BUSINESS IN BRIEF 26/10 Vietnam, Japan discuss hindrances to trade growth Business agencies and companies have high hope for trade stimulation brought about by the Vietnam-Japan Economic Partner Agreement (VJEPA), but are well aware of domestic obstacles to the process. The issue was the focus of a recent Vietnam-Japan economic forum held in Hanoi with a range of measures put forth by experts and seniors officials from both sides. Reviewing that Japan’s firms first entered Vietnam for export, Japanese Business Association (JBA) Chairman Shimon Tokuyama confirmed the stable market of over 90 million people has expanded this initial purpose to give it high potential for long-term investment. However, cumbersome procedures have hindered connectivity efforts, he said, adding that the support industry as well as public infrastructure in healthcare, transport, water and electricity supply have yet to receive adequate attention and investment from the State. Planning and Investment Deputy Minister Nguyen Chi Dung spoke about the improved business climate, competitiveness and foreign capital inflow prompted by the VJEPA while Vietnam Chamber of Commerce and Industry (VCCI) Chairman Vu Tien Loc underscored the management experience and advanced technology and services Vietnamese enterprises would broadly receive and benefit from as a result of free trade agreements. Loc recommended immediate action from public agencies to establish a consultation channel providing accurate, timely and accessible information for domestic business communities. Chairman Tokuyama proposed the Vietnamese Government concentrate on enhancing competitiveness, balancing the minimum wage, specifying development policies for each economic sector and devising suitable policies to utilise official development assistance. Seconding the JBA Chairman’s view, Deputy Minister Dung advised local companies to actively reduce costs and prices while integrating. VCCI Chairman Loc supplemented Dung’s advice with confirming diverse trade partners, production overhaul and product origin. He stated boosting manpower competency would be essential to expediting international cooperation. Official government statistics show that between 2011 and 2013, Japan topped the list of 101 countries and territories investing in Vietnam. Japan is currently Vietnam’s third largest trade partner with trade expected to near 30 billion USD and its investments are hoped to hit 38 billion USD this year. Sumimoto to build industrial park in Vinh Phuc province The Vinh Phuc People’s Committee has granted the Japanese company Sumimoto a licence to build the Thang Long Industrial Park covering an area of 213 hectares in the northern province. The Thang Long Industrial Park will be the tenth out of 19 industrial parks in Vinh Phuc province that have been given priority for development until 2020 under a scheme approved by the Prime Minister. The project, which is estimated to cost VND1.53 trillion in the initial stage, has increased total foreign direct investment pledges to Vinh Phuc to US$3.25 billion and those by Japanese investors to nearly US$800 million. The new industrial park will be located in Thien Ke and Tam Hop communes of Binh Xuyen district. The first phase will see construction on an area of 94.5 hectares. Calls for investment in the Vinh Phuc Thang Long Industrial Park will concentrate on hi-tech and non-polluting industries such as engine manufacturing, electronics and semiconductor parts, computer software and hardware, precision mechanics and biotechnology. It is estimated that the Vinh Phuc Thang Long Industrial Park will create over 25,000 jobs and contribute an annual VND5 trillion (US$225 million) to the State budget. Prior to the project in Vinh Phuc, Sumimoto built two other industrial parks: the Bac Thang Long Industrial Park to the north of Hanoi and the Thang Long II Industrial Park in Hung Yen province. In recent years, Vinh Phuc has taken bold steps in administrative reforms to make its business environment more appealing to foreign investors. Last year, it ranked 6th on the provincial competitiveness index, a giant leap from the 26th position a year earlier. Hanoi banking figures for October released The Hanoi Statistics Office has announced mobilized capital and credit figures for Hanoi in October. Total capital mobilized by financial institutions during the month was estimated at VND1.39 trillion ($54.89 million), an increase of 2 per cent against September and 17.5 per cent higher than last December. Deposits accounted for 94.3 per cent of total capital mobilized, an increase of 1.9 per cent compared to the previous month and 15.9 per cent higher than in December 2014. The issuance of valuable papers increased 4.2 per cent month-on-month and was 51.1 per cent higher than in last December.   Deposits mobilized from Vietnamese accounted for 74.2 per cent. Total outstanding credit in Hanoi in October is anticipated to reach VND1.16 trillion ($45.80 million), an increase of 1.4 per cent compared to September and up 15 per cent against last December. Outstanding short-term credit rose 3.3 per cent against September and was 9.3 per cent compared with December last year, while outstanding long-term credit fell 1.3 per cent month-on-month but rose 24.9 per cent against December 2014.Textile exhibition attracts 125 firms The Viet Nam Textile and Garment exhibition, which opened in HCM City yesterday, has attracted 125 local and foreign companies who are showcasing their products and services. Firms from Taiwan, Hong Kong, India, Korea, Malaysia, Thailand, and Turkey have brought machinery for sewing, knitting, spinning, cutting and printing fabrics, processing fibres, and embroidering, garment accessories, dyes and other products. The four-day event is expected to be especially important this year