Rice exports projected to reach 1.8m tonnes in Q2

The Viet Nam Food Association (VFA) expects to export 1.8 million tonnes of rice for the second quarter this year, said association chairman Nguyen Hung Linh.

He said that many enterprises have registered a large volume in rice export contracts so the nation could reach the target.

Truong Thanh Phong, an advisor to the VFA executive board, said there are many export contracts for the second quarter because Chinese traders have promoted imports of Vietnamese rice via commercial contracts and small trading activities at border gates, reported the Thoi bao Kinh te Viet Nam (Viet Nam Economics Times) newspaper.

This month, rice export volumes are estimated to reach 650,000-700,000 tonnes, the association said.

In April, Viet Nam exported 631,000 tonnes of rice, earning US$278 million.

In the first four months of this year, the exports had a year on year reduction of 6.9 per cent in volume to 2.04 million and 4.7 per cent in value to $931 million.

The association also said that by April 29, enterprises had bought 950,000 tonnes of rice under the national programme on purchasing one million for temporary stock.

Sugar industry tackles rising stockpiles

The domestic sugar industry needs assistance as the sector is facing a high inventory and threats from illegally-imported products, the Viet Nam Sugar and Sugar Cane Association (VSSA) has suggested.

VSSA chairman Nguyen Hai said that, by the end of April, inventory reached 690,300 tonnes, including about 663,600 tonnes at factories and roughly 26,700 tonnes at trading companies affiliated with the association, according to the Vietnam News Agency.

That was a record high inventory, which was over 100,000 tonnes higher than the level of the the same period last year.

The over-supply pushed sugar prices down to their lowest levels of the past few years. Prices dropped from VND18-19 million (US$857-905) per tonne in 2011 to VND12-13 million ($571-619) at present.

The large inventory was mainly due to slow consumption, with a volume of 100,000-120,000 tonnes of sugar per month produced at each factory, which was the same as in previous years, he said. Customers had reduced their spending on sugar and sugar products as the economic crisis led to a slowdown in sugar consumption.

The Ministry of Agriculture and Rural Development (MARD) said the sugar cane crop for 2013-14 is expected to increase areas being cultivated for growing sugar cane by 8,000ha to 306,000ha compared to the previous crop, with an expected harvest of 1.6 million tonnes of sugar.

Under the commitment to the World Trade Organisation , Viet Nam imports 77,000 tonnes of sugar annually. At the same time, some 400,000-500,000 tonnes of sugar have been imported illegally to Viet Nam each year, said officials.

Domestic demand has reached about 1.4 million tonnes of sugar, according to the association.

The MARD has asked the Ministry of Industry and Trade (MoIT) to permit exports of 400,000 tonnes of sugar through border crossings with China, in a bid to reduce domestic inventory.

The association has also proposed the MoIT permit exports of sugar to China with flexible mechanisms and to reduce value added taxes to zero for bagasse and treacle, Hai said.

With the current value-added tax rate of 5 per cent, the Government should set up a fund for re-investment in the local sugar cane and sugar industry, using revenues from part of the value-added tax paid by sugar producers and traders, he said. The fund is currently used to provide financial support for sugar cane growers and projects on developing sugar cane enterprises.

In the future, the industry will focus on developing new sugar seeds with higher quality and quantities, promoting combinations between production and consumption, and developing support products to increase added value.

Prime Minister Nguyen Tan Dung has signed a decision to support sugar factories by investing in producing electricity from bagasse, which is is often burned after processing.

By generating electricity, factories would reduce spending and lower production costs, while increasing competitiveness with illegal sugar imports.

North-South transmission line approaches 20th birthday

Circuit 1 of the North-South 500kV transmission line will mark its 20th anniversary on May 27, 2014, marking a milestone in Vietnam’s electricity sector and adding momentum to the ongoing development of the national transmission system.

In the early 1990s, the sector faced a big pressure of providing enough electricity for the southern region, as power plants there met only 89.73 percent of the total demand for energy, leading to power blackouts that hindered the region’s development.

To deal with the serious shortage, Vietnam spent two years constructing an extra high voltage line for the first time.

The line’s Circuit 1, stretching nearly 1,500 km from the northern province of Hoa Binh to Ho Chi Minh City, transmits around 2 billion kWh per year.

The line created a foundation for the expansion of the national grid, said Tran Quoc Lam, Deputy General Director of the Electricity of Vietnam’s National Power Transmission Corporation (EVNNPT).

