BUSINESS IN BRIEF 9/5

Ninh Thuan signs yet another renewable power project

Ninh Thuan signs yet another renewable power project, Foreign, domestic shareholders fight over control at Eximbank, Real estate sector M&As on the rise, Reforms needed to achieve 6.7% growth

A Canadian investor has plans to invest in the renewable power sector in the central province of Ninh Thuan as a reaction to the increase in unimplemented renewable power projects in the country.

The Canadian company, CMX Renewable Power Group, has recently attended a working session with the leadership of the Ninh Thuan People’s Committee to propose a $150 million solar power project.

Accordingly, once the project is approved, the investor will construct a 250 hectare facility where it committed to using local workers as well as local materials. In addition, CMX will supply 1 per cent of the solar farm’s power capacity to local people each year free of charge.

Deputy Chairman of the Ninh Thuan People’s Committee Pham Van Hau said that Ninh Thuan had always welcomed investment capital in the renewable energy sector because these projects would play an important role in the province’s socio-economic development and contribute to supplying renewable energy sources for the country.

Previously, a joint venture between Binh Nam Bac Investment Trading Co., Ltd. and Leverage Company from Japan expressed their interest in investing in a renewable energy project in the province.

Ninh Thuan’s greatest potential lies in the development of wind energy projects. As Vietnam’s wind energy hub, the province has licensed many investors to develop wind power plants here. For example, in mid-2014, Power Generation Corporation 2, a subsidiary of state-run Electricity of Vietnam (EVN), kicked off the Cong Hai 1 wind-to-power project in Suoi Gieng hamlet in Cong Hai commune. The project, worth over VND1.5 trillion ($69.76 million), is being constructed in two phases.

To date, Ninh Thuan has had plans for 12 wind-to-power projects, many of which have already been licensed. They include the Phuoc Nam renewable energy project, Enfinity, Mui Dinh, and Cong Hai projects.

Foreign, domestic shareholders fight over control at Eximbank

Domestic shareholders at Vietnam Export Import Bank (Eximbank) refused to show up at the annual shareholders’ meeting on April 29 possibly to protest foreign shareholders’ pushing them out of the Board of Directors.

Eximbank failed to hold the annual shareholders’ meeting on April 29 as the number of participants did not meet the minimum requirement of 65 per cent voting stake as per Eximbank’s charter. As of 10am on April 29 the number of shareholders at the meeting was 50.19 per cent.

Ngo Thanh Tung, representative of Eximbank’s Board of Directors, said that there were two groups of shareholders holding the respective stake of 11.82 per cent and 10.42 per cent, a total 22.24 per cent, who didn’t register to join the shareholders’ meeting even though the bank was proposing increasing the number of members in the Board of Directors.

Tung did not mention another 27.57 per cent stakeholders who did not register to join.

Clause VII of the bank’s rule on nominating, running for and voting for members of the Board of Directors and the internal audit and control committee of Eximbank for the 2016-2020 term ratified at the extraordinary shareholders’ meeting of Eximbank on December 16, 2015 said, “In case the number of members of the Board of Directors is lower than the planned number, but not lower than two thirds of the number needed to be voted into the board, and with the correct makeup as agreed on beforehand then the shareholders’ meeting will ratify this new board and there’s no need to vote to add more members right in this meeting. The bank will add members in the next nearest meeting.”

However according to the report of the April 29 meeting, although two groups of shareholders nominated members to the Board of Directors, the board did not put them up for voting. The board now has nine members and is short of two. This affects the right of those groups.

Many shareholders who did not join the meeting may have done so to show their disagreement. Eximbank’s big foreign shareholders including Sumitomo Mitsui Banking Corporation, Mirae Asset Exim Investment and VoF Investment Limited, a fund under VinaCapital, did not protest the board’s decision to not add members.

They even proposed reducing the number of members in the board from 11 to 9 after they had enough people in the board to prevent other groups of shareholders to have people in the board.

According to Eximbank’s audited financial statement, in 2015 the bank earned net profit of VND40 billion ($1.79 million), down 88 per cent from 2014.

Real estate sector M&As on the rise

Vietnam is becoming an attractive profit-generating market for investment in Southeast Asia, with a low interest rate, record low inflation in 2015, and the VND exchange rate far better than other currencies in the region.

The number of foreign and domestic investors studying the real estate market in Vietnam has been increasing sharply since the beginning of 2015.

More and more multinational investment and property development companies have realised this encouraging improvement, leading to a series of mergers and acquisition (M&A) deals in the retail and hospitality sectors in the past year.

This is the reason why, out of the $5 billion in M&As in Vietnam in 2015, most of the large sale transactions were in the transfer of real estate projects.

Entering 2016, the continued strong growth of sales in the residential market –  especially in Ho Chi Minh City – has driven investors to focus on M&As in this market. TNR Holding bought TNR Tower from Vingroup for $110 million; Keppel Land bought a part of Empire City project in Ho Chi Minh City from Empire City Ltd. New launches continued to be in the east (48 per cent) and the south (31 per cent) of Ho Chi Minh City.

