Demand for air cargo likely to grow 30 percent < />
Demand for air cargo is expected to jump in the last months of this year, creating potential for local and international freight airlines, said industrial analysts.
“Demand will likely grow by 30 percent in the second half of this year in comparison with the same period last year due to high demand from Asia, the EU and the US . Hong Kong Airlines return flights connecting HCM City with Hong Kong had an occupancy rate of 80-90 percent,” said Do Xuan Quang, general director of HCM City-based Victor Cargo Transportation Co.
Victor Co works as a general agent for foreign airlines in Vietnam , including Malaysia Airlines, South African Airways, and Egypt Air.
Vo Huy Cuong, director of the Civil Aviation Administration of Vietnam’s aviation transportation department said Hong Kong Airlines was a new-comer, starting operations in January with five cargo flights per week on the HCM City-Hong Kong route.
Others such as Cathay Pacific, Eva Air, Korean Air, China Airlines, FedEx, DHL and CargoLux are also bolstering their freight flights to Vietnam .
Local airlines have also paid great attention to this promising market. HCM City-based Trai Thien Air Cargo is preparing to debut its first commercial cargo flight in September. Trai Thien was established in June 2008 with a registered capital of 500 billion VND (26.3 million USD).
If Trai Thien begins services from September 5 as scheduled, it will become the first private air cargo carrier in Vietnam . It will transport cargo throughout south-east and north-east Asia .
The airline officially received a licence to provide freight services from the Civil Aviation Administration of Vietnam (CAAV).
However, Cuong said Trai Thien had not yet begun operations as the carrier had not rented aircraft that met CAAV standards.
Under Vietnamese aviation regulations, the leases of planes entering Vietnam must not exceed 25 years.
Le Giang Long, deputy director of Trai Thien said the carrier had discussed leases with companies from Singapore and the EU, but their planes did not meet the prescribed 25-year time period.
The carrier recently entered negotiations with Singaporean-owned Airmark Co, and believed the company could meet the requirement.
Trai Thien expected that the 18 tonne capacity B737-300F would arrive in Vietnam later this month to begin operating the scheduled daily Hong Kong-HCM City route. Future destinations include Singapore , Phnom Penh , Bangkok , Guangzhou and Taipei .
It is expected that the carrier will receive the second B737-300F in the first quarter next year. This will service domestic routes from HCM City to Hanoi , Da Nang , Nha Trang and Da Lat.
“If capacity remains at 60-70 percent use, we expect to reach break-even point after two years of operation for the international flights,” Long said.
“The company has made good preparations. Initially, we signed a memorandum of co-operation with US partners such as FedEx, UPS, and DHL and a cargo service company in Hong Kong and Singapore, to ensure enough cargo to meet the 70-80 percent capacity rate, for return flights to HCM City,” he said.
Quang said that it would not be easy initially for Trai Thien. However, it was essential to launch a private freight air service in Vietnam and he also wanted to open a similar cargo airline in the future.
The amount of goods transported by air in the first six months of this year rose by 36 percent over the same period last year, according to CAAV.
8 FDI licences may be withdrawn
Foreign direct investment (FDI) in the southern province of Ba Ria-Vung Tau had resulted in 27 projects totalling 2.3 billion USD being licensed so far this year, the province’s Department of Planning and Investment said.
However, issuing permits for foreign-invested projects didn’t mean they would go ahead, and many had stagnated or were developing ineffectively, department director Le Kim Huong said.
This had prompted a warning that licences would be withdrawn if action was not taken, she said.
Permits had been issued for foreign-invested projects valued at 26.2 billion USD over more than 10 years but only about 20 percent of the total had been disbursed, she said.
In the first seven months of this year, of the 2.3 billion USD licensed, only 650 million USD were disbursed, mainly for large projects, including a steel plant and a sea port. FDI disbursement in small and medium-sized projects, meanwhile, was only a trickle, she said.
The province had told investors in foreign-invested projects to speed up their development or face withdrawal of their project licences, Huong said.
Six project licences had already been withdrawn this year due to slow development or ineffective operation, she said.
