BUSINESS IN BRIEF 30/10

Nokia inaugurates US$300 mln plant in Vietnam

The world’s leading mobile phone manufacturer inaugurated a US$300 million factory in northern Bac Ninh province on October 28 after one and a half years of construction, aiming to boost Vietnam’s capacity in phone production.

Addressing the inauguration ceremony, Deputy Minister of Planning and Investment Dang Huy Dong said the high-tech project of Nokia contributes greatly to the bustling development of the country’s technology sector.

Stephen Elop, Executive Vice President of Nokia Devices and Services, said Nokia will continue its investment in developing the Vietnamese labour force, with a view to raising the workforce’s competitive capacity in the global market.

Covering a total area of 65,400 square metres, the factory initially manufactures the Nokia 105, shipping 95% of its product abroad.

Seafood surge nets exporters $5.37b in first 10 months of 2013

In October, Viet Nam exported US$689 million worth of seafood products, bringing its total seafood export turnover over the first 10 months to around $5.37 billion, up 6 per cent year-on-year, according the Ministry of Agriculture and Rural Development.

During the reviewed period, the US remained the largest importer of Vietnamese seafood, accounting for 21.7 per cent of the country’s total export value.

Meanwhile, exports to other big markets such as China, Canada and Thailand have also seen encouraging growth at 55.3 per cent, 21.6 per cent and 10.6 per cent, respectively.

However, the period saw decreases in some export markets such as Australia, South Korea and Italy.

In January-October period, the domestic fisheries sector produce over 2.37 million tonnes, marking a modest rise of 3.5 per cent, the ministry said.

The industry will produce 7 million tonnes of seafood by 2020, according to a master plan ratified by the Prime Minister in August.

Under the plan, the country’s seafood exports are projected to rake in $11 billion by 2020 with an average annual growth rate between 7 and 8 per cent. Aquaculture is expected to make up 65 per cent of the output.

The plan lays out ambitions to industrialise the sector by 2020, with a view to modernise the industry by 2030, while staying committed to sustainable and competitive development to integrate into the global economy.

The sector’s total output is expected to reach 9 million tonnes between 2020 and 2030, 70 per cent of which will come from aquaculture.

Export turnover is also projected to climb to $20 billion within the same time frame.

Banks struggle to meet credit target

The economy is heading to the year-end season and commercial banks are struggling to boost capital demand from enterprises that could help them to meet their credit sales targets.

The banks have slashed lending rates under the central bank’s instruction; a policy designed to ease pressures on overbearing loan repayment costs. And have advertised promotional activities in order to drum up more business.

Businesses can now get loans at about 8-9 per cent for the short term – compared to more than 20 per cent in 2011. While others offered nil interest incentives to attract borrowers. HDBank, for instance, offers loans at zero interest for the first month.

However, with the year-end season looming and the economic slump still dampening the economic horizon they are facing a double-whammy to sales targets that may prove hard to avoid as the final quarter wraps up.

Also, in order to tackle the chronic credit demand in the fourth quarter and Tet, several banks such as NamA Bank, OCB, HDBank, SeABank have been licensed to expand the lending cap up to 30 per cent.

A representative of a HCM City-based bank said that: “There is no where to run. Our business must guarantee a minimum benefit which comes from the credit business. This route puts pressure on our team to disburse capital to market members. We must meet our credit growth target.”

Nguyen Hoang Minh, director of the State Bank of Viet Nam’s HCM City branch said that credit growth would struggle to exceed 10 per cent, and would fall below the anticipated rate of 12 per cent.

Being led by such a target, some banks are on the way to expanding into unsecured loans, historically a high-risk venture.

Banking staff have also been approaching potential clients and have conducted one-on-one consultations to encourage them to take out further bank loans.

However this was not as easy as it sounds, Industry insiders said it was still not easy for companies to afford to expand in the current market turmoil, or for small-and medium-sized firms who did not have sufficient assets to put up as collateral.

Cao Sy Kiem, chairman of the Viet Nam Small and Medium Sized Enterprises Association, said that although capital demand from the business community was always higher in the final quarter, the capital flow was still at a standstill due to still-high interest rates.

Economist Tran Du Lich said that borrowing costs were not the only problem. Many enterprises were getting stuck in the current context of weak purchasing power, increasing inventory levels, and growing bad debts.

Analysis also warned that banks in their turn must be very cautious in new loan contracts to avoid non-performing loans.

India eyes Viet Nam business partnership

Trade co-operation has become an important mainstay in the Viet Nam – India bilateral relationship, with both being fast-growing economies in Asia.

The statement was made by first secretary of the Indian Embassy in Viet Nam John H. Ruolngul at a conference in northern Ha Giang Province on Thursday.

