Condo sales up strongly in HCMC

A number of real estate service providers on Tuesday released the last quarter reports for 2013 saying that the number of condos sold in HCMC doubled the sales figure of 2012.

Savills Vietnam informed that the number of apartments on offer had risen strongly, at up to 78% against the previous year and equivalent to around 6,400 condos, with some 5,800 units already sold, leaping 46% year-on-year.

The key factors helping the market run well comprise of a commitment to keep construction on schedule, prestige of project owners, effective distribution channels and financial support from developers and associated banks, according to Savills Vietnam.

Sharing the same view, CBRE Vietnam noticed that 2013 was the most flexible year in the last three years as developers had applied all sales promotion methods, ranging from lengthening payment duration to giving presents and discounts as rewards for quick payments. Besides, project owners now pay more attention to advertising and introducing products to woo customers.

An increase in the condo sales volume indicates the stronger confidence of project owners in the recovery of the local property market, said CBRE Vietnam.

The number of unsold apartments is declining but remains high, at about 17,200 units owing to an oversupply.

The market in 2014 is expected to change for the better compared to 2013, with homebuyers projected to continue seeing benefits. Despite this, CBRE Vietnam believed the situation would depend on other supporting elements such as reasonable selling prices and suitable products for the market along with projects with good construction progress.

Amway Vietnam opens branch in Bac Giang

Amway Vietnam on Wednesday opened its branch in Bac Giang City in the northern province of Bac Giang with an aim to expand business in the northern market.

How Kam Chiong, Amway Vietnam’s general director, said Bac Giang has been considered as part of the development strategy of his company in Vietnam for a long time. Along with Hanoi and Haiphong branches, the branch in Bac Giang is expected to give great supports to activities of distributors in the northern region.

On the same day, Amway was honored by the Vietnam Study Promotion Association for its considerable contributions to education over the past time.

Active as a multi-marketing-level company, Amway Vietnam has its own factory in Amata Industrial Park in the southern province of Dong Nai. Besides, it is constructing another plant in Vietnam-Singapore II Industrial Park in the neighboring province of Binh Duong.

Amway Vietnam is now operating 10 distribution centers and branches in HCMC, Hanoi, Haiphong, Can Tho, Danang, Vinh, Dong Nai, Ca Mau, Nha Trang and Bac Giang besides two stores and two training centers in Hanoi and HCMC.

Hoa Sen looks to higher profit

Hoa Sen Group (HSG) targets to earn an after-tax profit of VND600 billion in the 2013-2014 fiscal year compared to VND581 billion recorded in the previous fiscal year.

Speaking at the annual shareholders meeting held on Wednesday in HCMC, chairman of HSG Le Phuoc Vu said that last year’s high after-tax profit which increased by 58% on year resulted from the company’s anticipation of changes in price of hot-rolled steel. Therefore, it imported material at a low price, he added.

“Business results of last year exceeded the targets. The selling volume was 634,000 tons and revenues reached VND11.76 trillion, which rose by 32% and 17% year-on-year respectively,” Vu said.

“The export channel also achieved a good result with over 280,000 tons of products exported to 40 countries and territories, bringing in nearly US$252 million and helping HSG to secure its position as one of the leading roofing sheet exporters in Vietnam and Southeast Asia,” he added.

HSG paid dividend at a 25% rate last year and was among those offering high dividend rates on the market.

At the meeting, shareholders also approved the business plan for the 2013-2014 fiscal year, with the selling volume of 700,000 tons of products, VND14 trillion in revenues and VND600 billion in after-tax profit.

HSG plans to open 15-20 distribution branches and carry out a roofing sheet project in the northern region to increase the supply capacity. Besides, it will conduct pre-feasibility studies for local and overseas projects, establish representative offices or companies in some ASEAN countries as well as implement the investment plans in Thailand, Indonesia and Myanmar in June.

Vinatex raises investment in yarn, textile projects

Vietnam National Textile and Garment Group (Vinatex) has increased investment in yarn and textile projects to grasp export opportunities when Vietnam signs the Trans-Pacific Partnership (TPP) agreement expected for this year.

Speaking at a news conference in HCMC on Wednesday, Le Tien Truong, deputy general director of Vinatex, said that the group and member enterprises are speeding up investment in material production projects to raise localization ratios and added values of apparel products. Under the drafted TPP agreement, the yarn-forward policy will apply when textile and garment products are shipped abroad.

Last year, Vinatex deployed 42 projects with the combined capital of over VND6.3 trillion, including 12 yarn projects, nine textile projects, 17 garment projects and four others in such fields as infrastructure, supermarket, and cotton growing. Notably, the group commenced work on Phu Hung yarn plant project in Hue City with an output of over 2,000 tons of yarn a year.

To serve the integration goal, Vinatex will invest around VND5 trillion in material projects this year, focusing on yarn and textile projects as the TPP will offer many benefits in the textile, garment, leather and footwear sectors, Truong said.