Interestingly, the western part of the city has become busy again, accounting for 11 per cent of new supply. This reflects the recent trend of notable developers making the strategic move west for cheaper land prices, greater availability of land, and improved infrastructure over recent years via Vo Van Kiet boulevard and relatively complete inter-regional connectivity through the Ho Chi Minh City-Trung Luong expressway.

Since the second half of 2015, domestic companies have been “hunting” for suitable land banks in the west of the city to develop their projects. Notably, Khang Dien House Trading and Investment JSC bought 32 million shares of Binh Chanh Construction Investment (BCCI) JSC. This purchase allowed them to increase their land bank through the 400 hectare site in Ho Chi Minh City’s Binh Tan and Binh Chanh districts.

These owners are rapidly capitalising on the low-cost advantages of this western region, thus allowing them to develop new investment preferences while increasing the quality of life for low/mid-end customers in the area.

Since the end of 2015, Vietnam’s retail market has also been a hive of M&A activities.

Several Thai retailers have come to consider Vietnam “fertile” ground for brand development and investment.

One such retailer is Central Group. After opening two Robins Department stores in 2014, it is expanding its business in the electronics retail sector through the acquisition of 49 per cent in Nguyen Kim.

Real estate transactions were the majority of $5 billion in M&A’s in Vietnam during 2015

Another example, Berli Jucker (BJC) acquired Metro Cash & Carry in late 2015 and was listed among the potential buyers for Groupe Casino’s (France), 30+ Big C supermarkets across Vietnam. Other well-known retailers in the running for this acquisition include Dairy Farm Group from Singapore, Lotte Shopping from South Korea, and Aeon from Japan.

As the business results of city hotels and beach resorts are improving all the while, this industry looks likely to continue attracting foreign investors and operators, as well as local customers.

While the public is still wondering whether or not the apartment market in Ho Chi Minh City and Hanoi is undergoing a property bubble, thousands of resort properties have been traded successfully in the southern island of Phu Quoc, the south-central cities of Nha Trang and Danang in 2015 and 2016’s first quarter. Guaranteed yields and weekend sales events have funnelled billions of dollars into these coastal areas.

In the overall picture of M&A activities over the past year, we can see that the advantage of investment rests with the local enterprises because they have better access to land. They also understand the business environment as it relates to domestic sales, thus saving them more time implementing the deal.

However, domestic investors still encounter certain difficulties, as only some local firms have the financial capacity to dominate M&A deals.

Compared to foreign investors, domestic investors do not have much experience. To achieve high efficiency in M&A real estate transactions, an investor requires many different capacities – not just capital. Ideally, an investor should have the ability to evaluate the potential of the project relative to their company’s market share, weigh the investment objectives of the enterprise, determine a suitable price, be competitive in the bidding process, and – crucially – be able to implement and manage the project after the transfer.

In the context of the real estate market entering a new development cycle, a stable macro-economic situation, and positive domestic demand relative to a dampened regional economy, will foreigners with the financial resources be able to find more appropriate investment opportunities?

According to CBRE’s January 2016 survey of over 200 major investors across the Asia-Pacific region, 20 per cent of investors wanted to invest in Southeast Asia, as compared with 17 per cent in 2015. Also, 36 per cent of investors said that Vietnam was an attractive investment market, compared to Singapore, which scored 31 per cent.

However, according to the survey, the biggest concern for foreign investors seeking investment opportunities in Vietnam continues to be transfer price issues and transparency. If the buyer and seller can come together on these two issues,  M&A activities are likely to remain vibrant.

In 2016, Vietnam’s real estate sector is expected to continue its ascendancy, creating many opportunities and favourable conditions for M&A activities. This is due, at least in part, to the ASEAN Economic Community officially being put into operation in 2016, as well as the Trans-Pacific Partnership and other trade agreements which are in the final stages of negotiation.

CBRE expects to see continued interest in real estate, particularly in hospitality, retail, industrial, logistics assets, and, of course, the housing sector. CBRE believes that developers, investors, and users have Vietnam on their radars and the market will welcome new players in the near future.

Shining some light on delayed infrastructure works in second city

After several impressive ground-breaking ceremonies a string of infrastructure projects in Ho Chi Minh City have reported little or no progress. Why is this?

Starting work from April, 2015 with a total investment capital exceeding VND1.3 trillion ($59.7 million), the build-operate-transfer (BOT) project to build a new Binh Loi railway bridge crossing Binh Thanh-Thu Duc districts, replacing the old one which is over 100 years old, has seen no progress made.

After repeated warnings, the developer- Green Urban Investment and Development JSC and STD Construction and Investment JSC- promised to continue the project in October 2015. To date, no progress has been made, even though concerns remain that the old bridge could collapse at anytime.

Another BOT project, developed by Ho Chi Minh City Infrastructure Investment JSC (CII) to expand a 15.7km section of Hanoi Highway, an arterial route heading Ho Chi Minh City centre and Cat Lai port, is in a similar situation.

Despite holding its ground breaking ceremony six years ago, the project has yet to begin construction. With such a delay, the initial total investment cost of VND2.28 trillion ($104 million) faces a cost overrun threat.

