16:47' 06/05/2008 (GMT+7)
Forming economic groups from general corporations seems to be in fashion in Vietnam. However, experts have pointed out that this is not a good thing in all cases.
The director of a Japanese investment fund said that he cannot understand why Vietnamese enterprises like the word ‘economic groups’. The reports of equitised corporations and private companies all say that the corporations aim to form strong economic groups sooner or later.
Meanwhile, the director said that he thinks the most suitable model for Vietnam in particular and Asia in general is the existence of small- and medium-sized enterprises, which can easily adapt to new circumstances and be competitive.
In fact, the model of chaebol (big conglomerates formed and managed by big families, which control main business fields of the national economy) is shaky. Last year, the Hyundai Group chairman was convicted of embezzling public money. This year, the chairman of Samsung Group announced his resignation following his indictment on tax evasion charges.
In South Korea, the 30 biggest chaebols control 40% of the national economy. Meanwhile, in Vietnam, according to the Ministry of Finance, there are 70 economic groups and general corporations. The giant groups and corporations just make up 40% of GDP, but use 60-70% of bank loans and the same proportion of foreign loans.
Most of the said groups and corporations are operating in the most profitable business fields, where they enjoy a monopoly, including petroleum, electricity, coal, and aviation. Though being the sole players on the pitch, the economic groups and corporations often complain that they incur heavy losses and threaten to raise the sale prices of commodities.
These groups and general corporations especially like setting up subsidiaries, which are the playing fields where they can exploit most of the preferences from the monopoly. Many of them have jumped into other business fields, which has raised concerns about their capacities in business management. Audited financial reports by the groups show that many of them have not been making profit, or even causing the state to suffer losses.
Of course, the bad performance of the groups and the risks they meet lead to risks for the national economy.
Dr Le Dang Doanh, a senior economist, said that Vietnamese economic groups and corporations are now like giants with weak feet. They have large bodies but cannot stand firmly on their feet. They always need the support of the state to survive.
However, analysts have warned that monopolies will be removed under the pressure of global economic integration.
It is necessary now to put economic groups under the strict control of the law, and to tidy up the business environment, expert say.
Tuesday, 6 May 2008
solutions needed to stabilise pharmaceuticals market
05:28' 07/05/2008 (GMT+7)
According to the Ministry of Health, by the end of the first quarter of 2008, drug prices on the domestic market had risen by 8.93 percent. However, experts said that unforeseeable circumstances in both world and domestic markets had caused the abrupt increase in drug prices similar to what happened in early 2004.
Deputy Minister of Health Cao Minh Quang attributed the failure to control current drug prices to political instability in many countries around the world, the complicated situation in the domestic market, natural disasters and the soaring inflation rate.
In addition, the prices of input materials, which make up 90 percent of businesses’ production costs have driven domestic drug prices up. Meanwhile, imported medicines continue to be dominated by the global market.
The limited import of rare medicines has led to a monopoly on some drugs and difficulties in controlling the prices of others.
According to the Ministry of Health, approximately 20,000 kinds of drugs are sold in Vietnam. However, domestic producers only focus on common medicines at lower prices.
Meanwhile, poor distribution networks have also increased intermediate costs before patients can access the drugs, Mr Quang said
Many businesses prefer to import drugs through go-betweens rather than import directly from foreign producers in order to enjoy a percentage of their profits. Furthermore, more than 39,000 pharmacies have failed to meet the necessary requirements in terms of space and facilities under the Good Pharmacy Practice (GPP) standard. Currently, less than 40 pharmacies meet the GPP standard compared to the set target of having all GPP pharmacies nationwide by 2011.
According to the Pharmaceutical Product Management Administration, bad quality medicines accounted for 3.30 percent of the total drug samples in 2007, higher than the 2006 level of 3.18 percent while poor-quality medicines with a herbal origin made up a rather higher proportion of 10.8 percent.
Director of the Vietnamese National Institute of Drug Quality Control (NIDQC) Trinh Van Lau said that the amounts of low quality and fake drugs, including domestic and foreign drugs is increasing. In particular, imported drugs and oriental medicines which do not reach quality standards account for more than 10 percent. Mr Lau added that any kind of drug, which sells like hot cakes in the market will be copied immediately. The technology used to copy drugs is so sophisticated that even the real producers get fooled. In the past fake drugs appeared in remote areas but now they are available in the big cities. Antibiotic drugs and oriental medicines are the most copied.
Withdrawing from circulation and confiscation fake and low quality drugs has not been implementing in time. Furthermore, supervising the revoking of drugs is weak.
In order to control prices of drugs in the future, at a recent national meeting of the drug sector, deputy Prime Minister Nguyen Thien Nhan suggested setting up a website to list the prices of every drug and the punishments for violations. He urged the relevant agencies to strictly observe the quality of drugs and the distribution network and publicise the prices.
A long-term solution for controlling the price of drugs is to develop the pharmaceutical industry to gradually produce important antibiotic materials and organic pharmaceuticals to ensure enough materials for the domestic drugs industry. In 2008, the sector will also accelerate the production of domestic drugs as well as Generic drugs to supply the public healthcare system.
Mr Quang emphasised that to stabilise the pharmaceuticals market, Vietnam should increase its supplies and apply standards on the preservation and distribution of drugs to 39,016 retail drug sellers all over the country.
According to the Ministry of Health, by the end of the first quarter of 2008, drug prices on the domestic market had risen by 8.93 percent. However, experts said that unforeseeable circumstances in both world and domestic markets had caused the abrupt increase in drug prices similar to what happened in early 2004.
Deputy Minister of Health Cao Minh Quang attributed the failure to control current drug prices to political instability in many countries around the world, the complicated situation in the domestic market, natural disasters and the soaring inflation rate.
In addition, the prices of input materials, which make up 90 percent of businesses’ production costs have driven domestic drug prices up. Meanwhile, imported medicines continue to be dominated by the global market.
The limited import of rare medicines has led to a monopoly on some drugs and difficulties in controlling the prices of others.
According to the Ministry of Health, approximately 20,000 kinds of drugs are sold in Vietnam. However, domestic producers only focus on common medicines at lower prices.
Meanwhile, poor distribution networks have also increased intermediate costs before patients can access the drugs, Mr Quang said
Many businesses prefer to import drugs through go-betweens rather than import directly from foreign producers in order to enjoy a percentage of their profits. Furthermore, more than 39,000 pharmacies have failed to meet the necessary requirements in terms of space and facilities under the Good Pharmacy Practice (GPP) standard. Currently, less than 40 pharmacies meet the GPP standard compared to the set target of having all GPP pharmacies nationwide by 2011.
According to the Pharmaceutical Product Management Administration, bad quality medicines accounted for 3.30 percent of the total drug samples in 2007, higher than the 2006 level of 3.18 percent while poor-quality medicines with a herbal origin made up a rather higher proportion of 10.8 percent.
Director of the Vietnamese National Institute of Drug Quality Control (NIDQC) Trinh Van Lau said that the amounts of low quality and fake drugs, including domestic and foreign drugs is increasing. In particular, imported drugs and oriental medicines which do not reach quality standards account for more than 10 percent. Mr Lau added that any kind of drug, which sells like hot cakes in the market will be copied immediately. The technology used to copy drugs is so sophisticated that even the real producers get fooled. In the past fake drugs appeared in remote areas but now they are available in the big cities. Antibiotic drugs and oriental medicines are the most copied.
Withdrawing from circulation and confiscation fake and low quality drugs has not been implementing in time. Furthermore, supervising the revoking of drugs is weak.
In order to control prices of drugs in the future, at a recent national meeting of the drug sector, deputy Prime Minister Nguyen Thien Nhan suggested setting up a website to list the prices of every drug and the punishments for violations. He urged the relevant agencies to strictly observe the quality of drugs and the distribution network and publicise the prices.
A long-term solution for controlling the price of drugs is to develop the pharmaceutical industry to gradually produce important antibiotic materials and organic pharmaceuticals to ensure enough materials for the domestic drugs industry. In 2008, the sector will also accelerate the production of domestic drugs as well as Generic drugs to supply the public healthcare system.
Mr Quang emphasised that to stabilise the pharmaceuticals market, Vietnam should increase its supplies and apply standards on the preservation and distribution of drugs to 39,016 retail drug sellers all over the country.
Sunday, 4 May 2008
Lao Cai vows six-day project approvals
05:53' 05/05/2008 (GMT+7)
Newly-established firms in the northern mountainous province of Lao Cai can now obtain investment licences in as few as six days.
Three administrative agencies – the Department of Planning and Investment (DPI), the provincial Tax Department and the Department of Public Security– have already taken measures to make business registration easier in order to attract greater investment in the province.
The government of Lao Cai province has pioneered a "three-in-one" approach to the registration process, in which the business registration office within the DPI acts as the single access point for business start-up procedures.
In addition to issuing business registration certificates, the DPI is responsible for interacting with the Tax Department and Public Security Department to assess liability under the tax code and issue an official business licence within just 15 days. "The greatest benefit of this model is that it reduces the time to start up a business," said Vu Kim Quy, head of the Business Registry at Lao Cai’s Department of Planning and Investment. "It now takes only six days for businesses to get all the necessary documentation."
Lao Cai is home to nealy 1,100 firms with a total capital of VND4.5 trillion (US$281.25 million). So far this year, 90 firms have been granted licences, with a total capital of VND929 billion ($58.06 million).
Newly-established firms in the northern mountainous province of Lao Cai can now obtain investment licences in as few as six days.
Three administrative agencies – the Department of Planning and Investment (DPI), the provincial Tax Department and the Department of Public Security– have already taken measures to make business registration easier in order to attract greater investment in the province.
The government of Lao Cai province has pioneered a "three-in-one" approach to the registration process, in which the business registration office within the DPI acts as the single access point for business start-up procedures.
In addition to issuing business registration certificates, the DPI is responsible for interacting with the Tax Department and Public Security Department to assess liability under the tax code and issue an official business licence within just 15 days. "The greatest benefit of this model is that it reduces the time to start up a business," said Vu Kim Quy, head of the Business Registry at Lao Cai’s Department of Planning and Investment. "It now takes only six days for businesses to get all the necessary documentation."
