VIETNAM´s BUSINESS IN BRIEF 26/11
Spain cuts funding for Metro Line No. 5
Spain can only provide the Metro Line No. 5 project in HCMC with a fund of 200 million euros, or around US$256 million, instead of 500 million euros as planned, as the EU country is experiencing the impact of economic crisis.
Eduardo Euba Aldape, deputy director general for trade policy with Europe and Asia-Pacific of the Spanish Ministry of Economy and Competitiveness, met HCMC Vice Chairman Nguyen Huu Tin on Wednesday to talk about the loan that Spain would give the city.
Under the witness of Spanish Ambassador to Vietnam Fernando Curcio, Aldape informed that the Spanish government would provide the project with 200 million euros, instead of 500 million euros as announced before. However, he stated Spain would help HCMC access other capital sources, such as banks in Europe.
“Now is the time for us to strengthen bilateral cooperation to gain confidence of lenders, like the Asian Development Bank (ADB) and the European Investment Bank (EIB),” Curcio added.
Technical study of the Metro Line No. 5 has been finished and the Spanish consultant hopes to get approval from the HCMC government soon so that it can do following jobs, said Aldape. The metro line will run from Bay Hien Intersection in Tan Binh District to Saigon Bridge.
Aldape informed the bilateral financial program between Spain and Vietnam had been extended to February 2015. It is to say there will be more time to carry out two project packages, namely the Metro Line No. 5 and the environmental projects already listed.
“For the projects in HCMC alone, Spain has spent five million euros (US$6.4 million) on technical support. This is an unprecedented effort in Asia,” said Aldape.
Vice chairman Tin expressed sympathy with the Spanish government over the public debt problems it is facing. He hoped the situation would improve next year.
The Metro Line No. 5 project will be developed with total investment capital of some US$1.85 billion.
The first phase of the project, with the section from Bay Hien Intersection to Saigon Bridge, is planned to be financed by official development assistance (ODA) of Spain. However, as Spain’s ODA is only equal 40% of the expected figure, the city will have to look for additional funds.
Meanwhile, the city is still seeking funds for the second phase of the project, with the section from Bay Hien Intersection to Can Giuoc Coach Station.
HCM City yet to start tunnel toll collection
HCMC authorities have decided not to collect toll on the Thu Thiem Tunnel as scheduled for to ease financial pressure on local people and companies struggling in the current economic hardship.
The toll collection will be launched when the situation changes for the better, the municipal authorities said in an announcement released on Tuesday.
The city’s government in September had entrusted the Department of Transport to prepare for collecting toll on a trial basis before the job is undertaken officially. The Saigon River Tunnel Management Center is in charge of deploying the toll collection test.
Speaking with the Daily on Wednesday, Tran Quang Lam, director of the center, said his agency from September to end-October had experimentally operated the toll collection system. The trial activity only recognized vehicles, checked tickets and allowed vehicles to run across the tunnel.
The pilot process shows that there are about 70,000 motorbikes and over 15,000 cars running through the tunnel every day. With such a large traffic volume, the daily amount paid by vehicles using the tunnel will be considerable and will contribute to maintaining the tunnel in the context that the city’s budget is limited.
However, according the local government, the 2013 economic situation is unpredictable and has shown no signs of recovery as soon as expected. Many producers and traders will continue to face difficulties and challenges next year due to declining demand and mounting inventories.
Delaying the toll collection, therefore, is expected to help avoid leaving bad impacts on the socio-economic situation, especially efforts to control inflation at home.
Vietnamese businesses learn more about North Europe's potential
The Vietnam Chamber of Commerce and Industry and the Embassy of Finland in Hanoi organized a business seminar on Finland and the North European markets on November 21st in Hanoi, as part of the Vietnam-EU Business Forum 2012.
At the seminar, economists introduced the potential of North Europe in general, and Finland in particular, to Vietnamese businesses.
Moreover, experts from Finland provided Vietnamese participants with practical information on cooperation programmes and the Finnish government’s financial assistance tools, such as Finpartnership and Innovation Partnership Programme.
Finland and Northern Europe are potential markets for Vietnamese enterprises seeking cooperation and investment opportunities.
Finland has also shown great interest in business and investment in electricity, electronics, IT, software production, agricultural product processing, high-class packaging and environmental management in Vietnam.
Though Vietnam and Finland established diplomatic ties in 1974, their bilateral trade has stood at a moderate level.
