Hai Duong seeks approval to build admin complex

The provincial government of Hai Duong is seeking approval from the Prime Minister to develop a new complex of administrative buildings covering an area of 19.15 hectares east of Hai Duong City.

The new complex, including five functional zones, will be the working place of some 19 administrative agencies such as the provincial People’s Council, the People’s Committee and local departments. The building to house local departments will be the highest but not exceeding 20 floors, said the provincial government.

The total investment capital is estimated at VND2.06 trillion, with the provincial budget covering a half and the balance to be raised from sales and transfers of land and facilities of old departments.

The provincial government stressed the need to develop the new administrative complex as current facilities manned by top administrative agencies there have been deteriorating.

Previously, many provinces and cities nationwide such as Binh Duong, Ba Ria-Vung Tau and Danang have also spent trillions of dong each developing their concentrated administrative towers.

Metro Line 2 cost seen shooting up to US$2.1 billion

Total capital required for Metro Line 2 in HCMC from District 1’s Ben Thanh Market to District 12’s Tham Luong will be revised up to US$2.1 billion from the original cost of US$1.3 billion due to inflation and design revision.

The city authorities said in a report submitted to the Ministry of Transport on the construction pace of metro projects in the city that the second metro line is expected to be two years behind schedule.

The adjustment of the design has affected bidding, site clearance and resettlement.

The cost is estimated to jump by more than 60%, equivalent to US$784 million, due to the slow construction pace, inflation and an increase of the project’s components.

However, this amount is an estimate by the investor and its consultant. The city government has asked the investor to review the extra cost of each item.

In the original plan, the Ben Thanh-Tham Luong metro line in the first phase has a total length of 11 kilometers worth over VND26.1 trillion, or US$1.3 billion, with US$540 million in official development assistance (ODA) loans from the Asian Development Bank with, US$313 million from the German Development Bank (KfW) and US$195 million from the European Investment Bank.

The remaining US$326.5 million will come from the city’s budget.

The design and construction work was originally planned to last from 2014 to 2019, and the investor expected to test-run the line in 2020.

The cost of Metro Line 1 from Ben Thanh Market to Suoi Tien Theme Park in District 9, which is underway, was revised up to US$2.4 billion.

HCM City to pilot half-year advertising on buses

HCMC authorities will pilot ad placement on commuter buses operating on 10 bus routes for a six-month period before making it available on buses plying other routes.

According to the revised pilot scheme sent to the city government by the Department of Transport, ads should cover less than 50% of the exterior surface of buses.

Only locally-made goods, especially high-quality ones, will be featured on such ads, with their slogans printed in Vietnamese. Colors of the ads must be also aesthetically attractive and should not resemble those of traffic signs.

Advertising prices will be auctioned with the floor price set by the Department of Finance.

Some advertising firms said the fact that only Vietnamese products, especially high-quality ones, are allowed for advertising on buses could pose a big hindrance to them.

In addition, it will be difficult to lure clients due to the restriction on ad spaces on buses.

In terms of colors, advertising agencies proposed that all colors can be used including red as long as advertising contents are consistent with Vietnamese culture.

Earlier, the transport department had prepared a pilot scheme to put ads on buses on 10 routes in the city to subsidize the commuter service. However, the city government ordered a review of the scheme due to a number of shortcomings.

SOE reforms go slow, says expert

The restructuring of State-owned enterprises (SOEs), one of the three pillars of economic restructuring, has not met expectations in recent years, heard the Autumn Economic Forum 2014 held in Ninh Binh Province last week.

According to Nguyen Dinh Cung, director of the Central Institute for Economic Management, the equitization of SOEs has been slow, with only 16 SOEs undergoing equitization in 2011, 13 in 2012, 74 in 2013 and 64 in this year’s January-September.

State corporations’ divestments from non-core operations are also moving slowly with nearly VND3 trillion withdrawn in the seven-month period.

Cung said most divestments are just capital transfers within the State economic sector and among SOEs.

According to Sanjay Kalra, resident representative of the International Monetary Fund in Vietnam, SOEs’ debts accounted for nearly 15% of gross domestic product (GDP) in 2012, much higher than the 5% in 2001.

SBV governor puts bad debt at VND500 trillion

Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh, speaking at a question-and-answer session of the National Assembly (NA) Standing Committee in Hanoi on September 29, put bad debt in the banking system at VND500 trillion.

