BUSINESS IN BRIEF 1/1

Anti-dumping measures on cold-rolled stainless steel

The Ministry of Industry and Trade issued a decision imposing temporary anti-dumping measureson cold-rolled stainless steel imported from Taiwan, Indonesia and Malaysia.

These products are classified under code sections 7219.32.00; 7219.33.00; 7219.34.00; 7219.35.00; 7219.90.00; 7220.20.10; 7220.20.90; 7220.90.10; and 7220.90.90.

The imposition of these penalties is in accordance with Vietnam’s anti-dumping laws and regulations and the Ministry of Finance’s guidelines of paying anti-dumping duties.

The decision will become effective as from January 25, 2014.

Vietnam-Cambodia trade targets US$5 bil by 2015

Two-way trade between Vietnam and Cambodia has continuously grown over the years and is likely to reach US$5 billion by 2015, said Tran Bac Ha, President of the Association of Vietnamese Investors in Cambodia (AVIC).

After the eleven months of the year, two-way trade reached US$3.1 billion including US$2.7 billion from exports and US$465 million from imports, up 5% and 8% respectively against the same period last year, according to the Asia-Pacific Market Department.

Vietnam’s high import-export turnover of about 85% has enabled the country to become Cambodia’s third largest trade partner among over 140 nations and territories investing in the country.

Vietnam’s key Cambodian exports include petroleum, steel and iron, garments and textiles, agricultural machines, chemicals and fertilizers.

Cambodia’s Vietnamese exports include rubber latex, timber products, and tobacco materials.

Under an agreement to promote bilateral trade between the two nations in the 2014-2015 period, Vietnam is providing preferential tariffs of zero percent on 63 commodities from Cambodia while Cambodia is not imposing an import tax on 20 commodities of Vietnam.

Additionally, an agreement on transit goods should help Vietnam and Cambodia perfect a legal corridor for facilitating the transit of goods.

Vietnam-Brazil trade surpasses US$2 billion

Two-way trade between Vietnam and Brazil hit US$2.3 billion in 2013, including US$1.1 billion from Vietnamese exports, according to the latest statistics released by the Vietnam Customs Department.

Other statistics indicate that bilateral trade enjoyed a hefty year-on-year increase of 28%. Vietnam’s imports from the Brazilian market rose 52.5% from a year earlier to  

US$996.87 million, while its export revenue grew by 11.8% year on year to US$1.08 billion.

The two countries are expected to accelerate their bilateral trade to roughlyUS$5 billion over the next five years, and US$8-10 billion by 2020.

Saigon Newport Corporation wins port contract

Saigon Newport Corporation (SNP), one of the leading terminal operators in Vietnam, has won a contract to operate Cai Mep – Thi Vai international container berth for 30 years.

The leasing contact was signed between SNP and the Vietnam Maritime Administration in Hanoi on December 30.

Located in the southern coastal province of Ba Ria- Vung Tau, Cai Mep-Thi Vai port complex is able to accommodate the vessels of up to 110,000 DWT (9,000 Teus).

With the advantageous location, the terminal will make important contribution to the marine development and foster economic development in the region.

The US$611 million project, was financed by Japan’s official development assistance loans and Vietnam’s counterpart capital.

The Cai Mep terminal consists of two piers of 600 metres in length and can handle vessels of up to 110,000 DWT and has an annual capacity of around 700,000 TEUs.

The Thi Vai terminal also has two piers, and can handle ships of 50,000 tonnes.

 Industrial production grows by 7.4% in 2013

Vietnam’s industrial production value in 2013 grew by 7.4% from last year’s figure thanks to the remarkable recovery of the processing and manufacturing industry.

The information was heard at a meeting held by the Ministry of Industry and Trade (MoIT) in Hanoi on December 30.

According to the ministry, the processing and manufacturing enjoyed a much higher growth than the 5.5% increase in 2012 and accounted for 71% of the entire sector’s added value. Inventories in the field gradually fell over months.

By December 1, the inventory index only saw a year-on-year rise of 10% compared to a 21.5% increase at the beginning of the year.

Meanwhile, the scale and growth of Vietnam’s exports were higher than expected, helping the country gain trade surplus.

The export structure was shifted in line with industrialisation orientations and the ten-year import-export development strategy until 2020 with a vision towards 2030. Accordingly, processed goods accounted for 71% of total exports, followed by agro-aquatic products with 15%, and minerals and fuels, 7%.

