BUSINESS IN BRIEF 3/4
Saudi enterprises to increase VN investments
Many companies in Saudi Arabia are seeking investment opportunities in Viet Nam because of its promising markets, according to a Saudi official.
Speaking at a press conference in HCM City last week, Ambassador to Viet Nam Salah Ahmed Sarhan said that Saudi companies were especially interested in the agriculture sector, particularly the production and export of rice.
In addition to agriculture production, Saudi enterprises expected to establish relations soon with Vietnamese companies in the steel, petroleum and refinery industries as well as in real estate and tourism.
He said the governments of Viet Nam and Saudi Arabia recently had a successful meeting to discuss the development of trade and investment relations between the two countries.
The signing of an Investment Protection Agreement between Viet Nam and Saudi Arabia, which is scheduled to take place in mid-year, is expected to help increase trade and investment co-operation between the two countries.
"We encourage Saudi businessmen to come and invest in Viet Nam," he said.
Although ties in trade and investment between Viet Nam and Saudi Arabia began only recently, bilateral trade turnover reached nearly US$1.05 billion last year.
Viet Nam's major exports to Saudi Arabia include aquatic products, garments, pepper and electronic products (mobile phones and televisions).
Sarhan said that logistics was good in Viet Nam, particularly in the aviation area. He pointed out that the country had many modern planes but aviation infrastructure was still inadequate.
Saudi enterprises hoped to work with the aviation sector to invest in aviation infrastructure.
Saudi Arabia also planned to increase its co-operation with Viet Nam in culture, education and labour activities.
Also speaking at the press conference, Peter Scholten, vice commercial president of Saudi Airlines Cargo, said the company had begun two B-747 freighter flights per week from HCM City in combination with its Hong Kong flights.
Gas and food prices fall
Members of the Viet Nam Gas Association have agreed to lower the retail price of gas by as much as VND46,000 (more than US$2) per 12kg from the start of April.
Customers will be able to purchase 12kg gas cylinders from VND405,000 to 410,000 (around 20$) each, depending on the brand.
The association's president Nguyen Sy Thang said gas companies were required to announce the revised price at the beginning of this month, and retain it until May.
Members have been given the responsibility of managing their distribution agents and ensuring the reduction is passed down to consumers.
The association also said global gas prices had dropped around $160 per tonne compared to early March because of declining demand for gas in many countries following the cold winter.
In January, prices rose by VND126,000 ($6) per 12 kg following the global market, concerning local consumers.
The price of food has also decreased, with abundant supplies and slowing demand affecting the market.
In contrast to the downward trend, some supermarkets predicted a possible price rise in April.
Big supermarkets confirmed that the cost of beer, soft drinks and cosmetics would increase by 10 to 15 per cent, due to rising production costs.
Power costs are also likely to go up, with many experts predicting that Electricity of Viet Nam is likely to up prices in the near future.
Tank manufacturer opens factory
RK Engineering, a wholly foreign invested company from Japan on Mar. 29 inaugurated a high-pressure resistance tank, tank top, heatproof material and equipment plant in Dinh Vu Industrial Zone in the northern city of Hai Phong.
Speaking at the inauguration ceremony, the company's general director Yuzuru Tsuchiya said they are aiming to provide high quality products to the Asian market at competitive prices.
The US$14 million project will process 300 to 480 billion tonnes of products annually to serve the petrochemical and food industries.
Most of their finished products will be exported to Japan and other Asian countries.
Construction of the plant started last July, and it should be ready to go into operation next month as scheduled.
It will create jobs for 40 people initially, and 100 employees when it is fully operational.
Nippon Kyohan is the company's main investor.
Nippon Kyohan selected the Dinh Vu IZ because of its strategic location, access to the port, reliable utilities and tax incentives.
Nippon Kyohan is one of six Japanese tenants at the IZ, which has attracted more than 43 projects with total investment of US$41.54 billion, of which Japanese investment represents approximately 45 percent.
Vietnam’s ACB ranked 2nd in banking website speed
Asia Commercial Bank (ACB) in Vietnam was the second fastest in the banking website sector, according to the ZDNet Asia’s Business Web Performance Benchmark Report, which was released on March 30.
Asia Commercial Bank (ACB) in Vietnam was the second fastest in the banking sector, according to the ZDNet Asia’s Business Web Performance Benchmark Report, which was released on March 30.
The report ranked the speed and availability of the top 10 websites of five industry sectors across six Asian countries -- Singapore, Malaysia, Indonesia, Thailand, Vietnam, and the Philippines – focusing on the industries of banking and financial services, government, retail, telecommunications, and travel.