Binh made no mention of when the bad debt figure was calculated but said VND240 trillion out of the VND500 trillion had been settled.

Regarding the remaining amount, Binh said banks had set up risk provisions amounting to VND78 trillion as of the end of July. Mortgaged assets also have value doubling the loans.

However, Binh admitted that Vietnam Asset Management Company’s (VAMC) capability is limited. The firm has bought a slight VND86 trillion worth of bad debt.

Though the Government has approved an extra injection of VND2 trillion into VAMC’s capital, it is still a small figure compared to VND200 trillion of bad debt which it will have to deal with next year.

At the Autumn Economic Forum in Ninh Binh Province last week, Nguyen Van Phuc, deputy head of the NA’s Economic Committee, questioned whether the central bank had been playing hardball with the business community, fixing lending rates of 7-8% in spite of a projected inflation rate of around 4%.

Fielding the question, Binh said it is difficult to cut interest rates further to as low as 5% as inflation remains high, and it is not certain to tell that inflation can be put under control in future.

Policy change will lead to uncertainties and erode the confidence of citizens, Binh said.

Bad debt remains a bottleneck in the economy as many enterprises have bemoaned difficult access to bank loans.

Governor: Foreign reserves rise to record high

Vietnam’s foreign reserves have exceeded US$35 billion, the highest level ever in the country, central bank governor Nguyen Van Binh said in a report sent to the National Assembly Standing Committee before a question-and-answer session on September 29.

According to the report, the central bank has deployed a host of solutions to manage monetary markets and bank operations in order to achieve the targets of inflation control and monetary and foreign exchange market stability. This has helped the country post higher economic growth this year than the same period last year and increase foreign reserves.

The central bank has taken the initiative in maintaining an appropriate level of money supply in the economy. It has purchased foreign currencies to improve foreign reserves while withdrawing money via treasury bill issues.

As of August 29, the total balance of payments had grown 9.09% against late 2013. Capital mobilization rose 8.52%, and deposits in Vietnam dong had edged up 9.94% but borrowing in foreign currencies had dropped 0.1%.

Interest rates have gone down by 0.5 to 1.5 percentage points a year, with deposit rates losing 0.5 to one percentage point and lending rates falling by 1-1.5 percentage points.

At present, customers in priority sectors are subject to lending rates of 7-8% per annum. Meanwhile, normal borrowers can take out loans at short-term lending rates of 9-10% per annum and medium to long-term rates of 10.5-12% per annum. However, enterprises with healthy financial situations and feasible projects can enjoy lending rates of 6-7% per annum.

Credit institutions have also cut lending rates for old loans. Ending August, dong loans with lending rates of 15% per annum or higher accounted for 4.3% of total outstanding loans, down from the 6.3% recorded at the end of 2013. Those with lending rates from 13% made up 12.3% versus the 19.72% late last year.

Credit had grown 6.21% by August 29 compared to late last year and 12.35% year-on-year. Credit growth in the banking system is expected at 10% at the end of this year.

At the end of August, government bond purchases by credit institutions had surged 21.56% against late last year.

The inter-bank rate had hovered around VND21,200 per U.S. dollar as of September 15. The market has seen strong foreign currency liquidity while legitimate foreign currency demands of enterprises and individuals have been met.

Regarding bad debt settlement, reports of credit institutions showed that bad debt had totaled VND162.2 trillion as of the end of July, or 4.11% of total outstanding loans. The ratio was 3.61% by end-2013.

Between January and July, credit institutions settled VND40.8 trillion worth of bad debt, including VND14.3 trillion paid by customers, VND1.56 trillion from collateral sales, nearly VND14.5 trillion sold to organizations and individuals and VND8.3 trillion by using risk provisions.

Expert suggests three pillars to boost economic growth

Vietnam needs to develop a modern model of market economy based on the three pillars involving the roles of the market, the State and the society as one of the key factors to help the nation overcome the current socio-economic challenges, said former Minister of Trade Truong Dinh Tuyen.

The three pillars are an important impetus for economic restructuring, Tuyen told the Autumn Economic Forum in the northern province of Ninh Binh last Saturday.

Tuyen pointed out major challenges of the local economy such as prolonged macro uncertainties, high inflation, low gross domestic product (GDP) growth, rising business suspensions and public debt rise from 36.2% of GDP in 2008 to 56% of GDP last year.

According to the global public debt clock published by The Economist on August 20, each Vietnamese now has to shoulder US$99 worth of public debt.