He added that the system run by the EVNNPT has to date accessed 61 out of the 63 provinces and cities across the country. A number of 220-500kV transformer stations have been put into operation in 57 localities.

In addition to connecting three separate power systems in the north, the centre and the south, the 500kV transmission system helps ensure power supply for large cities and key economic zones.

According to the EVNNPT, the power transmission system will satisfy the economy’s demand for an annual amount of 145-150 billion kWh in 2015, increasing to 265-275 billion kWh by 2020.

The corporation will maintain and extend the 220-500 kV transmission system connected with China, Laos and Cambodia, looking to building a smart grid capable of improving the quality of electricity.

On May 5, the Pleiku-My Phuoc- Cau Bong 550kV transmission line, counted as Circuit 3 of the North-South 500kV extra high voltage line, was connected to the national power grid.

PM ratifies market development project

Prime Minister Nguyen Tan Dung has approved a project increasing consumption of domestic goods, which will be closely aligned to the ongoing campaign “Vietnamese people use Vietnamese products”.

The two initiatives are aiming to increase the market share of domestic products in Vietnam to 80 percent by 2020.

The new project, worth 228.93 billion VND (10.75 million USD), strives to boost production, distribution and consumption of made-in-Vietnam commodities. It is focusing on speeding up the expansion of the market and getting ministries, agencies and localities involved in the campaign.

By 2020, it hopes to have enabled centrally-run cities and provinces to build fixed sales points in the provision of domestic goods. They will also establish services that connect consumption demand with the supply of producers and enterprises.

Measures have been put forth to reach the goals in four particular areas: heightening public awareness of local goods; supporting the sustainable development of the distribution system; improving the competitive edge of home businesses; and raising the effectiveness of market control activities and consumer protection.

Investment will be channelled towards upgrading trade centres and facilities to hasten the extension of the distribution system in populous areas, industrial parks, rural and remote zones and islands.

Meanwhile, mechanisms and policies facilitating the sustainable sale of domestically-produced products will be improved.

Banks target growth in consumer lending

Banks plan to explore mergers or acquisition of financial institutions, as well as the establishment of new financial companies, to ensure a healthier bottom line by offering more consumer loans.

At recent shareholders meetings, at least three banks, Saigon–Hanoi Commercial Joint Stock Bank (SHB), Maritime Bank and Vietcombank, have asked shareholders to support plans to acquire or set up financial companies.

At its shareholders meeting last month, SHB's board of directors sought approval to merge with and restructure a financial company that would become the bank's affiliate and provide consumer loans.

Bank directors said such a move would add value to SHB's operations.

The Maritime Bank has also asked its shareholders to authorise the establishment or acquisition of a financial company that would specialise in developing consumer loans.

Similarly, Vietcombank has asked its shareholders to approve a plan to set up a consumer credit company.

Nghiem Xuan Thanh, general director of Vietcombank, said the retail banking market had much room to grow, but wholesale banking was not expected to develop as once predicted.

As most consumer loans are a small amount, they help banks disperse risks, he said.

Late last year, HDBank acquired Societe Generale Viet Finance (SGVF) and renamed it HDFinance.

Nguyen Huu Dang, general director of HDBank, said before purchasing the financial company, consumer lending had not been effective for the bank because of high costs.

Consumer loans are generally small, but they must also comply with the strict loan approval process at the bank.

After HDBank acquires a financial company, small loans below 30 million VND (1,420 USD) are then transferred to HDFinance.

HDFinance, which has modern management technology, can approve the loan in 30 minutes to an hour, which is much faster than the time needed for bank approval.

Banks prefer to restructure existing financial companies instead of establishing new ones as these companies have market experience, and, thus, risks are lower, Dang said.

According to economist Nguyen Tri Hieu, capital mobilisation at banks has been good, but they have faced difficulties in lending.

As a result, they need to focus more on personal loans, either through acquisition or establishment of financial companies or consumer credit companies.

Because financial companies are not required to comply with strict regulations, they can do business more easily than banks, which find it hard to thrive in the consumer loan market.

In addition, the income of Vietnamese loan applicants is sometimes hard to prove, as required by bank rules.

The banks' establishment of finance companies can help bring greater profits because of the higher interest rates on consumer loans, he said.