He said that Viet Nam was regarded as an important pillar in India’s “Look East” Policy and its government has always attached great importance to accelerating co-ordination with this Southeast Asian country.

Meanwhile, India remained one of Viet Nam’s top 10 trade partners, he noted during the forum on the two countries’ trade potentials.

Also at the event, domestic enterprises from 28 northern provinces shared co-operation opportunities with Indian partners while information on Indian businesses who wished to invest in Viet Nam was also provided.

Two-way trade had significantly increased in recent years. Trade reached US$3.94 billion over the past nine months of this year, up 39 per cent year-on-year or nearly equivalent to the figure for the whole of 2012.

During the January-September period, Viet Nam exported $1.84 billion worth of goods to India, up 49.6 per cent, while its imports from India reached $2.1 billion, up 31.2 per cent.

Among Viet Nam’s key export items to the market are agricultural goods, wood and wooden goods, chemicals, seafood, textile and garment and handicrafts.

The Vietnamese Trade Office in India predicted that bilateral trade turnover would surpass $5 billion by year’s end, and $7 billion by 2015.

In terms of investment, as of September, India had 73 valid investment projects in Viet Nam with capital totalling over $253 million, ranking 28th among 92 countries and territories investing in the country.

SBV debt pledge fails to rally shares

Shares failed to retain earlier gains yesterday on both stock exchanges despite the State Bank of Viet Nam’s (SBV) latest move to curb bad debts.

The Dai Doan Ket newspaper quoted State Bank Chief Inspector Nguyen Huu Nghia as saying the bank would bring the bad debt ratio in the system down to 3 per cent by 2015 and accelerate financial restructuring plans.

However, Nghia also admitted that SBV had identified more weak banks this year.

He said the restructure of these banks was complicated due to the abundance of interested parties involved.

“The process will be time-consuming and slower than expected,” he told the newspaper.

On the macroeconomic side, the real estate market had not recovered, while the manufacturing sector remained bogged down with slow consumption and a low capacity for paying debts.

“Financial institutions will still face a tough time ahead in handling non-performing loans,” Nghia said.

The inspector’s comments did not overly influence investors, with the benchmark VN-Index on the HCM City Stock Exchange losing 0.08 per cent to 500.75 points.

Trading value declined around 23 per cent compared to Thursday’s level, standing at VND1 trillion (US$47.1 million) as trading volume reached nearly 74.2 million shares.

The VN30, tracking HCM City’s top 30 shares, also slid 0.26 per cent to 560.57 points. Among the shares, losers outnumbered gainers by 12 to 7.

Yesterday, the exchange announced the Bank for Investment and Development of Viet Nam (BIDV) had filed for listing more than 2.8 million shares, coded BID.

BIDV conducted an initial public offering in December 2011.

On the Ha Noi Stock Exchange, the HNX-Index finished the day at 61.82 points, falling more than 0.1 per cent.

The value of trades reached only 70.8 per cent of Thursday’s session, totalling VND273.6 billion ($12.9 million) on a volume of almost 32.4 million shares.

The HNX30 was the only index to add value yesterday, edging up 0.1 per cent to close at 114.99 points.

Foreign investors maintained their buying trend, concluding yesterday’s session as net sellers by a margin of VND59.4 billion ($2.8 million).

Bond funds stumble in slow gov’t market

Domestic bond funds are struggling this year, with the Government’s bond market showing no signs of revival.

Only MB Capital Viet Nam Bond Fund (MBBF) of the three domestic debt funds reported notable growth in the first seven months of the year, rising 5.9 per cent, equivalent to 10.1 per cent annual growth.

The two remaining funds reported low growth, even lower than the banking interest rate.

According to Dau Tu Chung Khoan, Vinawealth’s VFF fund in the six-month period to October 8 increased by only 2.36 per cent – equivalent to an annual growth rate of 4.35 per cent.

Vinafund’s VFB fund saw modest growth of 0.7 per cent after four months of operations – equal to an annual rate of only 2.1 per cent.

The funds’ growth rates were far lower than the VN-Index, which has jumped 20 per cent since the beginning of the year, while equity funds have leaped by up to 35 per cent.

Low net asset value growth has led to investor caution, and some have withdrawn capital from the funds.

Statistics showed that the MBFF managed to raise only 375,000 bond certificates in comparison with its initial 5.4 million certificates. VFB’s certificates fell by 1.5 million compared to the initial figure of 9.8 million.

Difficulties were forecast to continue in the bond market for the rest of the year, a fund director said, adding that there was little chance for further interest rate cuts before 2014, so the Government bond market would remain unappealing.

Firms aim to improve investor relationships

Vietnamese companies have been urged to enhance their investor relations (IR) to improve share value and liquidity while consolidating their image and position in the market.

