BUSINESS IN BRIEF 23/3

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VietnamNet English - 26 month(s) ago 8 readings

Poor sales predicted for air-con, cooling appliances



Manufacturers and retailers of air-conditioning and cooling appliances are holding a pessimistic view on sales growth this dry season as the economic difficulties are still biting.

A source from a company that imports Japanese products told the Daily his company had seen no rise in air-conditioning and cooling products imports and this was a sharp drop versus 2010, when sales rose to record highs. He said it was hotter this year but the economic woes had dampened demand for air-conditioners.

Another factor that has forced the company to delay imports is a huge inventory carried over from last year. “To my knowledge, some firms last year offered great discounts to encourage electronics stores to buy their air-conditioners. But the centers witnessed a slump in sales and the lack of warehousing space for inventory compelled them to bring these air-conditioners to makeshift storage areas along the Red River,” he said.

Due to this bleak market outlook, his company will not launch any new product this year. He said revenues are barely enough to cover costs of researching, advertising and promoting new products.

A general sales agent identified as Tuan said he has not received any new product sample from manufacturers.

Le Pham Anh Thy, marketing director of Saigon-Nguyen Kim Shopping Center, said the retailer this year will boost supply of popular products with soft prices, such as air-conditioners priced at VND7-9 million per unit or refrigerators at VND3.5-6 million each. The shopping center will launch many promotion programs to lure budget-conscious consumers as well.

Thy said demand for air-conditioners was growing because of hot weather.

However, consumer preferences have changed. Unlike in previous years when hi-end products made up 60% of sales volume, sales of economy products have grown stronger than mid- and hi-end items.

Bui Tan Cuong, marketing director of Thien Hoa Interior Furniture and Electronics Center, said Thien Hoa would introduce several new electronic fans with advanced technology and at varied prices. Moreover, to stimulate sales, the retailer kicked off the annual summer sales program in mid-March, two months earlier than usual.

Air-conditioning and cooling appliances prices are now higher than last year, according to Saigon-Nguyen Kim. Particularly, air-conditioners have marked up by 15-20%, while refrigerators have added 10% or so.

The reason is attributed to the undersupply caused by the flooding in Thailand, where many Japanese electronics factories are based.

Many electronics retailers have hiked prices since the pre-Tet period.

As fuel prices have edged up by 10% and power prices will rise soon, Cuong of Thien Hoa said suppliers were seeking to increase prices. A number of them actually have difficulty ensuring inputs but some others will take advantage of the situation to push up prices.

Several electronics centers said the supply of electronics and cooling products from Thailand has resumed after an interruption ignited by the Bangkok flooding in October last year.

Vietnam has potential to expand garment exports to France

At a seminar to promote textile and garment exports to France and other EU countries, held in Ho Chi Minh City last week, French experts affirmed that Vietnam had vast potential and opportunity to expand exports to France.

The EU market is ranked second after the US for Vietnam’s textile and garment manufacturing industry, and export turnover to France was US$202 million in 2011.

Ms. Alice Baey, global purchasing director of the Casino group, one of the biggest European retailers with about 10,000 stores in nine countries, said that textile and garment exports from China and Bangladesh have occupied a large market share in EU countries and in France. However Vietnamese textile and apparel have many opportunities to expand exports to France, which wants to diversify supply sources.

Variety and excellent designs are important factors to penetrate the French fashion market, added Ms. Alice Baey.

French Company Oxylane Group-Decathlon, which specializes in production and retailing of sports goods all over the world, is one of the biggest partners of Saigon Garment Manufacturing Joint Stock Company (Garmex Saigon) for the last ten years. Decathlon now wants to expand its operations and look for more suppliers in Vietnam

Casino group is a bridge for bringing Vietnamese textile and garment, and other goods to foreign markets including EU.

France is a fastidious market with a high demand for quality, colour, fashionable designs and fast delivery time, said Pham Xuan Trinh, vice director-general of Phong Phu Home Textile.

Jo Bueters of Casino Group pointed out that businesses must meet criteria such as better product quality, design and delivery to enter this market.

Hanoi attracts nearly 120 million USD in FDI

Hanoi attracted 39 foreign directed investment (FDI) projects capitalised at nearly 120 million USD in the first quarter of this year, according to the city’s Statistics Department.

These represent a two percent increase in the number of projects and a 5.9 time rise in investment capital compared with the same period last year.

The FDI increase shows a positive sign for the city in the context of national and global economic downturn.

The department also reported that the city attracted over 35.6 trillion VND of development capital, a rise of 10.5 percent over the same period last year.