in the context of Viet Nam signing off on the Trans Pacific Partnership (TPP) and free trade agreements with Korea and the Customs Union of Russia, Belarus and Kazakhstan and the December inauguration of the ASEAN Economic Community. Nguyen Hong Giang, general secretary of the Viet Nam Cotton and Spinning Association, said when all the agreements take effect, Viet Nam's garment exports to the US, EU, Japan, and Korea would enjoy preferential tariffs, which would give it a considerable edge over other exporting countries. Viet Nam needs 8.5 billion metres of fabric annually to produce garments but produces less than 3 billion metres, and has to increase its fabric production immediately, he said. He expected the exhibition to help producers find machinery and technologies for the purpose. The exhibition organisers, Vinexad and Chan Chao International of Taiwan, will hold a seminar today and tomorrow to discuss Viet Nam's investment environment; solutions to improve productivity, efficiency and quality in the textile and garment industry; FTAs and their impacts on the industry's development; and why Viet Nam can become a hub in the global textile and garment supply chain. The exhibition is being held at the Tan Binh Exhibition and Convention Centre, Hoang Van Thu Street, Tan Binh District.  Hotel Saigon Morin wins Gold Star Award 2015 The Hotel Saigon Morin in Hue has won the Gold Star Award 2015 of Top 200 brands from the Central Committee of the Ho Chi Minh Communist Youth Union and the Central Board of the Vietnam Young Entrepreneurs’ Association. Hotel Saigon Morin had the great pleasure of being selected as a unique brand in central Thua Thien Hue province and this is the second time it has picked up the award. All brands considered have made valuable contributions to the development of the national economy and increased Vietnam’s prestige in the international arena. The hotel management and staff will continue to improve upon the hotel’s achievements and are committed to providing the best possible service, as per the hotel’s slogan of “Historic Place - French Colonial Style - Vietnamese Hospitality”. The hotel is now offering a family package for stays of three days and two nights for a maximum of two adults and two children under 10 years of age for VND4.15 million++ ($189). The package includes accommodation in a Colonial Deluxe room with a complimentary extra bed, a one-way Hue airport or railway station transfer by private car, and one combo set lunch or dinner featuring Hue specialties. Established in 1901, Hotel Saigon Morin is ideally located in the heart of Hue, with four facades facing Le Loi, Hung Vuong, Hoang Hoa Tham, and Truong Dinh streets, offering the best views of Truong Tien Bridge and the Perfume River. Taking advantage of its French colonial style, its 180 well-equipped rooms and suites are the largest in the city. All have parquet floors, marble bathrooms, and comfortable facilities and amenities.  Investors uninterested in social housing in HCMC Twenty percent of young households in Ho Chi Minh City are in need of apartments or houses priced less than VND1 billion (US$45,000) each. However, only few social housing projects have been implemented because of unattractive mechanisms to investors. After the Government issued a decree on social housing development program early 2013, it caused a movement of changing commercial housing projects into social type ones by investors. Transport Engineering Construction and Business Investment Company 584 even registered to convert all of its eight projects into social housing.  However, the number of social housing projects has gone gradually for recent years. Only few have been implemented such as HQC Plaza in An Phu Tay commune, Binh Chanh district invested by Hoang Quan Company. The project is nearly completed with 1,750 apartments priced at VND14.5 million (US$ 700) per square meter. The project of Thu Thiem Investment Company has 304 apartments of 40-60 square meter flats in Thao Dien ward, District 2.  Two other property developers Tan Binh Real Estate Company and Quoc Cuong Gia Lai have got loans from the VND30 trillion (US$1.34 billion) credit package to carry out their projects. The package has been disbursed inconsiderably with 26 percent nationwide. It is only 10 percent in HCMC. HCMC has planned to sell 3,000 apartments under social housing projects. However, only four projects have been opened for sale with 376 apartments in Districts 6, 8, Go Vap and Tan Binh. According to the HCMC Real Estate Association, the social housing development program has been unattractive with complicated mechanisms for change of commercial housing projects into social.  For bank loans, investors must get many signatures from provincial people’s committees to the Ministry of Construction, the State Bank of Vietnam and commercial banks. House buyers have met with difficulties in proving their income level to get assistances from the credit package.  Moreover, investors have faced with land price escalation. Investor of a project in Thao Dien ward bought 1,900 square meters at only VND2.5 million per one square meter in 2004.  However, the price now increases to VND12 million per one square meter in the land price list ruled by the city People Committee and up to VND20 million at market price. This has raised difficulties in calculating apartment price as it will be unfavorable to the investor if calculations base on the old price of VND2.5 million.  Chairman of the association Le Hoang Chau said that the Government should focus on two types of social housing including house for rent and hire-purchase because of limited budget. The build-then-sell type should have own mechanisms to lure local and international investors. At present, many commercial housing projects have the price of less than VND15 million per square meter.  