14th Int’l Garment Industry on show in HCMC

Nearly 200 businesses from 10 nations and territories around the globe attended the 14th Vietnam International Textile & Garment Industry Exhibition (VTG 2014) which opened in HCM City on October 29.

On display at nearly 360 pavilions were hi-tech equipment in the garment and textile sector with well-known brand names such as Artrend, Da Kong, Tajima and Weltex.

From the beginning of the year, Vietnam’s garment and textile sector has gradually secured a firm foothold in the international market with a turnover of more than US$15 billion.

Especially, local found materials make up nearly 50%, a considerable increase compared to the previous years. However, as these materials are not of high quality, Vietnam still has to import materials to produce high-end products.

This year’s event is expected to help local businesses access the latest machines and equipment and the most suitable material source.

The event will run through to November 1. 

Nearly 600 int’l importers register for Hanoi Gift Show

Nearly 600 international importers from the United States , European Union, Japan, and Australia have registered to join Hanoi Gift Show 2014 which opened in the capital city on October 27.

On display at 550 pavilions during the event were handicraft and fine art products, interior and exterior decorations, furniture, textile and embroidered products, household utensils, gifts and jewelry..

A fair called “One Village One Product” (OVOP) is held in the framework of the show. The fair will introduce to visitors special and unique items from all Vietnamese localities and Indonesia, Laos and Nepal.

During the event foreign importers will be invited to handicraft villages by the Hanoi Department of Industry and Trade to seek for trade partners and facilitate their business.

This is the fourth year the Department conducted Hanoi Gift Show which is expected to become an annual event for both local producers and foreign importers.

The fair will run through to October 30.

Vietnam seeks to boost aquacultural exports to Canada

Vietnam has undertaken efforts to enhance product quality and marketing strategies in a bid to take full advantage of Canada’s market potential for its aquacultural products.

Vietnamese seafood products, especially frozen tra fish (pangasius) fillets, are amongst the best-selling imported products in Canada and are available at a large number of retailers.

According to Hua Van Hao, President of Kien Fat Trade Company in Toronto, Canada, Vietnam should strengthen the State management of tra fish export in terms of quality and price in order to meet international standards.

Meanwhile, Lenny Wong, Executive Director of Ocean Parkers Inc., highlighted the large potential on the local market for Vietnamese seafood products, adding that his company imported and distributed 600 containers of tra fish and ba sa fish all over Canada each year.

Wong also suggested Vietnam improve product quality and food safety to gain the trust of Canadian consumers, while also increasing competitiveness in the field.

The Government recently issued Decree 36/2014/ND-CP, which requires breeders, processors, and exporters of tra fish to meet the Vietnam Good Agricultural Practice (VietGap) standards or international standards such as GlobalGAP and Aquaculture Stewardship Council (ASC), in a move to strengthen its exports to large markets such as the EU and the US.

Government bonds less attractive

The State Treasury was unable to sell out VND5 trillion worth of government bonds at an auction on the Hanoi Stock Exchange (HNX) on Wednesday despite higher coupons.

According to VietnamPlus, the State Treasury offered VND2 trillion worth of five-year bonds and VND3 trillion of 10-year bonds.

Some 17 members bid for the five-year bonds with a total valid bidding volume worth nearly VND2.8 trillion. They offered coupons ranging from 4.6% to 6.5% per annum.

However, only VND900 billion of five-year bonds were sold with a coupon of 5.01% per annum, 0.21 percentage point higher than the session on October 13.

Besides, only seven members joined the auction for 10-year bonds and bid to buy over VND1.9 trillion of bonds at 6.19-7.25% per annum. Ending the session, VND900 billion worth of bonds were sold at 6.3%, rising by 0.11 percentage point against the previous auction.

Figures of HNX showed that the State Treasury has mobilized over VND182 trillion from  G-bond issues since early this year.

Ocean Bank offers preferential loans

Ocean Bank has set aside VND1 trillion to make preferential loans available for corporate clients in need of capital to expand their production and trading operations.

The low-interest loans are available until March 31 next year.

The bank offers six-month loans with an annual interest rate of 6.99% for the first three months and loans of six-month to one-year terms with an interest rate of 6,99% per annum for the first six months.

Ocean Bank said the credit package is part of the bank’s support program for enterprises this year. Apart from preferential interest rates, the lender will launch promotion programs and offer incentives to corporate customers.

Printing-packaging sector forecast to grow 12% in 2015

The printing and packaging industry is projected to grow by 10-12% next year thanks to the fact that many firms are investing in technology to enhance product quality and bolster exports.