The two sides’ common goal is to beef up bilateral trade and investment. Rapid economic growth and economic structure reform in Vietnam are seen as good signs for the development of investment and trade between Vietnam and Finland.
Most recently, the Finnish government has put Vietnam on the list of 8 long-term partnerships for bilateral development cooperation. This has created favourable conditions for Finnish businesses, and at the same time confirmed the opportunity for economic development and cooperation for both Vietnam and Finland.
Lao-Viet JV Bank opens new branch
The Lao-Viet Joint Venture Bank (LVB) on November 22 opened a branch in the northern province of Xieng Khouang of Laos, raising the number of its branches in the country to six.
The new branch reflects LVB’s commitment to accompanying businesses investing in Laos and contributing to fostering economic ties between Vietnam and Laos.
Established in 1999, LVB is currently one of the leading commercial banks in Laos with its total assets worth nearly $460 million.
Exports hit over US$104 billion in 11 months
Vietnam’s total export turnover over the past 11 months is estimated to reach US$104.002 billion, up 18.4 percent against the same period last year.
According to the General Statistics Office and the Ministry of Planning and Investment, garments and textiles contributed US$13.786 billion to the total export values while mobile phones and spare parts contributed US$11.413 billion, footwear US$6.469 billion, computers and spare parts US$6.9 billion, seafood US$5.632 billion, and crude oil US$7.769 billion.
In November alone, export turnover hit US$10.2 billion, down 1.2 percent compared to the previous month.
The foreign investment sector posted an export turnover of more than US$6.7 billion—a slight increase on the previous month—making up 65.7 percent of total export earning.
Major export items enjoying high turnovers include seafood (US$550 million), cashew nuts (US$124 million), coffee (US$254 million), crude oil (US$805 million), rubber (US$260 million), and footwear (US$650 million).
Garments and textiles earned US$1.3 billion in exports while total export earning of mobile phone and spare parts reached US$1.35 billion.
Experts say Vietnam’s November import turnover reached US$ 10.25 billion, up 0.8 percent against the previous month. The foreign investment sector enjoyed an import turnover of roughly US$5.7 billion, contributing 55.6 percent of the total.
Key import commodities include oil and gas with a turnover of US$617 million; cloth (US$685 million); electronics, computers and components (US$1.4 billion); and machinery and related equipment (US$1.3 billion)..
In 11 months, total import turnover is expected to exceed US$103 billion, up 6.8 percent on the same period last year.
Machinery and equipment contributed over 14 billion; electronics, computers and electronic components US$12 billion; oil and gas US$8.3 billion; and cloth US$6.4 billion.
Real estate market expected to recover
Experts believe that in spite of the challenges clouding the sector’s outlook, the real estate market is bound to recover over the next two years.
At a recent HCM City seminar discussing the real estate market’s potential, authorities identified some of the biggest contributors to the loss of trust among consumers and investors. These include a high inventory level representing great value, incomplete construction plaguing many projects, and the slow progress in compensation and site clearance.
Le Hoang Chau, President of the Ho Chi Minh City Real Estate Association, said that with the current difficult economic context, the real estate market would not be able to address all its issues by 2013.
There are currently 10,000 apartments, 1,000 houses and 19,000 sq.m of office space still unsold in Ho Chi Minh City alone, Chau said. The real estate market’s problems have a domino effect on other sectors, such as building material production and interior decoration, and cause unemployment.
Economist Dinh The Hien said the sector is now enduring its hardest times in 15 years. Despite the sharp decrease in the prices of houses and apartments, their liquidity remains at low levels.
The total sales of real estate businesses listed on stock exchanges fell 20–25 percent compared to the same period last year, Hien said, adding that their profits also fell by 35–40 percent.
Hien said he believes the diminishing trust consumers place in the quality of houses and apartments is one of the main reasons for the low liquidity, noting that many “high-quality” residential projects are only providing adequate services.
Once the legitimate rights of consumers are violated or disrespected, they will no longer accept the products in question, especially when the market is confronted by various challenges.
The overabundance of houses and apartments will continue as many projects are nearing completion, Hien said.
He forecast the market will stabilise by 2014.
Nguyen Manh Ha, Director General of the House Management Department under the Ministry of Construction, said that though various responses have been proposed, none can solve the problems of the sector overnight.
He recommended measures to maintain a balance in supply and demand and assist consumers.
Ha said the Ministry of Construction has submitted a proposal to the government on establishing a house saving fund. Its implementation is expected in Hanoi and Ho Chi Minh City very soon.