Ngo Van Minh, responsible for IR at MB Securities, has said that relations are a bridge connecting enterprises, investors and stock market participants, providing each with relevant business information.

Currently, information from listed companies in Viet Nam still lacks transparency, which is discouraging investors. This means IR is even more indispensable, especially with the gloomy stock market backdrop, he said.

However, Minh acknowledged that so far most companies had failed to take the initiative in providing information to stakeholders. In Viet Nam, stocks of many enterprises have traded below their book value in major part due to bad IR performance, Minh said, stressing that IR would help improve the companies’ brand names.

Minh said that IR was a long-term process that would not produce immediate results, pointing out that the efficiency of IR will depend on stock value news, frequent investor visits, timely press releases and a larger capital mobilisation capacity.

According to Vice Chairwoman of PetroVietnam Fertilisers and Chemicals Company (DPM) Nguyen Thi Hien, foreign investors were showing increasing interests in DPM shares recently thanks to the company’s enhancement of its investor relations.

Hien said that information management and exchange in IR were important factors ensuring efficiency and transparency and in turn boosting investors’ confidence.

Viet Nam’s aviation industry takes off

Viet Nam will become one of the third-largest aviation markets in the world, according to Singapore’s Lianhe Zaobao (United Morning) newspaper.

Viet Nam’s demand for air travel achieved double-digit growth in 2013, creating opportunities for major aircraft manufacturers such as Boeing and Airbus.

The International Air Transport Association (IATA) forecast that by 2014 Viet Nam would become the world’s third-fastest growing market for international passengers and freight after China and Brazil.

The association predicted the Vietnamese aviation market would transport 34 to 36 million passengers and 850,000 to 930,000 tonnes of cargo by 2015 and 52 to 59 million passengers and 1.4-1.6 million tonnes of cargo by 2019.

FPT reports reveal soaring Q3 revenue

In the third quarter, software giant FPT recorded VND7,547 billion (US$359 million) in revenue, up 23 per cent against last year’s third quarter.

Its before-tax profit reached VND563 billion in the third quarter, a year-on-year increase of 2 per cent.

After nine months, FPT’s net revenue reached VND20,030 billion ($953 million), up 14 per cent over the same period last year.

Before-tax profits reached VND1,839 billion ($87 million), equivalent to 102 per cent of last year’s profits. After-tax profit was VND1,524 billion and after-tax profit attributed to parent company’s shareholders was VND1,134 billion, up 6 per cent and 4 per cent respectively. Earning per share reached VND4,134 per share after nine months.

Phan Thiet airport given green light

Minister of Transport Dinh La Thang has signed a decision approving the planned Phan Thiet airport in central Binh Thuan Province.

The 543-ha airport will be built in Thien Nghiep village of Phan Thiet city. It will provide general aviation as well as search and rescue and emergency services.

The passenger terminal building will be around 5,000 square metres with maximum capacity of 300 passengers.

Bkav launches free e-customs programme

The Bkav Internet Security Corporation announced on Monday that it can now provide 12-month free electronic customs software on the website www.eHaiQuan.vn.

The software, called eHaiQuan, helps enterprises carry out customs procedure on the internet. It is compatible with the Viet Nam Automated Cargo and Port Consolidated System and the Viet Nam Customs Information System (VNACCS/VCIS), which is financially and technically supported by the Japanese government.

The two systems will be used by the General Department of Viet Nam Customs from 2014..

MK Smart recognised as high-tech VN firm

MK Smart Joint Stock Company under the MK Group was recognised as Viet Nam’s first high-tech enterprise by the Ministry of Science and Technology (MOST).

The company has met all of the high technology regulations set out by MOST, to become a market leader in Viet Nam’s fledgling smart card sector.

The company’s average revenues over its first three years made up 60 per cent of the industry’s total revenue each year, while this stretched to 70 per cent in its fourth year.

At least five per cent of workers possess graduate degrees, while the company also applies eco-friendly and energy-saving solutions in production and product quality management.

Demand drives seafood exporters towards Brazil

Viet Nam’s seafood businesses planned to promote seafood exports to Brazil to meet the high demand in what was regarded as a stable market, according to the Viet Nam Seafood Exporters and Producers (VASEP).

In recent years, demand for seafood in Brazil had increased, said VASEP, adding that the Brazilian Government had encouraged people to increase seafood consumption from 9kg per person to 12kg per year through trade promotion programmes.

The association said that in the first nine months of this year, Viet Nam’s seafood exports to Brazil grew 70.6 per cent in value year-on-year to US$72.7 million, of which $72.3 million came from tra fish.

