BUSINESS IN BRIEF 22/6 - Vietnam
Last update 07:00 | 22/06/2013 0 0 12345
BUSINESS IN BRIEF 22/6
ADB-funded project brings power to Lai Chau province
Households in 31 mountainous communes in northern Lai Chau province on June 19 gained access to electricity as a project to expand and improve the province’s rural power grids started generation.
The generation is part of an Asian Development Bank (ADB)-funded programme to develop renewable energy, expand and improve power grids in remote rural areas.
The two-phase programme has a total investment of over 948 billion VND (45 million USD), including 30 million USD funded by ADB.
Its first phase is expected to complete later this month, with 5,758 households in Lai Chau province and 7,944 others in Dien Bien province gaining access to electricity.
Once becoming fully operational by the end of 2014, the programme will provide electricity to 14,487 households in 48 communes in eight districts of Dien Bien province and 16,207 households in 53 communes in Lai Chau province’s six district, including Than Uyen, Tan Uyen, Phong Tho, Tam Duong, Sin Ho and Muong Te.
It will help raise the number of families having electricity in Lai Chau province from 61 percent to 79 percent and in Dien Bien from 67.9 percent to 81 percent.
Binh Duong export value up 16% in five months
Local export enterprises in the southern province of Binh Duong had signed contracts to export products until the end of the year, said an official from the Binh Duong Province's Association of Exporters and Importers.
Export value from the province in the first five months of this year increased 16 per cent to nearly US$5 billion against the same period last year, according to the People's Committee of Binh Duong.
Domestic invested enterprises achieved a year-on-year increase of 5.2 per cent in export value to $820 million, while foreign invested firms' enjoyed a year-on-year rise of 18.6 per cent to $4 billion.
Key exports including wood products, textiles and garments, leather, footwear and handicrafts had contributed to the surge, despite the economic downturn, according to the Binh Duong Importers and Exporters Club.
Pham Van Xo, head of the club, said the club's 156 members had all signed export contracts until the end of the year, and the apparel, leather and footwear industries had received large orders for cheap, quality goods.
Enterprises must cut production costs, apply modern technology and use a trained workforce to increase profits, Xo said.
This year, local leather and footwear enterprises were producing good designs and applying modern technology in production and management to reduce risks, he said.
Le Hong Phoa, chairman of the Binh Duong Apparel Association, said that local apparel exports increased 7.3 per cent in value in the first five months to $600 million compared to the same period last year, and Binh Duong was considered one of the leading apparel provinces in Viet Nam, he said.
However, the sector still faced many challenges, he said. Those included lack of capital, dependence on material imports and lack of workers.
Additionally, the economic downturn and technical barriers on export markets were also challenges for local exporters, Xo said.
Larger foreign firms were also dominating the market due to larger production scale and financial capacity that left local companies struggling to keep up with global demand.
Local enterprises should invest in infrastructure and technology to increase exports, he said.
Binh Duong exports are projected to increase 20 per cent in value this year to $15-16 billion, and key exports including wood products, textiles and garments, leather, footwear, latex and handicrafts are expected to achieve good results.
Strong growth forecast for high-tech export sector
High-tech products, a key export item for HCM City, are expected to see strong growth in the near future, according to speakers at a seminar held yesterday in HCM City.
The seminar was organised by the Department of Industry and Trade, Sai Gon Hi-tech Park and WTO Centre's Development and Research Institute.
Huynh Khanh Hiep, deputy director of the city's Department of Industry and Trade, said that export turnover of high-tech products reached US$2.46 billion, an increase of three times compared to 2011. This accounted for 11.4 per cent of HCM City's total export turnover (not including crude oil).
The main export markets for hi-tech products are in Asia (Japan, Singapore, mainland China, Philippines and Thailand).
Among hi-tech products, the city's software exports are expected to reach an average growth rate of 40 per cent each year. By 2015, this is estimated to account for 2 per cent of the total export turnover.
However, Hiep said to reach the target, support policies from the government were needed.