A number of local printing companies have been influenced recently by the global economic crisis, the domestic economic difficulties and the development of online communications, said Nguyen Van Dzong, chairman of the Vietnam Printing Association. However, he told the Daily at the Vietnam International Packaging and Printing Industry Exhibition 2014 (VNPrintPack) taking place until this Saturday that the printing and packaging industry is still expected to grow 7% for the whole year and 10-12% next year.

There are more than 1,000 printing and packaging firms nationwide earning total revenue estimated at over US$1 billion a year, with the domestic market accounting for a lion’s share, Dzong said.

Au Tung Mau, deputy general director of Hung Nghiep Formosa Co., Ltd, told the Daily that the company’s operation is running well this year with two production lines producing BOPP films and two others for PVC films with maximum output of 5,000 tons and 500 tons a month respectively.

The local consumption of these two types of film is faring better and forecast to enjoy good growth next year. Mau’s company has 2,200 workers with half output for domestic consumption and the other half for export, Mau added.

Hung Nghiep Formosa has spent more than US$1.1 billion building a manufacturing facility covering 300 hectares at Nhon Trach Industrial Zone in the southern province of Dong Nai to produce synthetic fiber, nylon and PVC and BOPP film as packaging materials.

Nguyen Thanh My, board chairman of My Lan Group, said the group is acquiring more production lines for printing materials using environmentally-friendly technology.

Given that local printing and packaging companies are in fierce competition with Chinese imports, the group is boosting its exports to the U.S., Canada, Germany, Poland and Turkey with export revenue amounting to US$25 million a year.

If local firms want to keep long-term business with customers from the U.S and Europe, they should pay close attention to product quality, My suggested.

VNPrintPack 2014 opens in city

* As many as 230 local and foreign enterprises are attending Vietnam International Packaging and Printing Industry Exhibition 2014 and Vietnam International Food Processing Industry Fair now taking place until this Saturday.

The two exhibitions are organized by Vinexad in collaboration with Chan Chao International Company at the Saigon Exhibition and Convention Center (SECC) in HCMC’s District 7.

According to the organizers, this is a good chance for local and foreign companies to sound out business opportunities and look for partners, and exchange and apply advanced technology to printing and packaging industry.

Over 1,100 firms to join connectivity program

The HCMC Department of Industry and Trade said more than 1,100 enterprises have put their names down to participate in a supply-demand connectivity program to be organized for companies in HCMC and other provinces next week.

Le Ngoc Dao, deputy director of the department, said enterprises based in HCMC account for 847 of the number and the rest from other provinces such as Long An, Tien Giang, Ben Tre, Vinh Long, Ninh Thuan, Lam Dong, Ba Ria-Vung Tau, Hai Duong and Ha Tinh.

Distribution and retail firms enterprises make up 782 out of the total number and the remainder are manufacturing enterprises.

The one-day program will feature the displays of products and the signing of deals between suppliers and distributors. There will be seminars for producers to speak out their challenges when selling products to distribution chains and for distributors to make clear policies for goods purchases and discounts.

The conference will help suppliers and distributors find cooperation opportunities to boost their domestic sales and exports. It will create a chance for farmers and agro-aqua-forestry cooperatives to find local and foreign distributors.

Through the event, HCMC expects to secure supplies of goods with reasonable prices and meeting food safety requirements for the kitchens in economic zones, industrial parks, factories and schools in the city.

Dao said the city would arrange a trade promotion trip to Russia for enterprises next month. “Russia has high demand for agricultural products, processed seafood and consumer goods such as rice, vegetables, fruit and basa fish. Interested enterprises should register with the department,” she said.

Prices of low-grade rice seen slipping

Prices of medium and low-grade rice are forecast to decrease in the coming time as their supply will increase strongly while demand will stay the same on global markets, according to economic expert Nguyen Duc Thanh from the Vietnam Center for Economic and Policy Research.

Thanh, who is also head of the paddy and rice research team of the Alliance on Climate Smart-Agriculture, warned an increasing supply of medium and low-grade rice by India, Myanmar and Cambodia could affect Vietnam’s world rice market share in the coming years.

Thanh said paddy output and yields of Vietnam have kept increasing since 2005 as farmers have expanded their fields and produced paddy for a third crop instead of only two crops in previous years.

Low-grade rice now accounts for over 40% of Vietnam’s rice export volume, Thanh told a conference on the structure of the rice sector and benefits for farmers in Hanoi on Tuesday. Low-grade rice brings low profit to farmers as this type of rice does not generate high export revenue.

Luong Van Tai, a farmer in An Giang Province, said paddy output in the Mekong Delta province has increased but prices have stood at around VND5,000 per kilo for years. But prices of input materials such as fertilizer, pesticides and paddy seeds have kept rising.

Thanh said local rice exporters will face fiercer competition on global markets when supply of medium and low-grade rice surpasses demand, and this will push down paddy prices on the domestic market.