Particularly, telephone and spare parts surpassed garments to become the largest hard currency earner with US$21.5 billion, making up 16% of the country’s total export turnover and enjoying an impressive growth of 69.2%.

The import-export activities of domestic enterprises recovered and tended to increase. Their 2013 export turnover was estimated to grow 3.5%, up 2.3% against the previous year.

Credit growth reaches 11 percent

The banking sector’s credit growth reached 11 percent in 2013, which is said to suit the banks’ “health,” the Lao Dong (Labour) newspaper reported, citing reports of the State Bank of Vietnam (SBV).

The loan to deposit ratio was between 91-92 percent, lower than the 2011 level (more than 100 percent).

Nguyen Thi Hong, head of the SBV’s Monetary Policy Department, said at the bank’s December 16 conference that the credit structure saw remarkable improvements, focusing on production and business, especially the prioritised fields.

In the first 11 months of this year, credit to rural farm production increased by 17 percent; high technology – driven enterprises, 24.51 percent; and exports, 3.32 percent.

Bad debts were also gradually brought under control.

According to the SBV’s estimation, about 105.9 trillion VND (4.977 billion USD) of bad debt was settled during 2012 and the first 10 months of this year.

The bank said the interest rate in 2013 was kept stable, increasing only 1 percent against the forecast rate of 1-3 percent at the beginning of the year.

The year 2014 is forecast to still be difficult for the banking sector. Thus, the sector needs to prepare provision for bad debts. Nevertheless, the SBV projects that Vietnam ’s banking sector would grow by 12-14 percent in 2014.

Expressway toll collection auctioned in HCM City

Cuu Long CIPM on December 30 signed a contract for toll collection rights to the Ho Chi Minh City-Trung Luong Expressway with Yen Khanh Service Trading and Production Co Ltd.

The HCM City-based company won the auction with a bid of 2 trillion VND (95.2 million USD) for permission to collect tolls at four existing stations, Cho Dem, Tan An, Ben Luc and Than Cuu Nghia, for five years starting from January 1. The payment will be made in three phases over six months.

The Ministry of Transport had assigned the Cuu Long Corporation for Investment, Development and Project Management of Infrastructure (Cuu Long CIPM) to oversee the contract with Yen Khanh Company, said Duong Tuan Minh, director general of Cuu Long CIPM.

“It is the first infrastructure project in the country in which toll collection rights have been transferred via public auction,” he said.

The successful auction would lay the foundation for cooperation between the State agencies and private economic sector to develop transport infrastructure, Minh said at the signing ceremony.

Deputy Minister of Transport Nguyen Van The has asked Cuu Long CIPM and Yen Khanh Company to work closely to implement the contract to address any problems arising during the contractual period.

The 40-km expressway connecting Ho Chi Minh City to Tien Giang province in the Mekong Delta was put into operation in February 2010. It started collecting fees in February 2012. It was built at a cost of nearly 10 trillion VND (476 million USD) funded by the State budget.-

Retail sector growth slows as consumer spending crimp

Vietnam’s total retail sales and service revenues reached 2,618 trillion VND (124.66 billion USD), up 12.6 percent year-on-year, the General Statistics Office (GSO) reported.

The increase, however, was the lowest seen in the past four years, compared with the 24.5 percent, 14.2 percent and 16 percent increases seen in 2010, 2011 and 2012, respectively.

Vu Manh Ha, a senior expert at the GSO Trade Department, blamed this year’s slower retail sales pace on low local demand as customers have curbed spending to focus only on buying or using essential goods and services.

Many enterprises in the sector, meanwhile, had to restrict their business expansion plans as they continued to encounter obstacles including capital shortages, a high volume of stockpiled goods, and increasing prices of raw materials, Ha said.

The trade sector, which accounted for nearly 80 percent of total revenues, rose 12.2 percent over the same period last year, while hotel and restaurant services’ revenues were up 15.2 percent, and the tourism sector saw a modest rise of 3.5 percent.

During this year, foreign-invested enterprises posted the highest revenue rise of 33 percent, followed by the local private sector, with 15.3 percent. Notably, State-owned companies saw an 8.6 percent slump in total retail sales.

The country’s retail sector, with a boost from foreign retail distributors, has initially proven it has changed for the better.

At present, there are 650 supermarkets in 59 of the 63 provinces and cities across the country and 117 shopping centres in 32 provinces and cities.-

Risks of high inflation rate in 2014 to linger: authority

The Price Management Department under the Ministry of Finance has forecast that there still are risks for Vietnam’s inflation to be high in 2014 due to the impact of policies to remove difficulties for business and production in 2013.