The current situation is the consequence of an outdated economic structure, with the industrial sector still heavily reliant on outsourcing while agriculture which is important to the country’s economy remains underdeveloped.

Besides, the private sector has failed to make the most of potential while the State-run sector still plays a dominant role in the economy. This has resulted in expanding monopolies of State-owned enterprises (SOEs).

Though the number of SOEs has slumped from 12,000 in 1990s to around over 1,000 at the moment, affiliates of State-run groups and corporations have mushroomed, resulting in a high proportion of SOEs in the nation’s GDP at 32%. Notably, SOEs have reported a high bad debt ratio.

Therefore, Tuyen stressed the importance of speeding up SOE restructuring, selling all state stakes in the sectors the State does not need to retain, and enhancing governance at the enterprises where the State still holds majority stakes.

The nation also needs to boost agricultural restructuring and rural development.

A report by the International Labor Organization (ILO) showed that the productivity of Vietnamese workers is equal to only one-fourth of that in Thailand, one-fifth in Malaysia, one-tenth in South Korea and one-fifteenth in Singapore.

To fuel the nation’s economic growth, Tuyen proposed a number of solutions such as stepping up administrative reform and improving the investment environment. The Government has told relevant agencies to adopt drastic measures to realize these goals.

Tuyen said it is crucial to sell bad debt at commercial banks, restructure the banking network and make the state of bad debt transparent.

The Government should divest State stakes from SOEs held by State Capital Investment Corporation (SCIC) to have more finances to address basic construction and SOE debts, and take appropriate measures to tackle SOE leaders who have caused bad debt. This will help ease the burden of credit institutions.

Tuyen called for the Government to consider devaluating Vietnam dong by around 3% to encourage exports and develop supporting industries.

HCM City’s economy posts steady growth

The HCMC economy is showing signs of steady growth and is expected to attain growth of over 9.5% this year, said Le Hoang Quan, chairman of the municipal government.

The city’s gross domestic product (GDP) growth has been accelerating since early this year, expanding 7.7% in quarter one, 8.7% in quarter two, 10.3% in quarter three and an estimated 10.7% in quarter four.

Therefore, it is likely that the city’s GDP growth target of 9.5% for this year will be realized compared to last year’s growth rate of 9.3%, Quan told a meeting of the HCMC Party Committee on September 29.

An economic recovery is in sight, the city leader said.

Production at enterprises has turned busy again, while sales of goods and services as well as exports in the January-September period are higher than the figures recorded in last year’s same period.

Total sales of goods and services have picked up 12.5% in the nine-month period totaling VND476.14 trillion while export turnover has reached US$23.8 billion, up 3.5% year-on-year.

Credit institutions in the city have mobilized VND1.226 trillion in the three quarters, rising by 4.71%.

According to Quan, this year the city focuses on helping enterprises, especially small and medium ones, to access bank loans. Banks have lent around VND22 trillion to enterprises to help them expand business and the total amount of credits is expected to reach VND30 trillion this year, up 50% against the initial plan.

HCMC was assigned to collect VND228 trillion in taxes this year and VND169.5 trillion, equivalent to 64%, has been collected so far, and it is expected that the year’s budget revenue in the city may exceed the target by 5%.

Regarding foreign investment attraction, the city has issued certificates to investment projects worth US$1.45 billion in January-September, up 6.9% against the same period a year earlier. What is more, according to Quan, most foreign investments have been poured into hi-tech projects.

HCMC looks set to realize 24 out of 26 socioeconomic targets for this year, with running-water supply and treatment of pollution being the only two targets unlikely to be met, Quan said.

Talking about this, chairwoman of the HCMC People’s Council Nguyen Thi Quyet Tam said failures in these two areas will leave a huge impact on residents, especially those living on the outskirts.

A report of the city government showed 96% of rural households in HCMC have access to clean water.

Beer, spirit SCT hike triggers concern

Beer production and consumption in the domestic market may fall sharply following a proposed tax policy slated to take effect in the second half of next year.

In the amended Special Consumption Tax (SCT) Law, the tax levied on beer would increase from the current 50 per cent to 55 per cent starting from July 2015, and then rise further to 60 per cent from 2017 and 65 per cent from 2018.

Similarly, the rate applied to alcohol with a proof content from 20 degrees will increase from 50 per cent to 65 per cent and for alcohol below 20 degrees from 25 to 35 per cent.