In banking and finance, OCBC Bank in Singapore and Bank of Ayudhya in Thailand were ranked fastest for a response time of 1.3 seconds. Ho Chi Minh City-based ACB was the second fastest, at 2.8 seconds. The worst performer came from Indonesia, where Bank Rakyat Indonesia took a staggering 35.6 seconds.
Singapore had the highest availability average of 99.32 percent in this sector, while the Philippines placed last at 85.63 percent.
Results were mixed between countries in terms of response times. Singapore, for instance, scored the best speeds for most sectors but was edged out of the top three in the telecommunication segment.
In telecoms, Thailand, Vietnam and the Philippines emerged as the top three in response times. Thailand’s True Internet had the best time of 2.1 seconds, followed by Vietnam’s Thien Duong Web at 3.8 seconds, and Digital Telecommunications in the Philippines at 5.1 seconds. Singapore’s SingTel was in fourth place with 5.3 seconds.
The slowest times for all six countries were in the double digits. AirAsia was Singapore’s slowest time at 10.8 seconds, but this was faster than AirAsia in Vietnam, at 18.5 seconds. Indonesia’s Agoda.com was the slowest, at 24.6 seconds.
Sites in Singapore again were on top with the highest availability, at an average of 99.08 percent. Indonesia came in last at 89.35 percent.
Beleaguered Bianfishco reneges on debt again
Debt-stricken seafood company Bianfishco has again failed to fulfill their promise to fully repay farmers for catfish purchases by the end of March. It now asks for an extension to next week.
Earlier it had twice committed to settle the payments to around 41 local catfish farmers within March.
It is not clear how much this sum is but in all, the Can Tho City-based firm has raked up outstanding debts of US$61 million to nine banks, a credit institution, and a number of farmers.
Its CEO Tran Van Tri on March 31 held a meeting with the farmers for negotiation, which was witnessed by a team formed by Can Tho City authorities to look into the company’s massive debts.
Tri continued to make vague promises about debt clearance as he did in previous meetings, said Vo Thanh Hung, head of the inspection team.
Tri said he had yet to repay farmers since he was not legally authorized to withdraw money from the company’s bank account, Hung quoted the CEO as saying.
Hung said Bianfishco still owes farmers around VND245 billion (US$11.7 million), down by VND16 billion as previously calculated.
According to Le Van Chien, one of the farmers, Tri had earlier said that his wife, Tran Thi Dieu Hien, who has authorized him to assume her executive post at the company, would write a letter of authorization to transfer all of her stakes to him within March.
But since that transferring procedure has yet to be completed, Tri does not have the full rights to settle the debts, the farmer said.
Hien reportedly left for the US in February to seek treatment for her alleged breast and liver cancer.
“My wife is staying too far away from the agency in charge of handling the authorization tasks,” explained Tri.
Last week Can Tho City authorities ordered that Hien return to Vietnam to settle outstanding issues as it is rumored her treatment in the US is only a shield for her to evade responsibilities.
To prove his wife is really on an overseas medical treatment, Tri has released a photo of Hien lying on a sickbed with a shaven head. However this photo’s electronic data show it was taken nearly three years ago, on September 16, 2009.
As for this, Tri explained the camera had just been bought and not yet been reset.
Tri also said his wife cannot leave the US for now, since the airline company has refused to transport her “due to her severe diseases.”
Lao airline starts flights to Da Nang
Laos Airlines has opened its first direct flight from Pakse to Da Nang via Savannakhet.
The first pilot chartered flight with 70 passengers landed on Da Nang International Airport in central Vietnam on Mar. 30.
As scheduled, there will be three direct flights on ATR27 aircraft from Laos to Da Nang City on Tuesday, Thursday and Saturday each week.
The route is a cooperation of the Da Nang city's administration and the Lao Government in order to celebrate the 50th anniversary of diplomatic relations between Vietnam and Laos.
Wrongdoings at Song Da Corp cost state $512 mln
Some VND10.676 trillion ($512.7 million) should be retrieved for the state budget due to mistaken investments and capital allocations in the state-owned Song Da Corp, said the State Inspectorate after a recent inspection.
The State Inspectorate has also pointed out a series of errors at the state-run group.
Song Da Corporation was established after the merger of six similar state-run corporations operating in investment and construction.
However, instead of revaluing the amount of state capital and the total assets of the six companies and the merged one, the Ministry of Construction empowered the new board of directors to do the job, thus leading to inaccurate evaluation of the charter capital.
