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BUSINESS IN BRIEF 26/12
IFC
to invest in Vietnamese SMEs
Philippe
L. Ahoua, the International Finance Corporation’s (IFC) Asia Pacific Region
Treasury Client Solutions Spokesperson, has detailed the corporation’s
intentions to invest in Vietnamese small and medium-sized enterprises (SMEs)
in the near future.
Speaking
on the sidelines of a seminar on Vietnamese capital market development, Mr.
Ahoua noted the country remains without a credit rating agency for corporate
bonds. As a developing market, Ahoua identified IFC’s task in
He
emphasised the corporate bond market’s potential capital is open to all
private enterprises. Ahoua promised IFC has proper risk assessment procedures
tailored to SMEs.
He
outlined some of the group’s international corporate bond successes and
summarised IFC’s aims to encourage credit and develop businesses in
He
acknowledged the current economically challenging context has forced many
companies away from new project development in favour of consolidation and
restructuring.
Ahoua
approved of Vietnamese management agency attempts to shore up the legislative
framework regulating the corporate bond market.
Wood
exports to pick up
Due to
the US imposition of dumping tariffs on Chinese exports, Vietnam Timber and
Forest Products Association (Vifores) General Secretary Nguyen Ton Quyen
says, demand is expected to surge from September to December in the lead up
to the holiday season.
According
to Vifores, the consumption of timber products seems inversely related, down
by 20 percent on the domestic market but up by 15% in export volume and
value.
One
reason is that both manufacturers and businesses are worried about the high
level of products in stock. Even wood exporters who have received enough
orders up to August next year are busy recruiting more labourers to fulfill
their quotas.
The
Ministry of Agriculture and Rural Development says in the first nine months
of 2013, the total value of timber exports reached US$3.77 billion, up 12% on
average compared to the same period last year. The
According
to Vietnam Customs statistics, the turnover of FDI enterprises made up 64% of
the country’s total export earnings in the first nine months of the year.
They are better than domestic enterprises in terms of management skills and
capital sources to expand their distribution networks.
A
number of foreign-owned enterprises have rented workshops and stores from
domestic businesses to maintain stable supplies to the
The
wood processing industry has yet to develop its new product lines to meet the
customer demand. In fact,
The
The
General Department of Forestry says the wood processing industry grew at an
annual rate of 41–42% in the 2005–2010 period, and 20–30% in the last three
years. Its wood and timber shipments have reached more than 100 nations and
territories.
Despite
its significant increase in material imports, the sector had a US$3 billion
trade surplus in 2012.
The
General Department of Forestry has asked the Ministry of Industry and Trade
(MoIT) to include the wood–processing sector in the list of priorities given
to highly competitive businesses from 2013 to 2020.
Bridge
to further facilitate Vietnam-Cambodia trade
Located
about 75 km from
Over
the past years, two-way trade has increased at a steady annual growth of 30
percent.
In the
January-October period, their trade turnover reached US$2.94 billion and is
projected to climb to US$3.5 billion by the year’s end and about US$5 billion
by 2015.
According
to
The
department said the results will contribute to increasing
Under
the document,
The
two sides have also agreed to strengthen links in agrifood and seafood
preservation and processing technology in parallel with increasing trade in
farm produce and seafood.
Vingroup
has officially opened its
Located
in the city’s south, Vincom Mega Mall is the capital city’s largest
underground shopping and entertainment complex and Vingroup’s second “Mega
Mall” model project designed for Vietnamese consumers.
Addressing
the inauguration ceremony, Vingroup Vice President Nguyen Viet Quang affirmed
the company’s commitment to transforming
Matching
the scale of
Vingroup
also opened its Vin Kids Centre (VinKC) on the same day, incorporating the
Vinschool kindergarten and Time City Vinmec International Clinic.
2013
is the second consecutive year
While
the domestic sector faces a trade deficit of US$13.1 billion, the foreign
direct investment (FDI) sector enjoys a trade surplus of nearly US$14 billion
as it was mainly focused on manufacturing and assembling products with low
added values.
According
to the General Statistics Office of Vietnam (GSO), the country has achieved
US$132.2 billion in export revenue, up 15.4% from last year’s figure.
The
largest earner is the FDI sector with the lion’s share of the total export
volume of electronics, computers and components, garments and footwear.
