Forex rates eat into car sales

Unfavourable foreign exchange rates in February have taken a toll on the sales of imported automobiles.

Total sales by members of the Viet Nam Automobile Manufacturers Association (VAMA) reached just 7,889 units in February, a decrease of 24 per cent from January sales, with passenger car and SUV sales declining by an even more substantial 35-37 per cent, according to VAMA representative Nguyen Anh Tuan.

January auto sales had totalled 10,424 units, an increase of 48 per cent over the prior January but still 17 per cent lower than sales in December 2010.

Imports of completely-built units (CBUs) fell from 6,100 units in January to just 4,500 in February, according to figures from the General Statistics Office.

Meanwhile, marques such as Toyota, Ford, GM Daewoo, Mercedes-Benz, BMW and Hyundai have all increased their retail prices substantially since the devaluation of the Vietnamese dong against the US dollar last month.

Toyota’s sticker prices have risen by VND34-101 million (US$1,619-$4,809), while Ford has hiked prices by VND37-64 million ($1,761-$3,047) and Honda by VND13-32 million ($619,000-$1,523) per vehicle. A buyer of a Honda Accord 3.5 AT, for instance, can now expect to pay VND50 million more.

Tran Kien, a car dealer on Le Van Luong Street in Ha Noi, said auto sales slowed substantially in February. Many automobile dealers were also ceasing imports of new cars with the aim of first selling existing inventories, he said.

The continued rise of the dollar, higher interest rates on consumer loans, and higher VAT and registration fees would add up to a sluggish car market this year, Kien predicted.

Luxury automakers are shifting their business models in order to drum up new sources of sales, with BMW and Mercedes-Benz looking to boost fleet sales to hotels and resorts.

BMW has delivered eight BMW 730Li luxury vehicles and Mercedes-Benz E250 vehicles to the five-star Sofitel Legend Metropole in Ha Noi and the five-star Sofitel Sai Gon Plaza in HCM City. Sofitel Sai Gon Plaza general director Philippe Godard said that making deluxe vehicles available to customers was part of the hotel’s comprehensive plan to upgrade.

BMW fleets have already been chosen by the Sheraton Sai Gon Hotel, Sheraton Nha Trang Hotel, Movenpick and Hilton Ha Noi Hotel, while Mercedes Benz fleets are in use by the InterContinental Sai Gon, Windsor Plaza Hotel, Park Hyatt Sai Gon and New Horizon Hotels.

Domestic coffee prices register dramatic increase

Central Highland coffee bean prices in the provinces of Dak Lak, Lam Dong, Gia Lai and Dak Nong jumped yesterday by VND3.3 million to VND49.1-49.2 million per tonne in the past two days, according to local farmers.

Luong Van Tu, chairman of Viet Nam Coffee and Cacao Association, said the sharp increase in coffee prices on the domestic market was due to high prices on the world market.

Meanwhile, the International Coffee Organisation (ICO) has predicted a low coffee output of 133.7 million bags due to a poor Indonesian crop, pushing up global prices, he said.

Export prices for Vietnamese coffee also rose at Sai Gon Port to a record high of US$2,430-2,450 per tonne.

Traders said many farmers had reduced the volume of coffee on sale in order to help squeeze prices even higher, meaning little product would be available for export.

However, coffee for export for this month was expected to increase by 22 per cent against last month due to 345,000 tonnes stockpiled at warehouses, traders said.

In the first two months of this year, Viet Nam exported 235,300 tonnes, earning $462.8 million. The exports had a year-on-year increase of 6 per cent in volume and 47 per cent in value.

The association expected the total coffee export value to reach $2 billion this year, up from $1.7 billion last year, due to high export prices.

Exchange launches annual report contest

HCM Stock Exchange in coordination with the Dau Tu Chung Khoan (Securities Investment) magazine and fund manager Dragon Capital announced yesterday this year’s annual report contest for listed companies on the country’s two exchanges in HCM City and Ha Noi.