Some policies encourage farmers to produce low-grade paddy. For example, Decree 109 containing conditions for rice exports prevents a number of firms from producing and trading specific rice products, which can bring about high profits for both exporters and growers, Thanh said.

Agronomist Vo Tong Xuan told the conference that the decree should have particular regulations for enterprises to tap the niche market by exporting high-grade rice and specialty rice.

It is important to create a level playing field for enterprises in order to improve the brand, quality, diversity and prices of Vietnam’s rice, Xuan said.

Consumer confidence slightly softer in October

The Vietnam Consumer Confidence index announced by ANZ Bank and Roy Morgan in October has fallen slightly by 0.3 percentage point from the previous month to 134.7, primarily driven by survey participants’ falling confidence in the next 12 months.

In terms of personal finances, 53% (down five percentage points month-on-month) of Vietnamese respondents expected their family will be better off financially this time next year compared to just 7% (up two percentage points) opting for worse off financially, ANZ said in a report released on October 22.

Of the respondents, 33% (up two percentage points) said their families are better off financially than a year ago compared to 23% (up two percentage points) who said their families are worse off financially.

Considering the Vietnamese economy, 51% (down three percentage points) thought Vietnam will have good times financially in the next twelve months and just 15% (up one percentage point) projected bad times financially.

In addition, 61% (up one percentage point) predicted Vietnam will have good times economically over the next five years compared to just 7% (unchanged) with bad times economically.

Meanwhile, 42% (up two percentage points) said now is a good time to buy major household items, the highest for this indicator since January 2014, compared to only 14% (down seven percentage points) who said now is a bad time to buy major household items.

Glenn Maguire, ANZ Chief Economist for South Asia, ASEAN & Pacific, said within the consumer confidence survey, the conflicting influences of asset price deflation and softer consumer goods inflation affecting relative perceptions of financial wealth, particularly the propensity to consume most apparent this month.

“As we previously highlighted, wealth effects from the equity market are a key determinant of consumer confidence in Vietnam and the weakness in the local bourse over the month has clearly weighed on consumer confidence,” he commented.

In addition, with consumer price inflation having continued to soften recently, price savvy consumers are now recognizing the present as a good time to purchase a major household item.

As the survey showed, 42% of Vietnamese, the highest level so far this year, believed now is a good time to purchase a durable item.

Simplified licensing could bring home prices down

Home prices are quite low at the moment and could not be lower but investors believed they could bring down prices further if the licensing procedures for housing development projects are streamlined, according to experts.

Economic expert Vu Dinh Anh told a seminar on real estate recovery in HCMC on Tuesday that the current house prices are too low and that land prices may double next year, pushing up the investment of housing projects.

Nguyen Vinh Tran, general director of Nam Long Investment Company, said home prices could decline if land prices drop but it is difficult for the company to lower house prices.

However, Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, said it is possible for enterprises to cut prices by around 20% if they carefully select building materials and apply high technology to reduce investment. Besides, they will be able to slash another 10% of their total costs if administrative procedures are simplified.

Complicated procedures have pushed up investment costs, Duc pointed out.

According to Tran Trong Tuan, director of the HCMC Department of Construction, it takes a company 21.5 months to start work on a small-scaled property project and 26.5 months for a big project from the date of applying for a construction license.

Le Huu Nghia, director of Le Thanh Construction and Trading Company, said the company has developed eight projects and none of them was licensed in fewer than 30 months. Some projects even took the company up to four to five years.

Nghia shared Duc’s viewpoint, saying that if administrative procedures are processed quickly, enterprises would spend less time on their projects and make better profits.

Tuan said the department has tried its best to reduce administrative paperwork in response to property enterprises’ complaints.

Tuan said the licensing of a property project involves not only the department but also other departments. He also said some enterprises are not financially capable or do not comprehend relevant regulations.

“We are willing to work with enterprises on reviewing administrative procedures concerning the issuance of construction licenses. If it is our fault, we will admit it,” Tuan said.

Many energy centers ineffective

Although there are more than 14 energy saving promotion centers and over 40 centers for industrial promotion established nationwide to support power efficiency, half of the total are performing ineffectively as they just do jobs concerning promotion of energy saving.

Trinh Quoc Vu, head of the Science Technology and Energy Conservation Department under the Ministry of Industry and Trade, raised the point at a recent conference on energy in the Mekong Delta province of Tien Giang.

Vu said such centers were opened to advise local governments on their energy audit and efficiency policies with an aim to ascertain how much power is wasted and find solutions to the problem so that enterprises can adopt proper measures to save power and gain more profit.

In reality, half of the centers have actually helped companies make changes to save as much energy as possible and the remainder simply introduces the benefits of saving power for locals and firms via issuing leaflets. The reasons for the ineffective centers are that they lack experts in power technology and equipment.