Indonesia to invest in Vietnamese food

The Indonesian Government plans to invest in Vietnam ’s food sector, Indonesian Minister of Agriculture Suswono said in a press briefing in Jakarta about his Vietnam visit from Mar. 15-16.

He said during his visit, on the occasion of participating in the 31 st United Nations Food and Agriculture Organisation (FAO) Regional Conference for Asia-Pacific, he worked with Vietnamese Minister of Agriculture and Rural Development Cao Duc Phat over food security related projects in Vietnam .

Indonesia is ready to cooperate with Vietnam in researching and developing some hybrid rice varieties, Suswono said, adding that Vietnam has great potential and rich experience in agriculture, highlighting its position among top world rice exporters.

Suswono expressed his admiration toward Vietnam in harvesting as many as three abundant crops from a total area of 4.3 million ha per year, producing 10 million tonnes of rice annually. Meanwhile, Indonesia , with total cultivation area of 8 million ha, only harvests two crops per year with an average yield of 5.1 tonnes per hectare and has to import more than one million tonnes of rice every year.

The Indonesian Minister said he hopes that through cooperation with Vietnam in developing new rice varieties, Indonesia can increase its rice output to 9-10 tonnes per hectare per year, fulfilling the country’s target of ensuring domestic food security and exporting 10 million tonnes of rice annually by 2015.

Indonesia also cooperates with Cambodia and Myanmar in the area of food, he said.

Vietnam's Mar-Apr diesel imports up nearly three-fold from Feb

Vietnam is set to import nearly three to four times more diesel in March and April than in February, as importers seek additional volumes to fill a demand build-up after an import tax was scrapped this month, industry sources said on Tuesday.

The country's top oil importer and distributor, Petrolimex, and state-owned oil marketer, PV Oil, are seeking a total of 78,000 tonnes of gasoil for delivery over March and April in two separate tenders, they said.

This is in addition to the 96,000 tonnes of gasoil already purchased by Petrolimex, PV Oil and Saigon Petro, for March and April.

With gasoil prices hovering at their highest in more than 10 months, driven mainly by higher underlying crude prices, Vietnam had stayed away from the international market for the early part of this year.

In February, Saigon Petro bought just 16,000 tonnes of gasoil while Petrolimex skipped spot purchases. Petrolimex had also skipped term imports of gasoil in the first quarter of 2012, due to lower demand caused by slower economic growth.

"When prices are up, importers just wait and use their inventory to serve the market; when prices go down they will import again, but you can't wait so long," said a source based in Vietnam, referring to the renewed buying from importers for March and April in order to meet pent-up domestic demand.

Petrolimex is expected to seek gasoil for the second quarter of this year soon.

Vietnam scrapped the import duty on diesel in the beginning of March, after it let fuel distributors raise retail prices of petrol and oil products by up to 12 percent.

While the rise in retail prices is still inadequate for importers to break even on diesel and gasoline sales, the higher prices make it more attractive for retailers to sell the products, in turn driving up demand, industry sources said.

For retailers to break even, retail prices have to rise 6,000 dong (29 cents) per litre instead of the increase of 1,000 dong per litre made by the government, they added.

Rising oil prices pose a risk as transport prices contribute nearly 10 percent to Vietnam's basket of consumer prices, bank ANZ said in a report early this month.

Garment and textile exports to EU plunge

The volume of Vietnam’s garment and textile exports to the European Union (EU) market saw a year-on-year reduction of 30 percent during the January to mid-March period, said the Vietnam Textile and Garment Association (Vitas).

Public debt crises and EU consumers reducing their spending were reasons for the decreased export level, said Vitas.

EU importers are shifting their contracts from Vietnam to Cambodia, Laos and Bangladesh to avoid the import tax of 10 percent, as middle-income Vietnam no longer enjoys most favoured nation (MFN) status, the association said.

To boost garment and textiles exports, the Ministry of Industry and Trade suggested businesses focus on the number of free-on-board (FOB) and Original Design Manufacturing (ODM) contracts and using more local materials for production.

Businesses reveal weaknesses

Vietnamese businesses are said to be weak in management skills, competitive capacity, human resources training, technological knowledge and solidarity.

Vietnam has more than 400,000 businesses, 95 percent of them being small and medium-sized, not to mention a large number of extremely small businesses in the unofficial economic sectors.

Over the past few years, under the impact of the global economic downturn, many domestic businesses had to declare themselves bankrupt or suspend operations after suffering great losses and failing to pay high interest rates on bank loans.

