Gov’t threatens unflinching carmakers with tariff cut

The Ministry of Finance has threatened to cut auto import taxes to reduce car prices as local auto companies have shown no signs of doing so themselves.

Minister Vu Van Ninh issued the warning while speaking to reporters on the sidelines of a National Assembly Standing Committee meeting.

The warning, directed at the Vietnam Automobile Manufacturers’ Association (VAMA), was made after auto companies agreed to rein in soaring car prices at a closed meeting with the ministry on Friday.

Automakers at the meeting asked the government to adopt several measures that would enable them to reduce their prices, but neither party has made any progress so far.

Vietnam agreed to cut auto import tariffs from 80 to 70 percent by 2011 in accordance with the country’s WTO commitment.

But the MOF lowered the tax rate to 70 percent in August, arguing that both the quality and quantity of cars assembled in Vietnam were not high enough to meet local demand.

“Import tariffs on new cars will continue to drop if retail prices remain unchanged,” said Ninh.

The minister hopes that lowering the tariff will encourage foreign carmakers to move into the local market, forcing Vietnamese carmakers to reduce their prices.

Local manufacturers, however, have thrown such cautions to the wind.

Mercedes Vietnam is the only company that has cut its prices so far.

Several small carmakers have said they cannot reduce their prices due to their poor performance over the last two years. Larger companies have said that they need to wait from parent company permission.

A Ford Vietnam representative said it would take time to reduce auto prices in Vietnam. “We need more time to study price reduction,” he said.

“The state should consider lowering the import tariffs on components,” said a representative from another manufacturer.

source: http://www.thanhniennews.com/business/?catid=2&newsid=32217

Vietnam joins Global Compact for responsible business

The United Nations Global Compact Network, a voluntary initiative aiming to foster sustainable and responsible business practice, has been officially launched in Vietnam.

A launching ceremony was held in Ho Chi Minh City on September 26 with the presence of John Hendra, UN residential coordinator in Vietnam, and Doan Duy Khuong, Vice President of the Vietnam Chamber for Commerce and Industry (VCCI).

The event is part of a series of activities related to the Asian Forum on businesses’ social responsibility that will be opened on September 27 in Ho Chi Minh City.

The UN Global Compact Network encourages businesses to embrace ten universal principles in the areas of human rights, labour standards, environment, and anti-corruption. It calls on company to put these principles into their business strategies and daily business operations.

With close to about 4,000 organisations, trade unions and non-governmental organisations, and 3,100 businesses, including 500 in the Asian-Pacific region, the network is the largest voluntary initiative for businesses.

Khuong said VCCI would initiate an open discussion on the social responsibility of businesses, focusing on consequences and benefits that the compact would bring to Vietnamese society and businesses to facilitate the development of a dynamic and equitable economy.

source: http://www.nhandan.com.vn/english/business/270907/business_vnf.htm

Retail market looking more attractive to foreign firms

International experts have reported the actual income per capita in Viet Nam is much higher than official reports suggest, which comes as good news for foreign retailers seeking investment opportunities.

According to a recent report made by international auditing consultation company KPMG, annual income per capita in Viet Nam may be 25 percent higher than initial data suggested if undeclared wealth estimates are included. Originally, annual income was said to be around 800 USD for 2007. Now auditors estimate that average incomes in large urban areas such as Ha Noi and Ho Chi Minh City may be double that amount.

Total disposable income is increasing by around 2 billion USD per year, to reach 30 billion USD by the end of 2007, the report said.

The report partly explained why the country’s total retail sales currently accounts for 43.5 percent of nominal GDP, higher than the figures of 35 percent and 33 percent in China and Thailand, respectively.

KPMG said the increasing number of youth with high incomes will play a major role in helping the retail market to leap forward. Growth of retail sales is strong at 12 percent to 16 percent since 2003.

KPMG singled out the sales of personal-care and household products as boasting the highest growth rates since 2000. Clothing, footwear, cosmetics and perfume sales have all averaged between 11 and 14 percent year-on-year-growth in volume, while the figure for pharmaceuticals has been 13 percent.

Experts said that with the appearance of foreign retail giants in the country, domestic consumers will benefit as new retailers will provide access to quality goods at reasonable prices.

Moreover, new distribution regulations will also allow domestic producers, who are sub-contractors for foreign distributors, to sell their products directly in local markets. Currently, made-in-Viet Nam products, which are churned out according to foreign ordering contracts, must be exported before re-importing to sell to local consumers. Therefore, under the current regulations, local consumers have to pay double what other countries pay for the same products.

Experts said Viet Nam ’s admission to the World Trade Organisation will open doors for retailers. Under the country’s WTO pledges, import taxes imposed on consumer goods will be reduced by 5-10 percent.

Foreign investors will also access the domestic retail market with greater ease, as entirely foreign investor groups are allowed to set up their own businesses in the country’s retail industry as of January 1, 2009.

Realising the market’s great potential, existing foreign retailers including Espace Bourbon Group, Parkson, and Metro Cash and Carry are expanding their retail chains in order to maintain or enlarge market share. This month, Metro Cash and Carry opened its eighth store in the country, while Parkson reportedly intends to have 10 stores by 2009.

Other world leading retailers Tesco, Wal-Mart and Carrefour have mapped out plants to enter the market soon.

source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/215384/Default.aspx

Viet Nam attracts big spenders

Viet Nam in September alone welcomed 350,000 foreign tourists, raising the total number of foreign visitors in the first nine months of 2007 to 3.2 million, up 18 percent year-on-year.

The country saw increases in the number of tourists from countries and territories that are renowned for high consumer spending levels such as Hong Kong - up 31 percent; Japan, 14 percent; the Republic of Korea, 22 percent; Russia, 60 percent; France, 40 percent, and the Netherlands, 42 percent.

Tourists from ASEAN countries were also on the rise as Indonesian, Singaporean, Thai and Malaysian arrivals surged by between 12-61 percent.

Room occupancy rates in key tourist sites all exceeded 70 percent throughout the country, while 4-5 star hotels in Ha Noi, Ho Chi Minh City and Nha Trang reported having between 90-100 percent of their rooms booked.

The number of domestic tourists going abroad to Thailand, Singapore, Malaysia and China also were on the rise.

Travel businesses in the country expect that outbound tours will swell in number as a number of foreign airways continue to offer budget services from Viet Nam.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/215458/Default.aspx

Hai Phong exports 880 million USD worth of product

The northern port city of Hai Phong has so far this year netted close to 883 million USD from exports, up 26.8 percent year-on-year.

The city expects to hit its target of 1.2 billion USD for 2007 as it looks to join the 1 billion USD export club for the second time.

The city’s export staples recorded good results such as aquatic products earning 28.9 million USD; plastic products, 44 million USD; textiles and garment, 84.4 million USD; footwear, 263.4 million USD; and electronics 40.5 million USD.

However, the export turnovers recorded by the locally-run, centrally-run and foreign-invested sectors increased unequally, with the centrally-run and foreign-invested sectors seeing annual growth rates of 37 percent and 59.4 percent, respectively, as compared to the 10.8 percent figure registered by the locally-run sector.

The foreign-invested sector in the past nine months fetched 420.7 million USD or almost 48 percent of the city’s entire export total.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/215465/Default.aspx

Banks not moving towards US$ interest rate cut

Experts thought that commercial banks would lower deposit interest rates following the FED’s move, but the banks have taken no action.

Opinions differed about whether US$ interest rates would go down after the FED’s move to cut the interest rate.

In the past, right after FED announced raising the interest rate, Vietnamese commercial banks also raised the deposit and loan interest rates accordingly. However, it has been happening in the opposite way recently: FED maintained the US$ interest rate for a long time, while domestic banks have been trying to raise their interest rates since the beginning of the year.

An Binh Bank, for example, is now offering the very impressive interest rate of 5.45% per annum.

Luu Duc Khanh, Director General of ABBank, said that the bank would not think of lowering deposit interest rates until it could mobilise enough capital to fund import-export deals. He said that ABBank was now focusing on funding import-export activities; therefore, the demand for US$ capital has been increasingly high.

The Deputy Director of a joint stock bank in HCM City said that his bank did not plan to cut interest rates in the short term. He said that FED’s move did not much affect the exchange rate and interest rate policy in Vietnam.

“The demand for foreign currency loans is now very big,” he said. “As Vietnam integrates more deeply into the world, local enterprises need to import equipment and technologies, and they need capital in US$ to pay for the imports.”

In fact, US$ interest rates, though they have been raised several times so far this year, are still lower than VND interest rates. The low interest rates of US$ loans make US$ loans more attractive to enterprises.

Though admitting that the inter-bank interest rate may decrease as domestic banks have transactions and links with international banks, local bankers still insist on the firm interest rates of US$ deposits and loans.

Meanwhile, Nguyen Phuoc Thanh, Deputy Director General of Vietcombank, thinks that US$ interest rates will go down. However, he said that not all banks would cut interest rates, because they still needed to consider their foreign currency capital supply.

Ho Huu Hanh, Deputy Director of the HCM City Branch of the State Bank of Vietnam, also thinks that an interest rate cut is possible, especially as rates are now at high levels (5.05-5.25% per annum for 12-month term deposit).

However, he said that several banks might not reduce interest rates because they wanted to attract clients with high interest rates. He said that FED would have meetings discussing the adjustment of the US$ interest rate in November and December, and that it would be very risky for banks to pursue an interest rate race.

Once US$ capital becomes profuse, and foreign banks cut interest rates on deposits, domestic banks will have nowhere to make deposits in order to get profit and pay interest to their clients.

Source: http://english.vietnamnet.vn/biz/2007/09/745059/

Business exports litchi to US, RoK

The Bac Giang Foodstuff Export Joint Stock Company said that it has recently shipped a total of 136 tonnes of frozen and dried litchi valued at 146,000 USD to the US and the Republic of Korea (RoK).

The company is one of the largest litchi processors in the northern province of Bac Giang. Its products include canned litchi, frozen litchi pulp, litchi juice and frozen litchi fruit.

