BUSINESS IN BRIEF 30/6

Hi-tech support industry: high demand, limited supply

Companies in the Saigon Hi-Tech Park are in high demand of domestically made support components however local firms have been unable to meet the demand.

Domestic firms can supply simple components like packing and plastic trays while complex parts of machines which require high accuracy are severely short, said Le Bich Loan, deputy head of the park.

The US Intel Group built their largest chip plant worth US$1 billion in the park in 2010. Domestic firms provide only 10 percent of the plant’s component demand in 2013.

The number of Vietnamese companies able to meet Intel’s requirements is too limited, said its representative.

According to a survey of Japan External Trade Organization (JETRO), domestic suppliers can supply less than 32 percent of support components for companies from Japan who is the largest foreign investor in Vietnam in 2013.

The country’s Foreign Direct Investment reached US$22.4 billion last year and Japan firms account for 26 percent with 500 projects, JETRO CEO Osato Kazuhiko said.

Businesses have spent much on import components and devices in the country’s major export industries in recent years.

Imported components occupy up to 58 percent of export value of electronic products, computers and phones, equivalent to US$40 billion. Of this number, phone component import approximates $20 billion.

The Government has provided preferential policies to develop the support industry however they are not enough and ineffective.

High interest rates of 8-15 percent have affected the competitiveness of domestic companies in this field, who are in small and medium scales, said Tran Tien Phat, CEO of Datalogic Vietnam.

One-to-one deal touted for renewables

As the Vietnamese government’s subsidy on electricity has left prices below power firms’ expectations, foreign investors have proposed a trial process of selling renewable power directly to end-users as a short-term solution.  

At the bi-annual Vietnam Business Forum (VBF), held in Hanoi two weeks ago, foreign investors asked the Vietnamese government for permission to pilot a mechanism for wind, solar and biogas power projects where independent producers may sell directly to end-users through one-to-one power purchase agreements.

When required, these independent producers would pay distribution and transmission fees to the state-run Electricity of Vietnam (EVN). Such fees would have to be agreed upon as part of the competitive wholesale market, read a proposition prepared by the VBF’s Energy Working Group at the forum.

While Vietnam has the potential for renewable energy, private investment in the sector is very modest due to government policies not yet covering the potential risks.

The Vietnamese government is planning for renewable energy to make up at least 5 per cent of the nation’s total power supply by 2020, but this is becoming increasingly unrealistic as private investors are reluctant to enter the market.

Statistics from the New and Renewable Energy Department, under the General Department of Energy, show that total renewable energy connected to the national grid is approximately 1,500 megawatts, of which 1,466MW are generated from small hydro-power projects. There are also two wind power projects in Bac Lieu and Binh Thuan provinces. However, sources such as solar, biomass, biogas or municipal waste power remain untapped.

Foreign investors have been outspoken in their criticisms of EVN’s feed-in-tariff to independent power producers, which is currently at just below 8 US cents per kilowatt hour, as being too low to give investors profit or guarantee bank loans.

“As EVN is incurring major losses, no private foreign investor or bank is likely to accept EVN’s plan to buy electricity from wind power plants unless guarantees are offered by the Vietnamese government,” the proposition indicated.

“Professional wind power producers that are reliable and have the necessary finance have had no opportunity to enter the Vietnamese market as of yet,” it added.

However, foreign investors believe that Vietnam’s renewable energy goals can be achieved if the direct power sale trials are successful without any guarantees from the government or any power price offset by EVN. They cited direct power sales as working well in other emerging markets such as India, Mexico and Brazil.

“A power purchase agreement directly signed between an independent wind power producer and an end-user such as a multi-national company could be used to access loans via international banks, and together with the producer’s financial resources, could ensure continued wind power investment in Vietnam in the future,” the proposition concluded.

Disbursements of VND30-trillion home loan package meager

Just more than 7% of the VND30-trillion home loan package for housing projects and low-income buyers has been disbursed one year after it was launched as one of the measures to fuel recovery of the real estate market.

A recent report by the Ministry of Construction showed that disbursements of the package had totaled VND2.16 trillion as of May 31, or one year after the program kicked off.

According to the ministry, 5,378 households and individuals had registered to borrow over VND2 trillion from five participating banks, including the Vietnam Bank for Agriculture and Rural Development (Agribank), the Bank for Investment and Development of Vietnam (BIDV) and the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank). Of which, 5,368 borrowers had taken out more than VND1.34 trillion.

Besides, more than VND812 billion had been disbursed for 19 housing projects out of more than VND1.89 trillion registered for 23 projects. In HCMC, only one social housing project of Hoang Quan Real Estate Corporation got VND244.6 billion.

