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8May/14Off

Vietnam calls for nearly $60 billion of foreign capital for major projects

Last update 12:14 | 08/05/2014

VietNamNet Bridge – The Vietnamese government is calling for new infusions of foreign investment in infrastructure and agriculture projects.

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The sketch of Long Thanh Airport.

Prime Minister Nguyen Tan Dung has approved the list of national projects calling for outside funding from now to 2020.

The list consists of 127 projects divided into five groups: technical infrastructure; social infrastructure; agriculture; agricultural preservation and processing; and manufacturing & service.

The total capital called for by these projects is over $58 billion. Several individual projects are worth billions of USD, such as Khanh Hoa Province’s Nam Van Phong refinery in the Nam Van Phong Economic Zone, which needs up to $8 billion. For that project, foreign investors can contribute up to 75 percent of the capital.

The North-South highway project, with segments from Ninh Binh to Thanh Hoa and from Thanh Hoa to Nghi Son, is calling for foreign investment of nearly $1.9 billion in the form of public-private partnerships (PPP). Other projects and their funding requirements are: Noi Bai-Ha Long highway (nearly $1.8 billion); Long Thanh Airport in Dong Nai Province ($5.6 billion for Phase 1); Bien Hoa-Vung Tau railway $5 billion); the Dau Giay-Lien Khuong highway ($3.5 billion); and the power center in Binh Dinh Province ($4 billion).

The transport infrastructure projects need the highest amount of capital, with 35 projects under the PPP and BOT (build - operate - transfer) forms and using official development assistance (ODA). There are three projects planned to develop infrastructure for industrial parks and 10 projects of urban water supply and solid waste treatment.

The agricultural sector is also a focus with 44 projects, including projects to develop high-tech agricultural parks in the Mekong Delta, Thai Nguyen and Son La.

There are also eight agricultural storage and processing projects and four production and service projects.

Na Son

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6May/14Off

Forex reserves rise to $35 billion

May, 06 2014 09:24:30
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A customer buys US dollars at a VIB Bank branch in Ha Noi. The country's foreign exchange reserves have reached US$35 billion. — VNA/VNS Photo Tran Viet

 

HA NOI  (VNS) — The State Bank of Viet Nam received US$10 billion in the first four months of 2014, raising the total foreign reserves to $35 billion, Governor Nguyen Van Binh announced.

Binh also added in the Government's April meeting that if taking into account the potential, the reserves probably amounted to $45 billion. Larger reserves are believed to help stabilise foreign exchange rates.

The money supply in Viet Nam's banking system at the end of April was an estimated 4.18 per cent, Binh noted without stating a figure.

Remittance in three months was about $2.3 billion. Last year, Viet Nam was among the top 10 remittance recipients with $11 billion, and it is likely to stay robust this year, according to the World Bank's latest issue of the Migration and Development Brief.

The money supply growth rate was lower than the same period last year, which experts blamed on a decline in total demand. However, the governor of the central bank rejected the rumour, adding that the figure simply reflected the current economic situation.

Binh, again without stating a figure, noted that in the first four months of 2014, total deposits at banks increased to 3.41 per cent from the end of last year, or increased to 5.1 per cent against the same period last year. — VNS

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6May/14Off

Vietnamese manufacturing sector reaches 3-year high

May, 06 2014 09:18:03
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A production line of the EBA Machinery Corporation in Nomura Industrial Zone in Hai Phong City. The country's Purchasing Managers' Index (PMI) last month hit a new high of 53.1. — VNA/VNS Photo Danh Lam

 

HCM CITY  (VNS) — The Vietnamese manufacturing sector continued its recent run of improvement in April as the Purchasing Managers' Index (PMI) hit a new high, surpassing the previous best achieved in April 2011, according to an HSBC monthly report.

The headline, seasonally adjusted PMI – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – rose to 53.1 in April from 51.3 in the previous month.

Business conditions have now strengthened in each of the past eight months, with the latest improvement being the strongest in the history of the survey which began in April 2011.

The rate of growth in new orders received by manufacturers accelerated for the second month running in April and was the fastest in the series history.