Sources from the website www.rauquavn.vn of the Ministry of Industry and Trade showed that in the 2007 crop, Bac Giang province harvested a record 150,000 tonnes of Thieu litchi.

The acceleration of litchi export has helped ease growers’ worry over the devaluation of litchi as a result of bumper crop.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/215167/Default.aspx

Exports up 19.4 percent in nine months

The country gained 35.2 billion USD from exports in the first nine months of the year, a year-on-year increase of 19.4 percent, according to the Ministry of Industry and Trade.

To the country’s nine-month export turnover, foreign-invested enterprises made up 14 billion USD, a year-on-year rise of almost 32 percent.

This was the first time that the export value of textile and apparels products surpassed that of crude oil, ranking first among the country’s export items with more than 5.8 billion USD. The country’s crude oil earnings also exceeded the 5 billion USD mark. They were followed by footwear, close to 3 billion USD; wooden products, 1.7 billion USD; and electronic appliances and computer components, over 1.5 billion USD.

Economic experts said that many months ago, textile and apparels products were forecast to take the first place in export revenues because of the reduction in crude oil exports due to limited sources for exploitation. Exports of textile and apparels continued its strong growth after the country joined the World Trade Organisation and export quotas to the US were removed.

Rubber earnings reached 933 million USD and are forecast to hit 1 billion USD by the end of this year. The value of farm and fisheries products continued to rise with rice generating almost 1.3 billion USD; coffee, almost 1.5 billion USD; and seafood, more than 2.7 billion USD.

The increases in farm products’ export value and volume were attributed to trade promotion activities, the improvement in product quality and rising world prices, said analysts.

Regarding export markets, exports to the EU rose by 28.5 percent, accounting for more than 19 percent of the country’s total exports; and to the US increased by 25 percent, or 20.5 percent of total exports.

Also in the past nine months of the year, almost 42.9 billion USD was laid out on imports, a year-on-year rise of almost 30 percent.

Imports chiefly included machinery and equipment that is yet to be manufactured in Viet Nam.

The ministry said that although exports increased, the competitiveness of Vietnamese goods has not been improved considerably as export goods were neither diversified nor of high economic value.

To maintain high growth in the remaining months of the year, the ministry asked domestic enterprises to boost production, expand outlets while paying due attention to the quality of export products, especially farm products and seafood.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/215228/Default.aspx

Ten key export products to have export turnover of over US $1 billion

Nhan Dan Online - According to the Ministry of Trade and Industry, this year 10 key export products are predicted to have their export turnover reaching over US $1 billion. These include rice, coffee, rubber, seafood, garments, footwear, electronics and electronic components, crude oil, electric wires and cables and wood products.

Especially, export turnovers of some agricultural products in the group have increased remarkably due to their price increases on the world market.

Export turnover of rice is forecast to reach US $1.4 billion; coffee: US $1.5 billion (up 30% against 2006) and rubber (US $1.44 billion).

Those products with high and stable growth are industrial and processing ones such as seafood (expected to earn US $3.8 billion from exports this year), garments and textiles (US $7.5 billion) and electronics and electronic components (US $2.2 billion.)

This year, Vietnam’s total export value is forecast to hit US 48 billion, up 20.5% against 2006.

Source: http://www.nhandan.com.vn/english/business/260907/business_t.htm

Stock market rebounds, money comes back

The stock market has been warming up after a long time of freezing, thus attracting idle capital from investors.

Analysts say that the warming stock market is attracting a big cash flow: instead of injecting money in gold and real estate, investors are now eyeing Vietnam’s stocks.

The director of a HCM City-based securities company said that real estate traders had returned to securities trading floors. The price fever in the real estate market in the last few days has helped the traders earn fat profit, which they are now injecting in stocks. As the gold price keeps skyrocketing, traders find stocks a better investment channel.

In fact, the skyrocketing gold price has helped many gold speculators make profit, and gold traders now also are heading for the stock market. Mr Tuan, the owner of a gold shop in HCM City, said that gold investors would pour money in stocks as a short-term investment channel, while waiting for other opportunities in the gold market.

The recovery of the stock market proves to be very satisfactory, and really has prompted real estate and gold return, and encouraged current securities investors. The stock market is forecast to see further surges towards the year’s end, thus becoming very attractive in the eyes of investors.

Several listing companies have reported satisfactory business results for the third quarter of the year, which shows the good health of the stock market.

Domestic investors always wait and see the moves made by foreign investors. Meanwhile, foreign investors, encouraged by the recovery of the global stock market, have purchased Vietnam’s stocks in large quantity recently. In fact, Vietnam’s stock market is not much influenced by the regional and the world’s stock markets. However, financial experts said that the influence would be clearer with the changes of the monetary policies in the world, especially the FED’s move to cut the interest rate.

Many investors expect that the VN Index will exceed the threshold of 1,100 points forecast by experts by the end of this year.

In related news, share prices have been increasing considerably over the last few days. On September 24, ACB was sold at VND144,500/share, or VND30,000 higher than earlier this month, while STB was sold at VND66,500/share. On the OTC market, Eximbank, Military Bank, Habubank and VP Bank all have seen 5-10% increases.

Commenting about the bank share price movement, experts said that the market still awaited the results of the Vietcombank’s IPO, after which, the price levels of bank shares would be set up.

Source: http://english.vietnamnet.vn/biz/2007/09/745063/

Hong Kong firm to set up joint venture in Viet Nam

Luks Group (Vietnam Holdings) Co. Ltd of Hong Kong has decided to set up a joint venture in real estate in Viet Nam.

According to the company, at the end of August, 2007, its wholly-owned subsidiary of Luks Land agreed with the Indochine Company in Viet Nam to set up a joint venture. Luks Land will contribute close to 5 million USD to the joint venture.

Luks Group (Vietnam Holdings) Co. Ltd is listed on the stock exchange of Hong Kong. It is principally engaged in the manufacture and sale of cement products and property investment in Viet Nam.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/214968/Default.aspx

Da Nang pulls plenty in new investment projects

Technology giant FPT has applied to set up a company to produce computer hardware and software for export in central Da Nang city.

To be set up at the Da Nang Industrial Park in Son Tra District with a registered capital of 18 million USD, the project will also provide telecom and IT infrastructure services.

Luong Luc, head of the Da Nang Industrial Park and Export Processing Zone Authority’s Planning and Investment Division, said the project was likely to get the licence next month.

His agency has also given the go-ahead to Hong Kong’s Indochina Capital Corp to invest 70 million USD to develop a 68-hectare complex in Hoa Khanh Industrial Park that will comprise a hi-tech park, an office building, a commercial and services centre, and serviced apartments.

Indochina Land, a subsidiary of Indochina Capital, is also developing several other projects in the town like a five-star resort in Ngu Hanh Son district and a commercial tower along the Han River in Da Nang city.

Indochina Capital’s managing director, Peter Ryder, attributed his company’s large investments in the city to its rapid economic growth and well-developed infrastructure and human resources.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/215048/Default.aspx

Vietnam, best destination for manufacturing investors, why?

Ian Coleman, Head of Emerging Markets, PricewaterhouseCoopers LLP, which released the well-known EM20 report in July 2007, explains why Vietnam tops the report as the most profitable emerging market for manufacturing companies.

VietNamNet Bridge briefs the conversation between a Tien phong reporter and Mr Coleman.

In the latest reports released by the World Bank WB and the World Economic Forum WEF, Vietnam has fallen by several grades in the competitiveness index. Meanwhile, with EM20, Vietnam ranks first among the 20 emerging markets in terms of attractiveness as a destination for manufacturing companies. Is there a conflict in the reports?

EM20 does not contradict WB's and WEF's reports, because the reports have been created using different methodologies.

In general, most of the reports are created based on the average score from the competitiveness indexes of many nations. Meanwhile the EM20 by PricewaterhouseCoopers (PwC) tries to reflect the actual viewpoint of the world on an economy by showing the potentials of the companies that are making investment in 20 emerging economies.

This is the first EM20, and we will release the report annually; therefore, Vietnam's competitiveness index will still see changes in the future compared to other economies.

What factors persuaded PwC's researchers to rank Vietnam No 1 in terms of the most attractive destination for manufacturing companies?

The indices that always attract manufacturing companies are low production costs, corporate tax system, the cost for transporting goods to export markets, and scale of the market. I can say that the low labour cost, and the high economic growth rate are the two main reasons that help Vietnam rank No 1.

Also in the EM20, while Vietnam ranks No 1 in attracting manufacturing companies, it nearly ranks at the bottom in the 20 emerging markets in terms of the service sector. Could you please tell us more about the contradiction?

The indices in attracting companies in the service sector are based on how big the volume of the products in the service sector is that can be consumed in domestic markets.

The incomes of Vietnamese people remain relatively low, and the possibility that Vietnamese people spend money on the products of the service sector proves to be lower than the citizens of the rich countries in the Middle East or Europe. As a result, Vietnam's score in terms of the attractiveness in the service sector is lower than the manufacturing index.

Do you think that big groups in the world have become more interested in Vietnam since the release of EM20?

The report has drawn the special attention of the press worldwide. I mean the report has helped heighten the image of Vietnam in the eyes of international potential investors.

What would you say about the business environment in Vietnam as the world's leading investment consultant?

Vietnam's economy is growing rapidly and the country is opening its doors more widely to the world in both trade and investment.

Meanwhile, the domestic market is benefiting from liberalisation and reform programmes. The attractiveness of Vietnam in the eyes of international investors will be improved in the future in both the manufacturing and service indexes.

PWC is the world's biggest business consultancy group, now operating in 150 countries and territories.In the EM20, Vietnam even exceeded the well-known BRIC (Brazil, Russia, India and China) in terms of attracting manufacturing investors. China also got 95 points, the same as Vietnam, but it ranked second since production costs in Vietnam are lower than in China.However, Vietnam just got less than 10 points in terms of attracting investors in the service sector.

Source: http://english.vietnamnet.vn/interviews/2007/09/744655/

MOF threatens further tax cut if car manufacturers uncooperative

Minister of Finance Vu Van Ninh told the press on the sideline of the National Assembly Steering Committee’s meeting this morning that if local automobile manufacturers did not reduce their selling prices immediately, the Ministry of Finance (MOF) would further cut the tax on brand new imports.