The ministry said disbursements of the package jumped in the first five months of this year as participating banks inked lending agreements worth VND1.76 trillion at the end of last year but the figure amounted to over VND3.95 trillion as of May 31.

Nguyen Van Duc, deputy director of the HCMC Real Estate Association (HoREA), said disbursements of the VND30-trillion home loan package were too slow due to complicated lending procedures and the lack of eligible housing projects.

Duc said that property traders and firms had in the past one year voiced their concerns over the complicated approval process but the Ministry of Construction and the State Bank of Vietnam had made slow adjustments.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, told the Daily that slow disbursements resulted from little improvements in procedures applicable to the package. He assumed individuals were waiting for lending procedures to be streamlined before they took out loans from the program.  

The ministry said national real estate inventory decreased by 35% or over VND45 trillion in the first five months of this year compared to the first quarter of 2013, with staggering declines of 36% in Hanoi and 45% in HCMC.

Tech renovations urged to reduce reliance on China

HCMC chairman Le Hoang Quan has called for State agencies and State-owned enterprises (SOE) in the city to look for viable measures to fasten technological renovations and diversify material supplies so as to reduce heavy reliance on China.

Quan urged the agencies and local SOEs to take quick actions in the wake of rising tensions in the East Sea prompted by China’s illegal deployment in early May of a giant oil rig well within Vietnam’s waters.

At a meeting with representatives of local agencies and SOEs last week, Quan told them to cooperate with universities, institutes and scientists to develop technologies and seek new sources of materials.

Quan said the quality of machines and equipment at small- and medium-sized enterprises (SME) was low, with most imported from China, while Vietnam was well capable of manufacturing such machines. Therefore, it is necessary for universities, scientists and enterprises to work together to study and make machines and equipment to replace imports.

Le Van Khoa, director of the HCMC Department of Industry and Trade, said Chinese-made machinery and equipment were cheap but not fuel-efficient. Enterprises have to spend much more on equipment made in Japan or Germany but its efficiency is much higher.

According to Phan Minh Tan, director of the HCMC Department of Science and Technology, many enterprises in the city were keen on technological renovations. Twenty-nine businesses have set up their science and technology funds with over VND380 billion and spent over VND124 billion on new and modern technology.

“This spending is significant if it is compared to the city’s budget for science and technology,” Tan said.

Tan said the department had worked with 13 corporations and firms with plans on technological renovation and the city would finance them to improve performance.

The current labor productivity in HCMC is quite low, equivalent to only one-fourth of Thailand and one-tenth of Malaysia. However, Tan is optimistic about fast technological changes at enterprises in the next five years.

Mai Thanh Phong from HCMC University of Technology said Vietnam lacked so many materials to manufacture machines and that local scientists could help make machinery for SMEs only. However, there is a chance for Vietnam to replace old technology.

According to Assoc. Prof. Nguyen Thanh Nam from Vietnam National University-HCMC, enterprises need to team up with scientists to manufacture products meeting their requirements.

Chairman Quan said the HCMC government had a policy on technological improvements and called on the departments concerned to have long-term strategies to link researchers and enterprises.

Local science and technology teams are now able to produce many different machines, and thus the Department of Science and Technology needs to help enterprises approach them and assist engineers.

The Department of Industry and Trade proposed the city support enterprises import machines and equipment to replace outdated ones and develop manufacturing facilities to gradually reduce imports.

Quan said the city would help build a strong bridge between enterprises, banks and universities in order to research and turn out products.

Singapore leads foreign investment in HCM City

Singapore led foreign investors in Ho Chi Minh City in the first months of this year, according to a municipal official at a recent Vietnam-Singapore business forum.

In the three months of 2014, the country’s economic hub granted licences to 71 foreign-invested businesses with total investment capital of nearly 750 million USD, 4.5-fold increase against the same time last year.

The total included nine Singaporean enterprises capitalised at over 200 million USD, comprising 31 percent of the total foreign investment in the city, said Le Manh Ha, Vice Chairman of the Ho Chi Minh City People’s Committee.

Singaporean companies have so far invested in over 667 projects capitalised at nearly 7 billion USD.

Along with existing fields, Singapore investors are interested in technology, which is suitable to the city’s economic restructuring orientation as well as its capacity for skills and human resources, Ha said, adding the city is committed to creating favourable conditions for Singaporean businesses to carry out their long-term investment in the hub.

HCM City and Singapore are also seeing sound development in other areas such as trade, culture and education.

In 2013, Singapore was the city’s third biggest trade partner, with two-way trade of 3 billion USD.