Lao Cai is home to nealy 1,100 firms with a total capital of VND4.5 trillion (US$281.25 million). So far this year, 90 firms have been granted licences, with a total capital of VND929 billion ($58.06 million).
Nine bordergate EZs planned
23:09' 04/05/2008 (GMT+7)
Lorries carry goods through Lao Cai International Bordergate.
Prime Minister Nguyen Tan Dung has approved a plan to set up nine additional economic zones along the country’s bordergate region by 2020, bringing the total number of EZs in the country to 30.
The scheme, endorsed by the Prime Minister on April 25, is part of a larger economic development plan for the bordergate region up to 2020. It focuses on sustainable development and long-lasting friendship and political security between Viet Nam’s border provinces and neighbouring provinces in China, Laos and Cambodia.
The plan calls for the construction of infrastructure and the setting up of a well-co-ordinated management mechanism, together with policies that would increase the gross import-export revenues with neighbouring border regions to US$43 billion by 2020.
The nine target bordergate economic zones are Mong Cai, Lao Cai and Lang Son in the north, the special economic zone of Lao Bao and another central bordergate economic zone Cau Treo, the largest border economic zone of Bo Y in the Central Highlands, Moc Bai, An Giang, and Dong Thap in the south.
These bordergate economic zones should help strengthen international co-operation and attract domestic and foreign investment into the country, according to the master plan.
Bordergate zone
Located in the East-West Economic Corridor and the Viet Nam-Laos-Cambodia economic triangle, the Bo Y bordergate economic zone occupies 400ha in Ngoc Hoi District in the Central Highlands Province of Kon Tum.
To date, 54 investors have launched projects worth VND11 trillion ($687.5 million), including nine projects in the pipeline and 14 that have already been allocated land.
The zone is now focusing on developing infrastructure to attract investors, said Nguyen The Dat, head of the zone’s State management team.
Another bordergate economic zone on the trans-Asia highway, Moc Bai in southern Tay Ninh Province, also has great potential.
Located 70km from HCM City and some 170km from Phnom Penh, the 21.3ha zone opened in March, 2006 and has a commercial-industrial area and a duty-free supermarket.
Provincial authorities approved 38 projects capitalised at VND5.4 trillion ($337.5 million).
Phuong Trinh Co Ltd, in co-operation with Cambodian partners, has invested $3 million in launching a bus route linking Ben Thanh Market in downtown HCM City with Moc Bai and Tay Ninh town.
Lorries carry goods through Lao Cai International Bordergate.
Prime Minister Nguyen Tan Dung has approved a plan to set up nine additional economic zones along the country’s bordergate region by 2020, bringing the total number of EZs in the country to 30.
The scheme, endorsed by the Prime Minister on April 25, is part of a larger economic development plan for the bordergate region up to 2020. It focuses on sustainable development and long-lasting friendship and political security between Viet Nam’s border provinces and neighbouring provinces in China, Laos and Cambodia.
The plan calls for the construction of infrastructure and the setting up of a well-co-ordinated management mechanism, together with policies that would increase the gross import-export revenues with neighbouring border regions to US$43 billion by 2020.
The nine target bordergate economic zones are Mong Cai, Lao Cai and Lang Son in the north, the special economic zone of Lao Bao and another central bordergate economic zone Cau Treo, the largest border economic zone of Bo Y in the Central Highlands, Moc Bai, An Giang, and Dong Thap in the south.
These bordergate economic zones should help strengthen international co-operation and attract domestic and foreign investment into the country, according to the master plan.
Bordergate zone
Located in the East-West Economic Corridor and the Viet Nam-Laos-Cambodia economic triangle, the Bo Y bordergate economic zone occupies 400ha in Ngoc Hoi District in the Central Highlands Province of Kon Tum.
To date, 54 investors have launched projects worth VND11 trillion ($687.5 million), including nine projects in the pipeline and 14 that have already been allocated land.
The zone is now focusing on developing infrastructure to attract investors, said Nguyen The Dat, head of the zone’s State management team.
Another bordergate economic zone on the trans-Asia highway, Moc Bai in southern Tay Ninh Province, also has great potential.
Located 70km from HCM City and some 170km from Phnom Penh, the 21.3ha zone opened in March, 2006 and has a commercial-industrial area and a duty-free supermarket.
Provincial authorities approved 38 projects capitalised at VND5.4 trillion ($337.5 million).
Phuong Trinh Co Ltd, in co-operation with Cambodian partners, has invested $3 million in launching a bus route linking Ben Thanh Market in downtown HCM City with Moc Bai and Tay Ninh town.
BUSINESS IN BRIEF 4/5
23:48' 04/05/2008 (GMT+7)
Zamil spends $20mil to double its Vietnam steel production
Zamil Industries set to spend US$20 million to increase capacity in Vietnam to 100,000 tons a year from 50,000 tons in a bid to tap Asian demand for the construction material.
Zamil Steel, an affiliate of the Saudi Arabian maker of steel, air conditioners, glass and insulation, came to Vietnam in 1993, operating as a representative office.
Zamil Steel Vietnam, a joint venture between Zamil Steel Industries of Saudi Arabia and Japanese Mitsui, was established in Hanoi in 1997 to design, manufacture and supply top quality pre-engineered steel buildings like warehouses, workshops, distribution centers, showrooms, aircraft hangars, schools, and sports halls.
Its first plant in the city’s outlying Noi Bai Industrial Park has designed, fabricated and supplied buildings to Vietnam, China, Japan, and the South East Asia Region with 4,000-ton monthly outputs.
The manufacturer has recently put its second plant into operation in southern Dong Nai Province’s Amata Industrial Park, 35 km from Ho Chi Minh City.
It also aims to open sales offices in more provinces in Vietnam and enter new markets, including Australia and the US.
US executives to visit Vietnam
Some 50 executives from 23 leading US companies seeking business opportunities in Vietnam will begin a three-day visit to the country Monday, reported the US – ASEAN Business Council Saturday.
The business leaders will hold talks with leaders of the Vietnamese government and the Party.
The delegation – including executives from General Electric, Boeing, Chevron, ConocoPhillips, The Dow Chemical Company, ExxonMobil, Fedex, Ford, IBM, and Qualcomm – is led by Matthew Daley, chairman of the US –
ASEAN Business Council, and Stuart Dean, chairman of General Electric Southeast Asia and chairman of the US – Vietnam Trade Council.
Garments and textiles exports hit 2.6 billion USD
The garments and textiles export turnover for April increased by 50 million USD against the previous month, reaching an estimated 700 million USD, marking a rise of 8 percent on month.
During the first four months this year, the garments and textiles sector earned 2.6 billion USD, an on year increase of 24.5 percent. At present, all the deals for the second quarter of 2008 have been covered and prices have increased 10-15 percent on year.
However, footwear export turnover in April is only equal to that of March, reaching an estimated 330 million USD. In the first four months, the footwear sector only earned 1.35 billion USD. In spite of showing a 15.7 percent increase on year, this figure has only reached 30 percent of the yearly target.
No expansion of coffee areas until 2010
The Ministry of Agriculture and Rural Development has issued a directive asking provinces not to expand coffee growing areas from now to 2010, aiming to ensure the yield and quality of the product.
The ministry has asked its department in charge of the work to promptly complete a project on raising the competitiveness of Vietnamese coffee, taking measures to improve coffee quality and supporting farmers to cultivate new high-quality coffee varieties.
The directive also required Central Highlands provinces to urgently complete the rubber development programming, creating favourable conditions for businesses to lease land and cooperate with farmer households in shifting less-effective areas of perennial industrial plants into rubber areas.
In addition, the ministry has instructed localities to minimise the expansion of cassava acreage, especially in areas earmarked for other crops.
From now till 2010, construction of any cassava processing factory far from materials supply areas will not be permitted. Localities should create favourable conditions for modern processing facilities to purchase cassava for production.
The ministry said that unplanned development of crops and slash-and-burn practice for rubber and coffee planting are increasing in many localities, which not only affect the yield, quality and the market balance of the products, but also cause negative ecological effects.
Rice prices return to the normal
The prices of rice in Ho Chi Minh City have resumed to a stable level on April 30 and May 1 after the city's People's Committee asked supermarkets to provide sufficient supply to consumers.
Prices of different kinds of rice have reduced from VND 2,000 to 6,000. Most consumers chose supermarkets as they provided stable prices and unlimited quantity including 150 tonnes on April 30 and 100 tonnes on May 1.
In addition, rice trading corps and supermarkets sent mobile rice selling trucks to industrial zones, export processing zones and remote areas.
As a result, people in the city are buying rice with normal prices.
MoF okays set-up of airline insurance company
The Ministry of Finance has approved the establishment of the Vietnam Airlines Insurance (VNI) Company with initial charter capital of VND 500 billion (US $31.2 million).
VNI has some major founding shareholders, including Vietnam Airlines, the Vietnam Coal and Mineral Industries Group and Vietnam Machinery Installation Corporation among others.
The company will provide insurance services for air transport as well as marine and land transit, accident insurance and other non-life insurance services.
HCM City’s export value surges 34.6%
Ho Chi Minh City ’s export value soared 34.6% to US $7.48 billion in the first four months of the year.
The rise was mainly fueled by increases in earnings from garment and textile, which raked in US $1.08 billion, up 15%; footwear; US $457 million, up 9.1%; and wooden furniture, US $151 million, up 42.3%.
Crude oil remained the spearhead export line of the city as it brought home US $3.48 billion.
Seafood was the only product experiencing a decline in exports. It grossed over US $173 million in the period, a drop of 7.8% compared with the same time last year.
Seafood producers explained that they have been affected by petroleum price hike, which cost them 15-20% more than the previous period.
In the first four months, the country earned US $18.26 billion, a surge of 24.6% over the same period last year.
Vietnam’s seafood appreciated in EU market
Products of Ho Chi Minh City-based Vinh Hoan Seafood Co. was selected one of the best new products at the 2008 European Seafood Exhibition in Belgium .
According to Truong Dinh Hoe, Secretary General of the Vietnam Association of Seafood Exporters and Processors (VASEP), 44 local seafood companies attended the exhibition, including those who joined the event for the first time.