Director of the Ministry of Industry and Trade’s Industrial Policy and Strategy Institute (IPSI) Duong Dinh Giam said the beer sector has been largely affected by a number of legal documents and policies, such as the Investment Law, the Law on Enterprises, and particularly the SCT Law.

Giam argued that the tax increase on beer from 45 to 50 per cent in January 2013 had a significant impact on beer production and consumption.

Accordingly, beer consumption and production sank 8.2 per cent and 7.5 per cent on-year, respectively, in the first quarter of 2014. Meanwhile, while the beer sector provides jobs to 3 per cent of the workforce, it has created 7 per cent added value in the food processing industry thanks to higher productivity compared to other sectors.

The beer sector’s net revenue reportedly makes up nearly 60 per cent of the beverage sector’s net revenue.

A report on the role of the beer sector in Vietnam’s socio-economic development, conducted by IPSI in co-operation with policy research firm Regioplan (RP) and audit and advisory firm Ernst&Young (EY), showed that in 2013 the beer sector generated VND30 trillion ($1.4 billion) in added value and paid VND21 trillion ($1 billion) to the state coffers, accounting for 4.5 per cent of total budget collections from production and business.

The report also stated that the higher tax on beer products from the outset of 2013 had hurt the labour situation and budget collections when comparing figures from the first quarter of 2013 against the first quarter of 2014.

Tran Thuan An, head of Market Department at the Hanoi Beer, Alcohol and Beverage Joint Stock Corporation (Habeco) said the company would find it hard its financial goals if the SCT on beer goes up.

Stephane Gripon, CEO of Diageo Vietnam Limited, which distributes spirits in Vietnam such as Johnnie Walker and Smirnoff, suggested that any change to the investment environment and business operations should be carried out equally and consistently.

“If the government is of the view that they need to increase the SCT, implementation should be no earlier than January 1, 2016, and phase over the next three to four years, rather than a one-off change,” he stressed.

Thai firms’ visit anticipates giant refinery start

Two Thai firms are searching for opportunities to support a $22 billion oil refinery project in south-central coastal province of Binh Dinh’s Nhon Hoi Economic Zone.

Thailand’s Ratchaburi Electricity Generating Limited and KST Development Joint Venture Co. Ltd. both met with the provincial authorities to announce their ambition.

The refinery has a planned output capacity of 400,000 barrels per day (bpd), less than the originally announced $28.7 billion that would have generated 660,000 bpd per day when the project was first proposed in November 2012. It is being invested in by state-owned Thai oil and gas company PTT Limited.

The complex is also expected to pave the way for a number of satellite projects and has a huge demand for electricity, water and waste systems.

Binh Dinh Provincial People’s Committee Chairman Le Huu Loc said the province has completed basic land acquisition and is ready to deliver the developer ‘clear space’. The committee also has requested that the Ministry of Industry and Trade (MoIT) add the project to Vietnam’s oil and gas  development plan until 2025.

Meanwhile, On October 1 the MoIT and other authorities held a meeting about the refinery’s plan in preparation of submitting it to the prime minister.

 FDI attraction beyond expectations in Southern Key EZ

Foreign Direct Investment (FDI) attraction has fulfilled and exceeded 2014 plans in Ho Chi Minh City and the neighboring provinces of Binh Duong and Dong Nai, where are located in the Southern Key Economic Zone.

According to Binh Duong People’s Committee, the province attracted US$1.4 billion by mid September, accounting for 140 percent of its plan in 2014 and up 26 percent over the same period last year.  

Specifically, 113 new projects were licensed and 99 projects were adjusted investment capital. Among the new ones are a US$38 million project by Uchiyama Company and a US$120 million project by Nam Phuong Textile Company.

Those damaged in anti-China protests in May have also broadened production such as Esquel Garment Manufacturing that registered an additional capital of US$35 million.

The People’s Committee Chairman Le Thanh Cung said that Binh Duong has not only improved traffic, electricity and water infrastructures but also created clearer investment environment by administrative reform. Besides, businesses have been helped solve difficulties especially the protest damaged enterprises.

In Ho Chi Minh City, FDI capital hit US$1.45 billion in the first nine months, up 6.9 percent over the same period last year.

The City Export Processing and Industrial Zone Authority (HEPZA) reported that FDI attraction has exceeded its yearly plan since August. HEPZA will focus on attracting small and medium enterprises from the support industry to invest in the Vietnam-Japan Techno Park.