Norman Lim, Chairman of the Singaporean Businesses’ Association, said this year many Singaporean firms are eyeing on Vietnam ’s agro-forestry products and seafood, so Singapore promotion agencies have boosted cooperation programmes with their Vietnamese partners in these sectors.

Leow Siu Lin, Consul General in HCM City , highlighted the relations between the two countries, saying the ties were being stepped up by both governments and peoples, including their respective business communities.

In regards to social disturbances in May, she said the Singaporean Government and business community highly appreciate the timely measures taken by the Vietnamese Government, which showed the resolve to maintain a favourable, stable and safe investment environment for enterprises.

Edlyn Khoo, Director of International Enterprises (IE) at Singapore ‘s Ho Chi Minh Centre added that the city is a national leader in attracting investment from Singapore , followed by Hanoi and Quang Ngai, Bac Ninh, Binh Duong and Ba Ria – Vung Tau provinces.

She emphasised that Singapore ’s future goal is to strengthen its partnership with HCM City as well as with and other provinces in Vietnam . Singapore wishes to expand cooperation with Vietnam in a host of areas, including trade, import-export, technology transfer and preservation of food and farm produce to increase the value of Vietnam ’s agricultural sector.

In addition, Singapore’s famous brand names are keen on the Vietnamese consumer market, and hope to cooperate in franchising opportunities in such fields as retail, food and services, Khoo concluded.

ACE Life opens first fund manager in Asia

ACE Life, the global life insurance division of ACE Group, on June 19 announced the opening of its first fund management company in Asia to support ACE Life’s expansion and growth strategy locally.

ACE Life Fund Management Company (ACE Life FMC) will operate mainly in the securities sector with the main business lines involving investment fund management, portfolio management and investment advisory services. Its license was granted by the State Securities Commission of Vietnam in 2013.

Lam Hai Tuan, chairman and country president of ACE Life in Vietnam, said the recent developments of Vietnam’s financial markets offer many opportunities for growth in the fund management sector.

The opening of ACE Life FMC proves ACE Life’s commitment to grow Vietnam’s economy via contributing more to mobilizing domestic capital as well as attracting foreign investment capital to the country, Tuan said in a statement released on June 19.

One of ACE Life FMC’s main objectives is to manage assets of ACE Life in Vietnam. In the initial phase of its development, ACE Life FMC’s strategy is to focus on managing ACE Life’s portfolio through its investment management service of the Life Insurance Fund of ACE Life in Vietnam.

Building materials market still in difficulty

The building materials market has shown signs of slight recovery in recent months but challenges still abound, according to many enterprises attending Vietbuild 2014, an international exhibition on property and building materials opened in HCMC on Wednesday.

According to Tran Van Huynh, chairman of the Vietnam Association for Building Materials, after three tough years, the market has started to stabilize but is still far from sustainable growth. The building materials market depends much on property and construction.

Antonio Gigirey Vieiro, director of Taicera Keraben Co., Ltd., a producer of ceramic bricks, said the stagnation of the property market had dampened demand for building materials.

In the past when the property market was frozen, consumption of building materials declined correspondingly. Moreover, domestic enterprises are facing fierce competition from imported products.

Leu Van Nghia, deputy director of Nam Long Aluminum Company in HCMC’s District 12, said the company’s sales were heavily affected by the slowdown in construction activity.

Chu Van Minh, deputy general director of Building Materials Corporation No. 1, told the Daily that the property market needed to focus on mid-end housing projects so that building materials enterprises could supply those projects. This is also a way out for both sectors.

Huynh did not pin high hopes on the building materials market but expected it to be stable.

According to Huynh, enterprises operating in the sector need to cooperate with each other as well as focus on increasing the product quality and improving technology to better compete with imported products. Besides, the State should offer incentives to domestic building materials enterprises, enabling them to further participate in big projects.

Vietbuild 2014 taking place until Sunday is attended by 800 domestic, joint venture and foreign companies with over 2,300 booths.

HCM City wants special incentives for apparel material producers

The HCMC government will propose the Government and ministries grant special incentives to developers of industrial parks for textile and garment material production and corporate tenants.

The objective is to help textile and garment enterprises reduce their heavy reliance on material imports from China, heard a seminar in HCMC on Wednesday.

Le Van Khoa, director of the HCMC Department of Industry and Trade, told the seminar that the city government has given approval to Vietnam National Textile and Garment Group (Vinatex) and Saigon Agriculture Incorporation to develop an industrial park for suppliers of materials for the textile and garment sector.

The 80-hectare industrial park in Binh Chanh District costs more than VND100 billion and will have its infrastructure development completed in the next three to five years.