According to the Vietnam Commerce Office in Belgium , last year, Vietnam earned US $950 million from seafood export to the EU, a year-on-year increase of 27%. The figure is estimated to reach US $1.2 billion this year.
Vietnam’s seafood, especially those made from shrimps and catfish, are favoured by foreign clients, said To Thi Tuong Lan, VASEP’s Vice Secretary General.
Real estate website gets some ink
The US-owned real estate website www.metvuong.com is coming out free of charge in paper format for its customers and partners.
Along with listing properties for rent or sale, the publication covers articles about the market and real estate related services.
The monthly publication gives buyers, sellers, renters, and landlords another option to find or release information on land and houses, according to chairman Paul Song.
CB Rechard Ellis, Savills and Indochina Land are among the company’s partners.
Work starts on biogas plants
Construction on two biogas energy plants for Biogas Tay Ninh, a wholly foreign-owned company, began on Monday in the province.
Completion is expected in 10 months for the plants, worth a total of US$3million, which are being built under the build-operate-transfer (BOT) form.
The plants will use waste water discharge from tapioca processing facilities in Tay Ninh Province.
With an average capacity of 3,000 cubic metres of waste water a day, the plants will be able to produce up to 12,000 cubic metres of biogas.
"The plants will help us save energy and reduce up to 90 percent of pollutants from our waste water," said Khun Umnad, general director of the company Tapico Tay Ninh.
Tay Ninh produces one million tonnes of cassava annually, producing about 300,000 tonnes of tapioca.
Pharma plant opens in Phu Yen
Pymepharco Joint Stock Co has opened a plant to manufacture intravenous drugs in the central province of Phu Yen.
The VND184 billion (US$11.5 million) plant, utilising technology from India, Germany and Spain, will adhere to the strict manufacturing standards of the World Health Organisation. Pymepharco works with Stada Vietnam to produce the oral antibiotic Cefdinir.
Binh Dinh be dammed, with new projects
Construction of three hydropower plants in Vinh Thanh District in the south-central province of Binh Dinh began on Sunday.
Vinh Son Hydro-Electricity Plants 3,4 and 5, all situated upstream on the Kon River, are being built by the Vinh Son-Song Hinh Hydroelectricity Joint Stock Company and Vinh Son Investment Joint Stock Company.
The projects were initiated under a Government plan to develop the national electricity grid between 2006 and 2015.
The Vinh Son project 3 is expected to cost VND660 billion (US$41.5 million) and is funded by the Vinh Son-Song Hinh Hydroelectricity Joint Stock Company. When completed in 2010, it will have a capacity of 32MW.
The 18MW Vinh Son Hydroelectricity Plant 4 will cost VND400 billion (US$25 million) and is scheduled to be completed in 2011.
Vinh Son 5 will cost VND600 billion (US$38 million) and the 28MW plant will be ready by 2010.
Binh Duong’s got the juice
Binh Duong authorities have licensed Kirin Acecook Vietnam Ltd Co to build a fruit-juice bottling plant worth US$60 million in the My Phuoc 2 Industrial Zone in Ben Cat District.
The factory, expected to open in May 2009, will have a production capacity of four million bottles of juice a year.
The venture brings together the Kirin Beverage Group of Japan, the Acecook Group of Japan, and the Acecook Vietnam Joint Stock Co.
New PetroVietnam affiliate bows
PetroVietnam Construction Joint Stock Co, a subsidiary of the Vietnam Oil & Gas Group (PetroVietnam), made its debut at a ceremony in Ha Noi last Thursday.
With charter capital of US$ 32.8 million and nearly 3,000 employees, PVC designs and supplies steel structures, pipelines and petroleum storages for onshore and offshore oil and gas projects.
Thais come to Can Tho garden party
Refrigeration Engineering Joint Stock Co (REE), the Sai Gon Agricultural Joint Stock Co and Siam Orchids Thailand Co will create a tropical flower garden in the Cuu Long (Mekong) Delta City of Can Tho.
The garden, covering 200ha, will be built at a cost of VND150 billion (US$9.37 million), with completion expected in 2011. It will be a centre for the collection, hybridisation and production of flowers adapted to the Delta eco-system.
Sai Gon Cable Co to list
The Sai Gon Cable Co will list more than 29 million shares at the Ha Noi Securities Trading Centre on May 6.
The company, which specialises in the trade and production of electrical and telecom cables, is capitalised at VND300 billion (US$18.7 million), 31.1 per cent of which the State holds.
Vinacontrol revenue hits $1.57m
The Vietnam Superintendence and Inspection Co (Vinacontrol) has announced a net revenue of VND25.2 billion (US$1.57 million) in the first quarter of this year, a year-on-year rise of 43.7 per cent.
The company plans to earn a total revenue of VND100 billion this year and pay its shareholders a dividend of 12 per cent.
Vinacontrol specialises in surveying and judging product quality.
SJE earns $278,000 in Q1
The electrical company Song Da 11 has announced a post-tax profit of VND4.45 billion (US$278,000) in the first three months of the year, an increase of 26.3 per cent year-on-year. Shares in the company, coded SJE, closed at VND22,900 on Tuesday..
POT’s Q1 profit plunges 94.5%
The Post and Telecommunication Equipment Co has revealed a post-tax profit of VND258 million (US$16,100) from the first quarter of the year, a plummet of 94.5 per cent against the same period in 2007.
The company, capitalised at VND194.4 billion, pledges to continue with its planned projects this year in hope of achieving a pre-tax profit of VND45 billion on revenue of VND780 billion.
BVS to issue 30m shares
Bao Viet Securities Co, code share BVS, will issue an additional 30 million shares worth VND300 billion (US$18.7 million) on May 6 at the Ha Noi Securities Trading Centre.
The company said it intends to offer the shares to its existing shareholders at a price of VND32,000 a piece.
Ha Tien 1 buyback
The Ha Tien 1 Cement Co has said it will commission the Bao Viet Securities Co to buy back 300,000 shares from May 5 to July 5. The capital used to initiate the buyback will be mobilised from the company’s investment and development fund.
Hoa Phat earns $144 million
The Hoa Phat Co announced a total revenue of VND2.3 trillion (US$144 million) from the first quarter of this year, 30 per cent of its target for the entire year.
The company expects to earn a post-tax profit of more than VND451 billion, 60 per cent of its target figure. Hoa Phat is mainly involved in the trade and production of structural steel.
HCM City speeds up ODA disbursement
Ho Chi Minh City is speeding up the implementation of 23 projects funded by Official Development Assistance (ODA) official.
Most of the projects, which received over 30 trillion VND in ODA commitments, are large-scale transport works.
Since early this year, the city has disbursed over 896 billion VND (56 million USD) of ODA for the projects, or 27.5 percent of the yearly plan.
To accelerate the disbursement of ODA capital, the city is focusing on removing difficulties in site clearance and rising construction material prices.
HCM City targets growth in mechanical engineering
The Ho Chi Minh City People’s Committee has approved a plan to develop the mechanical engineering industry by 2020.
Under the plan, products with high added value and environmentally efficient will be favoured.
Key products will include autos, waterway transport vehicles, machinery and tools, and electric equipment.
All small mechanical establishments will be moved out of the city’s urban areas and modern ones will be moved to local industrial parks.
Zamil spends $20mil to double its Vietnam steel production
Zamil Industries set to spend US$20 million to increase capacity in Vietnam to 100,000 tons a year from 50,000 tons in a bid to tap Asian demand for the construction material.
Zamil Steel, an affiliate of the Saudi Arabian maker of steel, air conditioners, glass and insulation, came to Vietnam in 1993, operating as a representative office.
Zamil Steel Vietnam, a joint venture between Zamil Steel Industries of Saudi Arabia and Japanese Mitsui, was established in Hanoi in 1997 to design, manufacture and supply top quality pre-engineered steel buildings like warehouses, workshops, distribution centers, showrooms, aircraft hangars, schools, and sports halls.
Its first plant in the city’s outlying Noi Bai Industrial Park has designed, fabricated and supplied buildings to Vietnam, China, Japan, and the South East Asia Region with 4,000-ton monthly outputs.
The manufacturer has recently put its second plant into operation in southern Dong Nai Province’s Amata Industrial Park, 35 km from Ho Chi Minh City.
It also aims to open sales offices in more provinces in Vietnam and enter new markets, including Australia and the US.
US executives to visit Vietnam
Some 50 executives from 23 leading US companies seeking business opportunities in Vietnam will begin a three-day visit to the country Monday, reported the US – ASEAN Business Council Saturday.
The business leaders will hold talks with leaders of the Vietnamese government and the Party.
The delegation – including executives from General Electric, Boeing, Chevron, ConocoPhillips, The Dow Chemical Company, ExxonMobil, Fedex, Ford, IBM, and Qualcomm – is led by Matthew Daley, chairman of the US –
ASEAN Business Council, and Stuart Dean, chairman of General Electric Southeast Asia and chairman of the US – Vietnam Trade Council.
Garments and textiles exports hit 2.6 billion USD
The garments and textiles export turnover for April increased by 50 million USD against the previous month, reaching an estimated 700 million USD, marking a rise of 8 percent on month.
During the first four months this year, the garments and textiles sector earned 2.6 billion USD, an on year increase of 24.5 percent. At present, all the deals for the second quarter of 2008 have been covered and prices have increased 10-15 percent on year.
However, footwear export turnover in April is only equal to that of March, reaching an estimated 330 million USD. In the first four months, the footwear sector only earned 1.35 billion USD. In spite of showing a 15.7 percent increase on year, this figure has only reached 30 percent of the yearly target.
No expansion of coffee areas until 2010
The Ministry of Agriculture and Rural Development has issued a directive asking provinces not to expand coffee growing areas from now to 2010, aiming to ensure the yield and quality of the product.
The ministry has asked its department in charge of the work to promptly complete a project on raising the competitiveness of Vietnamese coffee, taking measures to improve coffee quality and supporting farmers to cultivate new high-quality coffee varieties.
The directive also required Central Highlands provinces to urgently complete the rubber development programming, creating favourable conditions for businesses to lease land and cooperate with farmer households in shifting less-effective areas of perennial industrial plants into rubber areas.
In addition, the ministry has instructed localities to minimise the expansion of cassava acreage, especially in areas earmarked for other crops.