Among 12 TPP member countries, the U.S. accounts for 43% of apparel export revenue from Vietnam, Japan 12% and the remaining TPP countries 4%. Therefore, TPP countries account for nearly 60% of apparel export revenue of Vietnam, Truong explained.

The ultimate goal of investment increase is to create and improve the connection among enterprises of the group, secure a closed process of yarn-textile-dyeing-finishing. The aim is to help enterprises shift their business from subcontracting to original design manufacturer (ODM) production model.

In 2013, Vinatex obtained US$2.9 billion in export value, up 12% against the previous year, while material imports cost around US$1.2 billion. Therefore, the group earned around US$1.7 billion in surplus from exports, much higher than the average ratio of the industry.

In 2013, Vietnam generated over US$20.3 billion in garment and textile export revenue, up 18.1% against the previous year. This was the first time the export value of local apparel industry crossed the US$20-billion line.

Many international organizations in their 2014 economic outlook reports have expected economic situation of key apparel export markets of Vietnam to improve this year. Vinatex expects that its revenue and export value will increase 12% in 2014.

VietinBank’s bad debt ratio less than 1%

Vietnam Joint Stock Commercial Bank for Industry and Trade, or VietinBank, reported that its bad debt ratio declined strongly to 0.82% by late 2013 with return on asset (ROA) and return on equity (ROE) standing at 1.45% and 13.9% respectively.

Its total assets increased by 14.4% against early 2013 while pre-tax profit was over VND7.75 trillion, or 3.3% higher than the target approved at the 2013 annual general meeting. The bank’s mobilization rose 11% while lending increased 14.7% against 2012, VietinBank announced at the conference deploying 2014’s business tasks in Hanoi City on Tuesday.

Last year, VietinBank paid over VND4 trillion in taxes, entering the list of the top ten corporate income taxpayers in Vietnam for a fourth consecutive year. The lender now is the biggest bank in the country in terms of chartered capital and equity with VND37 trillion and over VND55 trillion respectively.

The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) became the second foreign strategic investor at VietinBank besides IFC, marking a milestone in the bank’s international integration process.

Speaking at the conference, VietinBank Chairman Pham Huy Hung said that the lender would strive to raise market share in 2014.

Experts: 20% ownership in local banks not attractive

Following a Government decree allowing a foreign strategic investor to own a maximum of 20% in a local bank, up from 15%, insiders and experts said this new ownership limit is not attractive enough to lure large investors to the local banking sector.

Tay Han Chong, general director of Mekong Development Bank, said that a 20% stake could not help an investor secure control of a bank. On the other side, a bank is not willing to give power to a foreign partner with a 20% stake, as the foreign partner may not devote its efforts to a bank in which it just holds a 20% stake.

Chong currently represents a 20% stake of Fullerton Financial Holdings, which is 100% owned by Singapore’s Teamasek Holdings Pte Ltd, at Mekong Development Bank. An ideal ownership level for foreign strategic investors in a local credit institution must be over 50%, Chong said.

Nguyen Xuan Binh, deputy director of analysis and investment consulting unit of Bao Viet Securities Company, said that the foreign ownership limit increase would not cause significant impacts on mergers and acquisitions (M&A) in the banking system in the coming time.

A strategic investor often wishes to hold a stake of 30% or higher in a Vietnamese bank to raise its voice over management issues. Other countries in the region have also applied the 30% ratio, Binh said.

For the stock market, Binh said the decree will only cause impacts in long term when foreigners with higher holdings in banks can introduce more changes to local lenders. In short term, the news is just a temporary psychological factor.

In addition, the higher foreign strategic ownership limit in banks fails to meet expectations of stock investors as they are waiting for foreign room in listed firms to be lifted to higher than 49%, Binh said.

Therefore, prices of banking stocks remained normal in previous days and they just mildly advanced on Tuesday.

In fact, the new decree just allows for a higher holding ratio for a foreign strategic partner in a local bank while the maximum foreign ownership in a single local bank is still capped at 30%, unchanged from the previous ratio.

Earlier, a foreign strategic investor could not own more than 15% of the charter capital of a credit institution. In some cases, this rate can be raised to 20% with the Prime Minister’s approval such as stakes held by Mekong Development Bank and HSBC at Techcombank, Bank of Tokyo-Mitsubishi UFJ at VietinBank and May Bank at ABBank.

However, this is still a chance for foreign strategic partners with a 15% stake in local banks can raise their ownership such as Japan’s Sumitomo Mitsui Financial at Eximbank and Mizuho Financial at Vietcombank.

Consulate-General Promotions abound for consumers at Tet

As local purchasing power has started rising for the final days before the Lunar New Year holiday or Tet, companies are racing to launch numerous promotions to stir up demand.