Khoa said the city government is seeking a number of special incentives including corporate income tax exemptions for four years, 50% tax reductions for nine following years, land rent breaks for 20 years and import tariff exemptions for the goods which are not made domestically to support infrastructure developers.  

For material producers, the city wants corporate income tax exemptions for four years, 50% tax reductions for nine following years, land rent breaks for 11 years and import tariff exemptions for the machines and equipment which are not made in Vietnam.

“The city government will submit the incentives to central-level agencies via the Ministry of Finance. These incentives will likely be approved as the ministry has okayed similar projects, including a project to develop supporting industries for the textile and garment industry,” Khoa said.  

Le Dong Trieu, general director of Gia Dinh Textile and Garment Company, said apparel firms have to import nearly 70% of their materials from China.

“Though we have talked much about developing our own material sources to lessen dependence on imports from China for years, the import proportion from China has remained high due to its cheap prices and supply is diverse,” Trieu said.

Gia Dinh Textile and Garment has invested in a VND400-billion yarn factory with 40,000 spindles at Tan Tao Industrial Park.

Le Quang Hung, chairman of Saigon Garment Manufacturing Trading Company, said the most concern of the sector is dyeing due to its high costs for treating chemicals and wastewater.

Hung proposed the Government have incentives for foreign enterprises with financial capability and high technology to invest in textile and garment material production.

Vinatex forecast apparel exports will reach US$23.5-24.5 billion this year compared to US$20.4 billion last year.

Ministries asked to seek solution for pulp mill project

The Prime Minister has asked the Ministry of Industry and Trade to coordinate with the Ministry of Finance and Long An Province to support Phuong Nam pulp mill in Long An Province.

The plan to deal with the much-touted pulp mill must be submitted to the Prime Minister within this month.

Transport and Communication Development Investment Company (Tradico) under Civil Engineering Construction Corporation No. 6 started work on the pulp mill with an investment of over VND2 trillion in March, 2006. The State-funded project was then hailed as capable of producing the best kind of pulp in Vietnam.

At the time, farmers started growing jute over nearly 9,000 hectares in Thanh Hoa, Moc Hoa and Tan Thanh districts in the province to supply feedstock for the mill.

The project was suspended in 2009 due to many problems, including disagreement among farmers over jute buying prices as well as machine malfunctions, resulting in hiccups in operation of the mill.

After being transferred to Vietnam Paper Corporation after that, the mill was upgraded and started operation again but malfunctions remained.

A former investment official of Long An Province who was invited to join the project management but turned down the offer told the Daily that the decision to suspend the project at this time was too late as many difficulties have arisen, so much time wasted and huge losses incurred.

Besides, many jute growers have been badly affected, he added.

He said he refused to participate in the project due to its poor viability.

Tradico specializes in constructing transport works and is not experienced in developing paper projects. Moreover, the project’s material is jute, which has not been used by any other paper projects in Vietnam before.

In addition, the project was mired in uncertainties then because many enterprises had to struggle against imported paper despite receiving much assistance from the State before Vietnam joined the ASEAN Free Trade Area (AFTA) and the World Trade Organization (WTO), he said.

From a professional perspective, the leader of a paper company said that the project ended in failure due to the investor’s limited experience of the field.

The best solution, according to many people in the field, is to find a new investor who can continue the project, which is also the desire of the provincial government.

In fact, the province has continuously proposed support from the State so that the plant can continue operation and consume jute material in the province.

Phuong Nam pulp mill is regarded as an example of failure resulting from scattered and haphazard investments of State enterprises. Such ineffective investments not only affected enterprises themselves and wasted State capital but also hurt farmers.

Budget apartments attract buyers

Real estate firms and investors are focusing more on low-cost housing projects to boost consumption this year, as budget condos prove more attractive to buyers.

The First Home as a joint project between Gia Phu Cooperative and National Housing Organization Joint Stock Company (NHO) is being given a push to meet the strong demand of homebuyers.

Le Thi Hoa Duong, marketing manager of First Home, or Thanh Loc condo project in HCMC’s District 12, said 496 low-cost condos of the project have been all ordered since May.

With construction started last November, First Home with 14 stories aims to supply condos measured from 42.5 to 61 square meters each at VND386-600 million a unit.

NHO recently announced its plan to spend some US$1 billion building 14 housing projects resembling First Home in HCMC, Hanoi, Danang, Binh Duong and An Giang with 25,000 condos in total.

Duong said low-income buyers can access loans from the VND30-trillion home loan program of the Government to own a First Home apartment.

Many other investors in HCMC now are also launching budget housing projects that allow home-buyers to borrow from the VND30-trillion package to buy apartments, such as the Dream House project in Go Vap District, Tan Huong Tower in Tan Phu District, and Parc Spring project in District 2.

