Vietnam-France trade grow considerably

The exchange of goods between Vietnam and France has been highly stable over the years.

As a European Union (EU) member, France constantly developed its bilateral trade with Vietnam, with the trade exchange of goods growing at a  

high rate in the 2008-2012 period.

However, Vietnam had a slight trade deficit in 2009, due to the impact of global economic slowdown.

But in 2010, its exports to France increased by 35.6% compared to 2009, leading to a trade surplus of US$0.13 million.

In 2012, Vietnam’s total export earnings from France reached US$2.16 billion, a sharp increase of more than 30% over the previous year.  

France became its fourth largest  export markets in Europe and ranked 15th in its list of export markets.

This was attributed to a sharp rise in the export value of computers, electronics and components to US$203 million, tripling the previous year’s  

figure. Other items of high export value included telephones and components (up 65 %) and coffee (up 114%).

In 2012, total imports from France reached US$1.6 billion, up 31.9% on the previous year, with the volume of iron and steel increasing by 117%,  

means of transport and other components by 111.8%, and milk and dairy products by 107%.

In the first eight months of the year, Vietnam’s key export items to France included computers, electronics and components, footwear, telephones  

and components while its imports were mostly pharmaceuticals, machinery and equipment, and iron and steel.

Ha Tinh calls for Japanese investment

Ha Tinh currently ranks sixth in terms of foreign investment attraction, said mayor Vo Kim Cu. 

He was speaking at a seminar which was jointly held on September 25 by the Japanese Embassy Sumitomo Mitsui Bank and the Ha Tinh  

provincial People’s Committee as part of activities marking the Vietnam-Japan Friendship Year and the 40th anniversary of bilateral diplomatic  

ties between the two countries in more than 100 delegates from Japan’s big groups such as Sumitomo, Mitsubishi and Sojitz were present at the seminar.

They were encouraged to invest in the local support industry, transport, manufacturing and infrastructure sectors.

The provincial leader pledged to support Japanese investors, especially in administrative procedures.

Hirokazu Yamaoka, a representative from the Japan External Trade Organization (JETRO), suggested localities like Ha Tinh should draw more Japanese investors into their local development projects, especially in steel manufacturing.

Japanese businesses are currently operating in 36 Vietnamese localities, but most of them in seven biggest provinces and cities.

At the seminar, three memorandums of understanding on investment and product supply were signed between Ha Tinh and Japanese businesses.

Agro-forestry, seafood exports earn US$20.45 billion in 9 months

Vietnam’s agro-forestry and seafood exports in September were estimated at US$2.39 billion, raising its nine -month export revenue to US$20.45 billion, up 0.5% year on year.

Of this figure, agricultural exports accounted for US$9.93 billion (down 12%), but seafood exports earned US$4.61 billion (up 3%), and forestry product exports US$3.97 billion (up 12%).

Among high export earners were pepper (112,000 tonnes worth US$743 million), cashew nuts (188,000 tonnes worth US$1.19 billion), and tea products (101,000 tonnes worth US$161 million).

Meanwhile, rice, coffee and rubber exports went down in both volume and value.

Garment sector lacking in material input

The local garment industry enjoys high export revenue but depends largely on imported materials.

According to Vietnam customs, its exports from January to September earned US$12.237 billion, up 16.9% compared to the same period last year.

Le Quang Hung, Head of the Saigon garment and textile joint stock company (Gamex Saigon), says local producers are facing fierce competition from foreign rivals for imported materials.

He is ray concerned about the current shipmembers of input materials to Vietnam from foreign trade partners which come three weeks later than scheduled.

Against this backdrop, many material suppliers have raised prices by 10-15%.

As for businesses applying free on board (FOB) models they find themselves in a difficult position to buy adequate materials for production on order.

The current supply of input materials is far from meeting the growing demand of the garment industry.

Latest statistics showed that Vietnam had to import more than 817 tonnes of fabric worth US$5.697 billion mainly from Taiwan, China, and the Republic of Korea (RoK).

From January to August 2013, China earned US$3.44 billion from fabric exports to Vietnam, much higher than last year’s figure.

Local businesses also had to spend billions of US$ importing materials from Taiwan and the RoK.

Economist Pham Chi Lan suggests the Government of Vietnam would better support local farmers in developing material supplying areas for the  

garment industry. If not, she argues, the garment industry will be unable to meet strict regulations on product origin when Vietnam sign new trade  

agreements such as the Trans-Pacific Partnership (TPP) Agreement with other countries outside ASEAN region.