Although they pay a higher interest rate, borrowers of these loans do not have to deal with complicated procedures or provide collateral.-

Viettel Post intends first class five-year results

Military-run Viettel Post Joint Stock Corporation is envisioning a fruitful harvest over the next five years.

At its 2014-2019 shareholder meeting last week, it set a $190.5 million average revenue by 2019, requiring annual growth of 20-23 per cent. Within the same period it aimed at $2.33 million of after-tax profits, up 13-15 per cent per year and announced a dividend payment rate of 15 per cent year.

It also set its sights on the total fixed assets of $28.6 milion, rising 18 per cent per year.

Chairman Duong Van Tinh said that to reach these targets the company would increase its charter capital this year to equal its equity. Some 900,000 shares will be issued at an initial $0.47 per share.

Viettel Post has forecasted revenue hitting $69 million this year, up 30 per cent against last year. Its express delivery and stationary services are its main earners and this means an expected growth of 37 and 50 per cent, respectively.

The same forecast showed pre and after-tax profits of $1.58 and $1.18 million, both up 12.68 per cent on-year and with a return-on-equity ratio of 21.4 per cent. Income per share would increase 12.66 per cent on-year with a dividend payment rate of 15 per cent.

This year Viettel Post is expected to contribute around $2.9 million in taxes, up 12 per cent on-year, to the state budget.

During 2009-2013, revenues totalled nearly 161.9 million, at an average $35.8 million per year. Total post-tax profits stood at $4.14 million, with a return-on-equity ratio of 32.25 per cent and a dividend payment rate of 15 per cent per year.

Despite poor market conditions in 2013, Viettel Post still achieved annual revenues of $54 million, up 24 per cent against 2012. After-tax profit increased 17 per cent while labour productivity rose 29 per cent on-year. It contributed $2.58 million to the state budget, up 18.48 per cent on-year.

The company affirmed its focus on services with high added value and reinforced this with its merger with Viettel Telecom, which is a member of Viettel Group – the parent of Viettel Post, to expand its network to over 85 per cent of communes nawionwide, up 13 per cent against last year. Within 2014 it plans to have 700 transaction points nationwide.

“We will expand co-operation with countries such as Japan, Taiwan, Hong Kong and South Korea,” said Viettel Post’s general director Luong Ngoc Hai.

Early last month the company was listed as one of the 500 fastest-growing enterprises in Vietnam by FAST500, produced by market insider Vietnam Report and Vietnamnet. Viettel Post was the only firm from the small and medium-sized firm community in the post and delivery sector to be named.

Vietnam requires dairy firms to set annual price caps

Prime Minister Nguyen Tan Dung approved a Finance Ministry plan, Tuesday, designed to impose one-year price caps on children's dairy products, after researchers reported the major firms had implemented price hikes in spite of huge profits.

A ministry report released at a government meeting said that after raising their profits an average of 23 percent last year, the five largest dairy firms Mead Johnson, Nestlé, FrieslandCampina Vietnam, Vinamilk and 3A Nutrition JSC (a distributor) raised prices by up to 30 percent per product since last December.

The five provide 90 percent of dairy products for children under six in Vietnam -- a group that numbers ten million or one ninth of the country’s population.

During the meeting, PM Dung said the hikes were steep and have meant considerable profits for the companies, VnExpress reported.

The new regulations require the companies to hold prices for six months and set a price ceiling for 12 months.

Nguyen Van Nen, the government spokesperson, said the regulations can reduce prices by VND50,000-70,000 a box, or some ten percent.

“The companies must share, and collect a moderate profit,” Nen said.

Investigators found that Nestlé had not informed the authorities about some of the new prices, which earned it an extra VND5.2 billion (nearly US$247,000) by the end of March, while the other four did not make proper tax declarations.

Vice minister Vu Thi Mai said Nestlé was fined VND45 million while inspectors have collected more than VND10 billion in further taxes from the rest.

Inspections by the finance ministry have discovered no transfer pricing abuse at the firms, but found “unreasonably” mammoth spending on advertising has added to price hikes.

Mai said the advertisement expenses at four foreign companies exceeded regulated levels by nearly VND400 billion and had pushed prices up by 2.18-16.4 percent.

The advertising cost at Vietnam’s largest dairy firm, Vinamilk, accounts for 21 percent of its retail prices, she said.

Nen called on related authorities to closely follow dairy import prices to better control retail prices.