Similarly, Nam Long Investment Corporation and Thu Duc Housing Development Corp. (Thuduc House) said they will invest more in the affordable housing segment with their S-home and E-home brands respectively.

Nguyen Van Duc, vice chairman of the HCMC Real Estate Association (Horea), said the real estate market is now lacking affordable apartments but full of large and expensive condos.

Many enterprises have tried to split their large condos into smaller ones but have had difficulty with administrative procedures, Duc said.

A leader of a real estate company in the city said this year will be a bustling year for the low-cost apartment market and the segment will attract most investments in the coming time.

Le Chi Hieu, chairman of Thu Duc House, said the competition has become fiercer in the budget housing segment, adding that prices of some mid-end apartments have been reduced to the same level of low-cost housing to boost sales.

According to the Housing and Real Estate Market Management Agency under the Ministry of Transport, by the end of the second quarter, the country had 98 budget housing projects completed, including 35 projects with 19,000 apartments for low-income buyers and 63 projects with 17,400 apartments for workers.

In the meantime, 129 other budget housing projects are being developed with 55,000 apartments for low-income buyers.

Kinh Do joins Saigon Ve Wong to tap instant noodle market

Local listed confectionery maker Kinh Do Corporation has revealed a plan to partner with Taiwan’s Saigon Ve Wong Co., Ltd to produce instant noodle products in the third quarter in its continued foray into the food and flavor market.

Through its joint venture with Saigon Ve Wong, Kinh Do will launch spices and instant noodles in the market under the OEM (original equipment manufacturer) form. Saigon Ve Wong will produce instant noodles, rice porridge and pho (Vietnamese noodle soup) for Kinh Do.

A representative of Kinh Do told the Daily on Tuesday that the firm wanted to cooperate with Saigon Ve Wong as the Taiwan firm has many years’ experience in producing instant noodles, whose consumption is growing fast in Vietnam.

As a newcomer on the market, Kinh Do will not compete directly with other brands but will focus on high-end products, said Kinh Do’s general director Tran Le Nguyen in an earlier occasion. Nguyen was confident on the success owing to the company’s wide network with 300 distributors and 200,000 retail stores.

He said the corporation still has room to grow in the domestic instant noodle market whose size is now estimated at around US$2 billion per year.

Statistics of the World Instant Noodles Association show that Vietnam ranks fourth after China, Indonesia and Japan in instant noodle consumption.

Demand of the product on the domestic market, which is now mainly controlled by local Acecook and Asia Food and South Korea’s Masan, surged from 4.3 billion packets in 2009 to 5.1 billion packets in 2012.

Kinh Do also plans to expand its business in the cooking oil and coffee markets by acquiring stakes of two domestic firms, but it has refused to elaborate.

As leader of the domestic confectionery sector, Kinh Do said the market segment now is approaching saturation with little room for expansion, so it is shifting its investments to foods and essential products.

Customs told to inspect goods transport by GPS

The General Department of Customs has told its customs offices to use Global Positioning System (GPS) devices for managing and inspecting goods transported by containers to avoid theft and fraud during the transportation process.

Decision 1626/QD-TCHQ of the general department was made after the customs in some localities found that certain container truck drivers intentionally switched the trucks to other routes and unsealed containers to steal some goods inside.

Exporters also reported that in recent years many container truck drivers had stolen goods when transporting them to seaports for export, and some firms only learned of losses when importers informed of the lack of goods in such shipments.

If the GPS device is installed on goods transported by container trucks, forwarding firms as well as trading enterprises can keep track of the routes that the trucks are following via high-tech devices such as a smartphone or a tablet.

Any malpractices by drivers such as unsealing containers or changing routes can be uncovered.

Starting this month, the customs departments in Haiphong City and Quang Ninh Province in the north have run a pilot project of using GPS devices in their cargo inspections.

After the trial use in these two localities, the General Department of Customs will evaluate the efficiency of the scheme before expanding the use of GPS nationwide.

This year’s ICT awards offer chances for new products

This year’s HCMC Information, Communication and Technology (ICT) Awards will promote new products and services by putting them in the list of nominees.

Le Thai Hy, director of the city’s Department of Information and Communications, said that the sixth annual awards, themed “information security” as a preparation for the building of the Law on Information Security, will be expanded with new products and services in some categories.

The category of hardware awards this year will include chips, smart cards, information technology (IT), and electronic equipment integrated with embedded software.

Among the chips nominated for the awards are products studied, developed and produced by domestic firms to encourage local production and development, he said.