The statement by the head of the powerful ministry is considered the expression of the viewpoint of the ministry and the government of Vietnam on the need to protect the benefits of consumers. The threat clearly targets the members of the Vietnam Automobile Manufacturers’ Association VAMA, which have not made any move in the last one month since receiving the request by the ministry to lower selling prices.

Under WTO commitments, by 2011, Vietnam will have to cut the import tax on cars to 70%. However, after considering the real situation, which shows that locally made cars still cannot meet demand in terms of quantity and quality, and car prices remain overly high compared to regional prices, MOF decided to cut the import tax from 80% to 70% in August already.

“The tax rate on car imports under the form of complete built units will be further cut if the prices of locally made cars do not decrease in some days,” Mr Ninh said.

Mr Ninh said that if the import tax decreased, more imports would come, and supply would be profuse, putting local manufacturers in a fiercer competition. If local manufacturers do not reduce their selling prices, customers will choose imported cars because of good quality and reasonable prices.

Mr Ninh said that MOF had requested that the Ministry of Industry and Trade assess the automobile industry in general so as to draw up suitable policies to develop the industry.

Though MOF has continuously urged local manufacturers to cut prices, most of them remain unresponsive. Only Mercedes Benz has announced price cuts of $3,000-10,000 on E-class models.

When asked about plans to cut prices, small automobile manufacturers have said that the price decreases may not happen since business had not been satisfactory for the past two years.

Meanwhile, bigger manufacturers, when explaining why they were not cutting prices, have repeated the refrain that they were still awaiting the final decision from parent groups.

A staff of Ford Vietnam said that the company always had to programme a price adjustment plan, and prices could not be cut overnight.

A representative of another automobile manufacturer said: “We respect the promise we have made to MOF, but we need time to consider cutting expenses. The government should also consider lowering taxes on car part imports,” he said.

Source: http://www.vneconomy.com.vn/eng/?param=article&catid=04&id=e3b14d1d26dce6

Denmark Provides 61 Million DKK to Support Poverty Reduction in Vietnam

Denmark has joined other donors, together with the World Bank, to co-finance the sixth Poverty Reduction Support Credit (PRSC 6) worth totally 365 million US dollars to support the implementation of Socio-Economic Development Plan 2006-2010 in Vietnam which is the 1st operation in the second cycle of PRSC, which will last for five years.

Five operations (PRSC 1-5) have been implemented successfully in 2001-2006. PRSC operations are channelled directly to the government budget to support sustainable growth and poverty reduction.

Denmark has been co-financing PRSCs since it’s beginning in 2001. Its support to PRSC 6 is provided in recognition for the progress accomplished in policy reforms in Vietnam over the last year. Other co-financiers include ADB, Australia, Canada, Germany, the EC, Ireland, Japan, the Netherlands, the UK and Spain.

“PRSC 6 represents a very important milestone in Vietnam’s reforms towards a market economy and poverty reduction” said Mr. Ajay Chhibber, World Bank Country Director for Vietnam, “The credit will provide further support to Vietnam’s reform program.

These reforms in business and financial sector development, better governance and social inclusion are vital steps that Vietnam needs to become a middle-income country by 2010.”

PRSC 6 supports reforms in four important areas, which are business development, social inclusion, natural resources and modern governance.

Source: http://www.scandasia.com/viewNews.php?coun_code=vn&news_id=3794

HCM City attracts additional billions of USD

Ho Chi Minh City has so far this year granted licences to 312 foreign invested projects with a combined investment of almost 1.14 billion USD.

Eleven other projects have meanwhile been permitted for increasing investment by almost 180 million USD, bringing the total FDI to over 1.3 billion USD over the past nine months.

As much as 791 million USD was poured into 141 real estate development and consultancy services projects, while 99 industrial projects drew in 252.4 million USD, and construction industry with 40 projects and 39.4 million USD.

Of the 32 countries and territories investing into the city, the Republic of Korea takes the lead by investing 644.5 million USD into 106 projects, making up 34 percent of FDI projects and 56.6 percent of investment. In terms of number of projects, Japan ranks second with 34 projects and 20.8 million USD, followed by Singapore, with 30 projects and 287 million USD, Taiwan with 27 projects and 37.7 million USD and the US with 19 projects and 11.6 million USD.

The city is now home to 2,470 FDI projects with a combined investment of 15.83 billion USD.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/214904/Default.aspx

Manulife Financial eyes Viet Nam’s real estate

President and General Director of the Manulife Financial Dominic D’Alessandro praised the potential of Viet Nam’s real estate market, revealing that this sector will be one of his group’s prime areas in the near future.

“The strong growth of Viet Nam’s economy and its real estate market was the reason for Manulife Financial, the world’s fourth largest financial investment group, to make its decision”, Dominic D’ Alessandro told Lao Dong (Labour) daily.

According to the group leader, Manulife Financial made its first move by opening its office in Phu My Hung urban area in Ho Chi Minh City and plans to expand to other cities and provinces.

Besides investing in construction of trade centre and office buildings, the group will invest in the stock market despite of recent fluctuations.

In mid-July, the State Securities Committee granted license for the Manulife Fund Viet Nam to make public offering of the certificate of an investment fund to mobilise 250 billion VND (15.6 million USD). Less than two months later, the company closed the fund as the mobilised capital had exceeded the target.

Gilbert Pak, General Director of company said that this was the “golden moment” to invest in Viet Nam’s securities market as the country was in the initial period of the economic reform and the recent sahre price adjustment make prices of some stocks become attractive.

According to Dominic D’Alessandro, close to 90 percent of the capital of the investment fund will be invested in Vietnamese securities market.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/214905/Default.aspx

Foreign investment reaches 9.6 billion USD

The country has over the past nine months attracted over 9.6 billion USD in foreign direct investment (FDI), an increase of 38 percent over the same period last year.

The Republic of Korea maintains its leading status among 47 foreign investors in Viet Nam with a registered investment of 2.1 billion USD, making up 25.4 percent of the total. The RoK was followed by Singapore with 1.3 billion USD or 16.6 percent of the total, the British Virgin Islands with 1.2 billion USD and Taiwan with 629.7 million USD. Japan took over the fifth position from India by pouring in 623.1 million USD.

Newly-licensed projects averaged 8 million USD a project against 7.01 million USD recorded in the same period last year. The top 15 projects alone accounted for 45.7 percent of the combined investment of the 1,045 newcomers, reported the Foreign Investment Department under the Ministry of Planning and Investment.

Major investments were mostly poured into the heavy industry and real estate development such as construction of hotels or office and apartment buildings for rent.

Of the 64 cities and provinces nationwide, 50 have managed to attract FDI projects. Ho Chi Minh City led the nation with 1.1 billion USD in FDI while the oil-rich Ba Ria-Vung Tau province ranked second with 1.06 billion USD. Ha Noi took the third place with 864 million USD and Binh Duong, the fourth, with 634 million USD.

To meet a target of 13 billion USD in FDI for 2007, the Foreign Investment Department is focusing investment in vocational training to meet investors’ demands for high-skilled workforce.

Source: http://english.vietnamnet.vn/biz/2007/09/744231/

Investors gaze into the crystal ball

Want to know what foreign investors think of Vietnam's investment climate? More than 100 local and foreign bankers, investment fund managers and businesses who attended the Alternative Investments IQ Vietnam 2007 conference in Ho Chi Minh City last week helped provide some answers.

Vietnam’s market return potentials is standing head and shoulders above the rest of the Asian pack.

Kuwait Asia Holdings Private Equity Division senior manager Waleed Alowaiyesh was one of many of the conference attendees to offer a robust vision of Vietnam’s advantages over its investment rivals.

“We are looking for opportunities to become a minor stake holder in local firms that are operating in the three hot sectors of manufacturing, IT and real estate,” Alowaiyesh said.

The conference was the first to have been held in the country that looked to identify sweet spots in the domestic market for fund managers such as Alowaiyesh to exploit.

Rounding off a hectic first day, Alowaiyesh held a fistful of business cards and proclaimed: “We will find the answer to our question on where opportunities are located amongst these cards.”

Gazing into the looking glass, BIDV-Vietnam Partners Investment Management (BVIM) general director Bradley Lalonde said his firm saw the biggest opportunities to make substantial returns laying in the bevy of state-owned enterprises that were to embark down the equitisation road.

However, Lalonde signaled his concern over the repeated delays of eagerly anticipated initial public offerings (IPOs) such as the Vietcombank issuance. Fund managers in Vietnam fear that further hold outs may decelerate investment flows into the market, a real worry for firms such as BVIM that has $90 million in funds from domestic investors and a further $300 million from offshore players waiting for the green light to jump into the fray.

In response to investors’ concerns, State Capital Investment Corporation deputy general director Le Song Lai revealed that a plan to equitise and list 71 large state-owned enterprises (SOEs) by 2010 had been adopted by the prime minister.

According to the Ministry of Finance’s assessment, only 44.4 per cent of SOEs are classified as Group A (i.e. profitable) businesses, 39.5 per cent as Group B, and 16.1 per cent as Group C and most of them are small-sized ones.

VinaCapital, which recently announced it had established an infrastructure development fund pushed the infrastructure agenda with middling success. VinaCapital Group co-founder and managing partner Don Lam said Vietnam needed approximately $140 billion between now and 2020 for public works and strategic opportunities lay in the government’s lack of access to significant funding.

“With finance-banking and construction-real estate, these are the three most exciting areas for us, for the next three months at least,” said Andy Ho, VinaCapital Group’s managing director.

However, a large number of Vietnamese business representatives at the forum’s debate opined that red hot industries such as IT products and services, retail, bio-tech and pharmaceuticals are where the high-end profits were hiding.

Are the fruits still sweet?

A buzz surrounded this year’s conference on the stock market’s prolonged “correction” and the market forecast downgrade by Merrill Lynch.

VinaCapital’s Don Lam said that the buzz was much ado about nothing.

“These past few months have been a challenging time for the stock markets. The VN Index peaked at 1,133 points in mid-March and dropped till now, however, the underlying fundamentals still strong,” he said.