Judging from the real situation in the country, former Deputy Prime Minister Vu Khoan says Vietnam is a small production nation without a business foundation in history. Those engaging in the market even include cadres, ex-servicemen, or small traders.

According to a survey on more than 63,000 businesses across the country, 43.3 percent of business leaders have education qualifications lower than the secondary school level. The number of employers having master's degrees account for only 2.99 percent. Most employers and managers of private enterprises have yet to be trained professionally in socioeconomics, culture, laws as well as business administration skills, especially in the context of the country’s international integration.

These limitations can be seen clearly in their improper implementation of regulations on tax payment, personnel work, financial management, product quality, and industrial property.

Not a few businesses bite the dust as their operations are only based on available capital and personal experience without a strategic vision for long-term development.

Pro. Dr. Do Duc Binh from the National Economics University says Vietnam is in dire need of high-quality human resources and highly professional business managers. The role of business management and ownership is not clarified, so an executive director can also function as the employer, Binh notes.

According to Employment Consultancy Company VietnamWorks, Vietnam can meet only 30-40 percent of the demand for high-quality human resources.

Dr. Bui Thanh from the Ho Chi Minh National Academy of Politics and Public Administration underscores the need to sharpen the competitiveness of human resources in improving the quality of products and services.

He notes that the number of Vietnamese highly skilled workers made up only 36.4 percent of the total workforce in 2009.

In comparison with other countries, the quality of Vietnam’s human resources is still low but the number of untrained workers involved in the processing industry, hotel and restaurant services, tourism and agriculture is very high.

Vietnam’s advantage over other countries is its abundant cheap workforce, but this is becoming less attractive than before. In recent times, it has kept falling down the scale of the Global Competitiveness Index (GCI) in terms of high-quality workers.

Vietnamese businesses are based on low-cost labour to attract investment in labour intensive sectors such as garments and textiles, leather & footwear, seafood processing and electronic assembly industry. However, this competitive advantage will hold no attraction once the country is moving closer to the Global Value Chain without any negative signs of unstable growth and social instability.

In regard to the renewal of technology in production, Pro.Dr Do Duc Binh says that most Vietnamese business are using technologies which are outdated for two or three generations by international standards. In his view, the continual use of old technologies will only make domestic businesses less competitive in the long-run.

Vietnam is a major exporter of agricultural products but half of its processing businesses are still using obsolete technologies.

As a matter of fact, Vietnamese private businesses are finding themselves in a difficult position to compete with foreign partners, even in the domestic market, let alone in the global market. Weak competitiveness makes it impossible for them to provide high-quality products and services at reasonable prices and to improve their advertisement and marketing, trademark building, and distribution networks.

No doubt, most of them are now in limbo except some operating on a small scale.

Major cities tackle trade deficit

The capital city faced a trade deficit of up to US$2.91 million while HCM City gained a trade surplus of US$58 million in the first quarter this year, according to statistics office estimates.

The Hanoi Statistics Department said the capital fetched an export turnover of roughly US$697 million in March, down 13 percent over the same period last year. It raised the city’s export figure in the first three months to more than US$2 billion, down 2.8 percent.

The city, meanwhile, spent roughly US$1.82 billion on imports in March, down 14 percent over a year ago. Its import value in the first quarter totaled US$4.94 billion, down 15.4 percent.

The department attributed the city’s export decrease to a falling demand from importing countries, especially in the US, China and the EU.

The city’s export of agricultural products in the first quarter decreased sharply by more than 40 percent, with rice exports declining 42.2 percent to just US$69.4 million.

HCM City, the country’s largest economic hub, spent roughly US$6.2 billion on imports in the first three months, up 7.5 percent. It earned nearly US$6.25 billion from exports, up 8.7 percent, thanks to a rising export turnover based on several key staples.

Despite a decrease of 7.8 percent in volume, export value of crude oil in Quarter 1 still surged 9 percent to US$1.68 billion thanks to a price hike of 18.2 percent.

HCM City’s garment and textile exports also surged 8.9 percent to US$545.8 million. However, the industry’s exports to the EU market was showing signs of decline, said Vice Chairman of the Vietnam Textile and Apparel Association Pham Xuan Hong, adding that three-month exports were estimated to have slid 25-30 percent year on year.

Export turnover of seafood and footwear also surged 7.5 percent and 8.6 percent to US$98.5 million and US$142.6 million, respectively.

Agribank teams up with Thai bank

Thailand’s Kasikornbank has signed a service co-operation agreement with Vietnam Bank for Agriculture and Rural Development (Agribank), in its bid to extend its presence across ASEAN countries ahead of the regional single market.

This agreement is aimed at promoting trade and investment of both nations in preparation for the launch of the ASEAN Economic Community.

It was signed in Vietnam by Songpol Chevapanyaroj, executive vice president of Kasikornbank, and Kieu Trong Tuyen, deputy general director in charge of Agribank’s Board of Management.

“Vietnam is one of the top priority markets, where we must establish a strong and extensive network to accommodate Thai investment in the country, largely in the manufacturing sector,” said Songpol.

Cheaper labour costs now attract a large number of Thai companies to Vietnam. And trade and investment value is expected to rise when ASEAN becomes a single market in 2015.

In 2011, KBank forged a partnership with Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank), which showed the highest earnings last year thanks to its strength in overseas transactions.

Agribank, entirely owned by the Government, owns the largest branch network in Vietnam with over 2,300 branches.

KBank has so far established partnerships with banks in Indonesia, Singapore, Laos and Vietnam.

Ambitious plan to develop State Audit

International donors have pledged to help the State Audit of Vietnam realize its ambitious development plan for the 2012-2015 period.

A conference on supporting the State Audit in carrying out its action plan was held in Hanoi on March 20 attended by representatives from the UK Department for International Development, the World Bank (WB), the European Union, the Asian Development Bank, and the Canadian International Development Agency.

The plan is divided into two phases: from 2012-2015 and from 2016-2020. It focuses on six pillars including completing the legal framework for the State Audit’s organization and operations, developing its human resources, planning audit and technical application strategies, managing audit activities, applying information technologies, and boosting international cooperation.

Addressing the conference, State Auditor General Dinh Tien Dung confirmed his organization is giving top priority to realizing this development plan in order to become a modern audit agency.

A WB representative said that the State Audit of Vietnam should establish a management board to oversee the project, adding that the WB is committed to working with the top audit agencies around the globe to garner support for this project.

19 countries and territories to join Vietbuild 2012

The International Exhibition of Construction, Building Materials, Housing and Interior Decor (Vietbuild) 2012 will take place in Hanoi on March 24-28.

This year’s event will see the participation of 450 businesses from 19 countries and territories.

The expo will feature 1,350 booths showcasing building materials, electrical equipment, interior decoration and industrial machinery.

Many new real estate projects and modern technology will also be introduced.

A forum to help businesses develop orientations and strategies will take place during the event along with a seminar on Vietnam-China exchanges.

CPI up 0.2-0.4 pct in March

The country’s Consumer Price Index (CPI) in March is expected to increase slightly, around 0.2-0.4 percent, following a sharp fall in both Hanoi and HCM City.

Hanoi’s CPI rose by 0.19 percent compared to February, while in HCM City it was up 0.12 percent.

The CPI was believed to go up considerably, driven by a dramatic rise in the prices of petrol and gas in early March. However, inflationary measures are paying off, causing the CPI to slow down.

In the past month, the prices of rice, clothes and footwear were stable, while food prices fell slightly. The price of gold was down 0.11 percent and of the US dollar decreased by 0.67 percent against February.

By contrast, the CPI in Long An province dropped 1.7 percent compared to the previous month, becoming the first locality to record deflation.

The overall price of food in the province was down 4.73 percent, with the price of rice falling sharply, by 9.12 percent.

One-fifth of Vietnamese have bank accounts

About 20 percent of the population in Vietnam use banking services, with non-cash payments accounting for 14 percent of the total payments made, said Bui Quang Tien, Director of the Payment Department under the State Bank of Vietnam (SBV).

A Tien released these figures at a press briefing in Hanoi on March 19 about a banking conference and expo (Banking Vietnam 2012), scheduled to take place in Hanoi on May 25-26.

According to the SBV Payment Department Director, the entire banking system in Vietnam has provided nearly 42 million payment cards and installed 13,500 ATMs.

He said that the Prime Minister has approved a plan to boost non-cash payments in Vietnam during the 2011-2015 period, aimed at diversifying banking services and promoting e-payments.

According to the plan, cash payments will be reduced to less than 11 percent of total payments in Vietnam by 2015, while the number of citizens with bank accounts will reach 35-40 percent of the country’s population.

By 2015, it is expected that 250,000 Point of Sale (POS) locations will be available in the domestic market and 200 million banking transactions will be carried out each year.

