With bank loans falling at the end of this year and losses from a gloomy domestic real estate market, many property developers have begun slashing prices of their apartments to boost revenue.
On Monday, just three days after PetroVietnam Power Land announced a discount of 34 per cent on it's apartments, the Sai Gon Mekong Company reduced prices on 500 apartments in the An Tien urban area project in HCM City's District 7 from VND18 million (US$860) per square metre to VND14.5 million ($690) per square metre.
Representative from the company's leaders Ho Van Tuyen said the move was an attempt to recoup capital for new business opportunities.
Late last week, PetroVietnam Power Land Company cut off 34 per cent of the 85 apartments in its PetroVietnam Landmark project in District 2 to VND15.5 million ($738) per square metre from the earlier VND23.8 million ($1,130).
The sell-off was aimed at resolving the difficulties of a frozen property market and rising costs, the company said in its filing with the State Securities Commission.
Its VND100 billion ($4.75 million) loan from the Lien Viet Post Joint Stock Commercial Bank is due on November 23.
In the case of a failure to pay on time, the company would have to pay a penalty of 150 per cent of the interest rate, said its general director Hoang Ngoc Sau.
Selling all the units at the discounted price, however, would mean the company's profits would fall by VND70 billion ($3.33 million), Sau said.
In HCM City's neighbouring province of Ba Ria – Vung Tau, Vung Tau Real Estate and Construction Joint Stock Co recently announced a 12-27 per cent discount for its Thuy Van apartment project.
Dang Hung Vo, former deputy minister of natural resources and the environment, said slashing prices was a good sign that brought property prices closer to their real value.
It was a normal phenomenon and in line with market rules, he said, adding that even a 30 per cent price cut would not cause losses for companies.
Economists said that with banks urging real estate companies to repay loans, darkening an already gloomy real estate market with no respite in sight, more price cuts were around the corner.
Le Hoang Chau, chairman of the HCM City Real Estate Association, said this was the best measure in the current situation to ease cash-flow difficulties and avoid overdue interest payments.
Enterprises could accept losses in one project to raise funds that save other projects and tide over the current difficulties, he said.
However, some insiders worried that the mass discounts would lead to market chaos.
There would be a big problem if all real estate developers in the domestic market decided to reduce prices of their apartments, said a representative from Hoa Binh real estate trading floor.
Buyers would believe the final purchase price to be much cheaper and no one would want to buy first, which would make the market more stagnant, the representative said.
Le Tan Hoa, director of Lilama SHB Co, which is developing four apartment projects in HCM City, agreed. He said that it was unreasonable that apartments with the same standard, quality and investment costs were sold at different prices.
"I do not support the sell-off because it inadvertently makes customers sceptical about the quality of apartments," he said, adding that no clients would dare to buy an apartment if the second would get advantages over the first.
The Viet Nam Real Estate Association General Secretary, Phan Thanh Mai, said lowering prices meant poor effectiveness of the real estate projects and enterprises might suffer losses.
Thus, enterprises should draw up suitable and effective business strategies to avoid scattered investments, Mai said.
Economist Vu Dinh Anh said enterprises had to reduce the prices of their apartments mainly due to pressure from the banks.
This was a good lesson for enterprises utilising borrowed money in the real estate business. The real estate market was not always hot. It sometimes went down or froze, Anh said.
The most important thing was that the enterprises needed to offer reasonable housing prices that customers could afford because the local housing demand remained large, he said.
Workshop eyes planning reforms
UNICEF Viet Nam, in partnership with the Ministry of Planning and Investment, concluded a two-day workshop in the central province of Ninh Thuan yesterday, to review the results of a five-year project to reform the process of formulating socio-economic development plans.
The intensive capacity-building project, which focused initially on HCM City and the provinces of Dien Bien, Ninh Thuan, Dong Thap and An Giang, aimed to boost the process of monitoring and evaluating plans at all levels of government, but further efforts were needed to build competent resources and secure sufficient financial flows, said UNICEF's executive deputy representative in Viet Nam, Jean Dupraz.