PXP Vietnam Asset Management director Kevin Snowball said the continued focus on China and South East Asia would push the alternative investments in Vietnam considering the country as a hedge against a “China only” strategy.

In his message to PXP’s investors, Snowball said: “At 900 points by August this year, PXP estimates the VN Index to be on 22 times weighted average 2008 earnings. 1,200 points is achievable by year-end, particularly if the exchange reacts quickly to resolve the issues of trading technology and the delay of large SOE equitisation.”

Stumbling blocks to investment

However, Ernst & Young Vietnam partner Allanda McConnell rang alarm bells. “Vietnam can be both an enormous opportunity and a potential threat to any foreign investor,” she said.

Another problem that looms large on the horizon for first time investors in Vietnam is corruption. Vietnam ranked 111th out of 163 countries in 2006 based on the Corruption Perception Index and its rank of 160th out of 174 countries for ease of doing business is woefully short of where the country needs to be.

Templeton Asset Management Limited executive director Richard Piliero sits on the other side of the fence and is adamant that the financial market is on its way to substantial growth.

At the moment, corporate disclosure is still weak even during IPO stages and worse for OTC companies. Piliero said the over-the-counter market was still largely un-regulated and comprised the bulk of “listed” securities with no requirement for a display of full financials.

These are the operational challenges that are faced by stakeholders before and during the investment process in Vietnam.

Source: http://www.vneconomy.com.vn/eng/?param=article&catid=03&id=535267b9e1fd11

US$ interest rates not to decline despite FED’s decision

Though the US Federal Reserve has cut the interest rate sharply by 0.5% per annum, the interest rates on the domestic market will not be cut accordingly.

The decision by FED on September 18 to reduce the interest rate from 5.25% to 4.75% has immediately led to interest rate decreases in other markets in the world. SIBOR, for example, saw interest rates down to 5.12% from 4.91% (12-month term). Prior to that, the rate on LIBOR also decreased from 5.13% to 4.85%.

As for the US$ interest rates on the domestic market, Nguyen Phuoc Thanh, Deputy Director General of Vietcombank, said that the FED’s decision would not show immediate effects. The interest rates will be adjusted step by step, as banks will still consider foreign currency supply and demand balance.

Mr Thanh said that joint stock banks would cut their interest rates first in 10 or 15 days, because their interest rates proved to be higher than those offered by state-owned banks.

Nevertheless, directors of joint stock banks all said that US$ interest rates would not decrease from now till the year’s end because of four reasons:

First, big joint stock banks like Sacombank, Eximbank, Techcombank, VIB Bank have just raised the interest rates on US$ deposits, a step in their plan to mobilise US$ capital from now to the year’s end, and they cannot cut the interest rates suddenly. Moreover, the banks all considered the possibility that FED would cut the interest rate when adjusting their interest rates.

Second, since August, a series of domestic and foreign, state-owned and joint-stock banks have launched programmes on issuing bills of exchange at high interest rates in order to attract more short-term capital (the rate offered by Habubank was the highest, at 5.55% for 11-month term bills of exchange).

The issuance of bills of exchange shows that the demand of banks for US$ capital is very big, while mobilised capital is limited.

Third, as the demand is greater for US$ capital, this has triggered competition among banks in mobilising capital. Small and newly set up banks will keep attractive interest rates, high enough to attract clients.

Fourth, experts have guaranteed that the demand for foreign currencies will remain very big. Though Vietnamese banks may consider withdrawing money they have deposited at foreign banks because of the interest rate decreases, the sum of money will not reach ‘several billion dollars’ as people have wildly guessed. In fact, the sums of money Vietnamese banks have deposited in foreign banks are not as big as people think, because there was not a big gap between the interest rates in domestic and foreign markets in the last time.

The supply of foreign currencies may be improved when more overseas remittance comes. However, an expert from the US programme on financial study in Vietnam said that no clear impact of this supply source on the interest rate policy had been found in recent years.

The expert also thinks that it is not likely the interest rate will decline towards the year’s end, and that the domestic market leads an independent life from the world’s market as it still does not have close links with the world’s market.

FED has cut the interest rate due to problems in the inner US economy, problems that are not so serious in Vietnam, he said. The biggest problems in Vietnam now are the GDP growth rate and the high inflation, but these are two quite different stories.

Source: http://english.vietnamnet.vn/biz/2007/09/744225/

ADB provides loan to energy project

The Asian Development Bank (ADB) has approved a US $28 million first-stage loan for Vietnam’s Mong Duong thermal power project. The plant will ultimately add 2,200 megawatts of generating capacity to Vietnam’s electricity system.

Total ADB funding under the two-stage financing program will be $931 million.

“Vietnam needs to diversify its energy resources to ensure a reliable, long-term source of power to fuel the nation’s development,” said Director of ADB’s Southeast Asia Department Infrastructure Division, John Cooney. “Given its availability, and the fact that it is the most affordable source of energy in northern Vietnam, where this project is located, coal is a necessary part of that mix.”

A prerequisite of ADB support for the Mong Duong thermal power project was a detailed environmental impact study. In order to mitigate an impact on the environment, the project will introduce circulatory fluidised bed boiler technology, which will significantly reduce emissions.

“While projects like Mong Duong are essential for Vietnam’s continued growth, we recognise that greater use of clean energy, renewable energy, and increased energy efficiency are critical to Asia’s longer-term development,” said Mr Cooney.

ADB is working closely with Vietnamese authorities to implement the country’s National Program on Energy Efficiency and Conservation. Vietnam is one of six priority countries for clean energy investment assistance under ADB’s US $1 billion a year energy efficiency initiative.

Vietnam’s demand for electricity is growing at a rate of 16% each year. The country’s continued economic development hinges on its ability to keep up with this growing demand.

Power outages in Vietnam are becoming increasingly acute during the dry season due to low water levels in hydropower plants, which currently generate approximately 40% of Vietnam’s electricity output.

ADB is also supporting energy efficient metro-rail transportation systems in Hanoi and Ho Chi Minh City, which will significantly reduce vehicle emissions in both cities.

Source: http://www.nhandan.com.vn/english/business/210907/business_adb.htm

Goods import taxes to be slashed

Up to 96.6% of the tax-levied commodity groups will enjoy lesser taxes, according to a Government report presented by Finance Minister Vu Van Ninh at the second session of the 12th National Assembly’s Standing Committee on September 20.

For export taxes, the Government will increase ceiling levels by a maximum of 20% for crude oil, coal and metal ores.

According to Minister Ninh, the adjustments are in line with Vietnam’s WTO commitment to reduce tariffs and the ASEAN Common Effective Preferential Tariff that will be implemented by the country from 2008.

The NA’s Committee for Finance and Budget asserted the necessity of the adjustment of import-export taxes, stressing the need to minimise its negative effects on domestic production, particularly agriculture and people’s livelihoods.

The committee said the raising of the export tax ceiling must be scrutinised in order to ensure export promotion policies and trade balance.

Most of the NA Standing Committee members agreed with the adjustment and asked the Government to keep a close eye on the situation.

Source: http://www.nhandan.com.vn/english/business/210907/business_g.htm

Cross-border trade with China hits 1.5 bn USD

Import and export revenues through the Mong Cai bordergate leading to China were estimated at 1.5 billion USD in the first nine months of this year, an increase of almost 20 percent over the same period last year.

Viet Nam exported 691 million USD worth of commodities through the border gate while recording 218 million USD in imports and 656.6 million USD from imports for re-exports.

Economists attributed the surge in bilateral trade to huge reforms in customs procedures at the bordergate as well as China’s increasing demands for farm produce, rubber and seafood.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/214610/Default.aspx

US firm has new additives plant in HCM City

The US-owned company W.R. Grace Vietnam Co Ltd on September 20 opened new manufacturing facility in the HCM City’s Hoc Mon district.

The plant, with an investment of more the 1 million USD, will manufacture cement processing additives and concrete admixtures.

The Hoc Mon facility also has a quality control laboratory, dedicated to the delivery of products and services for Vietnamese customers.

Source: http://english.vietnamnet.vn/biz/2007/09/743455/

BIDV enters into partnership with IBM

US leading computer maker IBM will assist the Bank for Investment and Development of Viet Nam (BIDV) in information technology development through personnel training, IT updates and consultancy.

Under a memorandum of understanding signed in Ha Noi on September 20, IBM will also help BIDV design an IT development strategy for the 2007-2012 period.

BIDV Deputy General Director Le Dao Nguyen said the initiative showed the bank’s firm commitment to the application of cutting edge IT within its core banking services.

The bank had previously inked a licensing pact with the US-based Microsoft Corporation, under which BIDV will be enabled to exclusively use Microsoft Office Standard 2007 software.

Under the contract, BIDV will purchase 6,000 licences to use within its network and would be able to upgrade to any new software versions the global software giant rolls out in the next three years.

BIDV is currently one of Viet Nam’s biggest commercial banks, boasting total assets of more than 200 trillion VND (12.5 billion USD). The bank also recently won approval from the Prime Minister to re-invest itself into a financial-banking group.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/214440/Default.aspx

Seminar highlights need for improved tourism service quality

Local and foreign tourism experts gathered at a seminar in Ho Chi Minh City on September 20 to discuss ways to improve much needed service quality in Viet Nam’s tourism industry.

Participants convened on the meeting from 160 member establishments of the Pacific Asia Travel Association (PATA)’s Viet Nam Chapter, Australia, India, the Republic of Korea, Germany and Britain.

All attendees agreed that Viet Nam’s accession to the World Trade Organisation (WTO) opened up exciting opportunities for the sector.

However, they said, domestic companies still faced difficulties in market research and updating information about the latest in tourism trends.

Viet Nam’s tourism sector welcomed 3.6 million foreign tourists and 18 million domestic visitors in 2006, year-on-year increases of 5.6 percent and 12.5 percent, respectively, with revenues reaching 36 trillion VND (2.25 billion USD) last year, up 12.5 percent over 2005.

In the first eight months of this year alone, Viet Nam greeted 2.5 million foreign visitors.