A Tuoi Tre investigation found that imported infant formulas had been sold at three or four times their import prices since companies were paying doctors and nurses to recommend their products to pregnant women and new mothers and promote them at medical conferences.

A price cap to stabilize child dairy prices was also suggested in March by Nguyen Anh Tuan, head of the ministry’s Price Management Department, after the ministry launched its investigation into the pricing policies at the five firms.

Businesses now have to register their wholesale prices with the ministry, also listing their expected retail prices.

Inspectors found that the firms markup their products by some 30-40 percent.

Tuan said the big markup makes it hard to control retail prices, but the ministry is working to fix that.

He told Tuoi Tre newspaper one solution could be publicizing the registered wholesale prices.

High dairy costs act as a dampener on the physical growth of Vietnamese children, with middle-income parents saying formula costs eat half their salaries.

Last October, the government announced it would delay a $10-billion program to increase the average height of the population by providing free milk at nurseries and primary schools in the country’s 62 poorest districts between 2014 and 2020.

The program was expected to benefit two million kids, offering them a chance to enjoy milk two times at their schools per day.

Capital management is sweet for Masan

Major Vietnamese food producer Masan Group has attributed its rocketing growth to its allocation of capital raised from international long-term corporate investors.

In 2013 Masan saw long-term investments of about $1.5 billion from high-profile names such as the International Finance Corporation (IFC), KKR & Co. (KKR), J.P. Morgan and TPG Growth. Masan then designated $964 million to general business activities, $174 million to M&A deals and $350 million to balance its books, said a Masan report announced at the group’s annual general meeting in Ho Chi Minh City on April 25.

The meeting approved the multi-business private group’s plans to issue an additional 4.5 million ordinary shares to clear its liabilities as per existing agreements with the IFC, pursuant to a convertible loan extended to Masan by the IFC in 2010, and with MRG, an investment vehicle controlled by the UK’s Mount Kellett Capital, pursuant to a convertible loan extended to Masan by MRG in 2011. The issue is set to begin this year and will run through the first four months of next year.

Masan chairman Nguyen Dang Quang said M&A had played a very important role in the group’s growth momentum. The company acquired leading Vietnamese coffee product maker Vinacafe Bien Hoa, animal feed manufacturer ProConco, and iconic mineral water producer Vinh Hao.

Masan completed an overall business shake-up in 2013 to focus more on the consumption and resources sectors with the hope of higher profits. It expects 2014 revenue to hit at least $1 billion, double that of 2012.

The diversified giant with interests ranging from instant noodles to tungsten mining set up Masan Consumer Holdings to directly control two operating platforms – Masan Consumer and Masan Consumer Ventures. The former continues to serve as the group’s food and non-alcoholic beverage business, while the latter is an incubation platform for high-growth opportunities.

Korean expat Seokhee Won, a former top executive with global giant Unilever, was recently named the new CEO of Masan Consumer and deputy CEO of Masan Group. He is expected to leverage his 22 years experience in the consumer goods industry to help the group achieve its $1 billion plus 2014 revenue target.

At the general meeting, Dominic Price, former CEO of Indochina and India for J.P. Morgan, was elected as a new member of the board as Madhur Maini decided to step down. Chairman Quang said in another statement, “The arrival of Dominic Price will greatly strengthen Masan’s efforts to implement a corporate governance platform, while the appointment of Seokhee Won is an important part of Masan’s commitment to deliver transformational growth in the consumer sector.”

Last year, J.P. Morgan and its affiliates provided Masan Consumer’s Masan Industrial with a three-year line of credit of up to $175 million. Of this, $150 million is guaranteed by the Multilateral Investment Guarantee Agency (MIGA), a World Bank member. At the time Masan was the first private company in Southeast Asia to secure MIGA support for a corporate finance loan.

Recently, on April 25, MIGA executive vice president Keiko Honda arrived in Vietnam to seek and identify areas where MIGA can help the country mobilise capital for important infrastructure projects and other job-creating enterprises.

Township to go up in old Nha Trang airport area

The authorities of Nha Trang City in Khanh Hoa Province have announced a detailed zoning plan for a major trading, finance and township complex on part of the area of old Nha Trang Airport.

Under the scale-1/500 zoning plan, the township covers more than 61 hectares of the area in Phuoc Hoa, Phuoc Hai, Phuoc Long and Vinh Nguyen wards of the central coast city. The township is planned to have a population of 11,000 people. Some 23,6 hectares of the township will be reserved for new houses, 23 hectares for roads and parking lots, and the rest for parks, flower gardens, playgrounds and public utilities.