In the process of management and use of state capital and assets, the group and its investment arms poured some VND2.335 trillion into non-core businesses, violating the provisions of the Ministry of Finance.
Loose management in the use of capital assets also led to the lost tax revenue and poses a risk for further loss of state capital, said the inspectorate.
Specifically, the corporation and certain member companies inefficiently contributed some VND195 billion in state capital to the Vietnam Investment Fund and Vietcombank Fund member No.3, which are now at risk of losing the capital.
The state inspectors also found that there had been many mistakes in the management of capital assets used in a number of projects.
The corporation did not perform the role of investor in the Me Tri-My Dinh township project as approved by the Hanoi People's Committee, but instead handed the job to Sudico and Bitexco without permission. The same thing happened to the Nam An Khanh township project.
As a result, the state inspectors proposed that the Prime Minister handle more than VND10.676 trillion in wrongly allocated state capital, of which VND9.976 trillion was involved in the financial wrongdoings carried out by Song Da and its affiliates.
A source told Saigon Tiep Thi newspaper last month that the Song Da Group is facing difficulties in balancing its capital sources to repay foreign debts due to a bid debt from its affiliate, Ha Long Cement Joint Stock Co.
Earlier, the Vietnamese Ministry of Finance was assigned by the prime minister to provide a guarantee for Ha Long Cement Co to borrow foreign loans.
However, the ministry instead guaranteed the loan of Song Da Corp (now merged as the core in Song Da Group). Then, this corporation signed a contract to re-lend VND3.335 trillion to Ha Long Cement Co, equal to the lending interest rate of foreign banks.
Therefore, the ability of Song Da Corp to repay depends completely on the repayment capacity of Ha Long Cement Co.
However, the cement company has delayed progress for one year and has suffered losses of VND78 billion in 2009 and VND500 billion in 2010. It is now in the original repayment period for foreign banks, about VND400 billion per year, but it is unlikely to repay its debts in due time.
Sugar suppliers drive buyers away with high price
Confectionery and beverage producers are asking the Ministry of Industry and Trade to import 270,000 tons of sugar instead of using locally-made sugar because of the latter’s higher price.
Sugar manufacturers and their consumers on Wednesday sat back together in HCMC to look for ways to solve the deadlock, but the rift remained deep between the two sides.
Local output, according to the meeting convened by the Vietnam Sugarcane and Sugar Association, is about 1.4 million tons in the 2011-2012 crop, increasing by 300,000 tons compared to the preceding crop.
Coupled with 100,000 tons stockpiled since last year, sugar makers are suffering from a serious oversupply, said Nguyen Thanh Long, chairman of the association.
Very few local sugar makers – such as Bien Hoa and Bourbon Tay Ninh – have secured contracts to sell sugar to local confectionery and beverage makers, while many large consumers are seeking approval to import sugar for their production, he said.
“Vinamilk, Kinh Do, Bibica and Red Bull and other firms insisted on importing around 270,000 tons of sugar while a large number of local sugar suppliers couldn’t find a way to approach these corporate buyers,” Long said.
Bibica’s general director Truong Phuc Chien cited the big difference between local and import sugar prices as the reason behind his sugar import plans.
Imported sugar is priced at only US$700 a ton, or roughly VND14,700 per kg, while local sugar enterprises charge much higher prices, at up to VND17,000 a kg.
“We have no reasons to buy local sugar at such unreasonable prices compared to import products,” Chien said. Bibica needs about 6,000 tons of sugar every year.
According to Mai Hoai Anh, who is in charge of purchasing and import-export of Vinamilk, the sugar demand at his company is growing between 15% and 20% a year.
However, price volatility in the local market during the past five years has discouraged Vinamilk from buying locally-made sugar with large volumes, Anh said.
Ha Quang Tuan, chairman of Hanoimilk, pointed out that the average production cost of sugar at local enterprises was as much as VND14,500-15,500 one kg, equivalent to sugar prices traded on international markets.
With the present high price, local sugar suppliers are unable to win large buyers like Hanoimilk, Vinamilk, Tan Hiep Phat or Coca Cola.
This year’s sugar import quota is limited to 70,000 tons in line with the country’s commitment to the World Trade Organization. This is 200,000 tons lower than the amount demanded by the market, Deputy Minister of Industry and Trade Nguyen Thanh Bien said.
What local buyers and suppliers need to do now is reach an agreement about sugar prices.
Based on the negotiation result between the two sides, the ministry will decide the 2012 import quota, Bien said.
