Business in brief 09 April

The southern province of Dong Nai, home to 30 industrial parks, has seen increasing demand for labour – defying the downtrend elsewhere in the country.

Over 22,000 people have been hired since early this year, one per cent more than the same period last year, according to the provincial Department of Labour, Invalids and Social Affairs.

The demand for labour steadily rose in many sectors, especially electronics, garments and mechanics, after businesses stabilised their production. However, most companies now require employees that are more qualified.

The department aims to bring jobs to 27,000 people in the second quarter of this year.

The labour market in HCM City has remained stable. Labour demand in the first quarter of this year increased by 1.4 per cent from the fourth quarter of last year, according to the city’s Centre for Forecasting Manpower Needs and Labour Market Information.

Tran Anh Tuan, deputy director of the centre, told Thoi bao kinh te Viet Nam (Viet Nam Economics Times) that about 70,000 jobs will be offered in the second quarter.

Casual workers miss out on social insurance

If media outlets gave more coverage to the social insurance policy for workers in the informal sectors, these workers would be more likely to participate in the programme, labour experts say.

About 139,000 people voluntarily participated in the social insurance programme last year –barely 1.3 per cent of those eligible.

Most of them learned about the programme, which has been in place for five years, through word of mouth rather than media coverage, according to Luu Quang Tuan, deputy director of the Institute of Labour Science and Social Affairs (ILSSA).

Nguyen Thi Thu Hien, a part-time domestic helper in Ha Noi’s Hoang Mai District, said she did not intend to sign up for social insurance.

"It would be too complicated. I’d have to go through so much paperwork," she explained.

Workers in the informal sectors represent 70 per cent of the total number of workers, according to a survey ILSSA conducted in Ha Noi’s Thanh Xuan and Dong Anh districts. They also depend heavily on financial support from friends and family.

The survey revealed that as informal workers’ incomes rose, they would be more likely to participate in the insurance programme.

Older people also showed more interest in the policy, with 55 per cent of people over 40 expressing willingness to participate. Additionally, those with family members already participating in the programme are more likely to sign up themselves.

Viet Nam is not alone in facing the challenge of promoting voluntary social insurance participation among informal workers. Other developing countries have the same problem, said Axel Neubert, regional representative of the Hanns Seidel Foundation, at a recent workshop held to review the voluntary social insurance programme.

Neubert added that a long-term strategy was needed to integrate voluntary social insurance promotion and other social protection policies with national socio-economic development targets.

Many labour experts agreed, saying that the country lacked a rights-based social protection system that included the entire population.

Vietnam earns VND53.5 trillion from tourism services in Q1

Vietnam fetched VND53.5 trillion (US$ 2.5 billion) from tourism services in the first quarter of this year, equal to third of the sector’s total revenue in 2012.

According to the statistics of the Ministry of Culture, Sports and Tourism, the total number of foreign tourists reached 1.8 million, mostly coming from China, the Republic of Korea and Japan, while that of domestic tourists was estimated at 12.3 million.

A report from the ministry says this was owed to the successful holding of a wide range of tourism activities in Haphong, Quang Ninh and other localities, particularly during the Lunar New Year festival.

The first Vietnam International Travel Mart will take place in Hanoi from April 18 to 21 with nearly 400 from 343 domestic and foreign businesses.

Lowering interest rates to 10 percent not yet within easy reach?

Not a few commercial banks are willing to reduce interest rates on loans down to 9 or 10 percent, despite low credit growth posing a huge challenge to the national economy.

In a recent exchange with a Voice of Vietnam Radio (VOV) reporter, Ass.Prof. Dr Tran Hoang Ngan from HCM University of Economics said the current 7.5 percent deposit interest rates will give commercial banks a good chance to rapidly reduce lending rates.

Commercial banks have attributed the failure of businesses to meet lending conditions as a pretext for not helping them access capital, a situation that has led to an environment of near-nil credit growth.

Conversely, Vietnam’s economy primarily depends on credit capital to maintain its growth. Therefore, a financial support package is needed to assist private businesses, farmers and household producers who are facing difficulties, Ngan said.

Factors such as input costs, interest rates, value added tax (VAT) and utility expenses have all impacted on production and growth.

Businesses should take into account these elements to maintain reasonable margins on their products while still meeting market requirements.

The influx of foreign goods at competitive prices is a challenge for domestic businesses when they are struggling to cope with the low purchasing power in the context of international economic integration.

If businesses could use available funding more effectively, they wouldn’t have to rely so heavily on bank loans, Ngan supposed.

The National Financial Supervision Committee (NFSC) cited slow credit growth in the first quarter as another stumbling block.

In the past three months, liquidity grew at a modest rate with interest rates on loans falling in tandem with inflation rates.

Interbank interest rates fell slightly compared to the previous quarter, along with several key interest rates, like the discount rate dropping to 6 percent and the Vietnam dong deposit rate to 7.5 percent.

The flow of capital into the production sector has remained weak for whatever it’s worth. By March 21, credit growth was just 0.03 percent while the amount of mobilized capital rose 3.86 percent compared to the late December level.

Government bonds are still considered to be an attractive investment channel for credit organizations because of low interest rates and small risks.

The current levels of bad debts are hindering businesses from accessing bank loans. Consequently, the 12 percent credit growth target is still out of reach, the NFSC said.

Financial expert Bui Kien Thanh insisted on the State Bank of Vietnam (SBV) to perform its role as a central bank by regulating the flow of capital and providing enough credit for domestic businesses to grow steadily in the long run.

Thanh said the SBV should lend to commercial banks based on its regulated interest rates which hover between 3-5 percent make it easier for domestic businesses to pay interest rates on commercial loans even at 10 percent if necessary.

Lowering lending interest rates is the best solution to help businesses save their bacon in the current situation, Thanh stressed.

However, Dr Tran Hoang Ngan argued that it is no easy task for the central bank to let commercial banks lower their interest rates on loans when it requires coordinated efforts to curb inflation and ensure the stable growth of the national economy.

The bottom line is the commercial banks need restructuring in the first place before pump priming, Ngan said.

Drought pushes up coffee prices

The price of coffee will continue to climb in the medium term due to the prolonged drought in the Tay Nguyen (Central Highlands) region.

The output would decrease by 30 per cent, predicted the Viet Nam Coffee-Cacao Association (Vicofa).

Statistics from the provincial department of agriculture and rural development showed that 55,000ha out of the total 500,000ha of coffee-growing areas were suffering from drought. About 95ha had completely withered.

Average rainfall in the region was estimated to be 30 per cent lower than previous years, especially in Dak Lak Province, meaning that reservoirs did not contain adequate water.

Vicofa estimated that around 70 per cent of the region’s total coffee area was thirsting for water.

In the first half of March, news about the drought pushed the price of coffee up from VND38 million (US$1,800) per tonne to VND46 million ($2,200) within 10n days – the highest price jump in two years.

However, increased rain at the end of the month brought prices back down.

According to the association, the recent rain would not end the drought. Therefore, it urged farmers and enterprises not to hurry to sell their coffee because the price was expected to increase.

An expert from Vicofa worried that the drought would affect the quality of coffee and create conditions for buds and fungi to develop, damaging the trees.

Meanwhile, Bao Minh Insurance Corporation recently halted the sale of drought insurance for coffee in Dak Lak Province, according to newspaper Thoi Bao Kinh Te Sai Gon.

Ho Hai Dang, a representative from the agricultural insurance company, said that the company suffered losses from offering drought insurance in the past two years.

Since not many local farmers used the insurance, the company could not afford to pay compensation. Dang recommended that the government support the company to develop this type of insurance.

Economic difficulties take their toll on large-caps

Large-cap stocks have been included for the first time on the list of shares with alert status on both national stock exchanges– indicating that economic hardships have begun to squeeze even big businesses.

Late last week, the HCM City exchange placed shares of four companies under alert status due to business losses in 2012.

Three are large real estate firms: Khang Dien House Trading and Investment (KDH), Kinh Bac City Development (KBC) and Licogi 16 (LCG).

There are currently 70 stocks under alert status on both exchanges, while the number of shares under control hovers around 15.

In the past, the stocks on the "black list" consisted of only medium and small companies, but a lack of capital and high lending rates on the back of prolonged economic difficulties have pushed even big companies into losses.

KBC has never reported losses since its debut in 2009. But a surprisingly big loss of nearly VND434.7 billion (US$20.7 million) incurred in 2012 placed it under alert status for the first time.

LCG, a share with EPS (earning per share) reaching VND10,000 in 2010, also posted a loss of almost VND36.6 billion ($1.7 million) last year. Meanwhile, KDH incurred a loss of VND55.5 billion ($2.6 million) during the same period.

In theory, big companies should have enough capital to survive for a few years during an economic crisis, but prolonged economic difficulty, particularly the stagnant real estate market, has exhausted their capital. Revenues are not big enough to offset these costs.

Executives of Licogi 16 said the company would sell any of its projects if it could find buyers. This year, it sets a modest goal of no profits. In the projected worst-case scenario, the company would see losses of VND94 billion ($4.5 million) and no dividends.

Licogi 16 shareholders took responsibility for weak management during a meeting last week, saying they also failed to accurately predict the speed of development on the market. The company is determined to restructure and improve management.

KBC and KDH has yet to announce the date of their shareholders’ meetings but investors expect these companies will soon announce specific plans to help them overcome the current difficulties.

Ministry takes measures to stabilise prices of key commodities

The Ministry of Finance has issued Directive No 3847/BTC-QG asking relevant municipal and provincial departments to enhance price management and stabilisation.

The move came as part of efforts to prevent dealers from pushing up the prices of essential commodities improperly on the back of rising retail petrol prices, which rose by VND1,430 (US$0.07) to VND24,580 ($1.18) per litre from March 28.

Relevant agencies were requested to constantly monitor prices of key commodities like food, foodstuff, medicine, milk and gas, as well as transport services.

At the same time, they must keep a close eye on price registration and declaration, clamp down on price hike registrations which are not directly affected by the fuel cost adjustment, and supervise the prices of products and services decided by the State. Those engaged in production with intensive use of petroleum and oil are also encouraged to innovate technology and apply fuel-saving solutions to help increase output and lower prices.

Mercedes doubles warranty period for genuine spare parts

As the first and only premium manufacturer in Viet Nam, Mercedes-Benz Vietnam has introduced a 2-year warranty for parts with immediate effect.

Accordingly, parts purchased and installed at its 10 authorised service dealers throughout Viet Nam will be replaced at no extra cost during the 2-year warranty period.

Discounted plane seats seek to lure domestic passengers

The HCM City Tourism Association and Vietnam Airlines on Tuesday announced a discount programme aimed at stimulating domestic travel demand this year.

Vietnam Airlines will offer discounts of 38-58 per cent on domestic flights from HCM City and Ha Noi to Hai Phong, Da Nang, Nha Trang and Phu Quoc for tourists booking at 11 travel firms.

They include Vietravel, Sai Gon Tourist, Fiditour, Hoa Binh, Lien Bang and Festival.

The travel firms announced discounts of 35-42 per cent on package tours to Da Nang, 30-47 per cent to Ha Noi, 23-34 per cent to Nha Trang, and 27-52 per cent to Phu Quoc.

Their sales began on April 1.

Last year, a similar programme opened in May and became popular despite the economic situation.

By the end of the year, it attracted 15,800 customers who got discounts of 35-40 per cent on package tours.

Free ATM services still available

One month has passed since the new regulation that led to banks starting to charge fees on debit card holders for withdrawing money from ATM machines.

According to the State Bank of Viet Nam’s Payment Department, however, 35 card issuers are still offering the service free-of-charge.

Under Circular No 35/2012/TT-NHNN, card issuers are allowed to charge fees on debit card holders, especially for ATM transactions as of March 1.

These fees can be up to VND1,000 (US$0.05) per transaction in 2013, VND2,000 in 2014 and VND3,000 from 2015, and the banks could choose where to set their fees.

The department reported that most banks with the free-of-charge service are small- and medium-sized so they offered the service free-of-charge in order to keep their existing card-holders as well as attract new ones.

The ATM withdrawal fees were mainly applied to large banks which account for 70 per cent of the country’s total debit cards and 57 per cent of the country’s total automatic teller machines, the department said.

Banks that have so far applied the fees are Vietcombank, Sacombank, SeABank, LienVietPost Bank and Western Bank.

Three others (BIDV, Vietinbank and Agribank) have also planned to collect the transaction fees but are yet to set a date to implement these fees.

The large banks said they had little choice but to apply the fees as they had so far invested a significant amount in installing and maintaining the ATM systems.

Along with the regulation on allowing card issuers to charge fees, the central bank also required banks to improve their services.

Besides having to supply cash for their ATMs within four hours of running out of cash, card issuers were also requested to answer their clients’ complaints within five days but banks continue to violate this regulation.

The central bank is drafting a decree to include strict punishments for such offences and has set up teams responsible for checking the quality of ATMs.

In the past few years, 50 banks have joined the Vietnamese ATM card market, with 50 million debit cards having been issued and 15,000 ATMs installed.

Viettel cable TV plan causes concern

Viettel’s proposal to provide cable TV services faces opposition from the Viet Nam Pay Television Association.

The association last month petitioned the government to prevent Viettel from receiving a licence to provide a cable TV service, saying its presence would make the competition too intense.

However, industry insiders said Viettel had the upper hand in cable infrastructure in comparison with current industry players and that its entry into the market was a fait accompli.

Viettel deputy general director Nguyen Manh Hung said the company would save 50-70 per cent of costs required to expand into remote and rural areas.

An industry expert, who asked to remain anonymous, said Viettel already had 200,000km of optical cable which covered 95 per cent of the communes across the country. It also had 25,000 technical staff – a number that overwhelmed its competitors.

"With these advantages, Viettel would only need a few years to build its cable TV network, other companies would need at least 10 years," the expert said.

According to Viettel’s application, up to 16.5 million households nationwide were not connected to cable TV, but would use the service.

Viettel plans to have 5 million subscribers in the first five years, 35 per cent in urban areas and 65 per cent rural.

The Ministry of Industry and Trade said Viet Nam Television (VTV), with its diverse VTV channels, held 65 per cent of pay TV market share, of which SCTV had 32 per cent, VCTV 19 per cent and HTVC 14 per cent.

VTV has 3 million subscribers out of 4.5 million pay TV subscribers in the country. Of these, VCTV has 1.2 million, SCTV 1.5 million and K+VTV in joint venture with France’s Canal Plus 400,000 satellite TV subscribers.

This means VTV controls 70 per cent of the pay TV market share in Viet Nam.

Truly competitive power market still a decade away

Not until after 2022 will Vietnam have a full-fledged competitive power market, says a draft decision on a roadmap for development of the local power market.

The draft decision was on Tuesday posted on the website of the Ministry of Industry and Trade for public comments. According to the draft, Vietnam’s competitive power market will have three levels of development.

The competitive power market is taking shape at its first level, which will last until 2014. From 2015 to 2022, the competitive wholesale market will be developed, and thereafter the competitive retail market will be formed.

The formation of the competitive power market is aimed at abolishing subsidy in the power industry, providing customers with a multiple choice of power suppliers, attracting investors into the power sector and reducing the price hike pressure.

However, Tran Viet Ngai, chairman of the Vietnam Energy Association, said the time for the competitive power market to become full-fledged should be shortened. He suggested the competitive power retail market should be formed in the period from 2015 to 2017 for free competition among sellers and removing subsidy quickly.

The competitive power market started operations in July 2012. Experts said one of the conditions for a truly competitive power market should be supply always larger than demand, which Vietnam had yet to achieve.

Hydropower currently makes up some 40% of the nation’s total power output. The major hydropower plants are run by Vietnam Electricity Group (EVN), while private investors only own medium- and small-scale hydropower plants.

In the competitive power market, medium and small hydropower plants are no match for the large-scale ones operated by EVN, but they can only compete with those generating power from coal, diesel oil and wind turbines. Meanwhile, coal-fired, diesel oil-fired and wind power plants will hardly find outlets due to high production costs.

The draft decision says the competitive power retail market will be complete some time after 2024. Then, electricity companies will set power retail apart from power distribution network operation, and thus separate units in charge of power retail and distribution network operation will be established.

In the period 2016-2022, for the development of the competitive power retail market, power system operators and power market managers will be separated and not have conflict of interests with market participants.

Ministry says will support large-scale rice field enterprises

Companies engaging in large-scale rice field model will be subject to many incentives including soft loans to buy farm produce as contracted with farmers or to stockpile rice, said the Ministry of Agriculture and Rural Development.

The ministry now is passing around for comments a draft version of policies aimed at encouraging collaboration between farmers and enterprises under the large-scale rice field model.

The tentative policies are to replace Decision 80 on incentives to stimulate farm produce demand via contracts which is no longer suitable after the nation became a member of the World Trade Organization.

As such, enterprises when developing the model will be subsidized 50% of expenses for agricultural promotion and vocational training targeting farming households. Besides, they will be given priority to borrow money with low lending rates to carry out contracts or stockpile farm produce in line with the Government’s plans.

Local cooperatives will be entitled to 100% of expenses for training management officers and an initial aid of 50% of costs for constructing warehouses and acquiring equipment for rice preservation.

Meanwhile, local farmers after joining the model will be funded 50% of costs for plant protection drugs and another 50% support for seedlings in the first crop.

Nguyen Van Tien, general director of An Giang Import-Export JSC (Angimex), which has taken part in the model over the past time, said this is a good policy and that it will encourage many more entities to develop large-scale farming.

According to the Cultivation Department under the agriculture ministry, in the winter-spring 2012-2013, as many as 21 southern provinces participated in large-scale rice field model with a total area of more than 76,500 hectares, up 50,000 hectares versus the summer-autumn crop 2012. The department expects the large-scale farming area to reach 200,000 hectares next year.

The large-scale rice field model was initiated in the summer-autumn 2011 and has been expanded gradually after every rice crop, with the number of corporate participants rising.

Air-con sales triple in scorching weather

Owing to the on-going abnormal hot spell, sales of air conditioners has shot up sharply and the increased demand for the products is expected to last until June.

Dinh Anh Huan, general director of Dienmay.com, referred to a report of a market research firm as saying that over 150,000 air conditioners were sold in the local market last month alone, three times higher than the months before and after Tet.

Lien An Thach, sales director of Dien May Cho Lon supermarket, deemed the sales volume mentioned above reasonable, explaining sales of air conditioners has sharply risen since early last month.

“The demand for air conditioners has strongly surged, so our delivery and installment teams don’t have enough workers to help buyers at certain times,” he said.

Similarly, air conditioner retail websites like Dienmay.com and maylanhgiare.com are also facing overloads in sales. Some retailers even propose customers delay assembling the products while others let customers do the job by themselves.

Property firm to list on HOSE

Nam Long Investment Joint Stock Company (NLG) will begin trading 95.5 million shares on the Hochiminh Stock Exchange (HOSE) on April 8 at VND27,000 each, the property developer said on Tuesday.

Speaking at the conference on investment opportunities into NLG on Tuesday, Nguyen Xuan Quang, chairman and general director of the company, said that this move aims to help the enterprise mobilize capital for its property projects.

Despite the falling prices of many property stocks, Nam Long still insists on its listing plan thanks to cooperation with financial organizations such as Nam Viet, a 100% Goldman Sachs-owned investment fund, Aseana Properties Limited of Malaysia’s Ireka Group and VAF under Mekong Capital.

Nam Long targets to mobilize from VND200-400 billion via the stock channel. In the coming time, the enterprise will continue to focus on feasible projects, especially EHome projects designed for middle-income earners.

The enterprise has plans to launch 14,000 EHome condos onto the market from now to 2017.

Jewelry appraisal firm to start up in June

An independent gold appraisal company will be established in June with a charter capital of VND10 billion, said Dinh Nho Bang, vice chairman of the Vietnam Gold Business Association.

The association is waiting for license to establish the enterprise, which is expected to have a Vietnamese CEO and two foreign experts. Testing machines will be equipped for the enterprise.

This company will be based in HCMC’s District 5 and the association will expand its network to Hanoi City. The company is set up by five member enterprises of the association and NamABank.

Establishment of the enterprise aims to control gold jewelry and gemstone quality in the country. At present, many people are offered sub-standard jewelry products.

Moreover, the quality of gems is now uncontrollable. The problems will be prevented if material is tested and sealed.

The association will organize a seminar on improvement of gold jewelry quality in HCMC on April 6.

ASEAN stock exchanges accelerate connection

Seven stock exchanges across ASEAN with total market capitalization of over US$2 trillion and more than 3,000 listed companies are speeding up their connection to form a regional capital market to attract capital inflows from other regions.

At the 18th ASEAN Exchanges CEOs’ Meeting held in HCMC this Monday, leaders of the seven stock exchanges agreed to organize more Invest ASEAN conferences after the first event of this kind was successfully held in HCMC last week.

This is one of the efforts to make the companies listed on these seven stock exchanges known to domestic and foreign investors, aiming towards the development of the ASEAN capital market, said the Hochiminh City Stock Exchange (HOSE).

On March 2, the Bursa Malaysia Stock Exchange was connected to the ASEAN Trading Link, following the connection of the Stock Exchange of Thailand on January 15 and the Stock Exchange of Singapore on February 2. Such a link allows investors to easily access and conduct transactions with over 2,200 companies listed on the three exchanges.

Tran Dac Sinh, chairman of HOSE, said the collaboration of the seven stock exchanges, including two in Vietnam and those from Indonesia, Malaysia, the Philippines, Singapore and Thailand, is called ASEAN Exchanges. The aim of such collaboration is to facilitate the development of the ASEAN capital market by promoting cross-border links, creating ASEAN-style products and undertaking the initiatives already in place.

Many companies listed on these seven exchanges are giants in finance-banking, energy, telecommunications and automated production.

In ASEAN Exchanges, there is a group called ASEAN Stars, grouping 180 blue-chip stocks of ASEAN representing 30 leading companies from each exchange in terms of transaction value and liquidity.

The first ASEAN Invest taking place in HCMC last Saturday attracted some 1,200 local and foreign investors, who wanted to sound out investment opportunities in ASEAN and listen to the experience of investment in the ASEAN stock market shared by experts and business owners.

Sinh said: “Invest ASEAN 2013 was attended by 11 listed companies in the group ASEAN Stars from the stock exchanges of Malaysia, Singapore and Thailand. Investors expressed great interest in cross-border transactions in ASEAN.”

Vinacas calls for effort to stop cashew price drops

Vietnam Cashew Association (Vinacas) calls for cashew exporters to quote the same prices of cashew nuts to prevent buyers from pushing down prices further.

Vinacas Chairman Nguyen Duc Thanh said Vietnamese cashew nuts had better quality than the same products of Cambodia and African countries, so they should be exported at high prices.

This is not the first time Vinacas has told exporters not to undercut each other that may affect the entire industry. The association did so once in late February and eventually helped shore up cashew export prices.

Now, under the pressure exerted by importers, Vinacas calls for a joint effort among cashew exporters to keep export prices from falling further

“Importers have been pushing down prices of Vietnamese cashew nuts in recent years, so local enterprises need to join forces to win contracts with reasonable prices rather than racing to lower prices,” said Thanh.

Cashew nut export prices are currently US$7-8 per kilo. Importers only need to process them a little more to sell at twice the price.

Therefore, they are trying to push down prices as much as possible, he remarked.

However, thanks to their good quality, Vietnamese cashew nuts can be sold to the high-end markets at 15% higher prices.

On March 26, the cashew nut category WW320 was priced at US$3.37-4.42 a pound (or 0.454 kilo), which fell to US$3.36-4.41 on March 28 under the pressure placed by importers and had remained unchanged days later. In line with the decline in export prices, raw cashew prices in Binh Phuoc and Dong Nai have gone down VND1,000-2,000 to VND29,000-30,000 per kilo.

The country exported some 42,000 tons of cashew nuts in the first three months, earning US$239 million, down 58.5% in volume and 8.7% in value year-on-year, according to the Ministry of Agriculture and Rural Development.

Work to start on city’s new water plant next week

Thu Duc 3 Water Plant with total investment cost of VND1.2 trillion, or US$60 million, will get off the ground next Monday.

It is one of the five water plants to be developed by Saigon Water Corporation (Sawaco) from now to 2024 in order to increase its clean water supply capacity for HCMC to 3.4 million cubic meters per day.

Thu Duc 3 Water Plant covering three hectares in HCMC’s Thu Duc District will have a daily capacity of 300,000 cubic meters. Using the crude water from the Dong Nai River, the plant is scheduled to start operation in June 2014 to supply clean water to the city.

Owner of this water plant project is Saigon Clean Water Investment and Trading Joint Stock Company (SWIC). The company was established in 2010 with 60% owned by Sawaco, 30% by Refrigeration Electrical Engineering Corporation (REE) and the rest by Water Supply & Sewerage Construction and Investment Joint Stock Company (Waseco).

In November, SWIC signed an engineering, procurement and construction (EPC) contract for the project with Germany-based Passavant Roediger and Vietnam’s Construction Corporation No. 1.

The project owner will borrow 66.5% of the investment from Germany’s Commerzbank – Akabank and 21% from Vietinbank. The remaining 12.5% will be sourced from its own fund.

Sawaco’s clean water supply capacity is now some 1.5 million cubic meters a day. The water firm plans to raise its daily capacity to 2.4 million cubic meters by 2015, with 92% of the people in HCMC to be provided with clean water, and 3.4 million cubic meters by 2020 to ensure water for all people in the city.

In related news, Ha Van Sang, director of Kenh Dong Water Plant, told the Daily that his water plant would officially produce clean water in May with a capacity of 150,000 cubic meters per day. The plant will start trial run this month.

Water from Kenh Dong will be led to Tan Hiep Water Plant and sold to Sawaco for supply to the city’s western part.

In addition to Thu Duc 3 Water Plant, Sawaco will develop four other plants from now to 2024, namely Tan Hiep 2, Thu Duc 4, Tan Hiep 3 and Thu Duc 5, costing a respective US$100 million, US$130 million, US$162 million and US$176 million. Thu Duc 5 will have a daily capacity of 500,000 cubic meters, while the others are designed to produce 300,000 cubic meters a day.

Long Thanh Airport compensation to hit VND10 trillion

Some VND10 trillion will be needed for compensation and resettlement of households forced to relocate to serve the development of Long Thanh International Airport, said Ngo The An, vice chairman of Dong Nai Province’s Long Thanh District.

The government of Dong Nai last week had a meeting with the provincial departments and Airports Corporation of Vietnam, investor in Long Thanh Airport, to discuss issues regarding this project, he said.

At the meeting, Dong Nai Vice Chairman Tran Van Vinh asked Long Thanh District and relevant agencies to carry out compensation and resettlement work now so that the airport project can get off the ground in 2015.

The total cost of compensation and resettlement for the households forced to move by site clearance for Long Thanh Airport was estimated at VND7.5 trillion in 2009. However, due to inflation, the cost has surged to around VND10 trillion, said An.

As per the zoning plan, Long Thanh Airport will cover 5,000 hectares, encompassing the communes of Long Phuoc, Bau Can, Long An, Binh Son, Suoi Trau and Cam Duong in Long Thanh District. Nearly 5,400 households with over 17,000 people will have to relocate to serve the development of the airport project.

Four resettlement areas for relocated households will be formed in Binh Son, An Lam, Long An and Loc An, covering nearly 550 hectares.

The project owner is seeking assistance of Dong Nai’s government in developing the systems of medium voltage cable, water supply and wastewater treatment for the airport.

Some components of Long Thanh Airport will be completed by 2020 and the first flight will be launched then, according to the Dong Nai Department of Construction.

In line with the development of the airport, Dong Nai is drawing up a zoning plan for the surrounding areas to connect to the airport when it starts operation.

The Long Thanh Airport project will be developed in three phases. The first from 2015 to 2020 requires US$6.7 billion for construction of two runways, taxiways, aircraft parking zones and two terminals with an annual throughput capacity of 25 million passengers and 1.2 million tons of cargo.

In the second phase until 2030, another runway will be built. During this phase, the capacity of the passenger terminal will be doubled and the cargo one will be able to allow for 1.5 million tons per year.

In the third phase after 2030, the airport will have a total of four runways and its terminals will be capable of handling 100 million passengers and five million tons of cargo per year.

AirAsia stops two air services to Vietnam

Low-cost AirAsia will stop operating Kuala Lumpur-Danang flights from this June while its offshoot Indonesia AirAsia will not offer flights between HCMC and Jakarta from the middle of this month.

According to AirAsia’s press release, the carrier will not operate four Kuala Lumpur-Danang flights every week as it is reorganizing the flight network. Affected passengers can change their flights for earlier ones or get the airfares refunded.

The Civil Aviation Administration of Vietnam has also confirmed the flight suspension of AirAsia. An official of the administration told the Daily on Wednesday that AirAsia will operate flights between Kuala Lumpur and Danang until June 9.

AirAsia started to open the direct Kuala Lumpur-Danang route in December, 2011 with flights on every Monday, Wednesday, Friday and Sunday.

Some travel firms in HCMC have also announced that the HCMC-Jakarta air service would be suspended from April 15 after over three years of operation.

According to Tran Xuan Hung, director of Viking Travel, AirAsia early last month still received bookings for flights departing in September and October but in the middle of last month it said that it would stop flying between HCMC and Jakarta. From April 15, flights on this route will be operated via Kuala Lumpur in Malaysia with four flights per week.

Vietnam Airlines last year opened the direct flight connecting HCMC with Jakarta with a frequency of four flights per week. The discounted tickets of this service bought by travel firms are US$230-250 per return ticket, which is still US$30 higher than that of AirAsia.

However, Vietnam Airlines offers a more convenient departure time and added services for passengers.

According travel agencies, Vietnam Airlines plans to fly to Indonesia daily from this June.

High coffee prices discourage importers

The local coffee prices have picked up some VND100,000 to over VND43 million per ton, weakening the buying energy of importers and making them switch to other markets.

However, coffee exports did not decline significantly in March, said Nguyen Viet Vinh, general secretary of the Vietnam Coffee and Cocoa Association (Vicofa).

Coffee price increase is ascribed to the prolonged drought, making coffee output in the 2013-2014 crop forecast to drop by one-third from 1.2 million tons in the previous crop. Therefore, many farming households in the Central Highlands are hoarding coffee, waiting for better price.

“Currently, each ton of coffee sells for VND43.3 million in Daklak and VND43.4 million in Gia Lai. Compared to early this year, coffee prices have risen by nearly VND200,000 per ton,” said Vinh. However, he said the increase was not significant and would not cause any fluctuation in the market.

Another reason why importers are buying less coffee from Vietnam is coffee prices of Indonesia are falling as this country enters the harvest season.

Vietnam and the world’s second largest Robusta coffee producer Indonesia represent nearly a quarter of the global coffee output. South Sumatra, the main coffee growing area in Indonesia, produced about 9.7 million 60-kilo bags in the 2012-2013 coffee crop, up 16.9% over the previous crop, contributing to a more abundant supply for the market.

Chinese shrimp traders disturb market

Raw shrimp prices in the Mekong Delta have risen to the highest level over the past two years as Chinese traders boost direct purchase, leaving local traders with insufficient supply to fulfill export orders.

Since the beginning of this year, traders from China have bought a considerable volume of raw shrimp, even those with low quality. They even ask suppliers to inject impurities into shrimp or go to factories in the Mekong Delta to have local enterprises seek supply for them, said Nguyen Van Kich, general director of Cafatex Corporation in Hau Giang.

Meanwhile, Chu Van An, deputy general director of Minh Phu Seafood Corporation in Ca Mau, said Chinese traders went to shrimp farming zones in the Mekong Delta to buy raw shrimp at high prices to compete with local traders.

After buying raw shrimp, Chinese traders inject impurities to increase the size of shrimp and then export them at high prices. Vietnamese companies do not do so and thus they cannot compete with Chinese traders in buying material shrimp, said An.

Therefore, domestic shrimp processors and exporters are grappling with a shortage of raw shrimp.

“Several contracts for export to Japan and the U.S. have been signed but enterprises do not have shrimp to process and deliver to their partners. My company has received many orders for export to Japan, but can hardly find material supply. They (Chinese traders) have bought it all, big shrimp, small shrimp, everything,” said Kich.

The strong buying energy of Chinese traders greatly affects the local shrimp processing industry, said An.

“Workers lose their jobs, our potential markets like the U.S., Japan and South Korea will likely switch to other suppliers. Therefore, decent shrimp traders will suffer severely,” he said.

Raw tiger prawn is currently priced at VND240,000-245,000 per kilo of 20 units and VND150,000-155,000 per kilo of 30 units in Ca Mau. Notably, a kilo of 15 units now sells for VND310,000-320,000, hitting the two-year high, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

The increase in shrimp prices generates higher incomes for farmers. However, Kich said doing business with Chinese partners posed many risks.

“Chinese traders have raised prices for three years, but if one year they pushed down prices, Vietnamese farmers would suffer,” he stressed.

Truong Dinh Hoe, general secretary of VASEP, said that in principle, farmers sell shrimp to whoever offers high prices to buy their products. Even so, if Chinese traders kept buying a vast volume of raw shrimp in Vietnam, it would deal a hard blow to the local shrimp processing industry.

In 2012, Vietnam exported over US$193 million worth of shrimp to China, accounting for 8.6% of the total shrimp export turnover. In the first two months of 2013, Vietnam’s shrimp exports to China reached some US$31.6 million, said VASEP.

State budget revenue drops despite import-export growth

The total import-export turnover in the first quarter grew more than 18% year-on-year, yet the State budget revenue from import-export fell VND3.4 trillion, says a report of the Ministry of Finance.

Imports and exports in the first three months totaled US$58.8 billion, up 18.3% over the same period last year. Meanwhile, the State budget revenue from import-export reached VND41.15 trillion, equal to 17.3% of the estimate, a drop of over VND3.4 trillion, or 7.7%, year-on-year.

After VND14 trillion worth of value added tax was refunded, the State budget revenue from import-export in the first quarter stood at VND27.15 trillion, or 16.2% of the estimate, down 10.7% year-on-year.

This is ascribed to the sharp decline in trade of thosee items subject to high tariffs such as automobiles, said the finance ministry.

In addition, under Vietnam’s commitments in free trade agreements, import duties on a number of products will be gradually lowered.

Therefore, the customs authority has introduced several measures, including raising export taxes on coal and apatite and import taxes on gold, flavorings and chemicals for beverage production.

Investors pledge huge funds for Northwest

Twenty six projects worth a total of nearly VND9.5 trillion were granted investment certificates at the Conference for Investment Promotion and Social Security for the Northwest held in Tuyen Quang Province on Wednesday.

In addition, the event witnessed the signing of 15 agreements on over VND20 trillion worth of loans for investors in the Northwest. Banks also pledged to provide more than VND500 billion for social security in this region.

Deputy Prime Minister Nguyen Xuan Phuc, who is the head of the Northwest Steering Committee, expressed his pleasures at the above pledges.

The largest projects licensed on Wednesday are the VND1.6-trillion rubber planting project of Dau Tieng Rubber Corp. in Lai Chau, the Cam Thuy 1 hydropower project worth VND1.2 trillion to be developed by Infrastructure Investment and Transportations Construction Co. in Thanh Hoa and the VND885-billion lead factory of Tay Giang Corp. in Yen Bai.

Among the loan agreements, that of the highest value is the one signed between VCB, BIDV, Vietinbank, Agribank and EVN, in which the banks will lend EVN VND14.5 trillion to build Lai Chau hydroelectric plant. Meanwhile, Dong Ta Phoi Co. under Vinacomin will receive VND1.7 trillion from Vietinbank to extract copper ores in Lao Cai.

Vietnam Bank for Social Policies signed a memorandum with the Northwest Steering Committee, with an aim that credits for the Northwest would have an annual growth rate of 10-15% from now to 2017. In the period 2015-2017, outstanding loans for the region will increase by VND16 trillion and reach VND38 trillion by the end of 2017.

The Conference for Investment Promotion and Social Security for the Northwest was organized by the Northwest Steering Committee and the government of Tuyen Quang Province. The event was attended by 17 members of the Party Central Committee and over 1,000 delegates who are leaders of the Government, ministries, the World Bank and businesses.

The conference was held to seek ways to promote socio-economic development in the region consisting of 14 provinces with the highest percentage of poverty-stricken households in Vietnam.

Although Hanoi-Lao Cai Expressway funded by ADB is near completion, infrastructure remains the major bottleneck for the Northwest, said delegates.

BIDV Chairman Tran Bac Ha suggested: “This region is full of minerals, so the policy of infrastructure in exchange for minerals would work.”

However, the opinion of the leader of BIDV, the bank that pledged over VND1.3 trillion for four projects at the conference, was not supported.

Minister of Planning and Investment Bui Quang Vinh told the media on the sidelines of the conference: “Such an idea is very outdated, inconsistent with the view of the Government and the Ministry of Planning and Investment.”

He explained mineral and forest resources had been depleted and the Government did not agree to grant licenses for miners to export crude ores.

To develop the traffic system in the Northwest, he suggested calling for private investors to build the lifeblood roads under the formats of PPP, BOT and BT.

Decree 61 on incentives for investors in remote areas, including the Northwest, compiled by the planning ministry has been submitted to the Government.

Vinh said the Northwest had attracted only US$2.45 billion of foreign direct investment, very modest compared to over US$200 billion of the entire nation.

Victoria Kwakwa, the World Bank’s country director for Vietnam, said the Northwest is the poorest region in Vietnam and the bank would continue to assist the region in poverty reduction.

BIDV is offering households in the region loans worth US$500 million financed by the World Bank. Kwakwa urged the authorities to set aside small loans for local households to help them escape poverty.