Seminar on Vietnam-US aviation cooperation

A seminar was held in HCM City on September 25 to discuss ways of developing Vietnam’s civil aviation sector as well as Vietnam-US aviation cooperation.

The event gave Vietnamese and US experts a chance to share experience in managing airport traffic, public-private partnership in aviation and certification of airplanes.

US Consul General in HCM City Rena Bitter said the US and Vietnamese Governments have enjoyed a dynamic partnership in the aviation sector, noting that the seminar will help US experts provide more support for Vietnam in this field.

The US Trade and Development Agency (USTDA) has provided the Civil Aviation Administration of Vietnam (CAAV) with over US$1 million to intensify efforts for safety conditions.  It has also funded many projects in Vietnam totaling more than US$20 million.

Poland’s pharmaceutical firm set to operate in Vietnam

Polpharm- a leading pharmaceutical group of Poland has included Vietnam in its market development strategy in Southeast Asia.

Polpharm’s investment scheme and its already successful operations in the EU, Russia, Kazakhstan, and Central Asia were announced at a September 25 to debut its business operations in Vietnam.

It will open a representative office in Hanoi to introduce more than 600 types of pharmaceutical products, predominantly used in treating heart, digestive and mental health diseases.

Rajmund I. Martyniuk, Vice President of the Management Board and Commercial Director for Polpharm Group, highlighted huge potential for his firm’s operation in the Vietnamese market, which he described as a key location for expansion to other ASEAN members.

Davlet Matkerimov, Polpharma Vietnam General Manager, said his group’s presence in Vietnam will help local patients improve their health condition, adding that his firm wants to produce medicines in Vietnam and transfer knowledge and technology to Vietnamese partners.

Exports fetch US$96.5 billion in nine months

Vietnam was estimated to earn US$96.5 billion from exports in the first nine months of this year, a year-on-year increase of 15.7%.

According to the General Statistics Office (GSO), FDI businesses contributed US$58.4 billion, or 60.6%, to the figure. Their export earnings marked a 27% rise from the same period last year.

In the nine-month period, the country made a trade deficit of US$124 million or 0.1% of total export value.

The FDI sector only posted a trade surplus of nearly US$4 billion in the reviewed period.

Vietnam is expected to rake in US$68 billion in export earnings in the second half, bringing this year’s total export value to US$129 billion, which will mark a 12.5% increase from last year, according to the Ministry of Trade and Industry.

Meanwhile, the country’s import value is estimated to hit US$70 billion, raising the year’s total imports to US$132 billion, a year-on-year rise of  14.5%.

HCM City surveys Argentinean market

Ho Chi Minh City is willing to facilitate Argentinean businesses’ partnerships in the fields of the city’s strength like services, food processing and  hi tech-used agriculture and tourism.

Permanent Deputy Secretary of the HCM City Party’s Committee Nguyen Van Dua issued the statement at his meetings with General Secretary  of the Argentinean Communist Party Patricio Echegaray, Deputy Speaker of Buenos Aires City Council Dante Gullo and Chairman of the  

Vietnam-Argentina Culture Institute Poldi Sosa on September 23-24 as part of his working visit to the Latin American country.

The visit took place at a time when Vietnam and Argentina are carrying out practical activities for the 40th anniversary of diplomatic ties and  pushing for stronger friendship and cooperation.

The HCM City official also introduced to the hosts his city’s role as Vietnam’s largest economic hub, a big centre of culture, education and  

training, science and technology, and international exchanges.

On the occasion, a business forum was held by the Vietnamese Embassy in Argentina and the Argentinean Ministry of Economy, offering a  venue for HCM City businesses and Argentinean partners to establish contacts and seek partners.

Bilateral trade between the two nations has grown in recent years reaching US$1 billion for the first time in 2011.

In the first eight months of this year, the two countries made a year-on-year soar of 48 percent to US$1.1 billion in trade. Vietnam mainly ships  footwear, electronics, rubber and garments to the South American country, while importing animal feed, animal and plant oil, seedlings and  medicines.

Viet Kieu car imports must clear customs

Vehicles shipped to Vietnam’s ports that are not eligible for import under the mode of movable assets of repatriating overseas Vietnameses  (Viet Kieu) will be fined and then confiscated if they are not re-exported.

This comes under new regulations the Ministry of Finance recently proposed to the Government with the aim to prevent people from taking  advantage of the Government’s Viet Kieu automobile import policies to make illegal profits.

Under the new regulations, vehicles not re-exported within 30 days of the local customs departments' decisions will be confiscated.

