New Report Highlights Staggering Costs Ahead for Water Infrastructure

By Patrick Crow, Washington Correspondent

The American Water Works Association (AWWA) has warned that the cost of repairing and expanding US drinking water infrastructure will top $1 trillion in the next 25 years, an expense that likely will be met primarily through higher water bills and local fees.

The AWWA examined the timing of water main installation and life expectancy, materials used, replacement costs and shifting demographics. It said nationally, the infrastructure needs are almost evenly divided between the needs to replace and expand infrastructure.

Because pipe assets last a long time, water systems that were built in the latter part of the 19th Century and throughout much of the 20th Century have, for the most part, never experienced the need for pipe replacement on a large scale, the report said. The dawn of an era in which the assets will need to be replaced puts a growing stress on communities that will continue to increase for decades to come.

AWWAs $1 trillion estimate covered work until 2035, if pipes are replaced at the end of their useful lives. Over a 40-year period, through 2050, the needs exceed $1.7 trillion. Replacement needs account for about 54% of the national total, with the balance (about 46%) attributable to population changes over that period.

It said pipe replacement expenses account for more than 84% of the $278 billion needed in the Northeast and Midwest through 2035. In the rapidly growing South and West, expansions to meet a growing population amount to about 62% of the projected need of $277 billion in that same time period.

The AWWA study said that required national-level investment will double from roughly $13 billion a year now to almost $30 billion annually by the 2040s (in 2010 dollars) and that level of investment must be sustained for years if current levels of water system performance and service are to be maintained.

It said increases in household water bills will vary, but in some communities the infrastructure costs alone could triple the size of a typical familys bill. It said rural communities may face the biggest challenge because their scattered populations require more pipe miles per customer.

The study said that the most impacted households could see their drinking water bills increase between $300 and $550 per year above current levels to address infrastructure needs.

AWWA said postponing infrastructure investment in the near-term raises the overall cost and increases the likelihood of water main breaks and other infrastructure failures. It added that the $1 trillion investment does not have to be made all at once: there is time to implement asset management plans and set rates that more closely reflect the cost of water service.

The AWWA report was issued before a House of Representatives panel explored potential financing tools to help communities to finance wastewater and drinking water facilities mandated by environmental laws and regulations.

Rep. Bob Gibbs (R-Ohio) chaired the hearing by the Committee on Transportation and Infrastructures Subcommittee on Water Resources and Environment. He said municipalities face unfunded federal mandates at a time of dwindling revenues due to the economic downturn.

Gibbs was working on a bill to provide direct low-interest loans to drinking water and wastewater systems that are planning or constructing significant infrastructure projects.

His Water Infrastructure Finance and Innovation Act (WIFIA) is similar to a proposal by water groups, including AWWA, the Association of Metropolitan Water Agencies (AMWA) and the Water Environment Federation (WEF).

Under WIFA, EPA would give direct federal credit assistance to drinking water and wastewater infrastructure projects seeking loans larger than $20 million. The program would complement, not replace, the existing state revolving fund (SRF) programs. It would focus on projects that may not benefit from SRF assistance due to their large price tag or their low placement on state priority lists.

Drinking water and wastewater projects eligible for loan assistance through WIFIA would include a variety of construction, replacement, and rehabilitation projects, security enhancements, energy efficiency improvements, water reuse projects and efforts to increase water efficiency or reduce demand for water system capacity.

At the hearing, M3 Capital Partners Vice President Thaddeus Wilson said his firm is forming a North American water infrastructure fund that will be initially capitalized by a US public pension plan as the cornerstone sponsor.

It is expected that the fund will focus primarily on offering an innovative Design-Build-Operate-Finance approach to municipal water infrastructure project delivery. We believe this approach offers a robust form of public-private partnership to municipalities to capitalize their water infrastructure improvements, which may include the repair, upgrade or replacement of drinking water and wastewater treatment facilities and, in some cases, their related distribution and collection systems, he said.

Also at the hearing, Aurel Arndt, general manager of Lehigh County Authority in Allentown, PA, testified for AWWA. He said WIFIA would fill a significant gap between what current water infrastructure tools can do and what needs to be done.

He said WIFIA would lower the cost of local water infrastructure projects at little or no long-term cost to the federal taxpayer. The mechanism would borrow US Treasury funds to provide low-interest loans, loan guarantees, or other credit support to local communities. Loan repayments, with interest, and guarantee fees would flow back to WIFIA and into the US Treasury, with interest. Eligible water infrastructure projects would include water, wastewater, and wet weather related projects.

Arndt said AWWA believes the local rates and charges should remain the cornerstone of water infrastructure financing, but there are times when large infusions of capital are needed for major projects.

WIFIA will allow our nation to build more water infrastructure at less cost, Arndt said. A number of water infrastructure tools have been sincerely proposed over the years, but WIFIA is the one that best targets the real needs of communities, makes the most fiscal sense, and that will have the most impact on our nations water infrastructure.

WEF Executive Director Jeff Eger also endorsed the WIFIA approach. Local governments are facing the worst financial circumstances in more than a generation. If we are going to continue to provide essential services and make progress in water quality, we need to re-imagine the way we provide local water services. We need to encourage innovation innovative technologies, innovative management approaches, and innovative financing.

The National Association of Water Companies (NAWC) also testified about financing solutions for the nations investment in water and wastewater infrastructure. Jeffry Sterba, president and CEO of American Water Works Co., NAWCs largest member, said substantial private capital already is at work in the water industry.

He said NAWC has estimated that its six largest members together are investing around $2 billion each year in their systems, compared to the $2.4 billion total federal appropriation for the Clean Water and Drinking Water state revolving fund (SRF) programs this fiscal year.

In other Washington news:

WEF has announced a new strategic direction to champion sector-wide initiatives that improve water services through innovative practices and holistic water management approaches.

EPA said it will provide up to $15 million in funding for training and technical assistance to small drinking and wastewater systems, those that serve less than 10,000 people, and private well owners. It said 97% of the nations 157,000 public water systems serve less than 10,000 people and more than 80% of those serve less than 500 people.

The Obama Administrations proposed fiscal 2013 budget proposal would cut EPA spending and SRF funding for the third year in a row. EPAs funding would drop $105 million to $3.8 trillion. The Drinking Water SRF would fall $69 million to $850 million and the Clean Water SRF would decline $325 million to $1.175 billion.