HCMC People’s Committee said that the city will continue improving investment environment and prepare land fund for foreign enterprises to invest in the support industry.

In Dong Nai, FDI capital approximated US$923 million by the end of August, a year on year increase of 17.4 percent.

Vietnam records 10.6% increase in public debt

Vietnam's per capita rate of public debt has increased by 9.9% or VND 1.8 million over the past year, according to a recent report by the Economist.

According to the Economist, as of October 1, Vietnam’s total public debts reached USD84.32 billion, accounting for 47.3% of the country’s GDP, up 10.6% from a year earlier.

With a population of 90.96 million, each Vietnamese citizen would have to bear USD930.43 in public debt, were it to divided evenly.

Speaking at the government’s regular meeting on the afternoon of September 30, Chairman of the Government Office Nguyen Van Nen said the prime minister recently asked the Ministry of Finance to review the country’s public debt along with a few other economic indicators.

Nen said that there is still a lack of consistency in the current methods of calculating public debt in Vietnam, and the ministry must work out standardised and accurate calculation methods, file a report to the Party and National Assembly and then announce it to the public.

Currently, the ministry is providing information about public debt by bulletin, but these are not always up to date. The second bulletin was released last October.

According to the latest bulletin, the ministry claimed that Vietnam’s public debt accounted for only 55.7% of the country’s GDP, which is lower than the NA’s ceiling rate of 65%, and is still at manageable level in accordance with recommendations of the World Bank and the International Monetary Fund (IMF).

However, according to estimates by Dr. Pham The Anh, Vietnam’s public debt accounts for as much as 98.2% of its GDP when taking into account debts held by state-owned companies that are not guaranteed by the government and accumulated debts for construction of infrastructure.

Long Thanh Airport plan to be submitted to National Assembly

The construction plan for Long Thanh International Airport, which is expected to cost USD6 billion in the first phase, will be submitted to the National Assembly for consideration after receiving approval from the government.

At the regular government meeting on September 30, Minister and Chief of the Government Office Nguyen Van Nen said that the government and the State Appraisal Council approved the project proposed by the Ministry of Transport.

Prime Minister Nguyen Tan Dung has authorised the Ministry of Transport to submit the plan to the National Assembly. The Ministry of Transport must explain to the NA the benefits of building a new airport instead of expanding Tan Son Nhat or Bien Hoa airports.

The document sent to the NA should indicate the size, efficiency and cost of the project and an estimate of how much it would add to public debt.

Deputy Minister of Transport Nguyen Hong Truong said that the project will be divided into two phases. The first phase will cost USD6 billion and will be carried out between 2020 and 2025. Phase one is designed to serve 20-25 million passengers per year. The second stage is scheduled for after 2030, and will increase capacity to 60-80 million passengers annually.

In the past, some experts said that the feasibility study for Long Thanh International Airport is unreliable and that it must be re-checked to avoid waste.

Prime Minister Nguyen Tan Dung said that it is preferable to build a new international airport, as an upgrade to Tan Son Nhat International Airport to increase its capacity to 40 million passengers a year would be costly and unfeasible.

According to the PM, the southern economic zone is Vietnam’s economic centre and has the highest demand for air transport, which is rising for both domestic and international routes.

Liberty denies selling five-star Pullman hotel

Que Huong-Liberty Company has denied rumors that it plans to sell the Pullman hotel, asserting that the information on the sale of the property is untrue.

Do Hoang Trang, general director of Que Huong Liberty Joint Stock Company, said leaders of the firm were struck when some news websites reported Liberty is seeking to sell the five-star Pullman Saigon Centre on Tran Hung Dao Street in District 1.

He told the Daily via telephone that “the news is untrue. We have no plans to sell Binh Minh International Hotel Co. Ltd., the investor of Pullman, nor the hotel itself.”

Earlier, media reported that the Pullman hotel is put up for sales only a few months after its official opening.

The news stemmed from an assumption on the website adalidda.com. This online page reported that a five-star hotel in HCMC with 300 rooms and managed by the international hotel operator Accor was ready for transfer.

Trang said the room occupancy and business are growing well although the hotel has just been put into operation lately. Currently, his firm is calculating the impact of the false information on its activities and seeking to handle it.

“Information relating to our company worries shareholders. We have not yet located the source of this information, and are still evaluating its impacts,” said Trang.