During a December 30 conference on the development of Vietnam’s prices and market in 2013 and prospects for 2014, the department also pointed to natural disasters, floods and animal and plant diseases in 2013 as another reason for the forecast.

According to Dr. Vu Dinh Anh, in 2014, the price development will be affected by the traditional management policies as well as slow growth of demand.

On the other hand, prices and market will also be impacted by loosening policies such as the widening of budget deficit to 5.3 percent of GDP and the issuance of bonds worth 170 trillion VND (8 billion USD) for the 2011-2015 period, he said.

In addition, efforts to ease difficulties for enterprises, support the market and speed up growth may force the currency flow to move faster and intensify the inflation pressure.

Sharing Anh’s opinion, economist Ngo Tri Long held that major challenges still face the national economy in 2014 as the global economy is forecast to remain gloomy.

Although the consumer price index has been brought under control, the risk of price hikes still looms, he said.

According to the General Statistics Office, the December CPI increases by 0.51 percent month-on-month and 6.04 percent year-on-year. The 2013 average CPI increase is at 6.6 percent over that of 2012, marking the lowest rise in the recent 10 years, it said.

Meanwhile, Pham Minh Thuy from the Economic-Financial Institute under the Ministry of Finance, said the price developments in 2013 prove the efficiency and proactiveness of the Government’s interference in the market.

He also emphasised that the stable prices in 2013 can be a good chance for the Government to adjust those of a number of products in the market mechanism and reach the set target of controlling the inflation at the same time.

However, he added, the adjustment should be carefully considered to avoid market shock and adverse impact on the daily life.

Chili planters enjoy record price

Despite the selling prices of many crops in the southern province of Soc Trang have shown a slowdown this year, chili planters have earned huge profits. Hot chili trees have opened a new, promising business trend for farmers in this Mekong Delta province.

Local planters have sold their hottest chili or ot chi thien,(meaning chili that points to the sky) or ot hiem (chili like Pequin) between 38,000 and 42,000 VND per kilo as their wholesale prices, the highest selling rate recorded in Soc Trang over the last couple of years.

According to farmer Ly En from Dai Tam village, My Xuyen district, his family has earned over 10 million VND as profits from his 2,000 square metres of chili plantation. En said if the chili selling price keeps stable from now to the lunar New Year, he will earn a highest income level over the last ten years.

Farmer Lam Thanh Ha explained that chili planters in Soc Trang province have enjoyed a bumper crop due to favourable weather conditions. Ha said under the shadow of chili trees, farmers also can grow lettuces, green onions, and coleslaws to add up their incomes.-

Obstacles block formation of supermarket joint venture

Domestic retailers have failed to forge an alliance to compete with foreign rivals, experts have said.

Four large domestic retailers – Satra, Hapro, Phu Thai and Sai Gon Co-op – planned to build a large retail group, VDA, with a strong trademark that could compete with foreign trademarks and would be the driving force in the local retail industry. However, the plan fell through for many reasons.

Pham Dinh Doan, Phu Thai Group chairman, told Thoi bao Kinh Doanh newspaper that the greatest challenge had been acquiring land and infrastructure. Establishing the alliance required support from the government.

In addition, the state should provide support for logistics services to the group because these services are poor in the domestic market, stated Dinh Thi My Loan, chairwoman of the Association of Viet Nam Retailers.

Therefore, the group has planned to build a logistics system to complete the supply chain in the domestic retail market, but the group has faced difficulty in acquiring land to build warehouses in various provinces and cities.

Nguyen Thi Thu Hien, Hapro’s managing director, noted that the four large retailers had the same target for launching the joint venture, but they did not have a unified management system for it.

Hoang Tung, the founder of the Pizza Home trademark, claimed the VDA was a joint venture amongst the four groups, but they each had a different business culture and varying business targets, so it was hard to achieve success.

However, just because the alliance was not successful does not mean the local retail industry cannot compete with foreign retailers, Tung explained.

A marketing expert said the revenue of local retailers has increased due to expansions of their retail system and attempts to approach more customers.

In addition, local retailers hold the advantage of knowing the shopping habits of domestic customers, whereas foreign firms have to conduct market studies for this information.

Firms face mixed fates on customs exemptions

Posco Vietnam and Keangnam Vina were delighted to receive tax breaks from the Ministry of Finance, while Doosan Vietnam was not so lucky.

The Ministry of Finance (MoF) has agreed not to apply administrative sanctions on Posco Vietnam’s failure to declare handling costs at customs.