The work starting ceremony of another project to build a 2.7km road linking Pham Van Dong road and the Go Dua bridge in Thu Duc district took place in early December 2015, but no further progress has been made.

The project, developed by a consortium consisted of HNS Vietnam Investment JSC and Van Phu Investment JSC and Bac Ai Investment and Construction Consulting JSC, reports VND1.13 trillion ($52 million) in total investment capital for phase 1 construction (not including land acquisition cost) and will go under a build-transfer (BT) format.

The projects’ delay was mainly attributed to difficulties in site clearance and compensation. In some cases, construction occurs parallel to site clearance.

For instance, regarding the project to build the road connecting Pham Van Dong street and Go Dua bridge, the developer is currently still involved in negotiations regarding compensation costs with the local residents.

Regarding the project to build the new Binh Loi railway bridge, the cause of delay, according to the city’s Department of Transport, involved site clearance impediments.

Another delayed project, the $100 million-plus scheme to build an underground parking area beneath Le Van Tam Park, the holdup was caused by a design change to the fire prevention and cure system to meet new regulations, according to Le Tuan, general director of Underground Space Investment Development Corporation (IUS), the project developer.

Industry experts speculated that the developers’ lack of experience was also a cause leading to project delays.

For example, the developers of the projects to build the new Binh Loi railway bridge and the Hanoi Highway expansion section were in fact operating in housing construction and so lacked experience in implementing large transport infrastructure projects.

Reforms needed to achieve 6.7% growth

But economists predict the national economy may achieve the goal of 6.7% GDP growth rate if reforms are undertaken aggressively.

Dr. Nguyen Dinh Cung, Director of the Central Institute for Economic Management, says it’s important to tighten unnecessary public-invested projects and focus on the truly effective projects with solid economic impact.

Economist Le Dang Doanh shares the view that membership in the ASEAN community will strongly affect Vietnam’s trade balance beginning in the 2nd quarter. Obtaining Official Development Assistance (ODA) loans will be more difficult, resulting in reduced ODA.

Dr. Doanh recommends strong reforms by changing the method of selecting public-invested projects, seizing opportunities of trade liberalization and pushing administrative reforms.

Dr. Nguyen Duc Thanh, Director of the Vietnam Institute for Economic and Policy Research, calls on the government to go ahead with its macro-economic stabilization goal: “The government should restrain spending but adopt a strategy for spending cut rather than hard landing.

Without this, the budget deficit problem can’t be solved and that will affect the implementation of goals set by the NA. At the same time, we hope that the economy will recover, bringing in more revenues”.

Dr. Dao Van Hung, Director of the Academy of Policy and Development, stressed the need to continue strong institutional and administrative reforms, particularly reforms of state-owned enterprises.

Some economists point to optimistic signals in Vietnam’s economy. Dr. Vu Dinh Anh says the growth target of 6.7% is within reach, adding that the economic restructuring since 2011 plus the reform of the growth model will boost Vietnam’s growth this year.

Can Van Luc, senior advisor at the Bank for Investment and Development of Vietnam, says “There are many factors that impact growth.

For example, this year’s average oil price will return to a higher level than last year. This year’s food prices will also be higher than last year.

Another factor is the high credit growth, about 18%. We are hopeful about Vietnam’s high economic growth rate”.

Anti-dumping duties on stainless steel imports revised up

The Ministry of Industry and Trade has adjusted up anti-dumping duties on cold-rolled stainless steel products imported from China and Indonesia while cutting tariffs on similar products imported from Malaysia.

The ministry announced the decision last week following the first review of anti-dumping measures against a number of cold-rolled stainless steel products imported into Vietnam, according to the Vietnam Competition Authority under the ministry.

Under the decision, the duty will be 17.47% for products made by China’s Shanxi Taigang Stainless Steel from May 14 this year to October 6, 2019, well above the current 6.58% tariff levied since October 5 last year.

A duty of 25.35%, up from 4.64-6.87%, will be slapped on imports of the similar products manufactured by other Chinese producers.

The ministry revised up the anti-dumping tax on cold-rolled stainless steel imported from Indonesia to 13.03% from 3.07%, but lowered the duty on products from Malaysia to 9.55% from 10.71%. The duty on Taiwan’s stainless steel exports are kept unchanged at 13.79%-37.29%.

The revised duties will be slapped on cold-rolled stainless steel items classified under Harmonization System Codes 7219.32.00, 7219.33.00, 7219.34.00, 7219.35.00, 7219.90.00, 7220.20.10, 7220.20.90, 7220.90.10, and 7220.90.90.

On September 5 last year, the ministry levied anti-dumping taxes on cold-rolled stainless steel products imported from China, Indonesia, Malaysia and Taiwan.

About a year later, Posco VST Co Ltd and Inox Hoa Binh Joint Stock Company, on behalf of other local stainless steel producers, petitioned the ministry to review anti-dumping duties on the products under Vietnam’s Ordinance on Anti-dumping of Imports.

In October last year, the ministry decided to review anti-dumping measures against cold-rolled stainless steel products imported from China, Malaysia and Indonesia.