To help solve the situation, the sugar association is seeking approval from the Ministry of Agriculture and Rural Development to export unneeded sugar and to store 200,000 tons temporarily.
Lamenting of losses, EVN still posts strong growth
Despite repeatedly complaining of losses over the last few years, the Electricity of Vietnam Group, commonly known as EVN, has paradoxically posted strong growth in revenue during these loss-stricken periods.
Last year the power monopoly increased the power price by 15.28 percent, but saw its revenue rise by as much as 27 percent, raising questions among industry insiders.
A year earlier, the peak time of its losses, EVN still managed to reap more than VND90.8 trillion, or US$4 billion, thanks to two power price hikes that year.
In 2011, the figure reportedly rose to as much as VND100 trillion, or $5 billion, a 26.7 percent increase against 2010, according to a report the Ministry of Industry and Trade submitted to the government.
However, such high growth was not included in the business report of EVN, in which it only posted data on power saving, losses, and the power loss rate.
The adjusted average power price in 2011 was VND1,304 a kWh, while consumers actually had to pay around VND1,400 for every kWh, admitted Dang Huy Cuong, head of the Electricity Regulatory Agency under the Ministry of Industry and Trade.
The reason for this is that electricity for household use has been increased by a greater amount that power for production, he said.
However, many consumers are still skeptical about the real power prices they have to pay, compared with those announced by EVN.
Doctor Nguyen Minh Phong from the Hanoi Institute for Socio-economic Research said the rate can be as much as VND2,000 a kWh.
Under the current mechanism, how much a kWh really cost is something only known to EVN, an expert who used to work as an EVN chief revealed.
While the average price is VND1,304 a kWh, consumers have to pay VND2,000-2,060 for every kWh from the 150th kWh in total consumption, he said.
“And only EVN knows the exact ratio of consumers who exceed the 150kWh mark,” he said.
“Even the audit officials cannot inspect this since they cannot look into the power bills of some 17 million consumers countrywide.”
The expert also expressed his skepticism as EVN posted a 27 percent revenue growth last year, while the power price was hiked by only 15.3 percent.
“With its subsidiaries also facing financial problems, it is unlikely that EVN reaped high incomes from the non-core businesses.”
The expert thus urged that the government and the Ministry of Finance look into the difference.
“At present, the cost prices EVN buys power from hydropower and thermal power generators are only some VND600 – 700 a kWh.”
Meanwhile, Dr Phong, of the Hanoi Institute for Socio-economic Research, said that while the global power prices have gone up and down, domestic prices have gone only one direction: upward.
“It is difficult for the power market, which is basically a monopoly to EVN, to be transparent,” he concluded.
Jack-up drilling rig launched in Vung Tau
Vietnam has become one of the top ten countries in the world to build jack-up drilling rigs up to international standard.
A ceremony to transfer the Tam Dao 3 rig to owner, Vietsovpetro, was held on March 30 at the PetroVietnam Marine shipyard in the southern city of Vung Tau.
With a 145m jacket, the Tam Dao 3 is able to drill wells up to a depth of 6,100m.
As a project of national importance, the construction of the rig has been recognised by the Vietnam Shipping Registration Agency and the American Bureau of Shipping.
Following this success, which marks a milestone for maritime construction in Vietnam, Vietsovpetro have placed another order with the yard for a second jack up drilling rig.
The company will also build a drilling barge able to drill up to 10,000m, ordered by PetroVietnam Drilling and Well Services Corporation.
Japan to lend $1.6 bln to Vietnam
Vietnam will receive loans worth a combined US$1.6 billion from Japan to fund eight projects to develop its infrastructure and technology, the Finance Ministry said on Friday.
The loan agreements, signed by the ministry and the Japan International Cooperation Agency on Friday, brought Japan's fund commitment to Vietnam to around $21 billion, the ministry said in a statement.
The loans will fund Vietnam's development of Hoa Lac science and technology city and infrastructure projects including the expansion of Hanoi-based Noi Bai airport, National Road 3, Ho Chi Minh City railway, the statement said.
Japan is now Vietnam's largest international donor, the ministry said.
Dong Nai 4 hydropower plant begins generating energy
The first turbine of the Dong Nai 4 hydropower plant in central highlands region began generating electricity to the national grid on March 28, helping ensure stable supply in the upcoming dry season in the region.
The turbine which has the capacity of 170MW, has successfully completed a trial basis for 20 days.
Located in the upstream of the Dong Nai river in Dac Glong district of Dak Nong province and Bao Lam district of Lam Dong province, the Dong Nai 4 hydropower plant was built at the end of 2004 at a cost of VND4.7 trillion.
