoa Sen had passed a resolution on conducting a pre-feasibility study for a steel project in Indonesia. The group is considering the form and the scale of investment and intends to carry out the project within the next 1-2 years.

With a population of 260 million and high economic growth of 6-7% a year, Indonesia is a large market with many investment chances for Vietnamese businesses, including Hoa Sen, Vu said.

The Indonesia-Vietnam Trade, Tourism and Investment Forum is being held at the Sheraton Saigon Hotel with the theme “Indonesia-Vietnam: Partnership for Prosperity”. The two-day event will wrap up today.

The forum is organized by the Embassy of Indonesia in Hanoi, the Consulate General of Indonesia in HCMC and the Vietnam Chamber of Commerce and Industry. It offers a chance for Vietnamese and Indonesian businesses to exchange information and seek partners.

As of May 31, Indonesia had 35 valid projects in Vietnam, with total registered capital of US$285.2 million, ranking 27th among 101 nations with investment in Vietnam, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

Indonesia had invested in 11 of the 21 sectors in Vietnam, focusing on industrial processing and manufacturing with 16 projects worth US$112.17 million, followed by accommodation and catering services with US$65.89 million. The healthcare sector had received a project with total investment of US$52.6 million.

Meanwhile, Vietnam has seven ongoing projects in Indonesia with total investment of US$106.7 million, mainly in the fields of mining, oil and gas, and communication. The project owners are Vietnamese giants like Vietnam Oil and Gas Group (PVN) and Vietnam Multimedia Corporation (VTC).

Indonesia is currently the fourth largest trade partner of Vietnam in Southeast Asia. The bilateral trade turnover recorded stable growth in the past few years, rising 84% from US$2.5 billion in 2008 to US$4.6 billion in 2012.

Indonesia is boosting export of items that are major export items of Vietnam, except rice and pork, including textile-garment, footwear-shoe, mechanical products, electrical and electronic products, wooden products, handicrafts, seafood, plastic products and coffee.

US$3.9-million program to help SMEs boost exports

A total of US$3.9 million will be spent on a program aimed at improving the export competitiveness of Vietnamese small and medium enterprises (SMEs) through the system of local trade promotion centers.

The program will be implemented from 2013 to 2017, with US$3.32 million financed by the Swiss Government and US$570,570, or 14.6% of its total budget, provided by the Vietnam Trade Promotion Agency (Vietrade) and local organizations.

Do Thang Hai, director general of Vietrade, an agency under the Ministry of Industry and Trade, said SMEs are making an increasingly big contribution to Vietnam’s economy. However, their contribution to export is still modest because of their limited ability to compete, satisfy quality standards and access business support services, he said at the launching ceremony of the program on Thursday.

Therefore, the program aims to enhance the contribution of SMEs to the export turnover of the priority sectors. To do so, the program will assist SMEs in accessing support services in their regions and localities.

In addition, the program sets three objectives: to increase the capacity of local trade promotion centers and other organizations with the same function; to establish a national export council; and to improve the performance of Vietrade, the government agency in charge of trade promotion on a national scale.

In the first phase of the program, handicrafts, fruits and vegetables are given the priority to receive support in value chain development and export.

This program is a continuation of the project “Support for Trade Promotion and Export Development in Vietnam – VIE/61/94” with financial aid from the Swiss government, focusing on strengthening Vietrade and a number of trade associations, said Grigitte Bruhin at the Embassy of Switzerland.

The Swiss government has assisted Vietnam in sustainable economic development since 1993.

Under the new national strategy for Vietnam in the period 2013-2016, Switzerland reaffirms its commitment to long-term support for Vietnam to achieve inclusive and sustainable growth. Results will be reflected through higher quality of life and contribution to the agenda of economic reform.

HCM City to focus on safe vegetables

The municipal agriculture department plans to expand application of Vietnamese Good Agricultural Practices (VietGap) standards to 1,730ha, or 50 per cent of the city’s vegetable gardens, by 2015.

Le Minh Dung, deputy director of the city’s Department of Agriculture and Rural Development, told a forum organised recently in HCM City that by then, 30 per cent of vegetable gardens in the city are expected to have VietGap certification.

All vegetables and fruits sold in the city markets must comply with hygiene and food safety regulations by 2015, Dung said.

He said that as of last year, the city had 102 communes and wards producing vegetables with a total cultivation area of 3,630ha, an increase of 150ha from 2010.

Over the past several years, the city has issued policies to encourage application of safe production methods like VietGAP in growing vegetables as part of the programme to restructure its agricultural sector, he said.

However, as of today, just 145.7ha of vegetable gardens have VietGap certification.

