High-end leases demarcate Saigon’s “well-known brand” streets

Dong Khoi, Nguyen Hue, Le Thanh Ton and Le Loi Roads are now called “the well-known brands” streets in HCM City, because area trade centres only sell products with well-established names. Retail leases in this business hub, therefore, are also the highest in the city.

In late April 2010, Vincom Tower, a 58,000 square meter shopping complex, began welcoming guests. The rent for a ground floor space here is equal to the rent on the upper floor of another nearby trade centre.

Brand barriers

The appearance of fashion shops selling global brands like Louis Vuitton, Versace, Milano, Lacoste, Espirit and Omega, has turned Dong Khoi into a road with the highest rental rates for a retail premises in HCM City.

Fashion traders call Dong Khoi “the road of high rank,” because it is very difficult to lease a space here, even when the renters have plenty of cash. Vincom Centrerental rates are up to $250 per square metre and, retailers must sell products with well-known brand names to be able to lease a spot on the first or upper floors.

Louis Vuitton occupies the first floor of Opera View Centre, presenting a silent but visible statement to newcomers– only high-end products welcome. Le Van Canh from Artex Saigon, the investor of Opera View, stated frankly that the company prioritises leasing to international brand names.

Businesses that intend to lease a space at Parkson trade centre are always questioned about what products they sell, which brand names and their world rankings.

A luxury shopping centre invested by Duy Anh Fashion Cosmetics and Saigontourist will become operational in the third quarter of 2010. The shopping centre, at the intersection of Nguyen Hue–Le Loi roads, covers an area of 2000 square metres and will gather the most popular brand names in the world like Chanel, Burberry, Ferragamo, Bally and Zegna.

Retail rents escalate

Marketing analysts report that the Louis Vuitton product representative was very lucky to obtain a lease at Opera View of just $15,000 a month.

The appearance of Vincom has now pushed area rents to new heights. The $65 per square metre rent at the Tax trade centre is just equal to halfthe rent of Vincom’s ground floor. Moreover, clients must lease an entire kiosk at Vincom, with an area of 70 square metres.

All other types of retail premises are raising their rents too. In 2009, one shop with the width of its entrance door (just four metres) leased for $4000, but nowthe rent has increased by 25 percent. If the shop has a little wider entrance, the rent would have doubled.

One businessman leased a big shop on Dong Khoi Road with an area of 7×12 square metres in February 2009 at $30,000 a month. Two months ago, he was approached by a foreign brand representative to sub-lease for 50 percent more.

According to CB Richard Ellis (CBRE), businesses must compete fiercely to be able to lease unoccupied “beautiful” premises. The firm calculated that rent increased significantly in the first quarter of 2010 and will increase still further in the second quarter.

Source: Saigon tiep thi

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Rubber, textile industries lament materials shortage

Both textile and rubber industries have been facing big difficulties due to the material shortage. While the material prices have been increasing, producers dare not raise the sale prices because they fear they may lose customers.

Natural rubber latex prices have risen dramatically since the beginning of 2010, surpassing the highest-recorded price level to stand at 67.5 million dong/ton.

According to Le Van Tri, Deputy General Director of Casumina, rubber latex has increased by two-fold, from 33 million dong per ton in September 2009, with a 300 percent increase over the first quarter of 2009.

Large natural rubber latex providers like Thailand, Malaysia, Indonesia, India, China and Vietnam must delay harvesting latex due to the drought, which has led to the serious shortage.

Ha Phuoc Loc, Deputy General Director of Da Nang Rubber Company, noted that the company needs some 13,000 tons of materials to make tires and other products in 2010. They just purchased 4000 tons from Vietnam Rubber Group, but must collect additional rubber from other sources.

According to Loc, the 300 percent price increase presents serious obstacles for enterprises. “If the rubber latex price does not decrease by the end of May, we will have to raise prices,” Loc admitted.

Prices have risen twice in 2010 already. On January 15 and March 15, Casumina, Da Nang Rubber and Sao Vang Rubber Companies all increased prices by 10 percent.

Casumina and Sao Vang representatives also observed that they prices will remain unchanged until the end of April, but after that, if the rubber rates continue rising, they will be forced to increase prices.

