Business in brief 04 Jan 2013
Industrial production index sees positive signs
The industrial production index in December increased 5 per cent against last month and 5.9 per cent from the same time last year, according to the General Office of Statistics.
For the whole 2012, the industrial production index leapt up by 4.8 per cent from last year, of which mining industry was up by 3.5 per cent, while processing and manufacturing industry and power and gas industry saw a rise of 4.5 per cent and 12.3 per cent, respectively.
In general, industrial production met a number of difficulties in 2012 due to negative impacts of the slowdown of the global economy, reduced domestic consumption and low demands from major importing markets.
However, industrial production began to see positive signs in the ending months; as a result, the industrial production index was on the rise and the inventory index was falling.
The industries that enjoyed fast growth included shipbuilding and floating platform building (up by 136 per cent); telecommunication equipment production (48.3 per cent); spare parts (39.6); electronic device production (23.7); and power production, transmission and supply (12.3).
PetroVietnam pledges to continue East Sea oil extraction
Despite territorial disputes that have made work more difficult, oil prospecting and drilling activities will continue in the disputed East Sea.
At a press conference on December 27, Phung Dinh Thuc, Chairman of the Vietnam Oil and Gas Group (PetroVietnam) said their activities were becoming more difficult after a Chinese oil and gas company in June invited foreign oil bids for nine oil blocks, which lie entirely within Vietnam’s 200-nautical mile exclusive economic zone and continental shelf. The situation escalated after cables on their exploration ships were severed by Chinese fishing vessels.
Thuc said, "Our activities are in accordance with international laws and we are prepared for any scenario."
He further said PetroVietnam would tighten control over offshore activities and any exploration and extraction projects in 2013.
Despite the disputes and difficulties, PetroVietnam has achieved its goals in 2012. The group’s total revenue reached VND772 trillion (USD37 billion), an increase of 14.4% compared to 2011. The group also contributed VND186 trillion to the state budget, 18.5% higher than their goal.
The group has sent their restructuring plan for the 2012-2015 period and is waiting for the Prime Minister’s approval of the plan in January.
Remittances to reach USD11 billion
Remittances from overseas Vietnamese in 2012 may reach USD10-11 billion, an increase of 15-20% from last year. If these figures are confirmed it was mark the highest level of remittances in the last four years.
According to the State Committee for Overseas Vietnamese Affairs, there are about four million people of Vietnamese origin, including 400,000 temporary workers living abroad.
Domestic banks have created favourable conditions for such transactions.
With the huge rate gap between the black currency exchange market and banks reduced, more money has been sent through official banking channels.
A representative from a money transfer company under a major bank in Hanoi said that they had transferred USD1.1 billion since start of the year. Most of the remittances were from the US, Japan, Germany and Australia.
Another money transfer company under a bank in HCMC said remittances from guest workers abroad had recently increased and the company had transferred USD1.8 billion, which matched last year’s figures.
The State Bank of Vietnam in HCMC reported that in 2012, the remittances through commercials banks amounted to USD4.1 billion, an increase of 15% compared to 2011. They said only 15% of remittances were transferred though banks last year and the rate had surged to 34% this year.
People had also spent less on real estate. Only 23% invested remittance in property this year, compared to 52% last year.
Another reason for the surge in remittances has been Vietnam’s high deposit rates.
C.T Group enters retail industry with first supermarket
C.T Group last week put into operation its first S.Mart supermarket, setting up the landmark in its plan to expand business into the retail industry with a goal to set up 20 such shops between now and 2015.
The supermarket having an area of 3,000 square meters at 140 Tran Binh Trong Street in HCMC’s District 5 is worth VND40 billion and sells around 20,000 items of food, cosmetic, apparel products and home appliances, said Tran Kim Chung, chairman of C.T Group.
Among such products, there are around 200 products joining the city’s price stabilization program and hundreds of other products sold at lower prices compared to market prices.
The company, better known for its high-class property projects, is able to offer low prices to customers owing to a good purchasing system and an effective management team which help reduce management costs, he said.
The firm is currently investing in a clean vegetable system in the outlying district of Cu Chi, and the supermarket’s strength is to supply clean and fresh food products.
Two next S.Mart supermarkets will be opened after the Lunar New Year holiday, one in Go Vap District and the other in District 6.
Chung said that next year, the firm would likely develop S.Mart supermarkets in Myanmar and Indonesia.
* Saigon Trading Corporation (Satra) last week opened a Satrafoods convenience store in HCMC’s Binh Tan Districts which sells products of the price stabilization for workers.