EPA has awarded $388,000 to Andrews, TX, to install a filtration and reverse osmosis system to reduce arsenic and fluoride levels in drinking water.

The Water Environment Research Foundation is seeking proposals for technologies and processes to support the transition from a treatment-based water quality industry to a resource recovery and reclamation industry. The first target will be to develop phosphorus recovery technologies for different sized wastewater plants.

The Water Research Foundation is seeking proposals to improve and/or evaluate technologies and techniques for deteriorating water infrastructure. It and WERF plan to issue $500,000 in grants in 2012 in the third year of a four-year research program funded by EPA.

In a settlement with EPA, Welch, WV, has agreed to begin a $16 to $23 million program to end combined sewer overflows. Also, Welch will separate its sanitary wastewater and storm sewers and pay a $5,000 penalty for past violations.

The agency said Armstrong Environmental Services of Lancaster, PA, will pay a $35,000 penalty for allegedly exceeding industrial wastewater discharge permits into the citys wastewater treatment plant.

EPA has granted Plattsburg, MO, $364,000 toward a $661,800 to expand its drinking water main. The work includes 9,200 feet of 16-inch iron pipe, water valves and fire hydrants.

It has awarded $6.7 million to the Guam Waterworks Authority to improve drinking water and wastewater systems and meet groundwater monitoring requirements.

WEF Executive Director Jeff Eger also endorsed the WIFIA approach. Local governments are facing the worst financial circumstances in more than a generation. If we are going to continue to provide essential services and make progress in water quality, we need to re-imagine the way we provide local water services. We need to encourage innovation innovative technologies, innovative management approaches, and innovative financing.

The National Association of Water Companies (NAWC) also testified about financing solutions for the nations investment in water and wastewater infrastructure. Jeffry Sterba, president and CEO of American Water Works Co., NAWCs largest member, said substantial private capital already is at work in the water industry.

He said NAWC has estimated that its six largest members together are investing around $2 billion each year in their systems, compared to the $2.4 billion total federal appropriation for the Clean Water and Drinking Water state revolving fund (SRF) programs this fiscal year.

In other Washington news:

–WEF has announced a new strategic direction to champion sector-wide initiatives that improve water services through innovative practices and holistic water management approaches.

–EPA said it will provide up to $15 million in funding for training and technical assistance to small drinking and wastewater systems, those that serve less than 10,000 people, and private well owners. It said 97% of the nations 157,000 public water systems serve less than 10,000 people and more than 80% of those serve less than 500 people.

–The Obama Administrations proposed fiscal 2013 budget proposal would cut EPA spending and SRF funding for the third year in a row. EPAs funding would drop $105 million to $3.8 trillion. The Drinking Water SRF would fall $69 million to $850 million and the Clean Water SRF would decline $325 million to $1.175 billion.

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Higher broker education unnecessary: MKM

Michael Maher – Fair Go Finance on
23 Apr 2012 12:38 PM

Wise words Michael,

The focus on education has gone totally overboard. This has been very distracting for industry participants and mainly driven by the MFAA, a major bank and a mortgage aggregator. Neither of which should be leading the way or be involved in regulation at any level.

I strongly believe in a combination of both theory and practice. The regulatory environment ensures a certain education level has been achieved. The necessary experience and business processes must be in place in order to obtain a licence or be appointed as a representative.

Holding an Australian Credit Licence (as a credit provider or credit assistance provider) ensures that the lender/broker has satisfied the requirements to operate within the segment. The ongoing compliance regime ensures brokers are always improving them selves and their business practices. Brokers invest heavily in themselves and their business and the benefits are felt by the consumers that use their services.

We need an environment led by the MFAA that promotes the industry to flourish as well as encourage the introduction of new blood. It is well known that there is already plenty of experience in the industry, we now need to leverage this. This will not be achieved by promoting greater education standards on those that have worked so hard to give consumers a FAIR GO.

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GOP proposal would cause 350000 people to lose health insurance

Republicans also pointed out that Democrats in the House and Senate have in the past voted to recapture some of the subsidy overpayments to help pay for a doc fix delaying scheduled cuts to Medicare physician payments, and to eliminate the healthcare laws 1099 tax reporting requirement. The 1099 recapture pay-for reduced the number of people getting insurance by an estimated 265,000 a year.

In certain circumstances under current law, recipients are permitted to keep taxpayer-funded health insurance exchange subsidies to which they were not entitled. The bill before us today protects taxpayers by requiring those receiving higher subsidies than allowed under law to return any overpayments, said committee Chairman David Camp (R-Mich.). As [Health and Human Services] Secretary [Kathleen] Sebelius has previously said, requiring the return of exchange subsidy overpayments mak[es] it fairer for recipients and all taxpayers.

Four liberal advocacy groups — Families USA, Health Care for America Now, the Main Street Alliance and the National Womens Law Center — wrote to the committee to warn that the GOP plan would eliminate the safe harbor provision of the law.

The provision would raise taxes on families whose mid-year changes in income or circumstance cause a yearend recalculation of their premium tax credit, Health Care for America Now and the small-business group Main Street Alliance wrote in a joint letter. 

This proposal removes the repayment cap and jeopardizes the financial security of middle-income families who may face unexpected lump-sum repayments, even when income changes have been reported in an accurate and timely way. Fear of repayment will cause hundreds of thousands of families to refuse the premium tax credit assistance and go uninsured and unprotected against potentially catastrophic health problems and medical bills. Over time, the consequence will be fewer families with insurance and higher premiums for everyone else buying health insurance coverage.

The conservative Americans for Tax Reform countered with a letter supporting the provision.

While this may be scored by the Joint Tax Committee as an increase in revenues, it is assuredly not a tax increase, ATF President Grover Norquist wrote. This money was advanced to the taxpayer in error, based on outdated tax return information about the taxpayer. No one is at fault, but it is hardly a tax increase for taxpayers to benefit only from those tax provisions that the law allows them.

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‘Land ho!’ Or is it ‘Land no?’

THE RECENT Supreme Court decision on the highly controversial Hacienda Luisita case could pave the way to the long-delayed distribution of other agricultural estates among tillers, but experts are pointing out that a long and arduous process lies ahead for both the government and farmer-beneficiaries at Luisita and elsewhere.