In the category of best value-added service providers, the focus will be on over-the-top (OTT) service and cloud computing. The organizer told the Daily that the judgment board will evaluate the innovation of those products and services as well as their growth on the market.

This year’s awards feature six categories including enterprises having outstanding software solutions and products, enterprises having the most popular hardware, enterprises providing the best value-added services, organizations having outstanding IT applications, organizations and individuals making great contributions to the city’s IT development. and the best IT students.

Registration is open until August 15. The first round will be held from August 15 to September 15 and the final round from September 15 to September 25.

Major warehouse center off ground in Haiphong

Work has started on a major warehouse service center at Dinh Vu Industrial Park in the northern city of Haiphong.

The ground-breaking ceremony of C. Steinweg warehouse service center was attended by Prime Minister of the Netherlands Mark Rutte on Tuesday, the last day of his official two-way visit to Vietnam, according to Vietnam News Agency.

The center will have three warehouses with a combined usable space of 30,000 square meters and a cargo storage capacity of up to 70,000 tons a year.

Previously, the Haiphong Economic Zone Authority licensed the project covering 150,000 square meters and its first phase is scheduled to be put into service in August next year.

More than 20,000 tons of goods worth US$40 million is expected to go through the warehouse service center in the first year of operations.

The Dutch prime minister told the ground-breaking ceremony that the project was a testament of Dutch companies’ belief in the future of Vietnam.

Also on the same day, he pressed the button to launch Damen ASD 3212 ship at Damen Song Cam Shipyard in Haiphong. This 32-meter-long, 12-meter-wide rescue ship has been built for Venezuela.  

The Dutch-invested Damen Song Cam Shipyard has been developed with an investment of 65 million euro and the first phase covers 40 hectares in Thuy Nguyen District.

Nguyen Van Thanh, Party Secretary of Haiphong City, said companies of the Netherlands had invested more than US$200 million in many projects in the northern port city, mainly in shipbuilding and logistics.

The Gioi Di Dong to list on HOSE this month

The Gioi Di Dong Investment Joint Stock Company (TGDD) will have more than 62.7 million shares listed on the Hochiminh Stock Exchange late this month with an initial reference price of VND85,000 per share.

At a news briefing in HCMC on Monday, leaders of the company said that the over 62.7 million shares are equivalent to VND627 billion and will be traded with a code of MWG.

TGDD also announced a website at www.mwg.vn for potential investors to look into opportunities at the company. This website will be launched this Friday to provide information about business performance and financial reports as well as events for investors and shareholders.

Nguyen Duc Tai, chairman and general director of TGDD, said that the company currently takes half of the market share that mobile phone retail chains hold. The company targets to raise its mobile phone retail segment share to 35-40%.

Tai said TGDD obtained profit of VND170 billion in the first quarter of this year and its profit in the January-May period exceeded last year’s figure.

The company has expanded its brand Thegioididong to 63 provinces and cities in Vietnam and has plans to open 15-20 new stores of 150-200 square meters each a month towards the year-end.

The company will also inaugurate 700-1,000 shops of 30-40 square meters each in rural areas. Those C shops are expected to bring in around VND500 million in monthly revenue.

TGDD earned revenue of VND7.82 trillion and after-tax profit of VND250 billion last year. It targets to increase the respective figures to VND13.021 trillion (up 37%) and VND435 billion (up 68.3%) this year.

Sacombank teams up with Dutch group

Saigon Thuong Tin Commercial Bank, or Sacombank, signed a memorandum of understanding (MoU) on cooperation in the fields of food and agriculture with Rabobank Group of the Netherlands on June 17.

The cooperation was inked when Prime Minister of the Netherlands Mark Rutte paid a two-day visit to Vietnam, starting on Monday. As part of the deal, Rabobank pledged to share and provide technical help for Sacombank to launch credit products for food and agriculture sectors. The Dutch group will also give training to Sacombank staff to support the domestic lender to grow in these fields.

Marcel van Doremaele, CEO of Rabobank Singapore Representative Markets, said that agriculture development plays an important role in Vietnam as nearly three-fourths of the population lives in rural areas.

“With the MoU, we expect to join hands with Sacombank to improve financial services and products in rural areas, thus raising value and quality of food and agriculture sectors in Vietnam,” van Doremaele said in a statement released on June 17.

Sacombank general director Phan Huy Khang said Vietnam’s food and agriculture sectors still have large potential. Therefore, cooperation with Rabobank is expected to help the lender raise market share in the sectors.

Rabobank Group is a global financial institution with a presence in 41 countries. It targets various client segments including farmers and small and medium-sized enterprises.