Improved client demand and broadly stable output prices had reportedly contributed to higher new orders. New business from abroad also rose at a record pace during the month.

Higher new orders and improved productivity led to a seventh successive monthly increase in output in the manufacturing sector. The rate of growth quickened and was second only to that recorded in April 2011.

Rising new orders led manufacturing firms to increase their purchasing activity in April. Furthermore, input buying expanded at a survey-record pace.

This contributed to a first rise in stocks of purchases since October 2013 as some panellists reported having increased inventories in response to expectations of further growth of new business in coming months.

Manufacturers also took on extra staff during the month, following a marginal reduction in employment in March. Job creation has now been recorded in eight of the past nine months.

Rising new business contributed to an increase in the backlog of work, ending a five-month sequence of depletion. Stocks of finished goods also accumulated in April, albeit only marginally. Some panellists indicated that delays in the delivery of goods to clients had contributed to the rise in inventories.

The rate of input cost inflation quickened for the first time in four months. Respondents mainly attributed the increase in input prices to higher shipping costs as a result of new government rules.

This also reportedly had an impact on supplier lead times during the month, with vendors lowering the amount of goods they shipped.

Meanwhile, manufacturing firms lowered their output prices for the second month running

Commenting on the Vietnam Manufacturing PMI survey, Trinh Nguyen, Asia Economist at HSBC, said: "The manufacturing sector is doing the heavy lifting in Viet Nam and its improvement will help bolster beleaguered domestic demand.

"The strong bounce of output, new orders, new export orders, and employment are much needed to counterbalance the domestic slump.

"We expect exports to have another stellar year, in contrast to the rest of the region, due to increased investment into the country in manufacturing and trade negotiations to expand market access.

"We expect growth to accelerate slightly to 5.6 per cent this year from 5.4 per cent in 2013. Most of this will come from the manufacturing and service sectors as construction and agriculture sectors lag behind." — VNS

 

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6May/14Off

Foreigners earn big money from Vietnamese functional food market

Last update 11:40 | 05/05/2014

VietNamNet Bridge – Amway is building its second factory in Vietnam, NuSkin has got $15 million in revenue after one year of operation in Vietnam, while Unicity has got 22,000 members in its distribution network.

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With 1,800 Vietnamese and foreign manufacturers and distributors, 10,000 product items, the Vietnamese functional food market is booming.

Herbalife reported global turnover of $4.8 billion for 2013, an increase of 18 percent over the year before, of which the sales to the Vietnamese market accounted for a significant proportion.

When Unicity Vietnam made it first presence before the public, Asia Pacific President of Unicity Group Christopher Kim emphasized that, though the Vietnamese market has become very competitive, with hundreds of operational businesses and thousands of product items available, he is still optimistic about the group’s business performance in the future.

The success Unicity Vietnam has achieved over the last year has been described by one senior executive as “beyond our expectations”.

Mai Ngoc Lan from Unicity Vietnam revealed that the company is considering setting up a factory in Vietnam which would make products for export to regional countries.

Amway’s second factory in Vietnam, which is now under the construction, is expected to become operational in early 2015. The three production lines at the $25 million factory will churn out 24,000 products a year, worth $200 million.

According to Amway Vietnam’s CEO Doug Devos, the company has been growing stably over the last six years, since it set foot in Vietnam in 2008.

In 2013, Amway Vietnam earned $90 million in revenue, up by 14 percent over 2012.

The reports of market survey firms all have indicated that Vietnam is a lucrative market for functional food manufacturers. Vietnamese, with improved income levels, now have increasingly high demand for the functional food that help reduce weight, offer nutritional supplements, support cardiovascular health and improve beauty.

Euromoniter, a market survey firm, believes that the Vietnamese functional food market will grow steadily by 20 percent annually in the coming years.

Meanwhile, according to the Vietnam Supplement Food Association, 56 people out of every 100 in Hanoi and 48 out of 100 people in HCM City use functional food.

Melisa Tantoco-Quijano, NuSkin Asia Pacific’s President, noted that Vietnam is one of the manufacturer’s best newly emerging markets. “We can see high demand for anti-aging products here,” she said.