Small apparel firms see orders falling

Small and medium apparel enterprises struggled to survive in quarter one, with many of them suspending production, as their customers shifted their orders to Myanmar and Laos to enjoy lower prices, heard a business conference in HCMC last week.

According to Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association (VITAS), Vietnam exported US$27.4 billion worth of apparel last year and over US$8 billion in this year’s first four months, up 6% against the same period a year earlier.

Despite rising shipments, the industry is coping with a slew of challenges. Many small and medium enterprises have been mired in difficulties as they have found it hard to compete, Giang told the conference.

Giang explained that apparel products of Myanmar and Laos enjoy special tariffs for exports to Europe and the U.S. while Vietnamese firms will have to wait until 2018 to make use of preferential tariffs to export products to these two major markets when the new free trade agreements with them take effect.

In addition, apparel enterprises have become exhausted by so many inspections by customs, taxation, labor, environment and food safety authorities, with up to three or four inspection teams a quarter.

Giang requested the Government and the Ministry of Industry and Trade to revise the master development plan for the textile-garment industry towards 2020 as it is now outdated. For instance, while apparel exports exceeded US$27 billion last year, the target in the plan is US$20 billion for 2020.

In addition, the plan must be revised to match the development of industrial parks to facilitate management and wastewater treatment.

Giang also proposed relaxing the rule on formaldehyde content in imported fabric as it cost enterprises time and money to observe it. “Without the revision of the rule, Vietnam’s textile and garment industry would be in greater distresss.”

Minister of Industry and Trade Tran Tuan Anh said the development plan would be revised next year to make it compatible to the country’s international integration moves.

Anh said the ministry issued Circular 37 preventing fabric and fiber of low quality and containing harmful substances from entering the local market as they badly affect consumer health and threaten the development of the industry.

Though Circular 37 was better than Circular 32, according to the minister, the ministry will take into account opinions of the association to make adjustments to support enterprises.

Vietnam targets apparel exports of US$30 billion this year. An expert told the Daily that the target is achievable but called for enterprises to change their business methods to make the most of opportunities from the country’s international integration.

Supermarkets act to prop up seafood sales

Supermarkets and food stores in HCMC have put up signs showing the safety and clear origin of seafood they are selling in an effort to attract back consumers who have shunned eating fish following the mysterious death of tons of fish on the central coast.

The incident has kept consumers in HCMC away from seafood since large numbers of fish were found dead along the shores of Ha Tinh, Quang Binh, Quang Tri, and Thua Thien-Hue provinces.

Vo Hoang Anh, marketing director at Saigon Co.op, said demand for seafood at Co.opmart supermarkets and Co.op Foods stores has declined. Therefore, Saigon Co.op, the owner of the two chains, has posted notices about the origins of seafood they sell to consumers.

“All seafood products at our stores have been bought from the safe areas and quality tests have been conducted to make sure they are safe,” Anh said.

Every seafood product at Lotte Mart supermarkets is tagged with a notice about origin, according to a communications executive of the supermarket chain.

Ho Quoc Nguyen, public relations manager at Big C Vietnam, told the Daily that Big C purchases fish from fishermen in Thuan An of the central province of Thua Thien-Hue and that the quality of the fish has been confirmed safe.

Big C Vietnam is also working with authorities of Quang Binh, Quang Tri and Ha Tinh provinces to buy safe fish caught by local fishermen.

Meanwhile, Anh of Saigon Co.op said Saigon Co.op had bought 20 tons of fish in Quang Binh as of May 1 and tests showed the fish had met quality requirements.

Saigon Co.op also collected fish samples for testing at the agro-forestry-fisheries quality center in Danang City.

As observed by the Daily, seafood stalls at some markets in District 7 and Nha Be District like Phuoc Long, Bo Bang and Phu Xuan attracted fewer buyers during the weekend holiday than on normal days. Some stalls were closed during the holiday.

Mass fish deaths have hit fish sales at wholesale markets in HCMC.

Tran Thuy Lien, director of Binh Dien wholesale market which supplies seafood for wet markets in the city and neighboring provinces, said consumption of marine fish has dropped in recent days though they are supplied by fishermen from the central province of Binh Thuan to the Mekong Delta province of Kien Giang, instead of the north-central provinces hit by the fish deaths.

However, shrimp demand has surged, pushing the price up 50% against normal days.

SCIC weighs withdrawing capital from Bao Minh

State Capital Investment Corporation (SCIC) will consider an appropriate time to divest State capital from Bao Minh Insurance Corporation, said deputy general director of SCIC Le Song Lai.  

Bao Minh may be the last on the list of enterprises subject to capital divestments by SCIC, Lai said at the 2016 shareholder meeting of Bao Minh last week.

Lai said in October last year the Government ordered SCIC to set an appropriate schedule to take back State capital from 10 businesses, among which is Bao Minh.

SCIC said it is keeping a close watch on market conditions and the State budget, and has yet to decide a schedule for divestments from the ten enterprises.

Lai said as Bao Minh holds good growth potential, SCIC will pull capital out of  this firm later than others on the list. He said insurance is a conditional business sector, so Vietnam caps foreign ownership in local insurers at 49%.