The zoning plan estimates around VND680 billion (US$32.28 million) will be needed for infrastructure development.

In September last year, the Khanh Hoa People’s Committee publicized its plan to develop part of the area of old Nha Trang Airport into a trading, finance and township complex after the central province got the Government’s approval to turn part of the military-managed area into a place for civilian purposes.

According to the approval, the complex accounts for some 190 hectares out of around 238 hectares in the airport area.

Mekong Delta to receive investment boost

Ho Chi Minh City will host a conference on May 22 to introducing the investment environment in the Mekong Delta.

The event, co-organised by the Vietnam Chamber of Commerce and Industry (VCCI) in Can Tho and Mekong Promotion Club (Mekong PC), will focus on the region’s advantages, including raw materials for agricultural development, diverse terrain for eco-tourism, and the huge demand for infrastructure investment.

Experts will share experience in making the regional investment climate attractive to domestic and foreign businesses.

Nguyen Huu De, Deputy Director of VCCI Can Tho, said the conference will provide necessary information for businesses wishing to invest in the Mekong Delta, contributing to developing an effective supply chain in the region.

Pham Thanh Khon, Vice Director of the local Department of Planning and Development, noted that the Mekong Delta is becoming an attractive destination for businesses due to its improved investment environment.

He added that Kien Giang, Dong Thap, Ben Tre and Can Tho in the region are among the top 10 localities having the highest Provincial Competitiveness Index (PCI) in 2013.

IFC invests in Thien Minh Group to promote sustainable tourism

Thien Minh Group, a Vietnamese leading private tour operator and hotelier, has just receive a financial investment from International Finance Corporation, a member of the World Bank Group, for expanding its tour business and developing hotel chain across Vietnam.

According to an announcement released by the International Finance Corporation (IFC) today, the financial institution will invest $14 million in Thien Minh Group, aiming to boost Vietnam’s tourism sector, contribute to its economic diversification and sustainable growth, and create jobs.

“This investment deepens our partnership with IFC,” said Tran Trong Kien, chief executive eoficer at Thien Minh Group.

“IFC financing and technical advice will help us build one of the most successful, sustainable travel companies in Asia as well as an important player in the hospitality industry in Indochina,” he added.

Established in 1994, Thien Minh Group has grown from a tour operator into a leading privately owned integrated travel group with three main tour companies, an on-line booking company, 11 three- and four-star hotels and a hotel management company. The group brings more than 90 thousand tourists to the Southeast Asia region and achieved over 200,000 visits to its own hotels annually.

It is the owner of the famous Victoria hotel chain in Vietnam and the Buffalo Tour. One of Thien Minh Group’s latest developments includes Hai Au Aviation, which will operate scenic flights in the Halong Bay area and schedule flights on seaplanes between Hanoi and Halong, starting from August 2014. This will be the first time seaplanes are introduced to Vietnam for tourism purposes.

In pursuit of a green and sustainable tourism business, Thien Minh Group has committed to applying IFC’s Excellence in Design for Greater Efficiencies Green Building Certification System in its new hotels with the aim of reducing energy, water, and material consumption by at least 20 per cent compared with similar buildings.

“We're excited to support Thien Minh Group as a company that has built itself from modest entrepreneurial beginnings to become the leading private sector player in Vietnam's fast growing tourism industry,” said Simon Andrews, IFC’s regional manager for Vietnam, Cambodia, Lao PDR, Myanmar and Thailand.

“Thien Minh Group is showing the way for other entrepreneurs and private sector companies in Vietnam and setting standards by adopting international best practice in governance, operations and sustainability,” said Andrews.

Local tyre firms reinforce positions

Leading local rubber firms are ramping up efforts to reduce the dominance of foreign players in the domestic radial tyre market.

One year after Danang Rubber JSC (DRC) was the first to step foot into Vietnam’s radial tyre market, early last year, Southern Rubber Industry JSC (Casumina) put its own all-steel truck tyre manufacturing plant in the southern province of Binh Duong into service, which has a much bigger scope than that of DRC.

Casumina’s project, with a $3.3 billion investment, was reported to consist of three phases. The first has an annual capacity of 350,000 tyres for domestic consumption and export, the second (from now until late 2015) ups capacity to 600,000 and the third phase will see capacity reach 1 million per year.

