VietNam Business

Sunday, January 2, 2011

Building firms fail to win big contracts

HA NOI — Although the Vietnamese construction industry had seen positive growth in previous years, Vietnamese constructors struggled to win contracts for large-scale projects due to their low competency, said Vu Gia Quynh, Secretary General of the Viet Nam Association of Construction Contractors.

Quynh said there were a lack of appropriate policies that supported domestic constructors who faced many disadvantages when competing with highly-reputed and experienced foreign groups.

He said a policy that required a specific level of domestic input including the use of labour force and materials in construction projects, as in many other countries, should have been issued to support domestic enterprises.

Nguyen Thanh Su, deputy general director of Khang Thong Joint Stock Company, which is a key investor in the US$2 billion Happyland Entertainment Complex project in southern Long An province, said that sub-contracts, which were more accessible to Vietnamese enterprises, were often of low-value while there was also strong competition for them.

Many Vietnamese constructors are also at risk after submitting low bids in order to win contracts, then having to cope with the rising cost of construction materials.

Vietnamese constructors also lacked competency when it came to responding to contractual terms or other regulations, said Su.

Vietnamese constructors tended to be flexible when implementing contractual terms and they often used mediation when it came to disputes, Su said.

"In contrast, foreign bidders stuck to the contracts and punished domestic sub-contractors if they failed to meet them," he added.

Do Cong Hien, director of Vinaconex Corporation's construction department, said that seasonal workers also made it harder for domestic constructors. Many projects struggled to replace workers at harvest time when they returned to the countryside.

Although it's known that this is unprofessional, it happens due to the fact that a large proportion of workers are from rural areas.

Hien added that domestic enterprises had poorer access to high technologies than their foreign counterparts, which made them less competitive.

Vietnamese enterprises needed to take advantage of sub-contracts by learning from the technologies and experience of foreign groups, said Hien.

These were opportunities for domestic constructors to grow and become more competitive in the domestic market, he said. — VNS

Investors wary of rising land prices

HA NOI — The increasing cost of land sold at auction in Ha Noi has caused growing concern among investors.

Prices for land have risen from VND40 million (US$2,100) per sq.m to VND100 million ($5,200) in some areas.

In Long Bien District, the price has surged from VND30 million ($1,500) per sq.m to about VND50 million ($2,600) in recent times.

On Ngo Thi Nham Street in Ha Dong District, the price has increased to nearly $50 million ($2,600) per sq.m from $20 million ($1,000) last year.

In My Dinh residential area, prices now range from VND70 million ($3,600) to VND100 million ($5,200) per sq.m.

Further out in areas such as Me Linh Commune in Dong Anh District, prices have remained stable, ranging from less than VND10 million ($520) to VND16 million ($840) per sq.m.

Experts attribute the high price to easier procedures and more transparency.

"Small lots, which belong to the State, are often sold at auction. The auctions are organised by local or city authorities so information about the land is clear and reliable," said General Director of the Hoa Phat Real-estate Joint Stock Company, Pham Trung Ha.

Ha added that after winning an auction, investors are issued with land ownership certificates. However, they have to pay for the land immediately.

Ha forecast that the auction market would further develop due to its simplicity and comparatively low cost compared to other markets.

According to Ha Noi People's Committee, the city will auction 33 projects and land lots in 2010 at an estimated cost of VND2.6 trillion ($136 million). About VND2.3 trillion ($121 million) will be from land managed by the city and the rest from land managed by districts and communes. — VNS

Fruit and vegetable export prices rise

HA NOI — Fruit and vegetable export prices increased by 0.9 per cent against August, this year. Prices of fruit and vegetables saw a 7.8 per cent year-on-year increase according to Viet Nam Fruit and Vegetables Association (Vinafruit). Prices of some food items, such as fresh chilli, dry garlic, and dragon fruit all registered significant increases.

Vinamilk ups purchase price of milk

HCM CITY — The Viet Nam Dairy Products Joint Stock Company (Vinamilk) on September 30 increased its purchase price of milk from farmers by VND1,000 per kilogramme.

The move aims to help farmers overcome difficulties due to rising animal feed costs while encouraging them to improve both yield and quality of milk from their herds, the company said.

The company will now buy milk for between VND9,250 and VND10,250 per kilo depending on the location, it said.

$1.8 million Oolong tea factory inaugurated

LAM DONG — The foreign invested Haiyih Ltd Co on Thursday put into operation an Oolong tea processing factory.

The factory has a total investment capital of VND35 billion (US$1.8 million), covering an area of 12,000sq.m. The modern factory has a design capacity of 4,300 tonnes of tea per year.

General Director of Haiyih, Ha Thuy Linh, said the factory includes a cold storage, drying and processing areas, quality test room, modern processing line. The plant is expected to hit revenue of $7 million per year.