The store located next to Vinh Loc Industrial Park on Nguyen Thi Tu Street is the 18th store of the Satrafoods store chain and sells nearly 2,000 products, with food products accounting for 90%.
Satra has opened 12 new Satrafoods store this year, two stores lower than the year’s target of opening 14 stores.
Doosan Vina wraps up 2012 as ‘great year’
Korean-invested Doosan Heavy Industries Vietnam (Doosan Vina), which operates a plant in Dung Quat Economic Zone in central Vietnam, wraps up 2012 as another great year after beating all its targets, the company said.
Despite economic woes worldwide, “2012 is another great year for Doosan Vina that has seen us reach and exceed our targets,” said Hang Ha Ryu, general director of Doosan Vina, in a staterment.
The year of 2012 was the third full year of operations and the best year to date yet for Doosan Vina, said the company.
Shipments in 2012 totaled more than 34,000 tons, and the high-tech equipment bearing the “Made in Vietnam” tag has been sent to customers in Vietnam and ten countries worldwide.
The company’s five workshops namely boiler, heat recovery steam generation, material handling system, water and chemical processing equipment have all turned out products for customers from far and wide, including India, Singapore, Canada, Turkmenistan, Egypt, Saudi Arabia and the Philippines.
Doosan Vina is a high tech industrial complex in the Dung Quat Economic Zone of Quang Ngai Province. Its products include boilers for thermal power plants, heat recovery steam generators, desalination plants, and material handling systems among others.
Property sale plans diversified on poor demand
The local property market this year has seen sale plans diversified to attract homebuyers who don’t need to rush in times of steep price falls.
The high-end condo project Hoang Anh Riverview developed by Hoang Anh Gia Lai Group in HCMC’s District 2 is known for its double discounts.
In 2009, the project owner announced a 40% price cut, bringing down the condo price from VND49 million to VND28 million per square meter. This year, secondary investor An Binh Land has further slashed the price to VND18.2 million a square meter.
A few other projects are also offering 10-20% discounts.
Some land plot sellers commit to give buyers enough materials to build a simple house apart from construction permits, land use right certificates and free designs. Such a sale plan is mainly applied to land plots in Long An and Binh Duong, targeting low-income earners.
Owners of several land plot projects now have to accept installment payments to relieve buyers of financial pressure.
Dat Xanh Real Estate Service & Construction Corporation adopts this flexible payment method to boost sales of land plots in the Gold Hill project in Dong Nai’s Trang Bom District. Buyers pay VND5 million each month over a period of about 2.5 years.
Instead of discounts, some project owners promise valuable gifts to their customers. For example, Bao Gia Group has announced it will give VND1 billion worth of interior furnishing items to those buying the apartments of The Flemington project in HCMC’s District 11.
Meanwhile, Novaland pledges to transfer US$1,000, or some VND20 million, per month to bank accounts of the customers buying two-bedroom flats of the Sunrise City in District 7.
Apart from cars and furnishing items, gold is another kind of gift that property project owners offer homebuyers. Each customer of the Imperia An Phu project in District 2 will be given four taels of SCJ gold.
After making a down payment equivalent to 50% of the home value, homebuyers can take out loans to pay the remaining amount with a five-year term and a fixed interest rate of 1% per month. A number of property firms use this sale plan when their customers cannot access bank loans.
If mass buying is executed to get discount prices, mass selling is adopted to look for potential customers. The Settlement Week organized by Eden Real gathered a lot of projects of various segments, including apartment, low-rise house, villa, hotel, office building and workshop, to introduce to customers.
The owner of The Eastern project in HCMC’s District 9 allows its customers to pay an amount equal to only 10% of the home value. The rest will be paid after apartments are handed over, which is slated for late 2013.
On the website of the luxury condo project The Vista in HCMC’s District 2, the owner says: “We cover loan interest, you just move in The Vista!”
Many property project owners have joined hands with banks to offer homebuyers preferential loans with even a zero interest rate. In fact, they accept lower profit by paying loan interest for their customers.
Some project owners have decided not to offer discounts. In fact, in their initial plans, they included discounts of some 10%, which would be lowered gradually, or late buyers enjoy discounts one or two percentage points lower than the ones before them.
This “early birds discount” is beneficial to first comers, but it can only be applied in the projects with prime locations and good products.
Le Thanh Commercial Construction Co., for example, has put up condos of Le Thanh Twin Towers in HCMC’s Binh Tan District for lease in 49 years after tenants have paid the project owner VND350 million.