The tourism industry has so far attracted close to 5 billion USD in foreign direct investment invested in nearly 200 projects.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/214443/Default.aspx

Metro seeking to expand distribution network in Vietnam

Foreign distributors seem to be making fat profit in Vietnam’s market, which explains why Metro Cash & Carry is entreating the Ministry of Planning and Investment MPI for permission to open more distribution points.

Uwe Hoelzer, Director General of Metro Cash & Carry Vietnam, said that MPI agreed in the distributor’s investment licence granted in 2001 that Metro would open eight distribution centres. At that time, in 2001, Metro thought that eight would be enough for Vietnam’s market. However, the rapid development of the retail market Vietnam proves to be far beyond any expectations, and the eight centres are too modest if compared to the fast development.

Metro has lodged a proposal to allow it to open at least four more distribution points in Hanoi, HCM City, Dong Nai in the south and Nha Trang in the central region.

Metro is impatient to open more distribution points because it has opened all the points allowed by the investment licence. On September 19, 2007, Metro opened Hoang Mai distribution point in the south of Hanoi, which has the total surface area of 46,000 sq m. The Hoang Mai point has 300 staffs.

Hoang Mai has the total investment capital of more than $15mil, which means the distribution group has spent $120mil so far on its eight distribution points nationwide, fulfilling the first phase of its investment in Vietnam. The wholesale points are located in big commercial hubs including Hanoi, HCM City, Hai Phong, Can Tho and Da Nang. Last year, Metro opened an office in HCM City to gather goods for export to the Asian region.

Under Vietnam’s WTO commitments, as of January 1, 2009, Vietnam will open its distribution market to foreign distributors. However, Vietnam has been considering licencing foreign investors already in specific cases. The early comers to Vietnam, namely Metro, Big C and Parkson, are all making fat profit from the domestic market, and they all want to expand their business networks in order to conquer the market before 2009.

Source: http://english.vietnamnet.vn/biz/2007/09/743025/

Agifish gets more cash after reaching int'l standards

The An Giang Seafood Export and Import Joint Stock Company (Agifish) has record rapid growth in recent years thanks largely to its application of internationally recognised food hygiene and safety standards.

Primarily a catfish processor, Agifish's products accounted for 70 percent of Viet Nam's total seafood export to the US before the anti-dumping taxes were applied to the country's exporters.

Vo Phuoc Hung, an official from Agifish, said the company continues to be one of the top catfish exporters in the country and has earned a foothold in giant markets like Western Europe, Russia, Asia, and Australia.

"Quality and food hygiene and safety were the top priorities of the company's development strategy in retaining our market share, " said Hung.

Agifish was one of the first businesses to establishe a close connection between material areas and processing factories. Operating a safe aquaculture complex with a capacity of 70,000 tonnes per year, the company is able to self-supply close to 70 percent of its material demands.

"We buy the remaining materials from farmers but these materials must undergo careful examination before being processed," said Phan Cong Bang, Head of the company's Technology Department.

Agifish is one example of 400 seafood exporters nationwide that are striving to penetrate further into the world market by ensuring product quality and food hygiene and safety.

According to Nguyen Tu Cuong, Director of the National Fisheries Assurance and Veterinary Association (Nafiquaved), in addition to strict requirements for product quality, many foreign markets also regularly change food hygiene and safety standards, causing difficulties for local businesses.

A series of foreign importers have arrived in Viet Nam recently to check fish raising facilities and test aquatic products on the spot instead of checking batches of imported products only.

Seafood importers from Russia, for instance, have made three trips to Viet Nam this year alone in order to inspect products destined for export to Russia.

The Russian Animal and Plant Quarantine Department left the country impressed and promptly awarded 13 businesses export licences to the market, including Agifish.

Japan - one of the world's most fastidious customers - is also satisfied with Vietnamese seafood businesses in all production stages, from raising, collecting materials to processing after a series of inspections, according to Deputy Minister of Agriculture and Rural Development Nguyen Viet Thang.

Viet Nam has also earned a foothold in the tough European Union. The number of Vietnamese seafood exporters shipping to the EU has increased rapidly each year, amounting to 245 at present.

Viet Nam's seafood export revenues have drawn in 2.34 billion USD over the past eight months of the year, becoming one of the world's top ten seafood exporters in terms of value.

Ensuring quality and food hygiene and safety is a focus of the Vietnamese fisheries sector in order to fulfill its target of exporting between 4-4.5 billion USD worth of seafood by 2010, according to Deputy Minister Thang.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/214322/Default.aspx

US diplomat praises Vietnam’s growing economy

US Consul General Kenneth Fairfax to Ho Chi Minh City affirmed on September 19 that Vietnam is a rapidly growing economy.

The diplomat told a meeting in Da Nang city that Vietnam is one among the fastest growing Asian markets for US goods and the US is currently the six largest supplier of commodities for Vietnam.

The US Department of Commerce is holding a meeting of its officials based in ASEAN member-countries in Vietnam’s central coastal city to discuss priority trade policies and US-ASEAN trade and investment.

The four-day meeting, which opened on September 19, is being attended by senior US Department of Commerce officials, including its deputy assistant secretary - Dan Harris, and Juliet Bender, the commerce director of the Office of the Pacific Basin.

Invitees included senior and mid-level economic and commercial officers from other US agencies and US Chamber of Commerce offices in the region.

Officials have come to the meeting from Thailand, Malaysia, Indonesia, Singapore, the Philippines, mainland China, Hong Kong and Taiwan besides the US and Vietnam.

Source: http://english.vietnamnet.vn/biz/2007/09/743059/

Korean milk company to buy into Ha Noi Milk

Maeil – one of South Korea’s three leading milk producers – will pick up an undisclosed stake worth VND35 billion (US$2.18 million) in the Ha Noi Milk Joint Stock Company following a deal signed Tuesday.
Ha Noi Milk expected the deal would assist the company in reaching the international market.

Under the strategic partnership deal, the Korean milk producer will help Ha Noi Milk, which holds the third largest market share in Vietnam, to expand its production lines, adopt new technology and improve management.

Maeil will also support Ha Noi Milk to build a milk processing plant in the southern region of the country.

Ha Noi Milk is set to increase its chartered capital to VND100 billion (US$6.3 million) from the current VND75 billion ($4.7 million) through a share issue on the Hanoi Securities Trading Centre (HASTC) next month.

Maeil milk products are now available in over 20 overseas markets.

Vietnam is likely to import 76 percent of its milk production needs this year, according to the Husbandry Department.

Production of milk and milk powder will be around 243,000 tons this year, up 12.5 percent.

Milk production in Vietnam depends on two main sources: local fresh milk and imported milk powder. The department said the country had 132,000 heads of milch cows.

Due to a global milk shortage, the average price of dairy products in Vietnam rose 9.7 percent last year and is expected to increase by 12.5 percent this year.

Source: http://www.thanhniennews.com/business/?catid=2&newsid=32102

Sacombank Securities becomes company with largest charter capital

Sacombank Securities Company Ltd has announced an increase in its chartered capital from VND 300 billion to VND 1.1 trillion, becoming the leading securities company in Vietnam in terms of chartered capital.

The increase has been approved by the Vietnam State Securities Commission in a decision dated September 11.

Established in October 2006, Sacombank Securities JSC is a subsidiary of the Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), which is currently also the commercial joint stock bank with the biggest chartered capital (VND 4.5 trillion) in Vietnam.

The company’s key activities include securities self trading and brokerage in which it accounts for 10% of the country’s brokerage market share, it says on its website http://www.sbsc.com.vn.

The ACB Securities Company Ltd, a subsidiary of the Asian Commercial Joint Stock Bank has also announced an increase in its chartered capital from VND 250 billion to VND 500 billion.

Source: http://www.nhandan.com.vn/english/business/190907/business_sa.htm

Manulife fund proves attractive to investors

When Manulife launched an investment fund in July, there was concern that it would not be able to close the fund soon given the then lackluster stock market.
But this has been proved untrue. Nearly two months after the launch, the Manulife Progressive Fund 1 (MAFPF1) closed last Friday with great interest from individual and institutional investors.

Gilbert Pak, acting general director of Manulife Vietnam Fund Management Company, said the VND250-billion fund closing was not only meaningful for the fund manager but also indicated that individual investors were still confident in the stock market as the fund was contributed by more than 1,000 investors, including some institutions.

“Many people asked us why we launched the fund at a bleak time of Vietnam’s stock market as most stocks were falling,” said Pak, adding he replied this was a really good time to invest in the stock market and also a great time to mobilize funds.

He noted Vietnam’s economy grew 7.8% in the first half this year, income and expenditure of Vietnamese people increased as well, while foreign investors’ interest in Vietnam was rising.

“For all those reasons, I believed the market would develop in the coming time,” he said.

“On the occasion of our progressive fund’s launching, we would like to share our business concept that we not only offer the fund to investors but also educate the market how to do business based on the principles rather than on the psychology.”

Mark Canizares, equities director of the fund management company, said, “The fund will give investors access to Vietnam’s rapid economic development and the strong long-term performance expected from its equity market. It will be one of the few such funds offered to Vietnam’s investors that will be focused on Vietnam equities.”

The first general investors meeting of the fund will be held on October 6 and within 45 days after the meeting, the fund manager would complete all necessary processes to get a listing license for the fund units on the Hochiminh Stock Exchange.

Elaborating on the fund’s investment strategy after closing, Pak said the fund aimed at growth in profit so it would focus on equities. The fund will use 65% to 95% of its net asset value (NAV) to invest in listed firms, up to 25% to invest in unlisted firms trading on the over-the-counter market, and the remainder will be used to invest in cash and debt tools.

High progress means high risk so the fund also sets principles for investment, such as not using more than 10% of its NAV for investment in a listed company, not over 5% in a public company, and total investment capital in five companies must be lower than 40% of the fund’s NAV. The fund will not invest directly in real estate projects.

Pak also said the MAFPF1 fund would focus on some sectors like banking and finance, consumer products focusing on branding and distribution, manufacture of furniture, wooden products and handicrafts, light manufactured goods, including garments, footwear and plastics, and telecommunications.

