Business in brief 04 July, 2013
Indonesian enterprises keen to do business in Vietnam
Eight Indonesian state enterprises plan to establish cooperation with local companies or through investment, ANTARA News has reported.
They include coal mining company PT Bukit Asam, fertilizer company PT Pupuk Indonesia, telecommunication company PT Telekomunikasi Indonesia, aircraft manufacturer PT Dirgantara Indonesia, cement company PT Semen Indonesia, pharmaceutical company PT Kimia Farma, logistics agency Perum Bulog and oil and gas company PT Pertamina.
PT Bukit Asam will supply coal to Vietnam’s power plants, and PT Kimia Farma will establish ties with Vietnam pharmaceutical company.
PT Telkom will join a Vietnam telecom company in developing international-scale projects.
Bulog cooperation with Vietnam is important for Indonesia to meet its rice demands in case of drought that could reduce the domestic rice production.
Tien Giang farmers’ cow breeding
A cow breeding project to improve the livelihood of poor farmers has been launched in the southern province of Tien Giang.
It is partly funded by Canadian Heifer International and the Norwegian Mission Alliance Vietnam.
The project has an investment of VND18.2 billion, including VND14.2 billion from the Canadian and Norwegian organisations. It will be carried out from now until June 2017.
As many as 2,400 poor households in Phu Thanh and Phu Dong communes in Tan Phu Dong district will benefit from the project.
In the first phase, 300 households will each receive a cow worth VND12 million while 300 others will be given a preferential loan of VND8 million per household to breed pigs, goats, poultry or aquatic animals.
The remaining 1,800 households will be supported in the second phase.
The programme aims to raise incomes, ensure food safety and nutrition for the beneficiaries as well as improve their awareness.
It also creates opportunities for them to access other sources of capital.
Eleven export commodities earn US$1 billion in revenue
These export commodities hit more than US$1 billion in the first half of 2013.
Among the highest earners were mobile phones (US$9.907 billion), followed by garments and computers (US$7.98 billion and US$4.712 billion, respectively).
Other commodities fetching more than US$1 billion each were footwear, crude oil, seafood, machinery, transport vehicles, timber products, coffee and rice.
According to the General Statistics Office, 15 countries in the world imported Vietnamese goods worth US$1 billion or more in past six months.
The United States was still the largest importer of Vietnamese goods worth US$8.846 billion, up US$1.276 billion from a year earlier.
Japan and China came second and third, importing goods worth US$5.289 billion and US$4.948 billion from Vietnam, respectively.
Other major export markets for Vietnamese goods were the Republic of Korea, Germany and Malaysia.
In the past six months, Vietnam’s total export revenues were estimated at US$62.053 billion, up 16.1 percent year on year.
Export turnover likely to surpass US$126 billion this year
The country’s export turnover is expected to reach US$127 billion this year, one billion higher than the set target, according to the Ministry of Industry and Trade (MoIT).
The MoIT said that in the context of positive changes in the world, major economies like the US, Japan, and the EU have adopted a number of stimulus packages to help restore and develop production and business activities, and increase consumer trust.
Against this backdrop, Vietnam’s economy has gradually improved and is predicted to become much better in the remaining months of the year with its export turnover estimated at around US$127 billion, one billion higher than the set target.
The ministry, for its part, has devised a string of measures to boost trade promotions with a focus on commodities which are much sought after at home and abroad.
It warned producers and exporters of import barriers and urged them to improve the quality of commodities to avoid risks for enterprises when signing export contracts with foreign partners.
The MoiT said that the FDI sector has overtaken the domestic sector in terms of export revenue, with a trade surplus estimated at US$5.41 billion to compare with the domestic sector’s trade deficit of US$6.82 billion in the first half of this year.
Exports of processing industry show a six-month increase of 27.2 percent, accounting for 68.9 percent of the total turnover, with the volume of mobile phones worth US$9.91 billion (up 97 percent). Meanwhile, most of export items (except pepper and cashew nuts) from the agricultural and seafood sector have dropped to a level lower than last year.
In the first six months of 2013, the country’s export turnover is estimated at US$62.05 billion, up 16.1 percent against the same period last year. Of the total figure, the domestic sector earned US$20.9 billion (up 2.2 percent) but the FDI sector fetched US$41.14 billion (up 24.7 percent).