The city has encountered many difficulties in growing vegetables following VietGap standards due to small-scale production and the lack of capital to upgrade infrastructure, which is required under the national standard, he said.

Besides, there are no stable outlets for VietGAP produce and the difference between prices of normal and VietGAP-certified vegetables is not high enough to encourage farmers to apply the national standard, he said.

The lack of a logo for VietGap certified vegetables has made it difficult for consumers to identify the safer vegetables from normal ones, he added.

Dung said “the city plans to take many measures to encourage vegetable cultivation with safe production methods.”

The city People’s Committee last March approved a zoning plan for safe vegetable production until 2020, so relevant agencies should quickly implement it, he said.

“The city will step up research to produce vegetable seedlings with high productivity that can grow well locally. It will also focus more on technology transfer, establish safe vegetable production models, especially cultivation of organic vegetables, to raise production efficiency and incomes for farmers.”

Strengthening trade promotion, providing farmers with market information in a timely manner and supporting them in building safe vegetable trademarks are among other measures that the city will take in the coming time, Dung said.

He said the city will step up food safety inspections of fruits and vegetables, and co-ordinate with other provinces and cities to boost production and sales of safe vegetables.

Vo Ngoc Anh of the HCM City Agriculture Extension Centre said that they would organise more training courses to instruct farmers on application of GAP in vegetable production.

Dung suggested that the Government issue a decree on quality checks of farm produce at wholesale markets and quickly come up with a logo for VietGap to help consumers choose the safer when they buy vegetables.

Ho Tram resort gambles that it can woo the public

The opening of long-awaited and much-touted Ho Tram Strip, the first casino integrated resort in Vietnam, has come a step closer.

Asian Coast Development (Canada) Limited (ACDL) last week announced a summer opening date after a delay obtaining an amended investment certificate from the government.

The project owner, through its subsidiary Ho Tram Project Company, said the Ba Ria-Vung Tau province resort would be open on July 26, 2013 under the name of “The Grand – Ho Tram Strip.”

“Extraordinary resort properties should be identified by a name and brand that reflect their quality, stature and uniqueness. After a long discussion process with stakeholders, branding experts and all departments within our organisation, we found ourselves coming full circle – all the way back to the first name that was put on the table: The Grand,” said John Webb, The Grand – Ho Tram Strip’s vice president of hospitality.

The announcement comes three months after MGM Resorts International withdrew from a contract with ACDL for managing this first integrated resort, which was initially named MGM Grand Ho Tram. This move also comes despite an internal dispute involving a lawsuit between the company’s high-ranking executives, showing ACDL’s determination to launch the project.

“We could not be more excited,” said Ho Tram Project Company general director Colin Pine.

If things go according to plan, Vietnam will have the first casino integrated resort that which could enhance the nation’s tourism appeal and bring thousands of visitors to the country.

The first phase of The Grand Ho Tram Strip includes 541 five-star rooms, gaming facilities, meeting and convention space, ten bars and restaurants, a spa, teens’ and children’s areas, three swimming pools and luxury retail shops.

Last October the developer also commenced the construction of the second phase of The Grand Ho Tram Strip, which will include a second tower of 559 rooms and additional leisure facilities. In addition, The Bluffs Championship Golf Course designed by Greg Norman is under construction.

Apart from The Grand Ho Tram Strip, another similar sized integrated resort operated by Pinnacle Entertainment Group and three other five star resorts will be built in the future.

US airport developer to touch down in Cam Ranh

Cam Ranh airport is expected to be United States-based ADC-HAS Airports’ maiden project in Vietnam.

In a recent meeting with the Ministry of Planning and Investment, an ADC-HAS Airports representative said the firm was working with Airports Corporation of Vietnam to set up a joint venture to expand the central Khanh Hoa province airport, a gateway to the famous Nha Trang coastal tourism destination.

ADC-HAS Airports is a consortium between HAS Development Corporation, the development affiliate of the Houston Airport System, Airport Development Corporation of Canada, and OMERS Strategic Investments. The firm has also been developing and operating Quito airport in Ecuador, San Jose airport and Liberia airport in Costa Rica.

The firm started studying Vietnam aviation infrastructure investment options in 2010, with an initial proposal to invest into seven airports in central region under public-private partnership form.

“We hope this will be our first project in Vietnam, that would set foundation for the expansion to other projects,” said the representative.

At this time, ADC-HAS Airports gained support from Overseas Private Investment Corporation (OPIC), a US government development finance institution, for funding its investment in Vietnam.