If the Government assists investors in VAT and business income taxes and land use fee, the price will reduce to suit low income households, he said, adding that should be considered as a social housing type under PPP (Public Private Partnership) model. US demand grows for VN textiles and garments Third-quarter numbers for Viet Nam's textile and garment industry show US demand growing and taking the lead amongst buyers, accounting for nearly 50 per cent of the industry's total export revenue so far this year. According to statistics from Viet Nam's General Department of Customs, export revenue for the first nine months of this year reached nearly US$17 billion, of which $8.3 billion came from the US market. While total textile and garment export value grew by 10 per cent compared to last year, the US market outstripped it with a 13.6 per cent increase. This means US buyers are active leaders of the sector's expansion. The second and third largest importers trail the US considerably; Japan imports $2.03 billion, and South Korea $1.54 billion. Exporters in the industry look favourably on a constellation of recent free trade agreements, like one already signed with Korea, the Eurasian Economic Union Free Trade Agreement signed in May and the long-discussed Trans-Pacific Partnership (TPP). If the TPP is signed, Viet Nam textile and garment exports to the US will see the current 17-30 per cent tariffs dropped. The sector plans to take advantage of the EU-Viet Nam Free Trade Agreement whose negotiations were finalised in August. Once the parties sign the agreement, the 12 per cent tax on Viet Nam's textiles and garments will cease, making the products more competitive in the market. Dubious GM foods sold in Vietnam without labels Imported genetically modified (GM) foods, especially grains, have flooded the Vietnamese market in recent years, but they are almost surreptitiously sold, with people knowing little about them. According to the Ministry of Agriculture and Rural Development, soy bean imports this year top 1.2 million tons, with the majority coming from the US and Canada, both major GM producers. But most soy bean products in the market are not labeled as “GMO”. Thanh Nien checked at a supermarket in Ho Chi Minh City's  district 5, and of several dozen products made from soy beans, only one carried a label saying “wholly made from Vietnamese soy beans.” The others did not indicate origin. The owner of a grains store on Tran Chanh Chieu Street in district 5 told Thanh Nien his shop had both Vietnamese and imported soy beans. US products were cheaper than Vietnamese but not as tasty, he said. He said he did not know anything about GMO. The Quality Assurance and Testing Center No. 3 (Quatest 3) said it had conducted a test on some agricultural products sold in HCMC in 2010 and found 111 out of 323 samples, or 34.4 percent, were GMO. The GM products were mostly soy beans, potatoes and tomatoes. The tests were done at the request of the HCMC Department of Science and Technology. None have been done since. An executive at an animal feed manufacturer, who asked not to be named, told Thanh Nien the company imported half the soy beans needed for its production from the US, Brazil, and Argentina. In March, this year the Ministry of Agriculture and Rural Development allowed farmers to grow three varieties of GM corn sold by Swiss firm Syngenta for food and animal feed. But consumers do not have much choice since most GM products are not labelled so. Phan Thi Viet Thu, deputy chairperson of the HCMC Association of Consumer Rights Protection, said the Law on Food Safety and Hygiene required products with GM ingredients making up more than 5 percent to have labels, but the lack of detailed instructions meant no product in the market is labeled as GMO. “It is not fair on customers. Authorities should quickly make it mandatory to label GM products.” Taiwanese firm to invest $50 million in VN Leading Taiwanese apparel maker Eclat Textile plans to increase its production capacity in Viet Nam to benefit from the Trans-Pacific Partnership free trade pact, Asia.nikkei.comreported. The company, which supplies major clients such as Nike and Adidas under outsourcing contracts, will invest US$50.5 million to upgrade two factories. The expanded capacity will top 5 million pieces of clothing each month. Meanwhile, Taiwanese media reported that $40 million will be spent on a factory in Ba Ria-Vung Tau Province and $10.5 million on another plant in Dong Nai Province. Construction of these factories will start in early 2016. Foreign currency use expanded The State Bank of Vietnam (SBV) has issued Circular No. 16/2016/TT-NHNN, amending and supplementing certain articles in Circular No. 32/2013/TT-NHNN on the right to use foreign currencies in Vietnam. Circular 16 adds some cases relating to national defense and security and oil and gas where the use of foreign currencies is permitted after approval is sought and gained from the SBV. The Circular also provides direction on the necessary documentation for such requests, such as licenses and similar organizational paperwork, as well as proof of the need to use foreign currencies. If the paperwork is found to be lacking the SBV will seek additional document within ten working days. If everything is in order, a decision will be made within 45 days. The Circular will take effect on December 3. Apparel firms invest in technologies to prepare for TPP Local textile and garment enterprises regard investments in modern technologies as a way to help them address challenges and compete as foreign enterprises are flocking to Vietnam to benefit from the Trans-Pacific Partnership (TPP). Saigon Garment Manufacturing Trading Joint Stock Company (Garmex Saigon) has recently spent much on purchasing automated