“We have a strong and proven record of providing effective wealth management and investment solutions for clients and we believe that makes for a compelling proposition for Vietnamese investors. Our investment principles are depth, discipline and focus. We will focus our investment strategy on companies that we believe exhibit high quality earnings growth potential with sound strategies and a strong management team and that are likely to benefit from Vietnam’s WTO accession,” he said.

Manulife is one of the only two publicly traded life insurance companies in the world to be awarded an AAA rating by Standard & Poor’s.

This is the first fund of the Manulife Fund Management Company (MVFM) and the fund manager also plans to set up more funds, including offshore ones from next year.

Licensed in 2005, MVFM, a wholly owned local subsidiary of Manulife Vietnam, has managed up to VND3 trillion in assets of bonds and equities for the life insurer Manulife Vietnam.

The fund manager is also a member of MFC Global Investment Management, which has offices in the United States, Canada, the United Kingdom, Japan, Hong Kong, and throughout Southeast Asia.

MFC Global under Manulife Financial manages the assets totaling about US$210 billion and has more than 100 years’ experience in managing portfolios for the Manufacturers Life Insurance Company, John Hancock Life Insurance Company and other major clients.

Manulife Vietnam, the first 100% foreign-owned life insurance company licensed in Vietnam in 1999, now provides financial services to more than 300,000 customers through a network of 3,000 agents.

Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries have totaled US$386 billion by late June this year.

Source: http://www.saigontimes.com.vn/daily/detail.asp?muc=1&Sobao=3028&SoTT=6

Giant GE to make big investment in Vietnam

Colin Low, GE National Executive for Singapore, the Philippines and Vietnam, has not admitted anything, except the news about the working visit by GE’s Chairman and Chief Executive Jeffrey R. Immelt on September 28, during which he will meet government representatives and announce an important investment deal in infrastructure.

Colin Low, GE National Executive for Singapore, the Philippines and Vietnam
Vietnam’s media guess that the important investment deal Mr Low has mentioned is a project of many millions of dollars, following the heavy investment of other giants in the world, including Intel and Foxconn.

GE is a well-known US-based technology, telecommunication and financial service group, which has been present in Vietnam since 1993, even before the US lifted the embargo against Vietnam in 1994. In 2003, GE established GE Vietnam Company Ltd, 100% foreign owned, specialising in providing post sales services in health care, electric equipment and power. At the end of 2006, GE opened a representative office of GE Consumer Finance in Hanoi.

Mr Low said that four GE subsidiaries were present in Vietnam: GE Infrastructure (power, aviation, water), GE Industry (electricity, high-grade materials), GE Healthcare and GE Consumer Finance.

GE’s main clients in Vietnam include Vietnam Airlines (air carrier), the Electricity of Vietnam, Vietnam Railway Corporation, PetroVietnam (oil and gas), public and private owned hospitals.

When asked why GE decided to invest in Vietnam, Mr Colin Low said that the main reason was that Vietnam’s Investment Law had become open and protected the benefit of investors.

In fact, South Korean, Japanese and Taiwanese investors all eye Vietnam as an investment address because they want another non-China destination to set up their projects, because investors do not put all eggs into one basket in order to disperse risks. In general, foreign investors see Vietnam as a potential market for outward investment.

With the achievements of the four GEs in Vietnam, the group has every reason to be optimistic about its future performance in the country. GE’s total turnover was $62mil in 2006, and the average growth rate is at 20% per annum, or 3-fold higher than the GDP growth rate. Vietnam is now described as a market with great potential, which is now taking off.

Mr Low also highly praised the quality of the Vietnamese labour force. In Hai Phong city, which has developed industries, labourers there have been well trained to fit industrial production projects.

GE is considering the demand for chartering aircrafts from the national air carrier Vietnam Airlines in order to negotiate a contract on aircraft chartering, Mr Colin Low told the press on September 18.

He said that Vietnam Airlines needed to charter long-distance aircrafts for the direct flights from Vietnam to the US to be launched soon, and needs Boeings. Meanwhile, GE has 1,400 aircraft for lease.

GE once leased three aircrafts to Vietnam Airlines, and 16 of Vietnam Airlines’ operational aircrafts (Boeing 777 and Airbus 320) use GE engines.

Source: http://english.vietnamnet.vn/biz/2007/09/742597/

Foreign investors more enthusiastic than ever before

As the stock market has been witnessing prolonged falls, experts have warned that foreign investors may withdraw from Vietnam. However, the happenings in the stock market recently show the opposite.

A recent survey conducted by the State Bank of Vietnam on the portfolio investment capital in Vietnam has confirmed the upward trend in foreign investment in the country. Currently, 74 foreign investment funds are present in Vietnam, including 22 funds established in the first eight months of the year. The funds include big names like Sumitomo Mitsui Vietnam, Fullecton Vietnam Fund, Credit Agricole Fund, which bring capital from Singapore, Japan and South Korea to Vietnam.

The total capital brought to Vietnam by the end of August is believed to reach $6bil, or 10% of GDP, which shows that Vietnam remains attractive in the eyes of foreign investors. At a business forum held recently in HCM City, foreign investors said that it was now very simple to raise funds to be injected in Vietnam’s stocks. Investment funds are now ready to pump more capital into Vietnam’s market once big corporations are equitised and make IPOs.

In fact, despite the market falls, foreign investors have never left Vietnam. Statistics show that at many trading sessions, foreign investors’ transaction volumes have accounted for 1/3 of the total trading volume of the market.

Foreign investors prove to put high hopes on big corporations’ IPOs. Since Bao Viet (insurer) sold 10% of its stakes to HSBC for $255mil, three other banks, Vietcombank, Incombank and BIDV, have been intensively looking for foreign strategic investors, to whom they are planning to sell 7-10% of total stakes.

Bao Viet and the said banks are the leading financial institutions in Vietnam, and thus the targets of many international investors. Therefore, it is predictable that foreign investors will have to spend several hundred million dollars to become the strategic shareholders of the banks and insurers.

Most recently, when commenting about Vietnam’s stock market, Sang-Ho Ryu, Managing Director of KIS, a South Korean securities investment group, said that the economic growth rate of Vietnam at 8.5% proved to be very impressive, and promised attractive investment deals on the bourse.

Refusing to consider the worries about the falls of the stock market, Mr Sang-Ho Ryu said that the stock market was in the correction period after a period of overly high development.

The market falls can bring big opportunities, when investors can buy stocks at soft prices before the stock market recovers. Foreign investors may well understand that Vietnam’s stock market is very promising, and they are now more enthusiastic than ever before.

Source: http://english.vietnamnet.vn/biz/2007/09/742157/

Shoe & leather exhibition opens in HCM City

The 9th International Shoes & Leather Exhibition kicked off at the Ho Chi Minh City International Exhibition and Convention Centre on September 18.

The event, co-organised by the Viet Nam Leather & Footwear Association (Lefaso), Viet Nam Leather & Footwear Joint Stock Co. and Top Repute Co., Ltd, drew the participation of over 110 companies from 17 countries and territories.

Machines, materials, chemical and leather and footwear products are being displayed during the three-day exhibition, which is expected to attract 8,000 visitors from Viet Nam and other countries.

Viet Nam’s footwear export turnover reached nearly 3.6 billion USD in 2006, representing a 20-percent increase against the previous year.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/214002/Default.aspx

Construction of eyeglass lense factory starts in Binh Duong

Work started on the construction of a facility that will produce eyeglass lenses for export in southern Binh Duong province on September 18.

The first phase of the plant will be built by Hoya Lens Viet Nam , a subsidiary of Japan 's Hoya Group, on 3.5 ha in the Viet Nam-Singapore Industrial Zone II at an estimated cost of 66 million USD.

Once fully operational, the plant will provide 2,300 jobs for local workers.

Since its inception two years ago, the Viet Nam-Singapore Industrial Zone II has granted investment licenses to 97 foreign-invested projects, worth 1.2 billion USD in total.

The zone has been widely regarded as the most attractive destination for investors in the province.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/214046/Default.aspx

Vietnam’s economy: “No miracles but robust”

Vietnam’s economy is robust and continues to expand rapidly with a GDP growth of 8.3 percent in 2007 and 8.5 percent projected for 2008.

This was said by the Asian Development Bank (ADB) in a major report released in Hanoi on September 17, 2007.

The report assessed that Vietnam’s economy has grown strongly over the past few months in spite of not achieving any miracles after joining the WTO (World Trade Organization) in January this year.

The Asian Development Banks outlook for 2007 (ADO), forecast Asia’s growth in 2007 at 7.6 percent in March this year and 8.3 percent by the end of the year. As for Vietnam, its growth accelerated in the January-June period to 7.9 percent, which is a half percentage point faster than a year ago.

According to the report, nearly all the economic expansion in Vietnam comes from industry and services and the dynamic private sector is noted with an expansion of 20.5 percent, more than double the rate of state enterprises.

Among the sub-sectors, manufacturing grew by 12.4 percent but mining posting minimal growth after suffered from a 7.4 percent contraction in crude oil production because of a decline in output of the White Tiger oilfield, the biggest in Vietnam.

In terms of services, trade and finance grew by 10.4 percent and hotels and restaurants which benefited from buoyant consumption and increased tourism, rose by 12.7 percent.

On the demand side, strong investment and consumption were the main drivers of the economic expansion in Vietnam. Investment grew by 14 percent in the first half of the year, stimulated by Vietnam’s WTO accession and by improvements to the business environment. Much of the growth in investment is from the domestic private sector, whose share of overall investment increased to about 35 percent in the first half of 2007, up from 23 percent in the last 6 years.

The buoyant investment led to a steep 30.4 percent increase in imports in the first half of 2007 with the import of capital goods surging by 46.5 percent. Regarding exports, textiles and clothing increased by 25.5 percent in the first half of the year after the abolition of quotas, and wooden furniture exports also rose by 23 percent.