He noted that Japan, which imports a great deal of software, especially from China, has shifted its attention to the ASEAN region, including Viet Nam. Domestic demand has also increased as more government agencies and businesses have invested in IT.
"Local companies need to restructure businesses, seek high-quality human resources and cooperation opportunities to strengthen exports of high-tech products," Hiep said.
Le Thi Bich Loan, deputy head of the management board of Sai Gon Hi-Tech Park (SHTP), said that in the first five months of the year SHTP's hi-tech product exports reached $695 million out of $1 billion in total export turnover.
However, most of this came from foreign-invested enterprises.
The localisation ratio of high-tech products was still low, at 18 per cent. It is expected to increase to 35-45 per cent by 2020, she said.
"Currently, domestic enterprises are facing many difficulties including capital shortage. They are still weak in R&D and design. These are key to increase added value added for products," she said.
SHTP, in collaboration with city authorities, has offered incentives on taxes, land rentals and loans, as well as training support for high-tech support industry projects inside the SHTP.
Chu Tien Dung, chairman of the HCM City Computer Association, said the State should issue support policies on infrastructure for production, including land, technology and communications, to save costs and increase competitiveness with other countries.
Human resources are also an important factor to help software companies develop in an international market. Employees are plentiful, but the quality of staff is not high, failing to meet demand, according to Dung. The lack of skilled workers has hindered export growth of companies, he said.
Dung said there was also a need to build national trademarks for high-tech products and hold more trade promotions to introduce products to the global market.
Local products get thumbs up
Vietnamese goods such as Vinamilk dairy products, 333 Beer and Hao Hao instant noodles have been highlighted for their brisk sales in the domestic market.
The latest report from consumer information group Kantar highlighted several Vietnamese products in their rankings of top brands in the health & beauty, home care and beverages and food sectors across the county.
Local products such as Vinamilk, Masan's Chinsu fish sauce, Tuong An cooking oil, Sabeco's 333 Beer and My Hao dish washing and fabric detergent were ranked high.
According to the report, the five most chosen food brands were Vinamilk, Chinsu (Masan), Hao Hao instant noodles (Vina Acecook), Dutch Lady (Friesland Campina) and Tuong An cooking oil.
Vinamilk reaches nearly every Vietnamese household (94 per cent of the population), with 57 million individual sales each year.
The top five brands in health and beauty are P/S of Unilever, Kotex of Kimberly Clark, Clear of Unilever, Lifebuoy of Unilever and Colgate of Colgate-Palmolive. All are from multinational firms.
The beverage sector saw Nestle's Nescafe on top, followed by Sting energy drink from Pepsico, Sabeco's 333 Beer, Coca-Cola and URC Viet Nam's C2 ready-to-drink tea.
The Kantar World-panel Brand Footprint Ranking measures the popularity of brands in 32 countries in four continents.
Long An GDP growth reaches 9.7%
Mekong Delta Long An Province posted a 9.7 per cent increase in Gross Domestic Product (GDP) in the first half of 2013.
However, this year's H1 posted the lowest GDP growth in four years, the provincial Statistics Office has revealed.
In the first six months of 2013, the construction industry soared 13.9 per cent; the trade and services sector increased 11.5 per cent; and agriculture, forestry and fisheries grew 2.9 per cent.
The province also posted total retail sales and services of VND16,681 billion (US$793 million) in H1/2013, up 18.6 per cent year on year.
Long An earned a total of $1.3 billion from exports, up 16.4 per cent year on year, while it spent $1.036 billion to import goods and services, up 7.8 per cent.
Sai Gon Co.op opens supermarket
Sai Gon Co.op opened its 62nd supermarket in central Nha Trang City with investment capital of more than VND120 billion ($5.7 million).
The store covers an area of more than 10,000sq.m and stocks more than 30,000 products including food, cosmetics, garments and household appliances and utensils.
It is the second Co.op supermarket in central Khanh Hoa Province to provide price-stabilised goods for local residents and neighbouring provinces.