machines to replace outdated equipment which is mainly operated manually and requires much labor. According to Nguyen An, general director of Garmex Saigon, machines are now cheaper than earlier and many textile and garment companies are purchasing new machines with high technology. For instance, a Juki one-needle sewing machine was sold at US$600 some 20 years ago but a programmable sewing machine of Juki is priced US$580 now. Complex details of old machines require workers with good skills while unskilled workers can sew well with new machines. Besides, cloth cutting machines that Garmex Saigon has recently bought have helped reduce the number of workers at this stage by 80% in comparison to old machines. An said investing in modern machines, organizing production activities systematically and improving management are necessary for textile and garment enterprises due to increasing competition in terms of product price and labor. According to An, the world economy has yet to fully recover and producing countries are competing intensely in terms of price. As a result, using advanced machines can help the company increase productivity and reduce material losses in order to offer competitive prices. In addition, with Vietnam’s participation in the TPP, there will be more foreign enterprises coming to Vietnam to invest in the textile-garment sector to get tariff incentives when exporting products to TPP states like the U.S. Therefore, Vietnamese enterprises will face tough competition regarding labor as foreign direct investment (FDI) enterprises have special policies to attract workers. Without investments in technologies and modern machines from now on, textile and garment enterprises would face stronger competition from FDI enterprises, An added. According to Pham Xuan Hong, chairman of Saigon 3 Garment Joint Stock Company and chairman of the Association of Garments, Textiles, Embroidery and Knitting (AGTEK), the textile-garment sector is not attractive to workers, making enterprises active in the field lose staff easily. When skilled workers quit their jobs, enterprises normally have to employ unskilled ones and train them. Therefore, to ensure productivity and quality, enterprises need to invest in new technologies and equipment. Hong said textile and garment enterprises cared about exhibitions on machines used in the sector like the 15th Vietnam International Textile and Garment Industry Exhibition (VTG 2015) set to open on Wednesday in HCMC. The four-day expo will take place at Tan Binh Exhibition and Convention Center (TBECC) in Tan Binh District. There are real demands, which require exhibitors at the expo to provide useful information for textile and garment enterprises, according to Pham Quynh Giang, deputy general director of Vietnam National Trade Fair and Advertising Joint Stock Company (VINEXAD). VTG 2015 is organized by VINEXAD in coordination with Taiwan’s Chan Chao International Co., Ltd, Hong Kong’s Yorkers Trade and Marketing Service Co., Ltd, Hong Kong’s Paper Communication Exhibition Services, AGTEK and the Vietnam Cotton and Spinning Association (VCOSA). More than 125 local and foreign enterprises with nearly 300 booths will showcase their innovative products and technologies. Exhibitors are from 12 countries and territories, including Vietnam, Thailand, Singapore, Japan, Hong Kong, Germany, Turkey, South Korea, India, Taiwan, Malaysia and China. Can Gio sea reclamation project to expand by 480 hectares Can Gio Tourism Urban Area Joint Stock Company has got the HCMC government’s nod to map out an investment plan for a sea reclamation project in Can Gio will be expanded by 480 hectares to 1,080 hectares. The HCMC Department of Planning and Architecture is supporting the company to draw up a zoning plan, scale 1/2,000, for the sea reclamation project for submission to the city government for approval next month. As required, the zoning plan must contain appropriate solutions to road transport while protecting the Can Gio Biosphere Reserve in the outlying coastal district. The plan should comprise waterway and aviation facilities like a port and a helipad to spur tourism in the district. The sea reclamation project in Can Gio, also known as Can Gio urban-tourism project, came out 15 years ago. The project worth some VND8.47 trillion (US$379.2 million) has been delayed since it got off the ground in late 2007. In June, Vingroup Joint Stock Company was allowed to join the project as a strategic partner. The city government is pinning high hopes that the project would be implemented as soon as possible to drive the development of Can Gio. Covering 70,000 hectares of mangrove forest, water coconut and canal, Can Gio is regarded as the green lung of HCMC and half of its total area was recognized in 2000 by UNESCO as a biosphere reserve thanks to its rich and diverse ecosystem. Ministry drafts regulations for trade activity The Ministry of Industry and Trade is drafting a number of decrees guiding the implementation of the 2005 commercial law with many new regulations governing goods, services, State monopoly in the trade sector and services limited to trading.  Tran Do Quyen, deputy head of the legal department at the ministry, told a review conference for the 2005 commercial law in HCMC on October 20 that the ministry will submit a decree on goods, services and State monopoly in the trade sector to the Government for signing early next month. In the second quarter of 2016, a supplemented decree on goods trading and relevant issues at foreign-invested enterprises in Vietnam will come out. In addition, a revised decree on prohibited, restricted and conditional goods and services will be introduced in the period.   