Speaking at a press conference organized by agrarian reform advocates last Monday – a day before the Supreme Court released what many are now calling a landmark decision – former University of the Philippines School of Labor and Industrial Relations (SOLAIR) dean Rene E. Ofreneo said that in Hacienda Luisita alone, the difficulty of identifying the legal successors of those dead farmer beneficiaries and addressing the system of arriendo are just among the many hurdles that the government could face in implementing the Court’s decision.

The arriendo, a system where local government officials and former managers and supervisors of Hacienda Luisita, Inc. (HLI) leased tracts of land from farmers at a rate of P10,000 per hectare each year, was adopted there in 2004. Most of the pieces of land are leased until 2015, noted Ofreneo.

He also said that for agrarian reform to be successful the Department of Agrarian Reform (DAR) must work closely with the farmers to provide support services and agricultural credit assistance.

Indeed, since the Comprehensive Agrarian Reform Program (CARP) was implemented in 1988, DAR has always fallen short of its targets of hectares of lands to be distributed to farmer-beneficiaries.

The department’s own data show that from 1987 to 2010, it managed to distribute only a total 4,741,782 hectares out of the original 7,397,318. As of February 2012, DAR reported to have distributed only 113,196 hectares out of the intended 200,000 hectares for 2011.

CARP was intended to redistribute sprawling agricultural estates, regardless of crops or fruits produced, among landless tillers. But it immediately met resistance from many of the families who owned these estates, most of whom had held the properties for generations.

In many cases, measures that were already considered as favoring landowners were seemingly twisted some more and put the tillers at a greater disadvantage.

Among these was the Stock Distribution Scheme (SDO), where farmers and landowners both become stockholders of a corporation governing the estate. This let a property escape being subdivided among the tillers for distribution. In return, the farmers would receive a just share of the fruits of the land they till. In addition, the law orders that the farmers’ assets in the corporation should be composed of the majority, or more than 50 percent of the total assets, to protect their interests.

In the case of HLI, however, the farmers’ assets were composed of 33.296 percent only, while the Cojuangco clan – which counts President Benigno Simeon C. Aquino III among its members – owned 66.704 percent.

But CARP seems to have finally caught up with the Cojuangcos. In an en banc session in Baguio City, the Supreme Court affirmed its November 22, 2011 ruling to distribute the 4,335-hectare Hacienda Luisita, a sugar plantation in Tarlac province, to the 6,296 qualified farmers.

The Court dismissed HLI’s December 2011 appeal to reverse an earlier ruling that “recalled and set aside” the option for farmers to remain stockholders of HLI.

The decision placed HLI under the “compulsory coverage on mandated land acquisition scheme of the Comprehensive Agrarian Reform Program (CARP),” repudiating the SDO scheme.

In an 8-6 vote, the Court also denied another HLI appeal on just compensation.

HLI had argued that just compensation should be based at the time of the taking or at least at the issuance of notice of coverage by DAR in January 2006, pursuant to the Presidential Agrarian Reform Council (PARC) resolution in December 2005.

The Supreme Court decision means that the farmers would pay the Cojuangcos only P40, 000 per hectare or P173.4 million, which was based on the land’s value on Nov. 21, 1989 when the stock distribution plan was approved, instead of P1 million per hectare or P4.335 billion

The 1989 rate was just fair and which the farmers could afford, Christian Monsod, legal counsel of the farmers, said in the Monday press conference by agrarian reform advocates.

Monsod also said that they believed the Court would uphold the side of social justice – the farmer beneficiaries. But if social justice could be further invoked, Monsod commented, an additional compensation should be given to the farmers for the 24-year delay on giving the land to its due owners.

Policy and agrarian reform advocates Center for Research and Special Studies (CRSS) and Climate Change Congress of the Philippines (CCCP) meanwhile said in a press release that the Court’s recent decision could lead to the distribution of other disputed agricultural estates under the SDO scheme, particularly in the Visayas region.

For instance, two SDO cases pending at the PARC are the Hacienda Anita (owned by SVJ Farms) and the Hacienda Teresa (owned by 14 Colored Corporations). Both haciendas are located in Negros province.

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BUSINESS IN BRIEF 25/4

Stocks gain on late trades

Investors rushed to buy low-valued shares during yesterday afternoons session, rescuing both stock indices from another losing day.

On the HCM City Stock Exchange, the VN-Index closed yesterday up 0.1 per cent at 465.65 points. Both market volume and value increased 33 per cent, totalling 88.3 million shares worth a combined VND1.36 trillion (US$64.5 million).

Gainers largely outnumered losers by 156-79 with 69 codes hitting the ceiling prices. Many fell in the morning but rose to the ceiling in the afternoon, most of which were real estate shares including Hoang Anh Gia Lai (HAG), Tu Liem Urban Development (NTL), Ba Ria – Vung Tau House Development (HDC), Development Investment Construction (DIG) and Investment and Trading of Real Estate (ITC).

Over half of the 30 leading shares in market value and liquidity gains pushed the VN30 Index up 0.24 per cent to 534.89 points.

SACOM Development and Investment Corp (SAM) was still the most active stock in the afternoon with 3.3 million shares traded, surging 4.71 per cent to VND8,900.

The sense of precaution shadowed the market in the morning session but the slight corrections in the past few days after hitting a nearly one-year high strengthened the belief that another upward trend was taking shape, analysts of FPT Securities Co wrote on the companys website yesterday.

The petrol price hike and low CPI did not affect the market much. Analysts said the most important issue now was money flow. If money was not withdrawn abruptly from the market, the uptrend would likely be sustained, but not massively in all stocks as before.

On the Ha Noi Stock Exchange, the HNX-Index earned another 0.98 per cent to close yesterday at 78.57 on a turnover of VND733 billion ($35 million), up 20 per cent from Mondays total value.

Advancers almost doubled decliners with PetroVietnam Construction (PVX), the most active stock with over 6 million shares exchanged, rising 1.75 per cent to close at VND11,600.

Foreign investors were net sellers on both exchanges yesterday, unloading a combined VND33.5 billion ($1.6 million) worth of shares.

Da River diverted for dam project

The Da River has been officially closed for the first phase of construction on the Lai Chau Hydropower Plant in the provinces Muong Te District.

Electricity Viet Nam (EVN) is the investor in the 1,200-MW project, worth VND35.7 trillion (US$1.8 billion). Construction began early last year for completion in 2017.