The Brazilian market achieved the highest growth rate in tra fish exports with a year-on-year rise of 70.5 per cent in value, accounting for 6.1 per cent of total tra fish export value, the association said.

Viet Nam’s tra fish exports to Brazil were helped by strategic promotional campaigns in response to falling demand from the EU and US markets, the association said.

Seafood exports to the US still reached $273.7 million in the first nine months, followed by the EU at $267.2 million and ASEAN at $86.4 million.

VASEP said Brazil imported seafood products from around the world, and its four largest frozen fillet fish import markets were China, Chile, Viet Nam and Argentina.

The average export price of tra fish to Brazil in the first eight months of this year dropped to $1.92-2.12 per kilo from $2.26-2.41last year, the association said.

Figures released by VASEP showed that by the end of the third quarter, the country’s seafood exports had reached $1.8 billion, an increase of 12.5 per cent over the same period last year.

SHS launches online mobile transactions

The Sai Gon – Ha Noi Securities Joint Stock Company (SHS) this week introduced the SHMobile system, which enables customers to do online transactions via their mobile phones.

The system allows users to immediately access their securities transaction accounts safely and effectively. It ensures business account security with one-time-password (OTP) solutions and timely warnings whenever customers use different devices to log in to the same account.

SHMobile also includes useful functions such as viewing previous transactions and online money transfer. Information on accounts and transaction commands is synchronised to all mobile devices.

HCM City retail show expects to attract 300 exhibitors

The Viet Nam Retail and Franchise Show (VIETRF) will take place at Saigon Exhibition and Convention Center in HCM City from October 31- November 2.

Run by Korean Company Coex, this is the only Retail Franchise trade show in Viet Nam. It will include 300 pavilions from 42 countries and territories.

The VIETRF 2013 serves as a platform for international franchisors and sellers to meet franchisees, distributors, wholesalers, retailers and decision makers.

Russian business tycoons seek lucrative Viet Nam partnerships

Leading Russian businesses are visiting Viet Nam to seek ways to expand co-operation with local partners, said Chashinsky Andrey Alexandrovich, an official from the Committee for Science and High Technology of the Russian State Duma.

During their October 27-November 6 visit, the Russian businesses will continue a long-term project highlighting Viet Nam and Russia as new economies, he said, adding that they are willing to work with Vietnamese partners to apply the latest Russian technology in the Southeast Asian market.

The Viet Nam-Russia comprehensive strategic partnership has helped promote wide-ranging cooperation between the two nations, especially in economics, trade and investment, he noted.

Representatives from Russia’s hi-tech companies introduced sectors they were strong in such as electrical engineering, information technology, drilling and new technological products for public health.

The guests are scheduled to work with the Vietnamese National Assembly’s Committee of Science, Technology and Environment, introduce Russian companies at the Viet Nam-Russia Tropical Centre and attend a Viet Nam-Russia business conference.

Electronics stores battle for business

Electronics traders in the north are competing for customers by opening new stores, even though the purchasing power for these products has not increased.

Tran Anh and Media Mart, the two largest local electronics traders, opened new stores in Ha Noi and Hai Phong on Friday. Tran Anh has nine stores; Media Mart has eight.

Tran Anh has the most new electronic stores in the north. It opened three in the second quarter and one in the third quarter, with plans to open another in Ha Noi by the end of the year.

Tran Xuan Kien, Tran Anh Digital World Joint Stock Company’s chairman and general director, said the aggressive openings were part of an expansion strategy that included other large northern cities, such as Hai Phong, Quang Ninh and Thanh Hoa, and even the south.

The local electronics market is fiercely competitive, said Nguyen Thanh Hai, Media Mart’s marketing manager, with no individual retailer having more than 10 per cent market share.

This was why so many new stores were opening, another company leader explained. If one company opened a store, its rivals felt obliged to follow.

The gloomy real estate market made it easy to rent cheap retail space, he added.

Electronics stores have implemented several trade promotion programmes, but the programmes were not effective due to the economic downturn.

Businesses urged to upgrade IT operations

Vietnamese companies need to make better use of information technology, including e-commerce, so they can be more competitive in the global workforce, participants at a recent conference held in HCM City said.

Nguyen Trong Duong, head of the Department of Information Technology, said internet use had climbed, with 131 million mobile phone subscriber and 40 million internet users.

Vu Lam at Google Inc in Viet Nam said surveys showed that Viet Nam ranked second in terms of internet usage in the region, with time spent on internet penetration equaling time spent watching television.

Businesses should make advertising plans based on these new trends, he said.

In addition, nine out of 10 people access the internet via their mobile phones, making marketing on mobiles more important.

He said that companies should develop well-designed web pages that can be accessed via mobile phone.

Duong noted that e-commerce had changed customers’ habits, with many of them looking for information first online before buying in stores.