Over 3.5 million foreigners visit Vietnam in six months
In the past six months, more than 3.54 million foreigners came to Vietnam up 4.9 percent from a year earlier, according to the General Statistics Office.
Among 18 countries and territories having the largest numbers of visitors to Vietnam (over 35,000), Russia took the lead with a sharp increase of 57.8 percent in the reviewed period.
The number of foreigners arriving in Vietnam by air accounted for 80.7 percent, (up 0.8 percent), while those coming by road and sea were just 15.9 percent (up 12.5 percent) and 3.4 percent (up 2.7 percent), respectively.
However, the growth rate was still 16.9 percent lower than last year’s level.
Salt output to top 1 million tonnes
Salt output is likely to increase by 18 per cent this year to reach one million tonnes, the Ministry of Agriculture and Rural Development has said.
This would be enough to meet domestic demand, the ministry claimed. Production up to June 15 stood at almost 800,000 tonnes, including 193,000 tonnes produced industrially.
The ministry attributed the increase in output to favourable weather conditions in the central region.
It has instructed industrial producers to improve infrastructure at salt field level. Salt prices remained reasonably high, enabling farmers to make decent profits, the ministry said.
Growth in HCM City boosts first half GDP by 7.9 percent
The nation’s commercial hub has recorded a GDP of VND340.654 trillion (US$16.2 billion) in the first half of 2013, a year-on-year increase of 7.9 per cent.
A report by Le Hoang Quan, Chairman of the HCM City People’s Committee at a meeting held on Friday to review the city’s socio-economic development in the first six months of 2013, said that the city’s service sector rose by 9.1 per cent over last year, the agricultural sector by seven per cent, and the industrial and construction sector by 6.2 per cent.
The city achieved an export turnover of over $13.7 billion, a year-on-year increase of 6.2 per cent, while its import turnover rose by 15.5 per cent to $12.7 billion. The sharp increase in imports is due to increases in the import of materials for textile and garments, footwear, pharmaceuticals, plastics and fuel sectors, according to the report.
Total retail sales went up by 11 per cent year-on-year to VND288.9 trillion, up by 11 per cent compared with the same period last year, the report said.
It noted, however, that the city’s economy still faced difficulties due to the global economic turmoil, large inventories and stagnant property market.
The report said the city welcomed over 1.9 million foreign visitors in the first half of the year, an increase of five per cent compared with the first half of 2012, and the tourism sector’s turnover of over VND41 trillion ($1.95 billion) in the same period marked a significant 30 per cent year-on-year increase in value over last year. No explanation was given for the apparently disproportionate surge.
Quan said at the meeting that to reach targets set for the second half of 2013, all agencies and departments would carry out several measures mapped out by the city administration.
He said the city would continue to help businesses solve their problems through policies and incentives including exemption of some taxes and payment extensions for other taxes so as to release more capital for development.
Quan said priority would be given to farming and rural development, and to supporting industries, medium and small enterprises and enterprises using high and advanced technologies.
The city would also promote investment and exports, he said.
Quan asked State management agencies in the city to enhance dialogues with businesses, especially medium and small enterprises, in their localities. He said this would result in greater understanding of difficulties the firms were facing and help create more favourable conditions to promote production.
Military Bank arm plans restructuring
Military Bank Securities plans to list after merging with another firm over the next 2-3 years, the company announced during its annual general meeting last week.
With support from its parent bank - the Military Bank (MB) - the brokerage will restructure itself and choose another securities firm to merge with.
After merging the company will retain the name, Military Securities Company and stick to its existing operational strategies.
The bank will still hold a dominant stake, while at the same time provide support to its offshoot in terms of network development, cross-selling and creating new products.
"The merger will strengthen our position in the market by making the most of our brand name, new technologies and customer base," said the company.
After merger with a much stronger asset base, operational efficiency will be enhanced which in turn will meet the requirements demanded by the State Securities Commission.
"Shareholders from both companies in the merger will benefit as soon as the new entity makes a profit," said a company spokesperson. "In addition, listing will greatly improve the liquidity of our shares."
The brokerage has not yet revealed the name of the company they are targeting for the merger.
Military Bank Securities expects to make VND353 billion (US$16.8 million) in turnover this year, equivalent to only 89 per cent of last year’s revenue. However, gross profit is estimated to jump by 73 per cent to VND20.5 billion ($0.9 million).