On the opening occasion, Co.op mart Nha Trang offered discounts of 50 per cent on thousands of items till June 30.-
Viet Nam to host German businesses
The 14th Asia-Pacific Conference of German Business will be held in HCM City in November 2014, the German Industry and Commerce Viet Nam has announced.
Viet Nam's position as one of Germany's most important partners in Southeast Asa has presented it with the chance to host the conference for the first time.
At the meeting, German enterprises will make exchanges and promote trade with regional firms, economic experts and politicians.
The event will also offer opportunities for Vietnamese businesses to work with German peers to figure out ways to increase the two countries' bilateral trade and seek investment partnerships.
Tra fish exports forecast at $800m
Exports of tra fish are expected to reach around US$800 million in the first half of this year, down 7.3 per cent year-on-year, according to the Viet Nam Association of Seafood Exporters and Producers (VASEP).
Tra fish exports experienced a yearly decrease of 6.7 per cent in the past five months, reaching around $670 million in that time, VASEP said, blaming the unsatisfactory results for declining export value in some markets including the EU, one of Viet Nam's biggest customers.
Over the period, the country exported only $151 million worth of tra fish to the EU, plunging 17.6 per cent against the same time last year.
Truong Dinh Hoe, general secretary of VASEP, predicted that tra fish demand from the EU markets were not likely to recover as expected and Viet Nam's tra fish exports to the EU may not grow in the near future as the bloc's debt crisis had not been overcome, while consumer power was yet to change positively.
On a brighter note, Hoe said exports of tra fish to the US, another important market, could recover in the latter months of this year.
Tra fish exports to the US continued to increase, earning $150.8 million in the first five months, up 3.8 per cent against the same period last year.
Earlier, VASEP forecast that tra fish exports would bring in $1.9 billion by the year-end, surging 5.5 per cent year-on-year.
Tra fish business should meet stricter hygiene and registration conditions to guarantee quality and improve management of the sector, experts have said.
There should also be more co-ordination among tra fish farmers, processors and exporters, they said.
Firms get right to defer tax payments
Enterprises would be allowed to pay their tax debts by installments from the beginning of next month, under a new proviso intended to assist firms in weathering the economic storm.
The concession is set to be added to the amended law of tax management, due to come into force on July 1.
Under the caveat, deferred tax debts must be paid off within 12 months. Enterprises would then have to pay late payment fines at 0.05 per cent of the debt per day.
Enterprises must obtain a guarantee from credit institutions to qualify for the deferred payment. Under the guarantee, credit institutions must confer with tax agencies about the ability of firms to pay the taxes and fines for late payment in case enterprises do not fulfil their obligations.
If enterprises failed to pay tax debts according to the registered schedule, after five days of the deadline passing, guarantee institutions would be responsible for paying enterprises' tax debts and fines for late payment.
However, at a conference held last week by the General Department of Taxation, enterprises said the rate of 0.05 per cent per day for late payment, equivalent to 18 per cent per year, was high in comparison with the current loan interest rate of 12-13 per cent per year.
Enterprises also said that it would be difficult for them to gain such guarantees from credit institutions for deferred payment.
Seafood company delists due to low share value
Seafood processor Gentraco (GFC) will ask its shareholders to delist shares and terminate the status of a public company during its annual meeting tomorrow.
The company said that due to the overall impact of the economy along with its own difficulties, its share price in the stock market constantly declined to the current VND3,000 (US$0.14) per share.
Therefore, Gentraco could not raise capital through the stock market as well as enhance the interests of shareholders because of the low market value.
In addition, the Ha Noi Stock Exchange can delist the stock due to its low liquidity and being put under special warnings and control. Hence, the company will volunteer to cancel listing.
Gentraco expects revenue and profit this year will reach only VND779 billion ($37 million) and VND254 million ($12,000).
Seafood firms sell assets to stay in business
Viet Nhat Seafood (VNH) yesterday announced it had to sell some of its assets to raise capital for its operation.