Encouraged by the high growth rate of 30 percent per annum, NuSkin plans to attain 33 percent growth in 2014, while it is moving ahead with plans to “conquer” the Da Nang market in the central region.

Doug Devos from Amway Vietnam believes that functional food manufacturers have a brighter future in Vietnam. With the ASEAN free trade agreement (FTA) which takes effects from 2015, the enterprises which sell functional food directly will benefit from the tariff cuts of 0-5 percent.

By that time, functional food manufacturers would have a vast market of 600 million consumers.

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1May/14Off

Vietnam earns $7.7bn from cellphone exports in first 4 months

Updated :     04/30/2014 11:33 GMT + 7

 

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Vietnamese workers handle equipment at a Samsung Electronics Vietnam plant in the northern province of Bac Ninh.
Tuoi Tre
Vietnam earned nearly US$8 billion from exports of mobile phones and spare parts in the first four months of this year, according to the latest figures recently released by the General Statistics Office of Vietnam (GSO).    The country raked in $12.2 billion in total export revenue in April alone, seeing an increase of 23.2 percent ($2.3 billion) compared to the same period last year, Dau Tu (Investment) newspaper reported last week, quoting GSO figures.In the first four months of this year, Vietnam’s exports earned around $45.7 billion, up 16.9 percent ($6.6 billion) year on year. The FDI sector gained $30.4 billion in export revenue, a year-on-year increase of 17.2 percent ($4.5 billion).

The GSO statistics also show that assembled products were the main revenue generator in the January-April period. Accordingly, exports of mobile phones and spare parts earned $7.7 billion, up 29.2 percent ($1.7 billion); garment and textile shipments hit $5.9 billion, a 20 percent rise; and footwear topped $2.9 billion, surging by 21.9 percent ($511.2 million).

Vietnam saw strong mobile phone export revenues thanks to Samsung’s two manufacturing plants located in the northern province of Bac Ninh and Thai Nguyen, Dau Tu said.

The country's traditional exports also posted high earnings in the same period as seafood collected some $2.2 billion, up 32 percent; coffee earned $1.6 billion, an increase of 29.5 percent; and wood and wooden products generated $1.9 billion, a 22.4 percent expansion.

Vietnam’s imports reached $12.6 billion in April and $45.1 billion in the first four months of this year, up 13.7 percent over the same period last year. The FDI sector contributed $26.3 billion, up 18.2 percent compared to same period last year.

Vietnam ran a $400 million trade deficit in April and thus posted a trade surplus of $683 million in the first four months.

Last year mobile phones surpassed textiles to become the export commodity to earn the most for Vietnam, for which Samsung Electronics Vietnam was largely responsible.

In 2013, Vietnam exported as much as $21.5 billion worth of mobile phones and spare parts, while the export value of textiles, traditionally the export staple of the country, topped $17.8 billion, according to data from the Ministry of Industry and Trade.

According to Tran Duy Dong, deputy chief of the Agency for Economic Management under the Ministry of Planning and Investment, Vietnam has emerged as the main manufacturing destination for Korean smartphone maker Samsung when it accounts for 70 percent of the modern handsets sold globally.

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1May/14Off

Vietnam’s foreign exchange reserves hit record $35 billion

Last update 19:00 | 30/04/2014

VietNamNet Bridge - According to the Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh, this is the highest level ever. Binh also pledged that interest rates will not exceed 1% from now until year’s end.

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This information was released by Binh during a dialogue between Prime Minister Nguyen Tan Dung and the business community on Monday.

According to the head of the banking sector, Vietnam’s foreign exchange reserves are now at their highest level, at over $35 billion. "The figure not only highlights the stability of the Vietnam dong but also strengthens the position of Vietnam in the international arena," Binh said.

This is the first time a representative of the State Bank has made public the country’s foreign currency reserve. Earlier, Binh said that in the first quarter alone, the central bank purchased $7.7 billion.

At the end of October last year, in an update report, ANZ estimated the foreign exchange reserves of Vietnam at about $32 billion. At that time, the State Bank had not published specific numbers, but ANZ was able to make an estimate based on the government's report at the 6th session of the 13rd National Assembly. Prime Minister Nguyen Tan Dung had stated that the country’s foreign exchange reserves had rapidly increased, to a level sufficient for about 12 weeks of imports.