Speaking with the Daily on Tuesday, Phan Linh Phuong, marketing director of Nguyen Kim Shopping Center, informed that consumers tend to wait for discount programs to shop at the end of the year. In particular, Phuong said, Nguyen Kim in December saw its sales increasing by five to six times against the previous month owing to a huge sales program.

Meanwhile, Matt Krepsik, a senior executive of Nielsen for Southeast Asia, North Asia and Pacific, said that although savings remain the leading priority among consumers, essential products are still on the list of shopping priority of consumers. Families are inclined to cut spending on new clothes or enjoying outside entertainment services to save on monthly expenses during tough times, he noted.

However, the purchasing demand during holidays remains strong. An expert stated that shopping demand for Tet is always the top concern of local people, which is considered as a good opportunity for companies to speed up sales.

Khuat Quang Hung, head of Public Affairs & Corporate Communications General Management of Metro Cash & Carry Vietnam, informed that his company has introduced discounts of up to 49% on over 2,000 products for Tet. Metro centers from now until January 15 will discount prices for multiple items, with confectionery subject to a discount of 26%, drinks 25%, dried and fresh foodstuff 29% and clothes up to 49%.

To lure customers, local firms have also carried out better customer services such as free delivery and trial product usage.

In related news, supermarket chains in HCMC have said they will extend opening times before the Lunar New Year holiday or Tet by opening earlier and closing later than usual to meet rising shopping demand.

In particular, from January 20-26, Co.opMart supermarkets in HCMC will open an hour earlier and close an hour later than normal days, meaning they will be operating from 7 a.m. to 11 p.m. every day during this period.

From January 27 to 29, Co.opMart supermarkets will open at 6 a.m. and close at midnight. On the 30th day alone, they will close at noon.

After the Tet holiday, which falls on January 31, Co.opMart supermarkets will resume operation from the second day of the first lunar month, opening at 8 a.m. and closing at noon.

Similarly, at Big C supermarkets in the city, opening times before Tet are also extended compared to normal days. The supermarkets from January 23 to 28 will open at 7:30 a.m., half an hour earlier than other days, which will be changed to 7 a.m. from January 29 to 30.

As for the closing times, customers are able to shop at Big C until 10:30 p.m. from January 23 to 24, one hour later than normal. Besides, the supermarkets will close at midnight from January 25 to 26, and at 11 p.m. from January 27 to 29. On the 30th day, the supermarkets will stop operating at noon.

At Maximark system, the opening hours remain normal, opening from 9 a.m. However, customers can shop there until 11 p.m. from January 23 to 29 instead of the usual closing time of 10 p.m. Maximark supermarkets will be back to business from the eighth day of the first lunar month.

Meanwhile, Citimart system will close later than usual in the final week before Tet based on the shopping situation, said general director Nguyen Anh Hoa. “Our supermarkets will close after the last customer leaves,” she explained.

Mechanization reduces 20% of sugarcane production costs

Mechanization in sugarcane farming in line with the method of developed countries might help reduce up to 20% of sugarcane production costs, said local experts at a seminar on solutions to sugarcane production in the city on Wednesday.

Nguyen Van Loc, general director of Bien Hoa Sugar Company, said the application of mechanization in sugarcane farming might help cut sugar production costs by up to 20% and increase sugar productivity per hectare by 15-20% compared to the current method.

The ASEAN Free Trade Area (AFTA) will be effective in 2015 but the local sugar and sugarcane industry is still far backward compared to other counterparts in the region in terms of competitiveness, Loc said. Mechanization of sugarcane production therefore is the key to improving the competitiveness of local enterprises, he remarked.

Studies by experts in the industry indicate that there are many problems in the process of farming and harvesting sugarcane badly affecting yield and quality of sugarcane at home. For example, local sugarcane growers set the space between sugarcane rows at 0.8-1.4 meters while practices elsewhere in the world set it at 1.8-1.9 meters. With bigger space, local farmer can save on farming costs while enjoying an increase of 5-10% in productivity, he said.

For weed control, the combination between mechanization and chemistry will help cut chemical substance expenses by up to 50% and raise sugarcane productivity by 15-20%.

Dang Van Thanh, chairman of Thanh Thanh Cong Group holding stakes at many sugar companies in the nation, told the seminar that the sugar industry now was struggling with cheaper Thai sugar smuggled into the country due to the root cause of the poor sugarcane productivity problem.

Competent authorities would not face much hardship in fighting smuggled sugar like now if both sugar plants and farmers could improve sugarcane productivity and harvesting and production technologies, Thanh noted.

Poultry meat, egg supplies exceed demands

Livestock supply is expected to meet market demands during the 2014 traditional Lunar New Year holiday, or Tet, while poultry meat and egg supplies may exceed demands prior to the vacation, according to the Livestock Production Department under the Ministry of Agriculture and Rural Development.

Speaking at the conference in Hanoi City on Tuesday, Hoang Thanh Van, director of the department, said that market prices and livestock supplies will be stable if related agencies can maintain market management and effectively fight smuggling.