Deputy Prime Minister Hoang Trung Hai announced the closure at a ceremony yesterday, while praising the efforts of EVN, builders and local authorities.

There would be many things to do following the river closure, Hai said. He asked the project managers to complete flood prevention work and resettlement of residents in affected areas.

EVN general director Pham Le Thanh said at the ceremony that the plant would add a huge amount of electricity to the national grid, provide water for northern provinces in the dry season and boost the socio-economic development of Lai Chau and its neighbour Dien Bien.

It was estimated that more than 1,700 affected households would be relocated to new areas.

The second river closure is scheduled to take place in November and the first turbine is scheduled to go online in 2016. The plant has a reservoir of over 1,200cu m. It is expected to provide an average 4,670 million kWh annually.

Nokia starts work on manufacturing facility in Vietnam

Nokia yesterday kicked off the development of its manufacturing facility in Vietnam, to serve the growing demand for mobile phones all over the world.

Located in Vietnam-Singapore Industrial Park (VSIP) in the northern province of Bac Ninh, the Nokia Vietnam manufacturing facility is being developed on an area of 17 hectares. Nokia expects to start the operations of this factory in early 2013.

The event is one step further in reaffirming Nokias long term commitment to the Vietnam market, under Nokias strategy to connect the next billion people to information and the Internet, the company stated.

We highly appreciate Nokias efforts in making this commitment a reality, which contributes to the growth of foreign investment in Vietnam in general and in Bac Ninh in particular,” said Nguyen Nhan Chien, President of Peoples Committee of Bac Ninh province.

“We also hope this will bring up not only economic value, but also other social benefits for the country like job creation and community knowledge enhancement on information technology alike.

Mary McDowell, Executive Vice President, Mobile Phones, Nokia, said: Thanks to the valued support from the Vietnamese government, our manufacturing program in Vietnam has been progressing well. The new Nokia manufacturing plant will produce and provide new devices for compelling and affordable, localized mobile experiences, particularly in the growth markets.

Nokia is also committed to extending our positive reputation as an employer and as a corporate citizen. We expect to attract competent and energetic employees from the local skilled labor force. And in turn, employees at our new factory can expect a state-of-the-art facility and a positive, modern working environment with high professional and ethical standards, continued McDowell.

Nokia currently operates two representative offices in Vietnam: one in Ho Chi Minh City and the other in Hanoi.

In November, 2011, Nokia established a new company, Nokia (Vietnam) LLC, to build and operate the new Vietnam manufacturing facility.

VN businesses in Russia boost bilateral trade

The Vietnam Union of Friendship Organisations (VUFO) and the Vietnam Business Association (VBA) in Russia signed the minutes of cooperation in Russia on April 22.

Under the minutes, the two sides will exchange information about investment environments in Vietnam and Russia , give advices to implement economic, commercial and investment cooperative projects, and support enterprises in doing business in the two countries.

Attending the signing ceremony were Chairman of Vietnam-Russia Friendship Association Dao Trong Thi, Vietnamese Ambassador to Russia Pham Xuan Son, the VBA executive board and a VUFO delegation, which is on a working visit to Russia .

VBA President Tran Dang Chung expressed expectations that VBA members will do their utmost to contribute to the people-to-people activities and the promotion of Vietnam ‘s images in Russia .

He said he hopes to take advantage of the support of Vietnamese agencies and branches in building a long-term legal framework for the Vietnamese community in Russia .

Within the framework of the visit, the VUFO delegation offered flowers at Ho Chi Minh Statue and paid tribute to VILenin mausoleum at the Red Square, in the Russian capital of Moscow on the occasion of his 142nd birth anniversary.

Domestic tours cut prices to woo customers

Nearly twenty travel agencies under the Ho Chi Minh Tourism Association (HTA) have joined hands with national carrier Vietnam Airlines (VNA) to unveil a tourism promotional program targeting domestic tour packages between now and year-end.

VNA will slash airfares by 40 percent for services connecting HCMC and Hanoi, Hai Phong, Da Nang, Phu Quoc, and Da Lat to tour organizers, under the condition that the latter pledge to offer discounted travel packages to promote domestic tourism, according to Nguyen Thi Viet Thu, deputy head of the sales development department.

Specifically, round-trip tickets for the HCMC-Hanoi route will be VND3 million a passenger, while the respective rates for the HCMC-Da Nang and HCMC-Phu Quoc will be VND1.9 million, and VND1.6 million per passenger, she said.

HTA deputy chairwoman Nguyen Thi Khanh said her institution and VNA have selected 19 travel agencies to join in the program, each of which will offer at least six discounted packages.

The participants have booked airfares from VNA, while some have begun to reduce prices for their services since April 20, added Khanh.

“At a time when prices of almost all commodities have shot up, VNA’s lower airfares will greatly encourage tour organizers,” said Tran The Dung, deputy director of The He Tre Travel Co.

“If travel agencies cut their service prices by another 8 – 10 percent, tourism package prices can be reduced by at least 22 percent from the current rates.”

Tran Van Dong, director of Phu Quoc-based Huong Bien travel agency, said he will encourage local hotels and 3- and 4-star resorts to cut accommodation fees by 40 – 50 percent.

These discounted services, plus the lower air ticket prices, will create an impulse for the island’s tourism, he said.

Similarly, Da Nang-based Vitour Co also negotiated with its partners to cut service prices by at least 10 percent to “initially introduce at least six discounted tour at prices 25 – 30 percent lower than usual,” its director Cao Tri Dung said.

“VNA will provide particular assistance to tour organizers to enable them to offer the best prices for tourists,” promised VNA deputy CEO Trinh Hong Quang.

VN deals with global economic challenges

Vietnam should have policies to cope with global economic and financial challenges, said experts at a seminar in Hanoi on April 23.

At the seminar, jointly held by the Vietnamese Finance Ministry, the Asian Development Bank (ADB) and the Korea Asset Management Corporation, experts from Hong Kong, the Republic of Korea and Japan assessed the impacts of the global financial crisis on the economies of Asia in general and Vietnam in particular.

They put forward recommendations on macro-economic policies for Vietnam in the immediate future as well as in the middle term, to deal with global challenges.

They also shared international experience in the restructuring of State-owned enterprises (SOEs) and emphasised the role of asset management companies in improving the capacity and operational efficiency of businesses.

According to Vietnamese Finance Minister Vuong Dinh Hue, despite more satisfactory prospects in the first quarter of 2012, the world economy is still in difficult phase, with many risks and challenges.