The contest targets at encouraging the companies to improve professionalism and transparency in making their reports, to be better known to investors.

The organising board lays stress on information transparency in areas including cash flow, financial investment and reserves for risks, and corporate governance, according to Le Nhi Nang, HOSE’s Deputy General Director.

There should be comments on the financial status as well as analyses on business performance and risk management solutions.

The report’s design in ways to attract viewers and make it easy to understand will also be a focus.

This will be the fourth contest and Nang said listed companies had shown that they were increasingly aware of the importance of the annual report in introducing their companies to investors and partners.

Those who wish to participate in the contest should send their reports to either exchange no later than April 20.

Around 600 businesses are available on the boards of the exchanges.

Awards will be announced in early July, according to Nang, who is also head of the organising board.

Business community pleas for cuts in corporation taxes

The current enterprise income tax rate of 25 per cent was considered too high in the context of increasingly high input costs and relatively difficult capital mobilisation, said members of the business community yesterday.

The rate should be cut to 20 per cent to help enterprises put funds in reserve, reinvest cash and boost business and production.

The ideas were raised by lawyer Dao Ngoc Chuyen at a workshop to review emerging issues related to enterprise income tax and value-added tax two years after two relevant laws came into effect. The workshop was held at the Viet Nam Chamber of Commerce and Industry in Ha Noi yesterday.

Chuyen also said that all regulations on deductible and non-deductible expenses should be concentrated in a single legal document rather than dispersed in several, as is currently the case.

Nguyen Thi Lan Huong, a law professor at Ha Noi National University said the preferential tax treatments as stipulated in the latest decree on enterprise income tax went to projects and enterprises in the investment field rather than to the capital scales and revenues of enterprises.

“Very few enterprises are actually benefiting from preferential tax treatments because a majority of enterprises are small and medium sized enterprises (SME) that are subject to a relatively high tax level if they strictly follow the rules,” she said.

Huong said that since SME’s hadn’t received significant preferential tax treatments, their tax burdens have partly lead them to file false tax claims in order to evade responsibilities.

She recommended that lawmakers may consider allowing SME’s to enjoy VAT exemption when their revenues reached a particular threshold or enjoy enterprise income tax exemption during a particular period.

“If one of these two measures is taken, it will act as an incentive to motivate enterprises to ensure proper accounting and invoicing systems in line with regulations so they will be eligible for tax exemption,” she said.

Representatives from the Ministry of Finance said that they would take into consideration the comments and hoped to be able to reflect these concerns in the revision of relevant laws.

Vinacomin hikes coal prices

The Viet Nam National Coal, Mineral Industries Holding Corporation Limited (Vinacomin) has raised coal prices for products delivered to Electricity of Viet Nam (EVN) thermo-electric plants.

Effective from March 1, the prices of two regular types of coal were hiked by 5 per cent, with coal dust No4b rising to VND648,400 (US$31) per tonne and reaching VND520,000 ($25) per tonne of coal dust No 5.

Prices for two new products, coal dust No6a and No6b, were set at VND450,000 ($21.7) and VND 395,000 ($19) per tonne, respectively, not including Value Added Tax.

Deputy General Director of Vinacomin Nguyen Van Hai said the hike was calculated based on an agreement between Vinacomin and EVN under the guidelines of Circular 05/2011 TT-BCT on electricity prices issued by the Ministry of Industry and Trade last month.

The price increase followed the market mechanism which allows Vinacomin to cut losses, Hai said. However, it would only offset around 63 per cent to 68 per cent of the current product costs.

He also revealed that Vinacomin was planning to hike coal prices to other industries including cement, fertiliser and paper with a minimum increase of 9 per cent of export product prices.

This year, the group aims to sell 44 million tonnes of coal products including 27.5 million tonnes to the domestic market.

Vinacomin aims to continue to boost capacity by investing in its existing coal mines.

In another move, the group has recently submitted a report to the Prime Minister on its decision to discontinue contributing capital to enterprises operating in the finance, banking, securities, insurance and real estate sectors.