With e-commerce, local businesses can communicate better, promote products more efficiently and reduce costs and increase profits, he said.

Nguyen Tan Trung, general director of Mobivi, said online transactions had become more popular in the last five years.

Conference participants said that enterprises should enhance the use of IT in management for better control of their system. This would help reduce costs and improve labour productivity.

Investment in IT is a long-term strategy and enterprises must identify their priorities first to avoid scattered investments.

Although more companies are becoming aware of e-commerce, they do not update their websites and have not taken full advantages of IT in their business activities.

The conference was organised by the Young Business People’s Association and the HCM City Computer Association.

Firms told ‘stick to what you know’

Enterprises should focus on core businesses instead of investing in non-core sectors as Vietnamese firms seemed to be too young to participate in the multi-sector playground, said Dominic Scriven, Dragon Capital Managing Director.

He said the multi-sector growth model is seen as a “style” for Asian companies.

A study conducted by McKinsey in 2010 showed that multi-sector enterprises accounted for 80 per cent of turnover at the 50 largest companies in South Korea, 90 per cent in India and 40 per cent in China.

Especially, all of the companies had the highest average income in the 2000-10 period.

He said Viet Nam has seen the same story, as huge capital was poured into the non-core businesses of the country’s 50 largest companies in the 2006-09 period.

These businesses showed losses in the economic downturn, especially in 2008, with the average loss as high as 20 per cent.

Vietnamese enterprises have not had enough experience and necessary factors, such strong financial structures and administration and excellent leadership and intelligent divestment plans, to join in the playground, he added.

Le Hung Dung, chairman of the bank for Export-Import of Viet Nam (Eximbank) said the multi-sector boom in the past few years in Viet Nam was rooted in crowd psychology.

Dung told Investment Bridge Magazine that Viet Nam has seen several investment trends. In the 80′s, businesses were rushed to establish import-export companies, while they were keen on setting up joint ventures in the 90′s and banks in 2004-05.

It was these expended investments that caused businesses to have to pay an expensive price during the economic crisis, he added.

Nguyen Thi Mai Thanh, chairman of the Electrical Engineering Corporation’s management board said the fever of multi-sector growth was partly due to policies. In the past few years, several businesses were rush to invest in real estate if they had land.

Vo Tri Thanh, deputy head of the Central Institute for Economic Management shared the idea, saying that loosened monetary policies had contributed to the expanded investments.

Thanh said companies which concentrated on a core business have received consideration from investors, thus being easier in calling for capitals.

For example, Hau Giang Pharmacy Company which was listed in the most 50 effective businesses in Viet Nam has had a high and stable growth rate for years.

Pham Thi Viet Nga, chairman of the company’s management board said they have an absolute belief in core business.

We have not had plans to invest in other sectors though we could earn more, Nga said.

She added that businesses should review which sector they have performed in the best or hold competitive advantages over rivals in order to determine their core business.

Dominic said the world has had successful multi-sector groups.

He said the most important factor when investing in a project was its feasibility, profitability and sustainability rather than multi-sector or not.

Dong devaluation looking less likely

A healthier level of foreign currency reserves eased pressure on the State Bank of Viet Nam (SBV) to devalue the dong, according to an ANZ economics update released late last week.

Prime Minister Nguyen Tan Dung announced in early October that the dong could be further devalued by up to 2 per cent before the end of this year, as it was believed to be overvalued against the US dollar.

This followed a devaluation in June, when SBV raised the inter-bank average exchange rate by 1 per cent to VND21,036 per dollar.

ANZ said the central bank hadn’t published official data, but unofficial estimates of foreign reserves now stand at US$32 billion.

The estimate followed a recent Government report to the National Assembly that stated import cover (measured as the period of time that foreign reserves could cover the cost of imports) had increased to 12 weeks. This was a marked improvement on the 6-6.5 week window in 2012.

Despite the upbeat sentiment, ANZ reiterated its belief that further devaluation would still happen.

“We maintain our expectation for a gradual depreciation towards VND21,500/US$ by mid-2014,” the bank said.

ANZ believed SBV would keep its benchmark refinancing rate on hold at 7 per cent until the first half of next year, noting that more than 25 per cent of loans were still priced at over 13 per cent per annum, notwithstanding the cumulative effects of an 800 basis point reduction in interest rates since 2012.

“The structural problem of non-performing loans is expected to put a lid on growth, despite recent developments at the Viet Nam Asset Management Company (VAMC),” it said.

ANZ also said “we remain cautious towards the rapid increase in public debt over the last decade,” after the NA approved increasing the State budget deficit target to 5.3 per cent for both 2013 and 2014 and the Government proposed supplementary State bond issuance worth billions of dollars over the next three years.