In September 2010, Que Huong-Liberty Joint Stock Company dismantled the Metropole Hotel to make room for a new five-star hotel. The new 30-storey hotel with 306 rooms called Pullman Saigon Centre was invested by Saigontourist Holding Company, Que Huong-Liberty Joint Stock Company and Saigon Que Huong Joint Stock Company, and managed by Accor.

The hotel opening took place on January 8 after a soft opening period.

Business as usual at HSBC and Standard Chartered

Two major foreign banks, HSBC and Standard Chartered, on September 30 confirmed their normal Vietnam operations, effectively rejecting rumors about their possible closures.

As explained in their statements released on September 30, the two banks said they are completing legal documents to close branches of their parent banks in Vietnam but still operate normally as single-member limited liability banks.

Earlier, quoting a report the central bank sent to the National Assembly Standing Committee before the question-and-answer session by governor Nguyen Van Binh on Monday, some websites reported that the central bank was making procedures to close two HCMC bank branches with one of HSBC and the other of Standard Chartered.

According to HSBC’s statement, on January 1, 2009, with the approval of the State Bank of Vietnam, the Hong Kong and Shanghai Banking Corporation Limited incorporated a 100% foreign owned bank in Vietnam called HSBC Bank (Vietnam) Ltd. based on its HCMC branch.

HSBC Bank (Vietnam) Ltd. received all the legal rights and obligations from the HCMC branch of the Hong Kong and Shanghai Banking Corporation and has since been in fine operation.

In the first half of 2014, HSBC Bank (Vietnam) Ltd. has increased its charter capital from VND3 trillion to over VND7.5 trillion to better serve customers and to demonstrate HSBC’s long-term commitment to this market.

“We are still working with the State Bank of Vietnam to complete relevant procedures to close the previous HCMC branch of the Hong Kong and Shanghai Banking Corporation Limited,” it said.

Standard Chartered also confirmed that it would focus on development of its 100% foreign-owned bank in Vietnam. So, it is going to close the HCMC branch of the parent bank.

On August 28, the central bank gave the nod to the transfer of all assets and loans from the HCMC branch to Standard Chartered Bank (Vietnam) Ltd. and the withdrawal of the operation license of the branch.

The new bank got all the legal rights and obligations from the HCMC branch of the UK’s Standard Chartered Bank and has been in normal operation so far.

Business is as usual at all offices and branches of Standard Chartered Bank (Vietnam) Ltd.

Preparing for investment wave from Japan

HCMC Development Joint Stock Bank (HDBank) in coordination with Japan’s Hyakugo Bank, Ltd on Monday launched the Japan Desk to offer special services and assistance for Japanese enterprises which have been or will be present in Vietnam. With the Japan Desk, HDBank aims to meet the demand for specialized financial and banking services of Japanese enterprises with transnational business activities.

The Japan Desk is a specialized division of HDBank with specialists fluent in the Japanese language to provide a wide range of banking services for Japanese enterprises. The Japan Desk, designed in the Japanese style with elegant and modern details, is located at HDBank Trading Center (level 1 of HDTower, 25Bis Nguyen Thi Minh Khai Street, District 1, HCMC).

Clients who are Japanese investors will be supplied with banking products and services necessary for their business operations like account service, liquidity management, loan arrangement, e-banking, financial and investment consultation. These services will help increase convenience for HDBank’s clients.  

With attempts to improve the investment environment over the past years, Vietnam has become an attractive destination in the eyes of foreign investors, especially those from Japan.

Japan is now one of the biggest foreign investors in Vietnam. There have been so far over 2,200 Japanese enterprises operating in Vietnam with combined investments of over US$35 billion. The investment amount poured by Japanese enterprises into Vietnam is rising fast as more Japanese investors are shifting parts of their investments from China to ASEAN countries, including Vietnam.

According to Ueda Tsuyoshi, president of Hyakugo Bank, Ltd, the Japanese bank has launched activities to assist Japanese enterprises with investments in Vietnam since 2006 via a joint program implemented together with Vietnam’s Ministry of Planning and Investment. In June 2013, the bank started to seek a partner in Vietnam to carry out its global expansion plan and HDBank was picked.

With total assets of nearly VND90 trillion and charter capital of VND8.1 trillion, HDBank is listed in the top ten banks in Vietnam with a large network, high annual growth, organization meeting international standards and global expansion. HDBank has established correspondent relations with over 300 banks in more than 150 countries and territories and is preparing to open its first overseas branch in Myanmar.