An OPIC representative, who accompanied ADC-HAS Airports to the Ministry of Planning and Investment, said OPIC could finance $250 million for ADC-HAS Airports’ project in Vietnam if the project was effective and the financial institution wanted to expand its business in Vietnam through funding other ADC-HAS Airports projects. At this time, OPIC is funding two ADC-HAS Airports’ projects in Ecuador and Costa Rica.

Vietnam has 24 airports and most need to be upgraded to meet growing air transportation demand, a source of great potential to foreign investors.

Apart from ADC-HAS Airports, another United States’ airport investor Airis Holdings also plans to invest into Danang airport and Noi Bai airport in Hanoi under the public-private partnership form. Korean JOINUS Company Ltd is studying to build an international airport in northern Quang Ninh province’s Van Don district.

Credit growth inches up by 2.98 percent

Vietnam’s macro-economy has been kept on the right track this year thanks to a wide range of flexible credit solutions and proper monetary policies implemented by the State Bank of Vietnam.

The bank reports that by the end of May this year, credit growth had increased by 2.98 percent compared to the same period last year. The credit structure is focused on manufacturing, agriculture and export activities.

Meanwhile, the country’s exchange rates and foreign currency market in the reviewed period have been stabilised with improved liquidity. As of June 12, the average exchange rate at commercial banks was 20,828 VND to 1 USD. Dollarization has also reduced.

To reach the 2013 target, the bank will continue monitoring market developments in the last six months of the year so as to employ monetary policies in a timely and proper manner, controlling inflation while ensuring a stable macro-economy.

The bank is currently coordinating with other ministries and agencies to evaluate domestic business performance, especially the state of product consumption and difficulties in credit access that enterprises are dealing with.

The assessment will serve as a basis for the bank to design and conduct appropriate measures relating to credit and interest rate management for the benefit of local companies.

Small firms need more support

The Government should review its support and preferences for small and medium enterprises (SMEs) as they didn’t appear to be having the required effect, the Ministry of Planning and Investment has said.

Policies to support SMEs included preferential encouragement in finance terms, credit, production, market expansion, promotion, management, information and advice.

Ministries, localities and international donors also provided businesses development programmes, the Department of Business Development said, adding that the preferences, however, had not been effective.

A General Statistics Office survey in April showed that 90 per cent of more than 10,000 businesses surveyed had not been able to access preferential loans.

In a department survey, more than 60 per cent of SMEs did not know about support policies for technology renovation while 35.5 per cent knew of the policies but not in detail.

The department said one of the reasons was that there was no committee responsible for implementing the policies.

Deputy Minister Dang Huy Dong agreed policies had not met SME requirements.

Le Minh Hien, head of northern Hai Duong Province’s Business Registration Office, said SMEs needed better legal frameworks and administrative reforms, not money.

Nguyen Ngoc Han, director of northern Yen Bai Province’s Department of Planning and Investment agreed. He said businesses wanted mechanisms and administrative procedures to accelerate their projects.

Han said authorities should acknowledge the real needs of enterprises to provide effective support in the context of a limited State budget.

The ministry said the country had 375,000 businesses of which 97.5 per cent were SMEs.

The businesses had seen rapid development since 2000 when the Law on Business came into effect.

SMEs are providing jobs to 5 million labourers, 5.2 times higher than 10 years ago. Their turnover had increased 17.2 times in 10 years.

Low-income buyers shun social housing apartments

Commercially built apartments have become more popular with low-income buyers than social housing, as prices of the former have dropped substantially in recent years, according to real estate experts.

Many commercial, or non-government-funded, housing projects in Ha Noi and HCM City have lowered prices to VND10-14 million (US$476-667) per square metre, nearly equal to social housing costs.

Even though some developers of social housing have benefited from the Government’s preferential policies, the price of those apartments remains relatively high.

Apartments in the Tay Nam Linh Dam social housing project in Ha Noi, for example, sell for VND12 million ($571) per square metre.

Dr Pham Sy Liem, general secretary of the Viet Nam Construction Association, acknowledged that there was a significant price difference between commercial and social housing apartments.

He explained that the price of privately built apartments was based on market supply and demand, while social housing depended more on construction costs.

In addition, even though developers of social housing enjoy benefits such as lower taxes and interest rates on bank loans, and are not obliged to complete procedures changes in land-use, they are constrained by State policies and regulations.

Nguyen Dinh Lam, deputy director of the Dat Xanh Real Estate Company, explained that social-housing developers were not allowed to adjust their product prices based on market fluctuations in demand and supply.

In addition, buyers of apartments in social housing projects must meet strict conditions, which limits sales, said Tran Hong, deputy director of the Social Housing Development Company in Ha Noi.

A representative of a real estate company in HCM City, who declined to be named, also pointed out that social-housing apartments were often large in size and priced too high for low-income earners.

