BUSINESS IN BRIEF 10/11

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Promoting exports to Russia



Vietnam’s two-way trade turnover with Russia is expected to reach US$10 billion by 2020.

By the end of September, Vietnam’s exports to Russia rose dramatically to US$904 million, up 63.2 percent from a year earlier. Of the figure, seafood earned US$69.1 million, garment (US$54.9 million), coffee (US$30.5 million), footwear (US$32.2 million) and rice (US$30.2 million).

Two-way trade between the two countries showed a sharp increase from US$350-400 million in 1990s to more than US$1 billion in 2007 and US$1.813 billion in 2010.

Vietnam’s imports from Russia in the first nine months of this year, mainly steel, fertilizers, machinery, equipment, tools and petroleum, dropped by 35.5 percent to US$513 million,.

Head of the Trade Promotion Agency Do Thang Hai said despite this fact bilateral economic and trade relations are still far from meeting the two countries’ potential. Leaders from the two countries recently agreed to lift the levels of bilateral trade exchange to US$3 billion in 2012 and US$10 billion by 2020.

Hai said Russia with its GDP of US$1,500 billion and more than 140 million consumers is a great potential market for Vietnamese products.

He warned that to have a long-term plan for exports to the Russian market, domestic businesses should contact Vietnamese embassy and trade office staff in Russia to get first-hand knowledge of its laws.

VND5,000 billion to purchase coffee from farmers

The Bank for Agriculture and Rural Development (Agribank) has pledged to provide VND5,000 billion in loans for businesses to purchase coffee from farmers for the 2011-2012 crop.

Agribank signed a cooperative agreement with the Vietnam Coffee and Cocoa Association (Vicofa) to boost coffee development and exports.

Nguyen Ngoc Bao, Chairman of the Agribank Board of Directors, said the bank will provide loans for businesses to help them invest in new technology to avoid post-harvest losses. It will also offer capital to enterprises involved in the chain of production, purchasing, processing and exporting coffee.

Agribank is currently providing loans to around 400 businesses and 100,000 coffee households and farms across the country with a total annual debt balance of VND13,000-15,000 billion.

Soc Trang ready for second rice festival

Almost 1,000 booths for the Second Vietnam Rice Festival on November 8-11 in the Mekong delta province of Soc Trang have already been booked, said Chairman of the Soc Trang Provincial People’s Committee Nguyen Trung Hieu.

Hieu said that main activities of the festival will take place in Soc Trang city and preparations for the event have been completed.

With the theme of Honouring Vietnam’s pearl green environment and golden paddy fields, the festival will promote the trademark of Soc Trang rice and Vietnam and honour the roles of Vietnamese people in rice production, as well as the sector’s scientists, managers and businesses, Hieu said.

The festival will also include exhibitions of agricultural tools and production models from early years to modern times and models of the development of Vietnam’s rice through these periods, as well as a writing and a photo contest.

A seminar on “Vietnam – high-quality rice development path”, an international seminar on “Creating Vietnam’s rice trademark - Vietnam’s rice: Who buys? Who sells?” and a seminar on “Bai Xau (Ba Xuyen) – Soc Trang: from the first international seaport to the development future” will be included in the four-day event. The seminars will focus on analysing Vietnam’s position and strength when competing on the international rice market as well as new demands and requirements when joining the World Trade Organisation.

In Vietnam, agriculture plays an important role in the economy. Vietnam exported around 6.5 million tonnes of rice worth US$3.3 billion in the first 10 months of this year, year-on-year increases of 11.6 percent in volume and 20.3 percent in value, respectively.

The country’s rice export volume is predicted to be 7.1-7.4 million tonnes this year, compared with the previous forecast of 5.5-6.1 million tonnes.

Cuban, Vietnamese businesses boost cooperation

A conference on trade, investment and exchange among businesses was held under the framework of the 29th Havana International Fair (FIHAV) in Cuba on November 4.

The event, organized by the Thai Binh Investment Trading Corporation in co-ordination with the Vietnamese embassy in Cuba, aimed to introduce the trade potential and promote economic and investment cooperation between Vietnam and Cuba.

Speaking at the conference, Vietnamese ambassador to Cuba Vu Chi Cong said that, despite the US embargo against Cuba and the geological distance between the two countries, Vietnam has maintained and developed a multifaceted relationship with the country, making it Cuba's second biggest trade partner in Asia.

Ambassador Cong said the conference offered an opportunity for businesses in both countries to devise measures and action plans to strengthen bilateral relations.

Raisa Costa Blanco, Director of the Centre for Promoting Cuban Foreign Trade and Investment (CEPEC), said in order to effectively implement new socio-economic policies approved by Cuba’s Party and State, Cuban businesses are gradually improving themselves and widening cooperation with foreign counterparts, in an effort to contribute more to national economic development.

She also introduced prioritized fields to call for investment from the Cuban Government such as tourism, oil and gas, mineral exploration and renewable energy.

Blanco affirmed that the Cuban market always opens the door to foreign businesses, including those from Vietnam.

She said she hopes Cuban and Vietnamese businesses will be able to cooperate in various fields and contribute to the development of both countries.

Vietnam-US two-way trade increases sharply

Two-way trade turnover between Vietnam and the US in 2011 continued to rise sharply compared to 2010, according to US customs statistics released on November 4.

The figures show that Vietnamese exports to the country reached US$11.3 billion in the first eight months this year, up 20.6 percent against the same period last year, while US exports to Vietnam hit US$2.7 billion, a year-on-year increase of 21.5 percent.

Vietnam's exports to the US were mainly garments and textiles, footwear, seafood and wood products. The garment and textile export turnover was the highest at more than US$4.8 billion, up 19 percent compared to the previous year.

Exports of agricultural products to the US saw the sharpest increase of 41 percent, followed by paper and paper products (33 percent), machinery (29 percent), footwear (26 percent) and arts and handicrafts (25 percent).

US exports to Vietnam included machinery, equipment, raw materials and food. Cotton enjoyed the highest increase in export turnover with 100 percent, followed by machinery, electrical equipment and spare parts, (80 percent), and plastic products, (49 percent).

Milk and dairy products, poultry’s eggs, honey, and motor vehicles also rose by 30 percent.

More Saudi investment requested for Vietnam

Vietnam is seeking to inspire more investors from Saudi Arabia to participate in new transport infrastructure projects, especially in seaports, airports, highways and railways, said Finance Minister Vuong Dinh Hue.

Minister Hue expressed the wish aspiration during a working session with the visiting Vice President and Managing Director of the Saudi Fund for Development, Yousef Ibrahim Al-Bassam, in Hanoi on November 4.

Minister Hue highly valued the working visit by Yousef Ibrahim Al-Bassam and his entourage to Vietnam and said that Vietnam is paying attention to development of infrastructure and has a large demand for capital. He said he hoped that the Saudi Fund for Development will agree to increase the number and scale of loan projects to Vietnam.

Yousef Ibrahim Al-Bassam expressed his pleasure at the signing of two agreements on social welfare projects with Vietnam and said a group of Saudi Arabian experts will visit Vietnam to discuss loan projects including development projects in education and rural development.

Earlier, on November 1, the Finance Ministry signed loan agreements with the Saudi Fund for Development on a US$14.5 million project to equip a hospital and medical training centre in northern Bac Kan province and an US$11 million project to provide facilities for vocational training in the southern province of Ninh Thuan.

European businesses pour US$2.33 billion into Dong Nai

European businesses are taking the top spot in investment capital in southern Dong Nai province’s industrial parks with 65 projects worth US$2.33 billion and employing more than 20,500 workers.

More than 40 European entrepreneurs and representatives from relevant sectors gathered in Dong Nai on November 4 for a conference promoting investment and calling on European businesses to invest in the province.

Delegates shared experiences and discussed ways to iron out snags with the aim of attracting more European businesses.

The Chairman of the Dong Nai provincial People’s Committee, Dinh Quoc Thai, said despite facing certain difficulties, European investors have always been active in adapting themselves to Vietnam’s legal environment and contributing significantly to the province’s economic development.

Most European businesses are financially and technologically strong, enabling them to implement their projects efficiently. They have actively engaged in environmental protection and always paid attention to the community.

Dong Nai wants European investors to increase their investments in high tech industrial sectors and support industry, agriculture, vocational training and safe food processing.

The Chairman of the European Chamber of Commerce in Vietnam (EuroCham), Alain Cany praised Dong Nai’s investment environment in Dong Nai and its efforts in dealing with problems facing foreign businesses and ensuring security.

As a result, at the conference, more than 30 European businesses showed keen interest in investing in Dong Nai in areas such as the support industry and education and training.

Seminar increases international competitiveness of footwear sector

The Vietnam Leather and Footwear Association (LAFASO) in collaboration with Dun & Bradstreet (D&B) Company- the world's leading source of commercial information and insight on businesses held a seminar in HCM City on November 4 to help footwear businesses overcome difficulties.