Huynh Kim Tuoc, director of the Energy Conservation Center HCMC, pointed out a lack of finance as one of the causes of the situation. He said many banks have not been able to work out evaluation criteria for the loans provided for enterprises to execute energy-saving plans.

Fortunately, Denmark has plans to finance energy-saving projects for small- and medium-sized enterprises in Vietnam from next year with each firm allowed to get from US$10,000 to US$100,000, according to the Embassy of Denmark in Vietnam.

Vu said the Ministry of Industry and Trade will set up a fund worth US$200 million lent by the World Bank in 2016 to back enterprises’ efforts to change technology in order to save energy.

Brokerage firms fare well in Q3

A number of securities enterprises reported positive earnings results in the third quarter of this year thanks mainly to the strong rally of the local stock market.

HCMC Securities Corporation (HSC) obtained over VND640 billion in revenue in January-September, including VND216.7 billion in the third quarter, surging by 47% and 52.8% respectively against the same period of 2013.

Of the VND640-billion revenue between January and September, HSC earned VND223 billion from brokerage and services, VND177 billion from securities investment, VND9.8 billion from advisory services and nearly VND230 billion from others.

The enterprise’s pre-tax profit in the first nine months rose 71% year-on-year to VND409.8 billion, including VND134.6 billion recorded in July-September. Its after-tax profit exceeded VND320 billion, jumping by 78% year-on-year.

At an analyst briefing early this week, HSC explained the difference between the growth of before- and after-tax profit resulted from a corporate income tax reduction from 25% to 22% this year.

At the end of the third quarter, the enterprise fulfilled 86% and 94% of this year’s revenue and after-tax profit targets respectively.

In the third quarter, HSC ranked second on the Hochiminh Stock Exchange in terms of brokerage market share with 12.34% after Saigon Securities Inc. (SSI) with 13.27%. But the firm ranked first on the Hanoi Stock Exchange with 8.37%.

Bao Viet Securities Company (BVS) posted revenue of VND78.6 billion, up 52.8% year-on-year.

Explaining the strong rise, BVS said in a statement sent to the Hanoi Stock Exchange that the improvement of the stock market sent trading volume and value up strongly in the third quarter. Its after-tax profit also gained 30% to nearly VND28.6 billion in the period.

From January to September, BVS obtained around VND218 billion in revenue and VND90 billion in after-tax profit, up 42.4% and 14.5% respectively compared to the same period last year.

IB Securities Company (VIX) saw its after-tax profit in the third quarter soar 251% year-on-year to VND13.5 billion due to better proprietary trading.

Thanks to the strong rise of the market, VIX attained VND20.6 billion in proprietary trading revenue compared to over VND1.9 billion in the same period of 2013. The firm also earned around VND2 billion from advisory and issue guarantee services compared to zero earnings in 2013’s third quarter.

Its revenue jumped 325% to VND24.3 billion in the period while its operating cost leapt 290% to VND7.4 billion due mainly to rising spending on proprietary trading and manpower. The firm still obtained good profit as its revenue growth was higher than that of operating cost.

Despite the good business results, experts warned that securities firms are still facing risks due to margin loans extended to investors.

There were still enterprises with poor business results in the period. For example, Wall Street Securities Company racked up losses of VND21.4 billion due to rising operating cost and share price decline provisions.

AIA Vietnam posts strong growth in new premiums

Life insurer AIA Vietnam reported its new business premium growth of 92% in the third quarter of this year over the same period last year.

Its annualized new premiums in the period increased by 24% versus the same period last year. The firm also boasted a new milestone in August when it reported annualized new premium sales of over VND111 billion in a single month.

Stephen Clark, CEO of AIA Vietnam, said the company has focused on improving the quality of sales advice, services and products in this increasingly competitive life insurance market.

AIA Vietnam is also continually improving in important areas such as sales compliance, ethical behavior and adherence to regulatory guidelines and rules.

Automakers report surging demand

Automakers in the country are running their factories at full capacity to meet surging demand, which is in stark contrast to somber forecasts made earlier this year.

Toyota had earlier expected to sell 600 Corolla Altis 2014 units a month but has secured up to 1,400 orders only three weeks after this model was launched on the local market.

Toyota Vietnam said with the soaring demand, customers will have to wait for at least one month to take delivery.

The Japanese automaker has sold 6,300 Vios 2014 units since this model made its debut in the first quarter of this year but there are now more than 1,700 firm orders for the company to fulfill.

The number of Yaris 2014 units sold in June-September was 908, tripling the average sales of the old Yaris model.

Toyota Vietnam said its factory in the northern province of Vinh Phuc is running at full capacity. It takes two to three months for auto parts to be supplied by foreign firms for the company to assemble.