In recent years, HDBank has restructured itself by merging with DaiABank and buying Société Générale Viet Finance (SGVF), the latter being then renamed HDFinance.

Therefore, Tsuyoshi Ueda believes the launch of the Japan Desk at HDBank will help bolster effective support for Japanese businesses in their investment and business operations in Vietnam, improve Vietnam’s investment environment to make it a more secure environment for Japanese firms.

Tsuyoshi Ueda expects Japanese enterprises will be well provided with financial and banking services from a reputable unit like HDBank. “In the near term, there will be more and more Japanese enterprises making investments and doing business in Vietnam. Hyakugo has experience in serving Japanese enterprises and understands their culture while HDBank is a strong and reputable bank with a widespread network across Vietnam. For that reason, the cooperation between the two banks will best meet the demand of Japanese clients,” he says in a statement.

At the grand opening ceremony of the Japan Desk, Yakabe Yoshinori, deputy consul general of Japan in HCMC, says under the new growth strategy of the Japanese government, Japan will have more policies to facilitate outbound investments of Japan. In addition, the Ministry of Foreign Affairs of Japan also regards the policy to enhance economic diplomacy to recover the economy as one of the three main diplomatic policies to promote supports for Japanese enterprises when they make overseas investments. The cooperation between Hyakugo and HDBank is part of this development strategy.

According to Le Thi Bang Tam, board chairwoman of HDBank, the investment wave of Japanese enterprises in Vietnam is a good opportunity for domestic organizations and businesses to increase the quality of products and services to satisfy the demand of Japanese partners.

Early this year, in a Japan visit by State President Truong Tan Sang, HDBank signed a bilateral cooperation deal with Hyakugo to tap the opportunity.

Hyakugo is a reputable bank in Japan with total assets of up to US$47 billion and is expanding operations to overseas markets. As a result, HDBank’s cooperation with Hyakugo is expected to accommodate the global expansion and cooperation demand of the Japanese partner, according to Tam.

“With a strong financial capability and diverse services, HDBank is stepping up restructuring, and enhancing product and service quality to better serve its clients. In the past time, HDBank has run many programs to expand business abroad, and the launch of the Japan Desk is part of such a goal,” Tam shares.

Travel firms benefit from new expressway

Hanoi-Lao Cai Expressway is believed to bring favorable conditions for local travel firms to launch new tours to Vietnam’s northwestern region, and help visitors cut traveling time and enjoy scenes along the way.

Doan Thi Thanh Tra, director of marketing and communications of Saigontourist Travel Service Company, said travelers spend three and a half hours to go to Lao Cai from Hanoi, just half the previously required time. As such, the company can launch tours taking in more tourist attractions.

Saigontourist has launched a four-day tour to Hanoi-Lao Cai-Sapa costing VND4.6 million via the expressway, and recently won a contract to arrange this tour for 400 customers. The new tour departs weekly on Friday and provides travelers with high quality services in Lao Cai Province.

Similarly, Fiditourist Tan Dinh Travel Joint Stock Company (Fiditour) has introduced a six-day tour to northwestern provinces via the expressway, which costs nearly VND8.7 million and departs from HCMC.

Meanwhile, Binh Minh International Travel Co. Ltd. has opened a caravan tour to Sapa in Lao Cai, and travelers can drive to this famous destination by themselves on weekends.

3Q recovery for Ha Noi housing

The capital city's property market, including the condominium market, recovered slightly in the third quarter of 2014 because of positive economic factors.

According to its report on the capital city's property market for the third quarter which it released here yesterday, CBRE Viet Nam Company Ltd., a foreign property service provider, said the country's gross domestic product (GDP) grew by 5.62 per cent in the first nine months of 2014.

GDP growth, coupled with accelerating foreign investment, helped to boost manufacturing and exports and helped the country to counter low credit growth, the report added.

It quoted the State Bank of Viet Nam as saying that by the end of August 2014, credit to the real estate market had expanded by 9.85 per cent compared with that at the beginning of this year. This is higher than the 5.82-per cent credit growth for the entire economy, as well as the credit growth for other sectors.

It also cited the ANZ-Roy Morgan consumer survey, which showed that domestic consumer confidence closely followed domestic stock market trends, with both increasing since January.