Casumina estimates that once the plant reaches full capacity it would generate VND5 trillion ($238 million) in annual revenue, helping to turn the company into a leading player in South East Asia.

DRC’s radial tyre project, with VND2.9 trillion ($138 million) in total investment, consists of two phases. The already operational first phase has an annual capacity of 175,000 tyres a year. It will increase this each year to reach 600,000 by 2018.

When its plant was commissioned, DRC said it was the largest scale project in Vietnam’s auto tire industry and would aim to gradually replace imports.

Though the company is strong in manufacturing bias and specialised OTR tyres, radial tyres are now being established as its standard.

According to the Vietnam National Chemical Corporation (Vinachem) – the parent company of DRC and Casumina – radial tyre plants are pushing forward the local rubber industry and tyre sector toward reducing imports, diversifying product lines and increasing the commodity value of Vietnamese rubber.

In fact, with their advantages of durability, safety, light weight, and less friction, radial tyres are becoming increasingly popular in auto tyre production.

In the US, Japan and France, nearly all tyre manufacturers have shifted into making radials, and in Asia the rate is similarly high – 90 per cent in Malaysia and 50 per cent in China, according to figures from Casumina.

But this is only around 10 per cent in Vietnam, but is expected to reach 100 per cent in the next 20 years.

Given such potential, local firms are ambitious about taking over the market from foreign players.

In September 2013, Casumina rolled out its line of semi-steel radial tyres comparable to those of foreign producers, but only 80 per cent of the price of imports, and it stepped this up with the opening of its all-steel radial truck tyre plant.

According to Hanoi-based The Gioi Lop (Tiresworld) Company – a distributor of global tyre brands in Vietnam – China is a world leading radial tyre producer in terms of volume and a heavyweight competitor in terms of sales.

One problem faced by both DRC and Casumina is how to turn out high-grade tyre products that satisfy increasingly stringent market requirements.

Casumina and DRC hold around 60 per cent of general tyre and tube market share (Casumina 33 per cent and DRC 25 per cent). They are also leading players in the domestic market with Casumina holding 8 per cent and DRC 13 per cent of market share, according to the firms’ 2013 reports.

Vietnam opening the field for foreign firms

Vietnam will slash the number of conditional business sectors and professions in order to open up more investment opportunities for foreign companies.

Minister of Planning and Investment Bui Quang Vinh told the National Assembly’s Standing Committee last week that while drafting the amendments to the laws on Investment and Enterprises, the Ministry of Planning and Investment (MPI) would work with other relevant agencies to revise all existing 330 conditional business sectors and professions, and several dozen sectors banned from business and investment.

“The number will be reduced. The reasons for revision will be made public. It is expected that the fully revised list will be available in October,” Vinh said. “It’ll be a tough bit of work as it relates to many ministries.”

“This breakthrough will help Vietnam attract more investors, especially foreign companies eagerly waiting for Vietnam to open the doors previously barred areas of business,” he said. “This will also be in line with the Constitution that states that it is legal to operate in any business sector not precluded by the law.”

Under the two draft laws expected to be adopted late this year by the National Assembly, the list of banned sectors include projects harmful to national security and defence and the public interest, projects that could damage historical sites, culture, morality and customs, and projects prone to harming health, natural resources and the environment.

However, the National Assembly Chairman Nguyen Sinh Hung was sceptical about the regulations

“These vague regulations mean we’re banning almost everything, and investors will have no investment opportunities because every sector in the economy would be affected by such broad-brush descriptions. For example, garment production also relates to culture and custom.” Hung said. “It is necessary to specify exactly what banned and conditional sectors include.”

After being pared down, the banned list will be outlined in a governmental decree, not in an actual law.

The two new laws will also make it much easier for investors and enterprises, in terms of procedures.

The draft amendment to the Investment Law has removed many investment procedures including the granting of an investment registration certificate for projects not banned or subject to any conditions. Investors can register their investment projects online. Such certificate, which replaces the existing investment certificate, will be issued upon request, yet will remain compulsorily for investors engaged in ‘conditional’ projects.

Realty investors allowed to delay land-use fee payments

The Ministry of Finance has released a circular allowing real estate investors to delay land use fee payments if their projects had incurred losses as of the end of 2013, have grappled with high volumes of unsold properties or have not generated revenues despite big investments.

