Vietnam Industrial Parks InfoGate ! Industrial Zones ! Export Processing Zones ! Business in brief 4 Feb 2012

The State Bank of Vietnam granted permission on Thursday to five credit institutions to maintain compulsory reserves for Vietnamese dong deposits at below regulated levels for a five-month period beginning Feb. 1. The Mekong Development Commercial Bank, Mekong Delta Housing Bank, Agribank, LienViet Post Bank and the Central People’s Credit Fund will be allowed to maintain compulsory reserves 20% below the levels required pursuant to Circular No 20/2010 TT-NHNN issued by the State Bank in September 2010. The central bank said that it had eased the requirements for these institutions because they fulfilled a significant public policy role, lending heavily to agricultural producers and for rural development projects. Under Circular No 20, each credit institution would be required to ensure that at least 40% of its loans be made for agriculture and rural development in order to enjoy the lower compulsory reserves requirement.

The Ministry of Construction has required foreign-invested enterprises to report on their projects in order to build a plan for managing foreign direct investment in the property sector by May. The resulting plan would attempt to increase the quality of foreign investment, improve the efficiency of State management and also develop foreign investment in the property trading sector towards to 2020.

Vietnam is currently an attractive destination for Israeli diamond processing businesses, according to the Asia Pacific Market Department under the Ministry of Industry and Trade (MoIT). Some Israeli businesses in this field are now transferring operations from China to Vietnam, and have opened a factory in Ho Chi Minh City. Besides, Vietnam and Israel have much potential for cooperating effectively in the fields of food preservation, agriculture, telecommunications, electronics, solid waste and waste water treatment. In fact, Israeli businesses are increasingly visiting Vietnam to seek partners. For example, Netafim Company is developing irrigation technology in many southern provinces, and planting sugar cane in Thanh Hoa and cotton in the Central Highlands. Meanwhile Afimilk Company is cooperating with Vietnam’s TH Milk in rearing dairy cows in Nghe An.

The southern office of the national flag carrier Vietnam Airlines on February 3 announced airfare discounts on international flights in the beginning of this year. The special offer will be applied to flights from Ho Chi Minh City to cities in Europe, Japan and the Republic of Korea. Flying to Europe, passengers now pay US$699, 46 percent less than the normal airfare. A single airfare on the HCM City-Moscow route is discounted by 39 percent to just US$700. For Asian destinations, Vietnam Airlines offers a price of US$480, or 36 percent off, on the HCM City-Tokyo (Japan) route; US$530, or 30 percent off, on the HCM City-Osaka/Fukuoka/Nagoya (Japan) route; and US$449, or 18 percent off, on the HCM City-Pusan/Seoul (Republic of Korea) route. Promotions will last until March 31.

Phu My Fertilizer (DPM) reported a huge profit last year of over VND3.1 trillion (US$147.6 million), up 91.1 per cent compared to 2010. In the fourth quarter of last year alone, revenue reached VND2.1 trillion ($100 million) and net profit fetched VND932.7 billion ($44.4 million), doubling the figure from the same period in 2010. The amount of cash and equivalents at end of last year hit around VND3.6 trillion ($171.4 million), rising by nearly VND800 billion ($38.1 million) compared to the earlier parts of the year.

Software company FPT has announced its intention to invest in FPT Retail Co as a founder. The software giant will contribute VND85 billion (US$4 million) to FPT Retail, holding a 85% stake. FPT general director Truong Dinh Anh will act as the representative for the contributed capital within the retail company.

Saigon Beverage Co (TRI) may have to delist its shares from the HCM Stock Exchange as its accumulated losses last year exceeded its equity. The company reported a loss of VND86.7 billion (US$4.1 million) due to a huge increase in sales expenses, causing its total accumulated losses to reach VND306.3 billion ($14.6 million). Meanwhile, TRI ended last year with VND20.5 billion (nearly $1 million) in negative equity.

The Vietnam Association of Financial Investors has told troubled businesses to sell major stakes to foreign investors, and even recommended delisting from the stock market, saying that this year would continue to be tough. Management boards should publicize detailed information about their projects for shareholders, who should take caution when approving or rejecting projects. In addition, shareholders should require their boards to issue short- and long-term targets in dividend payment and to set up business development funds from net profit.

The Ministry of Natural Resources and Environment’s General Department of Land Management reported that while overseas Vietnamese bought apartments in the country, foreigners rarely did so. According to statistics, around 300 overseas Vietnamese and foreign individuals and organizations bought apartments in Vietnam before the Lunar New Year in 2012. Vietnam has policies on selling apartments to overseas Vietnamese and foreigners that were put in place in 2008 by Resolution 19/2008/QH12 and Decree 51/2009/ND-CP. The policies were expected to create breakthroughs in the domestic real estate market but they did not create as much interest as expected. Experts said regulations on property trading for overseas Vietnamese and foreigners were now too strict; for example, they could own their own apartments but not their own houses.

Ha Nam Province will create favorable conditions for foreign-invested enterprises operating in the province, Mai Tien Dung, Chairman of the provincial People’s Committee has said. Accordingly, they will continue to implement 10 commitments to foreign investors, expanding and improving the infrastructure at industrial zones such as Dong Van 3, Chau Son and Hoa Mac. Dung revealed that there were 15 foreign-invested projects operating in the province last year with a total capital of US$245 billion.

Korea Development Bank (KDB) has been allowed to open a representative office in HCM City under License 24/GP-NHNN signed by Governor of the State Bank of Vietnam early this month. In addition to its regular business functions, this office would act as a market research and liaison office, promote the construction of KDB investment projects in Vietnam, and monitor agreements between Korean and Vietnamese interests.

The net turnover of the post and telecommunications sector is estimated to reach VND11.1trillion (US$523million) by the end of January for a 23 per cent year-on-year increase, according to the General Statistics Office. New subscribers are reported at around 832,200, up 15.4 per cent against the same period last year for an increase of 3.9 per cent. Internet broadband subscribers and internet users rose by 18.7 and 22.6 per cent respectively, reaching 4.3 and 33.4 million people.

Dung Quat Bio-Ethanol Plant located in the Dung Quat Industrial Zone in the central province of Quang Ngai on February 3 turned out the first batch of product after 33 months of construction and trial operation. With four workshops, the VND2-trillion plant has a design capacity of 100 million litres of ethanol annually. The plant is scheduled to run at full capacity after one month of operation. It is expected to meet domestic demands for bio-petrol, contributing to saving fuels and reducing environmental pollution while offering jobs to 240 workers and helping local farmers raise their income. The plant will be handed over to the investor – the Central Petroleum Bio-ethanol Joint Stock Company - on the 37th liberation anniversary of Quang Ngai province (March 24).