In addition, Ha said, the ministry will intensify the inspection of construction projects, halt those deemed unfeasible, and redesign already completed apartments to more accurately meet consumer demands.
Nation tops Southeast Asia’s wood export market
Vietnam has become the largest wood exporter in Southeast Asia, earning US$4 billion over the past ten months of 2012.
According to the Ministry of Industry and Trade (MoIT), the value of wood exports have steadily increased from US$ 1 billion in 2004, to US$3.9 billion in 2011, and US$4 billion in the first ten months of 2012. Vietnam is now the sixth biggest timber and wood product exporter in the world and the second biggest in Asia.
The high quality of Vietnamese wood products has deservedly attracted the attention of the US and Japan, says the MoIT.
The Greek market is expanding its Vietnamese timber imports the fastest, increasing import value by 579.04 percent. Greece is followed by the markets in Thailand (121.66 percent) and Saudi Arabia (85.58 percent).
Exports to the Middle East increase sharply
Exports to the Middle East reached US$2.8 billion during the first nine months of 2012, up 56 percent against the same period last year.
The Ministry of Industry and Trade reported that telephones and electronic components saw rapid growth and became the market’s primary export commodities. The United Arab Emirates (UAE) took the lead, consuming 73 percent of the market’s exports, It was followed by Turkey with 11 percent, and Saudi Arabia with 9 percent.
Fabric and textiles rank second among export items, accounting for 9 percent of total export turnover. This type of commodity has become increasingly favoured by market forecasters in recent years, as they believe Turkish garment producers will ensure demand remains high.
Seafood products secured third place with 6 percent of total export turnover. Vietnam’s tuna products have been exported to 12 of the region’s nations, with Iran, Israel, Libya, UAE, and Egypt being the largest consumers.
Emerging export commodities like tobacco and glass could also soon capitalise on the potential of the Middle Eastern export market.
HCM City to host Lighting World 2012
The second annual lighting expo will be held in HCM City from November 29 to December 1.
The event, called Lighting World 2012, introduces the industry’s latest advanced products and technologies while producers and customers meet and discuss the trends that will guide developments in the sector over the next few years.
Organised around the theme “The Light of Future”, the event has already attracted 93 businesses from Italy, Spain, Belgium, Austria, Germany, France, the US, India, the Republic of Korea, Japan, and China.
Recent breakthroughs and redesigns in household lighting, industrial lighting, office lighting, outdoor lights, and LED technologies and accessories are all expected to be exhibited.
The organising board will also conduct seminars on the current status of the Vietnamese lighting sector, analyses of lighting consumption’s impact on the Vietnamese economy, as well as energy saving solutions based on LED technology.
Over US$12 billion in FDI
Vietnam has so far this year attracted US$12.181 billion in foreign direct investment (FDI), with more than half pouring in newly-licensed projects.
According to the latest report from the Ministry of Planning and Investment's Foreign Investment Agency (FIA), the country has granted licenses to 980 FDI projects during the reviewed period, representing a total capitalisation of over US$7.256 billion.
The processing and manufacturing industries led with more than US$8,507 billion in newly and additionally registered FDI capital, accounting for over 65 percent of the total FDI figure.
Real estate ranked second, attracting US$1,350 million in nine new projects. Five projects expanded their investment scale with an additional US$494.36 million, bringing total FDI in the real estate sector to US$1,845 million.
Other sectors that attract a large volume of FDI include information and communications, retail, wholesale, logistics, accommodation services, health care, science and technology, education and training, agro-forestry and fisheries, entertainment, electronics, mineral mining, water supply, waste treatment, financing, and insurance.
Japan remains Vietnam’s biggest foreign investor with 247 newly registered projects worth US$3,931 million and 103 expanded projects worth US$1,120 million. Singapore comes in second , followed by the Republic of Korea, Samoa, British Virgin Islands, Hong Kong (China), Taiwan (China), Malaysia, Germany, Thailand, the US, and France.
The southern province of Binh Duong is the top FDI destination (US$2.287 billion), followed by Ho Chi Minh City (US$1.145 billion).
November CPI rises 0.47 percent
Vietnam’s consumer price index (CPI) continued cooling down in November due to weak purchasing power, according to the General Statistics Office (GSO).
After skyrocketing to 2.2 percent in September, the country’s CPI went down to just 0.85 percent in October and 0.47 percent in November.