It has two turbines with a total output of 340 MW. When fully operational, the plant will be able to supply an average 1.1 billion KWh per year to the national grid.
ASEAN financial ministers pledge closer ties
The 16th ASEAN finance ministers' meeting closed in Phnom Penh on March 30, with an agreement to boost regional financial integration, to make the ASEAN Economic Community a reality by 2015.
A Vietnamese delegation led by Deputy Finance Minister Truong Chi Trung attended the event.
The participants said they believe that the regional economy will maintain a growth rate of between 5.6 to 6.3 percent this year, even with uncertainties in the global business environment.
The rate was attributed to a robust domestic demand, sustainable macro-economic policies and the ongoing economic restructuring in some countries.
Regarding the roadmap for ASEAN Financial Integration, the participants were pleased with the positive development of the capital market and the liberalisation of capital and financial services.
The progress made in customs cooperation was also applauded, especially the pilot project to implement a One-Gate ASEAN mechanism and harmonising ASEAN tariffs.
On addressing the event, Cambodian Prime Minister Hun Sen called on the assembled ministers to seek out new ways of ensuring trust in the market.
The ministers signed an amended ASEAN Customs Agreement to upgrade customs services across the region.
The one-day event saw the presence of the region’s finance ministers and representatives from several international organisations.
Q1 sees positive changes despite slow growth
Though the GDP growth rate slowed to 4 percent in the first quarter, there were a few good signs, the Ministry of Planning and Investment said at a meeting in Hanoi.
The rate of 4 percent is low compared to 5.57 percent of the same period last year and 6.1 percent of last year’s fourth quarter, the ministry said.
The Index of Industrial Production (IIP) picked up a mere 4.1 percent year-on-year, which is the lowest level in many years.
Multiple processing industries such as textile, garment, leather-shoe, chemical fertilizer, cement and steel recorded a drop in their indices.
Economic expert Le Dang Doanh ascribed the poor growth in the nation’s IIP to shrinking purchasing power, reflected in the consumer price index (CPI) of the early months, as well as the high inventories of cement, steel, furniture, fertilizer, apparel, beer and wine.
In the first quarter, trade deficit was only US$251 million, or 1.02 percent of export turnover. Meanwhile, CPI inched up a slight 0.16 percent in March compared to the preceding month.
Fuel imports fell by 32.1 percent year-on-year, while imports of fertilizer, machinery and fabric declined 27.4 percent, 1.4 percent and 11.1 percent respectively.
According to Bui Ha, head of the Department for National Economic Issues under the ministry, processing industries and consumption were experiencing tough times.
Enterprises had to scale down manufacturing, investment, imports of machinery and production materials and this caused stagnation in domestic production investment.
According to the ministry, the low CPI increase due to high inventories resulted in price discounts, dwindling incomes and a higher rate of unemployment, all of which led to a drop in total solvent demand and a sluggish growth in retail sales.
Though exports reached $24.5 billion in the first quarter, the outlook for export in the coming months is unpromising as most leather-footwear and clothing enterprises have run out of orders, said a representative of the Ministry of Industry and Trade.
Only a few of the major industry players have orders to export in the second quarter, said a representative of the trade ministry.
Sales of electronic and cooling appliances have plummeted, while cement and steel consumptions are suffering from the frozen property market, said the representative.
The representative of Electricity of Vietnam (EVN) said power output reached 26,500 kWh in the first quarter, increasing by 10.3 percent compared to the same period last year.
However, the fact that EVN hasn’t experienced any critical power shortage suggests that the manufacturing sectors are in trouble, said Deputy Minister of Investment and Planning Nguyen Van Trung.
Lam Nguyen Khoi, deputy director of the HCMC planning department, cited data of the General Department of Taxation which showed that 931 city-based enterprises had closed their tax codes for dissolution in the first quarter.
More than 5,000 enterprises have notified the tax department of their business suspension.
According to a report of the planning ministry which was previously submitted to the Government, over 2,200 enterprises went through procedures of disbandment and 9,700 others registered for operation suspension in the early months of 2012.
The number of dissolved and suspended businesses was thus 6 percent higher than the same period last year and the number of enterprises which have completed procedures for dissolution increased by 57 percent.
Meanwhile, as of March 21, the number of new enterprises fell by 8 percent and registered capital saw a year-on-year drop of 12 percent.
However, the macro-economic situation also showed positive signs this March, after the very bad performance in January and February, Bui Ha said.
The first quarter’s exports continued to grow, rising by 23.6 percent compared to the same period last year.