In the first nine months of this year, Ford Vietnam sold more than 9,200 units, up a whopping 68% year-on-year.

Jesus Metelo Arias, general director of Ford Vietnam, forecast the company’s total sales in all of this year would exceed 10,000 units, a target that Ford Vietnam has never reached before.

The customers who have placed orders for Transit, Ranger and EcoSport models have to wait until this December to take delivery.

Honda Vietnam has had more than 1,000 orders for its compact City car, which doubled the company’s earlier estimate for the model introduced one month ago.

Truck sales are also faring well. Buyers of Isuzu Vietnam’s heavy trucks have to wait until next March to have their orders fulfilled while customers buying Fuso trucks from Mercedes-Benz should wait until the start of next year.

According to the Vietnam Auto Manufacturers Association (VAMA), the nation’s auto sales amounted to 106,700 units as of the end of last month, rising 39% against the same period last year with sedans and trucks accounting for 40% and 36% respectively. The association estimated the whole year’s sales at nearly 145,000 units.

Max speed sparks concerns

Several transport experts have expressed grave concerns over a decision by the Ministry of Transport to revise up maximum speeds on certain expressways, such as 120kph on HCMC-Long Thanh road.

Relevant agencies should thoroughly check safety conditions on such roads before approving the new maximum speeds as designed on such roads, they said.

Pham Sanh, an expert in transport, said he supported the ministry’s move to raise the speed limits on expressways, but he was concerned about the current situation of traffic on expressways, which to a certain extent is still chaotic.

Before allowing for an increase of the speed limit to 120kph, the Transport Ministry should conduct a study on traffic safety when vehicles drive at such a high speed, Sanh told the Daily.

“Currently, safety issues on expressways are still not well controlled. The accident between a coach and a watering vehicle on the HCMC-Trung Luong Expressway that killed seven people in April indicates this problem. In my opinion, the max speed should not be raised to 120kph for now if a safety study has yet to be conducted,” he said.

Sanh suggested that there should be more regulations on vehicles passing each other, and the speed should be regulated the same on different traffic lanes of the same expressway.

Vu Xuan Hoa, director of Bach Khoa Construction Consulting Co., said the transport ministry’s move to allow for a maximum speed as designed for certain expressways is reasonable. However, further calculations should be made first.

In addition, expressway management agencies must also ensure the highest quality of the road. A small hole on the expressway can trigger a serious accident when vehicles run at 120kph, Hoa said.

Previously, authorities allowed for the maximum speed of 120kph on the HCMC-Trung Luong Expressway, but later reduced it to 100kph after several tragic accidents on the road.

As covered in the Daily on October 21, the Transport Ministry has just revised up the maximum speed to 120kph on HCMC-Long Thanh in the south and Thang Long Boulevard in Hanoi. The ministry is also considering schemes to raise the max speed on several other roads.

India woos Vietnamese investors

The Indian government is calling for Vietnamese enterprises to invest in the world’s second most populated country as part of a campaign entitled “Make in India.”

The Consulate General of India in HCMC last week held a function to promote the campaign initiated by Indian Prime Minister Narendra Modi to develop the country into a global manufacturing hub.

Under the initiative, local and foreign investors are encouraged to establish firms or joint-ventures to turn out products in India for domestic consumption and export.

Smita Pant, Consul General of India in HCMC, told the event that “Make in India” is not a slogan but a warm invitation for foreign companies to invest in the market that is home to 1.3 billion consumers.

The campaign aims to create a friendly environment for investors with transparent procedures. India has launched a website at www.makeinindia.com to provide detailed information about the initiative.

Vietnam is one of the top investors in Myanmar and its investments in Bangladesh are growing. These two countries share the borders with the North Eastern states of India.

In a few years to come, stronger ties between India and ASEAN will create more opportunities for those investors in the former.

The potential for enterprises of Vietnam and India to cooperate is described as huge as Prime Minister Nguyen Tan Dung along with Vietnamese businesses will pay an official visit to India this month. Direct flights connecting the two countries will be launched several months later.

A memorandum of understanding on twinning HCMC with Mumbai is under discussion. An Indian bank is also making great efforts to open a branch in the city.

“We call for investors to look at India as a huge market with favorable investment procedures....  We, at the Consulate General of India, will do our best to support companies to invest in India,” Pant said.

Mohan Ramesh Anand, chairman of the Indian Business Chamber in Vietnam (Incham), expected that the campaign will encourage more Vietnamese firms to invest in the production of farm produce, aquaculture and fisheries, food processing, footwear production and furniture and wooden products in India.

The Indian food processing industry is estimated to reach US$320 billion next year. Therefore, Anand urged Vietnam should seek to branch out into this huge market.