Some local leaders continued to hesitate in allocating provincial funding for socio-economic planning, holding a notion that investment in monitoring and evaluation of plans was optional, rather than an indispensable step in increasing the efficiency of governmental administration, said Nguyen Quang Thang, director of the Ministry of Planning and Investment's Department of Labour, Culture and Social Affairs.
"Persuading leaders and local authorities to change their mindset to embrace the new ideology towards monitoring and evaluation is no mean feat and one which requires vision, courage and persistence," said Thang. "It will take time and it can't simply be changed overnight."
UNICEF social policy specialist Samman Thapa said the project's initial aim was to enable provincial planners to utilise scientific tools, such as monitoring and evaluation, to make more result-oriented plans.
"The new approach requires planners to think about end results first, then think backwards from there, rather than just planning based on separate input and output indicators as they had been doing for most of the time," Thapa said.
"Even in that, you don't have as much citizen participation as you want. Citizen feedback mechanisms can contribute to even better planning since it reflects the extent of the real impacts of the policies. That's where the social audit comes in."
The social audit used such tools as citizen report cards, community score cards, gender audits and expenditure tracking surveys. The approach added value to existing planning practices by generating information that was complementary to existing administrative and survey data, said the chief of planning and social policy for UNICEF Viet Nam, Paul Quarles van Ufford.
Current practices tended to focus on quantitative economic and physical targets of plans rather than their impacts on the lives of ordinary people, especially children, Ufford said. Social audits therefore provided useful information on perceptions and opinions to assess the social dimensions of a plan's impact.
Through the provision of citizen feedback to policymakers and service providers, the social audit strengthened accountability and provided valuable insights to gradually improve service delivery, he said.
"Social audit can help highlight areas for improvement, previously unexplored but especially important, since it strongly taps into the perceptions of citizens in the governance of social policies to achieve the Millennium Development Goals with equity," Ufford said.
Capacity-building was key to enable researchers to better capture public perceptions and introduce appropriate methods to enable citizens to express themselves, he added, saying that the next stubs would include a capacity strengthening plan at national and sub-national levels and training a core group of researchers and officials on carrying out social audits.
The various tools and methodologies piloted in the project were expected to be integrated into a decree being drafted by the Government on monitoring and evaluation of socio-economic planning.
"The Ministry of Planning and Investment considers it an important task to continue to push for further revamps in the planning system with attention to the monitoring and evaluation process in the next phase and gradual institutionalisation of innovative approaches and tools," said Thang.
Insurer PVI receives positive rating
Insurer PVI Holdings, formerly PetroVietnam Insurance Corp, yesterday announced that it had received a stable rating from US credit rating agency AM Best.
PVI Holdings was rated B+ for financial strength and BBB– for issuer credit due to its restructuring from a non-life operating entity into a holding company.
"In the context of high inflation and risky economic conditions, our higher rating than that of the country as a whole is really positive," said PVI Holdings general director Truong Quoc Lam.
PVI Holdings shifted to operate under the new model only a few months ago, while the rating process took some time, Lam said. The company had been preparing for two years for this process, however, and established a rating consulting team to closely work with AM Best, he added.
"PVI inherits the corporate management from the old model, but what's new is the capital structure," he added. "Furthermore, the rating implies a 12-month prospect that our rating could be lifted."
After restructuring and selling a major stake to German partner Talanx Group, the value of PVI shares dipped. They closed yesterday on the Ha Noi Stock Exchange at VND16,200 per share, unchanged from the previous day's close.
Talanx Group regional director Juergen Decker acknowledged that the price at the time of forming the strategic partnership last month was much higher, at VND36,000 per share for a 25-per-cent stake.
"It has always been a question of timing," said Decker. "We are not concerned at all. We have the patience to wait until it [the market] gets better."
Under the partnership, PVI would insure all Talanx projects in Viet Nam, giving PVI a little bit of foreign market share, Lam said.
The company planned to begin offering life insurance next year, as well as equitise its subsidiaries.
"Equitising our subsidiaries will help us raise more capital in two ways, from both the parent company and the subsidiaries," said PVI chairman Nguyen Anh Tuan.
