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BUSINESS IN BRIEF 24/7   2010-07-24 - VNN

Property market fails to return to 2006-07 boom

The real estate market in HCM City this year has yet to match the level recorded in 2006 and 2007, as financing is less plentiful and supply and demand remain unstable.

The financial market’s role in the market is becoming increasingly important. With credit policies now limiting lending to the property sector, developers and investors have found it more difficult to obtain bank loans to invest in property sectors.

In addition, there is an oversupply of apartment buildings in HCM City, with the situation expected to last until 2015.

With lower prices, property markets in neigh-bouring provinces like Binh Duong and Dong Nai are competing with HCM City to attract investors.

Rents unattractive

In addition, investors are no longer viewing rental apartments as a good value as rental charges now account for only 0.3-0.5 per cent of apartment value, which is lower than current deposit interest rates.

With low demand and abundant supply, apartment prices in HCM City are expected to fall this year. Housing, however, has increased in prices quoted in Vietnamese dong, according to property companies in HCM City.

The price of houses, quoted in Vietnamese dong, has increased by 12-15 per cent compared to late last year, according to Pham Van Hai, general director of ACB Real Estate Company under the Asia Commercial Joint Stock Bank.

House prices quoted in gold fell by 20-30 per cent over last year, but the prices rose considerably when converted into dong.

Only 20 per cent of the market is selling houses priced in gold.

Villas to be offered in Vinh Phuc Province

Sixteen villas in the Flamingo Dai Lai Resort in the northern province of Vinh Phuc will be sold between July 21 and September 25, according to the developer, Flamingo Dai Lai Resort Joint Stock Co.

Villas of 500-540sq.m and 600sq.m will be offered at prices starting from US$1,200/sq.m, depending on location and furnishings package. Flamingo Dai Lai Resort was built at a total cost of about VND3 trillion ($157 million) on a 123ha site about 50km from Ha Noi.

Asia’s 2nd tallest tower for capital

The PetroVietnam Construction JSC (PVN), a subsidiary of the Viet Nam Oil and Gas Group, said it planned to build Asia’s second tallest building in Ha Noi.

The PVN Tower would have a height of 528 metres and 102 stories and a total investment capital of US$1.2 billion.

The tower is designed to house a complex of trade centres, offices, and apartments.

It will occupy a 25ha site in Ha Noi’s Tu Liem District.

Trinh Xuan Thanh, chairman of PVN’s management board, said the company planned to commission one of the world’s most famous architects to design the tower.

They include Argentina’s Cesar Pelli, who designed the Petronas Twin Tower (452 metres high); Adrian Smith from the US, who designed the world’s tallest building the Dubai Tower (828 metres high); and Australian Karl Fender, who built the 88-storey Eureka Tower, he said.

Construction is expected to start in early 2011. Building work is scheduled to last three years.

PVN held a two-day seminar on the proposed project in Ha Noi on Tuesday.

Karl Fender, president of the Australian National Institute of Architects, said on the sidelines of the seminar that skyscrapers should not be seen as status symbols but as necessary and functional.

Mohsin Ahmad, general director and chairman of US consultants Axis Design Group International, said he doubted there would be sufficient capital to finance the project – even if it were to get the go-ahead – because demand would be limited.

Over the past five years, a number of high-rise buildings have sprung up in the capital, including the 34-storey Vinaconex building, which stands 135m; the 65-storey Ha Noi City complex; the 50-storey Cau Giay Trade Centre; and the 70-storey Keangnam Ha Noi Landmark Tower.

The planned PVN Tower, which will have 102 storeys, will be the tallest building in Viet Nam.

Germany, Japan finance power deal

A US$470 million financing facility backed by Germany’s Export Credit Agency and Japan’s Nippon Export and Investment Insurance has been arranged for the 750MW PetroVietnam Nhon Trach 2 Combined Cycle Power Plant project in Dong Nai Province, Citi Viet Nam announced yesterday.

The package represents the largest deal in Viet Nam yet backed by the Export Credit Agency and will finance delivery and construction of a state-of-the-art gas-fired combined-cycle power plant.

The German agency will support $295 million of the 12-year financing facility while the Japanese agency will back the remaining $175 million. The entire facility will be guaranteed by Viet Nam’s Ministry of Finance, with international banks Citi, HSBC and Credit Agricole as arrangers of the German-backed loans and Citi, the Development Bank of Japan and the Sumitomo Trust & Banking Co Ltd arranging the Japanese-backed portion, according to details of the deal released by Citigroup.

"The Nhon Trach 2 Power Plant is a pivotal infrastructure project helping to meet Viet Nam’s electricity needs as the country continues its fast-paced growth," said Citi country officer for Viet Nam Brett Krause.