Lai is a board member of Bao Minh and a representative of State holding in the firm. As of September 10, the State had held a 50.7% stake in Bao Minh, equivalent to 42 million shares.

Three foreign organizations hold a combined 23 million shares (28.06%) of Bao Minh, including AXA S.A, Hong Kong’s Firstland and Chevalier.  

In addition to Bao Minh Insurance Corporation, the businesses from which the State plans to divest capital include Vietnam Dairy Products JSC, Vietnam National Reinsurance Corporation, Tien Phong Plastic JSC, Binh Minh Plastics JSC, Vietnam Infrastructure Investment and Development JSC, Ha Giang Mineral and Mechanics JSC, Sa Giang Import Export Corporation, FPT Corporation and FPT Telecom JSC.

According to the 2015 audited financial report, Bao Minh posted nearly VND3.5 trillion in revenue, a 10% pickup versus 2014, and over VND118 billion in after-tax profit, up 8%. The insurer met its full-year revenue target but its profit was lower than planned, and its growth was lower than that of other firms in the same sector.

Bao Minh ascribed the lower-than-targeted profit to higher fire compensation and risk provisions.

In 2015, Bao Minh registered total compensation payouts of VND1.61 trillion, up sharply from a year earlier and accounting for 51% of revenue. Of the amount, fire compensation made up VND190 billion, a 99% rise year-on-year.

Bao Minh compensated VND137 billion for businesses in Binh Duong and Dong Nai Provinces affected by worker protests against China’s illegal positioning of Haiyang Shiyou 981 oilrig in Vietnam’s waters in the East Sea.    

Bao Minh paid a 2015 dividend in cash at 10% of chartered capital, or some VND83 billion. It is conducting procedures to raise chartered capital.

Bao Minh is the third biggest non-life insurer on the local market after Bao Viet and PVI, and holds an around 9% market share. The company plans to raise its chartered capital to VND913 billion in 2016 and VND1.1 trillion in 2020.

At the shareholder meeting last week, Bao Minh cited data of the Vietnam Insurance Association as showing that Vietnam’s insurance revenue totaled VND70.19 trillion last year, up 25.75% against 2014 and the highest in the 2011-2015 period.

The non-life insurance segment is projected to expand 15% on average this year.

Biofuel sales in city lower than expected

Sales of E5 biofuel in HCMC are much lower than targeted as just over half of more than 510 filling stations in the city had distributed the fuel by the end of last month.

The city started a pilot scheme to sell E5 at 60 filling stations at the end of 2014 and expected the number to rise to 518 by 2015, the HCMC Department of Industry and Trade said in a report on E5 biofuel distribution in the first four months this year sent to the Ministry of Industry and Trade.

However, with 54% of the filling stations selling E5 as of end-April, consumption had reached 8,170 cubic meters per month, up 20% compared to end-2015, but this volume accounted for a mere 6.3% of total gasoline sales in the city.

In mid-December, the city launched a major campaign to call for consumers to use E5 but the number of E5 biofuel buyers has remained modest. Filling stations bemoaned that their E5 sales are much lower than those of A92 and A95 gasoline.

Slow consumption has led to high inventories of the biofuel, and losses in the transport and storage stages have made inroads into fuel trading firms.

E5 has remained unattractive to a large number of consumers as its price is not much lower than A92 while consumers fear this fuel might affect the performance of their vehicles’ engines. Currently, the price of E5 is only VND500 a liter lower than A92.

Low consumption has caused seven ethanol plants to stop operation as the production cost of ethanol, the main material for E5 biofuel production, is high. There have not been sufficient support policies from the Government for E5 production and distribution, according to fuel wholesalers.

Moreover, fuel trading firms have boosted A92 and A95 gasoline imports to cash in on low oil prices on global markets.

The city has proposed the Government assign relevant agencies to roll out new policy incentives to help ethanol plants resume operation and cut production cost and encourage more consumers to buy the biofuel.

Currently, nine fuel wholesalers in HCMC have a storage capacity of 1.2 million cubic meters and supply fuels for six general agents and 526 retail outlets. Fuel consumption in the city totals 130,100 cubic meters a month.

Dividend-paying season draws mixed reactions

The dividend-paying season which is entering its peak has drawn mixed reactions from shareholders as there are a few enterprises paying high dividends but many others are offering low dividends.

Viet Tien Garment Corporation (VGG) has paid dividends of 25-30% of par value over the past years. Its strong earnings last year allowed the garment firm to offer a 2015 dividend of 30%.

A shareholder indentified as Thanh said she bought VGG shares at VND36,500 each seven years ago. The share price rose to VND40,000 last March when VGG listed on the market for unlisted public companies (UPCoM) and has now shot up to VND60,000.

In mid-April, MEINFA JSC announced a dividend of VND4,000 per share though its market price stood at a mere VND900 per share. The company has paid dividends of 30-40% over the years.

Danang-based Middle Airports Services JSC (MAS) paid a 2015 dividend in four tranches, including three with 40% and one with 35%. The MAS stock rose by 89% in 2015, from VND73,500 to VND139,000 per share.