According to the MoF Circular 40 dated May 21, 2008, companies must pay additional tax for not declaring handling charges at port.

However, in the case of Posco Vietnam, the MoF waived the charge because the company carried out good handling at its single-purpose port.

The MoF chose to give the company the benefit of the doubt in a situation where clear regulations do not exist.

However, regarding its incorrect declaration of deductible items from taxable value in declaration 63, the ministry ruled that the company had violated regulations on state management in customs and would receive no such reprieve.

Keangnam Vina, the Korean-backed developer of Vietnam’s tallest skyscraper, also received good news from the tax department.

In a document sent by Deputy Minister of Finance Do Hoang Anh Tuan, the MoF ruled that Keangnam Vina’s imported goods could not be produced domestically and that this has been confirmed by the Ministry of Planning and Investment under Document 2709 dated November 6, 2011. Under these circumstances, the products will be exempt from import tax as per Keangnam Vina’s request.

Korean-owned Doosan Heavy Industries Vietnam (Doosan Vina) on the other hand, was not treated so favourably when applying for tax breaks on their imported mechanical goods.

According to Circular 193 dated November 15, 2012 promulgating the preferential import and export tariff according to the list of taxable products for import tax incentives, the importer must register a list of imported goods to the customs department before the first customs declaration.

As Doosan Vina had not yet registered its products, it was therefore not eligible to enjoy import tax incentives, said the MoF.

EVN says handled huge losses, raises doubt for $1 bln profit

The Electricity Group of Vietnam (EVN), the country’s sole power distributor, hinted during a Friday meeting that they posted a VND4.4 trillion profit in 2012 and in the same year managed to handle VND18.2 trillion out of the VND38 trillion losses accumulated since 2011.

This has sent analyst and economic experts to doubt that the state-run utility raked in huge net incomes of around VND22 trillion, or roughly $1 billion, in 2012.

At a media meeting on Friday, the Ministry of Industry and Trade publicized the electricity cost price of EVN, but rejected question for EVN net incomes in 2012 and 2013.

Under an order from the Prime Minister, EVN should have its electricity cost price confirmed by the industry and trade and finance ministries to be allowed to hike power prices. The production cost must also be made public before the price increase is made.

According to the industry ministry, the power cost price in 2012 was VND1,322.55 per kWh, and the earnings of EVN that year were VND4.4 trillion. Also in 2012, the accumulated losses of EVN dropped to VND19.8 trillion, while just a year earlier, the figure was VND38 trillion.

This means VND18.2 trillion of the accumulated loss has been handled by EVN, while it still managed to report a VND4.4 trillion profit, suggesting that the real profit is much larger than just VND4 trillion.

But EVN chief refused to comment on the real net income of 2012.

Dinh Quang Tri, its deputy general manager, only confirmed that the accumulated loss in 2011 was as much as VND38 trillion, with VND12 trillion came as the company had to general power by fuel, and VND26 trillion from the forex rate differences.

Refusing to reveal how much the real net income was before handling the accumulated loss, Tri only said “fortunately, in 2012, supply from hydropower plants has soared, enabling EVN to make profits.”

Associate Professor and Doctor Ngo Tri Long, a price expert, said EVN could have enjoyed VND22 trillion worth of profits in 2012.

“That’s why they could handle the VND18.2 trillion loss while maintaining the VND4.4 trillion profit,” he said.

“Are EVN chiefs afraid that posting huge profits are inappropriate?” Long said, referring to the common lament of “incurring losses” EVN cited whenever it asked to increase power prices.

But Long said EVN should treat profits as good news as members of the public are unhappy seeing the state utility repeatedly posted losses.

“EVN should publicize its real profits to delight the public,” Long said.

As for the financial figures for 2013, Tri said EVN’s revenues this year are estimated at VND172 trillion, or around $8 billion, while profit would be only VND120 billion.

This is the profit left after EVN continue to handle the accumulated loss. The accumulated loss should be completely handled by the end of 2015 as ordered by the Prime Minister, Tri said.

But again, he did not say anything about the net income excluding the accumulated loss amount.

Leading mobile retailer prospers in 2013

Mobile World JSC, a leading mobile handset retailer in Vietnam, has marked extraordinary business results in 2013 despite continuing economic hardships.

Recently the company reported revenues of VND7.8 trillion ($372 million) for 2013 with profits nearly doubling those of 2012.

Each month the company’s leading digital and equipment superstores and website thegioididong.com sold an average of 300,000 handsets and 10,000 laptops, earning VND250 billion ($12 million).