Several other project owners are also looking for chances in the condo-for-rent segment rather than leaving the finished apartments unoccupied.
Discounts available at Nam Do Complex
Those buying apartments of the Nam Do Complex project in Hanoi’s Hoang Mai District will receive a discount of VND1.5-2.1 million per square meter starting tomorrow.
In particular, the price of VND22 million a square meter will be lowered to VND20.6 million for fully complete apartments and to VND20 million for partially complete ones, said the project owner GP Invest. The company will put up 150 apartments for sale this Saturday.
The firm has also decided to adjust prices for customers signing home purchase contracts before today, December 31. Those making payments on schedule will enjoy a discount of VND1.5 million per square meter.
If homebuyers agree to pay 90% of the home value within January, the project owner will cut condo prices by VND2.1 million a square meter.
Moreover, customers borrowing loans from BIDV will continue to enjoy an interest rate of 6% per year since disbursement under a contract signed between the lender and GP Invest.
Nam Do Complex comprises residential area, preschool, office for lease and commercial space, developed on an area of more than 26,000 square meters at 609 Truong Dinh in Hanoi’s Hoang Mai District.
The residential area consists of two apartment buildings of 25-28 stories high called CT1 and CT2 and a 14-story mixed-used building. The apartments cover 72-152 square meters each.
CT1 has been built to the 25th floor and will take the roof in February. The apartments of this building are scheduled for handover in late 2013.
Meanwhile, CT2 is in the final stage and its apartments will be handed over in July.
Danang’s tourism in trouble due to room oversupply
A strong increase in the number of hotels and a decline in quality services have made hotel operators in Danang City encounter more problems due to the tough price competition.
Huynh Tan Vinh, deputy general director of Bac My An Resort Joint Stock Company and chairman of the Danang Tourism Association, said that the boom in the past years of hotel, restaurant and resort projects has resulted in the high supply and bad consequences for the city’s tourism.
“It is the redundant number of hotel rooms that has led to room rate discounts and undercutting, leaving a serious impact on business operations of this sector,” he told a regular meeting with the Danang Department of Culture, Sports and Tourism last week.
“A series of two- and three-star coastal hotels recently developed have lowered the room rate to VND300,000-400,000 per room. Such low price has posed a great threat to hotels located in the city’s downtown,” Vinh said.
Sharing the same opinion, Le Vinh Quang, chairman of Phu Hoang Service and Transportation Company, said that the city’s government should develop a detailed planning for the development of new hotels as with the current development, it is difficult to manage not only the price but also the quality.
Once the development is out of control, Danang will become messy and its reputation will be lost, especially when Danang is striving to become a tourist city, he said.
The reputation for Danang as a tourist city should go with festivals. However, with the current organization of festivals, Danang has yet to achieve the expected result due to many reasons, with timing as a major one.
“For example, the firework competition held on April 30 and May 1 has attracted a large number of tourists. However, Danang still has crowds of tourists on these days, and there is no need for the city to attract more tourists at this time of the year by organizing the fireworks event,” he said.
“If the competition were organized in summer when there is nice weather, Danang could avoid the overwhelming number of tourists,” Quang said.
In addition to objective reasons, many enterprises said that Danang’s tourism lacked a connection between enterprises.
Do Anh Tuan, director of Phuoc Tien Company, said that in order to succeed amid current difficulties, enterprises have no ways but to cooperate with each other to ensure the high quality of services.
Saigontourist obtains record revenue this year
Saigontourist Travel Service Company earned revenues of over VND2 trillion this year, up nearly 15% from last year, which is the highest revenues ever of the firm.
Vo Anh Tai, director of Saigontourist Travel Service Company, said that 2012 was a difficult year, but thanks to the sales network expansion, new products and promotion and marketing programs at home and abroad, the firm has achieved growth in number of tourists and revenue.
Saigontourist welcomed 450,000 local and international tourists this year and an average of some eight international ships every month, with 1,500-1,800 tourists and crewmembers per ship.
“Every travel season, we offer over 300 domestic and overseas tours. This year we opened eight new offices and branches nationwide to develop the sales network,” Tai said at the company’s Thank-You Party last week.
Saigontourist will inaugurate a new office at 1 Nguyen Chi Thanh Street, HCMC’s District 5, on Wednesday.
Exporters can still access foreign currency loans
Local exporters will still be able to take out forex loans for business activities instead of being subject to an earlier decision by the central bank stopping forex loans from tomorrow, according to a new circular.