From now till 2010, construction of any cassava processing factory far from materials supply areas will not be permitted. Localities should create favourable conditions for modern processing facilities to purchase cassava for production.
The ministry said that unplanned development of crops and slash-and-burn practice for rubber and coffee planting are increasing in many localities, which not only affect the yield, quality and the market balance of the products, but also cause negative ecological effects.
Rice prices return to the normal
The prices of rice in Ho Chi Minh City have resumed to a stable level on April 30 and May 1 after the city's People's Committee asked supermarkets to provide sufficient supply to consumers.
Prices of different kinds of rice have reduced from VND 2,000 to 6,000. Most consumers chose supermarkets as they provided stable prices and unlimited quantity including 150 tonnes on April 30 and 100 tonnes on May 1.
In addition, rice trading corps and supermarkets sent mobile rice selling trucks to industrial zones, export processing zones and remote areas.
As a result, people in the city are buying rice with normal prices.
MoF okays set-up of airline insurance company
The Ministry of Finance has approved the establishment of the Vietnam Airlines Insurance (VNI) Company with initial charter capital of VND 500 billion (US $31.2 million).
VNI has some major founding shareholders, including Vietnam Airlines, the Vietnam Coal and Mineral Industries Group and Vietnam Machinery Installation Corporation among others.
The company will provide insurance services for air transport as well as marine and land transit, accident insurance and other non-life insurance services.
HCM City’s export value surges 34.6%
Ho Chi Minh City ’s export value soared 34.6% to US $7.48 billion in the first four months of the year.
The rise was mainly fueled by increases in earnings from garment and textile, which raked in US $1.08 billion, up 15%; footwear; US $457 million, up 9.1%; and wooden furniture, US $151 million, up 42.3%.
Crude oil remained the spearhead export line of the city as it brought home US $3.48 billion.
Seafood was the only product experiencing a decline in exports. It grossed over US $173 million in the period, a drop of 7.8% compared with the same time last year.
Seafood producers explained that they have been affected by petroleum price hike, which cost them 15-20% more than the previous period.
In the first four months, the country earned US $18.26 billion, a surge of 24.6% over the same period last year.
Vietnam’s seafood appreciated in EU market
Products of Ho Chi Minh City-based Vinh Hoan Seafood Co. was selected one of the best new products at the 2008 European Seafood Exhibition in Belgium .
According to Truong Dinh Hoe, Secretary General of the Vietnam Association of Seafood Exporters and Processors (VASEP), 44 local seafood companies attended the exhibition, including those who joined the event for the first time.
According to the Vietnam Commerce Office in Belgium , last year, Vietnam earned US $950 million from seafood export to the EU, a year-on-year increase of 27%. The figure is estimated to reach US $1.2 billion this year.
Vietnam’s seafood, especially those made from shrimps and catfish, are favoured by foreign clients, said To Thi Tuong Lan, VASEP’s Vice Secretary General.
Real estate website gets some ink
The US-owned real estate website www.metvuong.com is coming out free of charge in paper format for its customers and partners.
Along with listing properties for rent or sale, the publication covers articles about the market and real estate related services.
The monthly publication gives buyers, sellers, renters, and landlords another option to find or release information on land and houses, according to chairman Paul Song.
CB Rechard Ellis, Savills and Indochina Land are among the company’s partners.
Work starts on biogas plants
Construction on two biogas energy plants for Biogas Tay Ninh, a wholly foreign-owned company, began on Monday in the province.
Completion is expected in 10 months for the plants, worth a total of US$3million, which are being built under the build-operate-transfer (BOT) form.
The plants will use waste water discharge from tapioca processing facilities in Tay Ninh Province.
With an average capacity of 3,000 cubic metres of waste water a day, the plants will be able to produce up to 12,000 cubic metres of biogas.
"The plants will help us save energy and reduce up to 90 percent of pollutants from our waste water," said Khun Umnad, general director of the company Tapico Tay Ninh.
Tay Ninh produces one million tonnes of cassava annually, producing about 300,000 tonnes of tapioca.
Pharma plant opens in Phu Yen
Pymepharco Joint Stock Co has opened a plant to manufacture intravenous drugs in the central province of Phu Yen.
The VND184 billion (US$11.5 million) plant, utilising technology from India, Germany and Spain, will adhere to the strict manufacturing standards of the World Health Organisation. Pymepharco works with Stada Vietnam to produce the oral antibiotic Cefdinir.
Binh Dinh be dammed, with new projects
Construction of three hydropower plants in Vinh Thanh District in the south-central province of Binh Dinh began on Sunday.
Vinh Son Hydro-Electricity Plants 3,4 and 5, all situated upstream on the Kon River, are being built by the Vinh Son-Song Hinh Hydroelectricity Joint Stock Company and Vinh Son Investment Joint Stock Company.
The projects were initiated under a Government plan to develop the national electricity grid between 2006 and 2015.
The Vinh Son project 3 is expected to cost VND660 billion (US$41.5 million) and is funded by the Vinh Son-Song Hinh Hydroelectricity Joint Stock Company. When completed in 2010, it will have a capacity of 32MW.
The 18MW Vinh Son Hydroelectricity Plant 4 will cost VND400 billion (US$25 million) and is scheduled to be completed in 2011.
Vinh Son 5 will cost VND600 billion (US$38 million) and the 28MW plant will be ready by 2010.
Binh Duong’s got the juice
Binh Duong authorities have licensed Kirin Acecook Vietnam Ltd Co to build a fruit-juice bottling plant worth US$60 million in the My Phuoc 2 Industrial Zone in Ben Cat District.
The factory, expected to open in May 2009, will have a production capacity of four million bottles of juice a year.
The venture brings together the Kirin Beverage Group of Japan, the Acecook Group of Japan, and the Acecook Vietnam Joint Stock Co.
New PetroVietnam affiliate bows
PetroVietnam Construction Joint Stock Co, a subsidiary of the Vietnam Oil & Gas Group (PetroVietnam), made its debut at a ceremony in Ha Noi last Thursday.
With charter capital of US$ 32.8 million and nearly 3,000 employees, PVC designs and supplies steel structures, pipelines and petroleum storages for onshore and offshore oil and gas projects.
Thais come to Can Tho garden party
Refrigeration Engineering Joint Stock Co (REE), the Sai Gon Agricultural Joint Stock Co and Siam Orchids Thailand Co will create a tropical flower garden in the Cuu Long (Mekong) Delta City of Can Tho.
The garden, covering 200ha, will be built at a cost of VND150 billion (US$9.37 million), with completion expected in 2011. It will be a centre for the collection, hybridisation and production of flowers adapted to the Delta eco-system.
Sai Gon Cable Co to list
The Sai Gon Cable Co will list more than 29 million shares at the Ha Noi Securities Trading Centre on May 6.
The company, which specialises in the trade and production of electrical and telecom cables, is capitalised at VND300 billion (US$18.7 million), 31.1 per cent of which the State holds.
Vinacontrol revenue hits $1.57m
The Vietnam Superintendence and Inspection Co (Vinacontrol) has announced a net revenue of VND25.2 billion (US$1.57 million) in the first quarter of this year, a year-on-year rise of 43.7 per cent.
The company plans to earn a total revenue of VND100 billion this year and pay its shareholders a dividend of 12 per cent.
Vinacontrol specialises in surveying and judging product quality.
SJE earns $278,000 in Q1
The electrical company Song Da 11 has announced a post-tax profit of VND4.45 billion (US$278,000) in the first three months of the year, an increase of 26.3 per cent year-on-year. Shares in the company, coded SJE, closed at VND22,900 on Tuesday..
POT’s Q1 profit plunges 94.5%
The Post and Telecommunication Equipment Co has revealed a post-tax profit of VND258 million (US$16,100) from the first quarter of the year, a plummet of 94.5 per cent against the same period in 2007.
The company, capitalised at VND194.4 billion, pledges to continue with its planned projects this year in hope of achieving a pre-tax profit of VND45 billion on revenue of VND780 billion.
BVS to issue 30m shares
Bao Viet Securities Co, code share BVS, will issue an additional 30 million shares worth VND300 billion (US$18.7 million) on May 6 at the Ha Noi Securities Trading Centre.
The company said it intends to offer the shares to its existing shareholders at a price of VND32,000 a piece.
Ha Tien 1 buyback
The Ha Tien 1 Cement Co has said it will commission the Bao Viet Securities Co to buy back 300,000 shares from May 5 to July 5. The capital used to initiate the buyback will be mobilised from the company’s investment and development fund.
Hoa Phat earns $144 million
The Hoa Phat Co announced a total revenue of VND2.3 trillion (US$144 million) from the first quarter of this year, 30 per cent of its target for the entire year.
The company expects to earn a post-tax profit of more than VND451 billion, 60 per cent of its target figure. Hoa Phat is mainly involved in the trade and production of structural steel.
HCM City speeds up ODA disbursement
Ho Chi Minh City is speeding up the implementation of 23 projects funded by Official Development Assistance (ODA) official.
Most of the projects, which received over 30 trillion VND in ODA commitments, are large-scale transport works.
Since early this year, the city has disbursed over 896 billion VND (56 million USD) of ODA for the projects, or 27.5 percent of the yearly plan.
To accelerate the disbursement of ODA capital, the city is focusing on removing difficulties in site clearance and rising construction material prices.
HCM City targets growth in mechanical engineering
The Ho Chi Minh City People’s Committee has approved a plan to develop the mechanical engineering industry by 2020.
Under the plan, products with high added value and environmentally efficient will be favoured.
Key products will include autos, waterway transport vehicles, machinery and tools, and electric equipment.
All small mechanical establishments will be moved out of the city’s urban areas and modern ones will be moved to local industrial parks.
BUSINESS IN BRIEF 4/5
23:48' 04/05/2008 (GMT+7)
Zamil spends $20mil to double its Vietnam steel production
Zamil Industries set to spend US$20 million to increase capacity in Vietnam to 100,000 tons a year from 50,000 tons in a bid to tap Asian demand for the construction material.
Zamil Steel, an affiliate of the Saudi Arabian maker of steel, air conditioners, glass and insulation, came to Vietnam in 1993, operating as a representative office.