Nguyen Duc Khiem, Chair and General Director of Viet Thang Textile and Garment Company, explained that visco fiber rates have been rising steadily by 10 percent every month since the beginning of 2010, from $2.2 to $2.7 per kilo. Cotton fiber has increased from $1.3 to $1.6 per kilo.

Phuong Dung, a small merchant in HCM City, provides thread and fiber. She can only provide 50 percent of the demand from textile workshops in the area. “Buyers accept high prices, but the supply is very short,” she stated.

One company’s general director pointed out that many fiber suppliers do not want to sell to domestic buyers, since the export price is high and domestic companies are always late in making payments.

In mid-April 2010, India prohibited the export of cotton to protect local industries, raising concerns in Vietnam since the country relies heavily on cotton imports.

Concurrently, China has been purchasing more materials from markets across the world, including Vietnam.

Source: Saigon tiep thi

Banks attempt to collect more in ATM fees, again

The Vietnam Card Association has sent a request to the State Bank of Vietnam asking the bank to support the association’s decision to collect fee from ATM transactions.

This is the second attempt by commercial banks to collect ATM fees. In the past Banks have asked to charge fees, but the plan was not approved by the State Bank of Vietnam.

The proposal on collecting ATM fees has already faced strong opposition from cardholders, who believe that ATM collection are contrary to the state’s policy on encouraging non-cash payment. They say that many cardholders, in order to avoid paying ATM fees many times, will withdraw all the money they have in their accounts.

Hoang, officer of a media company, said that banks can get many benefits from providing ATM services already, therefore, they should not think of collecting ATM fees. 22 million cards have been issued. If every card has the minimum balance of 50,000 dong as required, banks can use the 1,100 billion dong as investment capital.

The Vietnam Card Association has insisted on the need to collect fee from ATM transactions because the expenses banks have to pay per ATM transaction average around 5000 dong. Currently, cardholders have to pay fee when they make transactions with ATMs owned by other banks, while they do not have to pay fees when making transactions with ATMs of the banks that issue their cards.

The Card Association argues that the free withdrawal of cash from ATM will encourage people to use cash, all the while banks do not have money for reinvestment, and then do not have money to expand the network and improve quality service.

An officer of a bank said that the initial expenditure for every ATM is about $20,000, while banks have to bear many other kinds of expenses during the ATM operation. He said that most of banks now have to cover losses for ATM services, about 10-30 billion dong a year. Currently, only three banks can make profit from ATM services thanks to the large and effective POS system. There are 36,620 POS throughout the country.

The card association has also proposed that the Ministry of Finance slash the import tariff on various kinds of specialized equipment for using cards.

According to Nguyen Thu Ha, Chairwoman of the Vietnam Banking Card Association, commercial banks will not collect ATM fee in 2010. However, it wishes to begin collecting fee from 2011, that is, if this is approved by the State Bank of Vietnam.

Source: An ninh

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State will strictly control private credit information centers

At present, Vietnam has no privately-run credit information institutions. In the near future, based on a decree on credit information management that comes into effect as of April 15, the way for establishing such centers will be paved.

The State Bank of Vietnam (SBV) is collecting opinions on a draft circular that guides the implementation of a decree that allows the establishment ofcredit information centers if they meet strict requirements.

In order to establish a credit information company, a group must have commitments from at least 20 banks to provide information. The 20 banks must also agree that they will not provide information to any other company.

According to Pham Cong Uan, Director of the Credit Information Centre (CIC) under SBV, the requirement aims to restrict the number of privately-run credit information companies.

Uan noted that there are 51 banks in Vietnam, including foreign bank branches, so, under this regulation, Vietnam will have no more than two privatecredit information companies

He added that credit information companies can also get data from other credit institutions. They can cooperate with each other or with CIC in order to gain necessary information for clients.

Colin Raymond, an International Finance Corporation representative from the World Bank, maintained that Vietnam has good reason to restrict the number of credit information institutions. Russia set no limit on the number of such centres, which has resulted in nearly 50 companies and big difficulties in management.

IFC will give advice to SBV in building the legal framework for providing credit information.

The decree also stipulates that every company must have chartered capital of at least 30 billion dong and must have qualified employees who are not allowed to do other kinds of business.

CIC is assigned by SBV to manage credit information companies. In addition, CIC will join forces with other government agencies, inspectors, the information technology department and legal departments to grant licenses for privately-runcredit information centers.