Under Circular 37/2012/TT-NHNN just issued by the State Bank of Vietnam, credit institutions are allowed to provide short-term forex loans to companies having foreign currency income from exports to carry out business and production plans. However, exporters borrowing money in foreign currency will have to sell the amount to the lenders.
“Corporate borrowers have to sell the disbursed loan to lenders at the spot price,” the circular which will be effective until the end of 2013 clarifies.
Besides, the new rule also regulates that credit institutions are allowed to consider lending foreign currency to those in need of short-term, middle-term and long-term loans for commodities and services payments for foreign partners. It rules that borrowers must have enough revenue in foreign currency to repay the loans.
At the same time, local banks are requested to provide short-term loans to fuel wholesalers that the Ministry of Industry and Trade has allocated the 2013 quotas when these enterprises need foreign currency to pay foreign partners for imported fuel. The regulation will also be applicable until December 31, 2013.
The law specifies that local lenders are permitted to lend to key national projects and works that the National Assembly, the Government or the Prime Minister agrees to make investment. The target borrowers also include project owners of schemes that receive outbound investment licenses from the Ministry of Planning and Investment.
For other capital demand belonging to the priority areas in line with the orientation of the Government, local banks can provide loans in foreign currency upon approval from the central bank in accordance with the circular’s regulations.
The circular takes effect from January 2 and will replace Circular 03/TT-NHNN dated March 8, 2012 by the central bank governor on giving foreign currency loans to residential borrowers.
The Vietnam Association of Seafood Exporters and Producers earlier had proposed the central bank allow its members to continue to borrow foreign currency loans since the loan rates are much lower than those of loans in Vietnam dong. The new circular is seen a reply from the central bank.
At present, lending rates of the U.S. dollar stays at 6-7% annually, while Vietnam dong loan rates applicable to entities of prioritized areas are some 12%, according to a decision from last Monday.
The stability of foreign exchange rates in 2012 is one of the main reasons for the fact that many companies continue to take out foreign currency loans. The Vietnam dong/U.S. dollar exchange rate has mainly fluctuated between VND20,850 and VND21,000 this year while the average inter-bank rate has remained unchanged, at VND20,828 to the dollar.
Deputy Governor Le Minh Hung predicts foreign exchange rates to continue to be stable next year.
Fierce competition in mid-end condo segment
The market is currently biased towards the mid-end apartment segment, and thus project owners are competing fiercely in a bid to attract budget-conscious homebuyers.
Nam Long Investment Corp. is known for its Ehome condo projects targeting middle-income earners. The recently-launched Ehome 3 Saigon West project in HCMC’s Binh Tan District is in its first phase with 333 apartments priced from VND600 million to VND1 billion each under construction.
Nam Long hopes its budget products will lure young families. However, given the market slowdown, the company has cut a deal with Vietcombank to offer homebuyers interest-free loans in order to boost sales.
Specifically, homebuyers can take out loans worth up to 70% of the home value, with a term of 15 years and zero interest rate. In addition, they do not have to pay principals in the first 12 months.
The financial package will relieve homebuyers of their financial pressure. In fact, many customers are struggling as they pay both principal and interest sums until homes are handed over, said Nguyen Vinh Tran, managing director of Nam Long.
The apartment project Khang Gia in the city’s Go Vap District also shares the financial burden with its customers.
Over 320 apartments have been put up for sale at VND11.2 million per square meter, or some VND537 million per unit. Payments will be made in installments over 20 months.
The project owner has joined hands with BIDV to give homebuyers loans worth 70% of the home value with a term of 15 years and a preferential interest rate of 12% per year.
Similarly, the condos of the MBabylon project in Binh Tan District are on sale at a price of VND15 million per square meter, or about VND700 million a unit. Military Bank offers homebuyers loans equivalent to around 70% of the home value over 15-20 years with a lending rate of 12% for the first year.
Project owners are focusing on prices, especially sales promotions and financial support for their customers. However, not all of them have achieved success.
Some say that it takes more than just cheap prices to lure homebuyers. It is essential that project owners gain the confidence of their customers in order to survive, said Ngo Vi Hung, deputy general director of Sacomreal.
Before carrying out the Carillon project in Tan Binh District, Sacomreal has carefully studied the market and the needs of customers to design appropriate products. In addition, the firm has mapped out a viable pricing strategy based on the actual market situation, and thus it has drawn attention from a lot of customers, he said.
Sharing the same view, Nguyen Van Duc, deputy general director of Dat Lanh Real Estate Co., said project owners were competing in locations, prices, project utilities and especially apartment sizes.