ADB Vice Chairman Bindu Lohani said countries with strongly developing domestic markets but not those with huge overseas investments, will soon escape from the current crisis.

Although Vietnam earns large profits from exports to developed countries, the country still needs to pay more attention to domestic and regional demand, he said.

The restructuring of SOEs is also one of the key measures helping Vietnam overcome financial crises, Lohani said, adding that the ADB is joining the Vietnamese Government’s efforts in building strategies to reform SOEs, especially small and medium businesses.

He also stressed that Vietnam should base its economy on domestic resources and have suitable financial tools to implement reforms.

Participants at the seminar said that the satisfactory developments of the world economic and financial situation will create new opportunities and challenges for Vietnam to maintain its macroeconomic stability and economic growth.

In the first quarter of this year, the Vietnamese economy saw satisfactory signals such as a reduced consumption index, stable foreign exchange market, increased exports and a trade surplus of 224 million USD.

ABD forecasts that Vietnam ‘s economic growth will stand at 5.7 percent this year and be more than 6 percent in 2013.

Sembcorp gets OK for Vietnam industrial park, power plant

Singapore industrial conglomerate Sembcorp Industries said on Monday it has obtained approval to proceed with a $337.82 million industrial park and 1,200-megawatt power plant in Vietnam.

A Vietnamese-Singapore joint venture involving Sembcorp will develop the industrial park in Quang Ngai Province in central Vietnam, Sembcorp said in a statement.

The Vietnam-Singapore Industrial Park Quang Ngai will comprise a 600-hectare industrial park as well as a 520-hectare site zoned for commercial and residential development. The park will be the Sembcorp-led consortiums fifth in the country.

The Singapore firm also said its unit Sembcorp Utilities was granted in-principle approval to develop the 1,200-megawatt power plant in Dung Quat Economic Zone in Quang Ngai.

Sembcorp is currently assessing the feasibility of this project, it said.

Sembcorp businesses include oil rig building and ship repair, which come under listed Sembcorp Marine, as well as industrial parks, water and power generation.

New, highly competitive products named

Six more items were officially added to the list of national products of high competitiveness approved by the Prime Minister last week.

Rice of high grade, lifting equipment, network and information security products, vehicle engines, vaccines and products for national security are now considered national products.

Three others were also put in reserve, including catfish processed products, edible and medical mushrooms, and electronic chips.

The list is part of the implementation of the National Product Development Program to 2020, aimed at developing made-in-Vietnam products with advanced technologies.

The program’s goal is to raise the competitiveness of Vietnamese products in the world market in terms of originality, quality, and price, as well as to create higher added value.

To this end, the enhanced application of science and technology plays an important role, according to the program’s Steering Committee.

Vietnam’s forex reserves estimated at $19-20 bln

The foreign exchange reserves of Vietnam have improved significantly, equivalent to the payments for 9 weeks of imports from about 7.5 weeks as of mid-2011, said the government in a recent report.

But the government did not give the specific figure of the country’s forex reserves in the latest socioeconomic report 2011 submitted to the Standing Committee of the National Assembly late last week.

The current forex reserves may range from $19-$20 billion, newswires Vneconomy and Dan Tri quoted some experts, citing the government’s socioeconomic report.

However, according to the International Monetary Fund (IMF) norm, the scale of foreign exchange reserves should reach between 12-14 weeks of imports to be regarded as sufficient.

The norm for the safe rate of forex reserves of the World Bank is 10 weeks.

Earlier, Asian Development Bank (ADB)’s report estimated that the country had nearly $17 billion in foreign currency reserves, equaling to about two months of imports.

The reserves rose by around 25 percent over late 2011 following the active move of the central bank to buy foreign currencies, said ADB.

The State Bank of Vietnam early this month announced that it had used around VND130 trillion to buy $6.23 billion worth of foreign currencies from banking system for the national reserve in the first 3 months of 2012.

The reserves rose by $3.5 billion compared to the rate the ADB announced in mid-2011, said ADB expert Dominic Mellor.

At the Consultative Group’s meeting in June 2011, Nguyen Sinh Hung, then chairman of the country’s National Assembly, said the country targeted to increase its forex reserves to 16 weeks of imports in 2012.

The report also said that in Q1/2012, Vietnam’s international current account balance had positive signs. The country enjoyed a current account surplus of nearly $2 billion this year while it suffered a deficit of $126 million in the same period last year.

The country’s total export turnover in the first 3 months of 2012 continued to reach high growth rate with an estimate of over $24.8 billion, rising 25 percent year on year.
The total import spending in Q1/2012 is estimated at about $24.58 billion, rising 6.1 percent on year.

Thus, in Q1/2012, the country ran a trade surplus of $220 million, equaling to about 0.9 percent of the total export turnover, the best results versus the same period of recent years.

In Q1/2011, the country posted a trade deficit of $3 billion.

However, the report also said that the trade surplus was attributed to not only increasing exports and low imports but also to the declines in investments and processing industry production, resulting in the fall in the country’s demand for importing raw materials, machineries and equipment.

Tay Ninh petitions for duty free mechanism extension

The provincial Peoples Committee has petitioned the Prime Minister extend the duty-free mechanism for travellers who buy goods at Moc Bai Economic Zones duty-free shops to 2018, rather than terminate at the end of the year.

The extension was expected to better facilitate domestic and foreign businesses desiring to invest in the zone, the committee said, adding that the States decision to stop selling duty-free goods in the zone negatively influences its attraction of new investment projects.

Losing broker faces delisting threat

Bao Viet Securities Co (BVS) is conservatively targeting a profit of only VND14.6 billion (US$690,000) this year, BVS vice chairman Le Hai Phong said.

The company posted a loss of VND99 billion ($4.7 million) last year due to the difficulties of the market and weak information technology systems, Phong told the publication Dau tu Chung khoan (Securities Investment). In 2010, the brokerage also lost over VND90 billion ($4.2 million).

Phong said the companys top priority this year was to break this trend and posted a modest profit. Under State Securities Commision regulations, listed firms which post losses three years in a row are asked to delist shares from the stock exchange.

However, the firms leaders were still uncertain about the sustainable rally of the market, which would hinder it from reaching its targets.

If the market stops hitting new lows, our aims can be reached, said company chairman Nguyen Thi Phuc Lam.