In the final quarter of next year, the ministry will seek the Government’s approval for a revised decree on individuals conducting trading activity frequently but not required for registration, and a revised decree on trade promotion activities. The State will hold a monopoly in 16 goods and services fields such as defense, security, and production, distribution and export-import of industrial explosives; gold bar production and import and export of gold bars and material gold; and tobacco imports, lottery ticket issuance and cartographic drawing for defense purposes.  Goods and services subject to State monopoly are essential but enterprises of other economic sectors are unable to trade. For instance, the State holds a monopoly in operating multipurpose hydropower and nuclear power plants and running big power plants crucial to socio-economic development, defense and security.  Ten years after the 2005 commercial law came into force, the law has created favorable conditions for businesses and helped boost imports and exports. However, many challenges have arisen during the implementation of the law. Smuggling and trade fraud have worsened and dented economic growth.    Quyen said the ministry will petition the Government to consider drafting a revised commercial law in 2017 and have it passed in the following year. According to the revised law, the ministry will work out a special mechanism for the development of commercial infrastructure, specific trade in mountainous, rural and island areas.  Lawyer Tran Huu Huynh from the Vietnam Chamber of Commerce and Industry (VCCI) said there are many overlapping regulations on conditional business sectors in the commercial and investment laws. He said all goods and services associate with a business entity. If one business entity is forbidden, its products are illegal too. Therefore, there is no need for a list of prohibited goods and services, Huynh said. Do Van Dai, dean of the civil law faculty at HCMC University of Law, said judges had had trouble dealing with trade fraud lawsuits as there are overlapping regulations in different laws. This has caused losses for society. SOE equitization target seen unobtainable The target to equitize 1,309 State-owned enterprises (SOEs) in the 2011-2015 period has become impossible to achieve as only 340 of them have gone public. Dang Quyet Tien, deputy head of the Enterprise Finance Department under the Ministry of Finance, told reporters on Monday that 95 of the 340 equitized enterprises went public in the first nine months of this year. In addition, relevant ministries and agencies have restructured 600 other enterprises. Therefore, only 25% of the approved SOEs have been equitized. The proportion will be much higher but still far below the target if the 600 restructured enterprises are added. Tien underscored the importance of speeding up SOE equitization in the 2016-2020 period given clear regulations on the equitization process. More importantly, the process should be made transparent to help attract foreign investors. He said in the next five years, those enterprises which have been equitized but sold fewer shares than targeted will be transformed into public companies or listed firms to lure investors. Regarding the Government’s plan to divest State holdings at ten major enterprises as recently announced, Tien said the Government has allowed the State Capital Investment Corporation (SCIC) to choose an appropriate timetable for State capital withdrawals from those enterprises.  He explained the Government made such approval this year as the market conditions were not favorable for the sales of State stakes at these firms in previous years.       Tien said SCIC will withdraw State capital from the companies in accordance with the Government’s Decision 37/2014 on enterprises where the Government needs to hold or not to hold shares. This move will buoy Vietnam’s stock markets in the coming time. Deposits in foreign currency up Local banks have reported a significant pickup in foreign-currency deposits in recent months. In the third quarter of this year, foreign-currency deposits grew by 8-9% while foreign-currency lending growth slowed to 4-5%. Earlier this year, foreign-currency credit strongly surged. Local banks expect loans in foreign currency to continue rising in the coming months while deposits are projected to maintain steady growth. Explaining the situation, some banks said there has been anxiety over the development of the foreign exchange market from now to early 2016. Therefore, individuals, enterprises and banks have rushed to hoard foreign currencies to avoid negative impact of forex rate adjustments not only in China, the biggest trade partner of Vietnam, but also in other major markets. According to a macro-economic report the Government presented to the National Assembly on October 20, this year the Vietnam dong currency has been devalued by 5% against the U.S. dollar, the same as the fall of the Chinese yuan versus the greenback. Between January and September, the central bank depreciated the dong against the dollar three times and widened the trading band for inter-bank dollar/dong transactions from 1% to 3%. The move was aimed to ease pressure on the domestic currency and stabilize the foreign currency market, thus supporting exporters. Due to psychological factors, the greenback then turned firmer against the dong and approached the ceiling level set by the central bank. After the central bank deployed a host of measures as ordered by the Government, the forex rate and the market became normal again, the report said. If the central bank continues to maintain forex rate stability, market sentiment will improve, at least in the short term. However, there remain forex risks including China’s unpredictable monetary policy and Vietnam’s rising trade deficit. Banks also forecast no liquidity tension on the foreign currency market toward the year-end. On the inter-bank