Last year, the company exceeded its targets for revenue and profit by 27.5 per cent and 12 per cent respectively.
New policies fail to lift shares
Several new Government policies, including tax relief for low earners and a new ceiling on deposit interest rates, began from yesterday but shares still took a dive on the country’s both stock exchanges.
The threshold for paying income tax has risen from VND4 million (US$190) to VND9 million ($428.5) per month.
The cap on the deposit interest rate will be reduced to 7 per cent.
Despite such supportive policies, the recent downturn on the stock market has made investors extra cautious.
The decline slowed on the HCM City exchange in the afternoon with the benchmark VN-Index sliding just 0.23 per cent to 480.04 points.
The strong recovery of a few heavyweight shares, including Masan Group (MSN) and PV Gas (GAS), cushioned the index fall. Both rose nearly 3 per cent yesterday.
The market condition was still negative, however, as losers outnumbered gainers by 133-72 while 101 codes were unmoved.
The VN30, which tracks the top 30 shares on the bourse, was down by 0.69 per cent to 534.85 points. Trading was the two-month low at 35 million shares, worth nearly VND500 billion ($23.8 million), by the end of the session.
Property giant Hoang Anh Gia Lai Group (HAG) remained the most active with 2.35 million changing hands for VND20,400 ($0.97) each, down 1.45 per cent from the previous closing price.
What happened on the gold market loomed large on the stock exchange, stock analysts at FPT Securities Co said.
"A sharp drop in bullion prices is forecast to draw a considerable amount of cash from other channels, including equity markets," they said.
Besides, the fresh gasoline price hike last Friday and low manufacturing data hit the stock market, analysts said.
On the Ha Noi Stock Exchange, the HNX-Index also slipped 0.43 per cent to close at 62.49 points with nearly 16.7 million shares worth just VND130.4 billion ($6.2 million) being traded.
Investment FLC Group was the most heavily traded stock nationwide with over 3.8 million shares changing hands for VND6,400 a share.
Overseas investors were still net sellers on the HCM City market of VND19.2 billion ($914,300) worth of shares, but they were net buyers of about VND8.3 billion ($395,200) worth of shares on the Ha Noi market.
Global hike fuels gas price rise
Gas prices increased by VND13,000 (US$0.62) per 12-kg canister yesterday, according to wholesalers.
This means current retail gas prices range from VND375,000-380,000 ($17.9-18.1) per 12-kg canister. The domestic gas price hike occurred because of higher world gas prices and high transportation fees.
This is the third consecutive gas price hike since May. Earlier in the year, there were four consecutive price cuts.
The current price remains VND54,000 ($2.57) per canister lower than at the end of 2012.
Industrial production to grow
The industrial production was expected to grow more in the second half of the year than in the first, the Ministry of Industry and Trade said.
At its monthly press conference in the capital yesterday, the ministry forecast the industrial production index for the full year would be around 5.7 per cent, 0.5 per cent higher than the figure reported in the first half.
The country’s total export turnover was expected to reach US$127 billion, about $1 billion higher than the Government’s goal, while the trade deficit would be roughly $9 billion, 8 per cent lower than the target.
The Export-Import Department reported that the total export turnover in the first six months of this year was $62 billion, reaching 49 per cent of the goal for the full year. The current trade deficit was $1.4 billion, which was "under control," it said.
The ministry said purchasing power would improve due to many holidays falling in the second half of the year, together with the acceleration of the trade promotion programme.
It was estimated the total sale of goods and services would be 12.48 per cent higher than last year.
Meanwhile, the Domestic Market Department reported the increase in domestic petrol prices in June had followed an upward trend in world petrol prices. The domestic petrol prices increased twice, on June 14 and 28, by VND426 (US$0.02) and VND370 ($0.017) per litre respectively.
The department said the world’s 30-day average price of petrol showed an increasing trend in June, rising from $111.08 per barrel at the end of May to $112.975 on June 13 and $114.442 on June 27.
The department also said a nationwide check on the location of petrol stations was under way and those that did not meet planning regulations would have their licences revoked.
Regarding power prices, the Electricity Regulatory Department said any adjustments to prices must be based on a calculation of input costs to ease the impact on the consumer price index and economic growth.