Deputy general director Tran Kinh Doanh attributed this success to the firm’s nationwide expansion efforts along with its fresh customer-centric business approach.

Currently the system consists of more than 200 supermarkets throughout the country.

The staff have been trained to provide the highest quality customer service and are rewarded based on customer satisfaction.

“Our company has also sacrificed profits by providing some software and installation free of charge such as Lac Viet Dictionary and programmes for listening to music or watching films,” said Doanh.

This year also saw Mobile World invest considerable sums into its online services segment, upgrading desktop and mobile versions of its website to better service customers.

The company’s stores are the only retailers for the thegioididong.com website for mobile phones, resulting in nearly 10 million hits a month. It has achieved eminent international awards such as being listed among Vietnam’s top five e-commerce websites and among the top 500 leading retailers in the Asia-Pacific region in 2010, 2011, and 2012.

In terms of its business plan for 2014, the company’s northern sales manager Ngo Tan Tai said one of the company’s key strategic targets is to advance its superstore system to other major cities and test their presence in townships as well as rural and remote locations.

Notably, next year the company is planning to open 50 to 100 smaller stores in small townships to draw experience and find the best formula for greater involvement in rural areas.

The firm has the goal of opening 700 to 1,000 stores in countryside locations over the next five years.

Company executives also revealed their intention to list on Vietnam’s stock market in the first or second quarter, 2014, as well as launching new sales promotions.

“We really started focusing on a customer-centric business mentality in 2013 and believe we are in a position to achieve even greater results in 2014 under our dynamic service network,” said Tai.

Vietnam to slash import taxes for ASEAN-made vehicles

Beginning January 1, 2014, vehicles imported from 10 ASEAN countries to Vietnam will enjoy a tax cut ranging from 10-50 % following the ASEAN Trade in Goods Agreement (ATIGA).

Specifically, the tax rate for emergency cars and prisoner transport vehicles will range from 0 to 5%.

Following ATIGA, 4-seater to 9-seater cars imported from ASEAN countries to Vietnam will incur a tax of 50 % of the car’s value rather than the current 60%.

Trucks and other vehicles, depending on the type, will incur a new tax ranging from 0 to 50%.

Bicycle, motorcycle, and electric vehicle taxes will also decrease. Completely knocked down (CKD) cars will incur a tax from 0 to 50%.

Aircraft tax, which applies to airplanes and helicopters, will decrease to 0% starting from early 2014.

Japanese luxury car brand Lexus has officially entered the Vietnam market with 5 models launched at its recently-opened Lexus Saigon Center in downtown Ho Chi Minh City.

They include the $270,000 LS 460 L, one of the most expensive cars introduced at Vietnam Motor Show 2013 – the biggest annual expo for automobile industry – organized late October this year in Ho Chi Minh City’s District 7.

Lexus Vietnam has also introduced GS 350, RX 350, LX 570 with retail prices ranging from VND2.57 billion ($120,800)to VND5.35 billion ($251,500).

Representatives from the Japanese automaker said the construction of another official Lexus outlet in Hanoi is expected to be completed in the first half of 2014.

Hanoi Computer continues being found violating IPR

Officials from the Hanoi Department of Culture, Sports Tourism and the Police early this month conducted a joint inspection against Hanoi Computer located at 43 Lang Ha, Hanoi and found ASUS, LENOVO AND ACER computers and hardisks that were installed with unauthorised Microsoft software including Windows 8 pro, Windows 7 Ultimate and Microsoft Office Enterprise 2007.

Being one of the leading companies in the retail of IT products, but this is not the first time the company has been raided for violations of intellectual property rights. Previously on May 8, 2013, the local authorities discovered the unauthorised Microsoft software installations at its store located at 131 Le Thanh Nghi in Hanoi.

Hanoi Computer signed the Inspection Minutes to acknowledge its violation and admitted to using pirated software for their own business. Also, it committed to comply with the current regulations and to correct the violations in due course. Moreover, Hanoi Computer will face the administrative sanctions that are expected to be imposed shortly.

In recent years, many campaigns executed by the Vietnam Copyright Office, the Inspectorate of the Ministry of Culture, Sports and Tourism, and the Business Software Alliance to help change Vietnamese people’s perception, habit on using legal software as well as increase their awareness of respecting IPR laws which have positive impacts on creating a healthier ICT industry to contribute to the development of the whole national economy.