market, interest rates for tenors less than a week may inch up by 10 basis points, hovering around 0.3-0.5% per annum. Besides, foreign banks in the country are predicted to maintain huge capital supply this year. BIDV and VLA come together The Bank for Investment and Development of Vietnam (BIDV) and the Vietnam Logistics Association (VLA) have signed a Memorandum of Understanding (MoU) on comprehensive cooperation in the 2015-2020 period. The agreement was signed by Mr. Le Trung Thanh, Deputy General Director of BIDV, and Mr. Do Xuan Quang, Chairman of the VLA. BIDV will provide banking and finance services for VLA, while VLA will cooperate with BIDV to provide preferential policies to customers introduced by BIDV and vice-versa. The two sides also commit to cooperating in communications and branding and to support each other in terms of exchanging information. Mr. Thanh said that as Vietnam integrates internationally the logistics sector is facing many challenges in human resources, training, technology, management, and especially poor infrastructure due to limitations on financial resources. Bank credit therefore plays a significant role in terms of supporting business activities and increasing the competitive advantages of logistics companies. The signing of the MoU was conducted at a logistics forum in Ho Chi Minh City with the theme “Solutions to Improving Infrastructure, Facilitate Trade, and Improve the Quality of Logistics Services for Import and Export Enterprises.” Deputy Minister of Industry and Trade Tran Tuan Anh told the forum that export enterprises incur high costs in logistics services. Logistic enterprises and exporters have not found common ground and have failed to cooperate for mutual development. The cost of logistics is affecting Vietnam’s competitive advantage in international markets, accounting for around 20-25 per cent of GDP over recent years. Vietnam’s competitiveness will be improved if logistics costs can be cut. Who protects apartment buyers from swindling investors? Many housing projects had been opened for sale before the Real Estate Business Law took effect in July this year. However investors have not finished the projects and run away, leaving customers in a miserably hard journey to claim their houses while authorized agencies have not taken drastic actions to help them. The Real Estate Business Law requires investors of future housing projects to get bank guarantee to ensure customers’ right in case they fail to finish the projects. However, only one project has been guaranteed by banks in Ho Chi Minh City so far. Gia Phu apartment project has been infamous in Thu Duc district because it had been approved with 156 apartments but sold to 160 customers. At least 68 ones were sold to more than one person. Each buyer has paid an average of VND600 million (US$27,000). The half-done project has been abandoned while the company’s director and deputies have run away. Customers have signed and sent applications to authorized agencies for two years in vain. After receiving the first application, the HCMC People’s Committee Chairman Le Hoang Quan asked the Police Department to ascertain and strictly handle the case as per the law on June 10, 2014. Mr.Quan required the department to send a report within 30 days after the date they received announcement from the committee office. The office continued sending the second document asking related sides to transfer the application to the Police Department for investigation on March 26 this year. The third requirement in writing was sent on June 2 to the Police Department’s director to remind him of the two above documents and asked him to report the long-lasting case. Customers signed another petition to the Police Department’s director, heads of the People’s Procuracy and the Police Agency of Criminal Investigation in Social Order (PC45) on August 20. The petition proposed to investigate the case and prosecute offenders for swindling customers out of their properties. According to this petition, the customers had sent letters of denunciation to the Police Department in Thu Duc District and the city’s Police Department in March last year. Subsequently, the board of directors of the city’s Police Department and PC45 assigned Squad 8 to handle the case. Officials invited the customers to get statements afterward. However two years have gone by and the police force has yet to thoroughly solve the issue, said Mr. Hung, customer of Gia Phu project. Not long ago, Adonis project in South Saigon was approved to build 15-storey apartment block. However investor sold up to 18 stories, did nothing and fled away with money. Some apartment buyers at Royal apartment block project in Binh Thanh and An Suong residential area in District 12 have also fallen into similar situation. Many customers of PetroVietnam Landmark in An Phu Ward, District 2 of investor PVC Land had previously come to the headquarters of PetroVietnam claiming their apartments. Most of the apartments have been sold out and many customers said they had paid 95 percent of contract value. However the project has walked on the spot for four years and been unclear when it will finish. Director of Hoang Anh Saigon Real Estate Company Doan Chi Thanh said that when 60-70 percent apartments of a project were sold, investors could completely feel secure to implement the project. Hundreds of residents are still waiting for drastic actions from authorized agencies to remedy part of their damage. CII proposes building bridges on Hanoi Highway HCMC Infrastructure Investment Company (CII) has proposed plans for building two bridges in parallel with Hanoi Highway which will connect District 2 and districts 9 and Thu Duc to help reduce traffic congestion on the highway. In its documents recently sent to the HCMC Department of Transport, the