The Ministry of Finance also ordered the General Department of Customs to inspect cars that were currently stuck at ports. Those that were  proven to be smuggled would be treated as smuggled products in accordance with Article 45 of the Law on Customs.

The owners of vehicles kept at ports for more than 90 days would get notices. After another 30 days, if the receivers did not come to customs  departments for handling procedures, the cars would be sold and the money would go into the State budget.

The number of luxury vehicles brought in by repatriating Viet Kieu has rapidly increased, with more than 1.140 cars in 2012 compared with 164 in  2011.

Central bank issues regulations for VAMC

The State Bank of Vietnam on September 25 announced administrative procedures relating to selling, buying and solving bad debts from domestic credit institutions for the Vietnam Assets Management Company.

The procedures include the issuance, revision, adjustment and supplement of management policies and regulations on VAMC’s activities, allowing the company to buy bad debts at market value, approving its plans on bond insuance, financial support for credit institutions and contributing registered capital and equity.

Bad debts amounted to 142.27 trillion VND (6.8 billion USD) or 4.64 percent of total loans by Vietnamese banks at the end of August, a 20.15 percent increase since the end of 2012, the SBV’s Inspection Agency reported.

According to Chief Inspector Nguyen Huu Nghia, many measures will be taken to solve bad debts. The SBV will direct credit institutions to apply measures to recover debt and collateral and use provisions to settle bad debts and assets. It will also coordinate with VAMC to implement bad debts transactions.

All such activities must contribute to the objective of cutting the bad debts ratio to the safety threshold of 3 percent by the end of 2015 as planned by the National Assembly.

VAMC is expected to eventually handle around 40-50 percent of the bad loans in the banking system.

Woodwork brands gather at HCM City int’l fair

As many as 260 businesses from 19 countries and territories are attending the 10th Vietnam International Woodworking Industry Fair (Vietnam Woodworking) in Ho Chi Minh City from September 25-28.

The participation of such wood processors’ organisations as the European Federation of Woodworking Machinery Manufacturers (EUMABOIS), German Engineering Association (VDMA), and American Hardwood Export Council (AHEC) is expected to further consolidate Vietnam’s position as a manufacturing, sales and distribution centre for the woodworking industry in the Southeast Asia region.

Domestic enterprises, on their part, see it a chance to seek partners and advanced technologies meeting their demands.

On display of this year’ fair are modern machines and devices, advanced manufacturing systems as well as services that are practical and suitable to the market’s needs.

Woodwork remained Vietnam’s main export line for years. In 2012, the country raked in 3.4 billion USD from woodwork exports. The figure for the first eight months of this year was 2.3 billion USD.

Hanoi to host international tea meeting

Hanoi will host the International Tea Meeting from October 8-9 to introduce and promote Vietnamese tea products to foreign importers.

During the event, participants will discuss measures to ensure the sustainable production of the local tea industry in order to improve quality and expand export markets, said the Vietnam Tea Association.

Vietnam is the fifth largest exporter of tea in the world, shipping products to 105 countries and territories, chiefly to Pakistan, the United States, the United Arab Emirates, Germany, Poland, China, India, Japan, Sri Lanka and the Republic of Korea.

Vietnam’s tea for export is one of the nation’s three rising agricultural products in 2012, with a total turnover of around 227 million USD from 148,000 tonnes. In the first eight month of this year, the country exported 88,000 tonnes, earning 140 million USD.-

Price of paddy falls in Mekong Delta

The price of paddy in the Mekong Delta has dropped drastically as more areas under rice cultivation were flooded due to continuous heavy rainfall in recent days.

Fresh paddy harvested by combine harvesters was bought at around VND4,200-4,250 per kilo while fresh long-grain paddy was bought at VND4,600 per kilo.

As for fresh paddy that was so deeply submerged underwater because of floods and heavy rains, farmers had to harvest by hand, and for which price fell to VND3,500-3,800 per kilo for normal paddy, and to VND4,200-4,300 per kilo for long-grain paddy.

Lam Van Teo, a farmer in Thanh Loc Commune in Giong Rieng District of Kien Giang Province, said that continuous heavy rains have sent several farmers into despair as the cost for harvesting by hand was two times higher than that for harvesting by harvesters. Meanwhile, paddy price plummeted steeply as wet and muddy paddy is out of favor with traders. Under such circumstances, farmers will suffer huge losses.

The Department of Cultivation under the Ministry of Agriculture and Rural Development on September 24 said that farmers in the Mekong Delta provinces have so far grown autumn-winter rice crop on 790,000 hectares.