It noted that a recent joint report by the Ministry of Planning and Investment and the UNDP estimated the ratio of two to five year Government-issued bonds to Government-guaranteed bonds stood at 88.7 per cent.

State green-lights VN’s first securities merger

VIT Securities will merge with MB Securities on November 1 in Viet Nam’s first merger between securities firms, which recently received approval from the State Securities Commission.

The commission also granted a certificate for the exchange of stocks between the companies. More than 62.1 million shares will be issued.

The new brokerage after the merger will have charter capital of VND621 billion (US$29.2 million) due to the stock swap ratio. MB Securities shareholders will receive one new share for each two shares they currently own, while the ratio for VIT Securities shareholders is 1:0.462.

MB Securities has charter capital of VND1.2 trillion ($56.6 million), 120 million outstanding shares and convertible bonds worth VND600 billion ($28.3 million). VIT Securities has a charter capital of VND46 billion ($2.1 million).

VIT Securities posted losses of VND4.1 billion ($193,300) in the first six months of this year. As of the second quarter, its accumulated losses reached VND24.6 billion ($1.1 million), 53 per cent of the charter capital. The company’s total assets amounted to only VND29 billion ($1.3 million).Both companies are unlisted.

VRG sets $1.17b revenue goal for 2013

The Viet Nam Rubber Group (VRG) plans to foster trade promotion and expand export outlets in order to reap a VND24.5 trillion (US$1.17 billion) revenue by year-end, the group said in a conference in HCM City on Saturday.

Over the past nine months, it had sold 200,000 tonnes of rubber, earning a revenue of over VND17 trillion ($809.6 million) or 70 per cent of the target set for this year.

The General Statistics Office’s report revealed that the country had fetched over $1.7 billion from exporting 725,000 tonnes of rubber during the January-September period. Despite a modest increase of 1 per cent in volume, exports saw a drop of 17 per cent in value.

Viet Nam trade makes further forays into Italy

Viet Nam plans to open another economic office in Lombardy in 2014, expanding its presence in the most economically developed and industrialised region in Italy.

The office establishment was agreed during a meeting between Vietnamese Ambassador to Italy Nguyen Hoang Long and Lombardy regional president Roberto Maroni in Italy on Friday.

Lombardy is Italy’s economic centre, contributing 25 per cent of the country’s GDP. Viet Nam’s economic office will be based in Milan and will aim to help businesses from both countries capitalise on the potential of their respective markets and promote investment co-operation.

Central city receives $120m remittance

The central city had received US$120 million in remittances from 8,000 overseas Vietnamese this year, vice chairman of the city’s people’s committee, Nguyen Xuan Anh, said.

At a meeting with an overseas media delegation on Saturday, he disclosed that overseas Vietnamese invested in 55 businesses in the city with total investment capital of VND1.2 trillion ($57 million).

Mat Bao launches free website service

Free unlimited time, flexible content and simplicity are the advantages that the Mat Bao (Storm Eyes) company offers to its customers with its Landing Page service.

Users only need to register at www.id.matbao.net or www.matbao.net and follow instructions.

With a diversified database and template, it is easy for users to change the appearance of their website. The company also pledges to ensure security.

Spotlight turns to future of hydro-power

The National Assembly Committee on Science, Technology and Environment gathered to review the government’s report on reviewing the hydro-power development master plan in Ha Noi on Saturday.

The Government reported that it has approved the removal of six potentially large and 418 small hydro-power projects from the national plan. These plants are deemed to have low effectiveness while likely to cause negative environmental and social impacts.

The Government was also unanimous in suspending work on another 136 projects.

After the review, Viet Nam now has 815 hydro-power projects in its national plan, including 268 that are already operational and 205 under construction.

According to initial verification of the report conducted by the NA committee, the planning quality for small-scale plants is generally low.

While small plants account for almost 90 per cent of the total plants in the national master plan, their combined designed capacity provides only 26 per cent of the projected electricity output.

Addressing the session, NA Vice Chairwoman Nguyen Thi Kim Ngan said hydro-power plays a crucial role in ensuring national energy security and socio-economic development.

She noted that this source of power made up more than 48 percent of the country’s capacity for electricity generation and 44 percent of the national electricity output last year.

Hydro-electricity power plants are also involved in controlling flooding and droughts, ensuring a sufficient water supply, job generation and socio-economic development.

However, several incidents at hydro-electric power plants are causing public concern, so it is necessary to clarify the responsibilities of stakeholders and the solutions and detailed tasks in the time ahead, according to the vice chairwoman.

Regarding land clearance for hydro-power plant construction, delegates said the implementation of facilities in resettlement areas does not meet requirements due to the poor quality of farming lands in these zones and the lack of water supply, which create negative effects on the livelihood of local communities.