company proposed building a 430-meter-long, 14.5-meter-wide bridge near the existing Rach Chiec Bridge to connect the parallel roads on the right-hand side of Hanoi Highway in the direction from District 2 to District 9. The project is worth VND311 billion (US$13.95 million). Having a similar length and width to the first bridge, the second bridge worth VND319 billion (US$14.32 million) is scheduled to go up on the left-hand side of the highway, a backbone road link between the city’s east and neighboring Binh Duong and Dong Nai provinces. CII expects the two bridges would help reduce vehicular traffic on the existing Rach Chiec Bridge and the nearby Hanoi Highway. CII wants capital of the bridges to be added to the build-operate-transfer (BOT) expansion project for Hanoi Highway being implemented by the company. CII proposed constructing the right bridge first to ease traffic on the section of the highway from Cat Lai Port to a toll station. The second bridge will be built later. CII is seeking the city government’s nod to build an eight-lane tunnel under the Hanoi Highway section at Thu Duc Intersection, a four-lane overpass in the direction of Vo Van Ngan and Le Van Viet streets and access roads at the intersection. The project is estimated to cost around VND1.42 trillion. HCM City raises VND24 trillion from bond sales The government of HCMC has issued VND23.85 trillion (US$1.07 billion) worth of municipal bonds to raise funds for its projects in the 2003-2015 period, said Dao Thi Huong Lan, director of the HCMC Department of Finance. Lan told the third day of HCMC’s tenth Party Congress last Friday that 34 commercial banks, eight insurers, four securities companies, two finance organizations and other investors have bought the municipal bonds with tenors ranging from two years to 15 years. Regarding funds for development investments in the city, Lan said under the revised state budget law, the proportion of tax and fee collections HCMC is allowed to retain is in steady decline while the city needs more capital for development in the coming years. Therefore, the city will continue mobilizing funds from financial markets to fuel economic growth and meet socio-economic development targets. Lan also reported positive results of the enterprise-bank connectivity program which has been implemented since July 2012, as banks have provided more loans for businesses year after year. In 2015 alone, HCMC targets bank loans of VND60 trillion for the program but banks had pledged to loan VND105 trillion to nearly 4,000 customers in the year to September, or 75% higher than the full-year plan. Property, logistics stocks seen attractive to investors Securities firms have projected that trading of tickers in real estate, plastics and logistics sectors would be active as these sectors are expected to generate good profit in the last quarter of this year. Nguyen Xuan Binh, deputy director of the analysis and investment consulting unit of Bao Viet Securities, was cited by Dau tu Chung khoan newspaper as forecasting that the plastics, logistics and industrial park and property sectors would be the most attractive to buyers in the coming time. The plastics sector will probably see a foreign ownership limit increase as Vietnam’s joining the Trans-Pacific Partnership will give a major boost to logistics and industrial park sectors. Meanwhile, listed companies in the real estate sector are expected to complete many property projects toward the year-end and stocks in this sector could serve as a major growth driver for the main index. The VN-Index ended last week up 0.85% to 593.02 points while the HNX-Index rose by 0.53% to close at 81.18 points. Liquidity on both bourses stayed high but was lower than the week earlier. The HCMC market saw matching volume down by 17.5% to 549.4 million shares. Matching transactions totaled 191 million units on the Hanoi market, down 19.6%. Finance stocks like BVH, VCB and CTG were major contributors to the main index. Large caps such as GAS, VIC, VNM, BMP and FPT also fueled the market rally. In the middle of last week, the Government announced State capital divestment from ten enterprises, including some big names like VNM, BMP, FPT, VNR and BMI. These tickers rose strongly but their gains eased off at the final session of the week.   Speculative money flowed into many real estate stocks, besides food-beverage, logistics, construction materials and auto sectors since investors expected good earnings in the third quarter of these listed firms. Last Friday, the HCMC market’s largest tickers moved to the upside with VNM (+1%) and the second largest bank in Vietnam CTG (+1.9%) erasing the broader market’s losses. Notably, there were over US$5 million worth of CTG shares traded, accounting for 5% of turnover on the main bourse. Meanwhile, MSN and VIC, which were struggling to post gains during the week, finally closed in the green. Although both were up less than 1%, they contributed a combined 0.5 point to the VN-Index. Foreign investors stayed on the selling side on the HCMC exchange last week. They net sold VND168 billion worth of shares, chiefly CII, HAG, SBT and HSG. On the contrary, they acquired some VND73 billion worth of BVH shares and VND60 billion worth of SSI shares.  