SMEs shaken by import ban on older machinery

Despite Vietnam’s call for investment from Japanese small and medium enterprises to develop supporting industries, Japanese investors have complained that unclear regulations limiting the import of used machinery and equipment is deterring them from investing.

Chikara Fujita, an official at the Japanese region of Kansai’s Bureau of Economics, Trade and Industry at a recent meeting between Kansai-based enterprises and the Ministry of Planning and Investment (MPI), said that Japanese small and medium enterprises (SMEs) were concerned over the unclear regulations related to the import of second-hand machinery in Vietnam.

“The unclear regulations seem to discourage foreign SMEs from investing in Vietnam. As most of them are operating in supporting industries, this will negatively affect the economic development of Vietnam,” said Fujita.

Last November, the Vietnamese government issued a decree guiding the implementation of the Commercial Law which involved clauses related to the trade of second-hand machinery. The regulation meant the Ministry of Sciences and Technology (MST) was tasked with setting the criteria for imported second-hand machinery.

But the new criteria have yet to be set, and while waiting, the import of second-hand machinery needs MST approval, delaying projects.

Do Hoai Nam, director of the MST’s Department of Technology Appraisal, Examination and Assessment said the new criteria would be aimed at limiting outdated equipment imports into Vietnam.

“It is necessary to limit the import of older machinery, but the procedures should be simple. The complicated and unclear regulation is delaying many Japanese projects here,” Fujita said.

Yoshilo Kobayashi, an official at Kansai Economic Federation’s International Committee said the new regulation would prevent Japanese SMEs from investing in Vietnam.

“Many Japanese enterprises want to relocate production from China to Vietnam. If Vietnam tightens criteria for importing second-hand machinery this will hamper their investment plans,” said Kobayashi.

Mitsuhiko Lino, president of Toyo Drilube Company – which is building a manufacturing plant in the northern province of Ha Nam, said many small and medium investors had to use second-hand machinery and equipment because of limited finances.

“It’s expensive to buy the newest equipment. The Vietnamese government should resolve this issue,” said Lino.

“We’re currently considering allowing the import of machinery which is up to five year’s old and maintains 80 per cent of its quality,” said Nam. However, he failed to provide any indication when the guidance would be issued.

Sluggish $1.5 billion power plant finally adds EPC contractors

The construction of the Long Phu 1 thermal power plant, which has undergone over three years of delays, finally received positive news last week when new partners were agreed upon to implement the engineering procurement construction contract.

The engineering procurement construction (EPC) contract was signed between PetroVietnam – the project investor and a consortium consisting of Power Machines (Russia), BTG Holding (Slovakia) and PetroVietnam Technical Service Corporation (PTSC).

During a recent press meeting in Hanoi, PetroVietnam chairman Phung Dinh Thuc stated that the addition of new partners to the EPC contract for Long Phu 1 was reasonable.

He said, “Despite PTSC being a strong corporation, this is a large-scale project, so we had to seek co-operation from other contractors.”

The EPC contract was previously assigned to PTSC in 2010. At the time, PTSC announced plans to put the first unit of the plant into commercial operation after 39 months (in 2014) and to finish the entire plant after 45 months (early 2015).

However PTSC’s objectives became evermore distant. Many reasons were given for the delays, of which the most important was the actual capacity of the general contractor, including the necessary experience and the ability of subcontractors to provide key elements.

Facing slow project progress, during the past two years, the Ministry of Industry and Trade was assigned by the government to ask PetroVietnam to seek additional contractors.

When complete, the Long Phu 1 power plant will have the generation capacity of 1,200MW, and will be one of three plants at the Long Phu Power Centre, with a total capacity of about 4,400 MW. When fully completed the complex will supply 7.8 billion KWh per year to the national power grid.

Banks target familiar clients to boost credit

Instead of offering cheap loans to all potential clients to simulate credit growth as had been done in 2012, commercial banks towards the end of this year are instead targeting clients with specific credit packages.

LienVietPostBank agreed to provide a VND2 trillion ($95 million) loan for the PetroVietnam-invested Vung Ang 1 Thermal Power Plant this month.

Vietcombank and SeABank this month signed a credit agreement worth $150 million with Petrovietnam Exploration and Production Corporation. Vietcombank will provide 83.5 percent of the funding with the remaining $24.75 million covered by SeABank.

TPBank signed an agreement providing VND2 trillion ($95 million) to Vietnam Railways to bolster the company’s working capital.

Sacombank, Agribank, MHB, OCB, Military Bank, ACB, NamABank, Navibank, VietinBank and DongABank also granted VND289 billion ($13.7 million) to 34 enterprises in Ho Chi Minh City’s Go Vap district alone.