The upcoming Banking Vietnam 2012 event has the theme “Information Technology towards Effective Banking Governance and High Quality Banking Services”. Future strategic planning for the banking sector and new trends in banking technology will be discussed at the expo, as well as non-cash payments, bank governance, risk management, and security solutions for better banking services.

The event is being jointly held by the SBV Information Technology Department and the International Data Group (IDG).

Int’l Trade Fair to be held in Hanoi

The 22nd Vietnam International Trade Fair will be held in Hanoi from April 4-7 on the theme of “Vietnam – Cooperation and Development”.

Along with the participation of local businesses, Vietnam Expo 2012, is expected to attract companies from more than 20 countries and territories including Belarus, the US, Russia, China, Japan, India, Thailand, Singapore, Indonesia, the Republic of Korea, Taiwan, Hong Kong, Malaysia, Indonesia, Myanmar, Cuba and Cambodia.

On display are agricultural products and processed food, interior and exterior decoration, handicrafts, fashions, electronics, IT products, machinery and equipment, building materials and services.

Seminars on trade and export promotion will be held to offer the chance for local and foreign businesses to share experience and establish partnerships.

The fair will also include business contract signing ceremony, medal award ceremony and business tours.

Lang Co bay’s largest tourism area to be operational

Laguna tourism area, the largest of its kind in Lang Co bay, in the central province of Thua Thien-Hue, will be put into trial operation in early June this year.

According to Singaporean investor Banyan Tree, the $875 million tourism area is expected to officially open on Sept. 1.

Two five-star hotels, the Banyan Tree resort with 120 rooms and the Angsana Resort with 320 rooms and a 18-hole golf course have been built in the first phase of the project, which started in August, 2009.

Once fully completed, Laguna Hue tourism area will be a venue of seven five-star hotels with 2,000 rooms, 1,000 villas, convention and trade centres and a golf course covering an area of 280 ha.

Business challenged to achieve growth by caring

A seminar to discuss the relationship between enterprises, the environment and community will take place in Ho Chi Minh City today.

The British Council organised seminar “Sustainable Business Practice” aims to explain how social enterprises can engage with big business for mutual benefit through corporate and social responsibility (CSR) programmes and wider activities in support of socio-economic development.

The event will feature prominent Vietnamese corporate and social enterprise leaders alongside government participants.

With the emphasis on social enterprise, not charity, British Council aims to promote the value of social enterprise as a way to developing a sustainable business model where responsible social and environmental behaviour drive the business.

In Vietnam, the British Council is partnering with the Centre for Social Initiatives Promotion (CSIP) and Social Enterprise London, working together in raising awareness of the benefits that social enterprise can offer to the community, they aim to enhance the capacity of local entrepreneurs.

In order to do this task, British Council and related bodies are sourcing practical advice, identifying sustainable funds and finding partners as well as proving training and mentoring programmes based on UK and international expertise.

They also help link local social entrepreneurs with international counterparts in order to share new approaches.

“No business or organisation works in isolation and we all benefit from serving and building links with our wider communities. There’s no doubt social responsibility is not only morally welcome, it also boosts brands, reputation, awareness and loyalty – not just from customers but from staff themselves,” said British Council Vietnam director Robin Rickard.

“Vietnam’s development is a success story that has been noted across the world – we’re looking now for the same entrepreneurs that helped fire that development to look at how their organisations can further contribute to their communities and ultimately their country. We are lucky that Vietnam boasts a number of fine social entrepreneurs who are proving to be excellent ambassadors in this field,” Rickard said.

Local travel firms eye Myanmar market

Although Myanmar is not yet a large market of HCMC’s tourism, local travel firms have started to shift attention to this new frontier with many cooperation agreements signed with Myanmar partners in a visit last week.

Nguyen Thi Khanh, vice chairwoman of the HCMC Tourism Association, said that the association has signed an agreement with Myanmar’s tourism association on exchanging tourists. The agreement will serve as a bridge for the cooperation between firms of the two sides, she said.

“We will firstly focus on providing good tours for Vietnamese tourists to visit Myanmar, and after that will bring tourists from Myanmar to Vietnam. This market is quite new but we see huge potentials,” Khanh told the Daily on Monday.

Fiditourist Co. in the visit last week signed a cooperation agreement to exchange tourists with Myanmar’s leading travel firm Myanmar Tourism Service Company. Fiditourist is one of the first local firms to offer tours to this country and is still operating tours of this kind every month.

“Currently, we are still unable to develop the number of tourists from Myanmar, but in a survey we find that there are a large number of wealthy people who have high potentials for traveling. We expect this market will grow well in coming years,” said Dang Trung Nghia, deputy general director of Fiditourist.