On the Hanoi bourse, foreigners net bought VND9 billion worth of shares, mainly TIG, PVS and SHB. They sold PVS shares valued at VND5.2 billion. Sugarcane farmers earn profit after three years of losses Sugarcane farmers in the Mekong Delta have been able to earn profit in the 2015-2016 crop after three years of making losses or breaking even. Sugar refineries have adjusted up cane buying prices amid an undersupply. Nguyen The Tu, head of the Agriculture and Rural Development Office of Phung Hiep District in Hau Giang Province – the largest cane producing area in the Mekong Delta, said farmers could earn profit of at least VND30 million (US$1,350) per hectare in the 2015-2016 crop. Tu told the Daily that this year’s cane area in Phung Hiep District totaled 7,800 hectares, falling 500 hectares over the last crop. “The reduced acreage has led the supply to slide, so sugar mills have raised the cane price and farmers have benefited,” Tu explained. Cane in the region is sold to refineries at VND1,100-1,150 a kilo for the ROC16 variety and VND900-950 a kilogram for ROC11 and ROC13 varieties, up VND200-300 per kilo compared to the previous crop. Tran Van Tam, head of the Agriculture and Rural Development Office of My Tu District in Soc Trang Province, said sugar refineries now buy cane at VND900-1,000 a kilo, a rise of VND250-300 over the 2014-2015 crop. As the cane acreage in the district is 250 hectares lower than last year, sugar plants have increased the price to ensure sufficient stock. The Vietnam Sugar and Sugarcane Association (VSSA) estimated that farmers in the Mekong Delta have cultivated about 41,890 hectares of cane in the 2015-2016 crop, down 6,000 hectares against the previous crop. Tu calculated farmers could yield 105-110 tons of cane per hectare in this crop, so cane output in the Mekong Delta could possibly fall by 630,000-660,000 tons this year. According to the Ministry of Agriculture and Rural Development, in the year to September 15, sugar inventories at plants had totaled 158,300 tons, down 120,000 tons over the same period last year. A fall in inventories is another reason for enterprises to step up cane purchases. U.S. to increase hardwood supply to Vietnam The United States has an ample source of hardwood supply and can double or even triple shipments to Vietnam to meet increasing demand for materials to turn out wooden products for export, said Michael Snow, executive director of the American Hardwood Export Council (AHEC). The U.S. is Vietnam’s second biggest supplier of hardwood, with export revenue totaling US$238 million last year, up 10.7% year-on-year, Snow told a seminar on American hardwood held last Friday by AHEC, the Handicraft & Wood Industry Association of HCMC and the HCMC Architects Association. Snow said the U.S. always exploits less than half of available hardwood, so its supply never goes down. In addition, the nation strictly manages forests to ensure sufficient wood supply. Wood material imports from the U.S. into Vietnam have surged over the years but the U.S. can supply more hardwood to meet rising demand in this Southeast Asian market. Vietnam’s export of wooden products to the U.S. has risen sharply. Snow told the Daily that the U.S. imposes strict criteria on the legality of wood and requires imported wooden products to be manufactured from wood with legal origin. Therefore, Vietnamese furniture exported to the U.S. must have clear origin. The U.S. also applies technical conditions to chemicals in imported products, so Vietnamese exporters should study these requirements before selling wooden items stateside.   According to a report by the Handicraft & Wood Industry Association of HCMC, the U.S. is now the biggest export market for Vietnam’s wooden products with export revenue of US$1.2 billion in the first six months of this year, up 18.8% against the same period last year. Vietnam’s total woodwork export revenue in the January-June period of this year rose by 8.8% year-on-year to US$3.2 billion and is forecast at US$3.7 billion in the second half of this year. CAR of banks down, total assets up The capital adequacy ratio (CAR) of credit institutions in Vietnam has dropped while their total assets have gone up, especially at several commercial banks majority owned by the State.    Basic indicators of credit institutions released on the central bank’s website showed that their total assets had risen by 2.32% by the end of July compared to late last year and by 3.66% as of the end of August compared to late last year. Total assets of the banking system increased from some VND6,066 trillion as of August 31 last year to nearly VND6,515 trillion at the end of 2014 and around VND6,753 trillion by August this year. Banks credited strong credit growth in recent times to the rise in their total assets. According to the General Statistics Office, credit had grown 10.78% by September 21 against the end of last year, the highest in four years. Total assets of commercial banks majority owned by the State had expanded 3.24% by July and 5.95% by August, mainly because these lenders recently pledged to provide huge loans for many big projects. Vietnam Bank for Social Policies, Vietnam Development Bank and people’s credit funds had seen their total assets increasing 9.99% by end-July and 10.89% as of August. Meanwhile, total assets of commercial banks had inched up a mere 0.38% by end-August compared to the end of 2104, well below 0.94% by the end of July. This indicated commercial banks had attracted fewer-than-projected borrowers. Therefore, some experts forecast that commercial banks might not meet profit growth targets for 2015. However, the CAR of commercial banks majority owned by the State had fallen to 9.29% as of the end of August compared to 9.6% by end-July, suggesting that the health of these banks had declined. The loan-to-deposit (LDP) ratio is an important indicator for liquidity of these banks but the central bank has not announced the ratio since June. The LDP ratio of banks with majority State ownership had been 94.3% by end-May, above 90.74% in the same period of 2014 and an international limit of 80%. Data showed that credit institutions had used 25.9% of their short-term funds for mid- and long-term loans by end-August, higher than 20.2% at the end of last year and 19.3% in the same period of 2014. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR