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Cement producers need to pave way to new export markets
As domestic supply of cement is overtaking demand, producers badly need to find ways into foreign markets if they do not want their products to remain in a storehouse.
Figures from the Ministry of Construction show that at last year end almost 100 cement production lines were in operation with a combined designed capacity of 54.7 million tonnes per annum.
Another 18 lines are expected to be put into production this year with a total capacity of over 11.7 million tonnes. Together they will provide a surplus of around 2 million tonnes in 2010, after years of demand outweighing supply.
According to a ministry official, exports are a positive solution for the situation, apart from the fact that his ministry has required cities and provinces to immediately stop registering new cement projects at their localities until 2020.
The MoC has also delayed several new projects as well as existing schemes with a small scale. These actions were resulted from the concerns that a higher supply would ignite unfair competition and dumping.
However, roads to foreign markets are full of thorns rather than roses as Viet Nam exporters have to face rivals who have more advanced technologies and offer softer prices.
Experts have said investment in cement projects for exports was not profitable because cement plants required high technologies to ensure environmental preservation as well as involving in high transpotation costs.
The Vietnam Cement Industry Company has been selling products to markets in Laos, Cambodia, China and South Africa for several years, and the total volume stands at around several hundreds of thousands tonnes per year.
It is said that between next year and 2015, an additional 24 production lines will become operational and forecasts indicate that in 2011 there will be a surplus of 8 milion tonnes of cement. In 2015 supply will be 14 million tonnes higher than demand.
International bond issue
Viet Nam has mobilised US$1 billion from international investors via sales of its 10-year Government bonds on the New York Stock Exchange. Investment funds and asset management companies purchased 73 percent of the bonds that were issued, while insurance and retirement funds bought 10 per cent. Banks purchased the remaining 7 percent of the bonds.
The bonds have a nominal interest rate of 6.75 percent. However, they were released at US$98.576 for a US$100 bond paper; therefore, the net yield would be 6.95 percent. They are now listed on the Singapore Exchange and are due on January 29, 2020.
A Vietnamese banking official said the successful issue was significant as its confirmation of the country's credibility, and it would help Vietnamese corporations to release their international bonds.
Explaining the higher yield by the bonds compared with those of Indonesia and the Philippines, Deputy Minister of Finance Tran Xuan Ha said it was based on the country's credit ratings, the trading status of the (US$750 million) international bonds issued in 2005 and the international capital market's performance at the time of issue.
The Philippines issued $1.5 billion worth of government bonds, and Indonesia sold $2 billion worth of bonds at a yield of around 6 percent per year, around the time of Viet Nam's issuance.
The Deputy Minister cited that Viet Nam was rated lower than those two countries and its outlook was considered not as good as theirs. Further, Viet Nam's bond liquidity was not high. The rating, while appreciating Viet Nam's economic growth, political stability, and its safe level of Government debt to foreign countries, pointed out that there was a high trade deficit, inflation and a need for further banking reform.
Part of the mobilised funds would be used to finance the State budget and the rest would go to the Ministry of Planning and Investment and the Ministry of Finance. These ministries in turn would continue to lend funds to projects of State-owned corporations, such as Dung Quat Oil Refinery.
There are concerns over the use of the raised capital. The country cannot spend all the money immediately, and part of the amount would be authorised for the Bank for Investment and Development of Viet Nam to deposit with overseas banks at lower interest rates.
In October 2005 the country sold for the first time $750 million worth of 10-year bonds at an annual coupon of 7.125 per cent and the entire amount was put in the hand of the State-owned corporation Vinashin. There were complaints of ineffective investments by this corporation.
HCM City sees new share listings
Although the VN-Index has not bounced back as investors expected, in the lunar new year season the HCM City Stock Exchange has received more companies applications to list on its board.
The An Phu Irradiation Joint Stock Company (APC) is the latest member of the boarse, having its first trading day last Friday.
This Binh Duong Province-based has a charter capital of VND86 billion and its main business is to radiate fresh fruit, seafood and medical equipment. It is also the first of its kind on the exchange.
Earlier last week saw the same development by two real estate developers, the Ha Noi-headquartered Ha Do Group (HDG) and the HCM City-based Khang Dien company (KDH).
With a charter capital of VND135 billion (US$7.3 million), HDG is among the top listed property companies in terms of earnings per share (EPS) as it netted last year a profit of almost VND167 billion, or an almost VND13,000 EPS.
This year the company targets a net profit of VND250 billion, which is expected to increase to VND302 billion in 2011.
On it part, the VND332 billion Khang Dien is proud that its foreign investors, including Vietnam Opportunity Fund under inaCapital's management and life insurer Prudential Viet Nam, who represent an over 20 per cent stake helped his company map out strong development strategies, especially after the recent economic crisis. All KDH projects are in the city's districts 2 and 9, which will benefit from the city's projects of Thu Thiem Tunnel, Phu My Bridge and Eat-West Highway, according to chairman Ly Dien Son. Other companies expected soon to list at the exchange include the VND155 billion Thien Long Group, which specialises in producing pens of different kinds and other stationery.
Thuy Anh
vietnamnews
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