BUSINESS IN BRIEF 15/6/2010

US Ex-Im Bank tends to expand investment in VN; Capital shortages impede housing plans; Foreign firms seek distribution right for Vietnamese robots

The Export-Import Bank (Ex-Im Bank) of the US wants to broaden its investment to aviation, satellite, nuclear power, and infrastructure construction in Vietnam, said Chairman Fred Hochberg.

At his meeting with Governor of the State Bank of Vietnam (SBV) Nguyen Van Giau in Hanoi on June 14, the Ex-Im Bank Chairman affirmed that Vietnam is one of the bank’s nine key markets in the world.

SBV Governor Giau noted that the Ex-Im Bank’s increased operation in Vietnam will contribute to boosting trade between the two countries.

He asked the US bank to provide credits for Vietnam to help it develop the sectors with potential for development, such as renewable energy, biotechnology and road construction.

Both the bank leaders agreed that the Vietnam-US ties have developed robustly over recent years, especially in bilateral trade which reached 15 billion USD in 2009 despite adverse impact from the global financial crisis and economic recession.

Vietnam ’s exports to the US have risen sharply in recent years. In the first five months of the year, the country’s exports rose 11.5 percent over the same period last year

The same day, the US bank signed with the Vietnam Development Bank a credit deal worth 500 million USD for projects relating to communications, expressway, railway, renewable energy, waste treatment and medical equipment.

Operating in Vietnam since 1998, the US Ex-Im Bank has so far guaranteed loans and export credits and provided loans totaling 231 million USD in Vietnam.

Capital shortages impede housing plans

Capital shortage is hampering the implementation of social housing projects, such as those for workers in industrial zones and low-income earners in urban areas, according to the Ministry of Construction.

As of May 31, only 57 out of the 201 applicants for low-interest loans have been successful, the ministry said.

By the end of May, only 33 housing projects with a total investment of 2.5 trillion VND (132 million USD) for low-income earners that would have benefited some 55,000 residents, have got underway. Meanwhile, 97 other projects have been put on hold due to a lack of capital.

In terms of housing projects for workers, 24 have begun, worth a total investment of 2.6 trillion VND (138 million USD).

These will provide accommodation for 125,000 workers. However, a shortage of funds has halted 47 other schemes.

Deputy Minister of Construction Nguyen Tran Nam said the major reason for the shortage of funds was a lack of willingness by the private sector and local authorities to invest in these projects.

Nguyen Dinh Duong, director of the Hanoi Institute of Social and Economic Development Studies, said the largest obstacle enterprises were facing was access to capital loans.

Duong said that with the exception of large construction companies such as VINACONEX and HUD whose financial capacity was solid, most firms lacked the resources to run these projects in the absence of preferential loans.

In response to the situation, Pham Trung Tuyen, head of the office of the Central Steering Committee on Real Estate Market and Housing Policy, said the finance ministry and Vietnam Development Bank agreed to allocate 7 trillion VND (371 million USD) in preferential loans to 32 housing projects for low-income earners. The funds would also be made available to another 11 projects for workers in key areas such as Hanoi , HCM City , Da Nang and Dong Nai.

Nam said the ministry was also seeking to find other sources of funding such as foreign direct investment and official development assistance. Domestic credit organisations would also be approached, Nam said.

As of now, the total number of registered housing projects for workers is 264 with a total investment of 60 trillion VND (3.2 billion USD). A further 263 housing projects for low-income earners with an investment of 72.7 trillion VND (3.9 billion USD) have also been registered.

Foreign firms seek distribution right for Vietnamese robots

Seven foreign companies from Japan , the US , Poland and Germany has asked Vietnam ’s Tosy Robotics Joint Stock Company for the distribution right of its robots.

The request came when Tosy put on show 12 robots at the fourth International Trade Fair for Automation and Mechatronics (Automatica) in Germany from June 8-11, the Lao Dong daily cited Tosy’s General Director Ho Vinh Hoang as reporting.

In addition to the already familiar robot Topio Ping Pong, Tosy brought to the expo 10 industrial robots, including five parallel, three scara and two arm robots, and one human-shaped service robot that is capable of making cocktail, he said.

Hoang said Tosy’s industrial robots are much cheaper than those manufactured by foreign companies. For example, the price of Tosy’s parallel robot P404-01 is 5,500 USD, while a similar robot produced by Adept costs 45,000 USD and Fanuc, 33,000 USD.

According to the general director, Automatica drew the participation of 420 companies and groups from 42 countries and territories around the world.

Coffee producers explore Canadian market

A delegation from seven Vietnamese coffee companies paid a fact-finding visit to Canada from June 7-11.

During the trip, the delegation held working sessions with a number of local businesses and visited convenience stores and coffee shops in the country.

At a seminar in Ontario province, the entrepreneurs were introduced by the market study firm BPT to Canada ’s coffee market, distribution channels and ways of approaching, food safety regulations governing coffee and coffee-related products and consumer habits.

The Vietnam Coffee Corporation (VINACAFE) initialled an agreement with the Kien Phat Canada Company on exclusive distribution rights of Vinacafe products in this market.