The seminar aimed to provide businesses with information about consumption markets, challenges when penetrating the international markets, and solutions to seek capital resources and partners.

Pham Quang Thang, Business Director of FedEx Vietnam Company said that Vietnam is deeply committed to the global supply chain and considered an attractive destination for many exporters and importers. However, the Vietnamese footwear sector is facing pressures from competition in the international market, especially in terms of goods, transport, and meeting growing consumer demands.

Emmanuel C.Atienza, Business Development Director of D&B for Asia Pacific said Vietnam‘s footwear industry is finding itself in a difficult position due to the global economic downturn so it needs to renew its forms of business and seek partners to sharpen competitiveness.

This year, the footwear sector has expanded to four new export markets including Argentina, Chile, New Zealand and Slovakia, and is expected to earn US$ 6 billion in export turnover by later in 2011.

Largest home-made ship launched

Dung Quat Shipbuilding Company, a subsidiary of PetroVietnam, yesterday launched a 104,000-tonne crude oil tanker, which is the largest such vessel ever made in Viet Nam.

The ship, 245m long, 43m wide and 20m high, was built under a US$56 million contract signed with the PetroVietnam Transportation Joint Stock Corporation (PV Trans) in February 2007.

The company will hand over the ship to PV Trans in March next year when it is completed.

The shipbuilder is also building another tanker for PV Trans.

The 105,000-tonne ship is expected to be handed over to PV Trans in 2012 to facilitate crude oil shipping for the nation's first oil refinery Dung Quat.

DHL Express hits fast lane

On November 3, DHL Express opened its new $1.4 million facility in Hanoi hub close to Noi Bai international airport.

The newly-built 1,450 square metre state-of-the-art facility has a capacity to process 4,700 inbound and outbound shipments daily and allows for faster recovery and shorter processing times.

The new facility also doubles up as a service centre supporting the neighbouring Vinh Phuc, Soc Son and Thang Long industrial zone areas. The traveling time from the gateway to these areas will improve by approximately one hour.

In which, 30 per cent shipments checked directly here for areas airside having not to transfer to Hanoi. That means if receiving shipment from the newly-built facility can economise three hours.

“The continual growth experienced by the industrial sector in the northern provinces of Vietnam has driven the demand for express services to facilitate cross border trade. For DHL, the Vietnamese market is one with immense potential. The new facility further solidifies our leadership position in Vietnam and sets the stage for growth in the years to come,” said Tim Baxter, general director of DHL-VNPT Express.

DHL Express has joined hands with the local VNPT for five years with a $20 million total investment capital joint venture in Vietnam.

Tim said: “We will cooperate for the next five years. For DHL, our strong point is capacity of connection with a global network composed of more than 220 countries and territories and about 275,000 employees worldwide”.

The new gateway facility in Hanoi follows the recent opening of DHL Express’ new Long An depot in Ho Chi Minh City in June this year.

Ascott cuts deal to manage local serviced residence tower

Serviced residence operator The Ascott Limited on Thursday signed an agreement with Binh Thien An Property Joint Stock Company (BTA) to manage a tower of serviced apartments in the Diamond Island Sky Resort project under development in HCMC’s District 2.

The deal allows the Singaporean group to manage 200 fully-furnished apartments in the Diamond Island Luxury Residences tower by 2014, as well as to manage another 50 unfurnished apartments in separate towers within the condo project which will be available for lease in 2012.

BTA has invested some US$500 million to turn an 8-hectare islet into a complex project which includes four blocks of high-rise buildings with some 1,000 apartments and villas from 80 to 750 square meters each. Diamond Island Sky Resort is surrounded by the Saigon River and the Giong Ong To River.

Alfred Ong, Ascott’s managing director for Southeast Asia and Australia, said at the signing ceremony held in HCMC on Thursday that the contract will further reinforce the group’s leadership position in Vietnam, where it operates 1,600 apartment units at 10 properties in four cities of Hanoi, HCMC, Hai Phong and Danang.

“With this contract, we will provide a wider range of accommodation options to cater to the different lifestyle needs of our customers,” Ong said, adding that the project’s location may draw a strong demand for luxury residence in the coming time.

Ong said that with the government’s plans to transform District 2 into a financial and administration center, he felt confident the Diamond Island Luxury Residences would cater to high net-worth local residents and expatriates looking for quality accommodation in this area.

Trinh Thanh Huy, chairman of BTA Vietnam, said the company has spent a lot of time selecting the right operator with the global expertise and strong track record to manage its apartments. Ascott is recognized worldwide for its quality accommodation, service and operational excellence.