Zamil Steel Vietnam, a joint venture between Zamil Steel Industries of Saudi Arabia and Japanese Mitsui, was established in Hanoi in 1997 to design, manufacture and supply top quality pre-engineered steel buildings like warehouses, workshops, distribution centers, showrooms, aircraft hangars, schools, and sports halls.
Its first plant in the city’s outlying Noi Bai Industrial Park has designed, fabricated and supplied buildings to Vietnam, China, Japan, and the South East Asia Region with 4,000-ton monthly outputs.
The manufacturer has recently put its second plant into operation in southern Dong Nai Province’s Amata Industrial Park, 35 km from Ho Chi Minh City.
It also aims to open sales offices in more provinces in Vietnam and enter new markets, including Australia and the US.
US executives to visit Vietnam
Some 50 executives from 23 leading US companies seeking business opportunities in Vietnam will begin a three-day visit to the country Monday, reported the US – ASEAN Business Council Saturday.
The business leaders will hold talks with leaders of the Vietnamese government and the Party.
The delegation – including executives from General Electric, Boeing, Chevron, ConocoPhillips, The Dow Chemical Company, ExxonMobil, Fedex, Ford, IBM, and Qualcomm – is led by Matthew Daley, chairman of the US –
ASEAN Business Council, and Stuart Dean, chairman of General Electric Southeast Asia and chairman of the US – Vietnam Trade Council.
Garments and textiles exports hit 2.6 billion USD
The garments and textiles export turnover for April increased by 50 million USD against the previous month, reaching an estimated 700 million USD, marking a rise of 8 percent on month.
During the first four months this year, the garments and textiles sector earned 2.6 billion USD, an on year increase of 24.5 percent. At present, all the deals for the second quarter of 2008 have been covered and prices have increased 10-15 percent on year.
However, footwear export turnover in April is only equal to that of March, reaching an estimated 330 million USD. In the first four months, the footwear sector only earned 1.35 billion USD. In spite of showing a 15.7 percent increase on year, this figure has only reached 30 percent of the yearly target.
No expansion of coffee areas until 2010
The Ministry of Agriculture and Rural Development has issued a directive asking provinces not to expand coffee growing areas from now to 2010, aiming to ensure the yield and quality of the product.
The ministry has asked its department in charge of the work to promptly complete a project on raising the competitiveness of Vietnamese coffee, taking measures to improve coffee quality and supporting farmers to cultivate new high-quality coffee varieties.
The directive also required Central Highlands provinces to urgently complete the rubber development programming, creating favourable conditions for businesses to lease land and cooperate with farmer households in shifting less-effective areas of perennial industrial plants into rubber areas.
In addition, the ministry has instructed localities to minimise the expansion of cassava acreage, especially in areas earmarked for other crops.
From now till 2010, construction of any cassava processing factory far from materials supply areas will not be permitted. Localities should create favourable conditions for modern processing facilities to purchase cassava for production.
The ministry said that unplanned development of crops and slash-and-burn practice for rubber and coffee planting are increasing in many localities, which not only affect the yield, quality and the market balance of the products, but also cause negative ecological effects.
Rice prices return to the normal
The prices of rice in Ho Chi Minh City have resumed to a stable level on April 30 and May 1 after the city's People's Committee asked supermarkets to provide sufficient supply to consumers.
Prices of different kinds of rice have reduced from VND 2,000 to 6,000. Most consumers chose supermarkets as they provided stable prices and unlimited quantity including 150 tonnes on April 30 and 100 tonnes on May 1.
In addition, rice trading corps and supermarkets sent mobile rice selling trucks to industrial zones, export processing zones and remote areas.
As a result, people in the city are buying rice with normal prices.
MoF okays set-up of airline insurance company
The Ministry of Finance has approved the establishment of the Vietnam Airlines Insurance (VNI) Company with initial charter capital of VND 500 billion (US $31.2 million).
VNI has some major founding shareholders, including Vietnam Airlines, the Vietnam Coal and Mineral Industries Group and Vietnam Machinery Installation Corporation among others.
The company will provide insurance services for air transport as well as marine and land transit, accident insurance and other non-life insurance services.
HCM City’s export value surges 34.6%
Ho Chi Minh City ’s export value soared 34.6% to US $7.48 billion in the first four months of the year.
The rise was mainly fueled by increases in earnings from garment and textile, which raked in US $1.08 billion, up 15%; footwear; US $457 million, up 9.1%; and wooden furniture, US $151 million, up 42.3%.
Crude oil remained the spearhead export line of the city as it brought home US $3.48 billion.
Seafood was the only product experiencing a decline in exports. It grossed over US $173 million in the period, a drop of 7.8% compared with the same time last year.
Seafood producers explained that they have been affected by petroleum price hike, which cost them 15-20% more than the previous period.
In the first four months, the country earned US $18.26 billion, a surge of 24.6% over the same period last year.
Vietnam’s seafood appreciated in EU market
Products of Ho Chi Minh City-based Vinh Hoan Seafood Co. was selected one of the best new products at the 2008 European Seafood Exhibition in Belgium .
According to Truong Dinh Hoe, Secretary General of the Vietnam Association of Seafood Exporters and Processors (VASEP), 44 local seafood companies attended the exhibition, including those who joined the event for the first time.
According to the Vietnam Commerce Office in Belgium , last year, Vietnam earned US $950 million from seafood export to the EU, a year-on-year increase of 27%. The figure is estimated to reach US $1.2 billion this year.
Vietnam’s seafood, especially those made from shrimps and catfish, are favoured by foreign clients, said To Thi Tuong Lan, VASEP’s Vice Secretary General.
Real estate website gets some ink
The US-owned real estate website www.metvuong.com is coming out free of charge in paper format for its customers and partners.
Along with listing properties for rent or sale, the publication covers articles about the market and real estate related services.
The monthly publication gives buyers, sellers, renters, and landlords another option to find or release information on land and houses, according to chairman Paul Song.
CB Rechard Ellis, Savills and Indochina Land are among the company’s partners.
Work starts on biogas plants
Construction on two biogas energy plants for Biogas Tay Ninh, a wholly foreign-owned company, began on Monday in the province.
Completion is expected in 10 months for the plants, worth a total of US$3million, which are being built under the build-operate-transfer (BOT) form.
The plants will use waste water discharge from tapioca processing facilities in Tay Ninh Province.
With an average capacity of 3,000 cubic metres of waste water a day, the plants will be able to produce up to 12,000 cubic metres of biogas.
"The plants will help us save energy and reduce up to 90 percent of pollutants from our waste water," said Khun Umnad, general director of the company Tapico Tay Ninh.
Tay Ninh produces one million tonnes of cassava annually, producing about 300,000 tonnes of tapioca.
Pharma plant opens in Phu Yen
Pymepharco Joint Stock Co has opened a plant to manufacture intravenous drugs in the central province of Phu Yen.
The VND184 billion (US$11.5 million) plant, utilising technology from India, Germany and Spain, will adhere to the strict manufacturing standards of the World Health Organisation. Pymepharco works with Stada Vietnam to produce the oral antibiotic Cefdinir.
Binh Dinh be dammed, with new projects
Construction of three hydropower plants in Vinh Thanh District in the south-central province of Binh Dinh began on Sunday.
Vinh Son Hydro-Electricity Plants 3,4 and 5, all situated upstream on the Kon River, are being built by the Vinh Son-Song Hinh Hydroelectricity Joint Stock Company and Vinh Son Investment Joint Stock Company.
The projects were initiated under a Government plan to develop the national electricity grid between 2006 and 2015.
The Vinh Son project 3 is expected to cost VND660 billion (US$41.5 million) and is funded by the Vinh Son-Song Hinh Hydroelectricity Joint Stock Company. When completed in 2010, it will have a capacity of 32MW.
The 18MW Vinh Son Hydroelectricity Plant 4 will cost VND400 billion (US$25 million) and is scheduled to be completed in 2011.
Vinh Son 5 will cost VND600 billion (US$38 million) and the 28MW plant will be ready by 2010.
Binh Duong’s got the juice
Binh Duong authorities have licensed Kirin Acecook Vietnam Ltd Co to build a fruit-juice bottling plant worth US$60 million in the My Phuoc 2 Industrial Zone in Ben Cat District.
The factory, expected to open in May 2009, will have a production capacity of four million bottles of juice a year.
The venture brings together the Kirin Beverage Group of Japan, the Acecook Group of Japan, and the Acecook Vietnam Joint Stock Co.
New PetroVietnam affiliate bows
PetroVietnam Construction Joint Stock Co, a subsidiary of the Vietnam Oil & Gas Group (PetroVietnam), made its debut at a ceremony in Ha Noi last Thursday.
With charter capital of US$ 32.8 million and nearly 3,000 employees, PVC designs and supplies steel structures, pipelines and petroleum storages for onshore and offshore oil and gas projects.
Thais come to Can Tho garden party
Refrigeration Engineering Joint Stock Co (REE), the Sai Gon Agricultural Joint Stock Co and Siam Orchids Thailand Co will create a tropical flower garden in the Cuu Long (Mekong) Delta City of Can Tho.
The garden, covering 200ha, will be built at a cost of VND150 billion (US$9.37 million), with completion expected in 2011. It will be a centre for the collection, hybridisation and production of flowers adapted to the Delta eco-system.
Sai Gon Cable Co to list
The Sai Gon Cable Co will list more than 29 million shares at the Ha Noi Securities Trading Centre on May 6.
The company, which specialises in the trade and production of electrical and telecom cables, is capitalised at VND300 billion (US$18.7 million), 31.1 per cent of which the State holds.
Vinacontrol revenue hits $1.57m
The Vietnam Superintendence and Inspection Co (Vinacontrol) has announced a net revenue of VND25.2 billion (US$1.57 million) in the first quarter of this year, a year-on-year rise of 43.7 per cent.
The company plans to earn a total revenue of VND100 billion this year and pay its shareholders a dividend of 12 per cent.
Vinacontrol specialises in surveying and judging product quality.
SJE earns $278,000 in Q1
The electrical company Song Da 11 has announced a post-tax profit of VND4.45 billion (US$278,000) in the first three months of the year, an increase of 26.3 per cent year-on-year. Shares in the company, coded SJE, closed at VND22,900 on Tuesday..