Poor-quality gas safety equipments remain rampant
Though lighter ignition is blamed for most fatal gas explosions, widespread poor-quality gas safety valves and pipes are also threatening lives.
In Ho Chi Minh City, mostly in District 5, 11 and Thu Duc District, a variety of gas pipes and safety valves are available for various levels of prices.
At a gas equipment store on Pho Co Dieu Street in District 11, dozens of safety valves are sold for a mere VND50,000 each. While some of them are appropriately sold in boxes with labels, others are sold in plastic bags without any label.
Gas pipes are also sold all over the market for only VND20,000 for every one-meter pipe without labels specifying technical or instruction information.
Bich, a gas dealer in Thu Duc District, said many gas equipment distributors had repeatedly persuaded him to buy their safety valves and pipes for only VND80,000 a kit.
He said with such prices, he could earn twice or three times as much profit as usual.
“But since most of them are made-in-China without clear origins, I don’t dare to sell them,” he said.
At present, gas safety valves with Italian, Japanese, Indian and Chinese origins are available on the market, and the most popular are products from Italy and Japan which offer consumers a warranty of 3 to 5 years.
Chinese products on the other hand have only a 6-month warranty and are preferred by students.
An employee of a gas dealer told Tuoi Tre that some safety valves are labeled made-in-Malaysia while they are in fact Chinese products.
“Consumers thus have to check their products carefully in order not to be deceived,” he warned.
But many have bought these products too easily. For instance, V of Thu Duc District said he had bought a safety valve from some people disguised as gas technicians for VND500,000 a kit. These people said the kit was “of good quality and able to automatically switch off when left idle.”
But after using the kit for only a few days, his new gas cylinder was emptied.
A gas dealer later told him that the valve was second-hand.
Nguyen Kha, deputy head of the technical department at Gas Saigon Petro, admitted that no quality standards had been developed so far for gas safety valves and pipes.
“That’s why some gas dealers have even used water pipes as gas pipes,” he said.
Since gas pressure is lowered when gas passes the valve, many people mistakenly believe that the gas is no longer dangerous and thus any pipe can be used as a gas pipe, Kha said.
“However, water pipes can be worn out by certain kinds of gas and because of high temperatures,” he said.
Le Thi Anh Man, deputy chairman of the Vietnam Gas Association, said 12-kg gas cylinders mostly used in households are designed to be able to endure very hih pressure and temperatures.
But many old, substandard cylinders are still available on the market since relevant agencies haven’t done anything to remove them, she said.
She advised that besides carefully choosing the appropriate cylinder, safety valve and pipe, consumers should also pay close attention to equipment installation.
Consumers shouldn’t be lured by the cheap prices of poor-quality Chinese or old deteriorated pipes either, she said.
Nguyen Sy Thang, chairman of Southern Gas Co, said a gas cylinder could be used for 15 years at most, and after every five years gas companies should have their cylinders undergo a quality check.
“Gas consumers thus should be knowledgeable about the cylinder’s production date and the quality checking date,” he said.
Businesses are skeptical about tax cut
Many businesses and experts say the recently issued 30 percent cut on corporate income tax for small-and-medium-sized enterprises this year may not be of much help.
On November 4, the Prime Minister issued Decree No 109, providing tax relief for certain taxpayers including a 30 percent cut in corporate income tax for SMEs.
The cut is not applicable to income derived from securities and real estate trading, finance, banking, or insurance activities, and manufacturing or services subject to special consumption tax.
Newswire Vietnam Economic Forum quoted Dr. Nguyen Nam, deputy head of the Hanoi Business Association’s Institute for Business Development, as saying that around 50 percent of SMEs nationwide were suffering from high inflation.
He said many businesses had expected to see low incomes or losses this year and the tax relief thus wouldn’t help.
“Those [businesses] operating with losses would understandably not have enough income to pay tax, and thus would not need the cut,” Nam said.
Meanwhile, other businesses said the incentive was “not powerful enough to help them get out of the economic woes.”
Vu Dinh Long, director of Hanoi-based Dai Duong Xanh Co. Ltd., said small businesses such as his company had annual profits of only hundreds of millions of dong and had to pay corporate income tax of less than VND100 million (US$4,800).
“So the 30 percent cut will help us to save around VND20-30 million, which will be too small given our current difficulties,” Long said.
Many businesses are thus calling for stronger support such as tax exempting or a cut in rent.
Vu Ngoc Binh, CEO of Hanoi-based Phuong Lan Co. Ltd., said while the land leasing fee at the Lien Phuong Industrial Cluster last year was only VND36 million, the figure this year soared to VND464 million.
“We are badly in need of a land fee cut, which will enable us to reduce production costs and increase competitiveness,” Binh said.
Vu Quoc Tuan, chairman of the Vietnam Association of Craft Villages, also said SMEs had hardly been offered any incentive from the government in recent years.
He said rent for SMEs was twice or three times higher than rent for state-owned and FDI companies.
“An incentive on rent is essential for SMEs,” Tuan said.
Crop-ruining snails go from being pest to prize
The golden apple snail, a crop pest that Vietnamese used to treat as a sworn enemy, has now become a prized creature in the Mekong Delta since Chinese traders are offering high prices for it.
This is causing unease in the agriculture sector, with people fearing that local farmers would be tempted into illegally raising the dangerous snails, Sai Gon Giai Phong newspaper reported.
In Hau Giang Province’s Long My and Vi Thuy Districts, farmers are busy looking for the snails since they have become a stable source of income in recent times.
Not long ago some of the same farmers were spending good money on pesticides to destroy them.
Reportedly, it used to cost them around VND600,000 to protect a hectare of rice field from the snails.
Vo Van Sau of Vi Thang Commune in Vi Thuy said traders had been buying golden apple snails without shells for VND14,000 a kilogram since early last month.
“Almost every household in this commune hunts for the snails.
“Every five kilograms of snail with shells fetches a kilogram of meat and each household earns around VND100,000 daily.”
Golden apple snails have traditionally been used to produce feed for fish and poultry. Last year a kilogram cost a mere VND6,000.
At a facility owned by Nguyen Ngoc Am in Long Phu Commune, Long My, 50 people are hired to shell and wash the snails before exporting to China.
It has been busy in the last month, with Am buying around eight tons every day.
“The snails are shipped to China and Taiwan for animal feed processing,” he said.
Nguyen Van Khoa, chairman of the commune people’s committee, said local authorities encouraged people to hunt for the golden apple snails since it helped destroy a pest while also fetching incomes for farmers.
“But we are concerned that some farmers may opt to raise the snails for bigger profits,” he admitted.
Dang Ngoc Giao, deputy director of the Hau Giang Department of Agriculture and Rural Development, said the authorities must keep a close watch on the mass buying of golden snails for export to China.
In An Giang and Dong Thap, though the hunt for the snail is not as feverish as in Hau Giang, agricultural authorities have warned farmers against raising the snails.
A top official at the An Giang Department of Agriculture and Rural Development, said farmers sold the snails mostly to local feed processors, not Chinese.
But since the activity had been reported in neighboring areas, the province would persuade local farmers not to hunt for the snails, he said.
US opens door for 2 Vietnamese fruits
The US is set to lift a ban on the import of litchi and longan fruits from Vietnam following a guarantee from Vietnam’s National Plant Protection Organization (NPPO) that it would ensure they are pest-free when shipped.
They had been prohibited from entering the country under the Code of Federal Regulations which keeps out fruits and vegetables from certain countries to prevent the introduction and dissemination of plant pests.
The US Animal and Plant Health Inspection Service (APHIS) has prepared a pest risk assessment identifying all pests affecting the two fruits in Vietnam and a risk management document that recommends measures to prevent the pests from entering the US.
It identifies such 33 pests.
The APHIS has also developed a systemic approach on measures to mitigate the risks posed by the pests.
The measures require litchi to be grown in orchards registered with and monitored by the NPPO, and both fruits to be irradiated with a 400 Gy dose.
Finally, each consignment of litchi or longan shipped to the US should be accompanied by a certificate issued by the NPPO declaring that the consignment is free of pests.