In addition to attracting tourists from Myanmar, tour operators from HCMC also want to attract tourists from third countries to promote the common image “Four Countries-One Destination” of Vietnam, Laos, Myanmar and Cambodia, said Khanh from the tourism association.

The theme “Four Countries-One Destination” that took root in the International Travel Expo 2011 held in HCMC has drawn attentions of many foreign customers. Therefore, the city’s tourism wants to continue exploiting this theme in the expo this year together with boosting the cooperation of firms to lure more international tourists.

According to Khanh, some travel firms also regarded Myanmar as an investment destination as Myanmar is opening its door and the number of tourists is growing, prompting a high demand in tourism services and accommodation.

Besides, Myanmar has pledged to offer incentives for investors, and some firms have considered investing in hotels here.

Saigontourist Holding Company, Vietnam’s leading travel firm and hotel operator, is also inspecting this market. “We have yet to make the final investment decision but is carefully exploring the market and find it full of potentials,” said general director Tran Hung Viet.

HCM City water supplier to need US$2.5 billion by 2025

Saigon Water Corporation (Sawaco) will require some US$2.5 billion by 2025 to build new water treatment plants and upgrade water pipelines in HCMC to ensure the city’s entire population will have access to running water.

Sawaco can now meet water demand of 86% of the city’s population with daily output of 1.6 million cubic meters, Tran Dinh Phu, general director of Sawaco, told Belgian companies at a business meeting in the city last weekend.

Phu said worsening pollution in rivers, huge capital requirements for water supply systems, and poor control of water losses are the biggest challenges faced by Sawaco.

Sawaco is planning to increase the water supply capacity to 3.4 million cubic meters a day, revamp 1,500 km of pipeline, build an advanced management mechanism and cut the water loss ratio from the current 35% to 25% by 2025.

However, all these works will need a staggering US$2.5 billion, most of it to be sourced from official development assistance (ODA) loans.

Sawaco is working on five joint venture projects to build new water treatment plants with a combined capacity of 1.6 million cubic meters a day, namely Thu Duc 3, Tan Hiep 2, Thu Duc 4, Thu Duc 5 and Tan Hiep 3.

The water supplier is mulling using crude water in Dau Tieng and Tri An reservoirs as a backup source due to rising pollution in the rivers that have long been supplying water for the city, according to Sawaco.

Companies turn to mergers to stave off gloomy real estate results

Vietnamese electronics giant Hanel’s acquisition of the Hanoi Daewoo Hotel marks a bold move in the context of Vietnam’s current real estate sector.

Hanoi Electronics Corporation (Hanel) recently bought the entire stake in the formerly South Korean-owned hotel, but details of the deal’s value have yet to be made public.

The Duc Khai Corporation and Phuong Trang Auto Real Estate Investment Joint Stock Company recent sold their New Pearl real estate project on HCM City’s Nam Ky Khoi Nghia Road to the Van Thinh Phat Investment Corp.

Developer Van Phat Hung handed over its stake in HCM City’s Tan Tao project in Tan Binh District to the Khang An Investment Real Estate Joint Stock Company for VND68 billion (USD3.25 million).

Phan Xuan Can, Chairman of M&A consultancy Sohovietnam Real Estate Consulting Joint Stock Company, said it was finalising procedures to take over around 80 real estate projects mainly located in HCM City, Hanoi and Danang worth hundreds of billions of dong.

According to Can, the fall in the real estate prices has pulled down mergers and acquisition prices in the industry, with average deals 30% cheaper than in 2010.

He estimated that a lot of real estate projects would be sold during this year due to investors facing financial difficulties.

“This year may see numerous real estate M&A deals if no solution is worked out to stir up the gloomy market,” he noted.

A recent report by CBRE Vietnam showed that real estate M&A deals in the first nine months of 2011 totalled USD251 million, ranking third after consumer goods and finance industries.

CBRE Vietnam forecast that the year 2012 may be a boisterous period for real estate M&A operations, as the sector attempts to heighten market liquidity and competitiveness.

The company explained that due to the lingering gloom hanging over the market in the past three years, together with tight monetary policies, many real estate companies have become unable to continue their projects and have been compelled to sell some of their projects to fund their operations.

Some others with better financial capacity have opted to sell some of their projects as they want to focus their investment in certain market segments.

Vietnam opts to build roads out of cement instead of asphalt

Despite higher prices, Vietnam will switch to using cement for the construction of transportation projects instead of asphalt.