Some apartment projects with prices already slashed by 20% still do not sell well because they are too big and still too expensive. For example, a 40-square-meter flat priced at VND15 million a square meter is a different proposition than one covering 70-80 square meters with a price of VND13 million per square meter, he demonstrated.
“At present, competitive unit price does not guarantee success, but project owners have to pay attention to apartment size, along with other factors,” he stated.
Nguyen Duy Minh, deputy general director of Hung Thinh Land, said property prices had sharply risen and were now brought back to their actual values.
Project owners must demonstrate their capability for project development consistent with capital contribution of homebuyers, he noted.
“Even when low prices are offered, homebuyers would not make a purchase if they did not find assurance in project development,” he added.
Large cruise ships visit Ba Ria-Vung Tau in droves
More large international cruise ships with thousands of visitors on board have visited the southern coast province of Ba Ria-Vung Tau in recent times, the provincial Department of Culture, Sports and Tourism reports.
There have been more than 114,000 foreign visitors coming to the province on board cruise ships this year, a rise of over 100% over 2011, the department said.
According to Nguyen Van Son, deputy director of the department, the number of cruise ship passengers accounted for one third of the total number of foreign arrivals in the province in 2012, showing better growth prospects for 2013.
“Growth of the tourism segment is really impressive, so we now consider this an important source of visitors and will seek ways to develop it further,” he said.
Ba Ria-Vung Tau has two major strengths to become a port of call for large numbers of international cruise ships; one of them is its deep water sea ports for large-sized vessels. The other advantage is that the province is near international sea lames which allow cruise ships to stop by during their journeys to other Asian destinations.
However, foreign travelers have just called at Ba Ria-Vung Tau as a rest stop before heading to HCMC or the Mekong Delta for sightseeing and shopping tours. Only a small number of visitors travel to Vung Tau City or purchase some souvenirs at makeshift booths at the ports.
To deal with the poor business efficiency despite the overwhelming presence of travelers, the culture department now is drafting a program to attract more cruise ship visitors, Son told the Daily.
The province in early 2013 will invite tourism companies serving international cruise ships to a meeting to propose services and tours that are deemed as attractive to target travelers. Also, the local tourism industry plans to set up a number of qualified shopping venues to serve these foreign customers.
“We will closely cooperate with local travel agencies to enrich the services to lure more foreign cruise ship visitors to Ba Ria-Vung Tau,” Son noted.
‘We’re satisfied,’ says SBV’s Binh
Governor Nguyen Van Binh of the State Bank of Vietnam said on Thursday he was satisfied with the results of tackling bad debts, which is considered a major bottleneck in the economy.
“Saying that bad debt settlement is moving slowly is right but not right. We deal with bad debts depending on the circumstance,” said Binh at a press briefing on Thursday to review the monetary policy.
He cited an example of the U.S. government buying all debts, bad or not, and related it to Vietnam, saying that the country does not have enough resources.
However, he stated: “We deal with it slowly but aggressively.”
As of this October, credit institutions had restructured VND250 trillion worth of debts, or 8% of the total outstanding loans. “If this amount hadn’t been handled, the bad debt ratio would have surged further,” he said.
By the end of this year, banks will have extracted an estimated VND90 trillion for risk provisions, as they had extracted VND76 trillion as of end-November.
Banks have handled VND12-15 trillion of bad debts. “The banking system has done all it can do (to settle bad debts),” he stressed.
At present, banks no longer share huge profits or big bonuses, but they have to make risk provisions, he underscored.
He noted tackling bad debts must be responsibility shared by the whole economy, not of only the central bank.
Regarding the monetary policy, he said: “We’re satisfied with all that we achieve. When we set targets, some cast doubt. Last year, no one believed that we could restrain inflation at a single-digit rate and bring down interest rates to 10%.”
“Now, enterprises can access loans with interest rates of 10-11%. The exchange rate is stable. This is satisfactory.”
In regards to interest rate reduction in 2013, the governor said: “There is still a chance of inflation surging again, so we must practice prudence in interest rate management.”
“We have been able to quickly lower interest rate to 9%, an average of 1 percentage point per month, but further cuts should be deliberated. Whether interest rate will be slashed further in 2013 or not depends on our ability to curb inflation,” he said.
Binh also defended Decree 24 on gold management, which is the cause of the gap of VND4-5 million per tael between local and global gold prices.
“I once said this before the National Assembly that if the issue of domestic gold prices matching the world’s prices was demanded again, Decree 24 would be written off,” he said.