Farmers in Kien Giang, Vinh Long, Dong Thap, and Can Tho City have harvested about 100,000 hectares of autumn-winter rice crop with an average productivity of 5-5.2 tons per hectare.

Counterfeit fertilizer flooding local market

The Ministries of Industry and Trade, Agriculture and Rural Development, Public Security, and the Fertilizer Association of Vietnam held a conference to seek measures to prevent counterfeit fertilizer from flooding the market.

According to Le Quoc Phong, Vice Chairman of Fertilizer Association of Vietnam, three years ago counterfeit fertilizers and trading in low quality fertilizers mainly occurred in rural and remote areas and in a very small scale, including faking famous fertilizer brand names.

Now, this illegal practice is rampant and not only small and medium enterprises are involved but even fertilizer and plant protection agencies can now produce counterfeit fertilizers by a concrete mixer, fake genuine brands and circulate the product without detection.

Major General Nguyen Ngoc The, Head of the Department of Security, said that counterfeit fertilizer was uncovered in 45 provinces across the country, including Thai Binh, Nam Dinh, Can Tho, Dong Thap, Long An, An Giang, Tien Giang, Hoa Binh, Thanh Hoa, Nghe An, Binh Duong, Dong Nai, Ho Chi Minh City, and the highland provinces.

In the first half of this year, police inspected more than 7,000 fertilizer and plant protection agencies in the south and uncovered many wrongdoings, such as counterfeiting fertilizers of well-known brand names, mixing rock dust into fertilizer to increase weight, failing to show certificate of origin of materials to produce fertilizer, and the quality of fertilizers failing to meet standards.

Noticeably, counterfeiting of fertilizer also occurs in foreign countries. In border provinces, including Lao Cai, Ha Giang, Cao Bang, and Lang Son, police had uncovered low quality fertilizers, mainly imported from China.

Recently, dishonest traders also transferred packages of prestigious Vietnamese fertilizer companies to China to pack with low quality fertilizer then send back to Vietnam to consume or export to a third country.

In 2012 and the first six months of this year, police uncovered 1,390 violation cases, slapped a total penalty of VND17 billion, and seized 917 tons of fertilizers.

Le Quoc Phong, who is also a CEO of Binh Dien Fertilizer Joint Stock Company, said that as the number of fertilizer counterfeiters increased, sales and market shares of many big fertilizer companies were affected.

Nguyen Tan Dat, CEO of Southern Fertilizer Company, said that NPK fertilizer was generally used by farmers; hence, this product was counterfeited the most. The quality of counterfeit fertilizers was only 70-80 percent compared to that of genuine products. Thus, farmers have to pay at least 10 percent for low quality fertilizers, not to mention fake fertilizers. With fertilizer consumption of US$4 billion every year, farmers in Vietnam have to spend an extra $400 million because of low quality fertilizers.

However, why did not plant productivity decrease when farmers used low quality fertilizers?

Mr. Dat explained that the area under agricultural land in Vietnam is equal to 70 percent of that in Thailand but the amount of fertilizers used by Thai farmers annually accounts for 80 percent of that used by Vietnam. This means that Vietnamese farmers used too much fertilizer that they could not realize the impact of low quality fertilizers on productivity. This perceptibly raised costs on plants and created favorable conditions for counterfeit fertilizer to be effective.

Phung Ha, Head of Vietnam Chemicals Agency under the Ministry of Industry and Trade, said that compliance in granting license for fertilizer companies has made the situation more complicated. Regulations and standards for fertilizers remain vague while inspectors lack skills. Control on fertilizers is insufficient as ministries fail to coordinate with each other.

The ministries and Fertilizer Association agreed that more requirements in infrastructure as well as manpower should be imposed on fertilizer companies. In addition, the government should promulgate regulations soon so as to control trading of spurious fertilizer. Sanctions should be strong enough to deter violators. Moreover, it is important to help farmers distinguish low quality fertilizers.

Slow approval hinders conversion of commercial homes

There are no signs of recovery seen in the housing market due to the slow approval process for conversion of commercial apartments into low-cost ones and division of condos into smaller units, heard a seminar in HCMC last Friday.

At the seminar organized by the HCMC Real Estate Association (Horea), most participating companies expressed disappointment with the slow process of considering their proposals for splitting up condos and changing commercial apartments into budget ones.