The State budget revenue reached VND137 trillion as of March 15, equal to 19 percent of the whole year’s estimate.
Stable Forex rates, lower interest rates in the monetary market, and other indicators such as inflation, trade and budget deficits show that the overall economic situation is becoming more stable, Ha said.
Similar to other economic reports, the report of the Ministry of Planning and Investment concluded that there were positive changes in the first three months of 2012.
All sectors recorded certain developments, and the State budget revenue saw good results.
Vietnam, EU eye trade deal
Trade Commissioner of the European Union (EU) Karel De Gucht and Vietnam’s Minister of Industry and Commerce Vu Huy Hoang signed a Memorandum of Understanding (MoU) covering topics related to future negotiations on a bilateral free trade agreement (FTA).
The MoU was signed during the ASEAN-EU Business Summit, which opened on April 1 in Phnom Penh .
At the event, De Gucht called on delegates to step up a common FTA between ASEAN and EU. He said such an FTA will eliminate barriers to trade, services and investment between the two regions, while addressing issues relating to intellectual property.
Previously, the EU held separate FTA negotiations with Singapore and Malaysia, however, the group stills want to reach a common FTA with ASEAN as a whole.
The Trade commissioner also pledged to further promote trade ties between the EU and ASEAN despite the on-going global financial crisis.
ASEAN is currently the third largest trade partner of the EU with annual trade revenue of more than US$233 billion.
Vietnam Airlines discounts 40 percent on domestic fares
National flag carrier Vietnam Airlines will apply a discount of 40 percent on their domestic air fares for local travel agencies to promote inbound traveling from now until December 31, according to their southern office.
Vietnam Airlines and the Ho Chi Minh City Association of Tourism will pick certain travel agencies to cooperate in setting up discount tours for Vietnamese tourists.
Travel agencies need to book the tickets 30 days in advance and pay a deposit of 50 percent 14 days before departure.
Flights are on limited hours and are not applicable on national holidays like April 30 or May Day.
With the discount air fares, round trips between Ho Chi Minh City and Hanoi will cost VND3 million (US$150) per passenger, Ho Chi Minh City-Da Nang VND1.9 million (US$91) and Ho Chi Minh City-Phu Quoc VND1.6 million (US$80).
Tran The Dung, deputy director at the The He Tre tourism company, said this promotional program will make a positive impact on travel agencies, helping them to roll out discount tours to attract domestic travelers.
It is estimated that the fares for tours to central Vietnam and Phu Quoc island will drop by 20 percent compared to current ones.
“Our company will discount a further 8 percent to encourage people to travel inbound,” said Dung.
Hydropower generators post whopping profits
While the power sector has repeatedly bemoaned of losses, most of the hydropower generating companies, which account for nearly 50 percent of the sector’s supply, have posted huge profits in 2011.
Though they only sell the power to the Electricity of Vietnam Group (EVN) at less than a half of the price consumers have to pay, the generators can still secure high profits thanks to the low capital invested in projects.
For instance, Vinh Son – Song Hinh Hydropower JSC enjoyed a post-tax profit of VND345 billion, up by 13.5 percent year on year, according to the company’s financial report.
Similarly, most other hydropower generators have posted greater growth in profits than in revenue.
Ry Ninh II JSC, for example, posted an 88-percent growth in revenue in 2011 against a year earlier, while the growth for profit is as much as 133 percent.
Meanwhile, Mien Trung Power Investment and Development’s profit grew by 23 percent in 2011 compared to 2010, while the figure for revenue is only 12 percent. Nam Mu Hydropower JSC enjoyed a profit growth of 88 percent, and 34 percent for revenue growth.
One of the most crucial factors contributing to the whopping profits of hydropower generators is the low cost price, analysts said.
“Without the huge loans borrowed from banks, whose interest expenses account for a relatively large amount of profits, the players in the hydropower generating sector could post even bigger profits,” an expert said.
An example of this is the case of Song Ba Hydropower JSC, whose financial report audited on February 16 showed that the total revenues the company earned from selling electricity last year was around VND201.6 billion, while the total cost price was only VND74.6 billion.
This means Song Ba reaped a total profit of VND127 billion, or 170 percent of the cost price.
However, with the company having to earmark VND72 billion to clear loan interests, plus losses worth VND14.4 billion thanks to the exchange rate difference, and other expenses, the post-tax profit of Song Ba is only VND32 billion.
Figures from the audited financial report of Can Don Hydropower JSC also show that the company earned VND287 billion in revenues from the cost price of only VND91.7 billion, resulting in a total profit of VND195.3 billion, or 213 percent.