The report also said that Vietnam’s economic expansion is expected to accelerate to 8.5 percent in 2008, led by strong growth of two of its components – manufacturing and construction, industry is expected to grow by 10.6 percent in 2008. Services, spurred by consumption and tourism, as well as the gradual opening of some sectors to foreign participation, is projected to grow by 8.6 percent next year. Trade benefits from WTO accession are expected to keep export growth brisk in 2008 at 22 percent. As to inflation, the level is expected to be contained at 7.8 percent for 2007, and it is expected to be reduced further to 6.8 percent in 2008.

Mr. Ayumi Konishi, ADB Country Director to Vietnam, said that “those who have expected miracles from Vietnam’s WTO accession may feel differently, but the country indeed has been making a good progress in its economic development and reforms.”

Source: http://english.vietnamnet.vn/biz/2007/09/741949/

ADB predicts Viet Nam’s economy to expand rapidly

The Asian Development Bank (ADB) said that Viet Nam’s economy will continue to expand rapidly.

In the Asian Development Outlook 2007 Update (ADO Update), which was released in Ha Noi on September 17, the bank said that the Southeast Asian nation’s growth accelerated in the January-June period at 7.9 percent, which is a half percentage point faster than a year ago.

ADB Deputy Country Director to Viet Nam, Dr. Omkar Shrestha, said that Viet Nam’s economic growth for all 2007 is forecast to reach 8.3 percent, unchanged from the ADO 2007 projection, which was released in March of this year.

According to the ADB, nearly all the economic expansion in Viet Nam came from industry and services, and the dynamism of private sector is noted with expansion of 20.5 percent, more than double the pace of state enterprises.

The bank also said assuming that Viet Nam’s WTO accession will help further integrate the economy into global business networks, encourage foreign direct investment and maintain the momentum for domestic reforms, Viet Nam’s economic expansion is expected to accelerate to 8.5 percent in 2008.

Regarding the country’s inflation, the bank said the inflation rate has shown upward tendency, with 8.3 percent in 2005, 7.5 percent in 2006 and 7.3 percent in August 2007. The bank said that the inflation rate is a concern but not alarming. The inflation level is expected to be contained at 7.8 percent for 2007 and is expected to be reduced further to 6.8 percent in 2008.

According to ADB Country Director to Viet Nam Ayumi Konishi, the situation is considered to be under control, although the relatively high level of inflation calls for the Vietnamese Government’s close attention.

“What is most important for Viet Nam continues to be the acceleration of reforms and faster implementation of development projects through simplification of procedures,” he said.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/213845/Default.aspx

Laptop imports sky-rocket this year

The first eight months of this year saw laptop imports surge by over 190 percent from last year.

According to the Ministry of Industry and Trade, some 110,000 laptops were imported to Viet Nam in the period and that laptops have now supplanted personal computers (PCs) as the computer of choice in the country.

Close to 75,000 PCs were imported over the first eight months, up 5,000 over 2006.

The ministry forecast that the computer market in Viet Nam would grow by 60 percent this year, with imported computers accounting for a 35 percent market share.

Source: http://www.vnagency.com.vn/Home/EN/tabid/119/itemid/213873/Default.aspx

Service sector targets $12bil by 2010

The Government has targeted the nation's service sector to achieve a turnover of US$12bil per year by 2010.

Tourism will remain the largest foreign currency earner among the country's key service sector.

Under the Government's newly-approved plan, the nation aims to achieve an annual growth rate of 16.3% in service revenue during this period.

Specific service sector has been targeted to achieve even more aggressive growth rates, including insurance (29.3%), telecoms (24.5%), financial services (22.4%) and marine transportation (21.5%).

Tourism will remain the largest foreign currency earner among the country's key service sector, with projected revenue of $3.2bil, while marine transportation aims to earn $1.1bil and air transportation $950mil.

Unlike developed nations in which services account for around 40% of GDP, Vietnam's services sector reached only $21.8bil, accounting for only 10.8% of GDP, during 2001-05 period.

Japan External Trade Organisation (JETRO) senior advisor Ken Arakawa, at a recent seminar on services, outlined a lack of professional skills, poor service quality, and costly communication services as major obstacles facing the Vietnamese services sector.

WTO entry brought Vietnamese enterprises a lot of opportunities as increasing numbers of foreign service providers were interested in the Vietnam market, creating a chance for domestic companies to take advantage of higher-skilled human resources, more modern technology, and a more professional model for providing services and management, Arakawa said.

Other local experts suggested that Vietnam should focus on completing the legal framework in taxation, investment procedures, and incentives as well as building national trademarks.

Trade promotion campaigns needed to be launched in addition to developing marketing and human resources training, they added.

Source: http://english.vietnamnet.vn/biz/2007/09/741697/

South Korean investors want to inject billions in Hoa Binh

The mountainous province of Hoa Binh is now catching the special attention of investors from the Republic of Korea, who have suggested investment projects worth several billion dollars.

Most recently, Charm Vit has expressed its desire to invest in an entertainment complex estimated at $2bil. The Hoa Binh People’s Committee had a meeting with the investor, where it expressed support for the project and promised to create the best conditions for the project to be implemented soon.

Another South Korean investor, GNC, who is running several big investment projects in Hoa Binh already, is planning to inject money in the project on Xuan Tien new urban area and a 54-hole golf course there. The projects run by GNC include a project on a highway linking Hoa Lac to Hoa Binh capitalised at $150mil.

Seyoung Inc has also got a licence to build and run a garment factory for export to be located in Luong Son industrial zone in Hoa Binh province.

Hoa Binh authorities have recently organised an investment promotion campaign aiming at two key markets, namely South Korea and Japan, which has drawn the special attention of many investors, including big groups from the two countries. In Japan, the Vietnam-Japan Economic Research Institute has come forward and acted as a place to receive and promote investment for Japanese-invested projects in Hoa Binh.

Source: The mountainous province of Hoa Binh is now catching the special attention of investors from the Republic of Korea, who have suggested investment projects worth several billion dollars.

Most recently, Charm Vit has expressed its desire to invest in an entertainment complex estimated at $2bil. The Hoa Binh People’s Committee had a meeting with the investor, where it expressed support for the project and promised to create the best conditions for the project to be implemented soon.

Another South Korean investor, GNC, who is running several big investment projects in Hoa Binh already, is planning to inject money in the project on Xuan Tien new urban area and a 54-hole golf course there. The projects run by GNC include a project on a highway linking Hoa Lac to Hoa Binh capitalised at $150mil.

Seyoung Inc has also got a licence to build and run a garment factory for export to be located in Luong Son industrial zone in Hoa Binh province.

Hoa Binh authorities have recently organised an investment promotion campaign aiming at two key markets, namely South Korea and Japan, which has drawn the special attention of many investors, including big groups from the two countries. In Japan, the Vietnam-Japan Economic Research Institute has come forward and acted as a place to receive and promote investment for Japanese-invested projects in Hoa Binh.

Source: http://english.vietnamnet.vn/biz/2007/09/740935/

Investors not depressed about OTC shares

The OTC market last week witnessed several institutional investors, both domestic and foreign, including one from the Republic of Korea and one from Japan, hunting for Hoa Phat shares (HPG), which shows that investors are not depressed about OTC shares.

An institution has successfully bought 1mil HPG, and several individuals have purchased 200,000 units. A securities broker on Bao Viet trading floor in HCM City said that he had successfully acted as the broker for a deal in which 300,000 shares were traded.

The hunting for HPG proves to be a strange thing nowadays, while the OTC market is still freezing. A securities broker in Hanoi said that institutions seeking to buy HPG were ready to pay cash immediately instead of advancing security money in order to ensure the success of the transactions.

The demand for HPG has increased sharply since the group’s website announced the information about the post tax profit of the group in the first eight months of the year at VND330bil, fulfilling the yearly plan already. Hoa Phat plans to gain the profit of nearly VND500bil this year, and the plan is considered feasible. If so, the EPS of HPG would be VND3,967, and with the current price level of nearly VND75,000/share, the PE would be 18.4.

The broker on Bao Viet trading floor said that the current transaction price of HPG was really attractive if comparing HPG’s financial indices with other listing share items like SAM or KDC, which have similarities to Hoa Phat, or with Vincom, to be listed in September.

Vincom’s shares, for example, are trading at VND118,000/share, and the expected PE is 59.5 for 2007, and EPS VND1,983. If Vincom can gain the profit of VND131.6bil in 2007 (double the profit in the first half), the PE would be 57.5 and EPS VND2,053.

The HPG ‘phenomenon’ once again shows that investors are still interested in OTC commodities and they are still hunting for good share items. At this moment, several investment funds are seeking to buy shares of Cuu Long Pharmaceutical, Dong Phu Rubber and Masan. The low prices of the share items prove to be attractive in the eyes of investors, but the most attractive thing is the good brand name and good business strategy.

In the August stock bulletin, the Saigon Securities Incorporated SSI wrote that it was the right time for investors to carry out their long-term investment deals on the OTC market.

The OTC has been falling for the last six months, and the price of many bank share items have dropped to the deepest lows since the beginning of the year. However, the falls seem to be stopped with a low volume of transactions.

A question has been raised about why investors are still not buying shares at this moment. SSI believes that as the market has been freezing for quite a long time, domestic investors have become more hesitant and cautious. They will only make deals when they see clearers signs of the market’s recovery.

As for foreign investors, the transparency of OTC shares remains the biggest barrier: they have nearly no information about the companies, and it would be very costly to get the information.

In fact, Hoa Phat or Dong Phu shares can catch special attention from investors because the companies know how to provide information to investors, through mass media or their own websites.

According to SSI, in order to improve the current situation on the OTC market, the State Securities Commission should urge public companies to make registration and provide periodic information.

Source: http://english.vietnamnet.vn/biz/2007/09/740923/

HSBC enters strategic relationship with top Vietnam insurer, Bao Viet

*** HSBC, Asia's pre-eminent international bank, reinforces emerging markets presence ***
*** Deal is largest insurance investment in Vietnam ***
*** In line with HSBC's strategy of investing in high growth markets ***
*** Reinforces aim to be top 10 global insurance player ***

HSBC has entered into an agreement to acquire a 10 per cent stake in Vietnam's leading insurance and financial services group, Vietnam Insurance Corporation (Bao Viet), for VND4,121 billion (approximately US$255 million) as a result of which HSBC becomes the company's sole foreign strategic partner.