Jointly organised by the Vietnam Coffee and Cocoa Association (VICOFA), the Trade Mission and the Embassy of Vietnam in Canada , the visit was part of this year’s national trade promotion programme.

Canada is now one of the world’s largest coffee importers. Vietnam ’s coffee exports to this market have seen steady growth in recent years, reaching 3 million USD in the first seven months of 2009.

In the first four months of this year, Vietnam shipped abroad 465,000 tonnes of coffee, earning 651 million USD, a reduction of 16 percent in volume and nearly 23 percent in value due to the export price falling to 1,390 USD per tonne, 100 USD lower compared to the same period last year.

Gold prices unexpectedly increase

Domestic gold prices suddently shot up on June 14 to nearly 28.10 million VND (1,478 USD) per tael thanks to an increase in the world gold price.

International investors are betting on another increase as demand for precious metals as investments is very safe and gold is still very strong.

At about 10 am on June 14, the gold price offered by Sai Gon Gold and Silver Company (SJC) on the Ho Chi Minh City bourse stood at 28 million VND per tael (purchase) and 28.06 million VND per tael (sale), up 50,000 VND per tael compared to last week (1 tael equals 1.2 troy ounces).

Gold traded by the SBJ company at 8am on June 14 was priced at 28.03 million VND per tael (purchase) and 28.07 million VND per tael (sale). In Hanoi , the 10am price at Phu Quy SJC stood at 28 million VND per tael (purchase) and 28.06 million VND per tael (sale).

The price of 28 million VND per tael of gold returned late last week, concurrent with a significant increase in the metal price in New York last June 11. Last week was a turbulent week for the gold market: at times the price for the metal rose to 28.35 million VND per tael, then suddently dropped to 27.9 million VND.

Sales in the market recorded a strong increase when the gold prices were high, but quickly returned to normal when the price went down. Gold traders said the general trend in the physical gold market was less vibrant than in the past.

Domestic gold prices are far cheaper than the world price when taking conversion and other charges into account, running about 400,000 VND per tael less than other markets.

Loans tightened to prevent bubble

The State Bank of Vietnam has tightened lending for domestic real estate to avoid a bubble and encourage the flow of capital into manufacturing and agriculture.

The action was ordered by the Prime Minister, the bank said.

Duong Thu Huong, the Vietnam Banking Association Secretary General, said the action was reasonable as long as the situation was continually reviewed.

Vo Tri Thanh, deputy head of the Central Institute of Economic Management, said limiting loans for the property sector to 10-15 percent of outstanding credit would prove difficult.

However, Hoang Viet Phuong, Maritime Bank deputy director of corporate customers, said real estate loans of banks were identified in credit contracts, so if borrowers sought more than their quotes they had to explain why.

The state bank could tell when a bank tried to pass real estate lending over as consumption lending, he said.

VietNamNet/VNA

In 2009, outstanding loans for property reached 200 trillion VND, representing 11.76 percent of the total outstanding credit.

Hanoi and Ho Chi Minh City account for 65 percent of the loans which were for repairing and buying houses for consumers and building infrastructures at urban areas and industrial zones.

Mekong Capital invests in Nam Long Company

The Mekong Capital’s Vietnam Azalea Fund Limited (VAF) has acquired minority stakes of the Nam Long Investment Joint Stock Company worth about 9.1 million USD.

Nguyen Xuan Quang, chairman of the Nam Long Company said he believed that the combined strength between Mekong Capital and other foreign and domestic shareholders of Nam Long including ASPL and Nam Viet Ltd will help Nam Long achieve greater success in the future.

Nam Long is a real estate developer, operating in Ho Chi Minh City and southern provinces. It now owns 550 hectares of land in Ho Chi Minh City , the central city of Da Nang , the Mekong delta city of Can Tho and the Mekong delta province of Long An.

Biggest cold store in Southeast Asia opens

Preferred Freezer Services Antara Vietnam held a grand opening ceremony for a large cold store in HCM City on June 12.

Construction of the cold-storage facility was completed by the first wholly foreign-owned company licensed to operate cold stores in Vietnam .

According to industry experts, the 226,500-cu.m freezer is the largest single room cold store in Southeast Asia . The facility began operations on April 1.

It is the first fully automated warehouse in Vietnam . The leading-edge material handling equipment coupled with inventory warehouse management system provides a cutting-edge facility for local and multinational food companies.

Robotic cranes working in a – 200 C environment ensure superior quality handling without requiring workers in harsh sub-zero conditions.

The 1,670sq.m +5 0C loading dock is the largest of its kind in Vietnam .

Its oversized truck yard can accommodate 32 trailer trucks. Its 16 loading dock doors equipped with electrical plugs meet customer needs for speed, accuracy and quality.

Preferred Freezer Services of Newark New Jersey is the fifth largest cold store operator in the US and the seventh largest in the world.

Preferred Freezer designs, builds and operates facilities located throughout the US . Facilities are now under construction in China . Vietnam is Preferred Freezer’s first international operation.

VietNamNet/VNA

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