In the
meantime, imports hit US$131.3 billion, a year-on-year increase of 15.4%,
with the domestic sector accounting for US$56.8 billion, (up 5.6%) and the
FDI sector, US$74.5 billion (up 24.2%).
GSO
General Director Nguyen Bich Lam says there has been a change in the demand
for imports as the country wants to process semi-products of low added value
and then export them to other countries.
Products
of high import value include machinery and equipment and tools estimated at
US$18.6 billion, (up 16%), electronics, computers and components at US$17.7
billion (up 34.9%), cotton at US $8.4 billion (up 19.4%), phone handsets and
components at US$8 billion (up 59.5%), plastics at US$5.7 billion (up 18.9%),
garment and footwear materials at US $3.7 billion, (up 18.7%) and animal food
and materials at US$3 billion (up 23.6%).
Vietnam’s
largest import market is China accounting for US$36.8 billion (up 26.7%),
followed by ASEAN, US$21.4 billion (up 2.8%), the Republic of Korea, US$20.8
billion (up 34.1%), Japan, US$11.6 billion (up 0.18%), the EU, US$9.2 billion
(up 4.2%) and finally the US, US$5.1 billion (up 6.1%).
Most
notably, of its total import value, input materials for production account
for US$131.3 billion.
Work
starts on 70MW hydropower plant in Tuyen Quang
A
ceremony was held on December 24 to kick off construction of a 70MW
hydropower plant in Quy Quan commune, Yen Son district, the northern
mountainous
The
Yen Son Hydropower Plant has a total investment of 2.6 trillion VND (123.8
million USD) and once it becomes operational, the plant will provide 296
million kWh to the national grid per year.
Its
first turbine is expected to start generation in the first quarter of 2016
and the second one, the fourth quarter of that year.
As the
last of its kind on the Gam river system, the plant will help ensure water
for agricultural production and create landscapes serving tourism, thus
boosting the local socio-economic development.
Speaking
at the ceremony, Vice Chairman of the provincial People’s Committee Tran Ngoc
Thuc urged investors and constructors to focus all resources to complete the
work on schedule.
He
pledged that the province will create the best conditions for them to
implement the project, especially in site clearance.
The
country had a trade surplus last year as well, which was its first since
1993. During 2006-2011, the country suffered high trade deficits of up to 12
billion USD each year.
The
office said the country had a trade surplus of 863 million USD this year
after exports were estimated at 132.2 billion USD and imports, at 131.3
billion USD.
Compared
with last year, both export and import values have climbed 15.4 percent.
Adjusted
for inflation, the country's exports and imports increased 18.2 and 18.3
percent, respectively.
The
office reported that Vietnamese firms posted a trade deficit of 13.1 billion
USD, while foreign invested firms had a trade surplus of nearly 14 billion
USD.
Foreign
invested firms contributed 88.4 billion USD to the country's exports by value,
up 22.4 percent from the previous year. Excluding crude oil, the export
turnover of companies surged 26.8 percent to 81.2 billion USD. Vietnamese
firms accounted for 43.8 billion USD, up 3.5 percent.
Chairman
of the National Assembly's Economic Commission Nguyen Van Giau said that
exports had surged over the past two years. He also noted that foreign
invested firms had posted annual trade surpluses since 2008.
While
acknowledging the contribution of foreign invested firms to the country's
exports, experts pointed out that these firms, which are mainly processing
and manufacturing firms, also had significant imports. Their real
contribution to the economy, therefore, remains relatively insignificant.
Director
of the Vietnam Institute of Economics Tran Dinh Thien attributed the
situation to the lack of development of supporting industries, which has
forced companies to depend on imports for raw materials and equipment.
Experts
noted that going forward, the country's export turnover would continue to
depend on foreign invested firms if suitable long-term strategies are not put
in place for the development of supporting industries.-
Pangasius
exports set to drop back on depleted resources
The
value of tra fish ( pangasius ) exports is expect to fall slightly next year
due to a lack of raw materials, difficulty in obtaining loans for investments
and losses by farmers.
According
to a representative of the Vietnam Association of Seafood Exporters and
Producers (VASEP), while summarising activities in the fisheries industry at
a meeting held in
Nguyen
Huy Dien, deputy head of the Fisheries Department under the Ministry of
Agriculture and Rural Development, said at the meeting that the industry
would restructure production and exports of tra fish to continue developing
the tra fish industry next year and in the future.
Last
year, the department provided 110,000 tra fish for breeding to farmers and
companies in Cuu Long Delta provinces, said Dien. These fish, however, will
not be ready for harvesting and processing until 2015.
Also,
the department has collected opinions on boosting the trade promotion of tra
fish to increase its export value, as well as the added value of tra fish
products and enlarging domestic consumption, he said.
Under
the plan, the domestic consumption of tra fish would increase by 100 percent
in 2015 and another 300 percent by 2020, while the export value of tra fish
would reach 2.2 billion USD in 2015 and 3 billion USD in 2020.
Next
year, it would also supply a proposal to the ministry on policies for loans,
insurance and production cooperation for farmers and processors of tra fish
for export.
According
to the ministry, this year's output of tra fish fell by 7.6 percent to 1.15
million tonnes, compared to last year, and the export value of tra fish
reached 1.8 billion USD this year, which was similar to last year.
The
tra fish market is expected to recover by year's end due to the holidays,
though farmers have already sold out their raw material of tra fish.
Dien
said tra fish production this year faced many challenges, including a
reduction in export prices and strict standards from two large export
markets, the
Meanwhile,
many farmers suffered losses while raising tra fish on a small scale due to a
lack of capital, he said.
Korean
firms fund social buildings in Hai Duong
Social
facilities worth more than 200,000 USD financed by nine enterprises from the
They
were also partly funded by two enterprises in
Meanwhile,
other companies operating in the province, like Huyndai KEFICO, Silkroad CNT,
Michigan Hai Duong and Global MFG, also donated cash in support of poor
Vietnamese children and patients and joined in efforts to protect the
environment.
Speaking
at the event, RoK Ambassador to Vietnam Jeon Dae-ju noted that the Korean
firms will work harder to become part of Vietnamese society.
Deputy
Chairman of the provincial People’s Committee Nguyen Duong Thai, in his
speech, said the move is a manifestation of the Koreans’ sentiments towards
their Vietnamese fellows.
He
expressed hopes that the Korean firms will expand the outreach to more
underprivileged groups in the country.
Since
2012, KOTRA and the RoK Embassy in
Over
125,000 USD in cash and kind was raised by 11 Korean companies at such event
in the
The
RoK is now the third biggest foreign investor in
The
figures were released by the Directorate of Fisheries at a conference on December
24 to review the sector’s performance this year and set tasks for 2014.
The
amount of farmed shrimps in 2013 increased by 12.3 percent from last year to
548,000 tonnes, including 268,000 tonnes of black tiger shrimps and 280,000
tonnes of white-legged shrimps.
For
2014, the directorate keeps the two aforementioned kinds of shrimp, tra fish
and mollusc as key products for aquaculture.
Listed
firms starve shareholders of transparency: Vietstock
The
transparency level of listed companies on the nation's stock exchanges
remains weak, as most do not release company information to their
shareholders.
According
to statistics released by Vietstock, only 29 out of the 694 listed companies
on both national stock exchanges took the initiative to distribute compulsory
information to investors, as required by Circular 52/2012/TT-BTC of the State
Securities Commision about information publication on stock exchanges.
Those
releasing information were mainly Ho Chi Minh City-listed companies, as
opposed to only four listed on the Hanoi Exchange.
Real
estate companies topped the list, with four companies releasing information,
including Binh Chanh Construction Investment (BCI), Ba Ria-Vung Tau Housing
Development (HDC), Technical Infrastructure Development (IJC) and real estate
giant Vingroup (VIC).
The
list of companies complying with regulations on publishing information also
included three banks, including Vietinbank (CTG), Eximbank (EIB) and Military
Bank (MBB), as well as three retail companies, Ben Thanh Trade and Services
(BTT), Cu Chi Trade and Industry Development Investment (CCI) and Sai Gon
General Services Corporation (SVC).
The
remaining 95 percent of listed companies were found to have not released
information. Experts noted that the numbers indicated that many listed
companies are not properly serving their investors, which might cause their
stocks to be undervalued.
Experts
urged listed companies to pay attention to investor relations (IR), which
would help ensure transparency and the rights of shareholders, while
enhancing companies' images in investors' eyes.-
Quang
Tri targets 7 percent growth for 2014
The
central
It
also strives to collect more than 1.6 trillion VND (76.2 million USD) for the
State budget in 2014.
Chairman
of the provincial People’s Committee Nguyen Duc Cuong said that to reach the
targets, the province plans to continue streamlining administrative
procedures; give credit priorities to agriculture, exports production,
support and high technology industries; and renovate State-owned enterprises.
Quang
Tri will also increase human resource quality, science and technology
application, and price management as well as ensure social welfares, he said,
adding that it will promote cooperation with other
In
2013, the province has achieved an economic growth of 6.7 percent and
industrial production of 5.5 trillion VND (262.6 million USD). Its export
revenue reaches 118 million USD, a year-on-year increase of 23.5 percent.
There
are now 2,518 enterprises, 459 branches, 39 representative offices and 61
business centres in the locality with a total registered capital of over 16
trillion VND (761.9 million USD). They have provided jobs for nearly 33,000
people.-
Vietnam
runs trade surplus of 1.8 bln USD with Japan
Textiles
were exported more to
The
import of these goods made up 73 percent of
The
two countries signed a lot of significant documents like the agreements on
They
are working together in negotiations on the Trans-Pacific Partnership (TPP)
agreement.-
Bonanza
year for local cement exports
At the
current pace,
Thang
Long Cement, based in the
Thang
Long Cement’s CEO Johan Samudra said this year had proved fruitful in terms
of exports and expressed confidence the company would grasp more
opportunities to increase co-operation with other local and foreign partners
to bolster sales.
Learning
some hard lessons from 2012’s poor export results, state cement conglomerate
Vicem bolstered its efforts. By the end of November Vicem’s export volume had
surpassed two million tonnes (including 1.1 tonnes of clinker and around
900,000 tonnes of cement) up massively on the one million tonnes recorded in
2012.
“With
stable growth seen in recent months, we will surely reach our target of 2.2
million tonnes this year,” said a Vicem source.
According
to Cam Pha Cement’s general director Hoang Xuan Vinh, the company retained
stable market share in key export markets such as
Head
of the Ministry of Construction’s Building Materials Department Le Van Toi
said difficulties in the domestic market had seen cement firms dedicating
themselves to finding markets for their products.
Southeast
Asia and the Middle East remained key export markets for Vietnamese cement.
Earlier
in the year, off the back of a poor performance in 2012, the sector had set a
modest target of around 56-57 million tonnes in total sales for 2013 in
Vietnam. Exports have exceeded expectations, having a positive impact on the
cement sector’s total consumption this year, which was expected to exceed 60
million tonnes. Domestic sales surged approximately 10 per cent against 2012.
Indian
drugs banned after quality failures
India-based
pharmaceutical firm XL Laboratories Pvt., Ltd has had all of its products
permanently banned from being marketed in Vietnam for consistently trading
sub-standard products.
The
Ministry of Health’s Drug Administration sent word of the ruling to XL
Laboratories’ India headquarters, explaining that it had revoked the
registration numbers of drugs produced by the company which fail to meet
Vietnam’s drug quality standards.
In addition,
no new registrations will be granted to the company and authorities have
stopped receiving registration applications for new products made by XL
Laboratories Pvt., Ltd.
The
punishments came following reports from the National Institute of Drug Quality
Control, the Ho Chi Minh City Institute of Drug Quality Control and the Hanoi
equivalent found XL Laboratories to have been producing sub-standard
medicines as far back as 2010.
“XL
Laboratories’ medicine quality violations are very serious, frequent and
consecutive over the past few years,” said Drug Administration head Truong
Quoc Cuong.
XL
Laboratories’ drug standards infringements in Vietnam came to light in
January 2013, prompting the Drug Administration to stop granting certificates
for drug and drug material operations to the company. The administration then
suspended the nationwide use of anti-arthritis Diclofocal, a XL Laboratories
product imported by Vimedimex in Ho Chi Minh City.
As a
result of the findings, the Drug Administration launched a crackdown on the
producers of poor quality drugs in September 2013, asking departments of
health nationwide, the Vietnam’s National Institute of Drug Quality Control,
the Ho Chi Minh City Institute of Drug Quality Control, and all drug
importers to examine imported pharmaceutical products from 37 foreign drug
firms.
The
companies, hailing from Canada, Cyprus, France, Germany, India, South Korea,
Pakistan, the Philippines, Russia and the US, have been highlighted for
inspection having been discovered previously marketing low quality products.
Latent
bond market yet to deliver
The
corporate bond market saw robust growth this year, but experts have warned
that many challenges lie ahead.
“Together
with credit, corporate bonds are an increasingly important channel for firms
to raise capital,” stated the latest report of the Ministry of Finance’s
(MoF) Banking and Finance Department.
By
December 11, registered corporate bond volume reached VND52.2 trillion ($2.48
billion), with VND33.6 trillion ($1.6 billion) worth of corporate bonds
issued this year.
This
is 17 per cent higher than the issued volume in 2012 and 1.8 per cent higher
than the total volume of issued corporate bonds during the entire 2006-2010
period, according to the report.
From
2006 until present, $900 million in overseas bonds have been issued by firms
as diverse as Masan, Vingroup and Vietinbank. BIDV is expected to issue $500
million bonds on the international markets in the near future.
Ngo Ha
Quan, head of capital markets at Standard Chartered Bank, said six foreign
banks had participated in the domestic bond market and five state-owned banks
were also major investors.
He
added that only five of the country’s 20 insurers in Vietnam were active in
the bond market. In general, most investors focused on five-year term bonds.
The corporate bond market in Vietnam featured the participation of 17
corporate entities at the end of the third quarter. Real estate company Hoang
Anh Gia Lai Group led the market with VND3 trillion ($142.85 million) in
bonds, according to the latest report of the Asian Development Bank’s (ADB)
Asia Bond Monitor publication.
However,
the MoF’s Banking and Finance Department said that corporate bond market
value was still modest and most corporate bond issuers were household names in
Vietnam.
One of
reasons for the modest returns is that the corporate bond market’s
infrastructure still lacks credit agencies, secondary transaction systems and
a bond yield curve.
The
tight bond issue criteria, especially the regulation that only profitable
firms can issue corporate bonds, was also a big obstacle for many
enterprises, said the department.
In
November, the Vietnam Prosperity Bank (VPBank) and state-run mining group
Vinacomin successfully issued VND2.5 trillion ($119 million) and VND5 trillion
($238 million) worth of long-term bonds respectively. Vinacomin’s issue is
the biggest dong-denominated bond issue by a state-owned business group so
far.
In
late August, state-owned bank BIDV sold over VND3.1 trillion ($147.6 million)
worth of 10-year bonds that carry an annual coupon of 10.5 per cent in the
first five years and 11 per cent for the remainder of the term. Hoang Anh Gia
Lai has also issued bonds.
Other
large enterprises, state-owned groups and corporations also have plans to
issue bonds. State power generator Electricity Vietnam is preparing to issue
VND10 trillion ($476 million) worth of bonds.
“Besides
commercial banks, state-owned groups and insurance companies, it is necessary
to encourage institutional investors such as securities funds, bond funds or
voluntary pension funds into the market,” stated the department.
Vinacomin
chairman Tran Xuan Hoa said given the problems with the global economy,
corporate bond issues on the domestic market were a good way of addressing
capital shortfalls for many Vietnamese enterprises.
Imported
beer pricy, losing edge over local beer
The
price of imported beer from Belgium, Germany, Holland, England, and France, 3
– 4 times higher than local beer, is losing market shares as customers tend
to buy cheaper products in the face of economic slowdown.
This
year, imported beers including St. Sebastian Grand Cru, Duvel, and Chimay
from Belgium, Oettinger and Royal Dutch from Germany, Singha from Thailand,
and Corona from Mexico, can be found in any supermarket in Ho Chi Minh City’s
District 1 and 3.
Most
of these foreign products cost 3 – 4 times higher than local beers, despite
being the same size. For instance, Chimay beer may cost around VND95,000 to
VND280,000 per bottle, depending on the type and size.
England
and Belgium products are sold at about VND250,000 to VND255,000 per bottle
with a capacity of 250 milliliters. German beers sold in District 3’s Nguyen
Thong Street such as DAB, Bitburger, and Germania seem to be cheaper as their
price varies from VND22,500 to VND31,500 per bottle.
Le
Xuan Huy, a large beer dealer in HCMC’s Tan Binh District said that due to
the expensive price, most foreign beers imported to HCMC are sold in
supermarkets and stores in the city center rather than small beverage shops.
Vietnamese
people’s choice of beer depends on individual preference and varies by
region. “333,” “Saigon Green,” and “Saigon Red,” which account for 40 percent
of the total output of 2.9 to 3 billion liters of beer consumed yearly in
Vietnam, are most popular in the central region.
Phan
Dang Tuat, Chairman of Saigon Beer-Alcohol-Beverage Joint Stock Corp
(Sabeco), said the company focuses on providing customers with “333” and
“Saigon Red,” targeting middle and low income consumers.
But
Sebeco will target the premium segment soon, said Tuat, adding that the
company is preparing its strategy to reveal a new product to compete with
imported beers. “It will not only have a competitive price but also be of
better quality,” Tuat asserted.
He
expects that the entrance of Sabeco’s “Saigon Gold” early next year will make
the market more competitive.
According
to Nguyen Bao, owner of a food store in HCMC’s District 3, 6 out of 10
customers choose “333” beer as it is cheap and affordable. The price only
varies from VND200,000 to VND220,000 per carton. In comparison with Heineken
at around VND390,000 per carton, Tiger at VND290,000 per carton, or Sapporo
at VND380,000 to VND390,000 per carton, “333” is the most affordable beer.
H.T.,
who works for a foreign company which mainly collects research data and
surveys the FMCG group, said Vietnamese are “always open to tasting new
products when invited to do so but only buy popular brands.”
This
is also the reason why Foster’s, Zorok, and even Sapporo, which were mainly
given as gifts in previous years, are not attractive anymore, as not all
foreign products could successfully enter the Vietnamese market.
Long-termism
gives FDI cutting edge
Long-term
business plans and sound finances have helped many foreign invested enterprises
reap healthy profits in Vietnam this year.
Kiyoshi
Sato, deputy general director of Japanese-backed Makoto Sangyo Vietnam, said
despite the country’s economic woes, the company’s 2013 revenue from
electronics product sales was expected to grow 30-40 per cent against last
year. An identical rate was also expected in 2014.
Japanese-invested
precision engineers IIYAMA Seiki Company’s president, Tadashi Terasaka was
also upbeat over Vietnam’s economic prospects, claiming that IIYAMA Seiki had
established a factory in the northern port city of Haiphong in June 2013.
“We
are planning to expand this factory to sell products domestically and for
export to China. We’ll be able to manufacture 30,000 products a month,”
Terasaka told VIR.
Both
Sato and Terasaka underlined their long-term access to capital and business
plans which obviously included careful market research that indicated growing
demand for their products. They also said their performance had not been
particularly affected by Vietnam’s economic problems which they considered to
be a short-term issue.
Pham
Vu Hai, director of the Northern Investment Promotion Centre under the
Ministry of Planning and Investment’s Foreign Investment Agency, said the two
firms were typical of many foreign invested enterprises (FIEs) performing
well in Vietnam this year.
“FIEs
can ride out difficulties as they have business experience, solid networks
and no problems accessing finances. Unsurprisingly you can see they are
outdoing local enterprises, especially in the export sector,” he told VIR.
Operating
in Vietnam since 2004, the South Korean-backed garment maker KJ Vina in the
southern province of Binh Duong has seen its export revenue grow by an
average 15-20 per cent on-year. The 1,600-employee company’s investment is
fed by its parent company in South Korea and its products are exported to the
US and Canada.
The
General Statistics Office reported that the country’s total 11-month export
turnover reached $121 billion, up 16.2 per cent against the same period last
year. Locally-owned enterprises were responsible for $39.9 billion, up just
3.6 per cent on-year. Meanwhile, FIEs racked up $81.2 billion in turnover
(including crude oil exports), up 23.5 per cent on-year.
Nguyen
Viet Ha, managing director of the US-backed investment consultant Bower Group
Asia Inc, told VIR that almost all FIEs in Vietnam had stayed afloat amid
economic difficulties, which was in stark contrast to local firms.
“FIE
business plans are often well-prepared with a long-term vision, in which all
risk possibilities have been taken into account. FIEs also have good
financial health fuelled by overseas banks which can help them ride out
market changes. For example, during 2011 and 2012 the annual average lending
rate of 20 per cent in Vietnam barely affected FIEs, but local firms
suffered,” Ha explained.
It is
expected that Vietnam would likely attract over $21 billion in foreign direct
investment (FDI) this year, far higher than last year’s $13 billion. However,
Ha warned that FIEs were being hit by a 10-15 per cent rise in labour costs
for skilled employees, and the Philippines, Myanmar and Cambodia were
becoming rivals in terms of FDI attraction.
“Vietnam’s
tax and land incentives remain limited and administrative procedures and site
clearance problems still plague the country,” she said.
Echoing
her view, Seiki said it had taken nearly one year for his company to be
licensed and be allocated a manufacturing site, while it would have taken
just a week to complete in Japan.
Retailers
told link up or die
Industry
experts have advised local retail firms to team up to outweigh their foreign
peers as Vietnam will allow wholly-foreign firms to enter the retail sector
from early 2015.
Vu
Vinh Phu, chairman of Hanoi Supermarket Association told VIR that his
association and the Vietnam Retailers Association (VRA) recommended domestic
retail enterprises to enter marriages on convenience to build bigger firms in
anticipation of an influx of foreign retailers following the further opening
of the retail market to foreign investment.
Under
Vietnam’s WTO commitments, from January 11, 2015, Vietnam will permit the
establishment of wholly foreign-invested retail companies. Currently, foreign
firms can only operate in Vietnam’s retail sector via a joint venture with a
Vietnamese partner or through franchising.
Phu
said that at the moment domestic retailers have not been good at promoting
co-operation.
“Vietnamese
retailers favour promoting joint ventures with a foreign partner but they
should consider setting up an alliance with domestic retailers to increase
their competitiveness rather than develop alone,” added Phu.
Local
retailers were expected to continue facing difficulties next year as economic
downturn and decreased consumer spending will continue to bite. Phu stressed
that domestic retailers with scant capital, limited management ability and
feeble logistics would need to work out how they would compete in a
liberalised market.
The
country’s total retail sales and service revenues in the first 11 months of
this year reached VND2,386 trillion ($113 billion), the General Statistics
Office (GSO) reported. The figure represented a 12.6 per cent year-on-year
rise. However, the GSO added that the increase would have only been 5.5 per
cent if price hikes were excluded.
One of
leading Vietnamese retailers, Phu Thai Group Joint Stock Company’s general
director Pham Dinh Doan said that many domestic retailers including Phu Thai
had raised concerns about foreign retailers setting up shop in Vietnam. But
the growth towards domestic alliances among retailers was regarded as
something of a first in Vietnam’s cut-throat retail sector.
Doan
said that the four largest domestic retailers Satra, Hapro, Phu Thai Group
and Saigon Co.op had planned bigger firms seven years ago. However, the dream
has not yet been realised.
“It
seems that it won’t just be the big four retailers that are interested in
such an alliance. More domestic firms want to develop it in the retail sector
in order to compete with foreign retailers. Once Vietnam opens the door
further, rich foreign retailers will no longer be forced into partnerships
with Vietnamese firms,” added Doan.
According
to the VRA, Vietnam’s retail market remains full of potential. In 2013,
modern retail outlets in Vietnam only held a 25 per cent market share, in contrast
to the Philippines 33 per cent, Thailand 34 per cent, China 51 per cent,
Malaysia 60 per cent and Singapore 90 per cent.
The
Ministry of Industry and Trade estimated that by 2020, Vietnam would host
some 1,200 to 1,300 supermarkets, and more than 300 shopping centres.
The
recently released Vietnam Retail Market Forecast to 2014 Report published by
AT Kearney said that Vietnam’s total retail market was forecast to see an
annual growth rate of 23 per cent, offering many opportunities for both
domestic and foreign retailers. According to the report, in the next few
years, a short wave of consolidations will emerge as foreign retailers try to
establish their positions and penetrate the market.
So
far, existing foreign retailers in Vietnam have been quickly expanding their
businesses.
Casino,
owner of the Big C supermarket chain, has increased its total number of
supermarkets in Vietnam to 24. The company plans to open five supermarkets
and shopping centres annually over the next three years.
A
source from Parkson Vietnam Co., Ltd told VIR that so far, the Malaysian
shopping centre operator had eight shopping centres in Vietnam and last week,
the company opened its ninth store in Ho Chi Minh City, with its tenth store
due to open in mid-2014.
Meanwhile,
Germany’s Metro Cash & Carry Vietnam now possesses 19 stores nationwide,
a number expected to rise to 30-35 over the next three to five years.
The
Korean company Lotte Mart has been gradually consolidating its presence in
Vietnam with four centres already operating in Ho Chi Minh City, Dong Nai and
Danang. The fifth Lotte centre will be opened at the beginning of next year
in Hanoi’s Mipec Tower. The Korean company Lotte Mart has also unveiled its
plan to open 60 supermarkets in Vietnam by 2020.