In the US, the two fruits are grown in Florida, Hawaii, and California.
APHIS said the import of these fruits from Vietnam would not have a major impact on US litchi and longan growers.
Vietnam is expected to ship around 600 tons of litchi and 1,200 tons of longan.
Local rice faces competition from India, Pakistan
With fierce competition from low-cost Indian and Pakistani rice exporters, the bonanza for Vietnamese rice exporters in this year’s last quarter has not come as earlier expected.
Meanwhile, the Thai government’s policy to buy Thai rice at higher prices as of October, which was expected to make international rice importers buy from Vietnam, has yet to be implemented.
The global rice exporting market has thus remained intact and Vietnamese exporters who have earlier stockpiled a large amount in anticipation of a price increase are now desperately seeking customers.
Le Minh Truong, director of Can Tho-based Song Hau Food Co., said his company had almost no new contracts during last month since most customers left after knowing the prices.
“We can hardly sign any new contracts due to the big gap between Vietnamese and Indian price,” he said.
He said 5 percent broken Vietnamese white rice was being sold for $570 a ton, while the Indian price can be $100 a ton lower. He said Pakistan rice is even cheaper: about $450 a ton.
Vietnamese rice has been competed well with Thai rice since the middle of this year. But with India recently announcing their return to the rice exporting market, demand for Vietnamese rice has fallen sharply.
The Vietnam Food Association (VFA) said the local rice export market had cooled down recently, with local exporters being only able to sell to neighboring markets.
Truong Thanh Phong, VFA’s chairman, said India, rather than Thailand, was the main rival for local rice exporters.
India has a rice stockpile of more than 54 million tons and is able to supply 6 million tons to the global market, he said.
As for the Vietnamese rice industry’s concerns about the declining number of contracts, Phong assured that Vietnam still had other major customers.
“Vietnamese rice does not directly compete with India in certain markets such as Africa, and local exporters will continue to buy from farmers at good prices in the coming time,” he said.
He said that although Vietnamese export price was $100 a ton higher than that of India, Vietnamese exporters can still meet demand in Indonesia and the Philippines.
“Indonesia is planning to buy from Cambodia and Myanmar but supply from these two countries are limited,” he said.
PetroVietnam insurance arm’s financial rating maintained at B+
A.M. Best Co has maintained its financial capacity ratings of B+ (Good) and credit capacity for share-issuance rankings of bbb- (qualified) as before for PetroVietnam Insurance Corp (PVI), newswire Vneconomy reported.
The financial ratings with stable outlook assigned have been released after the insurance firm, an affiliate of the Vietnam National Oil and Gas Group (PetroVietnam), restructured its organization from a non-life operating entity to a holding company in June 2011.
Effective June 28, 2011, PVI JSC has been renamed PVI Holdings and the corporate structure has been changed to a holding company from a non-life operating entity.
Under the restructuring, PVI Holdings has direct interest in a non-life insurer (PVI Insurance), a reinsurer (PVI Reinsurance - PVI Re), a hospital (PVI Hospital JSC), an investment company (PVI Investment and Development JSC) and a media company (PVI Media).
The A.M.Best's evaluation reflected the Hanoi-based corporation's business results and strong position in Vietnam's non-life insurance markets.
It also reflects the planned financial support from its immediate parent company, expected improvement and adequate risk-based capitalization, and expected technical supports from the strategic partner of PVI Holdings.
In related news, PVI would pour VND700 billion in subsidiaries. A part of sum is to be infused to PVI Insurance by end of the year 2011 to strengthen the company's risk-based capitalization and to support the ongoing business expansion.
After this capital injection, combined with reduced risk retention in 2012, PVI Insurance's risk-based capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), is expected to be adequate to support its overall risk profile.
HDI-Gerling Industrie Versicherung AG (HDI-Gerling), the insurer's strategic investor has also committed to provide technical support for PVI Holdings.
HDI-Gerling Co, the member company of Germany-based Talanx Group, has become PVI Holdings' strategic shareholders after signing the cooperation contract worth over VND1.916 trillion, or 25 percent of total stake in PVI, with the insurance firm.