Similarly, Materials – Petroleum JSC (COM) paid a 2015 first round dividend at 7%, a second round at 15% and a third round at 40%. COM is active in petroleum trading, sales of equipment for filling stations and transport services.

Other businesses offering high dividends include Sao Ta Foods JSC and Truong Long Engineering and Auto JSC.

Given the annual interest rate of around 6% on average and the VN-Index’s rise of 6.2% year-on-year last year, such high dividends were really attractive to shareholders. However, only loyal shareholders could enjoy high dividends since liquidity of those stocks stayed low.

Meanwhile, many shareholders have fretted over meager dividends offered by local banks.

At NamABank’s general meeting, shareholders bemoaned a dividend payment of 5%, lower than interest rates. Last year the dividend was even lower, at 4%.

“We’ve invested in NamABank in anticipation of good profit but the 4% dividend is well below deposit and inflation rates. What have the bank’s leaders done with our money?” said a shareholder at the bank’s general meeting last year.

Seven out of a dozen banks here in the city did not pay 2014 dividends given the central bank’s concerns over their safety. Many banks were profitable but set aside huge amounts for risk provisions.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said dividends will not be higher this year as lenders have to focus on restructuring and deal with bad debt. In addition, banks must invest in technology to expand retail banking services.

Minh said a number of banks like Vietcombank and VietinBank will pay dividends at 10% of par value while the remainder will pay around 5% or nothing at all.

VietShrimp to kick off in Bac Lieu in June

VietShrimp 2016, the first event that features a trade fair and conferences on shrimp farming in Vietnam, will take place in the Mekong Delta province of Bac Lieu from June 24 to 26.

The event is expected to attract nearly 200 domestic and foreign exhibitors, and feature conferences on breeder shrimp, nutrition, the environment and diseases in addition to “The pride of Vietnamese shrimp” fair.

Nguyen Viet Thang, chairman of the Vietnam Fisheries Society (VFS) and the event’s head organizer, told a press conference last week that Vietnamese shrimp has been recognized by foreign consumers and many some local brands have become known on global markets thanks to shrimp.

But Thang said diseases and environmental pollution were among the challenges for the shrimp farming sector. Therefore, VietShrimp 2016 will be organized to seek solutions to sustainable development and quality improvements.

The show is also a chance to look into the strengths and achievements of local firms but also the challenges they are facing.

Vo Hong Ngoan, a major shrimp grower in the Mekong Delta, said the biggest weakness of shrimp farming in Vietnam lies in the quality of breeder shrimp.

He suggested suppliers of breeder shrimp issue a warranty of 30 days for white-leg shrimp and 60 days for tiger prawn and that buyers not pay for the shrimp that dies.

Le Thanh Luu, director of the International Collaboration Center for Aquaculture and Fisheries Sustainability under VFS, shared Ngoan’s view, saying this suggestion should be included in his report to be delivered at the upcoming event.

An Thong to return mining license over price falls

An Thong Mineral Investment Joint Stock Co under Hoa Phat Group has conducted procedures to return a mining license for Tung Ba iron ore mine in the northernmost province of Ha Giang.

The company said low reserves, higher-than-expected mining costs, and a hefty fall in global iron ore prices were some reasons behind its plan to give back the license to authorities. It wrote to the Government and the ministries of natural resources-environment, industry-trade, and finance last month announcing its withdrawal from the project.

The subsidiary of Hoa Phat Group had racked up accumulated losses of VND204 billion (US$9.1 million) by the end of 2015 due to high mining costs. Besides, it complained about the high fees it has paid for the State, which have resulted in the mining cost at Tung Ba up soaring.

An Thong would become insolvent if it continues mining.

An Thong got the mining license for Tung Ba in 2009 and started extraction in the fourth quarter of 2011. It has stopped exploitation and conducted procedures to give back the license to the State since October 2014.

Hoa Phat Group posted after-tax profit of over VND3.1 trillion (US$141 million) in 2014 and roughly VND3.5 trillion (US$156.9 million) in 2015. The losses of An Thong piled pressure on the group’s profit.

Vietnam-Cambodia-Thailand shipping route in the offing

The Vietnam Maritime Administration is collecting comments from sea transport firms, port operators and logistics companies on a plan to open a shipping route along the coasts of Vietnam, Cambodia, and Thailand.

The agency said corporate comments could help accurately assess demand for goods transport for the planned shipping route.

Vietnam, Cambodia and Thailand hold huge potential to boost trade, particularly via maritime activity. According to the administration, two-way trade between Vietnam and Thailand hit US$10 billion last year.

A number of infrastructure projects will be studied within the framework of bilateral and multilateral cooperation plans between countries of the Greater Mekong-sub region. The projects include opening the coastal shipping route to facilitate marine transport between Vietnam, Cambodia, and Thailand.

Late last year, a delegation of Thailand’s Consulate General in HCMC and leaders of southern provinces surveyed R10 coastal road stretching from the Mekong Delta province of Kien Giang to the coast of Cambodia and Thailand’s capital of Bangkok.

The survey found that the road section from Kien Giang to Cambodia has only two narrow lanes, so it limits cargo transport between Vietnam, Cambodia and Thailand. Therefore, opening the coastal shipping route is a viable solution.