Hai said that his corporation now aims at specialising in coal, electricity, minerals, coal mining equipment and chemicals industries only.

Specifically, Vinacomin will not follow through on its contributions to any businesses that it has made a promise for committed or registered capital.

The corporation plans to withdraw funds from companies to which it has already contributed capital at an appropriate time to ensure the businesses have secured alternative capital.

Currently, Vinacomin has 66 subsidiaries including 22 limited liabilities companies, 35 joint stock companies, 4 foreign companies and 5 administrative units. Up to now, it has invested in several projects in finance, banking, securities, insurance and real estate.

From 2011 onwards, the group will continue to equitise some limited liability companies that fall outside the coal mining sector and reduce its number of controlling shares in several subsidiaries operating in sectors such as trade, tourism and information technology in order to recover capital to, in turn, invest in coal mining and processing projects.

Poor households fearful of power jumps

Needy households are nervous about finding ways to deal with this month’s power price hikes.

According to Electricity of Vietnam (EVN), to become eligible to a government subsidy amounting to VND30,000 per month, needy households must procure registration forms from local power departments within 30 days from March 1, 2011.

Meanwhile, most local power departments are yet to list needy households in their areas.

In fact, many households said they did not know whether they must go directly to local power departments to take registration forms or the local governments will take it on their behalf then later provide them.

A representative from Hanoi’s Tu Liem District Power Department said a number of residents called asking about the procedures for registering. The power department has no concrete guidance about it.

In this respect, head of the Ministry of Labour, Invalids and Social Affairs’ (MoLISA) Planning and Financial Department Chu Quang Cuong said needy households may not have to fill in registration forms to become eligible for the subsidy.

Cuong said that EVN would transfer the subsidised money to the Ministry of Finance (MoF), which would then direct the money to the labour, invalids and social affairs sector, from there the money would go to localities.

“The [subsidised) money, together with some other sorts of aid, will reach the hands of needy people on a quarterly basis as the poor currently benefit from a number of state supports,” said Cuong.

To ensure subsidised money reach who in need shortly, MoLISA Minister Nguyen Thi Kim Ngan said in case EVN late in transferring subsidised money the MoLISA would join hands with the MoF to advance the sum to needy people.

The draft circular guiding electricity price subsidy towards needy households is reportedly in the making. Thereby, needy households could start receiving their power price subsidy not sooner than the second quarter of 2011.

The prime minister enacted needy household standards for 2011-2015 on September 21, 2010. Accordingly, needy households in rural areas are those which have an average monthly income of less than VND400,000 ($19.3) per person while in urban areas the benchmark is less than VND500,000 ($24.1) per person per month.

First transformer produced

The first made-in-Vietnam 500 kV transformer is ready to be put into operation, Tran Van Quang, general director of the Dong Anh Electrical Equipment Manufacturing Joint Stock Company (EEMC) said on March 9.

Quang said that his company and the Institute of Energy under the Ministry of Industry and Trade had finished the final tests on the machinery.

Vietnam was the only South East Asian nation to succeed in producing this kind of transformer, he said.

The first locally-made VND118 billion ($5.4 million) transformer will be installed and operate at the 500kV Station in Nho Quan district in the northern province of Ninh Binh , Quang said.

To produce the machine, EEMC had sent skilled workers and management and technical staff to work at local and foreign transformer stations to learn and exchange production experiences.

Few countries are capable of manufacturing 500kV transformers, including Germany , France , Switzerland , Japan , the Republic of Korea (RoK) and China ; and their import prices were very high, the director added.

The EEMC was 25-30 per cent cheaper to produce than the imported products of similar quality, meaning the 500kV transformer production will help save State spending, contribute to reducing the trade deficit and improve the efficiency of the country’s electricity sector, he stressed.

Investment promoted in Vietnam and Laos’ trade zones

More than 80 Vietnamese and Lao investors and businesses have attended a conference to promote investment in the Lao Bao special economic-commerical zone of Vietnam and the Densavan border trade zone of Laos.