Vietnamese enterprises have invested more than US$8 billion in over 500 overseas projects. Apart from the traditional markets of Laos and Cambodia, they have also poured significant investments into Russia, Malaysia, the United States, Cuba, Myanmar and Bangladesh.

However, Vietnam has only three projects in India with a combined investment capital of US$23.6 million.

No State money for bad debt

The Government has told the Ministry of Planning and Investment to withdraw its proposal for using the State budget to settle bad debt of State-owned enterprises (SOEs).

In an urgent document sent to the ministry, the Government Office said Deputy Prime Minister Vu Van Ninh has ordered the ministry to take back the proposal for using the State budget to finance bad debt of SOEs.

Earlier, the ministry submitted a draft report on the restructuring of public investments, SOEs and the banking system to the National Assembly Standing Committee in mid-October with the proposal written on page 67 of the report.

The suggestion immediately sparked public concerns that it is not fair to use taxpayers’ money to assist loss-making and inefficient businesses run by the State.

There are about 1,000 SOEs in operation. Total debt of this sector is estimated at VND1.600 trillion, equivalent to US$80 billion.

Finland firms keen on urban area projects in city

Many Finnish companies have expressed their strong interest in cooperating with HCMC in implementing urban area projects, especially the Thu Thiem New Urban Area in District 2, the Finnish Minister of Employment and Economy said.

Jan Vapaavuori told a conference on Finland’s hi-tech solutions for a smart city in HCMC on October 21 that in addition to urban area projects, Finnish firms want to invest in wastewater treatment as well as bridge and road development in the city.

HCMC vice chairman Le Manh Ha said with a population of over 10 million, the city is grappling with a host of challenges involving environmental pollution, traffic congestion and flooding.

Various solutions have been deployed, including the application of technologies in traffic management, but the results are still limited, Ha said.

Vapaavuori said after reaping success in the northern city of Haiphong and the Mekong Delta province of Long An, Finnish companies are looking for investment opportunities in HCMC.

Attending the conference in HCMC on October 21 were representatives of 23 Finnish enterprises operating in various sectors, including information techonology, telecommunications, hi-tech and education.

At the conference, Finnish firm Viope and Vietnamese company Gsoft clinched a cooperation agreement in information technology.

On Monday, Minister of Transport Dinh La Thang and the Finnish minister signed an agreement on air transport between the two countries. The pact is about transport rights; the airlines chosen to operate services between the two countries; taxes and charges for airlines, competition and cooperation to ensure aviation security.

The 26-article agreement is expected to promote economic, trade and tourism ties between the two nations once it takes effect.

Thang said the Government has indentified infrastructure development, particularly in transport as one of the breakthroughs for Vietnam to become an industrialized country by 2020. Therefore, the Government and the Minister of Transport are striving to look for finance, technology and know-how to realize the target.

Thang said with its technology and science strengths, Finland is one of the most important partners of Vietnam in developing sustainable and eco-friendly transport systems in this country.

Caesar Vietnam opens showroom in city

Caesar Vietnam Sanitary Wares Joint Stock Company has inaugurated a showroom featuring hundreds of sanitary products at 453 Ly Thuong Kiet Street in HCMC’s Tan Binh District.

The showroom having an area of over 600 square meters displays a wide range of items like washbasin, automatic hand dryer, bathtub, urinal and other bathroom accessories. The facility also showcases a new collection of items applied with modern technologies such as water-saving urinal and electronic toilet.

According to David Chen, deputy general manager of Caesar Vietnam, the showroom not only provides customers with advice on products of their choice at reasonable prices but also offers design consultations to customers.

Taiwan-invested Caesar Vietnam officially went into operation in 1996 with its plant located at Nhon Trach 1 Industrial Park in the southern province of Dong Nai. The company holds 15% share of the sanitary wares market with a network of three branches in HCMC, Danang and Hanoi as well as agents nationwide.

Can Tho to have credit guarantee fund for SMEs

A credit guarantee fund for small- and medium-sized enterprises (SMEs) will come into operation in Can Tho City on December 1 this year, according to the city’s vice chairman.

Nguyen Thanh Dung told a meeting with commercial banks in the Mekong Delta city on October 21 that the city government will be responsible for managing this fund.

Tran Quoc Dien, director of the fund, said this fund has initial chartered capital of VND60 billion sourced from the city’s budget. Can Tho needs support from banks to raise the amount to VND100 billion next year.

In response to Dien’s suggestion, most of the banks at the meeting agreed on contributing capital to the fund but did not detail their contribution ratios.

Dien said the fund will provide guarantees for SMEs to take out bank loans for their production and trading activities.

Dung said 90% of the firms in the city are SMEs and find it hard to gain access to financing sources. “Therefore, the fund will support enterprises’ production plans which in return help create more jobs for locals and the city government increase budget collections,” he said.