Anti-dumping duties on stainless steel imports revised up

The Ministry of Industry and Trade has adjusted up anti-dumping duties on cold-rolled stainless steel products imported from China and Indonesia while cutting tariffs on similar products imported from Malaysia.

The ministry announced the decision last week following the first review of anti-dumping measures against a number of cold-rolled stainless steel products imported into Vietnam, according to the Vietnam Competition Authority under the ministry.

Under the decision, the duty will be 17.47% for products made by China’s Shanxi Taigang Stainless Steel from May 14 this year to October 6, 2019, well above the current 6.58% tariff levied since October 5 last year.

A duty of 25.35%, up from 4.64-6.87%, will be slapped on imports of the similar products manufactured by other Chinese producers.

The ministry revised up the anti-dumping tax on cold-rolled stainless steel imported from Indonesia to 13.03% from 3.07%, but lowered the duty on products from Malaysia to 9.55% from 10.71%. The duty on Taiwan’s stainless steel exports are kept unchanged at 13.79%-37.29%.

The revised duties will be slapped on cold-rolled stainless steel items classified under Harmonization System Codes 7219.32.00, 7219.33.00, 7219.34.00, 7219.35.00, 7219.90.00, 7220.20.10, 7220.20.90, 7220.90.10, and 7220.90.90.

On September 5 last year, the ministry levied anti-dumping taxes on cold-rolled stainless steel products imported from China, Indonesia, Malaysia and Taiwan.

About a year later, Posco VST Co Ltd and Inox Hoa Binh Joint Stock Company, on behalf of other local stainless steel producers, petitioned the ministry to review anti-dumping duties on the products under Vietnam’s Ordinance on Anti-dumping of Imports.

In October last year, the ministry decided to review anti-dumping measures against cold-rolled stainless steel products imported from China, Malaysia and Indonesia.

Three-fourths of VND30-trillion home loan package disbursed

Around three-fourths of the VND30-trillion low-interest home loan package for low-income buyers has been disbursed, said the Department of Housing and Real Estate Market Management under the Ministry of Construction.

Local banks have pledged a total of VND24.2 trillion in loans for nearly 49,900 individuals and households. Of which, more than 16,200 households have borrowed VND6.8 trillion to buy budget homes, 26,000 with some VND13.9 trillion to buy commercial homes and 7,500 with VND3.5 trillion to repair or construct new homes.

Banks have disbursed over VND18 trillion for 49,900 households, including VND5 trillion for 16,200 households to buy budget homes, VND10.2 trillion for 26,000 households to buy commercial houses and VND2.9 trillion for more than 7,500 households to repair or build new houses.

In Hanoi, over 18,000 households have secured VND9.2 trillion in bank loans while HCMC has 11,900 households taking out VND6.7 trillion in loans.

Most borrowers have gained access to the package to buy low-cost apartments, followed by commercial apartments priced under VND15 million per square meter and measured at 70 square meters or smaller. Just a small ratio of borrowers need house repair or construction.

Besides, banks have pledged to lend to 60 projects with a combined value of VND7.7 trillion, including 16 projects in Hanoi worth VND3.7 trillion and eight projects in HCMC worth nearly VND1.2 trillion.

Lenders have disbursed VND4.2 trillion to 59 projects, including 15 projects in Hanoi and eight projects in HCMC.

According to the department, the value of the nation’s property stockpile stood at around VND41.4 trillion at the end of April, down by VND32.4 trillion (43.9%) against late 2014 and nearly VND3.4 trillion from the previous month.

VNPost to develop logistics centre in Da Nang

The Viet Nam Post Corporation (VNPost) will build a logistic and e-commerce centre in Da Nang’s Hoa Khanh Expansion Industrial Zone at a cost of VND196 billion (US$8.7 million).

Chairman of the corporation, Do Ngoc Binh, said it would be VNPost’s largest logistic centre in the central region, allowing them to provide quality services to customers.

The centre, which covers 50,000sq.m in Lien Chieu District, 20km away from the city’s centre, will help connect the East-West Economic Corridor, National Highway No 1, Da Nang-Quang Ngai Expressway and the railway system.

In 2014, VNPost also put into operation its office project on downtown Nguyen Van Linh Street at a cost of $9 million.

According to VNPost’s report, the corporation earned VND8.8 trillion ($391 million) in revenue in 2015, of which VND230 billion ($10.2 million) was net profit.

Da Nang aims to become a centre of hi-tech industries, logistics services and tourism in central Viet Nam.

Kerry Logistics Company from Singapore also opened its new logistics centre in the city in 2010.

The city has 100 logistics companies, but only five are members of the Viet Nam Logistics Association.

In addition, Da Nang is planning next month to start the second phase of Tien Sa Port. It will become a logistics centre for banks, forwarders and warehouse services in connection with the Da Nang-Quang Ngai Expressway and Da Nang-Cam Lo Expressway, as well as economic zones and the existing refinery in Quang Ngai and proposed ones in Phu Yen and Binh Dinh.