“We are glad to have Ascott manage our apartments and offer residents international-class accommodation in our project,” Huy said.

The developer said the condo project currently under development is scheduled for completion and it would hand over first residential towers to residents in early 2012.

An Giang, Dong Thap insure 160,000 hectares of rice

The Mekong Delta provinces of An Giang and Dong Thap plan to insure 80,000 hectares of rice each by the year-end in accordance with an experimental supporting program launched by the Government.

Representatives from Department of Agriculture and Rural Development of An Giang on Thursday met with farmers from An Phu, Chau Thanh and Thoai Son districts to prepare insurance contracts.

The contracts between the three districts’ farmers and Bao Minh Joint Stock Corp. should be signed at the end of this month, said Doan Ngoc Pha, deputy director of An Giang Province’s agricultural department.

“Insurance premiums are estimated to account for 2.3% of total value of each contract or farming expenses on every crop and is paid for every crop despite one-year term contracts,” noted Pha.

In Dong Thap, Bao Viet Insurance Corp. is chosen as the insurer of rice growers of the districts of Tan Hong, Thap Muoi and Chau Thanh.

According to Duong Nghia Quoc, director of agricultural department of Dong Thap, insured agricultural land can be around 80,000 hectares.

Farmers are required to hand in premiums in line with every crop as paddy prices are volatile from time to time and the sum of the premium is small, explained Quoc.

As per Decision 315/QD-TTg, a pilot program to buy insurance products for the local agricultural sector is set to be deployed during 2011-2013 in 21 provinces. The purpose is to help farmers ease losses caused by natural disasters and epidemic diseases.

Accordingly, poor farmers will receive 100% support of insurance premiums from the Government and this figure is set at 80% for those who are close to the poverty line. Other farming households or individuals as well as agricultural production organizations will be given 60% and 20% respectively.

The program is aimed at paddies, buffalos, cows, pigs, poultry, tra and basa fish, shrimp and white-legged shrimp across the country, such as Thai Binh, Nghe An, Bac Ninh, Dong Nai, Bac Lieu and Ca Mau.

Franchise business to thrive in Vietnam: exhibitors

The franchise business in Vietnam will grow much faster in the future, according to local and foreign firms at the third Vietnam International Shop+Franchise Show 2011 held in HCMC.

The three-day show, open until tomorrow at the Saigon Exhibition and Convention Center (SECC), has attracted the participation of 150 firms, including well-known South Korean companies such as Tous Les Jours, Kumho Tires, Everon and Bar BQ Boss.

Yoon Joon Ho, director of X-Rider Co. from South Korea, said his firm was looking for Vietnamese partners to expand its franchise after investing in a 4D cinema chain in supermarkets and commercial centers in HCMC, Hanoi, Dong Nai and Khanh Hoa provinces. X-Rider wants to popularize this kind of entertainment in Vietnam where there is a high percentage of young people and a growing economy, he added.

Meanwhile, Ho Kyoung Lee, CEO of FR Food Systems, said South Korean food was being favored by South Asian countries, and franchises are an ideal way to bring the food culture here.

Besides, there are four member companies of Korean Franchise Association (KFA) attending the show for the first time to sound out opportunities in Vietnam, said Won-hyu Park, Chief Commissioner of Government Policy & Consultant of the association.

Several foreign firms see Vietnam as a potential market for the franchise business due to its young population as well as a large number of new firms, according to Lee Wowbong from the show’s organizer, Coex Group. Franchising is a successful business model in Vietnam with an annual growth of 20% but Vietnam’s vague laws have caused problems for certain foreign investments, he added.

Although Vietnam is regarded as a potential market, a number of firms believe that the current situation is not suitable for franchises. Local banks are tightening loans with high interest rates, with new firms unable to access loans and finding space in Hanoi or HCMC to do business is not easy.

Provinces to set aside stock for Tet

Cities and provinces nationwide were set to reserve a significant volume of essential goods and foodstuff worth VND2.64 trillion (US$126.5 million) to serve consumers during the upcoming Tet (Lunar New Year) Holiday under a price- stabilisation programme, the Ministry of Finance (MoF) announced on Thursday.

An official of the Price Management Department under MoF said that the figure was much higher than that of VND950 billion ($45.5 million) spent by cities and provinces over the Tet holiday last year.

According to the department, the programme has so far attracted 244 businesses from 47 cities and provinces to participate. Of this number, 61 companies will use their own capital to run the programme without support from the State.