He proposed that the construction ministry build social housing units of less than 45sq.m each to meet demand.

Senior economic expert Nguyen Minh Phong said that social housing apartments would eventually become more attractive to buyers after several Government policies became effective.

He said the Government had approved plans to lower income taxes, corporate taxes and value-added taxes. Land-clearance costs were also expected to drop.

As a result, construction costs for social housing projects would drop.

Van Muon, deputy director of the Thien Co Real Estate transaction floor, said the competition in the market between the social-housing and private property segments would ultimately help cut costs, and thereby lower prices to an affordable level for lower-income apartment buyers.

U.S. dollars up 0.9% against early this year

The average buying U.S. dollar price quoted at commercial banks has posted a growth of some 0.9% versus early this year, says a six-month operation review of the State Bank of Vietnam (SBV).

SBV in the report said the U.S. dollar price has bounced back again since April, mainly due to higher trade deficit and psychological factors. The central bank has intervened into the market lately by boosting dollar sales properly.

A well-informed source told the Daily that the U.S. dollar price hike is partly due to the big gap between dong and foreign currency interest rates as recorded earlier, prompting many banks to convert foreign currency into dong for lending then. And now when the rate gap has been narrowed down, the banks have rushed to buy foreign currency to offset their short position.

SBV has launched sales of U.S. dollars three times this year, helping keep the short position at local banks at less than some 5%. However, the interventions are still underway now, with the exchange rate expected to be stable again at the end of this week.

A branch director of a big lender in HCMC said multiple export companies now have asked to sell the greenback to lenders at a negotiable rate higher than the ceiling level and the latter also agree with such proposals as local demand is running high at present.

The buying U.S. dollar price quoted at commercial banks has amounted to VND21,035 to the dollar since late last week, only VND1 lower than the selling price.

On unofficial markets, the buying and selling U.S. dollar prices stayed at VND21,240-21,300 to the dollar on Monday afternoon.

The source also noted that although the central bank plans to allow for an exchange rate increase of 2-3% this year, now is not the right time to do so. Supply and demand for the green back is still volatile but the situation is not suitable for dong depreciation as local supply is big enough for market interventions from time to time.

As per the report, the central bank in the next six months will continue to closely monitor foreign exchange rate movements, monetary market and foreign currency, and regularly review the international balance of payments to make assessments on forex supply and demand and manage exchange rate properly.

At the same time, the central bank will combine exchange rate and interest rate management to encourage dong holdings and mitigate U.S. dollar holdings at home.

Foreign companies to join manufacturing trade show

More than 300 exhibitors from 21 countries and territories will showcase their latest products and services at Vietnam’s leading manufacturing solutions trade show early next month.

The expo, co-organised by Singapore Exhibition Services Pte-Ltd and VCCI Exhibition Services Co.Ltd, will be held from July 2-5 at the Saigon Exhibition Convention Centre.

Eleven countries and territories, including Japan, France, Germany, Italy, the Republic of Korea, Singapore, Thailand and Chinese Taiwan will have multiple pavilions at the MTA (Metrology, Tools and Automation) Vietnam 2013 show.

The show will focus on precision engineering, machine tools and metal working, organizers said.

They said the international component of MTA Vietnam 2013 is very high, at 81 percent. Major brand names in many areas will be present, they added.

MAT Vietnam 2013 will also feature a series of exciting competitions and seminars, including Vietnam Welding Skill, Vietnam’s Welding Technology seminars – Today And the Future Vision; Using management Tools to Improve Quality in manufacturing Industries and New Approaches to Design machining manufacturing.

India being Vietnam’s 10th largest trade partner

Two-way trade turnover between Vietnam and India reached US$2.246 billion in the first five months of this year, up 47.1 percent against the same period last year.

According to the Vietnam Trade Office in India, Vietnam’s exports to India hit US$1.021 billion, (up 72.6%) and its imports were estimated at US$1.225 billion, (up 31 %), bringing the country’s trade deficit down by 40.6 percent to US$203.8 billion.

Five key items exported to India were telephones and components (up 323% to US$511 million), computers, electronic products and components (up 58.8% to US$79.7 million), machinery, equipment and tools (down 29.8% to US$69.5 million), natural rubber (down 12.8% to US$40.5 million) and coffee (up 39.7% to US$35.4 million).

Five key products imported from India were animal food and materials (up 37.3% to US$237.7 million), corn (up 19.9% to US$202 million), cotton (up 109% to US$115 million), steel (up 353% to US$104 million) and pharmaceuticals (up 4.4% to US$97.5 million).

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

BUSINESS IN BRIEF 24/6