PetroVietnam Nhon Trach 2 Power Joint Stock Co is a 62.8 per cent-owned subsidiary of the State-owned oil and gas giant, the PetroVietnam Group. The remaining shareholders include Electricity of Viet Nam (EVN), Viet Nam Post and Telecommunication (VNPT), Vinacomin, Company for Technology Development (CFTD) and the Bank for Investment and Development of Viet Nam (BIDV), as well as Japan’s J-Power.

PetroVietnam Nhon Trach 2 Power Joint Stock Co CEO Hoang Xuan Quoc called the plant a project of national importance and said it was part of Viet Nam’s current National Electricity Master Plan.

"By March 2011, electricity generated from this plant will contribute towards the meeting the increasing power demands throughout the country and consolidating the position of PetroVietnam as the second leading power generation entity in Viet Nam," Quoc said.

Natural gas for the plant will be supplied by PetroVietnam Gas Corp (PV Gas) via pipeline, and the EVN will buy the output of the plant through the national grid.

BIDV ranked with higher credit ratings

Standard & Poor’s yesterday assigned ‘BB’ long-term and ‘B’ short-term credit ratings to the Bank for Investment and Development of Viet Nam (BIDV).

The ‘BB’ long-term rating on BIDV reflects a two-notch uplift over the bank’s stand-alone credit rating. The outlook on the long-term rating was also an uplift but still negative by international standards, according to S&P, which assigned the bank a fundamental strength rating of ‘D’.

BIDV enjoyed potentially extraordinary support from the Government of Viet Nam if the bank faced financial distress, given BIDV’s systemic importance and majority State ownership, S&P noted in its report. The bank’s capital base was enhanced by an injection of State capital in 2010.

The rating uplift did not fully reflect such support, S&P said, since the ratings agency did not rate any bank in Viet Nam above the foreign currency sovereign rating.

"We actually would have deserved a three-notch uplift if the sovereign ratings were higher," said a senior BIDV official who asked to remain anonymous. "Of course, BIDV’s rating is still negative by international standards but a negative outlook is common for Vietnamese banks."

"These ratings are rather positive because all indicators reach the sovereign proof ratings," BIDV wrote in an emailed response to Viet Nam News. "The ‘D’ rating for the stand-alone is the highest level so far for Vietnamese credit institutions. S&P has recognised our improvements."

S&P believed the stand-alone rating reflected the State-owned bank’s weak capitalisation, mediocre funding profile, and weak asset quality by international standards, which were partly offset by the bank’s strong business position and franchise in the domestic market.

Early last month, Moody’s rated BIDV’s financial strength at E+ with a stable outlook. The ratings for BIDV’s domestic and foreign currency deposits were Ba2/B1, while its issuer rating stood at Ba2.

The ratings were considered positive since the global economy had yet to fully recover and Vietnamese banks were facing a range of challenges.

BIDV has asked Moody’s to conduct credit ratings for five years, reflecting the bank’s commitments to transparency and application of international standards to business operations.

Tuna exports surge despite barrier to EU

The nation’s exports of tuna so far this year increased sharply over the same period last year, according to the Viet Nam Association of Seafood Exporters and Producers (VASEP).

Export value saw three-digit increases to popular markets such as the Republic of Korea with growth of 412 per cent, followed by Taiwan at 328.8 per cent and Canada, 198.3 per cent.

According to the Viet Nam General Department of Customs, by June 15, the country exported 37,500 tonnes of tuna worth US$147 million, a year-on-year increase of 71.2 per cent in volume and 98 per cent in value.

At present, the US is the largest and most stable market for Viet Nam’s tuna. The US imported 15,000 tonnes of tuna from Viet Nam worth over $75 million, a year-on-year increase of 103.8 per cent in volume and 179.8 per cent in value.

During the review period, the nation also exported 2,600 tonnes of tuna to Japan for nearly $16 million, an increase of 50.7 per cent in volume and 119.9 per cent in value.

However, it is difficult for Vietnamese tuna in Japan to compete with similar products from other regional countries like Thailand and the Philippines due to a higher tax rate.

In addition, export of Vietnamese tuna to the EU decreased due to the effects of the EU’s IUU (illegal, unreported and unregulated fishing) regulation. Up to June 15, Viet Nam’s export of tuna to the EU hit 7,000 tonnes worth over $24.6 million, a year-on-year decrease of 14 per cent in volume and 6.6 per cent in value.

Work begins on sponge iron factory

Work will officially begin today on Kobelco Viet Nam Co Ltd’s sponge iron factory in the central province of Nghe An.

The US$1 billion factory will occupy an area of 40ha and be able to produce 2 million tonnes of products per year.

The mill is expected to be fully operational in the first part of 2013.

The company is a subsidiary of the Japanese Kobe Steel Group.

Quang Ngai attracts FDI capital

Central Quang Ngai Province has so far this year attracted three foreign investment projects worth US$400 million.

The province now has 20 foreign-invested projects with a combined capital of $3.8 billion.

The provincial People’s Committee has also granted licences to 14 domestic businesses in Dung Quat Industrial Park with a combined investment of VND3 trillion ($157 million).