According to the survey, nearly 60 per cent of respondents expect economic conditions in Viet Nam and their personal family situations to improve next year. A recovery in consumer confidence may give some grounds for optimism in terms of credit growth for the last three months of the year, the report added.

Apart from the recovery in domestic consumer confidence, manufacturing supported the country's overall positive economic performance and remained the most significant sector for foreign direct investments (FDI), accounting for nearly 70 per cent of total FDI. The country's real estate sector ranked second with $1.2 billion, or 11 per cent of total FDI.

"The positive economic factors in the third quarter of this year have promoted recovery of the capital city's property market, including the market of condominiums for sale," said Nguyen Hoai An, senior manager of CBRE Viet Nam's Ha Noi branch.

In the third quarter, the condominium market continued to witness active property launches and re-launches even during the so-called "ghost" month which, in the traditional Eastern mindset, is a time for refraining from business activities, the company said.

A total of 2,202 condominium units from six projects were added to the supply, and most of them were from the low-end segment. This pushed the total new supply of condominiums for the first nine months of this year to 6,829 units, surpassing the 6,745 units launched in the entire 2013.

Meanwhile, medium-end projects were actively re-launched, with massive promotion programmes that included interior design packages, car plans and deferred payment schemes, as most of these projects were already completed and buyers could move in immediately.

Sales momentum still remained strong despite the ghost month tradition. An estimated 2,550 units were sold in the quarter, a slight increase of approximately two per cent compared with that of the last quarter.

Sales for medium-end projects improved by 30 per cent while those for low-end projects declined as buyers moved up the price brackets and favoured completed projects. The total number of units sold for the first nine months reached 6,550, a 66-per cent year-on-year increase.

"Transactions for medium-end projects increased because of the high demand in this segment, and the supply of the medium-end projects has always accounted for a large volume of the market," An said.

In terms of primary pricing, a slight two- to five-per cent year-on-year increase in indicated tag prices were seen in the new launches of some medium- and low-end projects, especially the completed ones, An noted.

"Although promotions of higher value are on offer, the increase in tag prices shows that developers were more confident in the market and in the positioning of their projects," she added.

The prices of apartments for re-sale likewise witnessed a slight one-per cent quarter-on-quarter increase. Re-sale prices improved in most segments, with the strongest seen in medium-end apartments with a 1.8-per cent quarter-on-quarter surge. In the first and second quarters, an increase in re-sale price was stronger in the luxury and high-end segments.

Review support industry aid: experts

State assistance for the development of Viet Nam's support industries must be studied carefully to ensure its effectivity, experts said.

The call was made in response to the draft decree on the development of supporting industries that the Ministry of Industry and Trade recently formulated.

Under this decree, individual and corporate producers and distributors of products and services for supporting industries will be allowed to borrow low-interest credit from a VND30-trillion (US$1.4-billion) support industries fund.

The fund will be sourced from the State budget, official development assistance (ODA) loans and other investment funds, including an initial aid of VND2 trillion that will act as catalyst for the first three years.

Dao Phan Long, vice chairman of the Viet Nam Mechanical Engineering Association, said the most important task following the establishment of the fund would to determine which companies deserved to receive the aid, to avoid rampant and ineffective investment. Detailed policies should also regulate the use of the fund, Long added.

He suggested that business associations act as advisors while central agencies manage, instead of allocate, the funds to municipal and provincial agencies to further ensure effective implementation.

Besides the aid, the crafting of appropriate policies for support industries are more urgent, said industry insiders.

Tran Tuan Anh, director of the 19-8 Mechanical Joint Stock Company, revealed that enterprises in the support industries sector were interested in policies that would make their products more attractive to Viet Nam-based foreign companies.

The Government should regulate which Vietnamese-made products foreign companies in Viet Nam have to use in their production, Anh said, adding that Viet Nam's support industries needed this because the capital needed to invest in support industries was huge.

Long said it would be difficult for Vietnamese support industry enterprises to take part in foreign companies' supply chains because the latter often brought in their foreign support industry partners to Viet Nam when setting up establishments in the country.

Viet Nam currently has 1,400 enterprises in its support industries sector that manufacture electrical, electronics, metal and rubber components and accessories.

Inadequate supply of components and accessories from domestic support industries has forced manufacturers to look for foreign suppliers, leading to the country's prolonged trade deficit in industrial production in previous years.

Viet Nam had to import a wide range of components and and accessories worth $53.1 billion last year, and that number is expected to jump to $67.6 billion this year.

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