Business in brief 04/11
Foreigners are allowed to own one apartment in Vietnam for up to 50 years, according to a recent Ho Chi Minh City Construction Department. Foreigners that qualify include investors, those who contribute to national development, experts in various fields, those with a Vietnamese spouse, and non-real estate companies, the department said in the note, which aimed to provide guidance and clarification to a regulation allowing foreign ownership effective early this year. They are allowed to buy one apartment at commercial residential projects that do not prohibit foreign ownership, according to the note. When the ownership term ends, the foreign owners will have to sell or transfer the house. Foreigners will receive their ownership tittles within 30 days of submitting applications to the construction department, according to the note.
The Prime Minister has released a decision stating, in principle, private economic groups will be allowed in Vietnam. The PM confirms that the government will create favorable conditions in terms of law, administrative formalities and business environment to create more new businesses in Vietnam. The PM agreed in principle to the establishment of private economic groups in Vietnam and assigned the Ministry of Planning and Investment, the Vietnam Young Business Association and related agencies to research and suggest models. The Ministry of Industry and Trade has been asked to work out a mechanism to support outstanding businesses to develop global brands for products. The government also assigned the Finance Ministry to work with competent agencies to compile laws on export credit insurance.
Vietnam is hoping to raise USD1 billion from the sale of international dollar-denominated bonds sometime between now and early 2010, a Finance Ministry official said on Tuesday (03 Nov). "Most of the money, about USD700 million, would supplement the government’s budget and the rest would be loaned to state-owned companies," said the official, who declined to be identified because he was not authorized to talk to the media. The coupon for the 10-year bonds would be capped at 7 percent, he said.
Seventy nine garment and footwear makers were honored at a ceremony in Hanoi October 31 for their efficient operations and significant contributions to society. At the ceremony, Deputy Prime Minister Nguyen Sinh Hung said that garment and footwear are the nation’s crucial industries as they create jobs for more than 4 million people. He acknowledged the two industries’ all-out efforts to cushion the impact of the global economic recession and reap high profits in production. Such voting will help encourage other businesses to work harder to weather the economic storm and maintain their growth, said Mr. Hung. Garment businesses have set targets of earning USD10.5 billion in exports next year and USD16-18 billion by 2015.
A one-month long promotion campaign was launched in the capital city on October 31 in an effort to encourage Hanoians to use Vietnamese products. The program involves the participation of nearly 350 businesses specializing in food, drinks, fashion, garments and textiles, footwear, electronics, interior decorations, household furnishings and restaurant services. About 95 percent of the goods on sale are made in Vietnam. Apart from promotional areas in the city, businesses are putting up kiosks in the suburbs to serve the people in outlying districts and the countryside. In particular, there is a Gold Promotion Day on November 15 when there will be discounts of 30-50% on promotional items, mostly electronics, household utensils and garments.
Global natural rubber consumption is forecast to rise 1.6 percent next year from 2009 to 9.71 million tons, according to a report from the International Rubber Study Group (IRSG).The report from the Singapore-based IRSG obtained on Tuesday also revised its forecast for global natural rubber consumption this year to a drop of 5.2 percent to 9.56 million tons from a a drop of 5.5%. Consumption would accelerate 4.9 percent to 10.19 million tons in 2011, the group said in a report prepared for an international rubber conference in Ho Chi Minh City, Vietnam, due to open on Wednesday.
Vietnam had earned only USD13.7 billion from agricultural, forestry and aquatic exports by the end of October, down 8.9% from the same period last year despite a considerable increase in volume. The drop is attributable to a fall in the export prices of these products on the world market. Statistics from the Ministry of Agriculture and Rural Development show that export earnings from forestry products posted the largest fall of 14% to USD2.1 billion from a year ago, followed by farm produce (10.4% and USD6.6 billion), and aquatic products (9.6% and USD3.5 billion). Rice exports rose by over 33% to nearly 5.4 million tonnes but its export value fell by nearly 7.7% to nearly USD2.4 billion. Other farm products fared no better. Noteworthy was coffee - the country’s second biggest currency earner after rice in the agricultural sector - which saw a drop of 17% in value but an increase of nearly 17% in volume.
Lao Cai province and Hekou county of Yunnan opened a joint fair entitled ’Cooperation for the development of trade, tourism and investment’ in Lao Cai on November 2. The annual event provides a venue for businesses from Vietnam and China to exchange information and increase investments in both countries. This year’ s fair, which is the largest of its kind, has attracted 250 Vietnamese and Chinese enterprises displaying their products in nearly 600 stands from November 2-7, said Nguyen Van Thinh, Vice Chairman of the Lao Cai provincial people’s committee, who is head of the fair’s organizing board. On the sidelines of the fair there will be a lot of activities, including negotiations, tourism promotions, and the signing of economic contracts. Since 2003, the fair has been part of Vietnam’s major promotion programme.