POT’s Q1 profit plunges 94.5%
The Post and Telecommunication Equipment Co has revealed a post-tax profit of VND258 million (US$16,100) from the first quarter of the year, a plummet of 94.5 per cent against the same period in 2007.
The company, capitalised at VND194.4 billion, pledges to continue with its planned projects this year in hope of achieving a pre-tax profit of VND45 billion on revenue of VND780 billion.
BVS to issue 30m shares
Bao Viet Securities Co, code share BVS, will issue an additional 30 million shares worth VND300 billion (US$18.7 million) on May 6 at the Ha Noi Securities Trading Centre.
The company said it intends to offer the shares to its existing shareholders at a price of VND32,000 a piece.
Ha Tien 1 buyback
The Ha Tien 1 Cement Co has said it will commission the Bao Viet Securities Co to buy back 300,000 shares from May 5 to July 5. The capital used to initiate the buyback will be mobilised from the company’s investment and development fund.
Hoa Phat earns $144 million
The Hoa Phat Co announced a total revenue of VND2.3 trillion (US$144 million) from the first quarter of this year, 30 per cent of its target for the entire year.
The company expects to earn a post-tax profit of more than VND451 billion, 60 per cent of its target figure. Hoa Phat is mainly involved in the trade and production of structural steel.
HCM City speeds up ODA disbursement
Ho Chi Minh City is speeding up the implementation of 23 projects funded by Official Development Assistance (ODA) official.
Most of the projects, which received over 30 trillion VND in ODA commitments, are large-scale transport works.
Since early this year, the city has disbursed over 896 billion VND (56 million USD) of ODA for the projects, or 27.5 percent of the yearly plan.
To accelerate the disbursement of ODA capital, the city is focusing on removing difficulties in site clearance and rising construction material prices.
HCM City targets growth in mechanical engineering
The Ho Chi Minh City People’s Committee has approved a plan to develop the mechanical engineering industry by 2020.
Under the plan, products with high added value and environmentally efficient will be favoured.
Key products will include autos, waterway transport vehicles, machinery and tools, and electric equipment.
All small mechanical establishments will be moved out of the city’s urban areas and modern ones will be moved to local industrial parks.
Zamil spends $20mil to double its Vietnam steel production
Zamil Industries set to spend US$20 million to increase capacity in Vietnam to 100,000 tons a year from 50,000 tons in a bid to tap Asian demand for the construction material.
Zamil Steel, an affiliate of the Saudi Arabian maker of steel, air conditioners, glass and insulation, came to Vietnam in 1993, operating as a representative office.
Zamil Steel Vietnam, a joint venture between Zamil Steel Industries of Saudi Arabia and Japanese Mitsui, was established in Hanoi in 1997 to design, manufacture and supply top quality pre-engineered steel buildings like warehouses, workshops, distribution centers, showrooms, aircraft hangars, schools, and sports halls.
Its first plant in the city’s outlying Noi Bai Industrial Park has designed, fabricated and supplied buildings to Vietnam, China, Japan, and the South East Asia Region with 4,000-ton monthly outputs.
The manufacturer has recently put its second plant into operation in southern Dong Nai Province’s Amata Industrial Park, 35 km from Ho Chi Minh City.
It also aims to open sales offices in more provinces in Vietnam and enter new markets, including Australia and the US.
US executives to visit Vietnam
Some 50 executives from 23 leading US companies seeking business opportunities in Vietnam will begin a three-day visit to the country Monday, reported the US – ASEAN Business Council Saturday.
The business leaders will hold talks with leaders of the Vietnamese government and the Party.
The delegation – including executives from General Electric, Boeing, Chevron, ConocoPhillips, The Dow Chemical Company, ExxonMobil, Fedex, Ford, IBM, and Qualcomm – is led by Matthew Daley, chairman of the US –
ASEAN Business Council, and Stuart Dean, chairman of General Electric Southeast Asia and chairman of the US – Vietnam Trade Council.
Garments and textiles exports hit 2.6 billion USD
The garments and textiles export turnover for April increased by 50 million USD against the previous month, reaching an estimated 700 million USD, marking a rise of 8 percent on month.
During the first four months this year, the garments and textiles sector earned 2.6 billion USD, an on year increase of 24.5 percent. At present, all the deals for the second quarter of 2008 have been covered and prices have increased 10-15 percent on year.
However, footwear export turnover in April is only equal to that of March, reaching an estimated 330 million USD. In the first four months, the footwear sector only earned 1.35 billion USD. In spite of showing a 15.7 percent increase on year, this figure has only reached 30 percent of the yearly target.
No expansion of coffee areas until 2010
The Ministry of Agriculture and Rural Development has issued a directive asking provinces not to expand coffee growing areas from now to 2010, aiming to ensure the yield and quality of the product.
The ministry has asked its department in charge of the work to promptly complete a project on raising the competitiveness of Vietnamese coffee, taking measures to improve coffee quality and supporting farmers to cultivate new high-quality coffee varieties.
The directive also required Central Highlands provinces to urgently complete the rubber development programming, creating favourable conditions for businesses to lease land and cooperate with farmer households in shifting less-effective areas of perennial industrial plants into rubber areas.
In addition, the ministry has instructed localities to minimise the expansion of cassava acreage, especially in areas earmarked for other crops.
From now till 2010, construction of any cassava processing factory far from materials supply areas will not be permitted. Localities should create favourable conditions for modern processing facilities to purchase cassava for production.
The ministry said that unplanned development of crops and slash-and-burn practice for rubber and coffee planting are increasing in many localities, which not only affect the yield, quality and the market balance of the products, but also cause negative ecological effects.
Rice prices return to the normal
The prices of rice in Ho Chi Minh City have resumed to a stable level on April 30 and May 1 after the city's People's Committee asked supermarkets to provide sufficient supply to consumers.
Prices of different kinds of rice have reduced from VND 2,000 to 6,000. Most consumers chose supermarkets as they provided stable prices and unlimited quantity including 150 tonnes on April 30 and 100 tonnes on May 1.
In addition, rice trading corps and supermarkets sent mobile rice selling trucks to industrial zones, export processing zones and remote areas.
As a result, people in the city are buying rice with normal prices.
MoF okays set-up of airline insurance company
The Ministry of Finance has approved the establishment of the Vietnam Airlines Insurance (VNI) Company with initial charter capital of VND 500 billion (US $31.2 million).
VNI has some major founding shareholders, including Vietnam Airlines, the Vietnam Coal and Mineral Industries Group and Vietnam Machinery Installation Corporation among others.
The company will provide insurance services for air transport as well as marine and land transit, accident insurance and other non-life insurance services.
HCM City’s export value surges 34.6%
Ho Chi Minh City ’s export value soared 34.6% to US $7.48 billion in the first four months of the year.
The rise was mainly fueled by increases in earnings from garment and textile, which raked in US $1.08 billion, up 15%; footwear; US $457 million, up 9.1%; and wooden furniture, US $151 million, up 42.3%.
Crude oil remained the spearhead export line of the city as it brought home US $3.48 billion.
Seafood was the only product experiencing a decline in exports. It grossed over US $173 million in the period, a drop of 7.8% compared with the same time last year.
Seafood producers explained that they have been affected by petroleum price hike, which cost them 15-20% more than the previous period.
In the first four months, the country earned US $18.26 billion, a surge of 24.6% over the same period last year.
Vietnam’s seafood appreciated in EU market
Products of Ho Chi Minh City-based Vinh Hoan Seafood Co. was selected one of the best new products at the 2008 European Seafood Exhibition in Belgium .
According to Truong Dinh Hoe, Secretary General of the Vietnam Association of Seafood Exporters and Processors (VASEP), 44 local seafood companies attended the exhibition, including those who joined the event for the first time.
According to the Vietnam Commerce Office in Belgium , last year, Vietnam earned US $950 million from seafood export to the EU, a year-on-year increase of 27%. The figure is estimated to reach US $1.2 billion this year.
Vietnam’s seafood, especially those made from shrimps and catfish, are favoured by foreign clients, said To Thi Tuong Lan, VASEP’s Vice Secretary General.
Real estate website gets some ink
The US-owned real estate website www.metvuong.com is coming out free of charge in paper format for its customers and partners.
Along with listing properties for rent or sale, the publication covers articles about the market and real estate related services.
The monthly publication gives buyers, sellers, renters, and landlords another option to find or release information on land and houses, according to chairman Paul Song.
CB Rechard Ellis, Savills and Indochina Land are among the company’s partners.
Work starts on biogas plants
Construction on two biogas energy plants for Biogas Tay Ninh, a wholly foreign-owned company, began on Monday in the province.
Completion is expected in 10 months for the plants, worth a total of US$3million, which are being built under the build-operate-transfer (BOT) form.
The plants will use waste water discharge from tapioca processing facilities in Tay Ninh Province.
With an average capacity of 3,000 cubic metres of waste water a day, the plants will be able to produce up to 12,000 cubic metres of biogas.
"The plants will help us save energy and reduce up to 90 percent of pollutants from our waste water," said Khun Umnad, general director of the company Tapico Tay Ninh.
Tay Ninh produces one million tonnes of cassava annually, producing about 300,000 tonnes of tapioca.
Pharma plant opens in Phu Yen
Pymepharco Joint Stock Co has opened a plant to manufacture intravenous drugs in the central province of Phu Yen.
The VND184 billion (US$11.5 million) plant, utilising technology from India, Germany and Spain, will adhere to the strict manufacturing standards of the World Health Organisation. Pymepharco works with Stada Vietnam to produce the oral antibiotic Cefdinir.
Binh Dinh be dammed, with new projects
Construction of three hydropower plants in Vinh Thanh District in the south-central province of Binh Dinh began on Sunday.
Vinh Son Hydro-Electricity Plants 3,4 and 5, all situated upstream on the Kon River, are being built by the Vinh Son-Song Hinh Hydroelectricity Joint Stock Company and Vinh Son Investment Joint Stock Company.
The projects were initiated under a Government plan to develop the national electricity grid between 2006 and 2015.
The Vinh Son project 3 is expected to cost VND660 billion (US$41.5 million) and is funded by the Vinh Son-Song Hinh Hydroelectricity Joint Stock Company. When completed in 2010, it will have a capacity of 32MW.