At the conference in central Quang Tri province on March 10, participants were briefed on preferential investment policies relating to training demand, employment, traffic infrastructure, and tax reduction and exemption for the Lao Bao zone of Quang Tri province and the Densavan zone of Savanakhet province.

After 10 years of operation, the Lao Bao zone has attracted 41 projects with a combined registered capital of more than VND3.1 trillion and 350 businesses operating in industry, trade, service and tourism.

Since 2003, the Densavan zone has had 30 domestic and foreign projects totalling more than 106 trillion Lao kips.

Deputy Governor of Savannakhet province Suphan Keomisay said the conference was a good opportunity for the two countries’ investors to explore investment in the two zones.

With special preferential policies, the two zones are offering new investment opportunities for the two countries’ businesses in exploiting potentials and strengths of the important trans-Asia axis.

WB says ready to fund city’s bus network

The World Bank (WB) said on Wednesday it was willing to supply US$300 million for HCMC to develop the bus rapid transit system within the next few years under the framework of a green transport development project.

The project aims to meet urgent transport demands in the city by setting up a bus rapid transit (BRT) network, upgrade existing buses, improve the efficiency of roads and metro lines and enhance the city’s transport management capacity, said the bank’s senior urban transport specialist Ke Fang.

“Bus will remain a key transport means within the next five or 10 years although the city is investing heavily into metro projects,” Fang said at the meeting with HCMC vice chairman Nguyen Thanh Tai at the City Hall on Wednesday.

He explained that even after metro lines are put to use in the future, the commuter bus network would still play an important role in transport connection.

Besides financial support, the global lender will share knowledge and experience in planning, investment and operation of public transport means, said Fang, who in the previous days had had working sessions with related agencies in the city.

Paul Vallely, the bank’s transport sector coordinator, said at the meeting that half of the estimated fund of US$300 million for the city should be spent on developing BRT routes, while US$80 million is planned for upgrading the bus fleet and the remaining US$70 million for improving infrastructure and capacity building.

Vice chairman Tai at the meeting asked the Department of Transport to quickly establish a steering group to coordinate with the World Bank in developing this project, with a specific target to put the project into place before end-2013.

Vietnam needs six more textile, dyeing IPs

Vietnam needs to construct six more textile and dyeing industrial parks to meet the apparel export target of US$18 billion in 2015, said Pham Gia Hung from Vietnam Textile & Apparel Association (Vitas).

The IPs are planned for Nam Dinh, Thai Nguyen, Nghe An, Danang, Dong Nai and Tra Vinh.

“The six IPs will help Vietnam increase localization rate to 60% within the next five years,” Hung said.

The local garment and textile sector still depends on overseas materials and the current localization rate is 50%.

Addressing the seminar on “Solutions to expand export market for textile and garment sectors” on Wednesday, Hung said the U.S., the European Union and Japan would remain main import markets for Vietnam to 2015.

Apparel export values to the three markets were US$6.2 billion, US$1.8 billion and US$1.2 billion last year respectively. The U.S. is the largest apparel importer in the world.

However, the markets would make stricter requirements for Vietnamese products in the coming time such as environmental measures and corporate social responsibility.

Herb Cochran, director of American Chamber of Commerce in Vietnam in HCMC, said, if Vietnam wants to secure 55% export revenue within the next five years, local enterprises should obtain quality certificates, build or combine with supporting industry enterprises right now.

VinaCapital raises funds for local equities, property

VinaCapital Group is working on a plan to raise capital from overseas for its two new funds in a move to further its investment in local companies and the property market in Vietnam in the years to come, said the firm’s top executive.

Don Lam, VinaCapital’s chief executive officer, told a news briefing held at the Caravelle Hotel in downtown HCMC on Wednesday that the fund manager over the past few months met many international investors to promote Vietnam and introduce to them investment opportunities here.