The November figure represents an increase of 7.08 percent on the same period last year, and 9.43 percent since the beginning of 2012.
The decline in the November CPI was attributed to price reductions of key items in the 11 commodity groups. . Food and beverage and other services inched down 0.21 percent and 0.08 percent respectively. Education and healthcare services, which had seen the highest price rises in October, declined sharply in November, averaging around 0.13 percent. Post and telecommunications remained low, dropping to 0.01 percent.
The GSO also announced the latest gold price index even though it does not contribute to CPI calculations. The gold price index fell to 1.98 percent in November, while the price in USD finished down 0.11 percent compared to last month.
Both of the country’s largest cities, Hanoi and Ho Chi Minh City, posted low CPI readings of 0.22 percent and 0.10 percent respectively.
HSBC equips students with management know-how
HSBC Vietnam and the HCM City National University have jointly introduced a new financial management program for students at major universities in Hanoi, HCM City, Danang, and Can Tho.
It was officially launched on November 24 by a series of seminars on finance and discussions with HSBC’s senior directors.
The special program will provide around 3,000 students with useful knowledge of financial management and related career orientations.
It aims to help Vietnamese students improve their understandings of the skills necessary for building financial plans the financial acumen required to pursue their favoured careers. It will also give students valuable insights into savings, credit, insurance, investment, risks, and goal setting.
A competition was held offering opportunities for students to practically apply financial knowledge and devise effective solutions for real life situations. Five outstanding teams will receive prizes and have the chance to work at HSBC—one of Vietnam’s leading international banks.
HSBC has already implemented projects including basic financial management and consumer responsibility coaching for primary students and a curriculum on expenditure management for young women and teenagers living in difficult circumstances in remote areas.
The bank has also established an online library that provides students with free financial information and advice.
Work starts on first WB-funded hydro power project
A hydro-electric power plant funded by the World Bank got off the ground in Trung Son commune, Thanh Hoa province, on November 24.
Addressing the ground-breaking ceremony, Deputy Prime Minister Hoang Trung Hai noted that the project is of great significance as it helps not only generate power, but also prevent flooding and drought in the central region.
Vietnam imports electricity to serve domestic use, especially business production, and hydro power is a potential source of energy that can be taken into account. However, the country must use water resources efficiently to achieve its sustainable development target.
With the assistance from WB experts, the Trung Son project will meet tough criteria on the environment and safety, ensuring social security, said Hai.
He asked investors, contractors, consultants and supervisors to work on project progress and quality to put the plant into operation on schedule.
He also asked them to work closely with local authorities to take care of displaced residents in the new resettlement areas.
The project, with a design capacity of 260MW, is invested by the Electricity of Vietnam (EVN) group with a total capitalisation of US$410.7 million, of which US$330 million is sourced from WB loans.
WB Vietnam Country director Victoria Kwakwa said this is a well-planned project, meeting international standards. The plant, the first of its kind to be funded by the World Bank, will support local socio-economic development and bring numerous benefits to local people.
The first group of turbine is scheduled to generate power in the fourth quarter of 2016.
Coffee prices continue to rise
Vietnamese coffee prices have enjoyed a constant rise since last year and are likely to continue upwards in the future, according to the Ministry of Industry and Trade (MoIT).
The MoIT predicts that prices of coffee on the global market will surge by 2-3 percent annually, especially in the Southeast Asian region, thanks to increasing demand estimated to hit 172.2 million 60-kg bags by 2021. In 2012, the world’s total output stands at 131.6 million bags, which is below the collective demand of 137.1 million bags.
The total yield of Vietnamese coffee in the 2011-2012 crop remained high and coffee exports capitalised on advantageous prices. Between January and September 2012, the average offered price for Vietnamese coffee was US$2,126 per tonne.
Vietnam exported 1.41 million tonnes of coffee during the past 10 months , earning US$3.02 billion and representing an increase of 37.7 percent in volume and 32.7 percent in value compared to the same period last year.
Coffee prices are forecast to rise thanks to the limited 3 percent reserve of the previous crop. Accessing this stored volume is difficult as coffee traders are expected to wait for higher prices during the remainder of the year.
The two largest importers of Vietnamese coffee are the US and Germany, accounting for 12.11 percent and 12.09 percent of total market share respectively.
Indonesia is emerging as an export market with great potential for Vietnamese coffee, as indicated by a sharp recent increase in its import volume and value.