In addition to the difficulties caused for companies concerned, homebuyers have felt the pinch of the slow process as they have been unable to find small apartment units with affordable prices before they could borrow from the VND30 trillion home credit package funded by the Government.

Numerous enterprises in HCMC are seeking permission to split up their apartments, including Dat Lanh Real Estate Company with Thai An project in District 12, An Phu Joint Stock Company with An Phu scheme in District 6 and Quoc Cuong Gia Lai Joint Stock Company with a project in Binh Chanh. Meanwhile, multiple housing developers in the city have yet to get a nod to change their commercial housing projects into low-cost ones, Horea said.

The problem is that even these companies have had no idea about why their applications are not yet to be approved, Horea noted. These applications should be taken into consideration as soon as possible because many are struggling with business difficulties, the association insisted. Speaking at the seminar, Do Thi Loan, vice chairwoman of Horea, described the Government’s home credit program as a stalled property development project as money is ready for lending but there are no borrowers.

Only three commercial housing projects in the city have been allowed to convert into low-cost home schemes. They are Thu Thiem Investment Joint Stock Company’s Thao Dien resettlement project in District 2, Hoang Quan’s CC1 apartment scheme in Binh Chanh and Hoang Hiep’s apartment scheme in Tan Binh.

HCMC sells 100 budget homes to selected homebuyers

Saigon Thuong Tin Real Estate Joint Stock Company (Sacomreal) and Tan Binh District’s authorities signed budget home trading contracts with around 100 customers in HCMC last Friday.

The homebuyers selected by local government will be able to own condos of Carillon Apartment project. Located on Hoang Hoa Tham Street, the project with a total investment of around VND700 billion will supply the market with 484 condos, including 147 units for low-income earners.

The apartments cost around VND12 million per square meter with value-added tax included. Homebuyers will take out preferential loans from VietinBank and BIDV at an interest rate of 6% per annum.

Carillon Apartment is one of the low-cost home projects that do not use the State budget. The condos are expected to be handed over to customers by the end of the year.

Last month, the city government handed over 100 budget condos of 157/R8 condo building on To Hien Thanh Street in District 10 to homebuyers. Up until now, around 200 budget homes have been given to homebuyers, of which civil servants make up a high ratio.

Experts: Vietnam not attentive to sustainable growth

Despite Vietnam obtaining high economic growth in the past two decades, the nation has just focused on factors of growth without spending much effort focusing on sustainable development, experts insist.

Speaking at a seminar in the framework of the GreenBiz 2013 Conference and Exhibition that took place in Hanoi City at the end of last week, many experts said that the nation has reduced poverty and become a middle-income country, but it still has to deal with environmental issues, especially waste treatment and other social welfare problems. Currently, up to 80% of rural residents don’t have access to clean water.

Professor Max Preussner told the seminar that only 10% of wastewater in cities has been treated, while wastewater in rural areas is mostly untreated.

According to the Ministry of Health, the nation now has over 13,500 healthcare facilities  including clinics, health prevention centers, training centers and medicine production plants. Those at the central level discharge 7.3 tons of hazardous solid waste each day and the figure at the district level is 38.8 tons. Wastewater volume discharges are over 30,000 cubic meters and 90,700 cubic meters respectively.

Nguyen Thanh Ha, deputy head of the health environment management department under the Health Ministry, said that only 69% of hospitals and 32% of healthcare facilities have invested in a solid waste treatment systems or used treatment services. Meanwhile, most training centers and health stations have yet to install standard wastewater systems.

For a clean water sector, Vietnam targets that 100% of urban residents will access clean water in 2025 while 70-80% of wastewater is treated before being discharged into the environment. Around 20-30% of treated wastewater will be reused, Preussner said.

To realize these targets, Vietnam needs to raise awareness of its youth on recycling and reducing use of natural resources. The State should apply strict regulations and standards on wastewater and solid waste treatment. Besides, Vietnam should make use of green technologies developed in Europe during the past century, Preussner added.

For the lighting industry, Ngo Van Huy, general director of Philips Vietnam Company, said that lighting usually accounts for 19% of energy consumption. However, the ratio of energy demand for lighting in Vietnam is 25% because outdated and energy-consuming lighting equipment are still in use.

Up to 80% of buildings in Vietnam still use old lighting technologies. Once replaced with new devices, the buildings may save up to 40% of energy consumption, Huy said.

Expy project investors to be finalized at year-end

The Ministry of Transport has held a preliminary meeting to discuss the selection of a second investor for a project to build an expressway connecting Dong Nai Province’s Dau Giay intersection and Binh Thuan Province’s Phan Thiet and the list of investors involved will be finalized late this year.