Dung said the management of the credit guarantee fund plans to seek more money to raise its charted capital to VND200-300 billion to assist more companies.

Equitization of 432 SOEs to finish next year

The Government has pledged to speed up a national equitization scheme to ensure that 432 State-owned enterprises (SOE) will go public by the end of next year as scheduled.

Presenting a report on socio-economic development in 2014 and tasks for 2015 at the eighth session of the 13th National Assembly in Hanoi City on Monday, Prime Minister Nguyen Tan Dung said the Government has taken multiple measures to step up SOE equitization, according to chinhphu.vn.

Besides, the Government has focused more to SOEs’ divestments from non-core business operations, improvement of business governance and efficiency, and removal of difficulties during the equitization and divestment processes.

Between January and September this year, 71 enterprises went public (compared to 74 firms last year) with 35 launching initial public offerings (IPO) on the local stock market. The value of 123 other candidates was determined and around 200 SOEs are expected to go public this year.

Among the 432 SOEs entitled to the equitization scheme, 368 companies have set up steering committees, 257 firms are assessing their value and 123 firms have got decisions to publicize their value.

The report said most SOEs are profitable, contributing more to the State budget.

Last year, total assets of State-owned groups and corporations increased 10.4% against the previous year, equity up 15% and revenue up 5%. According to the report, 101 out of 108 enterprises reported combined pre-tax profit advancing 21%.

In the first half of 2014, SOEs’ revenue, pre-tax profit and tax payment met 50.5%, 57% and 54% of the year’s respective targets.

In 2015, the Government aims to finish the equitization of 432 SOEs and continue divesting capital out of the sectors that the State does not need to hold a majority stake.

The Government will also encourage private investment in production and trading, support the development of private companies and cooperative economy.

Ministry, firms at odds over housing inventory

The property market has shown signs of warming up in the final months of the year; however, statistics on the inventory volume are still a mystery due to different ways of calculation.

According to recent statistics of the Ministry of Construction, the value of property inventory was VND82.295 trillion as of August 20, down VND12.163 trillion (12.88%) against December.

There are still around 17,000 unsold apartments, equivalent to VND26 trillion, while the unsold land lots total over 8.7 million square meters worth VND28.5 trillion.

However, the owner of a big property company refused to comment on the reliability and accuracy of such figures, simply saying the ministry’s calculation is different from the company’s. While the ministry reports declining inventory over the time, housing developers are not that optimistic.

Both property investors and market observers believe there is huge inventory, mainly at high-end projects.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, proved this point, saying HCMC alone currently has up to 1,000 property projects which have been developed or are underway.

According to Duc, only 50 to 60 of those projects are offering their products for buyers and earning good sales while others whose combined value may be worth trillions of dong are standing still.

The latest statistics of the HCMC government do not indicate positive findings either. There are currently over 1,400 housing projects in HCMC covering a total land area of over 11,800 hectares and comprising more than 506,500 units. Nevertheless, only 426 projects have been finished, 201 others are under construction and up to 689 projects have been suspended.

Duc said suspended and unfinished projects should be counted as inventory. Besides, investors of such projects had to take out bank loans and the inventory value picks up 12% a year equivalent to the normal lending rate.

Meanwhile, Doan Chi Thanh, general director of Hoang Anh Sai Gon Real Estate Company, said a housing product is considered inventory when the investor finishes building infrastructure of a land lot project or foundation of an apartment project under the existing regulations.

Thanh admitted property inventory has declined from last year’s quarter three and good signs are seen in the low-end housing segment. However, there is no scientific basis to rely on the ministry’s inventory figures, he added.

Pham Thanh Hung, general director of Cen Group in Hanoi, said there is a controversy surrounding property inventory due to the inconsistent views of management agencies and companies.

Developing a property comprises several phrases, and if each sides view inventory in different phases, inventory statistics are different, Hung said.

Gov’t aims to cut bad debt ratio to 3% next year

The Government is planning to slash bad debt in the banking system to around 3% next year, according to its web portal at chinhphu.vn.

In a report on Vietnam’s socioeconomic performance in 2014 and orientations for 2015 made at the eighth session of the 13th National Assembly, the Government said the bank restructuring scheme has produced positive results.

The Government has basically restructured weak banks with seven credit institutions merged into others. Commercial banks have improved financial capability and secured network safety.

Between January and September, Vietnam Asset Management Company (VAMC) bought over VND50 trillion worth of bad debt, taking to VND90 trillion the total value of bad debt it has purchased.

Meanwhile, banks had set aside VND78.5 trillion credit risk provisions as of August to continue dealing with bad debts.

Next year, the Government will continue the restructuring of the banking sector and complete the operation mechanism of VAMC.