According to Uan, two companies have already expressed their intention to set up credit information institutions in Vietnam.

Source: Thoi bao Kinh te Saigon

Tourism to hit new heights

A nationwide set of standards to rate tourism services is expected to be published in the second quarter of this year.

The work was commissioned to the Ministry of Culture, Sports and Tourism by Deputy Prime Minister Nguyen Thien Nhan as part of a long-term programme to improve tourism in Viet Nam.

“A set of standards is necessary to promote better tourism as they will help ensure higher service quality,” said Vu The Binh from the Viet Nam National Administration of Tourism.

Under the new standards, tourism operators would have to meet certain criterion before they could sell tickets to tourists, said Binh. Localities, particularly tourism hot-spots, will also be required to perform comprehensive urban planning to meet the standards.

Ngo Quang Vinh, director of the Da Nang Department of Culture, Sports and Tourism, also welcomed the new standards.

“We have been awaiting the implementation of this new policy with great enthusiasm. It will help us to improve tourism services to maintain Viet Nam’s position as a popular tourist destination.”

Pham Tat Thanh, from the Lao Cai Department of Culture, Sports and Tourism, said the province had yet to receive information about the incoming set of standards but appreciated the move. Thanh added that the editorial team responsible for drafting the standards should ensure the standards would be comprehensive enough to be applied in every province.

Quality and quantity

Speaking about the importance of standards that address qualitative aspects of tourism, Thanh said: “Our recommendation, which is based on experience, is that standards should be linked to the level of satisfaction reported by tourists. For so long the number of visitors was thought to be the best measure of progress in the tourism industry but this is not sustainable. The extent to which tourists are satisfied –quality– is just as important as the quantity of tourists.”

Lao Cai Province is home to the immensely popular H’Mong town of Sa Pa which has enjoyed wide popularity from both domestic and international tourists in recent years.

Speaking about her experience as a tourist in Viet Nam, American Amelia Henry remarked: “Our trip would have been much more enjoyable if we hadn’t been chased down by overly-aggressive street vendors. Even though I was happy to buy souvenirs, being pressured to do so made me feel uncomfortable.”

Thanh said that this issue had given local authorities a headache although in Sa Pa the problem had been solved by creating a specific area where local people could set up stores to sell their goods. In remote hamlets around the town, Thanh said the problem persisted as it was difficult to police.

Simplify entry and exit

The Deputy Prime Minister has requested relevant agencies and localities to establish a common set of regulations on entry and exit procedures by land, sea and air for foreigntourists arriving at border gates to simplify administrative procedures.

Yet, Binh noted: “It would take a remarkable amount of time and work before visas-on-arrival could be issued at border gates throughout the country.

This is because the gates would first need to be equipped with powerful information systems and co-operate closer with relevant agencies.”

Another qualitative problem identified in the tourism industry is the lack of market research into tourist preferences. As British expat Elizabeth Liz put it: “Viet Nam should have done this market research sooner. Many tour agencies thought they knew what we [foreigners] want but in fact they don’t. And they never ask us.”

Deputy Minister of Culture, Sports and Tourism Tran Chien Thang said the tourism sector was starting to develop specific products for the international market, including the eco-, adventure and regional tourism to address this shortfall.

Others like French-Vietnamese Raymond Nguyen cited environmental degradation as one of the major problems with tourism in Viet Nam. After returning from a trekking tour in Sa Pa, he said: “Viet Nam is an ideal place for adventure tourism due to its spectacular sights and challenging terrain. But, the nature of the landscape, the reason why we come to Viet Nam in the first place, should be preserved, not destroyed.”

According to the Viet Nam National Administration of Tourism , while the number of foreign tourists entering the country dropped by 10 per cent last year to about 4 million, total revenue over the same period increased by 10 per cent to VND70 trillion (US$3.8 billion).

VietNamNet/VNS

‘Savings banks’ proliferate in response to State Bank curb on ‘branches’

Over the last two months, many commercial banks have been opening ‘saving banks,’ a move perceived as a way to expand even though the State Bank (SBV) has tightened controls over the opening of full service branches. The savings banks only accept deposits; they do not make loans.