HDI-Gerling has also pledged to provide full support for the corporation's member companies in such sectors of life insurance, non-life insurance and reinsurance.
PVI revealed to use the raised capital this time for supplementing chartered capital for PVI Insurance one-member Co Ltd in late 2011 so as to strengthe its financial capacity and competition position of the company in the market.
Up to June 2011, PVI Insurance has kept about 24 percent of total market shares, taking the leading position in terms of energy insurance, technical insurance and maritime insurance sectors.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed.
Additional key criteria utilized include: "Understanding Universal BCAR"; "Natural Catastrophe Stress Test Methodology"; "Rating Members of Insurance Groups"; "Risk Management and the Rating Process for Insurance Companies"; and "Assessing Country Risk."
Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.
Car registration fees in HCMC, Hanoi proposed to be raised
The Ministry of Industry and Trade has sought the National Assembly (NA) for the green light to raise the car registration fees in Vietnam’s two biggest cities of Hanoi and Ho Chi Minh City to 20 percent to limit private vehicles.
The car registration fee is now 12 percent and 10 percent of the vehicle prices in Hanoi and HCMC which have highest traffic density of the country.
Further measures, including the increase of the excise tax and registration fee on cars, should be applied to limit the rise of personal vehicles and trim down trade deficit, according to newswire Vnexpress.
The agency has also proposed then NA to adjust the special consumption tax on cars with less than 9 seats up to higher levels, effective as from 2012.
The current excise tax on less than six-seat cars have three levels of 45 percent, 50 percent and 60 percent, based on the cylinder of the machine. For cars of 6-9 seats, tax tariff is 45 percent-60 percent, depending on each type.
The ministry’s proposal has also been sent to the other functional units.
For registration fee, both general Department of Taxation and general Department of Vietnam Customs have agreed with the proposal to impose the highest pressure in Hanoi and HCMC at 20 percent.
The reason is that these cities have high vehicle density and traffic congestion is increasing.
Earlier this year, the Ministry of Finance has decided to increase the car registration fee cap from 15 percent to 20 percent.
Based on the allowable cap, provinces and cities nationwide will determine specific rates based on their local conditions. However, there have been no local authorities reported to have made the decision to increase the registration fees under the cap.
The current registration fees, which range from 10 percent to 20 percent of the vehicle price, have been officially in effect since October 15.
According to the statistics of the finance ministry, at present, the average income from car registration fees reaches about VND7 trillion per year, accounting for 2.5 percent of the country's total state budget revenue.
The total collection of car registration fees is rising steadily in recent years In particular, from VND3.363 trillion in 2006 to VND5.636 trillion in 2007, VND7.363 trillion in 2008, VND7.565 trillion in 2009, and VND9.209 trillion in 2010.
Vietnam imported about 48,000 autos worth $895 million in the first 10 months of this year, up 15.1 percent in volume and 16.5 percent in value year on year, according to estimates of Vietnam’s General Statistics Office (GSO).
October estimates show that 3,000 autos worth $46 million were imported, down around 33 percent in volume and value month on month, said GSO.
Car dealers affirmed that the decline in import value may persist in the last months of the year, but added that imports might be limited this year because unauthorized companies were not allowed to import cars.
Foreign banks required to follow forex rules
The State Bank of Vietnam (SBV) on Thursday requested foreign banks to strictly adhere to regulations on foreign currency trading activities.
Accordingly, general directors and directors at foreign banks’ branches or 100% foreign-invested banks have to observe current rules about local foreign currency management.
Document 8608/NHNN-QLNH issued by SBV says, “There are still a few foreign credit institutions and foreign banks’ branches having traded foreign currencies at exchange rates higher than the ceiling set by the central bank.”
“This badly affects the effectiveness of new policies, the stability of the foreign currency market as well as business activities of local lenders,” the document says.
To remedy the situation, banking inspection and supervision agencies will check foreign currency transactions with customers carried out via the inter-bank market at a number of foreign banks and branches.
Recently, with strict enforcement of the central bank, the Vietnamese dong has slightly appreciated.