Specifically, it will sell VND12 billion (US$571,400) in Phu Nhat Canned Food Co Ltd, which has a charter capital of VND36 billion ($1.7 million).
In addition, it had sold a VND54 billion ($2.5 million) property in HCM City to Sai Gon Trading Group earlier this year.
The company expects modest revenue and profits of just VND80 billion ($3.8 million) and VND4 billion ($190,000) for this year.
VNH shares lost 3.8 per cent yesterday to just VND2,500 ($0.10).
FPT earnings up in first five months
Software provider FPT announced its revenue during the first five months of this year reached nearly VND9.8 trillion (US$466.6 million), exceeding the period's target by 6 per cent and completing 36 per cent of the year's plan.
Gross profit was VND968 billion ($46 million), or 37 per cent of the year's plan, while net profit reached VND796 billion ($37.9 million), accounting for 36 per cent of this year's target.
Earning per share (EPS) after the first five months was VND2,162 ($0.10), equivalent to 35 per cent of the year's plan. FPT closed yesterday's session off 0.5 per cent to VND42,800 ($2).
Draft circular regulates asset management
The State Bank of Viet Nam this week unveiled a draft circular regulating the operation of the Viet Nam Asset Management Company (VAMC) which is to become operational on July 9.
According to the draft, lenders with non-performing loans (NPL) ratios of 3 per cent and above will be required to sell the loans to VAMC in either of two ways: at book value by issuing special bonds or at market value by using other sources.
VAMC will use the special bonds to buy only NPLs that are backed by collateral, 65 per cent of which must be real estate. The bad loans and collateral must be legitimate, not used to back other obligations of credit institutions and have full records and legal papers.
To have NPLs bought by the VAMC bonds, the balances or outstanding bad debts cannot be lower than VND3 billion for borrowing firms and VND1 billion for individual borrowers.
The Prime Minister will decide if VAMC buys bad loans that do not meet the conditions as recommended by the central bank.
To have bad loans purchased by VAMC at market value, which must be based on recoverability of the loans and collateral. The purchase price shall not be higher than the market value or the re-assessed value of the debts.
Borrowers must also have prospects of making repayments for the loans besides feasible production figures, business and repayment plans.
The draft circular also stipulates that credit institutions shall make specific provision for special bonds issued by VAMC.
Under the draft, VAMC can earn 2 per cent of total debts recovered and the income will be used to offset associated costs.
VAMC is expected to help the country to resolve roughly VND80-100 trillion of bad loans with a projected loan recovery rate of 20-40 per cent.
Vietnam Co-operative Bank to open
The Vietnam Co-operative Bank (Co-opBank), formerly the Central People’s Credit Fund (CPCF), will officially begin operating on June 24 with chartered capital of VND3 trillion (US$142 million) and an operational duration of 99 years.
The bank’s chartered capital is sourced from the State budget, CPCF members and other legal entities.
The two state capital representatives at the Co-opBank are the bank’s Board of Directors (BOD) chairman Tran Quang Khanh and its Director General, Do Manh Hung.
The bank will be headquartered in Nguyen Thi Dinh street, Cau Giay district, Hanoi and it will comprise a network of domestic and foreign branches.
Transformed from the CPCF, the bank will take responsibility for handling all the CPCF’s problems, in addition to implementing valid contracts and transactions signed by the CPCF.
VietinBank to loan $1.2b to Hoa Sen
The Viet Nam Joint Stock Commercial Bank for Industry and Trade (ViettinBank) will lend VND2.5 trillion (US$1.2 billion) to the steelmaker Hoa Sen Group for the construction of two mills containing cold rolling lines.
The loans will be disbursed in late 2013 and early 2014 under an agreement on strategic co-operation which was signed yesterday, said ViettinBank chairman Pham Huy Hung.
Each cold rolling line will have a designed capacity of 200,000 tonnes of metal per year.
VietinBank has also committed to providing funds for Hoa Sen Group to supplement the company's working capital. They will enjoy preferential lending rates of 8 per cent for short-term loans and 11 per cent for long-term credits, Hung noted.
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