They also suggested that the government report needs to provide more details about incidents at operating hydro-power plants as well as the causes of the problems, in addition to revealing their impact on the environment.

CPI slip stimulates retail sector

Retail sales and service revenue was estimated to reach VND2,158 trillion (US$102.8 billion) in the first 10 months of 2013, according to the General Statistics Office (GSO).

The figure represents a 12.6 per cent year-on-year rise, although it would be only 5.5 per cent if price hikes were excluded.

The hotel and restaurant sector posted the highest growth rate, contributing VND260.2 trillion ($12.4 billion) to total turnover and registering a year-on-year increase of 14.9 per cent.

The service sector followed with VND220.2 trillion ($10.5 billion), up 14.8 per cent over last year.

The GSO attributed the stronger purchasing power to higher demand in the wedding season and demand for school supplies as the new school year began in September, as well as warm clothes as winter approached.

Vu Manh Ha, an expert at the GSO, said the lower consumer price index (CPI) in October helped boost demand.

This month’s CPI was also much lower than the past few months. In September and August, CPI rose 1.06 per cent and 0.83 per cent respectively.

CPI increased by 5.14 per cent from December 2012 and by 5.92 per cent from October last year.

According to the GSO, the cost of nine of the 11 goods used to calculate the CPI increased this month, with food prices surging the most.

The price of transport dropped by 0.17 per cent, while prices of postal services and telecommunications inched down 0.03 per cent.

In October, CPI in urban areas posted slower growth than in rural areas, at 0.42 per cent compared to 0.54 per cent.

Gold prices, not included in the CPI, lost 2.87 per cent month-on-month and US dollar prices edged down 0.18 per cent.

Road tunnel risks explored in Da Nang

Methods of designing and constructing road tunnels and ways to maintain them by responding to natural and human risks were issues highlighted in an international seminar held late last week in central Da Nang City.

The two-day seminar, jointly held by the World Road (PIARC), the Viet Nam Road Administration and the Viet Nam Bridge and Road Association, drew the participation of more than 40 delegates from PIARC member countries including Spain, Norway, France, China and the UK together with Vietnamese experts in this field.

Van Huu Chien, chairman of the city’s People’s Committee, who is also former director of the city’s Department of Transport, said tunnels played an important role in developing transport infrastructure as they could help travellers avoid dangerous intersections, reduce traffic accidents, and save time for drivers.

Therefore, more and more tunnels had been built in the world in general and in Viet Nam in particular, he said.

However, due to the increasing number of vehicles using the tunnels, it was necessary to pay more attention to issues related to designing, operating and managing the tunnels to ensure their safety and sustainability, Chien stressed.

The numbers of incidents and accidents happening in road tunnels were probably not as high as those on roads, but their consequences were often much more serious, he said, adding that the quality of management of these projects must be further improved.

Ngo Thinh Duc, chairman of the Viet Nam Bridge and Road Association, said building and managing tunnels was a very new field in Viet Nam.

“Hai Van Tunnel is our first project. It has been in use since 2005, and still has to be completed. It means that we just have eight years of experiences since Japan’s technology was transferred to Viet Nam.”

Nguyen Dinh Bach, general director of the Hai Van Tunnel Management and Development Company, said from June 2005 to September this year, the tunnel has seen 11 overturned vehicles, 53 accidents and 41 fires.

Tunnel management and development still faces many difficulties due to the lack of experience and equipment for the examination, assessment and repair of structural faults, and fire prevention, Bach said.

Nguyen Huu Tien, deputy head of the Ministry of Transport’s Environment Department, said assessment of environmental pollution levels such as air and noise in tunnel areas had not been given much attention.

In addition, due to incomplete water drainage systems in big cities like Ha Noi, some tunnels such as Kim Lien Tunnel was easily flooded after heavy rains.

Therefore, to minimise environmental contamination, experts suggested the country continuously inspect the quality of the air and review and assess the efficiency of current environmental protection systems in the tunnels.

They also stressed the need to manage transportation activities, including the control of the loading capacity of vehicles across the tunnels, and raise community awareness on traffic safety regulations.

A credit agreement on funding for the Deo Ca Tunnel project on National Highway 1, which links the two central provinces of Phu Yen and Khanh Hoa, was signed in Ha Noi last week.

Following the agreement, the Commercial Bank for Industry and Trade (VietinBank) will loan Deo Ca Tunnel Investment JSC VND5.4 trillion (US$250 million) to build the 3.9-km tunnel.

Construction on the VND10.5 trillion ($500 million) tunnel started in late 2012. When completed in 2016, the tunnel is expected to reduce traffic accidents on National Highway 1 and boost the central region’s economic development.