Jardine Schindler, Cao Thang cooperate in training

Elevator firm Jardine Schindler Vietnam on June 17 signed a partnership agreement with Cao Thang Technical College to deploy an apprenticeship program as part of the company’s strategy to join forces with local educational facilities to develop a qualified workforce for the company’s sustainable development.

Under the program, 20 students of the first group of apprentices will be chosen for a three-year course from June 2014 to April 2017. In the first year, students will have to complete all the required subjects at Cao Thang and Jardine Schindler will select the best students.

The selected candidates will spend two years on dual training at the college and the company, and then one year on intensive training at Jardine Schindler Vietnam.

The dual training will help students get on-the-job experiences while they still study at the college. They will be equipped with all the necessary knowledge and skills to work for Jardine Schindler Vietnam as either certified Installation Fitter or Service Technician after finishing the apprenticeship program.

Ashok Ramachandran, managing director of Jardine Schindler Vietnam, said the company has encountered many difficulties in recruitment of technicians since most of the graduates cannot meet Jardine Schindler’s global criteria. Therefore, the apprenticeship program has been launched.

Ramachandran said the output will be the core fitter team consisting of high-standard members with robust craftsmanship expected to improve the serving quality for customers.

Graduates from the program will be awarded with a diploma in mechatronics technology issued by the college plus a certificate in elevator installation and maintenance issued by Jardine Schindler Vietnam.

Dao Khanh Du, rector of Cao Thang Technical College, said newly-recruited technicians would normally have one to two years of further training before they are certified and can work independently. The partnership between his school and Jardine Schindler Vietnam will help students familiarize with a real working environment and solve daily problems at work.

Urban areas hard to woo FDI projects in H1

Despite a strong rise in foreign direct investment (FDI) approvals in HCMC in the first half of this year, Saigon Hi-Tech Park (SHTP) and a number of urban areas in the city have not attracted any foreign-invested project in the period.

A report by the HCMC Department of Planning and Investment indicated that more than US$900 million has been registered for 162 new and 49 operational projects in the city from January to date, surging by 83.5% year-on-year.

However, most of the new projects have been licensed in industrial parks and export processing zones. SHTP, Thu Thiem and Northwest Cu Chi urban areas have lured none of the projects approved in the first half of this year.

Le Bich Loan, deputy head of SHTP, told the Daily that the hi-tech park has yet to have any FDI project in the year to date, partly because it has not met investors’ demand for land leasing. Moreover, the high-tech park’s management has set stricter selection criteria for newcomers who must be globally known, have source technology and invest in research and development activities rather than production only.

New investors should prove what their value added contributions they will be able to make before they are licensed. The objective is to stop investors from taking advantage of incentives and low-cost labor.

However, Loan said that a number of major investors are in negotiations to set up shop in SHTP and are having their projects appraised before licenses were issued.

In the same situation is Thu Thiem Urban Area in District 2. Trang Bao Son, deputy head of the Investment and Construction Authority for Thu Thiem New Urban Area, said several projects have been submitted to agencies at higher levels for consideration and approval.

A source said South Korea’s Lotte Group is working with Japanese investors to develop a commercial, hotel and office complex with total capital of US$2 billion. The HCMC government has given ‘in principle’ approval to this project and SHTP expects it will be licensed soon.

The management of Northwest Cu Chi Urban Area said many domestic and foreign investors had expressed strong interest in this area but they were unable to get a license before a 1/2,000-scale zoning plan of this area is approved.

However, the city government has recently passed the zoning plan to open doors wide to investors to enter Northwest Cu Chi Urban Area. The management said priorities would be given to investments in infrastructure, housing, hospital and school.

Consumer goods of global groups more favored, says Kantar

The Brand Footprint 2014 report released by Kantar Worldpanel last week shows that fast-moving consumer goods (FMCG) manufactured by global giants are preferred by most people in both rural and urban areas in Vietnam.

According to the Brand Footprint 2014 ranking revealing the most chosen FMCG manufacturers, Unilever took the top position in rural Vietnam and the second place in urban Vietnam.

Over 99% of the households in rural and urban areas used products of Unilever at least once in the past year, with P/S and OMO as Unilever’s top brands.

Meanwhile, Vinamilk was the leading manufacturer in four key cities namely HCMC, Hanoi, Danang and Can Tho. Its wide range of food and beverage brands like Vinamilk, Ong Tho, Ngoi Sao Phuong Nam and SuSu were chosen by 98% of urban households last year.

In rural areas, Vinamilk ranked third with its products chosen by 82% of rural households.

Masan won the second place in rural areas and the third place in urban areas, mostly thanks to the widespread use of its two sauce brands – Nam Ngu and Tam Thai Tu. Masan also owns other powerful beverage and food brands like Wake-up Café Saigon and Kokomi, which achieved high growth in rural Vietnam.