Lam revealed the group’s plan, saying that VinaCapital set a goal of raising between US$300 million and US$500 million to invest in Vietnamese equities and the real estate sector.

The fund manager active in asset management, investment banking and real estate, is seen as the largest investor in Vietnam’s real estate market, focusing on mid-range residential market and building new townships in the country.

Last year, the group launched two new brands including VinaLiving and VinaProjects for property development and management. Some projects such as Ocean Villas, Dune Residences, WTC Danang, Dai Phuoc Lotus Township, The Garland and My Gia Nha Trang Township are under construction.

Talking about the property segment the two new funds will invest in, Lam said the group would not invest in office building projects in the coming time as the office market has witnessed abundant supply and rents are falling down.

Meanwhile, hospitality is a segment the group will continue to invest in as it sees potential growth thanks to the increasing number of international arrivals. Currently, VinaCapital has invested in seven hotels and resorts across the country, the group’s CEO said.

Lam said VinaCapital would further its investment in retail projects given a strong demand in the sector. Besides a project to join the retail market this year, the fund manager was mulling three more retail projects in main cities in the country in the coming time.

In terms of residential development, he said the group would not risk its investment capital into apartment projects as the segment has seen abundant supply, but rather it would continue to invest in villa and row house projects around the country as the market demand remains strong in the segment.

Talking about the country’s current investment situation, Lam said those investors who do not look at the country short term recognized Vietnam as a potential destination for their long-term investments. It, however, will wait to see how the country responds to current economic challenges.

Also on Wednesday, Lam was given the Third class Labor Medal by the state president in recognition of the fund manager’s contribution to the country development in different fields of economy.

Established in 2003, VinaCapital Group has grown from a single US$10 million fund to a diversified investment firm with over US$1.7 billion in assets under management as of March 2011.

SCG opens first building materials showroom in Hanoi

Thai giant SCG Thursday opened its first building materials showroom in Hanoi, announcing to bring more innovative solutions for customers and business partners looking for premium quality building materials.

SCG Building Materials Showroom in Hanoi, located on 196 Truong Chinh Street, covers a spacious 3-storey building totaling 660 square meters.

It will provide SCG product information, technical data and consultant service to architects, designers, developers and house owners under two master brands “SCG” and “COTTO”.

They include SCG SmartBOARD and SCG SmartWOOD, SCG Ceramic Roof Tile “EXCELLA” collection, SCG Concrete Roof Tiles “CPAC Monier” and “Prestige” collection, SCG Thermal Insulation, SCG Acoustic Insulation and COTTO tiles, sanitary wares and fittings.

Besides, all new innovative product and building material solution will also be displayed in the showroom. It operates six days a week, Monday to Saturday, 8.00 am to 5.00 pm in order to fulfill the demand of all customers.

“In the near future, SCG plan to open second showroom in Ho Chi Minh City as well. And by the next 5 years, we plan to have a strong distribution network of building materials of more than 50 authorized dealers in 34 strategic areas, covering more than 90 percent of Vietnam population,” Sattawat said.

Currently, SCG has ten operations in Vietnam with more than $270 million of the total assets, $400 million of sales and trading volumes, and employs more than 800 local employees.

SCG aims to achieve US$12.8 million sales in building materials business for Vietnam in 2011.

PetroVietnam to set up Singapore-based arm

PetroVietnam Oil Corp (PV Oil), a subsidiary of the giant state-owned PetroVietnam group, will set up a petroleum trading arm in Singapore, according to a senior official.

The new company with an initial chartered capital of $5 million will have major business lines of trading crude oil in the international market, trading and importing petroleum products for Vietnamese market, said Le Nhu Linh, chair of member board of PV Oil.

At present, the Foreign Investment Department is making foreign investment license for PV Oil. The corporation has also planned to build a bio-petroleum production plant in Cambodia.

Two years ago, PV Oil started trading and distributing oil and gas products in Laotian markets via purchasing a Laos-based petroleum trading firm under Shell Group.