The 18MW Vinh Son Hydroelectricity Plant 4 will cost VND400 billion (US$25 million) and is scheduled to be completed in 2011.
Vinh Son 5 will cost VND600 billion (US$38 million) and the 28MW plant will be ready by 2010.
Binh Duong’s got the juice
Binh Duong authorities have licensed Kirin Acecook Vietnam Ltd Co to build a fruit-juice bottling plant worth US$60 million in the My Phuoc 2 Industrial Zone in Ben Cat District.
The factory, expected to open in May 2009, will have a production capacity of four million bottles of juice a year.
The venture brings together the Kirin Beverage Group of Japan, the Acecook Group of Japan, and the Acecook Vietnam Joint Stock Co.
New PetroVietnam affiliate bows
PetroVietnam Construction Joint Stock Co, a subsidiary of the Vietnam Oil & Gas Group (PetroVietnam), made its debut at a ceremony in Ha Noi last Thursday.
With charter capital of US$ 32.8 million and nearly 3,000 employees, PVC designs and supplies steel structures, pipelines and petroleum storages for onshore and offshore oil and gas projects.
Thais come to Can Tho garden party
Refrigeration Engineering Joint Stock Co (REE), the Sai Gon Agricultural Joint Stock Co and Siam Orchids Thailand Co will create a tropical flower garden in the Cuu Long (Mekong) Delta City of Can Tho.
The garden, covering 200ha, will be built at a cost of VND150 billion (US$9.37 million), with completion expected in 2011. It will be a centre for the collection, hybridisation and production of flowers adapted to the Delta eco-system.
Sai Gon Cable Co to list
The Sai Gon Cable Co will list more than 29 million shares at the Ha Noi Securities Trading Centre on May 6.
The company, which specialises in the trade and production of electrical and telecom cables, is capitalised at VND300 billion (US$18.7 million), 31.1 per cent of which the State holds.
Vinacontrol revenue hits $1.57m
The Vietnam Superintendence and Inspection Co (Vinacontrol) has announced a net revenue of VND25.2 billion (US$1.57 million) in the first quarter of this year, a year-on-year rise of 43.7 per cent.
The company plans to earn a total revenue of VND100 billion this year and pay its shareholders a dividend of 12 per cent.
Vinacontrol specialises in surveying and judging product quality.
SJE earns $278,000 in Q1
The electrical company Song Da 11 has announced a post-tax profit of VND4.45 billion (US$278,000) in the first three months of the year, an increase of 26.3 per cent year-on-year. Shares in the company, coded SJE, closed at VND22,900 on Tuesday..
POT’s Q1 profit plunges 94.5%
The Post and Telecommunication Equipment Co has revealed a post-tax profit of VND258 million (US$16,100) from the first quarter of the year, a plummet of 94.5 per cent against the same period in 2007.
The company, capitalised at VND194.4 billion, pledges to continue with its planned projects this year in hope of achieving a pre-tax profit of VND45 billion on revenue of VND780 billion.
BVS to issue 30m shares
Bao Viet Securities Co, code share BVS, will issue an additional 30 million shares worth VND300 billion (US$18.7 million) on May 6 at the Ha Noi Securities Trading Centre.
The company said it intends to offer the shares to its existing shareholders at a price of VND32,000 a piece.
Ha Tien 1 buyback
The Ha Tien 1 Cement Co has said it will commission the Bao Viet Securities Co to buy back 300,000 shares from May 5 to July 5. The capital used to initiate the buyback will be mobilised from the company’s investment and development fund.
Hoa Phat earns $144 million
The Hoa Phat Co announced a total revenue of VND2.3 trillion (US$144 million) from the first quarter of this year, 30 per cent of its target for the entire year.
The company expects to earn a post-tax profit of more than VND451 billion, 60 per cent of its target figure. Hoa Phat is mainly involved in the trade and production of structural steel.
HCM City speeds up ODA disbursement
Ho Chi Minh City is speeding up the implementation of 23 projects funded by Official Development Assistance (ODA) official.
Most of the projects, which received over 30 trillion VND in ODA commitments, are large-scale transport works.
Since early this year, the city has disbursed over 896 billion VND (56 million USD) of ODA for the projects, or 27.5 percent of the yearly plan.
To accelerate the disbursement of ODA capital, the city is focusing on removing difficulties in site clearance and rising construction material prices.
HCM City targets growth in mechanical engineering
The Ho Chi Minh City People’s Committee has approved a plan to develop the mechanical engineering industry by 2020.
Under the plan, products with high added value and environmentally efficient will be favoured.
Key products will include autos, waterway transport vehicles, machinery and tools, and electric equipment.
All small mechanical establishments will be moved out of the city’s urban areas and modern ones will be moved to local industrial parks.
Salt makers rake in the dough on rising prices
23:03' 04/05/2008 (GMT+7)
A salt worker in Duc Pho District in the central province of Quang Ngai harvests salt.
Sharp increases in the price of salt has compelled salt workers in the Mekong (Cuu Long) Delta region to fill up their aquaculture areas to produce salt again.
Several years ago, the price of salt was low, even falling to VND100,000 (US$6.25) per tonne. Salt makers could hardly make ends meet even while working very hard.
Unable to earn a living from making salt, a lot of farmers in the Mekong Delta shifted to aquaculture. However, earlier this year, the price of salt increased considerably, rising to VND1 to 1.2 million ($62.50 - $75) per tonne.
The increase was due to bad weather-early and long-lasting rainy periods - which caused low yields for salt makers.
Farmers in these areas, who gain little from aquaculture, are shifting back to salt again, hoping to earn more money.
According to estimates by departments of agriculture and rural development nationwide, salt makers in Ben Tre Province’s biggest salt producing area widened their production area to 860ha, and Soc Trang Province’s Vinh Chau District now has 1,400ha for salt production. Meanwhile, farmers in Tra Vinh Province have filled up 100ha of shrimp-raising area to make salt.
Many farmers in Ninh Thuan Province even borrowed money to invest in making salt. Trinh De Thoai, a resident of Khanh Chu Village in Khanh Hai Commune of Ninh Hai District, borrowed money at a very high interest rate. According to him, the cost of salt production is about VND180,000 ($11.25) per tonne, while the price of salt is currently VND1 million per tonne. Salt makers can profit greatly from making salt this year, earning VND25 to 30 million (up to $1,825) per ha.
According to Chau Thanh Long, deputy director of Ninh Thuan Province’s Department of Agriculture and Rural Development, Ninh Hai District has 800ha of shrimp-raising area. But earlier this year farmers filled up all these area to make salt.
"Though the increase in salt prices can help farmers make better earnings, giving over all cultivation area to salt making will destroy the province’s long-term plan for aquaculture," said Long.
This has become an issue that is hard to control among farmers: whenever a product’s price is high, farmers will immediately widen production area, ignoring the warnings of local authorities and planners.
A good trend or not?
"We cannot ban farmers from making salt. We have warned them not to destroy aquaculture raising areas to make salt, since the price of salt has always been fluctuating and irregular. But farmers all see the short-term profit," said Nguyen Minh Dang, vice chairman of the Long Dien Tay Commune’s People’s Committee in Bac Lieu Province.
Le Hung Hien, head of the Economic Department of Ninh Thuoc District in Ninh Thuan Province, shared the same concerns, saying that if the price of salt comes down again in the coming years, farmers’ lives in these areas would become even harder.
Stable development
With long-term perspective, the application of modern production methods in making salt needs to be carried out so that farmers can carry on with this traditional job.
According to Deputy Minister of Agriculture and Rural Development Diep Kinh Tan, the sector will put priority investment into trial projects for salt production that apply new technologies in order to gradually modernise the salt-making process.
The goal is to improve the productivity of salt making from 50 - 60 tonnes per hectare to 75 - 80 tonnes per hectare, instead of massive widening in production area.
Ben Tre Province has been successful in applying a new production model by covering the surface of the salt making area with plastic canvas. This can help shorten production time as well as increase productivity and salt quality. However, this method is costly, at around VND4.2 million ($260) per ha.
Thus, local authorities are therefore urged to support salt makers in providing preferential borrowing interest or other policies that encourage the adoption of more advanced production methods.
A salt worker in Duc Pho District in the central province of Quang Ngai harvests salt.
Sharp increases in the price of salt has compelled salt workers in the Mekong (Cuu Long) Delta region to fill up their aquaculture areas to produce salt again.
Several years ago, the price of salt was low, even falling to VND100,000 (US$6.25) per tonne. Salt makers could hardly make ends meet even while working very hard.
Unable to earn a living from making salt, a lot of farmers in the Mekong Delta shifted to aquaculture. However, earlier this year, the price of salt increased considerably, rising to VND1 to 1.2 million ($62.50 - $75) per tonne.
The increase was due to bad weather-early and long-lasting rainy periods - which caused low yields for salt makers.
Farmers in these areas, who gain little from aquaculture, are shifting back to salt again, hoping to earn more money.
According to estimates by departments of agriculture and rural development nationwide, salt makers in Ben Tre Province’s biggest salt producing area widened their production area to 860ha, and Soc Trang Province’s Vinh Chau District now has 1,400ha for salt production. Meanwhile, farmers in Tra Vinh Province have filled up 100ha of shrimp-raising area to make salt.
Many farmers in Ninh Thuan Province even borrowed money to invest in making salt. Trinh De Thoai, a resident of Khanh Chu Village in Khanh Hai Commune of Ninh Hai District, borrowed money at a very high interest rate. According to him, the cost of salt production is about VND180,000 ($11.25) per tonne, while the price of salt is currently VND1 million per tonne. Salt makers can profit greatly from making salt this year, earning VND25 to 30 million (up to $1,825) per ha.
According to Chau Thanh Long, deputy director of Ninh Thuan Province’s Department of Agriculture and Rural Development, Ninh Hai District has 800ha of shrimp-raising area. But earlier this year farmers filled up all these area to make salt.
"Though the increase in salt prices can help farmers make better earnings, giving over all cultivation area to salt making will destroy the province’s long-term plan for aquaculture," said Long.
This has become an issue that is hard to control among farmers: whenever a product’s price is high, farmers will immediately widen production area, ignoring the warnings of local authorities and planners.