Credit institutions close gold deposit accounts
Commercial banks all closed their gold accounts by the June 30 deadline, except for one or two with insignificant outstanding gold deposits, according to the State Bank of Viet Nam (SBV).
Previously, some banks asked the SBV to delay the deadline to the end of this year. Though the SBV declined the proposal, it said banks could seek support to resolve any issues.
The SBV originally set the deadline as December 30 last year, but increasing pressure from banks and a growing gold shortage caused the central bank to push it back to June 30 and organise auctions to increase supply.
From March to June, it organised 37 auctions for nearly 37 tonnes of gold.
At an auction today, another 40,000 taels of gold bars will go on sale.
Industry insiders said that the move was quite surprising, as banks had already closed their gold accounts.
However, SBV deputy governor Le Minh Hung said the central bank would still maintain its regulatory role and planned to hold more auctions in case market demand rose.
Drug dealers make use of lax policing
Drug dealers have taken advantage of international air routes to smuggle drugs in and out of Viet Nam, according to the Police Department for Drug-Related Crime Investigations.
The department yesterday gathered to discuss ways of tackling these dealers, who have become more ingenious and adaptable in their methods to avoid detection.
Since 2006, police investigating drug-related crime have worked with other law enforcement officials to detect 57 cases of illegal drug trading, involving 119 people. In that period, they have seized 67.45 kg of heroin and 75.54 kg of synthetic drugs.
Meanwhile, they have also faced personnel and logistical shortages which hinder their ability to detect sophisticated drugs crime.
Another shortcoming has been the concentration of drug prevention measures at major airports at the expense of smaller ones, which have been left exposed to crime.
Participants in the meeting said that in the future, capacity-building programmes would be required, not only for police but also for customs officials, aviation security and immigration authorities in order to track down potential drug dealers at airports.
Lieutenant General Do Kim Tuyen, deputy head of the Drugs Police Department under the Ministry of Public Security, said concrete guidelines should be publicised outlining the measures in preventing and controlling illegal drug trade via air routes.
Leading pharma firms keep essential drug prices stable
The price stabilisation programme in HCM City has drawn the participation of leading pharmaceutical firms since it was launched in 2011, ensuring stable supply of essential medicines and helping prevent price surges, a health official says.
A total of 13 pharmaceutical firms are participating in the programme this year, covering 392 locally produced medicines in 21 categories, Pham Khanh Phong Lan, deputy director of the city’s Department of Health, was quoted as saying by Sai Gon Giai Phong (LIBERATED SAI GON) yesterday.
Last year, nine pharmaceutical firms had joined the programme, compared with just four in 2011, Lan said.
The number of medicines sold at stabilised prices, which are 5-10 per cent lower than market prices, also increased to 80 in 17 categories last year from corresponding figures of 45 and 10 in the previous year.
As of May this year, an additional 312 drugstores have signed up for selling drugs under the programme, raising the total number to more than 2,300.
All 106 drugstores in city hospitals are selling the drugs, mostly used to treat fever, cough, diarrhoea, heart diseases, allergies and some chronic diseases.
Lan said the department works constantly with hospitals to ask doctors to give priority to prescribing locally made medicines, including those sold under the price stabilisation programme.
Indian firms find investment chances in Vietnam
A number of large Indian firms have found many opportunities for investment in Vietnam, particularly in infrastructure, mining, and vehicle instrument clusters, heard the India – Vietnam Investment Roundtable held in HCMC on Wednesday.
The event was organized by Invest India, an investment promotion organization, and the Vietnam Chamber of Commerce and Industry (VCCI).
Anil Kumar, president director of PT Pricol Surya, the Indonesian subsidiary of India’s Pricol Limited, said his company had been supplying motorcycle components to Honda, Yamaha and Suzuki.
The firm is looking to increase its market share in Vietnam, the second biggest motorbike market in Southeast Asia after Indonesia. To strengthen its customer care base and enhance services to manufacturers, PT Pricol Surya wants to set up assembly lines in Vietnam.
D. Jesudas Bell, managing director of Futurelinks International Pvt. Ltd., said he had seen chances for investment in infrastructure in Vietnam.
Vietnam has a high electricity demand, but the current tax policy for this field is not attractive enough for foreign investors, he remarked.