Commenting on the local husbandry industry in 2013, Nguyen Xuan Duong, deputy director of the department, said there were a lot of difficulties in the year’s first half as livestock prices tumbled while feed prices soared and enterprises’ stockpiles increased due to the influx of smuggled goods. Enterprises and farmers suffered losses and reduced investment in the sector.

The sector also faced huge losses due to diseases while animal health service fees stood high, accounting for around 5-10% of product values.

Deputy Minister of Agriculture Vu Van Tam said that domestic husbandry products, especially meat, will see tougher competition with imported goods in the coming time because Vietnam is expected to sign the Trans-Pacific Partnership (TPP) in 2014 and realize the ASEAN Free Trade Agreement (AFTA) in 2015.

Participating in the TPP, the husbandry industry will be the first sufferer, especially beef and poultry providers.

Domestic prices are still higher than those in the international market. If local enterprises fail to prepare for new rules and the Government fails to adjust development policies, local firms will lose the market to foreign companies, Tam added.

According to the department, livestock production has recovered since July, 2013 thanks to strong consumption and higher sale prices. The nation exports around 6,000 tons of pork to China each month, so pork prices will not tumble like in 2013’s first half.

As of last October, the nation’s total meat output was estimated to rise by 2.5% year-on-year.

SOEs restructuring still at snail’s pace

The Government’s State-owned enterprises (SOEs) restructuring scheme is still moving at a snail’s pace as restructured firms have yet to make clear improvements while eight out of 91 units have yet to present their restructuring plans to the Government.

The Government, the Ministry of Finance, the Ministry of Planning and Investment and the Government Office last year urged SOEs to speed up their restructuring plans but the restructuring process was still far from the finish line, said the Ministry of Finance at the summarizing conference in Hanoi City recently.

Four central SOEs, namely Vietnam Vegetable Oils Industry Corporation, Cuu Long Corporation for Investment, Development and Project Management of Transportation Infrastructure, Vietnam Medical Equipment Corporation, and Vietnam Post Corp., have yet to present their restructuring schemes to administering agencies. Meanwhile, four companies under Binh Duong Province’s and Hanoi City’s authorities have not submitted their restructuring schemes either.

According to a report of the Finance Ministry, some 83 out of 91 groups and corporations (excluding 18 corporations under the Ministry of National Defense) have finished their restructuring plans. Of which, 63 plans, including 57 of central firms and six of local firms, have been approved.

The Government has approved plans of 17 firms. Meanwhile, ministries approved plans by 40 firms and local authorities approved 57 others.

Another report of the Government showed that as of September 30, 2013, among 109 groups and corporations (including equitized firms in which the State still holds a majority stake), only 83 units had realized restructuring plans that had been approved by administering agencies.

Explaining the slow restructuring, the Government and the Finance Ministry said that ministries and SOEs have yet to take drastic actions for the restructuring process. Meanwhile, given the economic recession, enterprises have still met challenges in business and production while non-core divestment and equitization have come to a standstill due to hardship of the local stock and real estate markets.

Petrolimex posts massive profits behind closed doors

Vietnam’s largest fuel wholesaler Petrolimex held a meeting to summarize its 2013 operations on Sunday, but local press was not allowed to attend the event and only learned of the financial figures released behind closed doors a day later.

Reporters were not invited, and those who insisted on entering were politely yet firmly rejected.

A representative from the reception board told Tuoi Tre that the meeting was intended for Petrolimex members only, although the Deputy Prime Minister and officials from the Ministry of Industry and Trade were in attendance.

A brief financial report of the company was posted on its website on Monday.

Petrolimex’s total revenues in 2013 topped VND196.33 trillion (US$9.26 billion), dropping slightly by 2.25 percent from 2012, according to the report.

However, its pretax profits surged 97 percent from VND978.17 billion in 2012 to VND1.93 trillion, or $91.04 million, in 2013.

Profits from fuel trading activity alone accounted for VND768 billion of the sum.

The state-run fuel utility increased fuel prices a half dozen times last year. In all cases, Petrolimex defended the increase by citing a common explanation: global fuel prices were rising and it would incur losses if prices in Vietnam did not follow suit.

Petrolimex deputy general director Tran Ngoc Nam told Tuoi Tre that the above figures are only estimates.

Nam said the post-tax profits of last year were estimated at VND1.53 trillion. This would also be a 98.65 percent increase from a year earlier.

The executive also noted that Petrolimex earnings should be viewed objectively. Petrolimex sold as many as 8 million tons of fuel in 2013, and its return on equity ratio is around 10 percent, Nam said.

“Petrolimex only enjoys a modest profit of VND96 per liter of fuel it sells,” he said, adding that the profit is not so large compared to the company's capital.

Petrolimex adjusted fuel prices 11 times in 2013, including six cuts and five increases.

Fuel prices gained VND3,220 per liter, but lost only VND2,160 per liter following the adjustments.