Under its strategic partnership with Bao Viet, HSBC will offer the Vietnamese company technical assistance across all its businesses, with a focus on further enhancing its insurance capabilities. This will include the secondment of specialist employees and the provision of training to Bao Viet.

Headquartered in Hanoi, Bao Viet provides a diverse range of financial products and services to the rapidly growing domestic market. Through its 126 branches and 400 sub-branches, 5,000 employees and 40,000 agents, the company is market leader in both life and general insurance measured by premium income. BaoViet Insurance is Vietnam's largest general insurer with a market share of 35.2 per cent and 20.2 million policyholders in 2006, while BaoViet Life has consistently been one of the top life insurers in Vietnam with 1.6 million life policies in force. The Bao Viet group had total assets of US$1,039 million¹ at 31 December 2006.

Stephen Green, Group Chairman of HSBC Holdings plc, said: "This investment and strategic partnership with Bao Viet reflects a growing commitment to Vietnam, and is in line with HSBC's stated strategy of targeting investment at high growth markets with international connections. Vietnam is one of the fastest growing economies in Asia, with average GDP growth of more than 7 per cent in the past 10 years.

"We are honoured to be able to play a leading role through this landmark transaction in the first equitisation of a major state-owned enterprise in Vietnam. The deal also complements HSBC's growing presence in the country's banking sector - where we were the first foreign bank to receive approval for a 15 per cent strategic investment in a domestic Vietnamese bank, Techcombank - and reinforces our commitment to build presence in emerging markets."

Clive Bannister, Group Managing Director, Insurance, HSBC Holdings plc, said: "We are excited by the opportunities afforded by this strategic partnership which extends our reach in the Asia-Pacific region, leverages our global insurance capabilities and reinforces our aim to be a top 10 global insurance player. HSBC Insurance contributed US$1.6 billion to pre-tax profit in the first half of 2007, and delivers 30 million policies in 44 countries and territories a year.

"Bao Viet, with its nationwide distribution network, its well-known brand name and through its strategic partnership with HSBC Insurance, is ideally positioned to tap into the significant market potential present in Vietnam's fast expanding insurance industry. I believe our partnership, through bringing together the best of our people and resources, will assist Bao Viet in becoming a world class business to the benefit of its customers, employees and public shareholders."

Mr Le Quang Binh, Chairman of Bao Viet, said: "Our vision to remain the leading insurance and financial services company in Vietnam has now been strengthened by our strategic partnership with HSBC, one of the world's major financial services companies. Together with HSBC, we plan to expand our product and service scope, further strengthen our staff qualifications and explore the use of bancassurance to increase our business.

"Vietnam's insurance market has seen rapid growth in the past decade but with a penetration rate of 1.5 per cent of GDP in 2006, it is clearly still in the early stages of development. While Bao Viet has been a key player from the start in Vietnam's insurance industry, we plan to expand our role and lead the development of this exciting financial sector."

Under the terms of the agreement, HSBC - through HSBC Insurance (Asia Pacific) Holdings Limited (HSBC Insurance) - has committed to hold its shares in Bao Viet for a minimum period of five years. During this period, it has an option to purchase an additional 8 per cent of Bao Viet shares from the Ministry of Finance (MoF) at the then prevailing market price. Additionally, HSBC has certain pre-emptive rights to acquire shares currently owned by the MoF, subject to HSBC's total shareholding being limited to 25 per cent within the first five years of the agreement, and prevailing foreign ownership limits thereafter. HSBC's option and pre-emptive rights are subject to certain limitations and conditions.

HSBC was advised on this investment by HSBC Corporate, Investment Banking and Markets.

Source: http://www.prdomain.com/companies/H/HSBC/newsreleases/200791446051.htm

Russian mobile network to invest $1bil in Vietnam

Vimpelcom, the second-largest provider of mobile services in Russia, has stated that it will establish GTel Mobile and invest $1 billion in Vietnam in the next several years to provide technology to develop GSM-based mobile network in the country.

According to the company’s official website, in connection with the visit of the Vietnamese Prime Minister to Russia, Vimpelcom signed a principal agreement to establish a mobile telecommunications joint venture in Vietnam under the name of GTel Mobile.

Vimpelcom reveals that the other participants in the joint venture will be a company owned by the Ministry of Public Security of Vietnam and The Millennium Global Solutions Group, Inc., a US company.

The principal agreement states that VimpelCom will invest up to $1 billion over the next several years in the development of a GSM mobile network and provide technical and operational expertise to the joint venture. In accordance with Vietnamese investment laws, VimpelCom will own a minority voting stake in the joint venture. However, the principal agreement says that VimpelCom will hold a majority of the economic interest in the joint venture and will exercise significant influence over the joint venture’s operations.

“We are very excited about this transaction, our first expansion outside of Russia and the CIS. Vietnam is a very attractive market, with a growing population of approximately 85 million people and mobile penetration of approximately 32%. The country has joined the WTO and the economy is developing rapidly. Overall we view this as a great growth opportunity for VimpelCom and its shareholders,” said Alexander Izosimov, CEO of VimpelCom.

The establishment of the joint venture and the terms being discussed by the parties remain subject to negotiation and execution of final joint venture documents, receipt of regulatory approvals (including licenses and frequencies) and corporate approvals of the parties.

The VimpelCom Group includes cellular companies operating in Russia, Kazakhstan, Ukraine, Uzbekistan and Tajikistan, and recently acquired companies in Georgia and Armenia.

VimpelCom is recognised for introducing two digital cellular communications standards in Russia. It built the first dual band GSM-900/1800 cellular network in Russia and leads the development and emergence of the mass consumer market for wireless telecommunications in Russia with prepaid products.

The VimpelCom Group's cellular licence portfolio covers a territory with a population of about 240 million. Geographically it covers 76 regions of Russia with 139 million people, representing 95% of Russia's population as well as the entire territories of Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Georgia and Armenia.

As of March 31, 2007, VimpelCom's total number of subscribers in Russia and the CIS was 56.8 million (45.8 million of them are active, including 38.6 million in Russia, 3.5 million in Kazakhstan and 2.0 million in Ukraine).

VimpelCom was the first Russian company to list its shares on the New York Stock Exchange (NYSE) in November 1996. Its ADSs (American Depositary Shares) are traded under the symbol "VIP".

Source: http://english.vietnamnet.vn/tech/2007/09/740575/

Steel producers weep for highest ever ingot steel price

Several steel mills have reported losses due to the sharp increase of ingot steel prices, the Vietnam Steel Association (VSA) wrote in its document sent to the Ministries of Industry and Trade (MoIT) and Finance (MOF), which stressed that the steel market is now in a tense situation.

The report by VSA sent to the ministries yesterday September 12 showed that the import ingot steel price was $389/tonne on average in 2006, while it rose four times from May to August 2007 to $485, $513, $523 and $530/tonne respectively.

The ingot steel price has been pushed up to the highest ever level in history since September 2007, as the supply of ingot steel became limited as the result of the Chinese policies on limiting semi-finished steel exports.

In recent offers, suppliers required $570-580/tonne CFR. With the import ingot steel price at $550-560/tonne, the Vietnam Steel Corporation (VSC) will be dead sure to have a loss if it maintains the current selling prices. Once steel mills cannot get enough profit for reproduction, the market would suffer a serious shortage of finished products, when Vietnam is entering the high construction season.

Pham Chi Cuong, Chairman of VSA said that the market is now very tense, and that VSC has reported heavy losses in August as it tried not to raise the selling prices as required by the Government.

Mai Van Tinh, Chairman of VSC, said that the corporation has asked its members not to raise the selling prices in the last time, however, the member companies have been facing a lot of difficulties. Most of its members, including joint ventures, either took losses or just broke even in August. The total loss the member companies have suffered may reach VND10bil. Especially, Nasteel Vina, VPS have reported the loss of VND2bil for each in August.

Currently, the selling prices of VSC’s members are always VND200,000/tonne lower than other steel producers. The Thai Nguyen Cast Iron and Steel Company, for example, is selling rolled steel at VND9,645,000/tonne and bar steel at VND7,795,000/tonne. The Southern Steel Corporation is selling at VND9.5mil and VND9.650,000/tonne respectively. Meanwhile, the lowest price level applied by other steel mills is now VND9,920,000/tonne.

As the ingot steel price has been escalating, several enterprises have raised the selling prices by VND100-200,000/tonne since the beginning of September 2007. Some enterprises are now selling at record high price levels at VND10,100,000-10,200,000/tonne.

Steel mills all said that they would raise the selling prices of finished steel further. According to Le Ngoc Son, Head of the International Cooperation Division under VIS, the ingot steel price in China once hit the yuan150/tonne level.

With the price increase movement, even if the Government cuts another 2% tax on ingot steel imports, the price of finished steel would still climb to VND11mil/tonne (delivery at mills, and not including VAT), said Mr Son.

Why are steel mills’ inspection results not made public?

VSA and its members have been trying to explain that the steel price increased sharply in the last time because of the sharp increase of ingot steel prices, but their explanation has not satisfied the public. Meanwhile, Government officials have not released the result of the inspection tours to steel mills yet.

In fact, Nguyen Tien Thoa, Head of the Price Control Department MOF had a meeting with the press, at which he gave some details about the inspections. He said that the higher input material prices in the world’s market were the main reason behind the sharp price increases of different products in the last time. The ingot steel price, for example, rose by nearly 20%. He said that many steel mills have committed to cut expenses in order to cut the production cost and prevent price increases towards years end.

According to Mr Thoa, the Vietnam-Australia Steel Company has cut its prices by VND200/kg, while Thai Nguyen steel agreed to cut VND100-200/kg.


However, in fact, the former company has decided to raise the prices by exactly VND200/kg after the price cut before. Vinakyoei has also raised the selling price by VND100-200/kg, only Thai Nguyen and Southern Corporation have not raised the selling prices yet.

It seems that steel mills make promises to cut selling prices only when Government officials come for inspections, and they raise the prices again when the inspectors are away.

Source: http://english.vietnamnet.vn/biz/2007/09/740435/