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BUSINESSS IN BRIEF 15/3   2010-03-15 - VietNamNet/ND, VNA

Progress resumes on Taiwanese steel plant  


Taiwanese- invested Guang Lian Steel Viet Nam Co Ltd will resume construction this month on a multi-billion-dollar steel plant in the central province of Quang Ngai, the company’s general director, Hsueh Hung Yi, said in a recent meeting with provincial authorities.


The project in the Dung Quat economic Zone had been put on hold for over 18 months due to the global recession.


The deputy director of the Dung Quat Economic Zone Authority, Le Van Dung, confirmed that Guang Lian Steel had solved its financing problems and was preparing to relaunch the project at a budget enlarged from the previous 3 billion USD to 4.5 billion USD.


Guang Lian, established by Taiwanese steel giants Tycoons and E-United, has already begun work on the plant and a workers residence.

With first-phase land clearance nearing completion, 223ha of the eventual 455-ha site has been handed over to Guang Lian.


The plant, when completed, would have a capacity of 3 million tonnes in the first phase and 5 million tonnes in the second phase. It would use blast-furnace technology and would be one of the two largest projects in the economic zone. The first phase was expected to reach full capacity in 2013.


The project was originally licensed to Tycoons in 2006 with a budget of over 1 billion USD. The project costs rose to 3 billion USD in 2007, when Tycoons teamed up with E-United to upgrade the project technology.


Looser credit reignites leverage buying


Despite two modest declining sessions at mid-week which were regarded as a necessary correction, the VN-Index managed a gain of 3.53 percent on the week to close at 531.51 points.


The average daily value of trades reached nearly 2.4 trillion VND (125.7 million USD), an increase of over 48 percent from the previous week, while volumes also rose by 40 percent to a daily average of 55 million shares.


On the Hanoi Stock Exchange, the HNX-Index posted a more modest gain of 1.93 percent on the week, ending Mar.12 session at 173.45 point. Average daily trading value stalled at about 1 trillion VND (52.4 million USD), while average volumes edged up 1.4 percent to 31.8 million shares.


Shares posted a second straight week of gains on strengthening investor confidence in a glowing economic picture and the bright performance of listed firms, said FPT Securities Co analyst Nguyen Tuan.


“The State Bank of Vietnam’s decision to allow negotiated interest rates for medium – and long-term loans has continued to lift the stock market, enabling commercial banks to increase lending and provide more capital for stock investments,” Tuan said.


With daily trades reaching over 50 million shares per day, many analysts agreed that capital was again flowing back into the stock market. In addition to bank resuming lending for securities investment, brokerages were also allowing clients to make leveraged investments.


The market closing high on Mar. 12 would give impetus to a further advance early this coming week, HCM City Securities Co managing director Fiachra Mac Cana predicted in a report.


Overall performance on the week would hinge on the release of new inflation figures next week, said MacCana, predicting that, if inflation rose by less than 1 percent, the State Bank would further ease monetary policy and incite gains on the market.


After two weeks in which they ended up as net sellers, foreign investors concluded last week as net buyers on both bourses of a combined 342 billion VND (18 million USD) worth of shares. Dairy giant Vinamilk (VNM) was their most sought-after share, with foreign investors now holding some 46 percent of shares in the company, close to the statutory limit on foreign ownership.


Vietnam Airlines protests AirAsia joint venture 


National carrier Vietnam Airlines has requested the government to prevent Malaysian low-cost airline AirAsia from forming a new budget joint-venture in Vietnam.


According to Vietnam Airlines, AirAsia’s acquisition of a 30 percent stake in local VietJet Air last month was only a move to help the Malaysian company enter the domestic market.


As it’s difficult to expand their business to overseas markets, foreign carriers often try to invest in a local carrier, Vietnam Airlines said in a letter to Prime Minister Nguyen Tan Dung.


Although the government has set a 30 percent cap on foreign ownership in a local airline, the loophole is that the regulation applies to all foreign investors, including airlines. Jetstar, and now AirAsia, have taken advantage of the loophole to form joint ventures in Vietnam and this trend is bound to harm the local industry, the national carrier said.


VietJet Air, the first private airline to be licensed in Vietnam, said last month the Ministry of Transport has approved its joint venture with AirAsia.


AirAsia said last month that the new budget airline, VietJet AirAsia, will operate both international and domestic flights starting May.


Analysts said AirAsia’s investment in VietJet Air would help the local airline launch its service soon. VietJet Air received its license in 2007 but has delayed its first commercial flight many times since.


Vietjet AirAsia, if finally established, will compete directly with Jetstar Pacific, the first low-cost airline in the country.


Jetstar Pacific has not raised any objection to the co-operation between VietJet and AirAsia.


Qantas Airways Ltd., Australia’s largest airline, holds a 27 percent stake in Jetstar Pacific.


Final span of Cua Viet bridge in place


Nhan Dan Online – The final span of the Cua Viet bridge spanning the Hieu river in Quang Tri province got connected yesterday.


This is the longest ever bridge in the province, linking Gio Linh and Trieu Phong districts.


The construction of the ferro-concrete bridge, 806 metres in length and 12 metres in width, started in late 2007 with a total investment capital of over VND 277 billion.


It is expected to be opened to traffic by June 2010.


Vietnam Jan-Feb wood exports up 60 pct 


Wood product exports rose 60 percent in the first two months this year to US$617 million as orders increased amidst a recovering global economy, according to the Ministry of Industry and Trade.


If exports continue to grow at this pace, the annual target of $3 billion would be achieved without any difficulty, the ministry said.


Nguyen Chien Thang, chairman of the Ho Chi Minh City Handicraft and Wood Industry Association, said although prices have not recovered, local wood companies have received more than enough orders.


“Some companies were on the verge of shutting down last year, so it’s great to see all workers have enough work to do now,” he said.


Tran Quoc Manh, general director of HCMC-based Sadaco, said the woodcraft industries in other countries in the region like Thailand, Indonesia and Malaysia were recovering at a slower pace than Vietnam


The problem, though, was that it had become difficult to ask for higher prices from foreign customers because they were all still afraid that the economic recovery was not really stable, Manh said.


Huynh Van Hanh, director of the Minh Phuong Wood Company in Binh Duong Province, said local producers were also worried about the hike in power prices which took effect this month.


The 6.8 percent increase in electricity prices would drive production costs up 7 percent, Hanh said, noting that all materials would become more expensive following the hike.


Thang said the power price hike is a burden that is too heavy for the recovering wood sector. He said higher prices would end up making local products less competitive than Chinese exports.


VND 1 trillion worth of government bonds to be auctioned


The Hanoi Stock Exchange (HNX) will auction the VND 1 trillion worth of government bonds issued by the State Treasury on March 18, the HNX has announced.


The two and three-year government bonds with the same issuance date of March 23, 2010 and maturity dates of March 23, 2012 and March 23, 2013 respectively, will be sold at their face values and paid once when they mature.


The bonds will be sold at their face values. After the issuance, they will be listed on the HNX.

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