The leading task, therefore, was to deploy core technology system to serve risk management, Phong said.

His company has been implementing margin trading and its new system for a week, which is supported by the total of VND750 billion ($35.7 million) in cash and bonds. In the first quarter of this year, the company earned a profit of VND10.4 billion ($490,000), accounting for 71.5 per cent of the year plan. While self-trading revenue declined 47 per cent over the same period last year, other sources of revenue rose around 50 per cent.
Investment bank gets award for long service

The Bank for Investment and Development of Viet Nam (BIDV) received on Sunday the States first-class Independence Order for the second time on the occasion of its 55th anniversary.

It was also presented with the Lao Independence Order and the Royal Order of Cambodia at the ceremony for its contributions to boosting social welfare in the Indochina region.

Speaking at the ceremony, National Assembly Chairman Nguyen Sinh Hung said the Bank for Investment and Development of Viet Nam was a leader in helping Vietnamese enterprises boost investment promotion in other countries.

The bank has also helped encourage Vietnamese trade in Indochina and ASEAN countries, he said.

Besides, BIDV had been actively participating in community activities and social welfare, he said.

The commercial bank, which has been ranked as the best supporter of development in Viet Nam by the United Nations Development Programme, has connections with 1,551 financial institutions internationally and domestically.

BIDV, one of Viet Nams four biggest commercial banks, yesterday officially became a joint stock business, with a charter capital of VND23 trillion (US$1.09 billion).

Thaco takes 51 per cent of Korean special vehicles maker

The countrys largest truck and bus maker Thaco Truong Hai (Thaco) said it had acquired a 51 per cent share in Korean special purpose vehicle maker Soosung.

The US$3.5 million deal will help Thaco to expand its production scope to special purpose vehicles like crane trucks, dump trucks and cement mixer trucks.

According to Thacos general director Tran Ba Duong, Soosung would transfer production technologies as well as production lines and help Thaco to operate more efficiently.

Based in the Korean city of Incheon, Soosong employs 500 people and has an annual sales volume of $10 million.

Thaco recently invested US$104 million on a diesel machine production factory using Hyundai technology in an effort to increase the local content in its products.

The Quang Nam based company sold 32,000 vehicles last year, accounting for 29 per cent of the local automobile market and earning VND11 trillion ($ 527 millions) in revenue.

Retail market potential remains untapped

Vietnams total retail market is forecast to grow at 23 percent annually between now and 2014, offering many opportunities for both domestic and foreign retail businesses, according to a report by AT Kearney.

The report Vietnam Retail Market Forecast to 2014 says that modern retail channels will play a crucial role in future growth, improving their position in the market. Increasing purchasing power and changing lifestyles are some of the key growth drivers in the countrys modern retail market, it says, adding that during the next few years, a short wave of consolidation will emerge as foreign retailers are trying to consolidate their position and accelerate their market penetration.

The modern retail market will be the key distribution channel in Vietnam in the near future due to its huge consumption market of nearly 90 million consumers, AT Kearneys report remarks. Vietnamese consumers shopping habits are changing, with more spending in modern retail outlets due to convenience and health-related issues. Many consumers said that modern retail outlets give them good access to new products, more confidence in food safety, and clean facilities.

Vietnams total retail revenue in 2011 reached nearly VND2 trillion or approximately US$90 billion, an increase of 29.3 percent in comparison with the previous year, and contributing 15-16 percent of the Gross Domestic Products (GDP), a promising figure in the context of decelerated economic growth, according to the Ministry of Industry and Trade (MoIT).

The country currently has 636 supermarkets, 120 commerce centres and over 1,000 convenience stores. Experts says these figures still do not meet the demand. As a result, Vietnams retail market holds many opportunities for both foreign and domestic investors.

Competing with foreign retail businesses will be a big challenge for domestic companies, says MoIT. Leading international retail groups have poured large investments into their business expansions in Vietnam with the aim of gaining the lion’s share. This can be seen through the opening of more outlets and trade centres to compete with local retail businesses.

Leading brands like Metro Cash amp; Carry opened 10 new trade centres in 2011 while Parkson added seven new shopping centres in big cities across Vietnam. Big C invested US$14 million in a new trade centre in the central province of Thanh Hoa late last year, raising its chain in Vietnam to 17, and plans to increase the figure to 29 by 2013. Japans Aeon retail group decided to invest US$101 million in a chain of Jusco trade centres and supermarkets across Vietnam. With initial investment capital of US$80 million, the Republic of Korea (RoK)s E-Mart Group has signed a joint venture with Uamp;I Group to put their first project into operation this year.

Vietnamese retail businesses are also trying their best to stand firm in the local market. Co.op Mart will open six new supermarkets this year, increasing its network to 57 across the country. The electronic retail company dienmay.com plans to open five new stores this year, bringing its total to 12.

By 2020, E-Mart Vietnam will establish a chain of 52 supermarkets and stores in big cities with total investment capital of up to US$1 billion. Phu Thai Group, Itochu Group and Japanese company Family says their store chain has reached 19 since 2009, and they have planed to open 27 new stores this year.

Since the country opened its market to 100 percent foreign retailers in early 2009, with the entry of the likes of Metro Cashamp;Carry and Lotte Mart, modern retail formats are growing more prominent in the country. Some foreign retailers are also expanding their distribution networks to Vietnams rural regions. However, traditional retail channels still dominate the market.

In fact, the local retail network for common goods in general and necessity goods in particular remain poor and weak. Over the past few years, although the State and local businesses have concentrated on upgrading infrastructure and expanding the network, a lack of close co-operation and co-ordination among producers, businesses and localities has led to ineffective goods distribution.

In the face of fierce competition, Vietnamese retailers and distributors will have to come up with strategies to stand firm in the local market.

Hanoi’s export revenue up 4.4 percent in April

Domestic and overseas businesses operating in Hanoi have recorded a total export revenue of US$780.4 million in April this year, up 4.4 percent against last month and 10.4 percent compared with the same period last year.

Of the total, the export turnover of local businesses rose by 4.6 percent and 10 percent, respectively.

These modest figures show a fall in sale by businesses in the capital due to shrinking markets overseas such as the EU, Japan and the US.

In the first four months of this year, Hanoi’s export turnover reached US$2.86 billion, a year on year increase of 2.3 percent, of which the value of exports from local businesses rose by 3 percent.