While this is by no means a new approach, targeted credit packages have become more common this year. At the end of last year, to meet the greater year-end demand for capital, many banks offered VND1 trillion-VND10 trillion ($47.5 million-$475 million) in loans at 7-9 per cent interest. However, disbursement was slow as many firms could not afford to take on extra debts.

According to experts, targeting specific customers with real need for capital will help banks ensure their credit growth for the future. The agreements are also often characterised by long-term mutual benefits, including the banks providing additional financial services.

In addition, this closer co-operation means greater trust and the likelihood that banks will be inclined to extend credit to other projects.

When talking about the recent PetroVietnam-LienVietPostBank credit agreement, PetroVietnam’s chairman Phung Dinh Thuc said this was the first project between the state-run oil and gas giant and the bank. PetroVietnam was implementing several petrochemical, industrial gas and electricity projects and LienVietPostBank would act as one of the group’s most important financing partners.

However, Dang Ngoc Ha, strategy deputy director of VietA Bank said the approach might meant that capital would fail to be allocated effectively if banks tended to only focus on major clients, especially enterprises with close relationships to the banks.

However, Governor of the State Bank of Vietnam Nguyen Van Binh praised the move, claiming credit growth might hit 10 per cent by the end of the year.

The Vietnam Asset Management Company (VAMC) also bought nearly VND35 trillion ($1.66 billion) of non-performing loans (NPLs), which had acted as a barrier for credit growth. “The purchase of NPLs, together with efforts to restructure debts and settle NPLs via greater risk provision has contributed to GDP growth of 5.4 per cent this year,” said Binh.

Stock market offers rich opportunities

With a gradual improvement in the economy, many experts believe that the stock market could be the most attractive investment channel in the new year.

Based on the economy’s results this year in conjunction with the predicted effects of the government’s policies next year, experts believe that the real estate market will not necessarily experience an easy recovery and the gold and foreign currency markets are likely to remain tightly controlled.

Financial expert Nguyen Tri Hieu was upbeat about the stock market’s prospects. “In a positive scenario, the VN-Index will increase by at least 30 per cent compared with the end of 2013, equal to 600-650 points in 2014,” he said.

The attractiveness of the stock market is said to be result of positive macroeconomic developments.

According to economist Vu Dinh Anh, a low consumer price index (CPI) has helped create the conditions to stabilise the macro economy and implement solutions to enhance gross domestic product (GDP) growth in 2014. Anh claimed the GDP growth of 5.8 per cent and the CPI target of 7 per cent next year were quite achievable. These indicators were sufficient grounds for optimism about the stock market, he claimed.

The more healthy economy would also help listed companies recover. Tran Van Dung, chairman and general director of Hanoi Stock Exchange (HNX) said inventories among listed firm were decreasing, their losses were smaller and profits higher. In the coming time, as the economy recovered more, listed enterprises would post brighter profit forecasts.

“These will be the basic factors that will help the stock market in 2014, thereby offering more attractive investment opportunities to investors,” said Dung.

Tran Quang Vinh, investment director of Thien Viet Securities Company said the stock market was recovering well with improved liquidity and was receiving greater interest from foreign investors.

An additional factor that could point to a resurgence of the stock market next year included the potential lifting of the 60 per cent cap for foreign share ownership for listed companies, which was mentioned in the draft decision submitted to the prime minister by the State Securities Commission last November.

“In addition, the positive progress in negotiating the Trans Pacific Partnership (TPP) might generate sharp changes in the stock market in 2014,” said Tran Minh Hoang from Vietcombank Securities Company.

Grounds for optimism as market thaws

The residential for sale market is ending the year with signs of recovery.

The Ho Chi Minh City residential market segment seems to be showing signs of a cautious revival. Buyer interest has increased off the back of cheaper credit and valuations almost falling to cost price, bolstered by a rash of incentive programmes.

According to figures from CBRE, prices over the wider apartment for sale market fell some 30 per cent compared to their peak in 2007, and prices and have now reached levels deemed to be what the market feels is affordable.

Well located good quality developments are registering higher sales. Those include the Estella, Vista, Sunrise City and Nam Long’s E-home projects.

The catalyst appears to be discounts and extended payment terms that allow buyers to make payments over three to five years and furniture packages. Higher sales in these projects have been consistently reported since early this year, and this trend is expected to continue into next year.

Meanwhile, the Hanoi residential market after a year of remarkable price cuts has seen developers promote bare-shell products.