HSBC projects robust export growth for VN

HSBC Bank predicted that Vietnam’s export sector would achieve a strong rise of 15.9% this year, which is believed to give a much-needed boost to the country’s development.

In its Asia Economic quarterly report released on October 20, HSBC said after years of credit-intensive growth with most capital channeled into the inefficient State-owned sector, the country is taking a breather and focusing on a more sustainable growth strategy – exports.

Despite the global slowdown, Vietnam’s exports are punching above their weight, expanding by 14.1% between January and September. Thanks to the slower growth of imports, the trade balance also turned to a slight surplus of US$2.5 billion.

“We expect export growth of 15.9% this year, taking the export-to-gross domestic product (GDP) ratio to 81.4%. The economy will likely expand by 5.7% this year and accelerate slightly to 5.8% in 2015,” the bank said in the report.

Some good news for the export sector is ahead at the end of 2014 and next year. Negotiations on the free trade agreement between the European Union (EU) and Vietnam are due to be concluded soon while the Trans-Pacific Partnership (TPP) initiative is hoped to boost the competitiveness of Vietnam’s manufacturing sector.

Firms that want to take advantage of the country’s trade liberalization policy are setting up shop and increasing foreign direct investment (FDI) inflows. Agricultural exports are also gaining momentum although more work is needed to raise the added value of farm produce rather than competing on pure volume.

HSBC also mentioned other positive factors in the report, including the Government’s improving fiscal management. In the past decade, the economy suffered from too many wasteful projects that did not improve productivity.

Public projects are increasingly more scrutinized and more demand-driven. The Government is focusing on key infrastructure projects to alleviate bottlenecks such as highways and distribution.

However, a high non-performing loan ratio and the still inefficient State-owned sector remains a concern.

The State Bank of Vietnam (SBV) will likely accelerate restructuring banks towards the end of the year and next year, although the reform will probably increase the SBV’s supervisory capability within the regulatory framework.

The Government plans to boost the equitization of key enterprises in the last quarter of the year.

With low global oil prices and stagnant domestic demand, price pressures are subdued. Coupled with this, a favorable base effect will likely push inflation to a new low in the fourth quarter.

Therefore, SBV would have room to cut the open market operations (OMO) rate by another 50 basic points to 4.5%, HSBC projected.

Agricultural firms hard to access bank loans

Agricultural enterprises have voiced a series of difficulties in accessing bank loans as apart from the challenges caused by the economic slowdown, they are facing more weather and market risks than those in other sectors.

Nguyen Thi Hang, general secretary of the Vietnam Beekeepers Association, told a forum on agricultural enterprises in Hanoi City last week that Vietnam is the world’s third biggest honey exporter but no bank has provided loans for bee-keeping farms. As a result, bee keepers still invest in their business activities by their own funds and the money advanced by exporters while they have to pay various fees to local governments and environmental agencies.

Vo Quang Huy, deputy chairman of the My Thanh Shrimp Association in the Mekong Delta province of Soc Trang, pointed out the same situation for shrimp farms. He said shrimp growers are forced to have collateral for bank loans.

Huy suggested that the central bank should have appropriate policy to support shrimp farms.

Tran Van Chien, head of Co Dong Livestock Cooperative in Son Tay District of Hanoi City, said the livestock sector has struggled with many woes in the past three years, leading to many farms shutting down. It is very hard for farm owners to take out bank loans to resume operations.

“Our members need to invest billions of dong in their farms but cannot borrow money from banks. Banks only lend those already having contracts to sell their products to livestock companies. This forces farm owners to be employees of foreign firms,” Chien said.

Dao Cong Thang, director of Agricare Vietnam Co. Ltd., said his company has not been able to take out any bank loans or benefit supporting policies from the Ministry of Agriculture and Rural Development.

Thang also bemoaned policy changes that put agricultural firms on tenterhooks. “Policies change so quickly that we do not have enough time to respond. Our violations are inevitable and too many fines make our life very difficult,” Thang complained.

TPBank launches mobile payment service

Tien Phong Bank, or TPBank, on October 20 introduced its mobile payment service to small and medium-sized enterprises (SMEs) and stores.

TPBank will provide users with a device to connect to smartphones and to enable cell-phones to operate as points of sale (POS). Customers will have to deposit VND1.5 million to borrow the device and install software to their phones.

Unlike a traditional POS terminal, the new service does not require minimum monthly revenue. Usual POS service forces users to obtain a minimum transaction value of around VND50 million a month, so it is only suitable to large companies and stores.

TPBank is the second bank in Vietnam to offer the service. Last month, Saigon Thuong Tin Commercial Bank, or Sacombank, launched a similar service and users should buy a device for nearly VND2.4 million to subscribe to this service.

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