Credit institutions are buying gold, but there is no gold fever although citizens still have demand for this precious metal, he stated.
The banking system has bought 60 tons of gold since June, worth some US$3 billion. The governor said: “If US$3 billion worth of gold was imported, there would be strong fluctuations in the foreign exchange rate.”
“The local-global price gap today is VND5 million. Previously, we were greatly affected by a difference of VND400,000, but now there is no problem even with a gap of VND5 million,” he added.
He informed the central bank next year would sell gold into the market to increase the national reserve in the most beneficial way.
“Prices in the gold market will be regulated by us for the purpose of replenishing the national reserve so that all that gold will be converted into cash to serve production and business activities. The State has gold, the economy has money,” he said.
According to the document put forward at the meeting, the total money supply has risen 20% while credit growth is estimated at 7%.
Despite the poor growth, the credit profile has been changing in a positive way. Vietnam dong loans pick up 8.92%, while loans in foreign currencies decline by 3.51%.
By this year’s end, foreign currency deposits of citizens may drop by over 13% against late last year, while deposits in dong will likely surge 36%.
Mineral export control tightened
After numerous delays, the Ministry of Industry and Trade last week officially issued a circular imposing stricter control on mineral export in order to limit the sale of crude ore abroad.
As per Circular 41/2012/TT-BCT on mineral export, from February 4 only enterprises established and operating under the Enterprise Law will be permitted to export minerals. The minerals for export must have legal origins and be processed.
The circular is aimed at minimizing the export of crude ore through provisions on which types of minerals are qualified for export, said Nguyen Manh Quan, director of the Department of Heavy Industry under the trade ministry.
For example, Circular 41 stipulates that the types of titanium slag allowed for export are type 1 with the percentage of titanium oxide higher than or equal to 85%, and type 2 titanium oxide from 75% to less than 85%.
Nguyen Thuong Dat, vice chairman of the Vietnam Titanium Association, told the Daily that the titanium ore of local mineral processing companies often had 52% titanium oxide. Nearly 600,000 tons of such titanium ore has yet to be exported, he said.
There are currently five titanium slag processing plants nationwide with a total capacity of 60,000 tons per year. Localities are collecting data on unsold titanium ore to report to the trade ministry prior to January 15.
Circular 41 specifies minerals for export are metallic minerals, non-metallic minerals and minerals for industrial use, such as zircon powder, titanium slag, pure rutile ore, pure tungsten ore, pure nickel ore and products from bauxite.
Coal, oil, gas, condensate, fire ice, mineral water, natural hot water, minerals used as building materials and as raw materials for production of cement, alloys and metals are not in the scope of the circular.
As for origin, the circular states that minerals for export must be extracted from mines with mining licenses and full exploitation licenses granted by competent State agencies. They can also be legally imported minerals or those confiscated and put on sale by State agencies.
Circular 41/2012/TT-BCT will come into force on February 4, replacing Circular 08/2008/TT-BCT with guidelines for mineral export.
Local firms join hands for Tet goods distribution
Representatives of distributors and producers in HCMC and 13 provinces from the southeast region and the Mekong Delta signed a combined 40 cooperation agreements on goods supply for the Tet holiday in the city last Friday.
The agreements were clinched in the first business connection between 200 firms organized by the HCMC Department of Industry and Trade along with the HCMC Investment and Trade Promotion Center.
The connection is part of the trade cooperation program that HCMC and the provinces signed earlier.
It was attended by nearly 100 companies including 12 supermarket chains, six commercial centers, seven first-rate markets comprising of three wholesale markets, four commercial banks and several consumer good producers of the city. The event also saw the participation of 100 enterprises specializing in providing farm produce from Lam Dong, Binh Thuan, An Giang, Tra Vinh, Dong Thap, Long An and Can Tho.
After the meeting, there were 40 business contracts signed between local distributors such as Saigon Co.op and Maximark and provincial manufacturers.
PVN earns US$5.4 bil. profit
Vietnam Oil and Gas Group (PVN) this year has earned total revenue of some VND773 trillion, or nearly US$37 billion, up 14.4% against 2011, with a pre-tax profit of VND113 trillion (US$5.4 billion), an increase of 12.4%.
Le Minh Hong, deputy general director of PVN, announced the results at a briefing on the group’s business performance held in HCMC on Thursday.
PVN chairman Phung Dinh Thuc said oil and gas extraction and fertilizer production generated the most profit for the group. Vietsovpetro, PV Gas, Dam Phu My and service units of the fertilizer plants of PVN also greatly contributed to this profit.