6.7 trillion VND mobilised from Government bonds

The State Treasury mobilised 6.745 trillion VND (293 million USD) worth of Government bonds through bids organised by the Hanoi Stock Exchange (HNX) on April 27, reported Lao Dong newspaper.

Five trillion VND (217 million USD) was mobilised from 5-year bonds with an annual interest rate of 6.39 percent.

A additional 1.5 trillion VND (65 million USD) in 5-year bonds was raised through a secondary auction.

The remaining 245 billion VND (more than 10 million USD) was made up of 30-year bonds with an annual interest rate of 8 percent.

The State Treasury has mobilised more than 103.67 trillion VND (4.47 billion USD) worth of Government bonds since the beginning of this year.

Domestic retailers struggle to compete with foreign rivals

As more and more giant retailers do business in Vietnam, domestic firms are struggling to adapt to the heated competition.

Besides Big C by France’s Casino Group and Germany’s Metro Cash & Carry, other big names include Lotte and E-mart from the Republic of Korea, Aeon from Japan, Berli Jucker and Central Group from Thailand.

According to the Ministry of Industry and Trade, foreign retailers own more than 100 supermarkets and shopping malls out 800 total nationwide. However, their operations account for as much as 40 percent of the retail sector’s total revenue, leading to concerns over the future for local competitors.

Vu Vinh Phu, Chairman of the Hanoi Supermarket Association, said foreign retailers not only offer better and affordable products but also attractive promotions and post-sale services.

They also supply products under their own brands at competitive prices, ranging from cosmetics to daily necessities such as food and beverages, he added.

Locally-made products are struggling to enter foreign supermarkets which prefer merchandise made in their own countries, not to mention other requirements such as origin or quality certificates and compulsory periodic promotions.

Phu suggested authorised agencies carefully consider licensing new foreign retailers based on the Economic Needs Test – an administrative review that a wholly foreign-owned retailer has to undergo when it wants to open an additional outlet.

In his view, domestic retailers and manufacturers should work together to generate collective power.

Former Minister of Commerce Truong Dinh Tuyen called for adopting trade some defence tools to protect local sellers.

Tran Vinh Nhung, Deputy Director of the Ho Chi Minh City Department of Industry and Trade, requested stricter regulations when it comes to mergers and acquisitions, such as capping controlling stakes, publicising tax and financial reports to prevent transfer pricing and increasing the amount of Vietnamese goods on display in supermarkets.

Experts: Land use planning key to agriculture development

Agriculture and its related group of industries, hereinafter referred to as simply agriculture, in Vietnam provide employment to millions of people and are the backbone of the rural economy.

The industry is currently undergoing a massive transformation, evolving from simply a traditional way of life to a professionally managed industry offering plenty of areas to choose for investment.

According to a spokesperson for the Foreign Investment Agency, current foreign direct investment (FDI) for such agricultural related purposes as crop prodcution, raising livestock, acquaculture, forestry and fishing is relativley low.

Nationwide there are only about 530 foreign investment ventures registered at US$3.7 billion in agriculture, accounting for just an estimated 1.4% of total FDI in the country, said the spokesperson.

The combination of low productivity, added value, on-farm profitability combined with excessive debt, which are characteristics common to agriculture not just here in Vietnam, but also globally, are just not that appealing to foreign investors, he said.

Atsusuke Kawada, chief representative of the Japan External Trade Organisation (JETRO) in Hanoi said in turn that several Japanese companies have invested in high-tech agriculture related undertakings.

These endeavours include a hi-tech vegetable farm in the Central Highlands province of Lam Dong, growing mangoes for export to Japan in the Mekong Delta province of Dong Thap, another project in the northern province of Vinh Phuc and a fishing project in the central province of Binh Dinh.

“Inappropriate national and local government intervention that restricts investors ability to use farmland land freely is the number one impediment to attracting FDI in agriculture,” said Mr Kawada.

“Japanese investors perceive this government interference as symptomatic of deep-seated weaknesses in its capacity for policy formulation and implementation, particularly at the local governmental level.”

He said the failure to have an effective land reform strategy also negatively impacts the ability of the marketplace and producers in the agriculture industry to organize alternative processing and sales outlets.

If the goal is to attract significant amounts of FDI in the future into agriculture than land reform aimed at providing foreign investors with clear and unambiguous land use rights must be one of the building blocks.

Professor Nguyen Mai, president of the Vietnam Association of Foreign Invested Enteprises mirrors Mr Kawada views on the importance of land use reform saying it “is without question one of the pillars of restructuring agriculture.”

“It’s time to change the thinking in attracting foreign investment in agriculture. It’s important to pay attention to the desires of investors as to what kinds of plants and animals they want to raise,” said Professor Mai.

Dr Nguyen Anh Phong from the Institute of Policy and Strategy in Agriculture and Rural Development agrees saying, “the competitiveness of agriculutrue remains weak and the added value of farm produce remains far too low.”

To stimulate FDI in agriculture, the government needs to set priorities to restructure the nation’s land use laws, continue to improve infrastructure and be more proactive in supporting private companies’ development of the industry, Dr Phong concluded.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR

Leave a Reply