However, like Song Ba JSC, Can Don Co also had to clear a massive bank interest, and consequently enjoyed an after-tax profit of only VND90 billion.
Economic expert Dinh The Hien said it is of no coincidence that a number of businesses have rushed to invest in the hydropower sector, even those operating in the real estate sectors such as Hoang Anh Gia Lai and Duc Long Gia Lai.
“This is because the hydropower sector has many exclusive advantages,” he explained.
“For instance, they can exploit the free of charge resource of water, while the outlet for their product, which is electricity, is always secured.”
Hien said thanks to such advantages, it is no surprise to see the impressive financial results of the hydropower generators.
“The profits would be even higher without the businesses’ heavy reliance on bank loans,” he said.
Over 3,200 businesses dissolved in two months
3,259 businesses were dissolved or temporarily ceased operations in the first two months this year.
According to the Ministry of Planning and Investment (MPI)’s Business Registration Management Department, 1,664 businesses were dissolved and 1,595 businesses temporarily ceased operations.
This is the first time the department has publicized the number of businesses dissolved and it now plans to release such information on a monthly basis.
In 2011, 7,611 businesses were registered to go bust, whereas 53,792 were categorised as having to temporarily cease operations or delay tax payments.
Large scale rice cultivation urged
Rice production in the Cuu Long (Mekong) Delta should be reorganised to achieve sustainability, experts said at a conference last Friday in the Cuu Long (Mekong) Delta Province of Dong Thap.
Organised by the Dong Thap Province People's Committee and the Thoi Bao Kinh Te Viet Nam (Viet Nam Economic Times) newspaper, the conference brought together leading technical experts, researchers from the agricultural sector, businesses and policies makers to discuss rice production and consumption measures in the Cuu Long (Mekong) Delta.
From a rice importing country, Viet Nam had made great strides to become one of the world's biggest exporters of the grain, said Nguyen Thanh Bien, deputy Minister of Industry and Trade.
Viet Nam exported more than 83.6 million tonnes of rice worth over US$25 billion in the 1989-2011 period, with exports increasing strongly in recent years, from nearly 4.69 million tonnes in 2006 to 7.1 million tonnes last year.
However, rice production in the past years had also exposed many difficulties and shortcomings, Bien said.
Rice production in general still focused a lot on output and quantity, and had not been accompanied by planning and identification of consumption markets.
Infrastructure conditions serving rice production, preservation, processing and consumption remained inadequate, he said, adding that building and promoting brand names for rice grown in Viet Nam had not enjoyed proper attention.
Linkages among farmers, scientists and businesses had formed, but not proved as effective as expected, he said.
Farmers still cultivated many rice varieties, causing difficulties in building rice brands as well as ensuring consistency in quality, speakers said.
Pham Van Du, deputy director of the Cultivation Department, said: "The persistent challenge of rice production in the Cuu Long (Mekong) Delta is that output and export growth do not translate into livelihood improvement for most rice growers."
He said there were "too many" growers and most of them were operating on a very small scale. There were also many intermediates involved in rice production and consumption.
In addition, losses during harvesting and in post-harvest processing were still a big issue, marked by a shortage of drying machines and low rate of mechanisation, Du said.
Delegates at the conference said that to solve problems and raise incomes for farmers, the Cuu Long (Mekong) Delta should implement several measures including enhancing investment in preservation and processing technology, as well as reorganising production, processing and consumption.
These would ensure that all those involved in the rice value chain would profit, they said.
Bien called for the formation of close linkages between rice producers and rice trading businesses and exporters to cut back costs involved in intermediates and increase profit for rice growers.
Businesses should invest more in building rice warehouses, mills, drying equipment and other facilities in accordance with regulations set by the Ministry of Agriculture and Rural Development to raise quality of Vietnamese export rice, he said.
Building rice brands was a very important task, especially for specialty and high-end rice, he said.
He also stressed the need for adopting a long-term marketing strategy for rice in accordance with each market's demand.
Delegates agreed at the meeting that rice production in the Cuu Long (Mekong) Delta should follow large-scale production models that would facilitate the building of rice brands.
The Cuu Long (Mekong) Delta has nearly 1.8 million ha under rice cultivation, accounting for 53 per cent of the country's paddy yield and 96 per cent of its rice exports.
Singaporean firm keen on Vietnamese real estate
Singapore’s Cityneon Holdings, Limited has opened a representative office in Ho Chi Minh City as part of its expansion strategy to capture a large share of Vietnam’s lucrative real estate market.