EVN throws $5.75 bln into fields outside power sector: state inspectors

The total investment that the Electricity Group of Vietnam (EVN) has sunk into sectors other than its core business is as huge as VND122 trillion, or US$5.75 billion, the Government Inspectorate of Vietnam said in a report released Friday.

The GIV has been assigned to probe the capital and asset management of the state-run power utility.

According to the inspector’s conclusion, EVN has invested nearly VND122 trillion into the “outside investments,” while its chartered capital is only VND77 trillion.

Nearly VND2 trillion have been put into the finance, banking, insurance, and securities sectors, according to the report.

“The huge disparity of VND45 trillion is against the regulations, while these non-core investments do not bring economic effectiveness,” the inspectors concluded.

The state inspectors also found a number of violations at the EVN subsidiaries.

The GIV said the Ministry of Industry and Trade has also gone against the regulation when it allowed EVN to count the VND596 sum to set up an apartment block as one of the investment expenses of six power supply projects.

EVN declared the sum was to build the houses to serve the maintenance and repair tasks for its power projects, while the construction in fact include a series of villas, apartments, attached houses with features like swimming pools and tennis courts.

Deputy general government inspector Ngo Van Khanh said following the inspection conclusion, EVN must divest from the outside investments.

EVN and its subsidiaries must also review its operation and provide sanctions on those responsible.

An EVN chief told Tuoi Tre on Friday that the company will “strictly follow the inspection orders.”

Second SMEs Development program to be approved

The Government has proposed that the State President approve the Second Small and Medium-Sized Enterprise Development Program – Subprogram 2, which is financed by the Asian Development Bank (ADB).

The Governor of the State Bank of Viet Nam (SBV), authorized by the PM, on November 22, 2013 signed the Loan Agreement for the program with the representative of ADB.

Accordingly, ADB will provide a credit worth US$50 million for Viet Nam from the Asian Development Fund with the duration of 25 years, of which the grace period is five years, and the interest rate of 2%.

The program will be monitored by the Ministry of Planning and Investment.

The program includes 11 policy commitments from the Ministries of Planning and Investment, Finance, Justice, Labor-Invalids and Social Affairs, Industry and Trade and the SBV.  

It will support the Government in realizing the Small and Medium-sized-Enterprises Development Strategy.

Property firms in upbeat mood

With positive market developments seen last year, property companies expect the market to return to a growth path this year.

Last year saw a pickup in activity at the low-cost housing projects. Good sales were reported at land lots projects like BenCat Center City, Green Life City, Civilized City, Lavender City, IJC@VSIP, Sunflower City and Eco Town. Apartment projects such as EHome 3 Saigon West, EHome 4 Saigon North, 27 Truong Chinh, Tan Huong Tower, 8X Dam Sen, Sunview Town, Dream Home and 4S Riverside turned active as demand improved. Each and every sale of those projects attracted hundreds of prospective buyers.

According to a survey of Savills Vietnam, property firms sold around 5,800 apartments in last year’s final quarter, a rise of 46%, which was a good sign for the market.

Talking about the prospects of the property market, an investor involved in numerous projects under way in districts 7, 2 and Phu Nhuan said 2014 would be a defining year for enterprises in the sector.

He also expected much from the market in the new year. The company is involved in several major projects and is exploring opportunities to secure land in convenient locations to serve its long-term business strategy.

Nguyen Vinh Tran, general director of Nam Long Investment Corporation, said that in addition to ongoing projects, Nam Long would be developing three more EHome projects this year. The capital needed for those projects has been arranged as more than ten local and foreign organizations have recently shown interest in the issuance of over 25 million NLG shares.

“Housing demand is still huge. If project investors provide suitable products with reasonable prices and financial support for customers, they can see good sales,” Tran said.

Similarly, Phung Van Nang, general director of Nam Viet Company, is also optimistic about this year. He said that some low-cost projects distributed by Nam Viet in last year’s final months sold well, especially small apartments priced at around VND1 billion a unit. “This segment is promising this year,” he said.

In the land lot segment, Kim Oanh Company has four projects supplying around 2,000 lots for the market this year, general director Dang Thi Kim Oanh said.

Oanh said that despite the difficulties faced by the market, the low-cost land lot segment in Binh Duong and Dong Nai provinces remained liquid. This year the market may be busier as market conditions are forecast to be more favorable with the economy improving, interest rates declining and major infrastructure projects being completed.

Nhon Trach Investment Company is pinning high hopes on this year. According to deputy director Phan Thanh Vinh Toan, the opening of HCMC-Long Thanh-Dau Giay Expressway and forthcoming construction of Long Thanh Airport will create a much-needed impetus for the property market in Dong Nai Province, particularly its Nhon Trach District.

“If there in no change in the last minute, we will launch the first products of East Saigon urban area covering 942 hectares in Nhon Trach early this year,” Toan said.

According to Luu Thi Thanh Mau, general director of Phuc Khang Company, the market now has favorable factors to make headway.

“The stable marco economy, interest rates and exchange rate will help the property market recover and become more attractive to local and foreign investors,” Mau said.

Mau’s view sounds sensible. According to a recent report of the Foreign Investment Agency of the Ministry of Planning and Investment, together with positive signs of the economy, foreign investors believe in a recovery of the local property market.

Foreign direct investment (FDI) capital poured into the property sector was US$884.01 million, helping the sector secure the third position in attracting FDI.

Speaking at a recent meeting, Deputy Minister of Construction Nguyen Tran Nam said the property market could warm up this year. Only 2% of the VND30 trillion earmarked for the Government’s home loan program has been disbursed and more disbursements are expected in the coming time, he added.

New expressway hits nearby tollgates’ revenues

The opening early this month of a stretch of HCMC-Long Thanh Expressway has cut into revenues of two tollgates on the way between HCMC and Ba Ria-Vung Tau Province, the operators of the toll stations said.

Many vehicles traveling between HCMC and Vung Tau now prefer the 20-kilometer section of the expressway to the longer route via Hanoi Highway and then National Highway 51. Therefore, the operators of the two toll stations, one on Hanoi Highway and the other on National Highway 51 in Long Thanh, have seen their revenues tumble.

Tran Duy Nhan, deputy general director of the Bien Hoa-Vung Tau Expressway Corp. that operates the Long Thanh Toll Station, said his company’s revenue from the station has plummeted by one third to VND400 million a day from the previous VND600 million.

Nhan predicted the daily revenue would fall further in the coming time when more transporters opt for the expressway, which is now open to passenger vehicles and medium-sized trucks only. In addition, once the whole expressway is completed with an additional section from Long Thanh to Dau Giay, the station’s revenue would slide strongly.

The operator of the Hanoi Highway Toll Station is in the same boat, although the impact is less severe.

Le Quoc Binh, general director of CII as the tollgate operator, said the firm’s revenue has fallen, but he declined to give specifics. Binh, however, said that the impact was not big since the whole expressway project has not been completed, and vehicles could now run to Long Thanh only.

Data from the Vietnam Expressway Corporation as owner of the expressway project show around 8,000 vehicles use the expressway a day, with passenger vehicles accounting for 80%. The lowest toll fee is VND2,000 a kilometer, meaning at least VND40,000 for the 20-kilometer section compared to the lowest fee of VND15,000 charged by the other two toll stations.

Leather shoe exports aimed at US$11 bil.

The nation expects to obtain around US$11.3 billion in leather shoe and handbag exports this year with an average growth rate of 10%, according to the Vietnam Leather, Footwear and Handbag Association.

Last year, the industry reported export revenue of US$10.3 billion, rising by 18% against 2012 and exceeding last year’s target by 3%. Of the figure, exports of handbags and suitcases hit over US$1.9 billion, while footwear export value reached US$8.4 billion.

Vietnam is the second largest shoe exporter to the European Union (EU) after China with a market share of 8.5%. In addition, Vietnam’s exports to the U.S. have increased strongly with a market share of 8.4%.

The U.S. is considered a potential market with a consumption rate of seven pairs of shoes per capita and over 2.2 million pairs of shoes sold annually.

This year, local enterprises will also develop the domestic market, raising the localization ratio in products to 60-65%. Businesses will also reduce dependence on material imports by using locally-made products and attracting investment in material production.

In 2013, material imports for the leather shoe and handbag industry reached US$3.7 billion, up 18% year-on-year.

In the near future, local enterprises will face huge challenges when import tariffs will be lowered to 0% given free trade agreements. When the Trans-Pacific Partnership (TPP) and a free trade agreement with the EU are realized, local firms will see tough competition with other member countries due to a lack of capital, poor production capacity and outdated technologies.

Vietnamese footwear producers have found it hard to penetrate Eastern Europe, the Middle East and Africa, although the markets do not set high design and quality requirements.

Last year, domestic shoe consumption also fell given competition with sub-quality imported products. In addition, the nation has yet to control counterfeit and sub-quality products on the market.

Several groups earn profits thanks to rising power price

Vietnam Coal and Mineral Industries Group (TKV), Vietnam Oil and Gas Group and Vietnam Electricity Group (EVN) reported profits after the electricity price was adjusted up last year.

According to TKV, its revenues earned last year from selling 8.5 billion kWh were VND9.394 trillion, or 2% higher than the target and a rise of 77% over 2012. The group attributed the better results to electricity price increase to an average of VND1,498.8 per kWh and coal-fired thermal plants operating smoothly last year.

Nguyen Van Bien, deputy general director of TKV, said that selling electricity helped TKV earn a profit of VND200 billion last year, accounting for 6.6% of its total profit of VND3 trillion. “If the exchange rate is stable, TKV may make a higher profit this year,” he said.

According to Nguyen Sinh Khang, deputy general director of Vietnam Oil and Gas Group, the group’s subsidiary PV Power generated VND659 billion in profit last year due to joining the competitive electricity market. The total electricity volume PV Power sold was 16.16 billion kWh.

Both TKV and PV Power incurred losses in 2012 as EVN owed debts of electricity purchases while those selling electricity to EVN had to borrow loans to maintain their activity. EVN earned VND4 trillion last year and a large amount of such profit was used to pay debts.

Due to the rising electricity price, the coal price had been adjusted from August 1, 2013 and followed the market price from this year, ending the prolonged losses borne by TKV.

SBIC yet to make gains

Shipbuilding Industry Corporation (SBIC), successor of the heavily indebted Vinashin, has yet to gain profits as reported, but its loss has been reduced by VND7.9 trillion after financial restructuring, said SBIC chairman Nguyen Ngoc Su.

Vinashin had incurred a loss of VND86 trillion as of November, 2010. Therefore, the news that SBIC obtained a profit of VND7.9 trillion as of the end of 2013 has raised questions.

SBIC general director Vu Anh Tuan on December 30, 2013 said that the company’s revenue was expected at VND5.7 trillion in 2013. So the VND7.9- trillion profit, which is higher than revenue, is an illogical figure.

Speaking to the Daily on Wednesday, Su confirmed that SBIC’s 2013 financial statement was not negative any more while loss was slashed by VND7.9 trillion. If financial restructuring had not been conducted, SBIC would have had to pay VND7.9 trillion worth of original debts and interest sums last year.

As announced by Minister of Transport Dinh La Thang on the website giaothongvantai.com.vn, SBIC reported over VND24.6 trillion worth of large debts borrowed from domestic credit institutions before the financial restructuring. It had foreign debts worth US$600 million and took over US$135 million worth of debts due to contract termination.

However, SBIC reduced nearly VND22 trillion of original debts and interest sums for three large loans after conducting financial restructuring, cutting 70% of domestic debts, 52% of financial obligations from the overseas debt of US$600 million, and VND2 trillion of debts caused by contract termination.

Last year, SBIC reduced VND7.9 trillion worth of original debts and interest sums, helping secure capital flow balance, Su said.

In 2014, SBIC targets to earn nearly VND7.6 trillion in revenue but there is no profit target.

Previously, the enterprise was asked to obtain around VND11 trillion in revenues to secure profit for debt payment. However, the Ministry of Transport said that the figure was unobtainable.

State agencies requested for concentrated procurement

State agencies and organizations will have to make concentrated public acquisition of a large number of commodities rather than making scattered procurements if the Government gives nod to a proposal on this issue.

The Ministry of Finance has finished concentrated procurement mechanism and submitted it to the Government. Accordingly, State-owned units will have to follow concentrated procurement for a wide range of goods such as automobiles, office appliances, projectors, audio devices, furniture and stationery.

The ministry will announce the list of specific goods required for concentrated public acquisition and revise the list in each period.

Given this model, a purchasing unit will gather demands for commodities, select contractors and either directly sign sale contracts with contractors or let State-owned units to sign such public acquisition contracts.

The draft on public acquisition aims at securing goods quality, effective purchase and lawful auctions. Purchases will be made following yearly State budget estimation with transparency secured.

The draft also prioritizes online biddings during public acquisition.

The model has been piloted at the ministry and 24 other agencies under the Government’s Decision 179, and the concentrated public acquisition has help cut spending by VND467 billion compared to estimation.

Foreign retailers face difficulty opening second stores

The new regulation on setting up the second stores is posing unnecessary administrative procedure to foreign retailers and making them miss opportunities, according to HCMC Vice Chairman Le Manh Ha.

Ha said at a meeting held on Wednesday that the city government would present an official proposal on the issue to the Ministry of Industry and Trade to adjust the policy.

According to Ha, Circular 08/2013/TT-BCT on goods purchasing and relevant activities of foreign-invested firms in Vietnam which took effect on June 7 requires one more procedure, which will also cause retailers to waste more time.

Under the circular’s article No. 7 on opening retail facilities, firms have to submit the discussion results of the economic needs test (ENT) councils.

The council consists of the provincial government, the provincial department of planning and investment or the authority of economic zones, the provincial department of industry and trade and relevant agencies.

Such a procedure, according to Ha, is redundant as it is obvious that provinces and cities have to discuss the matter when considering issuing the licenses of opening second stores. Requiring firms to present the discussion results is unnecessary and a waste of time, he said.

Siemens to commercialize fuel-saving bus project this year

Siemens Vietnam is pinning high hopes that commercial production of the energy-efficient buses using the Siemens ELFA hybrid technology will be translated into reality this year after completing test of the first such bus prototype.

“Production of the bus is planned for this year,” Pham Thai Lai, chief executive officer of Siemens Vietnam, responded to a relevant question raised by the Daily in HCMC on Wednesday, when he met reporters to provide an overview of the company in Vietnam in 2013.

The bus prototype is now being tested on fuel consumption and emission reduction among others. Lai said that Siemens Vietnam was working with its partner Vietnam Motors Industry Corp. (Vinamotor) over the project but stressed that the number of such buses to be manufactured had not been decided.

Siemens Vietnam has also introduced the environment-friendly bus model to the authorities of HCMC, the economic hub of Vietnam where more than 3,200 commuter buses of different sizes are currently in service.  

Siemens Vietnam and Vinamotor launched the first hybrid-drive prototype bus in Hanoi in June 2013, a year when it celebrated the 20th anniversary of its official presence in Vietnam. The bus was the result of nine months of close collaboration between the two sides.

In September 2012, representatives of Siemens Vietnam and Vinamotor clinched a contract for manufacturing the bus prototype, three months after the two sides initialed a cooperation agreement for applying the Siemens ELFA hybrid-drive technology to city buses in Vietnam.

As the technology enables fuel consumption reduction by up to 50%, operators of those buses using this technology will be able to save significant costs and contribute to environmental protection.

Lai said 2013 was a successful year for Siemens Vietnam as the company saw its revenue increase by 25% over 2012 as the result of many major contracts it won in the areas of energy, healthcare, industry, infrastructure and urban development.

The contracts included extension maintenance and equipment supply services for Phu My 3 combined-cycle power plant in Ba Ria-Vung Tau Province, equipment supply for the Pho Noi 500kV station and its electricity transmission lines, and the comprehensive Aptio Automation solution for the medical center Medic in HCMC to ease workload and offer better healthcare services to patients.

Lai said that this year Siemens Vietnam continued identifying more opportunities in the energy, healthcare, industry, infrastructure and urban development as these were strongly expanding market segments in this country.

Lai hoped that the company would achieve a double-digit growth in revenue in 2014 although many challenges remained in this market this year.

Numerous apartments await buyers this year

Though HCMC’s property market warmed up a little last year, project investors still have much to do as there are dozens of thousands of unsold apartments awaiting buyers.

According to statistics of market research firms, HCMC still has 17,200 unsold apartments, with high-end apartments located in districts 2 and 7 and low-cost ones in the outlying districts of Binh Tan, Tan Phu and Binh Chanh.

The selling prices of high-end and low-cost apartments fluctuate around VND30 million and VND15 million per square meter respectively.

To stir up the market last year, investors had to offer many special promotions to attract buyers instead of providing direct discounts.

Offering financial support with longer payment terms was the solution used by many enterprises to reduce pressure for customers. The payments were made in tiny installments to make the scheme more affordable to buyers.

For instance, Novaland offered a payment method over a long period of up to 50 months to buyers of Sunrise City apartments in HCMC’s District 7 and buyers would pay around VND32 million each month. Similarly, with the Tropic Garden project in District 2, buyers could pay VND22.9 million monthly in 49 months.

Besides, paying installments in 2-5 years with no interest rate was another solution used by such property firms as Thu Duc House with the TDH Truong Tho apartment project and Him Lam Land with the Him Lam Riverside project.

One of the home buyers’ concerns was the volatile interest rates that caused difficulties to buyers when planning bank loan payments. To ease such concern, some enterprises coordinated with banks to launch the selling programs with interest rates kept unchanged during the payment period.

Phu My Hung Corporation in coordination with some banks offered a stable rate of 8% per year to buyers of Happy Valley apartments, and customers of the EHome 3 project invested by Nam Long Corporation also enjoyed a similar rate. Meanwhile, at Him Lam Riverside, buyers could pay half of the value to receive apartments and the remaining amount would be paid in five years with a rate of 6% per year.

In addition to financial support programs, some enterprises pledged to help buyers lease out their apartments in a couple of years.

Him Lam Land pledged to rent Him Lam Riverside apartments from buyers in two years at up to VND24 million per month.

According to Him Lam Land, the renting pledge helped buyer to exploit their apartments in the first two years and ensured the apartment values amid current situations.

At Le Thanh Twin Towers invested by Le Thanh Company in Binh Tan District, tenants gave VND350 million to the project owner to earn the right to stay in an apartment in up to 49 years.

Some investors reduced the service fees to attract potential customers.

With the SunView Town project in Thu Duc District, Dat Xanh Group offered free management services in 3-10 years, helping buyers to save around VND3 million each year.

In the land lot segment, some enterprises gave construction materials, or even built the foundations free of charge for buyers. Buyers of land lots in Tay Bac Saigon urban area, for example, were given five tons of cement and 5,000 bricks.

Various solutions taken by property enterprises created certain vibrancy on the market last year, with the number of apartments sold much higher than in 2012.

According to Savills Vietnam, among 6,400 apartments offered for sale last year, around 5,800 units found buyers, up 46% from the previous year.

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