A half-completed property project in HCMC. The Ministry of Finance has released a circular allowing real estate investors to delay land use fee payments if their projects had incurred losses as of the end of 2013 - Photo: Manh Tung

The ministry’s Circular 48/2014/TT-BTC provides guidelines for the delay in land use fee payments as stipulated in the Government’s Resolution 01/ND-CP. The beneficiaries are those whose land-use fee payments have not been extended in accordance with the Government’s resolutions 13/NQ-CP and 02/NQ-CP issued in May 2012 and January last year respectively.

The property developers meeting the requirements can be subject to the land use fee payment extension for a maximum of 24 months from the original payment date announced by tax authorities or relevant agencies. Enterprises will not have to pay fines for slow payments during the period.

Extension of the land use fee payments will be decided on a “case-by-case” basis and be valid for the amount which has to be paid to the State budget, excluding the fines for late payments.

For the projects developed for various purposes, the delayed land use fees will be calculated based on the allocated space for building houses for lease or sale.

The enterprises entitled to the land-use fee payment delay have to proclaim the fees while filing for their quarterly corporate income tax. The amounts paid to the State budget are based on those collected in property transfers, leases or sale contracts signed.

The circular also stipulates three subjects considered for payment delays for purchasing State-owned houses. They are households and individuals eligible for buying old State-owned house after June 6, 2013 when the Government’s relevant Decree 34/2013/ND-CP took effect, and those qualified for purchasing State-owned houses or allowed to continue buying State-owned houses in line with Decree 61/CP.

Saigon Sunbay: Super-project sits stagnant

Despite construction starting in late 2007, Saigon Sunbay, Vietnam’s largest seaside eco-town project to date in Ho Chi Minh City’s Can Gio district, has seen poor progress, resulting in suspicions and concerns from residents on the project site.

After seven years, the only completed features of the project are a wall surrounding the site built by former contract Dai Phu Gia-Anjeong consortium and a stone jetty lining 100 hectares of beach by local and current contractor Lung Lo-Sao Mai consortium.

According to people who live on the contract site, work halted immediately after completing the stone jetty right after Lunar New Year this year.

At the time, Lung Lo-Sao Mai had machines and construction crews on the site and work was in full gear, but since the holiday, no progress has been seen.

In early April, VIR contacted Can Tho Tourist City Corporation (CTC) and spoke with a company representative who confirmed that construction has now been halted for several months.

“We are making preparations for changes to the implementation plan,” he said, adding that the project would soon begin anew.

As per the initial design, Saigon Sunbay would cover 600ha including 200ha of beach and would cost a staggering $1.5 billion. The capital needed for site clearance and infrastructure development alone was estimated at $350 million.

Notably, the developer had also committed to creating a land fund by encroaching the sea and using the reclaimed land for site clearance.

Saigon Sunbay was divided into four zones: HeartBay (high-end resorts and hotels, diverse commercial, tourist and entertainment activities); LifeBay (high-end residential areas); EcoBay (floating resorts, green park, bungalow, spa, etc.) and BlueBay (beach and marina).

One of the main obstacles to the project’s progress was capital, the developer explained, saying that the project was based on the Ho Chi Minh City economic development forecast for 2007-2008.

Accordingly, the city was forecast to continue robust growth during that period, paving the way for developers to work on big projects and initiate plans to raise capital from partners. What happened instead was the financial and housing crisis and the developer was unable to source capital.

Asked by VIR on the current status of raising capital for the project, the company declined to respond about specifics, but said reports have been sent to city authorities and agencies, and steps were being taken to move forward.

One marked change at the project was the selection of new contractor, aforementioned Lung Lo-Sao Mai consortium, which is highly regarded and has a wealth of experience in hydraulic engineering and construction.

In late March VIR sent a dispatch to the Ho Chi Minh City Department of Planning and Investment requesting an up-to-date and transparent report on the project’s progress but an official response remains forthcoming.

Senior economist Nguyen The Hien, commenting on the case, said it was important for the developer to set progress targets. Otherwise city authorities would likely revoke the project’s licence or downsize its scale to devote more land to public tourism development, giving locals a better chance to involve in pushing forward tourism in the area.

Bank mergers mean capital difficulties for small firms

More small banks have been merging into larger banks in Vietnam, a trend that is expected to result in difficulties for small and new companies.

Under the government’s Project 254 on restructuring the credit system in the 2011-2015 period, around seven small and weak banks will undergo mergers this year, raising the total number of merged small banks to 15-17 by the end of 2014.