As part of this effort, the Ministries of Transport and Construction recently signed an agreement to heighten cooperation towards the implementation of this new policy.

According to Minister of Transport, Dinh La Thang, the efficient use of locally made cement in the construction industry is expected to take full advantage of local resources, enhance the quality of transportation works and spur domestic production. In addition, it should minimise the trade deficit, foster energy security and have positive environmental effects, he said.

He estimated a great demand for cement in time to come considering the construction of infrastructure, especially in the north-western region, the flood-prone central region, coastal areas as well as Ho Chi Minh Road Project.

The Minister of Construction, Trinh Dinh Dung, said that the use of cement for the building of roads and highways is conducive to the country's economic situation and its current transportation needs.

“Cement roads can last much longer than those made from asphalt, remaining in a usable state for around 30 years, while asphalt often only lasts for five to 10 years.” Dung shared.

The Ministry of Transport (MoT)’s Department of Science and Technology will pilot a programme using cement for the construction of a 25-kilometre-long road connecting the Hanoi-Haiphong expressway with Cau Gie-Ninh Binh expressway, Thang said.

He said that, in order to make an accurate assessment of the efficiency of cement in the construction of the nation's transportation infrastructure, these materials should be tested on roads of different terrains.

The MoT will request that the Department of Planning and Investment draw up a plan for the switch in use of materials in April 2011, through 2020, with a vision for further development through 2020.

Doosan Vina exports equipment to Turkmenistan

The Chemical Processing Equipment Plant (CPE), a unit of Doosan Heavy Industries Viet Nam (Doosan Vina), has completed a project to export 18 hi-tech pressure tanks and 20 heat exchangers to Turkmenistan. The second and final shipment of the project includes three pressure tanks and nine heat exchangers with a total weight of 560 tonnes.

Covering a 33,000sq.m site, CPE is one of five factories equipped with advanced machines and professional Vietnamese engineers.

Ministry won't cut taxes on cars imported from Laos

The Ministry of Finance has announced a list of commodities imported from Laos not allowed to receive import tax reductions.

The categories include petroleum and bitumen – originated products; cars with more than 10 seats and cars with engines designed for transporting people (opposed to a school of sharks); motorbikes and bikes with supporting engines imported from Laos; cell phones and cordless phones as well as equipment transmitting and receiving audio, images and data.

Thai investors to explore opportunities in HCM City

The Thailand Board of Investment (BOI) plans to take investors to Viet Nam with the objective of expanding investment opportunities in HCM City, blessed with a large number of industrial zones and convenient transportation.

Director of BOI's Foreign Investment Co-operation Office Wassana Mututanon added that the Thai delegation would meet with executives from the HCM City Chamber of Commerce to discuss the general picture of Viet Nam's economy to establish an initial idea for Thai entrepreneurs.

In addition, the Thailand Business Association (TBA) will hold a seminar on investment opportunities while investors will have a chance to visit a joint-venture industrial estate.

The upcoming field trip to Viet Nam is part of BOI's policy to promote Thai trade and investment in neighbouring countries such as Cambodia, Laos, Myanmar and Viet Nam.

Pepsico opens new bottling plant in Dong Nai Province

Food and beverage producer Pepsico last Wednesday inaugurated its new manufacturing plant in southern Dong Nai Province.

Covering an area of over 10ha in the Long Binh Industrial Zone of Bien Hoa City, the US$45-million plant was designed with a capacity of 180 million litres per year.

It was taken over from San Miguel Poor Foods (Viet Nam) last month as part of Pepsico's expansion campaign, said General Director Shekhar Mundlay.

The 6th of its facilities in Viet Nam, the plant will launch carbonated and non-carbonated drinks including Pepsi, 7up, Mirinda, Twister, Sting and Aquafina.

In the past three years, PepsiCo Viet Nam has enhanced its investment in the Cuu Long (Mekong) Delta. Its Can Tho plant has operated since 2009 and Pepsico Bac Ninh is expected to come into operation at the middle of this year.

Innovative solutions for cement industry presented

The latest technology for the cement industry, including automation and energy savings, was presented last week to nearly 100 representatives of cement manufacturers nationwide at a workshop held by Siemens Viet Nam.

The new tehnologies aim to minimise production costs and optimise existing facilities.

Local cement manufactures are experiencing a tough time in maintaining production volume and competitiveness due to the economic downturn and a sharp decrease in demand from the real-estate market.

Fund to distribute over 50% of gains

The Viet Nam Securities Investment Fund (VF1), managed by VietFund Management Joint Stock Co (VFM), will pay out at least 50 per cent of any net profits this year, the fund's stakeholders agreed in their annual meeting yesterday in HCM City.