The increase can be seen on exports such as garments at 5.2 percent and computer components and peripheral devices 29.2 percent.

Bank loans are still inaccessible, say realty firms

Despite the State Bank of Vietnam’s announcement on the loosening of the tightened credit valve targeting the real estate sector a fortnight ago, industry players say loans are still beyond their reach, while their projects remain sluggish.

A number of realty businesses said their loan applications have been rejected by banks for a myriad of reasons.

One such company, Le Thanh Co, was told that its application needs to be approved by the credit committee of the bank’s branch first, and then that of its headquarters.

“Even when it is approved, it will take at least several months to receive the money,” said Nghia.

He added that the company’s project, Le Thanh Twin Towers, is still under construction. Most of the VND500 billion need for the project is sourced from the company itself, and bank loans make up only VND24 billion.

“We only want to borrow another VND50 billion, just in case the market remains frozen,” he explained.

Similarly Le Tan Hoa, CEO of Lilama SHB, said the company badly needs capital to proceed with its two unfinished projects.

“Yet the banks all turned me down, saying they have to wait for guidance from the central bank in offering loans to realty firms,” said Hoa.

“Banks will either refuse to lend you money, or give the excuse that they are restructuring business debts,” said Nguyen Bao Hoang, deputy CEO of Thu Duc Housing Development JSC.

“Some banks require borrowers to have a stable source of revenue to be eligible for loans,” he added.

A bit luckier is Duc Khai JSC, who recently inked a deal with Vietinbank on a credit package offered to customers of the former’s Era Town project in HCMC’s District 7.

Customers will be offered loans worth 70 percent the value of the apartment they are to buy, said the company’s CEO Nguyen Ngoc Lam.

“Vietinbank also promised VND1.2-trillion in credit assistance to speed up the project construction.”

“Real estate prices have reached their bottom over the last few years, providing a good chance for customers like us,” said Thuy Linh, who recently purchased a 70-squar-meter apartment from The Era Town project.

Linh said she was only able to make up her mind when Vietinbank offered the credit help, adding however that she is concerned about the high interest rate.

“If lending interest rates do not go down in the future, it will be a problem for civil servants like us,” she said.

Hoang Anh Tuan, CEO of Tac Dat Tac Vang, said the largest issue for the realty market is weak liquidity.

Thus, customers should be provided with loans to enable them to buy houses, he said.
Though real-estate has been removed from the non-encouraged sectors for lending, interest for this sector still remain high, businesses complained.

“A bank promised to consider lowering the rate for my old loans, but then quickly disappeared,” said Hoang of Thu Duc Housing Co.

Mexico eager to establish trade ties with Vietnam

Mexican businesses are keen to set up trade links with Vietnamese partners, especially in the areas of coffee production and processing, aquaculture and tropical fruit export business.

This was released at a recent seminar entitled “Business in Vietnam” held in Mexico’s Tuxtla Gutierrez and Tapachula cities, drawing the participation of nearly 100 leading businesses from southern Mexico’s Chiapas state involved in the agro-forestry-fishery processing sector.

At the seminar, Vietnamese Ambassador to Mexico Le Thanh Tung and Trade Counselor Hoang Anh Dung briefed Mexican businesses on Vietnam’s present socio-economic development and investment environment.

Ambassador Tung said Vietnam is willing to create the best possible conditions for Mexican businesses to invest in the country with a view to strengthening bilateral cooperation comprehensively.

With two-way trade turnover estimated at US$1.037 billion in 2011, Vietnam is considered a gateway for Mexican businesses to penetrate the Southeast Asian market of approximately 590 million consumers, he said.

During the seminar, Tung met with local authorities, visited the Autonomous University of Chiapas (UNACH) and Mexican coffee and seafood processors and talked to the press about the current Vietnam-Mexico relations.

Chiapas State is located in southern Mexico and bounded to the East by Guatemala with a total area of 75,000 km2 and a population of 5 million. Chiapas has favourable climate conditions for developing the agro-forestry-fishery sector and hydro- and wind power.

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Company project earns Ohio tax credit

When Technical Rubber Co. begins major operations in its new 91,000-square-foot Johnstown facility in June, it will be taking the first step to earn a tax credit recently granted by the Ohio Department of Development.

Doing business as Tech International, the company was selected as one of 12 statewide to receive the credit based on the Ohio Jobs Creation Tax Credit Program. According to an ODOD news release, the Ohio Tax Credit Authority approved a 35-percent, six-year tax credit to Technical Rubber for the creation of $900,000 in additional annual payroll as a result of the companys Johnstown expansion project.

Its exciting stuff, said Kim Hansen, Tech Internationals chief financial officer. Hansen said the tax credit applies only to new hires.

Technical Rubber expects to create 29 full-time positions, generating $900,000 in additional payroll (and retaining $8.2 million in existing payroll) as a result of the companys local expansion project.

As part of the tax credit agreement, the authority requires the company to maintain operations at the Johnstown location for at least nine years.

The tax credit will begin January 2013 and will end December 2018.

This is very exciting for Johnstown, said Village Manager Jim Lenner. Were grateful of Tech Internationals commitment to Johnstown and Licking County. We look forward to their continued presence in Johnstown through the opening of their new facility in the Business Park.

Lenner said he expects the company to begin operations in the new facility within a couple of months.

The Ohio Job Creation Tax Credit Program was established in 1993 to provide a refundable tax credit against a companys corporate franchise or income tax based on the state income tax withheld from new full-time employees.

The Ohio Tax Credit Authority, a five-member independent board of taxation and economic development professionals, is responsible for reviewing and approving applications for tax credit assistance and setting the benefit level. The authority also has oversight responsibilities that include monitoring and reporting the progress of approved projects.

Tech International offers tire repairs and wheel service solutions. Founded in 1939 and based in Johnstown, the company markets more than 5,000 products in about 110 countries worldwide. It is recognized as one of the top exporters in the United States and has received numerous export awards from the US Chamber of Commerce and the Ohio Department of Commerce.

The company has subsidiaries in China, Japan and Europe. During its nearly 70 years of operation, Tech International has remained a family-owned, privately held company, continually owned and managed by the Chambers family.

Katie Sabatino, spokesperson for the ODOD, said Ohio selects businesses for the tax credit based upon whatever is a good deal for the state.

They wont (approve) a project unless they see a positive return on investment, she said.