The transaction center under the central bank on Thursday morning set the foreign exchange rate between the Vietnam dong and the U.S. dollar at VND20,595 and VND21,011 for buying and selling respectively.
Meanwhile, the Bank for Foreign Trade of Vietnam, commonly known as Vietcombank, bought one dollar at VND20,860 and sold it at VND20,865.
Total overseas remittance flown into the country this year is predicted to reach US$8.5 billion and the balance of payments will have a surplus of over US$3 billion.
Jetstar halts Hanoi-Da Nang, HCMC-Hue route
Vietnam’s low cost carrier Jetstar Pacific has temporarily halted the Hanoi-Da Nang and the Ho Chi Minh City- Hue routes from 1st and 15th November respectively.
The reasons are to reevaluate the routes, their operation potentials and to carry out the annual technical maintenance. From November 2011 until May 2012, Jetstar’s planes will undergo the periodic C-check, according to the airline representative.
Customers who have bought tickets on Ho Chi Minh City-Hue route will be transferred to fly with Vietnam Airlines, move departure day prior to November 15 or fly the Ho Chi Minh City- Da Nang route.
For those who are not satisfied with the above three options, Jetstar will refund them 100 percent.
Customers can also change to other routes like Ho Chi Minh City- Hanoi, Ho Chi Minh City- Vinh, Ho Chi Minh City-Hai Phong and pay an additional fee.
Jetstar Pacific said it plans to resume flights on the two routes in the summer next year.
HCMC concerned over rising bus subsidies
The Ho Chi Minh City’s government has so far earmarked VND1.2 trillion (US$57.6 million) on public bus subsidies this year and the figure can even go higher, a conference heard on Thursday.
Speaking at the municipal People’s Council meeting, the city’s Department of Transport reported that the People’s Council last year approved a plan to grant a total VND835 billion in subsidy to 110 citywide bus routes in 2011.
But the city later hiked the sum by VND422 billion due to the rising wages and fuel costs, making the full figure VND500 billion higher than the subsidy in 2010, the Saigon Times newspaper reported.
Experts said the increased subsidies did not lead to improved efficiency in operating the public bus sector since many issues were still left unsolved.
Some delegates in the council thus expressed concern that bus subsidiaries would become a burden for the city in the years to come if it failed to increase the number of passengers willing to use public buses.
The municipal Department of Finance said the Department of Transport’s proposal to buy new vehicles for the bus fleets was also encumbering the city budget.
If the transport department wanted to buy eco-friendly buses fueled by the clean compressed natural gas (CNG) in the next two years, it should submit a report on how energy-saving those buses were compared with the diesel-fueled ones for the city’s government to consider, the department said.
“The CNG-fueled buses can reduce environmental pollution and save fuel costs but their prices are also more expensive,” the finance department’s representative said.
For his part, Le Hai Phong, director of Ho Chi Minh City Public Passenger Transport Management and Operation Center, said subsidies on buses could be reduced next year since the municipal government had recently green-lighted advertising on buses.
Accordingly, buses will be allowed to carry ads on their sides, which is expected to bring in VND100 billion annually to help ease the city’s burden.
Deputy Tu Minh Thien urged the municipal Department of Transport to speed up the implementation of this plan.
He said running ads on buses was allowed in many other countries and thus it should soon be done in Vietnam.
“Even if the plan is delayed by just one day, it can cause a loss of hundreds of millions of dong,” he emphasized.
Meanwhile, Pham Van Dong, head of the Economic Budget Committee of the municipal people’s council, complained that HCMC Public Passenger Transport Management and Operation Center has yet to conduct any survey to find out why most city residents were reluctant to take the public buses.
The center must quickly conduct research on this issue so that the city government can take necessary measures to attract more people to its public transportation, he urged.
First Solar delays Vietnam plant, shares rise
First Solar Inc said on Thursday it postponed plans to build a new solar module factory in Vietnam until demand for the renewable energy source grows and its shares rose 1.7 percent in post-market trading.
Last week, the U.S. solar panel maker ousted its chief executive, Rob Gillette, and a day later slashed its 2011 profit and sales forecast.