Truong Van Phuoc, Vice Chairman of the National Financial Supervisory Committee, said it is law for small banks with weak competitiveness to accept mergers.

The mergers are a result of a change in capital requirements. In the past banks were required to have VND3 trillion (USD142.8 million) in capital as stipulated by Decree 141, issued in 2006. Instead, the required minimum legal capital for a Vietnamese bank will be VND4 trillion.

Dr. Le Xuan Nghia, head of the Business Development Institute, said that the US has thousands of banks with less capital than the Vietnamese requirements.

According to Dr. Nghia, the scale is important but the effectiveness of operations is the decisive factor in a bank’s survival.

Difficulties for small firms in accessing capital

In reality, many small and new companies report difficulties in getting loans from big banks.

Dr. Le Xuan Nghia said that big banks tend to try to attract big companies and ignore small ones.

In the US, the government encourages the establishment of investment companies and hedge funds for small and newly-established companies to help them get access to credit. Japan has many banks specialising in providing loans for small and medium-sized enterprises.

Because there is a lack of any such policy in Vietnam, and larger banks do not appear interested in lending to smaller firms, any small to medium-sized businesses are beginning to worry as the number of smaller banks diminishes.

Dak Lak exports coffee to 60 countries worldwide

Coffee, the key export of the central highland province of Dak Lak, is capturing an ever increasing share of the world market and is now exported to more than 60 countries and territories around the globe.

Among them, 31 markets have an export value of more than US$1 million each while 13 others have obtained values in excess of US$10 million each including Germany, Japan, Italy, the US, Belgium, Spain, the Republic of Korea, Switzerland, France and Russia.

Since 2008, cumulative coffee exports of the province have reached more than US$3.5 billion.  In the first quarter of 2014 alone, total coffee exports were US$260 million, far outpacing the US$600 million for all of 2013.

According to the People’s Committee, the export volume of coffee has remained relatively stable and the increases in value are directly attributable to increases in the selling price. At present, Dak Lak leads provinces and cities nationwide in coffee cultivation area, with more than 202,022ha, accounting for over 40% of the total area in the central highlands dedicated to growing coffee and 30% of the total area nationwide. It yields around 400,000 tonnes of coffee bean per annum.

Given the current state of the market, leading economists are relatively confident that coffee will continue to play a vitally important role in boosting the locality’s socio-economic development for many years to come.

Real estate market posts nationwide upswing

The Ministry of Construction has claimed there are signs of recovery throughout the real estate market.

According to figures from Ministry of Construction (MoC), the real estate market has seen improvements, with an increase in transactions and a slow-down in falling prices.

More than 1,500 successful transactions were reported in the first quarter in Hanoi, double the number recorded during the same period last year. In the first 15 days of April, more than 800 transactions were reported.

According to Nguyen Tran Nam, Deputy Minister of MoC, a range of projects had seen remarkable increases in sales, including Vingroup’s Royal City and Times City, Hoa Phat Group’s Mandarin Garden, Thang Long Number One, 175 Nguyen Trai and Victoria Van Phu.

Land and villa sales have also seen modest increases this quarter compared to zero sales during the same period last year.

“These figures reveal that Hanoi’s real estate market has seen positive movement with increasing transactions. In many projects, inventories has been reduced and prices have been stable,” Nam said at a meeting of the National Steering Committee for Housing Policy and Real Estate Market held recently in Hanoi.

Nam added that the most sought after projects were located within Ring Road 3, and were mostly bought by end-users, not speculators.

“This shows the fact that the market is now healthier, for both developers and buyers,” he claimed.

The same positive signs have been seen in Ho Chi Minh City. The MoC said that more than 1,000 successful transactions were also seen in the first two months of this year. In Ho Chi Minh City, affordable houses in suburban districts 8, 9, Thu Duc and Binh Chanh were proving the most popular purchases.

In Ho Chi Minh City’s neighbouring provinces, where land is 30 to 50 per cent lower than the city, buyers are expressing interest in the Long Hau residential area, which despite being located in Long An province, abuts the Phu My Hung urban development area.

Nam also claimed the figures proved that prices were no longer falling. Apart from projects in areas lacking completed infrastructure, completed projects located in central areas were maintaining prices, with some firms even increasing prices.

Nam said there was evidence of an increasing shortage of VND20 million per square metre and less than 100 square metre apartments.

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