However, the Government is reviewing investment incentives, promising chances for Indian power companies to find partners and jointly invest in the electricity sector in Vietnam.
Indian Consul General in HCMC Abhay Thakur noted that in the fields of mining and power, Indian investors could acquire stakes in Vietnamese companies during their restructuring process.
At the roundtable, Indian officials suggested businesses of the two countries cooperate in certain areas, such as rubber and coffee processing, and called on Vietnamese enterprises to invest in food processing and automotive sectors in India.
India is a large market with total food consumption of US$181 billion, which may rise to US$258 billion by 2015, said J.P Meena, joint secretary of the Ministry of Food and Processing Industries of India.
Currently, there are around 30 mega food parks with sufficient infrastructure in India. Vietnamese investors only need to equip machines and then start production immediately.
21 cases of banking sector violations found in five months of this year
At least 21 violation cases were detected in the Vietnamese banking sector in the first five months of this year, according to the Government Inspectorate.
The cases have caused a total loss of VND682 billion (USD32.5 million), 561.2 taels of gold and USD50,000. However, the State Bank of Vietnam and management agencies have confiscated more than VND8.2 billion (USD390,476) and punished 30 violators, including 14 who were prosecuted.
The Government Inspectorate said, during the first half of this year, inspection agencies uncovered 6 corruption cases that cost a combined loss of VND1.7 billion (USD80,952) for the state budget. Meanwhile, the party’s inspection agencies and internal inspection agencies also detected 12 corruption cases that involved 16 individuals, resulting in an additional loss of VND8 billion.
The Ministry of Defense discovered one official who embezzled VND8.1 billion from the state budget. The case has been sent to the criminal inspection agency and he awaits prosecution.
According to the Government Inspectorate, a number of agencies, including those in Binh Phuoc Province and HCM City, still are late in submitting reports on their officials’ assets. These reports, however, are sometimes inaccurate.
The Government Inspectorate also added that accuracy of asset auditing remains limited due to the lack because there is a lack of ability in agencies to handle such work. Transparency in areas with high risk of corruption such as bidding, auctioning of state-owned enterprise assets for privatisation and land compensation is still weak.
Banks race to cut lending interest rates
Though the State Bank of Vietnam (SBV) has lowered interest rates, banks have still found it hard to loan because so few enterprises qualify.
Many banks have tried to further lower interest rates which has caused worry among banking experts.
From June 28, the cap on deposits with terms of between one and six months was cut to 7% per year, while the ceiling lending interest rates for some prioritised industries was also cut to 9% per year. However only a minority of enterprises qualify for these loans.
Nguyen Duc Vinh, General Director of VPBank, cited the bank’s survey, saying that only one or two out of ten enterprises that apply for bank loans meet all requirements.
“The banking sector is faced with pressure to boost lending, but around 70%-80% of businesses fail to meet their requirements. This situation has led banks to continually lower interest rates," Vinh said.
The effect has been a race by many banks to lower their interest rates in order to attract more customers. This trend has brought about warnings from a number of experts.
Phan Thi Chinh, Deputy General Director of the Bank for Investment and Development of Vietnam (BIDV), said "This trend poses certain risks to the whole banking system."
According to her, due to the better access to capital, several enterprises have increased their profits by certain investments, some even exceeding their targets. This profit, she said, returns into the banking system in the form of deposits that earn interest.
On the other hand, she also noted that several foreign banks have jumped into the lending race by lowering interest rates. She added that, "If this trend continues, it could pose a problem when there are those who would take advantage of the disparity between the VND and foreign currencies, threatening the exchange rate."
Leaders of a number of commercial banks have suggested that the SBV lower the cap on lending interest rates and remove the cap on interest for deposits with terms of over six months. They say this would attract more deposits to small banks.
Nguyen Duc Vinh said some banks that have reported low credit growth have applied irresponsible policies, such as buying their own debt and increasing lending based on demand. He emphasised that these practices could lead to real trouble in the coming years.
Pham Thi Chinh agreed, saying that banks in this country are taking on more risk.
Her suggestion was that the SBV should more closely monitor the flow of capital in the banking system so as to ensure that an acceptable proportion of the funds are used for industries which promote economic development instead of non-production industries. This, she said, could help curb inflation.