It is anticipated that the firms will employ 17,000 local labourers.

Orient Bank makes $9m profit

The Orient Commercial Joint Stock Bank (OCB) said it had made a pre-tax profit of VND174 billion (US$9.15 million) in the first six months of the year - 43.5 per cent of its plan for 2010.

Deposits in the first half of the year totalled VND10.7 trillion ($567.9 million), up 18 per cent against the same period in 2009. The bank lent VND9.8 trillion ($516.6 million) in the first six months of the year, up 17 per cent against the same period in 2009.

The OCB has asked the State Bank of Viet Nam for permission to raise its charter capital to VND3.1 trillion ($163.15 million) from VND2 trillion ($105.26 million).

CMC chosen as Lenovo distributor

Lenovo yesterday, July 23, chose CMC Distribution as its new local distributor.

The partnership aims to expand Lenovo’s distribution network as well as its market share in Viet Nam.

CMC Distribution is one of three largest distributors in the computer industry. It works with HP, Acer, Sony, Sony Ericsson Toshiba, Emerson Network Power and 3Com.  

FPT reports significant first half

National telecom giant FPT Corporation posted revenues of VND9.978 trillion (US$522 million) in the first six months of this year, a 21.3 per cent increase compared to the same period last year.

Pre-tax profit for the period was VND1.087 trillion ($57.2 million), a 38.1 per cent year-on-year increase, Truong Dinh Anh, FPT deputy general director, said at a press conference yesterday.

Computers and cell phone distribution earned the corporation its highest turnovers and profits, while software services and exports posted a 36 per cent year-on-year increase in the first half of 2010, Anh said.

VN, China to build tourism complex

The Huu Nghi-Youyi Guan (Friendship-Friendship Gate) tourism complex will be built on the border of Viet Nam and China to bolster the two countries’ friendship and co-operative relations.

The authorities from border Lang Son Province and a working delegation from Guangxi, China, gathered in Lang Son on Wednesday to discuss the project.

The two sides agreed to set up a joint mission for the complex, which will connect Viet Nam’s Tan Thanh border gate to China’s Po Chai gate. Both sides are also committed to organise tours for visitors to explore the two countries’ border provinces.

25-storey complex for Thanh Xuan District

A 25-storey commercial and residential complex will begin construction early next year on a 2,700sq.m site in Ha Noi’s Thanh Xuan District.

To be built at a cost of VND370 billion (US$19 million) by the Vinaconex-PVC Construction Investment Joint Stock Co and Viet Nam Pharmaceutical Corporation, the complex is slated for completion in 30 months.

Developer tapped for low-cost projects

Ha Noi Housing Investment and Development Co No 5 has been selected to develop low-income housing in the Sai Dong new urban area in Ha Noi’s Long Bien District, the municipal People’s Committee announced.

The VND310 billion (US$16 million) project, on a site of 8,000sq.m, will include 420 apartments to be completed in the fourth quarter of 2012.

Ha Noi bourse signs MoU with Taiwanese

The Ha Noi Stock Exchange signed a memorandum of understanding with the Taiwan Stock Exchange on Monday to enhance bilateral co-operation in market information exchanges, technology transfer and training.

Participants in both markets would be able to use this new channel of communication to explore investment opportunities, the Taiwan Stock Exchange (TWSE) said in a statement. The exchange signed a similar MoU with the HCM City Stock Exchange in 2008.

"Such co-operation will further boost the internationalisation of both Taiwan’s and Viet Nam’s capital markets," said TWSE chairman Schive Chi.

In 2009, Taiwan-invested motorbike firm Vietnam Manufacturing and Export Processing (Holdings) Ltd issued Taiwan depository receipts, currently traded in Taiwan. 

BIDV Insurance to make IPO

BIDV Insurance Co will make an initial public offering of 11.5 million shares on the Ha Noi Stock Exchange on August 5 at an opening price of VND10,200 (US$0.54) per share. The shares will then begin regularly trading on the exchange in the first quarter of next year.

BIDV Insurance earned VND346 billion ($18.2 million) in the first six months of this year, an increase of 69 per cent over the same period last year, while its profits during the period rose by 81 per cent to VND36.3 billion ($1.9 million).

It is the sixth largest non-life insurer in Viet Nam, with total assets of nearly VND3.3 trillion ($172.1 million) as of June 30, 175 per cent higher than at the same time last year.

HCM City Securities posts $13.1m

 HCM City Securities Co (HSC) earned VND248 billion (US$13.1 million) in the first half of this year, an increase of nearly 70 per cent over the same period last year. Profits reached VND153 billion ($8.1 million) during the period, an increase of just 5.5 per cent.

HSC ranks third in the brokerage market on the HCM City Stock Exchange, with a 6.82-per-cent market share. This year, it has targeted earnings of VND556 billion ($29.3 million) and a net profit of over VND312 billion ($16.4 million).

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