Saigon
Co.op and Singapore’s retailer Fairprice has received approval for a
commercial joint venture for the Co.op Xtra and Co.opXtraPlus joint
supermarkets in 2014. The second Co.op shopping centre was opened last week
in Hanoi.
Foreign
retailers are maintaining confidence in Vietnam’s retail growth while the
upcoming legal change has caught the attention of leading global retailers.
According to the property consulting firm CBRE, France’s number one retailer
Auchan, for instance, early this year stated it planned to invest $500
million in Vietnam over the next 10 years.
In
another case, E-Mart, South Korea’s largest retailer would likely opt for a
joint venture as it prepared to officially tap into Vietnam in 2015.
Inox
firms sceptical on Posco claim
Local
firms using stainless steel have stated that complaints related to cheap
steel being dumped in Vietnam were not the root cause of Posco VST and Inox
Hoa Binh’s losses.
Domestic
firms that use imported steel are sceptical over Posco’s dumping claims
Debate
has continued following the preliminary result of an anti-dumping tariff on
imported cold-rolled stainless steel that was released three weeks ago by the
Ministry of Industry and Trade’s Vietnam Competition Authority (VCA).
Local
consumers of stainless steel criticised Posco VST, a wholly-owned affiliate
of South Korean steel maker Posco Steel, claiming it suffered losses, not
because of steel imports but rather because Posco VST increased its
production in excess of the market capacity.
This
information was found to be true in the case of nearly twenty stainless steel
users in a document provided last week to Prime Minister Nguyen Tan Dung.
The
document seen by VIR said “Posco VST and Inox Hoa Binh increased their
production in a manner which surpassed the market size. In reality this was
the main reason for their loss.”
The
VCA conducted a six month long investigation on imported cold-rolled
stainless steel, made at the request of petitioners including Posco VST and
Inox Hoa Binh. The investigation was carried out on batches of products which
were imported between April 1, 2012 and March 31, 2013. Following this
analysis, the VCA indicated it is due to levy an anti-dumping duty for 120
days on steel imports from mainland China, Malaysia, Indonesia, and Taiwan.
The highest tariff, 30.73 per cent, would be imposed on Taiwan’s Yuan Long
stainless steel corporation.
Posco
VST and Inox Hoa Binh, which account for 80 per cent of domestic stainless
steel production, claim that cold rolled stainless steel imports have been
sold in Vietnam at 20 to 40 per cent below domestic makers’ prices. They
assert this has damaged the domestic stainless steel manufacturing sector.
In
contrast, the document compiled by nearly twenty companies that use
cold-rolled stainless steel for their products maintained that during
2009-2012 Vietnam’s stainless steel sector increased its capacity in excess
of demand. After launching its second production facility, Posco VST’s total
capacity in 2012 reached 245,000 tonnes of stainless steel, surpassing
Vietnam’s total demand for stainless steel.
The
document stated “Posco VST borrowed a large sum for its investment and has to
pay a high interest rate of $10 million per year. That is the primary reason
leading to their loss.”
Posco
VST also exported its products at a significantly lower price which brought
about a loss. Their cold rolled stainless steel coil exports to Brazil
currently incur an import tax of 35.6 per cent.
According
to the Department of Tax in the southern province of Dong Nai, home to the
stainless steel factory of Posco VST, the company accumulated a loss of $66.8
million from 2008 to 2012.
In the
same period, Posco VST paid $2.3 million in personal income tax, value-added
tax and excise to the tax department. It has not had to pay any corporate
income tax because companies operating at a loss are exempt.
Therefore
stainless steel users appealed to the prime minister to consider not levying
anti-dumping tariffs on imported cold-rolled stainless steel from mainland
China, Malaysia, Indonesia and Taiwan. They also requested he check and
modify the VCA’s preliminary results.
Son Ha
buys about 7,000-8,000 tonnes of Posco VST’s steel annually, which only
satisfies 30 per cent of the company’s demand.
“The
problem is not the competitiveness of Posco VST, but the issue is that they
can’t supply the requisite diversity of stainless steel products to the local
market. Also, some of Posco’s products don’t meet necessary quality
standards,” said a company source.
Stainless
steel users also raised concerns that if the government were to levy
anti-dumping policies, it would drastically impact both companies using
stainless steel and end-users. Twelve months after the investigation into
stainless steel imports began, the final result of the dumping is scheduled
for July 2014.
Source:
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Thứ Tư, 25 tháng 12, 2013
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