Licences were withdrawn for projects by the Republic of Korean ’s AJ Vietstar Construction and Development Ltd, Ajung Technical and Construction Ltd Company, V-Can Ltd Company, Con Dao Pearl Company, Imac Vietnam Ltd Company and Maxco Ltd Company.
Huong said Ba Ria-Vung Tau province had improved its infrastructure to create favourable conditions for investors, especially in tourism projects.
It also was attracting FDI to the industrial sector because of its sea port and technical infrastructure, Huong said. And a “one door” administrative procedure, making use of information technology, had helped cut red tape.
Vinalines issues 52mln USD in bonds
Vietnam National Shipping Lines (Vinalines), the largest State-owned shipping and port operator in the country, on August 16 finalised issuing 1 trillion VND (52.08 million USD) worth of bonds.
The senior unsecured bonds will have a maturity of three years. They will carry an annual coupon rate of 14.5 percent in the first year and an average 12-month deposit rate in addition to 3.5 percent per annum payable in the second and third years.
The bond issuance will raise capital for new development projects.
Standard Chartered is the sole arranger and book runner for the bond issue.
Decree hopes to protect holders of convertible bonds
A new Government decree requires the sellers of convertible bonds to clarify all risks for potential buyers, as well as propose a risk-provision plan to protect the interests of existing bond holders whenever additional shares or bonds are issued.
Government Decree 84/2010/ND-CP, issued pursuant to the Law on Securities, is intended to help bond buyers calculate risk and to encourage companies to more responsibly honour their obligations.
Holders of convertible bonds previously faced short-term risks if the market price of an enterprise’s shares fell below the conversion price.
“I think the decree is a good move because it draws clear legal borders and makes convertible bond issues more transparent,” said Hoa Binh Securities Co deputy director Nguyen Huy Duong.
It also demonstrated the improvements in Government’s and the State Securities Commission’s control over the market, Duong said.
The decree has been issued at a time when the availability of bank credit is increasingly limited and convertible bonds are being regarded by enterprises as an alternative way to raise capital.
As of mid-July, about 17 listed firms had issued or planned to issue convertible bonds, most through private offerings or to strategic or institutional investors.
Convertible bond issues totalled about 10 trillion VND (526.3 million USD) in the first six months of the year, with an average term of two years and a coupon of 8-10 percent per year, according to Au Viet Securities Co.
Higher corporate bond coupons were increasingly attractive to investors since bank deposit interest rates now hovered at around 11.5 percent per year.
Vietnam Bond Market Association general secretary Do Ngoc Quynh forecasted that the growing medium- to long-term demand of enterprises would continue to drive the growing issue of corporate bonds.
Convertible bonds ensured interest to their holders even when stock prices fell, but when the prices of shares were relatively high, convertible bonds gave investors a chance to convert and invest in shares, Quynh said.
Goods prices continue to be stable
In response to current rumor that prices of about 300 goods items would increase soon, supermarkets in Ho Chi Minh City have affirmed that prices will remain unchanged.
Bui Hanh Thu, deputy general director of Saigon Co.op, Vietnam’s leading supermarket chain, told Sai Gon Giai Phong that some suppliers of non-food consumer products have informed that they would raise their prices due to increasing costs.
She said Saigon Co.op will check the price of each product to see if their proposal is reasonable.
In the case, the supermarket will has to adjust prices, it will ensure that the adjustment benefits and protects consumers, she said, adding that prices of all of goods will remain unchanged by the end of August.
Ms. Thu said a price hike of over 10 percent is impossible because a sales promotion program will be launched in Ho Chi Minh City in late August, with many goods offered a 50 percent discount.
In addition, sales are usually low in September. If distributors raise their prices, it will immediately affect consumption, she added.
Duong Thi Quynh Trang, head of Big C’s public relations department, said, “We are keeping track of prices and the market carefully to have the best business mode for customers.”
“Until now, Big C hasn’t received any price increase proposals from suppliers,” she added.
It is not good to raise prices now though the number of shoppers at Big C has soared by 15 percent over the same period of last year, Ms. Trang said.
Prices have remained unchanged at SatraMart, MaxiMark and CitiMart.
Supermarkets and distributors affirmed that rice prices have also been stable thanks to plentiful supplies, and there won’t be a surge in rice prices.
Source: VNA, SGGP
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