Vietnam-Japan joint initiative improves investment climate
Kyohei Takahashi, Co-Chairman of the Vietnam-Japan Economic Committee, said both countries have been active in realising the joint initiative aimed at creating an open and transparent investment environment.
He highly values the initiative, saying it has helped macroeconomic stabilisation, developed the support industry, created better living environments around industrial parks, augmented intellectual property, and expanded retail markets. It has also facilitated the development of public-private infrastructure investment.
The two countries have established a macroeconomic group to promote mutual understandings and demonstrated transparency in regards to their international balance sheets and foreign currency reserves, said Takahashi.
He also acknowledged some shortcomings, including the lack of clarity in regulations on recalling and dealing with discarded products.
Japanese Ambassador to Vietnam Tanizaki Yasuaki suggested the two countries focus on removing obstacles hampering investment to create conditions more conducive to foreign direct investment flows.
He revealed that Vietnam has received US$1.2 billion in the first installment of the Japanese Government’s 2012 ODA loans and Japan will soon make its decision on Vietnam’s ODA grant for the whole year.
Minister of Planning and Investment Bui Quang Vinh affirmed that in 2012 the joint initiative has helped Vietnam improve economic development policies, especially those relating to the investment climate, contributing to foreign investment attraction.
Japan is presently the top foreign investor in Vietnam, he said, adding Vietnam is expected to receive more assistance from the Japanese Government in the future.
Trade surplus worth US$64 million
The country’s trade surplus in the past 10 months of the year hit US$64 million, according to the Vietnam Customs.
By the end of October 2012, the country’s total import-export turnover reached US$187.5 billion, up 12.5 percent from a year earlier.
Of the figure, exports increased by 18.9 percent to US$93.8 billion, and imports by 6.7 percent to US$93.74 billion, against the same period last year.
The Ministry of Industry and Trade said total import-export value in October alone rose 9 percent to US$20.5 billion compared to September.
By the end of October, foreign-invested businesses earned US$101.2 billion (up 29.9 percent), making up 54 percent of the country’s total import-export turnover.
Topping export items with high revenue were cameras and components, telephones, computers, electronics, means of transport, wood products, crude oil, footwear, garment and textile, and seafood.
Among import items seeing a rise in turnover were mechanics, equipment, spare parts, materials for the garment and textile sector, footwear, oil and gas, computers, telephones, iron, steel and cattle feed.
New opportunities for garment sector
The Trans-Pacific Partnership Agreement (TPP) is expected to take effect as of 2015.
Le Quoc An, senior advisor of the Vietnam Textile and Apparel Association (VITAS) said Vietnam has conducted 14 rounds of negotiations and is preparing for the next round.
Once Vietnam joins the TPP, around 1,000 import tax lines will be reduced from 17.3 percent to zero percent while export growth will increase from 7 percent to 15 percent.
The garment and textile sector’s exports to the US market are estimated to reach US$7.6 billion in 2012 and around US$22 billion by 2020.
Around 10 businesses from different countries are planning to build factories in Vietnam in the near future.
Trade surplus to Malaysia hit nearly US$1 billion
Two-way trade turnover between Vietnam and Malaysia increased by 21.2 percent to US$6.53 billion in the first ten months of this year.
Of the figure, Vietnam’s exports to Malaysia were estimated at US$3.76 billion, up 18.4 percent and its imports from the country at nearly US$2.77 billion, up 25 percent, compared to the same period last year.
The Vietnam Trade Office in Malaysia said among key export items were crude oil, rubber, rice, computers and components, telephones, coffee, seafood, steel, machinery, equipment and means of transport while those imported from Malaysia include animal and plant oil, petroleum, chemicals, plastics, oil and gas products, timber, paper, milk and dairy products.
It is expected that two-way trade turnover between the two countries in 2012 will surpass US$7 billion, an increase of around 4.5 percent over 2011.
Vietnam is currently Malaysia’s fourth largest partner in ASEAN, after Singapore, Thailand and Indonesia.
Two investors register for casino project on Phu Quoc island
Two investors have committed to invest US$4 billion in a casino project on Phu Quoc Island district of Kien Giang province, according to the provincial Department of Planning and Investment.
The project covers an area of 135 hectares in Da Chong hamlet, Bai Thom commune.
One investor is a joint venture between local partner Bo Bien Vang Phuong Nam and Environmental Energy Solutions Technology Inc. from the Philippines. The other is a joint venture between local tourism company Ngoi Sao Bien JSC and Asia Strategies Consulting & Advisory Service Ltd.