Air Mekong test flies City to Phu Quoc route

HA NOI — The Mekong Airlines Joint Stock Company (Air Mekong) ran a test flight to carry 60 passengers from HCM City to Phu Quoc Island on Tuesday.

Following the trial, the carrier will officially launch flights from Ha Noi-HCM City-Phu Quoc three times a day from October 8. It is expected to open two additional direct flights between Ha Noi-Phu Quoc and HCM City-Phu Quoc in November.

VDB invests $62m in Phuoc Dong

HCM CITY — Sai Gon Investment Holding Corporation (SVI), (a member of Viet Nam Rubber Group – VRG) and Viet Nam Development Bank (VDB) signed a contract on Wednesday to provide VND1.2 trillion (US$62 million) for the Phuoc Dong service-urban-industry complex zone in the southern province of Tay Ninh.

The VDB will provide VND1 trillion ($51.28 million) for industrial zone infrastructure construction, covering an area of 3,200 ha with total capital of $1 billion.

23-storey Capital Tower opens in Ha Noi

HA NOI — The 23-storey Capital Tower opened its doors on Wednesday on Ha Noi'ls Tran Hung Dao Street, announced project investor Thu Do Tourism, Trading and Investment Joint Stock Company.

The VND500 billion (US$26.3 million) building covers 30,000sq.m. It is expected to help meet the growing demand for international standard office space .

Savills to act as Hapro's exclusive leasing agent

HA NOI — Savills Viet Nam Ltd Company was officially appointed as exclusive leasing agent for the Hapro Centre retail mall and offices which are owned by Ha Noi Trade Corporation (Hapro).

The Hapro Centre complex, located on Cat Linh Street, Ha Noi, is currently under development with an estimated investment capital of VND293 billion (US$15 million).

It comprises five retail floors and nine floors of grade B office space. Each floor includes more than 1,000sqm of space.

Upon completion, which is expected in late 2011, the centre will provide a total gross area of 17,730sqm and nearly 5,000sqm of parking space.

New Ana Mandara beach resort opens in Hue

Hue — The Ana Mandara Hue Resort officially opened yesterday on Thuan An Beach, a 20 minute drive from the centre of Hue.

This is the first project managed by Hotel Collection Indochine, a new Vietnamese hotel management company.

The company plans to inaugurate its second resort, Ana Mandara Ninh Binh, south of Ha Noi, in January.

Novaland begins Central Plaza construction

HCM CITY — Property developer Novaland recently began construction of its Central Plaza, which will be comprised of four 31-and 35-storey towers in District 7.

The US$500 million project is the second phase of the larger Sunrise City project.

Upon its completion, Sunrise City will include 12 towers with 1,800 apartments, and a 70,000 sq.m shopping centre. The company has already completed 70 per cent of the first six towers, comprising 752 apartments and 21,000 sq.m of retail space. The second phase is scheduled for completion in 2012.

Canal Park development project building progresses

HA NOi — The new Canal Park development project will include two 11-storey towers with apartments ranging in size from 86 sq.m to 272 sq.m. Construction is estimated to be completed at the end of 2011, according to investor Berjaya-Handico 12.

Phase one of the project, the underground portions of the complex, have already been completed. — VNS

Footwear sector plans to develop supporting industry

Photo: AFP

The Vietnam Leather and Footwear Association (Lefaso) has submitted to the government a strategy to develop the sector from now till 2025, focusing on the supporting and material industry.

According to Lefaso President Nguyen Duc Thuan, the strategy aims at ending the sector’s dependence on foreign materials and technologies and shifting from sub-contracting.

Under the strategy, the sector will need VND18.8 trillion (US$989 million) to produce shoetrees and models and expand production of materials including leather and leatherette.

The plan is expected to help the sector to earn $8.5 billion from exports by 2015 and $11 billion by 2020 with the localization rate of 65-75 percent from 50 percent at present.

Thuan explained that the strategy was prompted by the fact that the sector has been suffering from a serious shortage of materials for many years, due to a lack of supporting industry.

At present, the country has only 30 enterprises, including five with foreign investment capital, producing tanned leather, the main material for the footwear sector. Those enterprises can meet only 30 percent of the demands for materials of domestic footwear enterprises.

The Lefaso leader further said that the sector has also to cope with the EU’s anti-dumping tax on Vietnam’s footwear products.

In an effort to boost exports, Lefaso has carried out many promotion activities, including hosting the 29th international conference of the Asian footwear sector and the international fair of footwear materials and machines.

At present, Vietnamese shoe makers have got orders for exports to fill until the first quarter of 2011, as customers are shifting their attention from China to Vietnam.

In the first nine months of the year, the sector earned over $3.6 billion from exports, a year-on-year increase of 23 percent. The figure is expected to hit over $5 billion by the end of the year.

Footwear sector plans to develop supporting industry