VFM general director Tran Thanh Tan reported VF1 had a net loss in 2011 of nearly VND828 billion (US$39.4 million). The fund's net asset value (NAV) by the end of last year was about VND1.3 trillion ($61.9 million), equivalent to VND12,983 per fund certificate and down nearly 40 per cent from the start of the year. Due to hardships on the stock market, the fund certificates (VFMVF1) were also being traded at a discount averaging about 45 per cent.

"In nearly three months of this year, with the market rallying, VF1 has regained nearly 20 per cent of its NAV lost last year," he noted.

Tan said that this year the fund would focus on stabilising and increasing its NAV and increasing the liquidity of its investment portfolio. In addition to investing in large-cap shares, VF1 would continue to prioritise a value-oriented investment strategy, investing in companies with good fundamentals, strong cash flows and transparent operations. Meanwhile, it would also continue to adjust its portfolio to balance profit and risk.

Last year, fund assets were allocated towards increasing the proportion of cash, reducing the proportion of unlisted shares and maintaining a reasonable proportion of listed shares. VF1 reduced the proportion of unlisted shares in its portfolio from 16.8 per cent to 10.6 per cent, while increasing the cash ratio from 7.1 per cent at the beginning of the year to 17 per cent by year end.

"Although many forecasts say the market will continue with difficulty this year, positive moves by State agencies in stabilising the economy and restructuring the stock market have opened up new opportunities for investors– especially the circular allowing operation of open-end funds starting in March," Tan said.

VF1 will end its present form of operation in May 2014, he noted, at which time the fund would either convert to an open-end fund or completely terminate its operations. Though no decision has been reached, Tan said, assets would be liquified in prices which were advantageous at that time.

Storage enterprises neglect low-grade rice

The enterprises participating in the program to purchase one million tons of rice for temporary storage are prioritizing buying high-grade rice given the huge demand for this category from the Chinese market.

Director of a storage enterprise in An Giang said the Chinese market now has high demand for the 5% broken rice. Therefore, his company will prioritize purchasing high-grade long-grain rice to sell to Chinese partners, who are seeking to sign export contracts.

He admitted his firm hardly buys the low-grade paddy that is currently in peak harvest season since no new contract has been signed with the low-grade rice importers, such as the Philippines and several African countries.

“We need to be sure there are consumption markets before buying rice for storage,” said he.

Pham Phong Phu, director of Phu Binh Food Co. in Dong Thap, said: “The export situation is very difficult during these months. Since the year’s beginning, my company has exported only thousands of tons, mostly to China and Malaysia.”

A source told the Daily that local enterprises have signed contracts to export some 420,000 tons of rice to China.

Private rice trading firms in Ba Dac wholesale market and An Thanh Dong Industrial Cluster are spending these days delivering rice to traders in the northern region.

Nguyen Phuc Anh, director of Tan Tai III Company in the Tien Giang-based Ba Dac market, said since enterprises started to buy rice for temporary storage last Thursday, the purchasing power, especially of the low-grade paddy IR 50404, has significantly improved. Enterprises in Tien Giang have begun to store material rice albeit little, which helps push up the prices of IR 50404 rice products.

Particularly, the IR 50404 material rice has marked up to VND6,800-6,850 per kilo, while the finished rice is sold at VND8,000-8,200 a kilo. Anh said enterprises still store the low-grade rice IR 50404 because this category has good quality this winter-spring crop.

There are five enterprises in Dong Thap participating in the rice storage program with the assigned target to purchase 64,000 tons or rice, equivalent to 130,000 tons of paddy, versus the total 1.6 million tons harvested in this winter-spring crop.

With such a small amount, the rice storage program only has temporary effects on the market prices, said Duong Nghia Quoc, director of the Dong Thap Department of Agriculture and Rural Development.

He said the province has yet to receive any offer from the Vietnam Food Association (VFA) to join hands in supervising rice purchase and storage, like what the vice chairman of this association had told the media before the program was kicked off.

He expressed concern about the fact that enterprises prefer buying fragrant and long-grain paddy that only account for 48% of the cultivation area of the winter-spring crop, or 208,000 hectares. Meanwhile, what farmers are seeking is outlets for the low-grade paddy IR 50404, making up 52% of the cultivation area.

Regardless of the warnings of the scientists and the management agencies, farmers have rushed to grow the low-grade paddy IR 50404 since the paddy was well-consumed in last year’s rice crop.

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