Viglacera to export tiles to Indonesia
State-owned construction materials producer, Viglacera Group, has recently signed a Memorandum of Understanding for cooperation with the Indonesian PT Arwana Citramulia Tbk (Arwana) Group.
Accordingly, Viglacera will export tiles to the Indonesian market, worth US$8 million a year.
The company targets export growth of 25 percent per annum, reaching $75 million by 2015.
The company’s traditional markets include Russia, Taiwan (China), the ASEAN countries , Australia, South Korea, Japan, India, EU, Middle East, Africa and South America.
Southern Hydropower Company exceeds revenue target
Southern Hydropower Joint Stock Company (SHP) recently announced its business result of 2012 with revenue reaching VND192.7 billion, exceeding by nearly 40 percent the last year target of VND137.9 billion.
The company saw pre-tax profit of VND95.2 billion, up 124 percent compared to the target for VND42.4 billion.
This year, the Hydropower Company has set a target of VND195.4 billion, with pre-tax profit of VND53.4 billion. In September this year, Da Mbri Hydropower Plant will start test runs and provide an estimated 55 million kWh of electricity.
Ministry deliberates hike in electricity
Ministry of Industry and Trade is currently examining the financial audit report of 2012 of Vietnam Electricity--the country’s largest power company--and possibility of a hike in price, said Dinh The Phuc, deputy head of the Electricity Regulatory Authority of Vietnam.
He was speaking at a regular press conference hosted by the Ministry on July 1 in response to press queries related to a recent proposal from the National Financial Supervisory Commission to hike electricity price by 10-15 percent.
According to Mr. Phuc, power price will be adjusted when there are changes in cost price, material price or in the exchange rate.
Mr. Phuc said that if it is necessary to raise the price, the Ministry will carefully calculate a suitable rate in order not to affect the Government target to curb inflation and stabilize socio-economy.
The Ministry is also looking into another proposal to charge higher electricity prices from businesses in the steel and cement industries, which consumed upto 11.5 percent of commercial electricity last year.
Higher electricity price will prompt businesses in these two industries to move to better technology to save energy, he said.
Another matter of public importance was the petrol price hike, as domestic retail price hiked on two occasions in the last two weeks despite drop in world price.
Nguyen Xuan Chien, deputy head of Domestic Market Department, an organ under the Industry and Trade Ministry, said that data from his Ministry and the Ministry of Finance shows that world petrol price was on the rising trend in June.
Specifically, the price of Ron 92 gasoline was $111.08 a barrel on May 31 and increased to $112.9 a barrel on June 13 and $114.442 a barrel on June 27.
Mr. Chien said that the domestic retail price increase was in accordance with Government regulations. The Ministries of Finance, and Industry and Trade also permitted businesses to dip into the price subsidization fund to minimize impact of the hike.
Statistics depict relatively good economic picture: GSO
With gross domestic product (GDP) growing 4.9% and inflation picking up 2.4% against end-2012, the socioeconomic situation in the year’s first half was relatively good, said Do Thuc, director general of the General Statistics Office (GSO).
The global economy further contracts in the 2011-2013 cycle, with a growth rate of only 2.1%, according to the United Nations Economic and Social Council.
In this context, Vietnam’s economic growth is forecast to take a U shape, with 2012-2013 being the bottom. The economy will start to improve next year, Thuc predicted.
Although there are different opinions, statistics show that the Government managed to accomplish the goals of curbing inflation, stabilizing the macro-economy and achieving reasonable growth, he said.
To obtain the target for 5.5% GDP growth for the whole year, the growth rate in the second half must be 6%. “This is extremely difficult,” he said.
However, he noted that in Vietnam, management agencies had a great influence on the economy. Therefore, the 5.5% target would be obtainable if the Government increased investment and resource exploitation.
“Still, every solution has its risks. If we rushed to make investment, inflation might shoot up,” he warned.
GSO forecasts GDP growth will be 5.1-5.2% in the second half. With such a growth rate, plus healthy and stable balances, the goals for this year will be basically attained, he said.
GDP growth this year may be lower than last year, but in the current difficult context, it is not poor, he stated.
“The global GDP growth is only 2.1%. The growth rate in India fell from 11% last year to 7.7% this year. Our growth rate was 5.25% last year and even if falling to 5.1%, it is not a dramatic decline,” he said.