The domestic gold price settled at VND2,415,000/tael on November 3 after rising several times. The same day, the Saigon Jewellery Holding Company posted their gold prices, selling at VND24,010,000/tael and buying at 24,100,000/tael, an increase of VND50,000. At Export-Import bank, gold was being bought at 24,080,000/tael and sold at 24,160,000/tael. The increase followed encouraging signs of rebound on the Chinese, European and US markets.
Vietnamese developer Vincom plans to raise up to USD150 million through a debut international bond issue to fund property projects, state media reported on Wednesday. The Tuoi Tre (Youth) daily quoted the company as saying it had hired Credit Suisse to underwrite the bonds, which would be sold in November and listed on the Singapore stock exchange. The five-year bonds would have a face value of USD100,000. Vincom operates luxury resorts, shopping malls and high-end condominium projects in Hanoi, Danang, Nha Trang and Ho Chi Minh City.
Japanese life insurance Dai-ichi Life Vietnam opened a general agent office in the northern province of Hoa Binh, following the opening of another office in Phu Tho, increasing its network of more than 50 across the country, serving 500,000 clients. General director Takashi Fujii said expanding business to rural areas, a potential sector of the market, is part of the company’s strategy. These moves were aimed at achieving 10 percent of the market share in terms of premiums, in 2012, from the current seven per cent. It is now among the smaller insurers compared to the larger companies, including Bao Viet Life, Prudential and Manulife.
Vietnam may export a million tons of coffee in 2009 but the export revenue will not exceed USD1.8 billion due to a fall in prices, said Vietnamese Coffee Association (VCA) chairman Luong Van Tu. Mr. Tu said that although Vietnam’s coffee output is high, Vietnam cannot control the prices because there are so many other sellers. Since Vietnamese coffee exporters are often forced to sell coffee at low prices, the VCA recommended the establishment of an assistance fund which will offer preferential loans to help big exporters to stockpile coffee and dominate the global coffee market. Vietnam now has several agricultural products with high export value such as rice, pepper, coffee, but their prices are still controlled by the markets. The State, said Mr. Tu, should establish support funds to which the state and businesses would both contribute capital.
Foreign investors were net sellers of VND52.6 billion (USD3 million) worth of Vietnamese stocks out of a total VND3.24 trillion traded Tuesday, the Ho Chi Minh Stock Exchange said. Volume traded totaled 64.6 million shares, with foreign purchases accounting for 8.1% of that amount, the stock market operator said. In the month to date, foreign investors have been net buyers of VND145.5 billion of Vietnamese stocks.
It is reported on October 29 that in October this year, Vietnam produced around 390,200 tons of steel products, up by 1.5% month on month, up by 20% year on year. In the first ten months this year, its steel production was around 37.84mln tons, growing by 18.7% on an annual basis. According to the report, in October, the price in Vietnam market fiercely fluctuated. In the beginning of October, Vietnam domestic steel price was VND12mln-13mln (equal to around US USD666-733), while steel from Malaysia, Thailand and Indonesia as well as other ASEAN’s countries was lower VND300,000-700,000 (about US USD16-38). From October 19, Vietnam Steel Corp. adjusted down the price, and then the wire rod price was VND11.27-11.42 (around US USD626-634), the debar price for VND11.79 (about US USD655).
Construction of a 100 million USD hotel and villa complex began in the central city of Da Nang on Nov. 2. Funded by the VinGroup, the Raffles Hotel and Residences will feature a 142 five-star hotel and 39 luxurious villas on Non Nuoc Beach, which was recognized as one of the world’s most beautiful beaches in 2005. The project was originally licensed to the Magnum Company from the US. It was then bought back by Kingdom Hotel Investments and the European Hotel Corporation and transferred to VinGroup, which was previously called Technocom, from the Ukraine.
The Singaporean-headquartered CapitaLand has deployed 299 million Singaporean dollars (223 million USD) to further its growth in the real estate sector in Vietnam. In a press release last week, the company says Vietnam is the group’s potential fourth pillar of growth in addition to its core markets of China, Singapore and Australia. “Vietnam is a key Asian market for CapitaLand Group. The country’s strong economic growth and rapid urbanisation have presented many opportunities for international real estate companies like CapitaLand,” says the press release. Currently, CapitaLand Group’s presence in Vietnam is in HCM City, Hanoi and Hai Phong, in the residential and serviced residences sectors.
Minh Phu Seafood JS Company (MPC), the leading shrimp exporter in Vietnam, said it made a net profit of VND146.97 billion (USD8.2 million) in the first nine months of this year, compared to a loss of VND27.13 billion in the same period of 2008. Net revenues rose 3.8% on year to VND2.044 trillion during the period, the company said in a statement on its website. The nine-month EPS was VND2,066, it said. In the third quarter, MPC netted a profit of VND54.17 billion on net revenues of VND933.51 billion, down 41.4% and 6.9% on-year, respectively. The company earned USD109.5 million from exporting 10,980 tons of shrimp in the nine-month period, up 2% in value and 18% in volume from a year earlier. The U.S. was its biggest shrimp importer. MPC, with a 13.93% stake owned by foreigners, expects a pretax profit of VND236 billion and net revenues of VND3.17 trillion this year.