Asia Strategies Consulting & Advisory Service Ltd has asked the Vietnamese Government to accept it as an independent consultant in the process of building procedures and completing investment documents. At its proposal, local tourists will be considered to participate in Casino activities.
Expert downgrades 2012 economic outlook
Viet Nam 's economic growth rate in 2012 is forecast at 5.2 per cent. It is the second adjustment from the previous projections of 5.5 per cent and 6.5 per cent, and is due to the slowing down of the country's socio-economic performance in the first 10 months of 2012.
Nguyen Thi Tue Anh, head of the Competition Capacity and Business Environment Department of the Central Institute of Economy Management, made the judgment at a forum held in Ha Noi yesterday.
Agricultural production is moving in a downward trend while the industrial index has increased by only 4.8 per cent, half the figure of previous years, she said.
In the past 10 months, the country's import and export turnover stood at US$93.7 billion and $93.8 billion, respectively, a year-on-year increase of 6.7 per cent and 18.9 per cent, she added.
At the forum, domestic economists shared reviews of Viet Nam 's 2012 economy and predicted 2013 economy, which is helpful to policy-makers.
Touching upon fiscal policy, Nguyen Dinh Anh from Price Market Scientific Research Institute said that it is hard to make estimates for this year's State budget revenue because of impacts the slump in the economy has had. This might prompt an increase in budget deficit, resulting in an unstable macro-economy and budget spending restrictions, he added.
Presenting socio-economic projections for 2013, participants spoke of factors likely to increase inflation, but at a modest level.
Tue Anh suggested that the country change its growth model, boost foreign direct investment attraction and improve efficiency of the business restructure.
According to international organisations, Viet Nam 's economy in 2013 will see more positive signs than in 2012. They suggested that as the year 2013 is seen as a threshold for the following years, Viet Nam should focus on maintaining a sustainable macro-economy, growth, removing difficulties for enterprises, improving the employment rate, personal income and living standards of people of all classes.
According to the 2013 socio-economic development plan, Viet Nam 's economic growth will reach 5.5 per cent with 10 per cent export growth.
Meeting reviews 10 years of Viet Nam-Japan Initiative
The Viet Nam-Japan Joint Initiative after 10 years of implementation has helped the Vietnamese Government improve economic development policies, in particular the investment environment to attract more investment and develop the country's economy.
Minister of Planning and Investment Bui Quang Vinh made the announcement at a meeting held by the Ministry of Planning and Investment (MPI), the Japanese Embassy in Viet Nam and the Viet Nam-Japan Economic Committee (VJEC) in Ha Noi yesterday to review the fourth phase of the initiative.
Japan now ranks first among 96 countries and territories that have invested in Viet Nam. Therefore, Viet Nam wants to maintain Japan 's strong support in the fifth phase of the action plan, Vinh added.
Takahashi Kyouhei, VJEC's President, said that over the past 18 months Viet Nam has worked with the Japanese side to hold close to 40 policy talks to deal with difficulties that surfaced in the investment process.
Japan has made constructive recommendations and coordinated with Viet Nam to carry out joint surveys that will be used as a reference to complete laws and policies of Viet Nam 's functional agencies.
The two sides established a macroeconomic group in order to increase mutual understanding and make some of Viet Nam 's macroeconomic targets more transparent, including international receipt and expense balance, and foreign currency reserves.
Japanese Ambassador to Viet Nam Tanizaki Yasuaki says to attract more foreign direct investment to Viet Nam, the two sides have agreed to solve existing problems in investment procedures and environment. After the first ODA package of $1.2 billion for Viet Nam, Japan will decide on ODA capital for the whole year.
S&P lowers Vinacomin rating
Standard&Poor's on Thursday lowered its long-term corporate credit rating for Viet Nam National Coal and Mineral Industries Holding Corporation (Vinacomin) from "Double B Minus" to "B Plus" – with a stable outlook.
The ratings agency said the axBB long-term ASEAN regional scale rating on the corporation.
The downgrade reflected S&P's expectation that Vinacomin's financial risk profile would weaken due to the large capital spending and the declining profitability of the corporation's coal operation.
S&P forecast Vinacomin's debt-to-EBITDA ratio — the comparison of financial borrowings and earnings before interest, tax, depreciation and amortisation — would climb to more than 4.0x and its ratio of funds from operations (FFO) to debt to decline to about 15 per cent over the next two years from 2.8x and 24 per cent respectively last year.