Total investment in the year to date has dropped to 29.6% to GDP, versus 40% in previous years. If investment continued to dwindle, there would hardly be high growth, he stressed.
The countries with rapid growth have a high ratio of investment to GDP, he remarked. For example, Thailand and Indonesia achieve growth rates of 6% when investment stands at over 35% of GDP.
“The Government has noticed this and is seeking ways to boost investment, but public investment cannot be increased. That’s the problem,” he said.
“In the current tough times, everyone longs for rapid growth. But if we hastened, policies would get from one polar to the other, and we would never be able to overcome the crisis, or the fluctuations in the already weak local economy,” he told the Daily.
Special Incentives At QTSC Building
Up and running early this year, the 11-story QTSC Building 9 has reported 60% occupancy as it has become a trustworthy destination for domestic and international ICT firms.
Located in Lot 42 in Quang Trung Software City (QTSC), Tan Chanh Hiep Ward, District 12, HCMC, QTSC Building 9 is one of Grade-A office buildings whose state-of-the-art design meets international standards and demands of information and communication technology (ICT) enterprises. The building conforms to the business trend which favors flexible working conditions, with three stories set aside for the shopping center offering the best conveniences for not only clients in the building but people working and studying in the software park.
QTSC Building 9’s prime site allows it to have two main gates, one of which links with the inner part of QTSC, while the other connects the park with To Ky Street. This creates convenience for operation, transportation and commercial activities.
In a bid to attract more ICT enterprises, the park’s operator is applying special incentives for those who rent spaces at the office building. Lessees will enjoy a rental exemption of up to five months, free-of-charge Internet leased line up to two months and complimentary installation of telephones and fax machines, among others. All are aimed at providing the best support for enterprises.
“We attract businesses thanks to competitive prices, good infrastructure, stable power supply sources and especially the enthusiasm of staff in offering corporate services,” says Lam Nguyen Hai Long, deputy CEO of QTSC. “Low office rentals and low Internet, power and water supply charges, as well as other conveniences like dining and parking are our advantages that will help businesses save nearly 40% of operation costs compared with those leasing offices in the city downtown.”
QTSC is one of the key economic projects of HCMC which facilitate ICT development in the city and the country. About 140 domestic and foreign ICT enterprises and investors are doing business in the park, including giants like HP, KDDI and IBM.
Exports buoy up paper industry
January-June paper exports rose 15% year-on-year, giving a lifeline to the local paper industry that has seen a sharp drop in paper consumption at home, says a report by the Vietnam Pulp and Paper Association (VPPA).
Newsprint demand slid 29% and tissue paper demand plummeted 18% year-on-year in the first half due to current economic difficulties, VPPA reports.
Only some paper products posted growth, with writing paper demand increasing 6.3% and packing paper demand 1.1%. Local sale volume for all paper products reached nearly 1.4 million tons in the year’s first half, a slump of 3% year-on-year.
Meanwhile, paper exports totaled 67,800 tons from January to June, up 15% over the year-ago period thanks to stable shipments. Taiwan is the major importer of Vietnam’s paper products with total import volume of 42,800 tons while the U.S. is the big importer of Vietnamese notebooks and office papers.
Besides, Vietnam has also shipped a lot of big-roll tissues to Japan and other Asian nations with a combined volume of 11,000 tons in the period.
This year is a very tough year for the local pulp and paper industry as local factories have failed to run at full capacity while production costs are rising, seeing industry players struggling with price hikes and shrinking profit margins, according to VPPA.
On the contrary, other market players have fared well and continued to expand production. Kraft Vina Paper Co. Ltd. has raised its capacity by 12%, Chanh Duong Paper Company has installed new equipment with annual capacity of 350,000 tons and Phu Giang Paper and Packaging Co. Ltd has also put into operation a new machine with a designed capacity of 20,000 tons annually.
VFA defends floor price for export rice
The Vietnam Food Association (VFA), responding to criticism over new floor prices set for export rice, has dismissed an accusation that setting the lowest rice export prices is an anti-competitive practice.
Nguyen Phuong Nam, deputy head of the Vietnam Competition Authority, has described imposing floor export prices on rice and other items as anti-competitive. However, VFA chairman Truong Thanh Phong has hit back at this view.