The meeting last week was attended by 36 major enterprises in the infrastructure construction sector, mainly from France, India, the Philippines and Singapore.

Le Anh Tuan, head of the public-private partnership (PPP) project management board under the Ministry of Transport, told the Daily that the list of investors would be closed late this year and a bidding would be conducted early next year. The screening process will be supervised closely to ensure transparency, he added.

Dau Giay-Phan Thiet is the first expressway project to be implemented under the PPP format, so there are many incentives made available for investors.

The one who wins the bidding will get a grant from the World Bank, and will not have to borrow from commercial banks as the global development lender will provide another loan at an interest rate lower than a commercial one.

The Government will be fully in charge of site clearance of the project.

According to Deputy Minister of Transport Nguyen Ngoc Dong, the Dau Giay-Phan Thiet superhighway project will serve as a model for applying the PPP mechanism to other traffic infrastructure PPP projects in the country.

Bitexco Group as the first investor of the freeway project will contribute 60% of the project’s capital. The second investor will be chosen via a competitive tender and will contribute the rest.

In late July, the project was introduced in India, South Korea and Singapore.

The 98.7-km Dau Giay-Phan Thiet Expressway connects HCMC-Long Thanh-Dau Giay Expressway and National Highway 1A leading to Ba Bau in Binh Thuan Province. The project needs an estimated US$750 million.

Upon completion, the project will help shorten travel time from HCMC to the south-central region and reduce traffic on National Highway 1A.

VND1.2 trillion lent to Dong Nai bridge project

CC1, the developer of a project to build a new Dong Nai bridge and Vung Tau intersection in Dong Nai Province, last week signed deals to borrow VND1.2 trillion from Vietnam Bank for Industry and Trade (VietinBank) and Saigon-Hanoi Bank (SHB).

Speaking at the signing ceremony, CC1 general director Le Huu Viet Duc said the new Dong Nai bridge and its two approach roads started construction in June 2008. Just the bridge was completed in late 2009 while the other components are still under construction, he added.

Construction of the flyover and two access roads could be completed next June, according to Construction Corporation No. 1 (CC1).

Vietnam Development Bank was originally the lender of the BOT Dong Nai bridge project but the deal was disrupted due to some reasons. Therefore, CC1 has switched to VietinBank and SHB to take out VND1.2 trillion loans.

With new funding secured, CC1 will be able to accelerate implementation work to finish the bridge and Vung Tau intersection next January and other components in the middle of next year.

CC1 will collect toll fees to recover capital for the project in 15 years and two months, starting from January 2009 to next June at Song Phan station in Binh Thuan Province and from next July to February 2024 at Dong Nai station near Dong Nai bridge.

The Dong Nai bridge project consists of Tan Van intersection, new Dong Nai bridge, Vung Tau intersection, upgrade of old Dong Nai bridge, and access roads.

The project has a total investment of VND1.65 trillion, with the investor’s capital accounting for 20%.

Vietnam growth depends on debt management

A Government report warns that Vietnam’s growth and development in the coming years will depend largely on how the country uses loans and manages debts.

The report on Millennium Development Goals prepared by the Ministry of Investment and Planning and the United Nations Development Program (UNDP) says that while foreign loans come with terms of dozens of years, the ratio of government-issued bonds to government-guaranteed ones of 2-5 years is over 88.7%.

Therefore, while foreign debt obligations average out at US$1.5-2 billion per year, obligations for local debts amount to US$4.5-5 billion per year in the next four years.

The Government’s debt management and effective use of loans are vital to Vietnam’s sustainable development in the future.

Citing statistics in International Monetary Fund and World Bank studies conducted in the year’s first half, the report indicates that public debt of Vietnam accounted for around 48.3% of gross domestic product (GDP) late last year and the figure might be a little bit lower late this year, at 48.2%.

Currently, the ratio of debt obligations to total budget revenues is around 14-16%.

The report admits that foreign and public debts have increased rapidly in the past decade, putting the economy at stake.

When foreign debts outnumber public debts, Vietnam will become vulnerable to global economic shocks. Besides, foreign debts include exchange rate risks, and advantages of preferential loans will be greatly impacted by positive effects resulting from Vietnam dong’s depreciation.

Vietnam’s three major creditors are Japan (holding 34.3% of Vietnam’s foreign debts), the International Development Association of the World Bank (24.9%) and the Asian Development Bank (15%).