Popular developments have included Mulberry Lane and Mandarin Garden. A series of low-end projects with thousands of small sized units at affordable prices have also seen a peak in sales, including Golden Silk, Tan Tay Do and Sails Tower.

Dang Ngoc Chau, senior manager for residential project marketing at CBRE, said after the stagnation of recent years, the residential market in Ho Chi Minh has turned into a property buffet party for residential purchasers.

“The weak market has spurred a range of incentive programmes that have sparked some interest. Hanoi developers have offered early hand-over arrangements and improved project utilities and offered reduced or free management fees. Vingroup’s Royal City and Time City projects offered buyers a 10-year exclusion on management fees which helped stimulate buyer interest. Hanoi buyers are still however adapting a wait and see approach,” said Chau from CBRE.

In Hanoi, recent months have reflected a remarkable increase in residential selling, especially for mid and low-end housing

A range of projects have been opened for sale in the market, such as Tan Tay Do, Van Phu, Sky Garden, Golden West, Discovery Complex and many others.

According to experts, the key factor remained price. Developers who understood that demand for mid and low-end residential remained very high and were focusing on developing projects for this market segment would do well.

According to Trinh Dinh Dung, Minister of Construction, property inventories compared to the same period of last year had fallen.

Figures from Ministry of Construction revealed that unsold residential developments had remarkably reduced in the closing months of 2013.

Despite the end of the year prediction that VND96,800 billion of property would still remain in stock, this figure was 25 per cent lower that in the first quarter of the year.

However Dung added that positive signs could be seen in the low-end and social housing projects. Transactions in this segment had doubled compared to the first two quarters of the year.

Nam Long builds social housing provider reputation

Nam Long Investment Joint Stock Company is due to announce new foreign investors, in addition to its three current strategic partners- ASPL, Nam Viet Limited and Mekong Capital.

Nam Long Investment’s (NLG) newly appointed general director Nguyen Vinh Tran said the name of the new foreign partner, who bought over 25 million shares, would be released in January, despite the agreement being reached in October.

Earlier, when NLG announced the sale of shares to raise capital two months ago, 13 organisational investors expressed an intention to register to purchase shares. This included eight foreign investors; prestigious names like the International Financial Corporation, VinaCapital Opportunities Fund, Dragon Capital, Fujiwara Advisory Singapore Pte Ltd (Bridging Capital) and Orix Capital.

In the context of the property market doldrums and listed property firms’ poor share liquidity, the eager participation of investors into NLG’s plan to gain capital through share issuance has come as a surprise.

Mekong Capital managing director Chris Freund once said bothering with financial indexes was the story of short-term investors, whereas to organisational investors, factors like professional management, a lucid development strategy and transparency were decisive when making investment decisions.

Market observers assumed that with a share value of over VND17,000 ($0.81) per unit, the company’s shares were not the first choice to individual short-term investors, since scores of listed firms have seen their shares sink below the face value of VND10,000 ($0.47) per unit. In addition, within the context of a property market that has yet to rebound, receiving a good share price is no mean feat.

NLG has not only been calling for the engagement of foreign shareholders, the firm has also created co-operative investment opportunities for its projects. In November 2013, Indochina Land contributed a 35 per cent stake and joined with NLG to develop the mid-end EHome 3 West Saigon apartment project.

Indochina Land Holdings CEO Peter Ryder said NLG’s sound steps and strong commitment towards the brand were why they had teamed up with the company for the promotion of the EHome development.

EHome 3 properties have sold well in recent months and this is reflected by the fact that all the units in phase 1A of the development have been sold. The developer has also been able to hand over apartments to customers a month earlier than scheduled.

“We saw NLG’s long term vision with its plan of building 14,000 mid-end quality EHome apartments in the next five years and on top of that, these products match the needs of most local residents,” said Ryder.

NLG’s general director Nguyen Vinh Tran, who has a wealth of experience working in an international environment said, unlike many other firms, NLG has made strides to improve sales and co-operate with other domestic and foreign partners to develop new housing projects, despite the difficult real estate market.

Five years after the launch of affordable housing projects, NLG has developed a reputation as an expert in affordable housing development with 1,300 housing units having been sold so far.

According to a company source, the company will roll out a further 10,000 EHome apartments in the next three years. Tran, however, said that this was only a drop in the ocean. Ho Chi Minh City alone would need around 70,000-80,000 housing units annually and this was a vast market for the company and its wealthy partners to tap, particularly once the market revives.

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

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