Citing Circular 89 on floor rice export prices issued in 2011 by the Ministry of Finance, Phong said VFA has the right to decide the lowest price of rice for export at the beginning of a crop. A floor price, he explained, is used by the association as a measure to negotiate export contracts.
Circular 89 is based on Government Decree 109/2010/ND-CP on rice trading and the Pricing Ordinance.
On June 3, right before the Government approved a major program for purchasing one million tons of summer-autumn rice for temporary storage to shore up prices, the VFA adjusted the floor prices of two low-grade rice types. The floor price for 35% broken rice was lowered from US$365 to US$360 per ton, while the price for 25% broken rice was also slashed to US$360.
Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said floor export prices were mentioned in a draft decree on tra fish production and trading.
Unlike floor prices in the rice export sector, setting floor prices for tra fish is aimed at preventing exporters from undercutting prices to thwart competition, he said. However, he said imposing floor prices was not a good solution.
“Industry associations cannot determine floor prices and force enterprises to comply. Only the Government has authority to set floor prices and ensure their enforcement. However, this is an administrative order, which is no longer appropriate and goes against market rules. It is easily described as a Government intervention in export,” he said.
Ho Tram Strip uses helicopter to pick up customers
In addition to bus as a popular means of transport, The Grand-Ho Tram Strip in Ba Ria-Vung Tau Province which will open to public on July 26 will transport customers by helicopter.
The Grand-Ho Tram Strip has piloted the helicopter service to pick up customers from HCMC. However, the service is being piloted, and thus its specific fee has not been revealed.
The first part of this tourism complex’s first phase comprises of around 500 hotel rooms meeting five-star standards, gaming facilities, convention space, restaurants, bars, swimming pools and areas for children.
“Over 90% of services of the first part have been completed. The golf course and other services will be put into operation early next year,” said John Webb, vice president for hospitality and integrated resort.
The Grand-Ho Tram Strip is running two promotion programs on the occasion of its opening, which are a promotional room rate of VND1,888,000 plus per night (50% reduction compared to normal rate) applicable from July 27 to August 29, and a normal rate of VND3,666,000 plus per night inclusive of VND600,000 for food and a third night free.
Located in an area of over 164 hectares with a beach stretching over two kilometers in Ba Ria-Vung Tau Province, The Grand-Ho Tram Strip worth up to US$4.2 billion is invested by Ho Tram Project Company under Asian Coast Development Ltd.
The complex’s first phase will include 541five-star rooms, international restaurants, convention space, golf course as well as other beach recreation activities. Late last year, the investor started work on the second phase consisting of the second hotel with 559 rooms and other components.
HCM City keen on Siemens traffic tech
HCMC wants to cooperate with Germany’s Siemens to develop an intelligent traffic system and boost energy efficiency in buildings.
The city is facing many challenges such as traffic congestion, flooding and pollution. The city needs to join hands with Siemens to apply new traffic technology, said HCMC chairman Le Hoang Quan at a meeting Wednesday with Roland Busch, CEO of the Infrastructure and Cities Sector of Siemens Asia-Pacific.
There are several areas where the two sides can form partnership, Quan proposed, such as energy efficiency in buildings, power supply for metro lines, and development and transfer of intelligent transport technology. He suggested Siemens join the development of the German House in the city using energy-efficient models.
Busch said Siemens was willing to cooperate with HCMC in the areas where it had strengths like traffic technology, energy efficiency in buildings and power supply for metro systems.
He expressed interest in Metro Line No. 2 (Ben Thanh-Tham Luong) and would like to participate in this project.
Regarding the progress of Metro Line No. 2, Nguyen Van Quoc, deputy head of HCMC Management Authority for Urban Railways, said bidding documents for this project were under consideration and bidding would be launched soon.
Budget condo buyers get 50% VAT cut
Those buying and renting low-cost homes from today enjoys a value-added tax (VAT) rate of 5%, down by a half from the old level.
A 50% VAT cut is also given to homebuyers at the commercial projects with flats covering less than 70 square meters each and quoted at below VND15 million per square meter, says a dispatch released by the Ministry of Finance last Friday. VAT reduction is effective from today to June 30, 2014.
In addition, from today, businesses are charged a corporate income tax rate of only 10% on their earnings from budget condo sale and lease. The preferential tax rate is also applied to the low-cost housing projects developed by the State and private organizations and individuals.