Under the programme, businesses provide cheaper priced-commodities via two distribution channels. The first channel, accounting for 30 to 40 per cent of the total supplies, is aimed at low to mid-income families, while the other focuses on wholesalers, trade centres and supermarkets.

In terms of pricing, businesses involved in the programme will supply commodities at prices 5 to 15 per cent lower than those on the market.

According to HCM City's DoIT, the city now has 3,722 points of sale (POS) under the local price-stabilisation programme.

In addition to this programme, the city held a "2011 Promotion Fair" last month with 360 booths from 210 businesses of food, textile-garment, electronics and footwear. The fair offered 4 to 49 per cent discounts for products.

Businesses in HCM City also served lower-priced-products for workers and consumers at the industrial and processing zones located on the outskirts of the city.

These companies will not be allowed to raise prices if the market prices go up. Also, they must reduce their prices by more than 5 per cent if the market prices go down.

Deputy director of HCM City's Department of Industry and Trade (DoIT) Nguyen Van Dong said that his department would provide favourable conditions for businesses to search for goods in other provinces to ensure low and stabilised prices. He also promised to conduct regular supermarket inspections and price stabilisation shops to prevent speculation.

MoF said that businesses involved in the programme would be allowed to enjoy zero per cent interest rates on bank loans. Compared with banks' current high lending interest rates over 20 per cent, these companies are indeed given priority.

According to MoF, HCM City is the leading city involved in these activities and was the first to run the programme in 2002. Meanwhile, several other northern cities and provinces such as Ha Noi, Thai Nguyen, and Bac Giang and the Central Highland province Kon Tum started implementing the programme in 2008.

Footwear firms face stiff export hurdles

The footwear industry is facing a lot of difficulties including labour shortages and a reduction in export orders, says Truong Thi Thuy Lien, director of shoemaker Lien Phat Co Ltd.

Lien was speaking on the sidelines of a seminar that sought to find ways for the footwear industry to overcome challenges and grab opportunities.

The seminar was organised by the Viet Nam Leather and Footwear Association and Dun&Bradstreet – a global business information provider – yesterday in HCM City.

The public debt crisis in the US and EU had greatly affected consumers' mindset in these countries, leading to a reduction in export orders, Lien said.

Export volumes to the US and EU markets in the first quarter of next year is expected to fall 15-20 per cent over this year.

In addition, the labour-intensive industry was facing a severe shortage of labourers, Lien said, adding that many footwear producers were struggling to execute their signed export orders while others were not willing to sign new contracts for fear they would not have workers to fulfill them.

She and other enterprise leaders said that higher input costs this year were also causing problems.

"To overcome these difficulties, we have restructured our company's production, cut all unnecessary costs and reviewed our investment portfolio," she said.

Currently footwear enterprises were trying to remain operational and retain their work force; they did not dare to think of profits, she added.

Emmanuel Atienza, director Asia Pacific for Dun&Bradstreet in Asia Pacific region, introduced to more than 100 footwear producers an "Online Trust Solution" (an electronic trademark) to help local companies establish credibility with prospective customers.

Meanwhile, the Vietcombank promised to help reduce financial pressures on footwear enterprises with a variety of financial support packages that will, among other things, facilitate international payments and short-term loans.

Viet Nam earned US$4.7 billion from footwear exports in the first nine months of the year, a year-on-year increase of 31 per cent, with the US and EU being the two largest importers.

VN looks to attract Saudi funds for infrastructure

Viet Nam is seeking to attract more investors from Saudi Arabia to participate in new transport infrastructure projects, especially in seaports, airports, highways and railways, said Finance Minister Vuong Dinh Hue.

Hue made the statement while welcoming Vice President and Managing Director of the Saudi Fund for Development Yousef Ibrahim Al-Bassam in Ha Noi yesterday.

Hue said he highly valued the visit by Al-Bassam and his entourage to Viet Nam. He said Viet Nam was looking to develop its infrastructure and needed a great deal of capital. He said he hoped that the Saudi Fund for Development would agree to increase the number and scale of loan projects to Viet Nam.

Al-Bassam expressed his pleasure at the signing of two agreements on social welfare projects with Viet Nam and said a group of Saudi Arabian experts would visit the country to discuss new education and rural development projects.

Last Tuesday, the Finance Ministry signed loan agreements with the Saudi Fund for Development on a $US14.5 million project to equip a hospital and medical training centre in northern Bac Kan Province and an $11 million project to provide facilities for vocational training in the central province of Ninh Thuan.