Retailers still leaving commercial centers

As consumers have strongly reduced spending amid current economic challenges, more retailers have decided to leave commercial centers to seek new locations with lower rents.

Maximark shopping center on Ba Thang Hai Street in HCMC’s District 10 has many kiosks left vacant even on the ground floor. On the first floor, some retailers left two side-by-side fashion stalls two months ago but no customers have taken up the vacancies since then.

According to a salesperson on the first floor, most retailers at the shopping center have met difficulties this year as the number of customers has sharply declined.

Similarly, all kiosks of Pico Plaza on Cong Hoa Street in Tan Binh District were rented during the first days but trading at the center is quiet now. Many retailers have abandoned their stalls despite the shopping center only being in operation for around eight months.

The owner of a fashion stall at Pico Plaza said that few customers visit the center on weekdays. The plaza becomes busier at weekends but customers are mostly window-shoppers.

Meanwhile, the shopping and kids entertainment areas at Thien Son Plaza in District 7 have virtually stopped operations. According to a security guard of the building, many enterprises have closed down in succession since the start of the year.

Thien Son Plaza currently includes company offices, bank transaction points and classrooms of English training centers, while its retail business has perished.

Parkson Paragon in District 7 still has a number of retailers but the shopping center is another who receives very few customers on a daily basis.

Parkson Flemington in District 11 has a number of kiosks left vacant. However, the media department of Parkson Vietnam said that the center is rearranging some areas and that new retailers will arrive next month.

Marc Townsend, managing director of CBRE Vietnam, said high rents and low customer numbers are the biggest challenges of the retail industry at present.

Phan Van Ty, head of retail units of Savills Vietnam, said that many investors and building management units have reduced rents to support retailers.

For instance, the investor of Crescent Mall in District 7 in the first half of this year cut rents by 5% against 2012’s July-December to assist retailers. Consumer demand has declined strongly since last year, especially in the middle- and high-class fashion sector, Ty said.

According to Savills Vietnam, total retail supply in HCMC stood at around 776,000 square meters in the second quarter of the year, down 2.4% against the previous quarter, as many shopping centers closed or changed business functions.

Vietnam’s C.T Group eyes Myanmar IP

Ho Chi Minh City’s CT Group is planning to build an industrial zone in Myanmar to house Vietnamese investors.

The group has submitted plans for the Vietnam-Myanmar Industrial Zone to Myanmar Vice President Nyan Tun. CT has not yet released details to the public.

However, the group did say that the industrial zone would serve Vietnamese companies that want to invest in Myanmar, but did not have a home for their production facilities.

Myanmar is being eyed as a potential new emerging market by enterprises all over the world.

During their meeting with Tun, CT donated bed sets, blankets and pillows valued at $30,000 to support low-income people in areas affected by natural disasters.

CT Group is actively seeking business in Myanmar and it is also expanding into Indonesia.

According to the Myanmar Investment Commission, by the end of August 2013, the country saw a total of more than $43 billion in foreign investments. China is the biggest investing country and Vietnam is in the top ten list. The top exporting country to Myanmar is China, followed by Thailand, Singapore, South Korea, Malaysia, India, Germany and Vietnam.

The Myanmar Investment Commission reported that by the end of August the country registered more than $43 billion in foreign investment. China topped the list, followed by Thailand and Singapore. Vietnam was the eighth.

VIB hosts “Overview on macroeconomics and financial risk solutions” workshops

Vietnam International Bank (VIB) is hosting “Overview on macroeconomics and financial risk solutions” workshops in Hanoi on September 24, in Ho Chi Minh City on September 25 and in the Mekong Delta’s Can Tho city on September 28.

The workshops are aimed to provide enterprises with the most updated information on Vietnam’s economic situation, treasury/forex, analyses and forecasts from financial experts and economists through different topics.

With clear and specific counseling cases, participating enterprises will not only have a good overview of the macro-economic situation since the start of 2013 but also be consulted and provided with financial solutions in forex in the coming period, especially in late 2013 when import-export activities are rather busy.

“In the context of various difficulties and challenges facing the economy, enterprises are actually in need of useful advisory information and financial solutions for their strategies,” Le Quang Trung, deputy CEO and head of Treasury at VIB said. “Adhering to the bank’s philosophy to work closely with enterprises, especially importers and exporters, VIB always strives to create the best conditions to help our customers get updated information on the global and local financial markets. In addition, VIB also provides advisory services and forecasts on which enterprises can base to better manager risks in forex and maximize profits.”