Earlier this year, Governor Binh unveiled that interest rates would remain stable and, if adjusted, would not exceed 2%. However, talking to businesses on Monday, Binh reduced the ceiling to no higher than 1%.

In the dialogue with businesses, Governor Binh also answered questions related to interest rates for small and medium-sized enterprises (SMEs). He said that, at present, 60% of banking capital is being pumped into SMEs. "As such, any difficulties in the activities of SMEs directly affect the outcomes of the business of credit institutions," he said.

At a press conference last week, the State Bank said 16% of the total debt balance of the economy is suffering from the weight of 13-15% interest rates. Governor Binh said the majority of these debts are loans for consumption, and real estate.

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1May/14Off

99.9% of Vietnamese enterprises are super small

Last update 18:00 | 01/05/2014

VietNamNet Bridge – Of the more than 500,000 operating enterprises in Vietnam, up to 95-96% are small and super-small ones. If household-scaled businesses are added to the statistics, the percentage of small, super-small and micro-enterprises may account for 99.9%.

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VCCI Chair Vu Tien Loc.

 

 

Speaking at the dialogue between Prime Minister Nguyen Tan Dung and the business community on Monday in Hanoi, President of the Vietnam Chamber of Commerce and Industry (VCCI), Mr. Vu Tien Loc, said that of over 500,000 enterprises currently operating in Vietnam, 3,000 are state-owned enterprises, nearly 8,000 are enterprises with foreign investment and the remaining majority (97-98%) are private firms.

According to Loc, despite nearly 30 years of innovation with booming business opportunities, particularly in the areas of natural resource development, real estate, securities and banking, Vietnam has not yet had a generation of big companies and big brands that can compete with international rivals.

Vietnam also lacks mid-sized businesses, ones which are able to access new technology and become partners of transnational corporations and engage in the global value chain.

Loc added that of more than 500,000 operating businesses, large enterprises account for only about 2% and the ratio is similar for midsize enterprises. The remaining 95-96% of firms are small and super-small enterprises. Micro-enterprises (with less than 10 employees) account for 66-67%. If household-sized businesses are taken into account, the percentage of micro-enterprises may account for 99.9%, Loc said.

Given the problems that the business community is facing, VCCI gathered and submitted a report to the Prime Minister with over 300 specific recommendations. Among the petitions, the business community asked the government to continue innovating the legal system on business to guarantee property rights, business freedom and equal competition of businesses.

S. Tung

 

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29Apr/14Off

PM directs to improve investment, business environment

Last update 13:42 | 29/04/2014

 

VietNamNet Bridge – The Government will create favorable conditions for the business community to increase productivity, competitiveness, quality and competitiveness and make contribution to the nation’s socio-economic development.

 

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PM Nguyen Tan Dung -- Photo: VGP

 

PM Nguyen Tan Dung made the statement on April 28 at his conference with businesses in 2014.

The PM applauded efforts, achievements and contributions of the business community to the nation’s socio-economic development over the past time.

The nation has fulfilled goals set in the five-year-plan in the phase from 2011-2015 such as stabilizing the macro-economy, controlling inflation, guaranteeing social security, improving people’s lives, ensuring national defense and raising Viet Nam’s status in the world.

PM Dung also pointed out difficulties and shortcomings facing these businesses such as the number of enterprises is still low in comparison to the population and 97-98% of businesses are Small and Medium-sized Enterprises (SMEs).

The PM suggested ministries, agencies and localities work with the business community to further improve the investment and business environment.

The Government has paid due attention to completing the market economy regulations, setting up mechanisms and policies and implement administrative reforms for these businesses to develop, stressed the PM.

The PM instructed the banking sector to help enterprises get access to credits. He asked the Governor of the State Bank of Viet Nam to develop the capital market and create a close connection between banks and businesses.

The leader required these enterprises to raise their competitiveness, increase labor productivity, apply technology into production and enhance business management competence.

Besides, businesses are suggested to coordinate with functional agencies in preventing and controlling counterfeits and low-quality products as well as expand domestic and foreign markets, establish business culture and strictly follow the State’s regulations and rules.

Source: VGP

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29Apr/14Off

Hesitancy may spoil McDonald’s future in Vietnam

Last update 16:15 | 28/04/2014

 

VietNamNet Bridge – The US fast food giant McDonald’s may not gain market share as quickly as planned, due to its late arrival in Vietnam vis-à-vis its rivals, experts say.

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The biggest rivals of McDonald’s are Lotteria, KFC and Jollibee, all of which have had a presence in Vietnam for a long time, and now command 80 percent of the fast food market segment.

Lotteria is taking the lead in demonstrating that the invasion of the Double Arches is nothing to fear. The chain is opening a series of shops on the most crowded streets of HCM City – Nguyen Du and Ly Chinh Thang.

The fast food chain and KFC are now moving ahead with their business expansion plans by marching on towards other developed cities, including Phan Thiet.

The Asian Jollibee, encouraged by its success in the struggle with McDonald’s in the Filipino market, is staying calm, continuing its plan to open a new shop in District 3, targeting children.

A branding expert, when asked about the future of McDonald’s in Vietnam, noted that this depends on the number of shops McDonald’s plans to set up in the coming years.

If it plans to have 10-20 shops throughout the country, it will surely succeed. However, it would be impractical for it to open hundreds of shops.

In principle, once a fast food chain decides open many shops, it had better be sure it can bring the average prices of it products down to a level that fits the average Vietnamese income. That is because the company is forcing itself to target the majority of fast food customers rather than a small demographic with high incomes.

In other words, McDonald’s will succeed only if its products are positioned as valuable products.

McDonald’s has revealed that it will open its second shop in Vietnam on April 30, also in HCM City.

The first challenge for McDonald’s when opening the second shop, according to the above said branding expert, is that the customers in HCM City will have two shops to go to. In the worst scenario, customers would flock to one shop, leaving the other more deserted than usual.

That scenario is very likely to happen. Observers have noted that most of the customers going to the first McDonald’s shop are those who drive motorbikes, i.e., customers with medium incomes and young customers under the age of 25.

Moreover, the most outstanding feature of the customers under 25 is their modest income and fickle tastes. They lack the two most important characteristics that McDonald’s needs – high income and loyalty.

Tamnhin.net has quoted a foreign newspaper as commenting that McDonald’s McPork, priced at $3.10, is proving to be too expensive in light of the modest average Vietnamese income of $150 and the average food price in Vietnam.

McDonald’s has been trying to attract an upscale segment with its drive-thru service, which targets high income earners who come to the shop in their cars. However, a businessman noted that fast food is not the kind of thing that he and his colleagues, mostly middle-aged, like.

In newly emerging markets, the nouveau riche tend prefer using those services or products which can display their high status in society. iPhone is an example. Meanwhile, young upscale diners eat at McDonald’s but may not think of returning, because wolfing down a Big Mac just doesn’t bring the same “intangible value” as wandering down a street with iPhone in hand.

GDVN

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29Apr/14Off

Banks’ bad debts estimated at $14.6 billion

Last update 09:14 | 28/04/2014

VietNamNet Bridge – At the April press conference of the State Bank of Vietnam (SBV) on Friday, the non-performing loans of the banking sector by the end of February were announced at VND122 trillion ($5.8 billion), accounting for 3.86 percent of the total debt balance.

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However, Mr. Dao Quang Tinh, SBV’s vice chief supervisory inspector, said the bad debts would be up to nearly VND308 trillion ($14.66 billion), accounting for 9.71 percent of the total debt balance, if restructured bad debts were included.

Earlier, the National Financial Supervisory Commission said that the bad debt of the banking system is approximately 9 percent, instead of the 15 percent as reported by Moody's.

The central bank also said that deposit growth is currently five times higher than credit growth. By the end of March, loans for the [real] estate business grew 3.95 percent, compared to 1.09 percent of the first 3 months of the year.

Regarding a VND30 trillion package to aid low-income earners in buying homes, the State Bank said that so far credit agreements worth VND3.29 trillion had been signed, of which VND1.89 trillion has been disbursed.

Na Son

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