The office, located at the Saigon Trade Centre in HCM City District 1, will also serve as the company’s launch pad to penetrate Cambodia and Laos.
Cityneon Managing Director Ko Chee Wah said that the presence of its office in Vietnam reflects his company’s long-term commitment to establishing a firm foothold in the country’s fast-growing real estate development market.
“We are very excited about doing business in Vietnam as it is a promising market, thanks to its continued economic growth, and also the gateway to other markets in the region,” Ko said.
Cityneon has also won a contract worth US$5 million to participate in the MGM Ho Tram project in the southern province of Vung Tau. By getting involved with Singaporean and Japanese firms working on big projects, as well as the US$1.2 billion project with Becamex IDC in Binh Duong city, Cityneon expects to continue its success in Vietnam.
Sri Lanka sounds out cooperation opportunities in Vietnam
Sri Lanka’s minister in charge of international monetary cooperation, Sarath Amunugama, has expressed his admiration for Vietnam’s development achievements and said his country could learn from Vietnam’s experiences.
The statement was made by Amunugama during a workshop held in the capital city of Colombo on March 30 to explore the potential for economic cooperation between Vietnam and Sri Lanka.
The Sri Lankan minister emphasized many similarities between the two countries and favourable conditions that need exploiting to boost mutual assistance in bilateral economic cooperation and in overcoming challenges presented by the world economic situation.
Addressing the workshop, Vietnamese Ambassador to Sri Lanka Ton Sinh Thanh highlighted advantages in bilateral economic cooperation since the Vietnamese embassy was opened in Colombo one year ago, especially after the state-level visit to Sri Lanka by President Truong Tan Sang in October 2011.
Thanh also pointed out obstacles and challenges that officials, experts, researchers and business should cooperate to address.
He proposed delegates to the workshop discuss effective measures, the implementation of signed agreements, and preparations for a joint committee meeting between the two countries scheduled to take place in Hanoi this year.
Participants heard 10 keynote speeches by economists, especially in trade, investment, and tourism.
They raised their ideas about joint-business forums, fact-finding tours, and connections via aviation, sea and banking, as well as preferential tariffs, aimed at raising bilateral trade revenues to US$1 billion in the coming years.
The workshop was held in the context of Sri Lanka organizing a large consumer expo, which has captured great attention from the local media.
Vietnam, EU complete preparations for trade negotiations
Vietnam and the EU have completed a memorandum of understanding (MoU) on the contents of future trade negotiations on the sidelines of the 11th ASEAN-EU Economic Meeting in Phnom Penh, Cambodia.
European Union Trade Commissioner Karel De Gucht and Minister of Industry and Trade Vu Huy Hoang finalised preparations for official negotiations on bilateral free trade agreements on March 31.
The completion of the preparatory work is an important milestone in promoting trade negotiations between Vietnam and the EU as this document will serve as the main framework of the negotiation process.
Trade Commissioner De Gucht said that the decision reflects a clear desire to develop trade relations and improve the business environment for both sides, offering new opportunities for importers, exporters and consumers, and contributing to the development of both economies. The EU is committed to increasing its involvement in the dynamic Asian markets to boost trade and stimulate growth.
Both sides have agreed on several areas of focus in the future negotiations such as the elimination of import tariffs, non-tariff barriers and issues related to intellectual property and fair competition.
The MoU aims to ensure that both parties will engage in the negotiation process with common goals. Vietnam will be the EU's third partner in the Southeast Asia region after Singapore and Malaysia, with which it has already started negotiations for a free trade agreement.
Bilateral trade between the EU and Vietnam reached more than EUR18 billion in 2011. The EU is also one of the biggest investors in Vietnam with total investment capital of nearly US$1.8 billion.
HSBC Vietnam wins Asset Triple Awards
The Hong Kong and Shanghai Banking Corp (HSBC) Vietnam has been named Best Sub-custodian and Best Domestic Custodian in Vietnam by Asset Magazine in its Triple A Country Awards for 2012.
The awards are presented for banks which have the capacity to provide the best custody services and smooth handling of exceptional items as well as to constantly improve and expand products and services for customers.
HSBC Vietnam is the first 100 percent foreign-invested bank licensed to perform custody services in Vietnam and also a leading provider of custody services for foreign institutional firms and domestic fund managers.
Director General of HSBC Vietnam Sumit Dutta said the two prizes are an acknowledgement of the bank’s efforts. They also show the high appreciation of customers for HSBC’s assistance in accessing Vietnam’s market.
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