Customs aims to improve standards

The Customs Department targets meeting standards equivalent to developed countries in Asia by 2020, according to a source from Viet Nam General Administration of Customs (VGAC).

To reach this goal, the VGAC has developed a strategy to ensure that the sector develops internationally standardised customs procedures, based on IT applications and centralised data processing.

The sector will have professional customs forces and modern equipment that can perform effectively, thus helping business activities, tourism development, foreign investment, national security, social order, and protection of national interests as well as organisations and individuals' rights and obligations.

The VGAC scheme also specifies the main tasks that the sector must do to realise the objectives.

The customs sector will complete a legal framework in conformity with the country's administrative reform principles, as well as international standards and commitments.

In addition, customs procedures and management rules must be simplified and adhere to international standards and practices.

A clearance database will be created at the customs department level, and a one-stop-shop service will be put in place. The customs offices will also be part of Asean's one-stop-shop programme.

Under the plan, management skills will be aligned with those of regional countries.

The sector also plans to reorganise customs offices with the aim of centralising services in each office, similar to one-stop-shop. State administrative ability will also be improved.

Customs officials will be expected to exhibit professional ability and perform their duties in a transparent manner, and adapt quickly to technology changes and the international environment.

IT application will also be important for the sector to become modern organisation.

That work will include building a modern IT customs system based on centralised data processing and processing of e-documents, e-manifests, e-payments and e-certificates.

The plan calls for the building of regional data processing centres and establishing electronic gates with related offices to facilitate information exchange.

Immediate tasks include building key customs' branches nationwide (sea border gates, airports, land border gates, key economic zones) by 2015.

E-customs procedures and e-customs services will also be used for 60 per cent of imports and exports and 60 per cent of enterprises.

In the next four years, customs clearance time is expected to equal the average time of developed ASEAN countries in 2010. The aim is to be at the level of developed countries by 2020.

This year, the customs sector saw many achievements in administrative reform.

Seven more provincial and city customs departments have begun using e-customs procedures, making the number of customs agencies using e-customs procedures to 20, among the total 33.

As a result, 42,381 enterprises have already registered to participate in the use of customs agencies' e-customs procedures services, and 1.23 million declarations have been handled via this e-service.

The sector has also built technological infrastructure to expand the application of e-customs in new areas. It has also established standards on data exchange with business enterprises.

To facilitate the implementation of e-customs procedures, the sector has purchased rapiscan equipment, cameras and radioactive detectors.

MoIT lowers import quota on petroleum for efficiency

The Ministry of Industry and Trade (MoIT) has decided to reduce the petroleum import quota for this year to approximately 9.98 million tonnes from the earlier 11 million tonnes.

Among 13 domestic firms eligible for petroleum imports, only Viet Nam Air Petrol Limited Company was allowed to buy an additional 185,000 tonnes from previous 335,000 tonnes.

Nine enterprises were assigned decreased quotas while three other firms maintained their past quota.

The Viet Nam National Petroleum Corp (Petrolimex) received the largest import quota reduction with 459,000 tonnes. It was followed by an affiliate of the Military Petroleum Corp with 300,000 tonnes and MeKong Petroleum Joint Stock Co with 40,000 tonnes.

Despite the import quota reduction, MoIT still requested businesses to well-ensure a regular supply to their distribution networks and maintain a minimum flow reserve.

The domestic real demand for petroleum increased by only 8 per cent this year, far less than the earlier forecast, Deputy Minister Nguyen Cam Tu told online newspaper Vnexpress.

Meanwhile, the Dung Quat oil refinery's better-than-expected production output had also resulted in an adjusted petroleum import quota, Tu said.

Regarding sufficient supply, a higher import quota might result in a larger inventory. This would affect effectiveness of business activities, Tu said.

Plastics industry urged to go local

The Ministry of Industry and Trade and the Viet Nam Plastics Association have called on the plastics industry to focus on producing raw materials and additives in order to reduce imports.

The industry imports 70-85 per cent of resins and additives, and imports have increased an average of 15-20 per cent per year over the past 10 years, according to the association.

However, this goal, part of the development plan for the plastics industry through 2020, may not coincide with the targets of enterprises in the industry.

An Phat Plastics and Green Environment Joint Stock Co in the northern province of Hai Duong has had high growth in exports and planned to build one or more manufacturing facilities to produce products for export. Yet the company had to stop using locally-sourced recycled plastics as raw materials since the recycled material proved of unstable quality for production, said a representative of the company.