It also lowered the corporation's stand-alone credit profile to b+ from bb-.
It expected that Vinacomin would spend VND10-11 trillion (US$500 million) a year in the period of 2012-14 to complete its power, alumina and non-coal minerals projects and expand coal production.
The forecast was VND15-20 trillion lower than Vinacomin's plan.
S&P believed that Vinacomin would continue to have negative free operating cash flows at least until 2014 and would raise debt ratio to fund its investments.
The rating agency also expected that the corporation's coal operations would be gradually less profitable and cash flow generative over the next two years.
This was because the corporation has sold a higher proportion of coal to the domestic market at prices which were lower than market ones.
S&P forecast annual EBITDA at about VND10-12 trillion next year and 2014 while FFO at VND7.5-9 trillion annually until 2014.
Vinacomin's EBITDA and cash flows for the second half of the year would be likely to remain weak following the decline in coal prices since May 2012.
Construction starts on Lixil building material factory
Construction of a Japanese-invested building material factory kicked off yesterday in Long Duc Industrial Zone in the southern province of Dong Nai.
The Lixil Viet Nam Global Manufacturing Ltd Company under Japan's Lixil Corporation is building the factory with a total investment of US$441 million. The factory will produce resin and aluminium products, including sashes, doors, windows and frames.
It is the Lixil Corporation's largest project in Viet Nam and Japan's biggest project in Dong Nai Province.
Kawamoto Yuichi, deputy general director of the Lixil Corporation, said Lixil aimed to expand into new business sectors in Viet Nam during the next 10 years.
Morita Nguyen, business director of the Lixil Inax Viet Nam Ltd Company, said the corporation started business operations in Viet Nam 15 years ago and now has seven building material factories nation-wide.
The factory in Dong Nai is expected to begin operations in 2013 to supply building materials for the domestic market and for export to countries such as Japan, South Korea, Taiwan, Hong Kong, Cambodia, Lao and Myanmar, said Nguyen.
Sacombank, Eximbank confirm negotiations for possible merger
The merger of Sacombank and Eximbank is a serious possibility and not merely a rumour, with Eximbank chairman Le Hung Dung this week admitting that the two banks have been in negotiations.
The merger talk was initiated when Eximbank acquired a 9.73-per-cent stake in Sacombank from the ANZ Banking Group. Virtually no information was disclosed about the deal, prompting rumours of a merger being in the pipeline.
Dung told Thoi bao Doanh nhan (Entrepreneur Times) that the merger would be a good idea if it met necessary conditions.
The merged bank would become a major player in the nation's banking industry, with over 600 branches, charter capital of VND30 trillion (US$1.4 billion) and asset totalling VND400-500 trillion ($19-24 billion).
Sacombank has charter capital of VND10.7 trillion ($500 million), while Eximbank's totals nearly VND12.4 billion ($590 million). If the two banks were merged, the new entity's capital and assets would put it in a rarified league currently dominated by predominately State-owned banks like Vietcombank, Agribank, Vietinbank and the Bank for Investment and Development of Viet Nam (BIDV).
The merger would contribute to national economic development and the restructuring of the banking sector by reducing the number of banks and increasing the overall health of the financial system, Dung said. However, any deal would require the approval of the State Bank of Viet Nam and other relevant authorities as well as the shareholders of both banks.
Sacombank chairman Pham Huu Phu said the idea for the merger predated Viet Nam's accession to the WTO in 2007. The merger would help create a large-scale bank capable of competing on the market with foreign banks, Phu said.
HCM City to host Vietnam Expo 2012
The Vietnam International Trade Fair, one of the biggest trade promotion events, will be held next Wednesday in HCM City, announced the event's organiser, the Viet Nam National Trade Fair and Advertising Co.
The four-day event will attract the participation of 250 enterprises from 20 countries and territories, showcasing their products at 300 booths.
On display will be construction machinery, industrial equipment, electronics and computer and telecommunications products.-
Big C to embrace solar power
Supermarket chain Big C and Scheider Electric Viet Nam yesterday signed a co-operation contract to install a solar power system worth more than VND11 billion (US$526,000) at Big C Di An in southern Binh Duong Province.
The system, using 212kWp (aka Peak Power) solar panels, will be connected to the building's power grid and produce 230,000 kWh per year (about 7 per cent of the total power consumption of an average shopping centre).