Previously, VIB hosted similar workshops for enterprises, namely workshops on macroeconomics and forex market in the northern Thai Binh and southern Dong Nai provinces.

FPT earnings well ahead on year

In the first eight months of this year, FPT reported pre-tax profits of $76.7 million.

Revenues for the same period amounted to $824.4 million, a 13 per cent increase against the same period last year. This puts the company well on track to achieve their annual earnings forecast.

After-tax profits totalled $63.3 million, up 5 per cent against the same period last year and earnings per share hit $0.17, up 2 per cent.

The company’s primary revenue source was technology and telecommunications with 76 per cent growth. Software and system integration and IT services accounted for 21 and 23 per cent, respectively. Internet and digital content grew by 11 per cent.

Diversification in downturn

Foreign consultancies are changing their portfolios and gradually moving into other fields in response to the deteriorating real estate market.

Troy Griffiths, deputy managing director of Savills Vietnam, told VIR that the company’s traditional business lines, leasing and project sales, had come under duress and led to layoffs in under-performing areas of the business.

“However Savills total headcount has increased to 940 as we have added new business lines and expanded our property management services offering,” he explained.

“We are fortunate that our recurring income streams of property management and advisory services have delivered continuous cash flows, albeit at very low margins. Savills manages 70 buildings throughout Vietnam that delivers steady cash flow over challenging economic periods,” he added.

Griffiths said Savills would continue to diversify their business to cater to broader client needs.

Following its success and achievement in sales of high-end residential products and holiday home, Savills Vietnam has set out a new business strategy to diversify the stocks and to be more adaptive to market demand. Specifically, in late June, Savills Vietnam Real Estate Trading Floor launched this extended new business service for sales and marketing of affordable housing products.

The company has established a strategic partner with one of the local real estate company to exclusively distribute the Dream Home apartments developed by Dream Home Ltd. in Go Vap district, Ho Chi Minh City.

“Importantly the affordable housing sector represents over 70 per cent of the primary market; as such it would simply be bad business to ignore this potential,” said Griffiths.

Savills has recently expanded its consulting capacity with products such as Geographic Information Systems and its agency platform in Indochina and Myanmar.

Along the same line, CBRE Vietnam recently held a conference that focused on identifying more lucrative potential projects in Myanmar.

Marc Townsend, managing director of CBRE Vietnam, said the company had been affected by the real estate market’s downturn over the last few years, forcing its to reduce the working space of its Hanoi office by half.

The company’s property transaction centre in Hanoi has been narrowed and residential sales team has been most affected due to the housing market downturn.

“CBRE is serving fewer customers than before, but that has given us the opportunity to focus more on quality service. While there are fewer foreign investors, there are increasing numbers of local companies who are potential clients in the fields of banking, retail, and property development,” he added.

CBRE’s staff working in project management has increased from 2 last year to 12 at current.

“We are currently helping a large foreign company in Hanoi with more than 2,000 staff move its office. We supported them in leasing the space and fitting it out, as well as provided logistics for the move, on time and on budget,” Townsend said.

CBRE has expanded property management, with the floor area under management now doubling from last year’s figure and expected to double again by the end of this year.

Chris Brown, general manager of Cushman & Wakefield Vietnam said the slumping property market was affecting firms’ operations in several areas.

According to Brown, the company’s most heavily affected team was residential sales which spiked in 2007-2008 but had since been heavily impacted by falling demand nationwide. The company continued to be cautious in this area and was limiting the growth of the team until future conditions make expansion feasible.

“Cushman & Wakefield Vietnam has always been careful to avoid overly rapid expansion preferring to pace our growth strategically. We have seen softening in areas such as residential sales and leasing, but these business lines are inherently cyclic and we expect improvement in the next 12 months,” he said.

“We are using the slowdown as an opportunity to relocate to Vincom Center B this year, and expanding our workspace by more than 100 square metres, with room for future expansion,” he added.

“There are areas of our business which are growing and we now have 10 employees working in office leasing in Ho Chi Minh City. We also have developed a fully dedicated national retail services platform and investment agency services,” he said.

Cushman & Wakefield has this year concluded some of the larger transactions in Ho Chi Minh City such as Abbott Laboratories’ lease renewal at Me Linh Point Tower (2,600sqm), Nestle’s relocation to Empress Tower (3,200sqm), Microsoft’s relocation to President Place (744sqm), and JWT relocation to President Place (510sqm). In Hanoi, some of its larger transaction include the IBM’s renewal at Pacific Place (1,500sqm) and the Prudential’s relocation to Keangnam (1,700sqm).

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