Tien Phong Plastics Joint Stock Co had invested millions of US dollars to produce plastics pipe with a diametre of 1,000mm to serve major construction projects in Viet Nam, but would pay more attention in the future to finding new markets and new sources of raw materials, the company said.

The naton's plastics industry exports products to 55 foreign markets, with last year's exports valued at US$1 billion, an increase of 20 per cent over the previous year. Packaging products accounted for half of the export revenue, followed by household items (15 per cent) and plastic parts (10 per cent). The industry expectes to reach a total output of 4.1 million tonnes of plastics products this year.

According to the ministry, the plan for the industry aims to raise its industrial production value to VND78.5 trillion ($3.81 billion) by 2015 and VND181.57 trillion ($8.81 billion) by 2020. It targets an annual export growth rate of 15 per cent to reach $2.15 billion by 2015 and $4.3 billion by 2020.

Real estate funds may boost investment

Property analysts are calling for the establishment of real estate investment trust funds (REITs), saying they would yields practical benefits to the market and investors.

Like other funds, REITs can be publicly traded or privately held. Public REITs may be listed on exchanges like shares.

A senior World Bank expert said REITs were an effective channel for investment, development, and management of earnings from real estate, hotels, apartments, and other property.

Individuals can buy into the funds, even in small quantities, and have a source of regular income from dividends because 90 per cent of revenues have to be distributed to shareholders.

At a recent conference in HCM City, experts in real estate and construction spelled out the many advantages offered by REITs and exhorted property investors to consider them for mobilising funds.

Nguyen Van Hoang, CEO of the VREIT Management, said REITs would create safe, long-term investment opportunities.

Dividends could be lower than from shares but were higher than from government bonds, he said.

Phan Thanh Mai, general secretary of the Viet Nam Real Estate Association, agreed, saying REITs could make a significant contribution to the development of the country's property market.

Officials from the construction ministry said establishing REITs would help overcome the hurdles related to raising capital for housing development.

Housing development now relied on bank loans and a little bit on public funds.

REITs would mobilise disposable funds with small investors and households, they said, but for that they should get tax and other breaks.

REITs had been developing strongly around the world, but remained a new concept in Viet Nam which lacked a comprehensive legal framework for establishing and operating them.

An REIT market had to be created soon to facilitate development of not only commercial housing but also social housing.

This was because REIT could help social housing projects tap the market, helping ease the pressure on public funds.

Steel firms deny dumping, subsidies

Vietnamese steel pipe manufacturers and domestic steel companies are not dumping products in the US market and do not receive subsidies, the Viet Nam Steel Association (VSA) has affirmed.

Viet Nam would be willing to take the matter to court, it added.

The announcement was made after members of the US Circular Welded Carbon-quality Pipe (CWP) Association asked the American Commerce Department and the US International Trade Commission to conduct anti-dumping and anti-subsidy inspections on steel pipes imported from Viet Nam, India, Oman and the United Arab Emirates.

CWP products from these countries were threatening the US industry, said association members.

Talking about the potential lawsuit, VSA chairman Pham Chi Cuong said that 10 Vietnamese steel manufacturers were on the list and "some of them had never directly exported their steel pipe products to the US."

"However, they are ready to pursue the lawsuit because they want to protect their prestige to ensure the long-term co-operation with US partners," he said.

"Vietnamese CWP products were cheaper than their US counterparts because Viet Nam was able to import cheap raw materials from Asian countries."

He added that Government policies complied to help steel companies were entirely in accord with the country's commitments with the World Trade Organisation and international economic law.

According to the association, Viet Nam was estimated to export around 1.87 million tonnes of steel and steel ingot this year, a 44.5 per cent increase over last year.

Gamuda City project on track for completion during 2012

The US$258 million Gamuda City project in Hoang Mai District in Ha Noi is on course for completion next year.

The project, managed by Gamuda Land Viet Nam, involves the building of an international-standard park surrounded by a number of commercial developments (namely Gamuda Central, Gamuda Plaza) and residential developments (Gamuda Gardens, Gamuda Lakes).

The Yen So Park consists of cultural gardens, three parks and celebration square all constructed around Yen So Lake. The cultural gardens and traditional park are 95 per cent complete.

The Gamuda City project also includes the Yen So sewage treatment plant, which will be able to treat half of Ha Noi's waste water coming from the Set and Kim Nguu rivers. Treated water will eventually flow into Yen So Lake and the Red River.

The treatment plant is expected to be fully operational early next year.

On receiving an investment licence to construct Gamuda Gardens, a key township component in Gamuda City, Cheong Ho Kuan, the general director of Gamuda Land Viet Nam, said: "The first phase of the Gamuda Gardens development will be officially launched before the end of this year and it will be exclusively conducted by Gamuda Land Viet Nam Real Estate Trading Floor."

Gamuda Gardens features more than 2,000 homes (including villas and apartments) and community facilities such as a recreational club house, public and international schools, kindergartens, a medical centre and neighbourhood shops.

"Upon completion, Gamuda City will transform south Ha Noi into one of the most dynamic integrated commercial and residential townships, stimulating investment opportunities as well as upgrading the living standards of the people of Ha Noi befitting the Ha Noi Master Plan 2030," Cheong said.

Gamuda Land Viet Nam Limited Liability Company was established in 2007 to manage the rehabilitation of Yen So Park.

Market heats up in eastern HCM City

The property market in eastern HCM City is expected to heat up as new infrastructure projects are completed or put into use, according to Dau tu (Vietnam Investment Review).

According to property experts, HCM City property projects, in particular the luxury apartment segment, are expected to be especially attractive to developers because of infrastructure projects that are to be completed soon.

HCM City is focusing on developing infrastructure in eastern areas, including the completion of the Thu Thiem Bridge.

The Vo Van Kiet Highway signals greatly improved accessibility between the city centre and outlying areas. Thu Thiem Tunnel is expected to be put into use by the end of next month.

Some other projects such as Phu My Bridge that links District 2 and District 7 have also been put into use, and the Eastern Belt Road connecting District 2 and District 9 has also opened for traffic.

The HCM City-Long Thanh Highway is underway, while Ben Thanh – Suoi Tien Metro Line project has kicked off.

Previously, due to inconvenient transport conditions, Thu Thiem was mostly an isolated peninsula across from downtown HCM City.

However, the 1.49km-long Thu Thiem Tunnel, together with five bridges, will link the 737-ha Thu Thiem area with the city centre and enable it to become a city centre in the future, when HCM City is projected to be developed eastwards.

These important projects are a driving force in helping boost socio-economic development and the real estate market in the eastern part of the city.

This effect is prominent in District 2, which has become a key development centre not only in HCM City but also the entire nation.

By the end of October, there were more than 260 investment projects in the property sector in District 2.

Some luxury property projects have attracted a lot of attention from developers such as Estella (Keppel Land), Vista (Capital Land), and Blooming Park (Prudential Land).

The Kim Cuong Island project invested in by Binh Thien An Property Co has increased prices four times since September last year, currently selling for US$4,000 per square metre.

HCM City's apartment price ranges from VND6 billion ($288,461) to more than VND80 billion ($3.8 million).

However, the investor said 70 per cent of apartments have found owners. The special apartments priced $1-3 million were also occupied.

New infrastructure development means rising property values, the company said.

FPT makes arrangements to lower debt

To reduce its debt level, software giant FPT earlier this week decided to offer bondholders an option to convert to shares.

FPT issued 1,000 bonds and warrants in 2009, worth a total of VND1.8 trillion (US$85.5 million) and paying a yield of 7 per cent per year. It will now allow holders of this paper to swap one bond for 10 shares – equivalent to a payout of VND92,025 ($4.20) per bond, up from the VND69,000 ($3.20) offered last year.

FPT deputy director Nguyen The Phuong said the offer to convert bonds was part of its overall strategy to optimise its of capital.

"With our OneFPT strategy, we will focus on investment in our core lines of business and limit financial investments," Phuong said. "This will help limit any dilution of shares, creating long-term benefits for shareholders."

FPT has accumulated about VND2.5 trillion ($119 million) in cash-on-hand as of September 31 and also expects EVN Telecom to repay loans totalling VND708 billion ($33.6 million). Yet a number of investors have alleged that FPT was struggling under the weight of debts worth VND7.8 trillion ($371.4 million).

"Converting the bonds is a way to retire some of this debt before maturity," Phuong said.

"The warrants have lately become valueless as FPT shares are trading at around VND49,000 per share," said a VietCapital Securities Co report.

"When actual interest rates on the market are higher than bond yields, the intrinsic value of the bonds is lower than face value," the report said. "Therefore, FPT can buy back its bonds at a discount, it also eliminates the risks of stock dilution."

With a discount rate of 14 per cent, the report estimated the intrinsic value of the bonds at about VND1.7 trillion (nearly $81 million), or 95 per cent of the issue price.

"Bondholders will probably agree to sell as they want to get their money back," the report said.

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