Big C Di An, slated for completion early next year, will be the first commercial centre using solar energy in Viet Nam, and the system is expected to help the supermarket cut power consumption by 30 per cent, as well as reduce the power overload on the national grid.
Japan invests in Dong Nai
Construction of a Japanese-invested building material factory kicked off on Thursday in Long Duc Industrial Zone in the southern province of Dong Nai.
The Lixil Viet Nam Global Manufacturing Co Ltd under Japan's Lixil Corporation is building the factory with a total investment of US$441 million.
The factory will produce resin and aluminium products, including sashes, doors, windows and frames. It is the Lixil Corporation's largest project in Viet Nam and Japan's biggest project in Dong Nai Province.
Kawamoto Yuichi, deputy general director of the Lixil Corporation, said Lixil aimed to expand into new business sectors in Viet Nam during the next 10 years.
Morita Nguyen, business director of the Lixil Inax Viet Nam Co Ltd, said the corporation started business operations in Viet Nam 15 years ago and now has seven building material factories nation-wide.
The factory in Dong Nai is expected to begin operations in 2013 to supply building materials for the domestic market and for export to countries and territories such as Japan, South Korea, Taiwan, Hong Kong, Cambodia, Laos and Myanmar, said Nguyen.
Phan Thi My Thanh, deputy chairwoman of the provincial People's Committee, said Japan was the third largest foreign investor in Dong Nai, having invested a total capital of $2.6 billion.
She added that Japan would be given priority for future investment opportunities in the province over the coming years.
According to the Foreign Investment Agency - a subsidiary of the Ministry of Planning and Investment - Japan invested $28.9 billion in Viet Nam by the end of October 2012.
Vo Hong Phuc, former minister of planning and investment, said Japan still considered Viet Nam as a leading destination for investment. However, he added that the country faced increased competition from Thailand, Indonesia and even Myanmar for Japanese investment.
EVN, Siemens ink energy MoU
Electricity of Viet Nam (EVN) and German engineering giant Siemens signed a memorandum of understanding (MoU) in Ha Noi on Thursday to promote co-operation in the energy sector over the next five years.
Under the terms of the MoU, EVN and Siemens would exchange information, experience and technical training as well as search for financial resources for electrical projects.
At the signing ceremony, Siemens Viet Nam general director Pham Thai Lai said Viet Nam was one of countries in the region with the most rapid growth and most rapidly increasing power demand, and the energy sector was striving to meet that demand while dealing with electricity shortages in the immediate term.
Siemens would co-operate with EVN to implement the national electrical development plan, enabling Viet Nam to become a fully-industrialised nation by 2020. Siemens would also provide advanced products and technologies, help train and develop human resources, and support EVN to access to financing.
Ha Noi needs $25b to build trade centres
Ha Noi will require as much as VND521 trillion (US$24.8 billion) to make good on plans to develop high class whole sale and retail systems by 2030, the capital's People's Council has claimed.
Under the plans recently approved by the People's Council, the money will be used to convert the city's trading system into a national and regional trading centre by 2030. The city would call on foreign and domestic enterprises, individuals and organisations in the trade sector to raise capital, the council said.
Nearly a quarter of the figure (VND161 trillion) would need to be invested by 2020 with the remaining VND360 trillion ($17.1 billion) to be filtered through in the following decade.
Ha Noi would have eight agricultural wholesale markets, each with a scale of between 50-100ha, situated in Me Linh, Phu Xuyen, Thach That and Gia Lam districts.
Ha Noi would avoid building new inner city markets and would instead upgrade existing sites into hypermarkets.
The city would have 19 hypermarkets in its central area plus 32 shopping centres extending out to satellite cities such as Hoa Lac, Phu Xuyen, Son Tay and Soc Son.
Ha Noi would also develop general wholesale centres at regional level for industrial products in Gia Lam Soc Son, Chuc Son, Thuong Tin and Son Tay.
New international-standard exhibition centres would be built in My Dinh and Dong Anh areas, while Phu Xuyen and Soc Son would house logistics service centres to serve Ha Noi's customers.
According to the Ha Noi Industry and Trade Department, Ha Noi has 20 trading centres and 110 supermarkets, most of which are located in the central regions of Ha Noi.
The city doesn't have trading centres at regional and international level, or wholesale centres and logistics service centres,so enterprises have difficulties finding places to conduct business and high quality trading services, while they still pay high costs for their trading activities.
BUSINESS IN BRIEF 26/11 - News VietNamNet