The oil and gas projects overseas also bring in significant profit for PVN, he added. So far, PVN has invested in 14 foreign countries with a total oil and gas reserve of around 170 million tons.
In 2012, the group has started operating some new oil and gas fields abroad. At present, it is exploiting seven fields, including four in Russia, two in Malaysia and one in Venezuela.
“This year, the group has extracted over one million tons of oil in foreign countries, fetching a profit of US$160 million. We expect the revenue from overseas extraction projects to reach US$800 million in 2013,” said Thuc.
PVN has pumped nearly 17 million tons of crude oil in 2012, in which six million tons is sold to Dung Quat Oil Refinery and the rest is exported with a turnover of over US$10 billion. Besides, the group produces some 9.3 billion cubic meters of gas, rising 6.2% compared to 2011.
Fuel output is the only target that PVN has failed to reach. The group has produced 5.61 million tons, equal to 94.3% of the plan for this year.
This is ascribed to the technical problems of Dung Quat Oil Refinery. In the early months, the oil refinery operated with no profit, but recently it has made profits.
In 2013, PVN aims to produce 16 million tons of crude oil, 9.2 billion cubic meters of gas, 13.85 billion kWh of electricity, 1.52 million tons of fertilizer and 5.67 million tons of fuel with total revenue of about VND653 trillion.
PVN this year delays development of 24 projects worth VND11 trillion in order to focus on its core business. The total investment value of the group in 2012 was VND90 trillion.
In 2013, PVN will arrange funds to carry out key projects such as Nghi Son Oil Refinery and Petrochemical Complex and Long Son Petrochemical Complex.
AGPPS gets State support for rice brand development
The Government has selected An Giang Plant Protection JSC (AGPPS) to join a national key program to develop local rice brand with a total budget of up to some VND2.93 trillion, the company’s general director Huynh Van Thon said.
This is the nation’s target program to develop Vietnam’s rice brand with an aim to improve the quality of rice products for both local demand and export.
The Government under the program is looking to study and improve the quality of paddy varieties that have strong resistance against pests and diseases and high yield. Besides, the Government will focus on taking care of paddy during the production process to turn out clean and high quality rice meeting criteria of high-class foreign import markets and safety standards for local demand.
The agricultural research center that AGPPS has just set up to study, develop and transfer comprehensive solutions on paddy will cooperate with institutions and universities in the Mekong Delta to carry out the program. The Government will assists AGPPS with VND400 billion to do research and seek solutions to develop brands for the country’s rice as expected.
The company has invested VND80 billion to construct the Dinh Thanh Agricultural Research Center in Dinh Thanh Commune, An Giang Province’s Thoai Son District. The 80- hectare facility includes an experimental rice farming covering 60 hectares.
Dinh Thanh center is expected to help the firm deepen its presence in creating value chain for rice by providing good varieties to rice farmers.
Ethanol plants constantly run into losses
The ethanol plants run by Vietnam Oil and Gas Group (PVN) are facing many troubles due to low consumption at home and export prices below production costs.
PVN chairman Phung Dinh Thuc said his group was operating two ethanol plants, one in Dung Quat, Quang Ngai and one in Binh Phuoc. Meanwhile, the plant in Phu Tho will start production soon, said Thuc at a press briefing on the 2012 business performance of PVN last Thursday.
It now costs VND15,000 to produce a liter of ethanol, while export prices are only around VND13,000, he informed.
“We are studying how to operate these ethanol plants efficiently. We have developed ethanol plants but ethanol use has been limited,” he said.
As per a schedule approved by the Government, petrol with 5% bio-ethanol content, or E5 petrol, will be officially sold in Hanoi, Haiphong, HCMC, Can Tho, Danang, Ba Ria-Vung Tau and Quang Ngai in late 2014. Later, from December 1, 2015, E5 petrol will be widely available nationwide.
This promises outlets for ethanol producers. In addition, cassava farmers may no longer suffer poor sales after each harvest.
However, the period of nearly two years from now to late 2014 will be challenging for local ethanol plants.
Nguyen Anh Toan, deputy general director of PV Oil, a member of PVN, told the Daily that the two ethanol plants of PVN in Quang Ngai and Binh Phuoc began production in the second quarter of 2012. Most of their products are exported and less than 10% are consumed locally.
In 2012, PV Oil sold nearly 200,000 liters of E5 petrol, versus the annual capacity of 100 million liters of each of the ethanol plants that PV Oil invests in.