Delta development remains a trade focus

Measures to Boost Sustainable Growth for Major Products of the Cuu Long (Mekong) Delta in the Integration Era was the topic of an annual conference held by the Ministry of Industry and Trade in An Giang Province this month.

Figures released at the conference revealed that in the first nine months of 2013, the region’s industrial production and trade value grew by nearly 9 per cent compared with the same period last year.

In the same period, the region attained total retail sales of VND372 trillion (US$17.6 billion), a year-on-year increase of 19 per cent, and export value of $7.8 billion, up 7 per cent year-on-year, accounting for 8.13 per cent of the country’s export turnover.

However, these growth rates were lower than those of the previous years.

The Cuu Long (Mekong) Delta’s industrial production has scored a slow recovery due to the economic downturn that resulted in low purchasing power in the local market.

Representatives of the Departments of Industry and Trade from Mekong provinces said that prices of most farm produce in the region were low, resulting in low revenues earned by farmers.

Poor transport infrastructure development had also made the Delta less attractive to domestic and foreign investors, according to Huynh Van Ganh, director of the Kien Giang Department of Industry and Trade.

He said many bridges in the region are weak, allowing vehicles of 35 to 40 tonnes. This has caused inconveniences and raised transportation fees.

Other representatives asked the ministry to take measures to prevent the price of farm produce in the region to fall when the harvests come, and to encourage farmers to increase their production.

They also asked the ministry to help introduce projects in environmentally safe and energy-savings production, to improve goods promotion campaigns in local and overseas markets, and to use hi-tech services in the maintenance of farm produce.

During the meeting, An Giang’s Department of Industry and Trade signed a memorandum of understanding to cooperate in the fields of energy saving and combat cigarette smuggling and promoting industrial goods and handicrafts with partners from Vinh Long, Dong Thap, Tra Vinh, Tien Giang, Soc Trang and Can Tho City.

State tightens the screws

To prevent unhealthy competition between commercial banks in opening branches and transaction offices, the State Bank of Viet Nam (SBV) has issued Circular No 21 that became effective on October 23.

The circular was issued after local residents on Phan Xich Long Street in Phu Nhuan District and Nguyen Van Linh Street in District 7 called themselves “residents of HCM City Wall Streets” as commercial banks had opened so many branches and transaction offices on these streets.

Up to 16 branch and transaction offices of commercial banks such as Dong A, Vietcombank, ACB, and Sacombank have opened on a 1km stretch of Phan Xich Long Street.

In addition, a 300m section of Khanh Hoi street from Hoang Dieu Street to Kenh Te Bridge in District 4 has 21 branches and offices.

Cach Mang Thang Tam and Truong Chinh Streets house 39 branches and transaction offices of banks, including four offices operated by Vietinbank and ACB.

Similarly, a 1.5-km section of Nguyen Van Linh Street have 22 branch and transaction offices of commercial banks.

A manager of a Ha Noi-based commercial bank that has opened a branch office on this section of Nguyen Van Linh Street in Phu My Hung Urban Area said that investments in the area were made with the future in mind.

The area is expected to become densely populated as a number of property projects will soon become operational.

According to SBV, HCM City has 2,012 branches and transaction offices of banks headquartered in Ha Noi and HCM City, doubling 2008′s figures.

The city also houses 135 offices of saving funds, half of them established by banks headquartered outside HCM City.

However, banking experts have warned that the race in developing commercial banks’ transaction networks would pose risks for the country’s banking system.

“Many commercial banks have joined the race in developing their service network to seek profits. The State Bank of Viet Nam must issue warnings about this because many of these banks’ branches and transaction offices have operated ineffectively,” Nguyen Hoang Minh, deputy director of SBV told Tuoi Tre (Youth) newspaper.

The general director of a joint-stock commercial bank based in HCM City said apart from initial investments for establishment, a bank must spend VND500 million per month to operate a 300sq.m – 500 sq.m branch office in HCM City.

A transaction office must suffer losses for at least 12 to 18 months from the start of its operation.

Despite these losses, banks never close branches and transaction offices because it is much more difficult to get a license for a new transaction office.

However, Agribank decided to reduce the number of its branches in HCM City from 48 in the previous years to 40 in mid-2012, said Minh.

Under Circular No 21, banks will have two years to either turn their saving funds into transaction offices or close them down.

The circular also requires a minimum registered capital of VND300 billion ($14.2 million) to establish a branch or a transaction office in HCM City and Ha Noi.

In addition, the circular limits the number of bank branches. A bank can open no more than 10 branches in each inner district of HCM City and Ha Noi, with each branch having no more than two transaction offices. Branches in suburban districts must have no more than three transaction offices.

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

BUSINESS IN BRIEF 30/10