The company has accelerated efforts to boost the efficiency of its panels and said its top manufacturing lines were producing panels with a sunlight conversion of 12.4 percent.
Supermarkets trail behind in discount race
Though they are being sold at discount prices, many products at supermarkets in Hanoi are still more expensive than the same products sold elsewhere.
Topcare Supermarket on Cau Giay Street for instance has cut the price of its WD 8122 CVD Samsung washing machine by VND5 million to VND34.9 million (US$1,675). The promotion also includes a one-year warranty.
But the same washing machine is also being sold at a store on Nguyen Trai Street for only VND34.8 million and customers are also offered a Zen set of glasses worth VND375,000.
Similarly, a LCD 32LD550 television at Big C Thang Long is on sale at VND8.5 million, which is VND2.8 million lower than its original price. Meanwhile, the same product is being sold at Hai Tau Electronic Store on Hai Ba Trung Street for only VND7.8 million.
In response, Le Tung, Topcare’s marketing director, told Tuoi Tre that it would be unfair to compare the prices of supermarkets and other retail stores.
He said supermarkets often offer customers many services such as installing, delivering and customer care, while retail stores’ customer care services have lower quality and some stores don’t even provide them.
“Besides, retail stores can offer lower prices since their products can be outdated or of unclear origins,” he said.
Vu Vinh Phu, former director of the Hanoi Department of Commerce, said it was normal for discount prices at supermarkets to be equal or higher than normal retail prices because supermarkets have to spend large expenses on certain customer services.
“Retail stores may have evaded taxes to be able to offer lower prices,” he said.
Many consumers in Ho Chi Minh City have complained that they felt they were cheated by supermarkets.
Nhan, a resident of District 1 said she had bought some new clothes for her daughter at VND80,000 in Thai Binh Market.
But in the nearby supermarket, the same item was sold at a discount price of VND87,000, compared to the original price of VND130,000.
“So even with the so-called discount, there is still a 9 percent difference,” she said.
Hung of District 7 said he had bought a DVD player at VND550,000 at an electronics shopping center in District 1 under the center’s “golden promotion week.”
Though he was assured that his DVD “could not be any cheaper,” a few days later he found an identical player being sold for only VND470,000 at another supermarket.
“The mere difference of VND80,000 would not get me angry but the feeling of being cheated did,” he said.
Imports keep seafood processors afloat
With domestic supply drying up mainly due to disease outbreaks, seafood processors and exporters are increasingly depending on import of raw fish and other creatures, Sai Gon Tiep Thi newspaper said.
Imports rose 150 percent in the first 10 months to $417 million, with the materials being bought from more than 70 countries and territories.
The biggest items of import were fish, octopus, and lobsters.
The Vietnam Association of Seafood Exporters and Producers (VASEP) said imports by the seafood processing sector had surged in the last four years.
This year it is expected to top $500 million, or 10 percent of total exports, it said.
Saigon Food CEO Nguyen Van Hoa said it had become necessary to depend on imports since domestic supply of certain items like lobster, salmon, codfish, and octopus was inadequate.
“Domestic supply is only enough to meet 20 percent of our demand this year,” he said.
Local prices too were higher than that of imports, he said.
Saigon Food had been importing increasing volumes every year for the last five years, he said.
“We plan to import 10,000 tons this year.”
Businesses said the imports attracted very high tariffs.
For instance, oyster, shellfish, octopus, and lobster are taxed at 18 percent, and shrimp at 30 percent.
The domestic shortfall would continue for the next few years, the industry said.
Nguyen Huu Dung, VASEP’s deputy chairman, said the imports did not harm the domestic aquaculture or fishery sectors since many of imported items could not be raised or caught in Vietnam.
Pointing out that the imports helped businesses earn profits and create more jobs, he urged the government to provide the industry tax breaks.
“If the businesses can import $2 billion worth, exports will rise by $3.5 billion, enabling the country to replace China as the world's largest seafood exporter.”
Exports to October topped $5 billion, a 22 percent increase, and the full-year figure is expected to be a record $6 billion.