According to a previous plan, five ethanol plants would have begun operations by 2012. However, given the trivial market share of E5 petrol, some plants are still on a trial run, leading to a huge volume of cassava being unsold.
Investors expected to remain optimistic
Although profit takers showed up and liquidity slumped, securities enterprises expected investors to come back with optimism after the New Year holiday as both stock indices finished in the winning territory last Friday, marking the fifth consecutive rising session.
The transaction value last week retreated 30% if large put-through deals on both Friday and the day before were taken out. On Friday, there was a block deal of nearly 25 million EIB shares and another 1.7 million shares of TTP transacted. The Hanoi market also declined 16.8% in turnover but it was explainable by PVX and SHB, which experienced a spike in trading on Thursday.
Viet Capital Securities Company (VCSC) said it has been a year of peaks and troughs for both indices, especially for the HNX-Index which tumbled to a record low on November 6.
In 2012, the VN-Index had a better performance. It closed up 0.9% on Friday and for the full year it had won 17.6%, standing at 413.73 points. This marked the third year in a row Vietnam’s main index gained in the last trading day of the year.
Compared to the year 2011, matching orders increased 81% and 40% respectively in volume and value while put-through deals improved 37% and 33%. Foreign net buying amount rose even more remarkably by 142%.
Average liquidity was at peak from March to May at over VND1 trillion per day after the implementation of extended trading hours, but then dropped to the lowest point of the year in November before springing back again by nearly two times in December.
On the other hand, the HNX-Index, although notching up 1.67% in the final trading day to 57.09, lost 3% in value compared to the beginning of the year. Total turnover improved by a slight 4% compared to that in 2011 in terms of value but foreign investors showed stronger participation with 63% improvement in net buying value.
All in all, the northern bourse had a similar trading pattern with its southern counterpart when the best performing months were observed in March to May, down to a low in November before rebounding in December, VCSC commented.
“We saw a pattern in the last three years of a market rally in the beginning of the new year. Even for 2012 when there were a lot of hanging concerns over the economy before the year kicked off, the VN-Index went from 350 to a peak of 492 points on May 8,” it said.
“For 2013, on the ground of much more stabilized macroeconomic indicators, the commitment by the Government to tackle the non-performing loan issue and the signal of growth monetary policy in 2013, there are even less reasons why we should not believe history will repeat another time. We do not mean that indices will jump immediately in the first weeks. To the contrary, we think a correction may happen. But we are bullish in the early part of 2013,” the broker added.
VietinBank to sell 20% stake to BTMU
Vietnam Bank for Industry and Trade (VietinBank) will sell a 20% stake, worth VND15.4 trillion (US$743 million) to Japanese partner Bank of Tokyo-Mitsubishi UFJ (BTMU) under an agreement signed on Thursday.
This will be the largest acquisition deal in the Vietnamese banking industry, marking an important milestone for VietinBank after its equitization in 2008.
VietinBank chairman Pham Huy Hung said the bank had sought regulatory approval for the BTMU deal via a new share issuance, raising its chartered capital to some VND32.6 trillion and shareholder capital to VND45 trillion.
After the signing of the strategic investment agreement and comprehensive cooperation agreement, VietinBank will have the biggest chartered capital and the strongest shareholder base with the central bank remaining the biggest major shareholder, followed by foreign investors BTMU, IFC and related parties.
“The finding of a second strategic partner to increase shareholder capital provides a basis for consolidation and restructuring of the bank,” said Hung at the signing ceremony.
The two parties will support each other and share experience in operation, administration and risk management in the banking industry.
Nobuyuki Hirano, president of BTMU, said the transaction was part of the bank’s strategy which aims to further develop its business in Asia. “The alliance aims, through collaboration between BTMU and VietinBank, to expand business through measures such as strengthening support for Japanese companies operating in Vietnam, where high growth is expected.”
The stake transfer deal is advised by JPM Securities Asia Pacific Limited and is expected to be completed during the fiscal year 2013, subject to regulatory approval.
BTMU is the leading retail bank in Japan, while retail is a real weakness of VietinBank in particular and State-run banks in general.
BTMU is the largest bank in Japan and the core retail and commercial banking arm of the Mitsubishi UFJ Financial Group, with total assets reaching 218.9 trillion yen as of last March.
Established in 1988, VietinBank, coded CTG on the bourse, is the nation’s second biggest lender, holding a 13.5% share in the local credit market, 14% in the international payment and export financing market and 11% in the capital mobilization market as of December 31, 2011.