Meanwhile, Néstle jumped two places to sixth in the urban ranking. Néstle products were chosen last year by 85% of urban households.

Kantar Worldpanel’s Footprint 2014 was conducted in 35 countries. The complete ranking comprised over 200 FMCG categories across the beverage, food, health and beauty, homecare, alcoholic drinks, and confectionery sectors.

The data for the ranking related to purchases was collected in 52 weeks between October, 2012 and October, 2013.

HCMC limits condo split-ups in central area

HCMC vice chairman Nguyen Huu Tin has told the Department of Construction to restrict the division of commercial condos into smaller units, especially in the central administrative area covering 930 hectares.

In outlying districts, the department must consider infrastructure development and social conditions before allowing investors to split up their apartments, Tin said at a meeting with relevant agencies to deal with hindrances to the VND30-trillion home loan package on June 17.

Nguyen Van Danh, deputy director of the Construction Department, said investors in the city are seeking approval to change functions of 32 projects, in which they want to transform 11 commercial housing projects into budget ones and 21 others into those with small or medium-sized apartments (70 square meters each or less). Their goal is to meet requirements for the Government’s VND30-trillion loan package for the real estate sector.

Moreover, many developers have proposed dividing their condos, saying that the demand for small units is huge.

Tin said the department should be careful in approving the proposals to ensure fair treatments among enterprises. Besides, construction of converted projects should be sped up to improve housing supply in the city.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said local banks as of end-May committed to lend VND989 billion to 799 individuals and one company as part of the VND30 trillion home credit package funded by the Government.

However, shortcomings in mortgage verification procedures have prevented citizens from accessing the loan program or housing service, Minh said.

Tin, meanwhile, said bank procedures are still complicated.

For instance, an official who wants to benefit from the program must prove that he did not own any home in the past. Nonetheless, the competent authorities can only certify his current home ownership status. The regulation has spelled trouble for homebuyers and relevant State agencies, he said.

“Besides, the lending rate of 6% per annum is still high. For a normal civil servant with a monthly income of VND8 million, he could set aside a maximum of VND2-3 million for housing. We should consider revisions so that borrowers could afford budget condos,” Tin added.

HCMC chairman Le Hoang Quan said the real estate market is facing an imbalance with many high-class apartments but few low-cost units.

Related agencies should deal with the problems to ensure housing services for local residents, Quan said.

Vinamilk announces five-month financial results

The Vietnam Diary Product Joint Stock Company (Vinamilk) recently announced it earned VND1,240 billion from exports in the first five months of the year, and aims to raise the figure to VND4,000 billion by the year-end.

A company spokesperson also reported that the company’s total import-export revenue for the year is forecast to jump 15% year-on-year to VND36,298 billion.

Vinamilk currently exports infant formula, powdered milk, baby food, condensed milk, fresh milk, soya milk, soft drinks, and yogurt to 31 countries and territories around the globe.

Its major consumers are Cambodia, Thailand, the Republic of Korea, Japan, Taiwan, Turkey, Russia, Canada, the US, and Australia.

In early May 2014 Vinamilk broke ground for a US$23 million dairy product plant in Cambodia, in which it takes a 51% stake.

The company recently received a license for a US$3 million project in Poland – a move to penetrate the European market.

Over the next three years, the company plans to concentrate heavily on expanding its markets in the Middle East, Africa and the US.

Yamaha recalls 35,850 motorbikes in Vietnam over light switch defect

Yamaha Motor Vietnam is recalling 35,850 motorbikes over faulty brake light switches, the company announced Wednesday.

The brake light switch defect has been detected on Sirirus Fi and Jupiter Fi models that were manufactured between March 31 and May 22, 2014, Yamaha Motor Vietnam said in a statement.

The switch was made of substandard plastic, causing its cover to melt due to heat caused by static electricity, the company said.

Yamaha Motor Vietnam submitted a proposal to the Vietnam Register, which provides technical supervision and certification for means of transport, on June 11 to recall the affected vehicles for free part replacement.

Owners of the affected motorbikes are encouraged to visit Yamaha dealerships across Vietnam to have the brake light switch replaced for free.

This is the second recall launched by Yamaha Motor Vietnam in a little more than a year.

In May 2013, the company announced a nationwide recall campaign targeting the Yamaha Nozza – 1DR1 scooters over three technical errors.

The recall affects 83,000 Nozza scooters made between August 20, 2011 and March 30, 2013.

The technical faults include the fuel pipe and the bearing frame and bolts for the pipe.

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