According to the Department of Development, the Job Creation Tax Credit is a major factor in Tech Internationals decision to expand in Ohio, which is competing with China and India for this project. Both countries offer lower labor costs. State support would help move the project forward in Ohio.

Tech International is one of 12 projects approved for the tax credit that are expected to create a total 1,580 new jobs and retain 1,936 jobs in several communities, the ODOD news release stated. In all, these projects are estimated to result in $76.1 million in new payroll and more than $328 million in new capital investment.

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Sonru Launches its video interviewing solution on Taleo’s Solution Exchange (PR)

Sonru, today announced that its video interviewing solution is now available on the Taleo Solution Exchange, the worlds largest cloud community for talent management. Taleo Corporation (NASDAQ: TLEO) is a global leader of SaaS-based Talent Management solutions. The certified partner will allow users to now access Sonrus pre-integrated video interviewing solution within their hiring workflow. Customers will be able to view, share and provide collaborative feedback on the candidate interviews. It integrates with Taleo Enterprise.

Fergal OByrne, Group CEO of Sonru, Sonrus certification to the Taleo Passport program is a reflection of the increasing number of Taleo clients that are turning to Sonru to optimise their screening and interviewing process. Taleo clients are enjoying greater benefits from a time and cost saving perspective.

About the Taleo Solution Exchange?
Part of Taleos Partner Program, the Taleo Solution Exchange leverages an extensive network of partners, offering Taleo customers a highly diverse, pre-integrated set of products and services including candidate sourcing, assessment, tax credit assistance, background and drug screening.

About Taleo ?
Taleo (NASDAQ: TLEO) helps organizations improve the performance of their business by unlocking the power of their people. Taleo is the only company to provide industry leading solutions in every category of Talent Management. Through its cloud-based platform, Taleo optimizes recruiting, performance management, learning and compensation — and integrates them all so managers have the insights they need to achieve talent intelligence. Customers also plug into Taleos unique Talent Grid community to harness the power of proven best practices, millions of users, and Taleo-ready partner solutions. From small and medium sized businesses to large enterprises, more than 5,000 organizations rely on Taleo every day to pursue growth, innovation and customer success.

About Sonru
Sonru is a global leader in the field of video interviewing and selection. As recently recognized by both Gartner and Bersin as a leader in this space, Sonru has established the effectiveness and validity of using video in the recruitment process. Fortune Global 500 companies are innovating in their talent acquisition processes by using Sonrus video interview solution.

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Salt Lake City project turns to stimulus funds

Salt Lake City Providence Place Apartments goes a long way toward filling the need for workforce housing in downtown Salt Lake City.

The large 125-unit development is reserved for households earning no more than 60 percent of the area median income (AMI).

“We felt the needs of the 60 percent market were not being met,” says Kip Sheppard, president and CEO of Wasatch Advantage Group, LLC, explaining that many of the other affordable housing communities in the region are restricted to residents earning about 40 percent of the AMI.

He says the demand for affordable housing at the higher level is only going to grow with a $1.5 billion redevelopment effort taking place just two blocks away. Spearheaded by the real estate development arm of The Church of Jesus Christ of Latter-day Saints, the nearby City Creek Center will feature destination retail, office, and residential components, creating a number of jobs in the neighborhood.

Because the new apartments are reserved at the 60 percent level, the allowable income for a family of two is $33,060. For a family of three, it is $37,200.

Although Wasatch leaders felt good about their plan from the beginning, they nearly had to change course when construction prices spiked 25 percent to 30 percent around 2007.

“We had to decide whether to wait out the construction balloon or go market-rate,” Sheppard says.

After weighing different options, the Wasatch team remained convinced that the best use for the site was affordable workforce housing and was prepared to hold on to those plans. Fortunately, the wait wasn’t too long.

Inside the financing

The American Recovery and Reinvestment Act passed in 2009, creating new funding programs, such as the New Issue Bond Program (NIBP) and the Tax Credit Assistance Program (TCAP), to help spur affordable housing production during the economic downturn.

A combination of NIBP and TCAP funds, help from local leaders, and falling construction costs allowed the $18.7 million housing development to move forward.

“Centrally located in downtown, Providence Place is providing workforce housing for the folks who work in the support industry around downtown,” says Claudia O’Grady, vice president of multifamily finance at Utah Housing Corp. (UHC). “It is an important component of the housing piece that was missing.”

UHC provided financing through several sources, including the NIBP, TCAP, and low-income housing tax credits (LIHTCs).

The local support also included an $800,000 loan from the Olene Walker Housing Loan Fund and a $200,000 loan from the Salt Lake City Housing Trust Fund. The fund administrators understood the need for workforce housing in downtown and recognized that they had a one-time opportunity to leverage $2 million in federal stimulus money.

The Goldman Sachs Urban Investment Group (UIG) also played a key role as the direct LIHTC investor, providing $5 million in equity.

“There are two critical investment features that drive us and were present in abundance in the Providence Place project,” says Rachel Diller, vice president at Goldman Sachs UIG. “We’re always focused on the partners and the project impact. On the partners’ side, this project is a great example of the value that is created through private and public partnerships. The financing involved a coalition of public support from multiple agencies and levels of government, brought together by a strong and accomplished development partner in Wasatch.”

“The other compelling aspect is project impact,” Diller adds. “Providence Place is not just providing much-needed affordable housing but is also supporting the city’s downtown revitalization efforts. It’s an opportunity to create workforce housing that helps preserve an economically integrated urban community. Having families close to transit, downtown, and jobs is good for the economic development efforts of the city and important to the families who are housed there.”

Salt Lake City is also a market that the UIG team has focused on, helping finance the creation of more than 400 affordable housing units and several community facilities in the past two years alone.

The first residents moved into Providence Place in December, and the ribbon-cutting ceremony was held this January, exactly one year after its groundbreaking.

The seven-story development features five levels of housing and two levels of parking. The building offers a clubhouse, a media/business center, a fitness center, and an open-air atrium.

Key Financing

$9.8 MILLION in tax-exempt bonds through the New Issue Bond Program and issued by Utah Housing Corp. (UHC)

$5 MILLION in low-income housing tax credit equity from Goldman Sachs

$2 MILLION in Tax Credit Assistance Program funds from UHC

$800,000 loan from the Olene Walker Housing Loan Fund

$200,000 loan from the Salt Lake City Housing Trust Fund

$921,000 in developer equity