Saigon Commercial Bank (SCB), Techcombank, Vietnam Tin Nghia and Maritime Bank have all opened savings bank subsidiaries in HCM City

A savings bank only accepts deposits, delivers valuable papers for the parent bank, pays out kiều hối remittances from the overseas Vietnamese relatives of clients and wires funds. If customers want a loan, the savings bank can report the cases to the parent bank. Commercial banks see the savings bank model as a way to increase their presence in HCM City.

A branch director of a Hanoi-based bank commented that banks now barred from opening more full service branches are opening savings banks that they hope to upgrade into branches when there are favourable conditions.

Because savings banks it is easier to obtain permission from the watchdog agency to open them, especially in Hanoi and HCM City.

An official of the HCM City Branch of the State Bank said that SBV has decided that it will not allow banks that already have many branches in Hanoi and HCM City to open more. SBV is drafting an instruction which stipulates stricter requirements on the network operations of commercial banks.

To open a savings bank, commercial banks need only register its opening with the SBV branch where the savings banks are situated. Also according to the official, the requirements are easy and no limit has been set on the number of savings banks a bank can open in a city.

Experts say they do not see any risks in the boom of savings bank. However, the Vietnam Banking Association expresses concern over the rapid expansion of some banks’ networks. The association warns that a high density of banks in some areas will lead to unhealthy competition to attract customers.

Source: Thoi bao Kinh te Saigon

Power generators says it’s high time to raise electricity prices

VietNamNet Bridge – During a midyear review at the Ministry of Industry, power sector chieftans called on the Government to raise electricity tariffs, saying that the current low tariffs dissuade enterprises from investing in power generation.

General Director of the Vietnam Coal and Mineral Industries Group Tran Xuan Hoa said that Vinacomin is considering developing its own power grid in the Quang Ninh coal mining area to ensure the safety of production now troubled by regular electricity cuts.

Dao Van Hung, Chairman of the Electricity of Vietnam (EVN), citing ‘world experience,’ asserted that every dong of underspending on power causes at least three dong of real and intangible costs to Vietnam’s society. Continued power shortages will threaten Vietnam’s ability to reach other targets, including the 2010 target of 6.5 percent growth.

Hung called the electricity shortage the consequence of an average electricity price so low that investors refuse to make investment in power projects.

Currently, power producers are paid just 5.3 US cents (1058 dong) per kwh, much less than producers nearby regional countries. Investors insist that they must have a guaranteed offtake price of at least 8 cents.

Under fire for mismanagement of power shortages this year, EVN has consistently blamed ‘bad weather.’ Hung’s stance is a considerable turn-around. There now appears to be an industry consensus that it is high time to reconsider the power pricing scheme. “With power prices set so low, we cannot attract investment in power projects,” Hung said.

“We may consider subsidizing electricity costs for poor people, but if we do not adjust the general power price, the nation’s plans for power project development will not be fulfilled,” said CEO Hoa of Vinacomin.

Hung, the EVN CEO, said that in the context of the increasingly high demand and serious drought, the national electricity monopoly has mobilized power from all available sources to sustain production and support the people’s life. It has had to buy power from some sources at high prices. In the last six months, EVN’s losses have totalled 4700 billion dong (about $250 million).

Hung emphasized that the current electricity shortage is not a result of EVN’s monopoly control of the sector.

He reported that EVN has equitised nine power plants, including Cat Ba, Pha Lai, Vinh Son-Song Hinh, and Vung Ang. EVN now has 18 power of Vietnam’s 40 plants and accounts for only 47 percent of Vietnam’s power generation capacity. This will fall to 37.5 percent of the total capacity by 2015. Independent power producers including TKV and PetroVietnam will account for the rest.

Also according to Hung, it is necessary to establish a national power authority to purchase and sell electricity. It should belong to a state agency instead of EVN. In that case, EVN will not hold the monopoly in powergeneration and power distribution any more.

When asked why EVN does not purchase more electricity from independent thermal power producers, Hung said that EVN wants to purchase electricity, but the problem here is the price. If EVN purchases power at high prices, it will have to sell power at high prices which will burden businesses and people.

It is planned that from 2013, Vietnam will begin to import coal. “The question here is whether power companies will have the money to purchase coal at high prices. It is necessary to harmonize the prices of coal to be imported and the prices of electricity to be sold,” Hung said.

Source: Dan tri

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