A good trend or not?
"We cannot ban farmers from making salt. We have warned them not to destroy aquaculture raising areas to make salt, since the price of salt has always been fluctuating and irregular. But farmers all see the short-term profit," said Nguyen Minh Dang, vice chairman of the Long Dien Tay Commune’s People’s Committee in Bac Lieu Province.
Le Hung Hien, head of the Economic Department of Ninh Thuoc District in Ninh Thuan Province, shared the same concerns, saying that if the price of salt comes down again in the coming years, farmers’ lives in these areas would become even harder.
Stable development
With long-term perspective, the application of modern production methods in making salt needs to be carried out so that farmers can carry on with this traditional job.
According to Deputy Minister of Agriculture and Rural Development Diep Kinh Tan, the sector will put priority investment into trial projects for salt production that apply new technologies in order to gradually modernise the salt-making process.
The goal is to improve the productivity of salt making from 50 - 60 tonnes per hectare to 75 - 80 tonnes per hectare, instead of massive widening in production area.
Ben Tre Province has been successful in applying a new production model by covering the surface of the salt making area with plastic canvas. This can help shorten production time as well as increase productivity and salt quality. However, this method is costly, at around VND4.2 million ($260) per ha.
Thus, local authorities are therefore urged to support salt makers in providing preferential borrowing interest or other policies that encourage the adoption of more advanced production methods.
Brokerages seek new market share in nation’s hinterlands
18:16' 04/05/2008 (GMT+7)
Several securities firms have continued to expand their brokerage offices into provincial rural and urban areas to attract new investor activity despite the stock market downturn.
These securities groups are going on the offensive to grab their share of the growing nationwide demand for access to traded stocks in anticipation of a coming market recovery.
The boom in the number of new brokerage offices has been facilitated at the same time by new, easier administrative procedures for securities companies to establish localised branches.
Securities firms can now open local offices without first having to obtain permission from the State Securities Commission (SSC), and are simply required to report a new branch once it has already opened.
Brokerage houses have cut costs by co-ordinating with local enterprises. While the securities company focuses on personnel and equipment, the local enterprise provides the real estate in which the partnership is housed.
Expansion into the provinces has also been motivated by the mushrooming number of agencies in the trading hubs of Ha Noi, HCM City and Hai Phong City. As these markets approach the point of saturation, firms have begun to look outward in the search for greater transactional capacity.
For example, An Binh Securities Company (ABS) co-operated with Tat Thanh Co Ltd to set up an agency in Thai Nguyen City on April 24. This was the 16th local branch of ABS to open nationwide.
"The opening of this new ABS branch will satisfy the demand of this industrial city’s stock market investors," said an ABS representative.
On the same day, Capital Securities Co (CSC) opened an agency in northern Ha Nam Province. This is the first provincial branch of CSC, and also the first securities firm to open a local office in Ha Nam.
APEC Securities Co (APECS) opened an office in the northern Thai Nguyen Province on April 23 in co-ordination with Tan Cuong Hoang Binh Joint stock Co.
APECS recently opened branches in the four provinces of Long An, Dak Lak, Nam Dinh and Nha Trang City, as well as an office in Ha Noi.
On April 12, VNDirect Securities Co launched a local trading office at Vinh Yen Township in northern Vinh Phuc Province.
Nguyen Manh Hao, director general of APECS, said that since the firm’s inception it had pursued the development of a nationwide network of offices.
Hao expressed reservations about the promise of remote market connectivity, however, saying, "Although the application of modern technologies has made it possible to trade securities via telephone or online, someone still has to be there on the trading floors to make a deposit or withdrawal on an account, or register an account in the first place, so the on-site agency will always be necessary."
To operate such an agency, said Hao, it costs APECS, and other firms like it, tens of millions dong a month. This sum is not small, especially given the current difficult situation with the market as well as the fierce competition between securities firms.
Taking on the added cost of developing a nationwide brokerage network, therefore, is a long-term strategy on the part of APECS with a view towards staking out a dominant position in the market in advance of its rebound in the future, Hao added.
Viet Nam’s stock market is still in its infancy and it has great potential to develop under long-term vision. While the number of private individuals investing in securities throughout the country so far remains modest, analysts predict that the figure will continue rising steadily.
Hoang Van Hiep, a farmer in the central highland province of Lam Dong said: "While real estate prices are high and unstable, investment in securities becomes more attractive."
Another farmer in Lam Dong Province said: "Securities investment is a new and unfamiliar channel of financial activity for me, but definitely one that I intend to look into further and in which I hope to one day participate."
Several securities firms have continued to expand their brokerage offices into provincial rural and urban areas to attract new investor activity despite the stock market downturn.
These securities groups are going on the offensive to grab their share of the growing nationwide demand for access to traded stocks in anticipation of a coming market recovery.
The boom in the number of new brokerage offices has been facilitated at the same time by new, easier administrative procedures for securities companies to establish localised branches.
Securities firms can now open local offices without first having to obtain permission from the State Securities Commission (SSC), and are simply required to report a new branch once it has already opened.
Brokerage houses have cut costs by co-ordinating with local enterprises. While the securities company focuses on personnel and equipment, the local enterprise provides the real estate in which the partnership is housed.
Expansion into the provinces has also been motivated by the mushrooming number of agencies in the trading hubs of Ha Noi, HCM City and Hai Phong City. As these markets approach the point of saturation, firms have begun to look outward in the search for greater transactional capacity.
For example, An Binh Securities Company (ABS) co-operated with Tat Thanh Co Ltd to set up an agency in Thai Nguyen City on April 24. This was the 16th local branch of ABS to open nationwide.
"The opening of this new ABS branch will satisfy the demand of this industrial city’s stock market investors," said an ABS representative.
On the same day, Capital Securities Co (CSC) opened an agency in northern Ha Nam Province. This is the first provincial branch of CSC, and also the first securities firm to open a local office in Ha Nam.
APEC Securities Co (APECS) opened an office in the northern Thai Nguyen Province on April 23 in co-ordination with Tan Cuong Hoang Binh Joint stock Co.
APECS recently opened branches in the four provinces of Long An, Dak Lak, Nam Dinh and Nha Trang City, as well as an office in Ha Noi.
On April 12, VNDirect Securities Co launched a local trading office at Vinh Yen Township in northern Vinh Phuc Province.
Nguyen Manh Hao, director general of APECS, said that since the firm’s inception it had pursued the development of a nationwide network of offices.
Hao expressed reservations about the promise of remote market connectivity, however, saying, "Although the application of modern technologies has made it possible to trade securities via telephone or online, someone still has to be there on the trading floors to make a deposit or withdrawal on an account, or register an account in the first place, so the on-site agency will always be necessary."
To operate such an agency, said Hao, it costs APECS, and other firms like it, tens of millions dong a month. This sum is not small, especially given the current difficult situation with the market as well as the fierce competition between securities firms.
Taking on the added cost of developing a nationwide brokerage network, therefore, is a long-term strategy on the part of APECS with a view towards staking out a dominant position in the market in advance of its rebound in the future, Hao added.
Viet Nam’s stock market is still in its infancy and it has great potential to develop under long-term vision. While the number of private individuals investing in securities throughout the country so far remains modest, analysts predict that the figure will continue rising steadily.
Hoang Van Hiep, a farmer in the central highland province of Lam Dong said: "While real estate prices are high and unstable, investment in securities becomes more attractive."
Another farmer in Lam Dong Province said: "Securities investment is a new and unfamiliar channel of financial activity for me, but definitely one that I intend to look into further and in which I hope to one day participate."
FDI disbursement hits new monthly record
17:18' 04/05/2008 (GMT+7)
A Tatung Viet Nam Company worker installs refrigerator parts. FDI disbursement reached more than $1.4 billion in April.
VietNamNet Bridge - Foreign investment disbursed in April reached more than US$1.4 billion, the highest amount ever in a single month, according to the Ministry of Planning and Investment’s Foreign Investment Agency (FIA).
Disbursement of foreign direct investment (FDI) refers to actual capital investment made following an earlier commitment by foreign investors in the form of registering for an investment licence.
Disbursement, therefore, is a more accurate measure of the real impact of FDI on the economy than gross FDI totals based on registration of projects.
Disbursement follows all licensing procedures and approvals and reflects actual capital expenditures and commencement of business operations.
For instance, $8 billion was disbursed out of a total registered FDI of $21.3 billion last year, according to the FIA. There were now 8,600 foreign-invested projects pending or in progress nationwide, with $85 billion in registered capital, of which only $30 billion has been disbursed.
South Korea’s Halla Energy & Environment became the latest major foreign investor to disburse capital on Tuesday, breaking ground on a factory for producing heavy industrial equipment in the My Xuan B1 Industrial Park in the southern province of Ba Ria-Vung Tau.
"Having received an investment licence in January, we have now been able to begin construction of the facility from which products should hit the market by the end of this year. It’s unexpectedly fast," said Vina Halla general director Ho Yong Shon.
Le Minh Chau, director of the Ba Ria-Vung Tau industrial zones management board, said the province’s FDI disbursement rates, the ratio of disbursed capital over registered capital, had reached 45 per cent.
"Most foreign-invested pro-jects in the province are implemented on schedule," Chau said.
Dong Nai Department of Planning and Investment director Bo Ngoc Thu boasted that the province’s FDI disbursement rates had reached about 57 per cent.
In the southern province of Dong Nai, two real estate projects covering sites of 366ha and 305ha, had investment licences issued last Friday and saw construction begin only five days later, said Thu.
"We are fully aware of the importance of preparing sites for investors. Most foreign-invested projects in industrial zones can disburse capital as soon as investors receive investment licences," said Foreign Investment Agency director Phan Huu Thang.
Thang said authorities were making great efforts to reduce the lapse between registration and disbursement of capital. Disbursement currently lagged considerably behind registration, he said.
"Our goal is to have disbursement reach up to 50 per cent of last year’s registered capital, with a target to reach disbursement of about $10 billion this year," he said. "But a higher figure could be reached if all localities deal effectively with site clearance."
Dong Nai, besides building resettlement areas, has piloted farmers joining their capital with companies in the form of contributing their land to projects such as the $750 million Dong Nai Waterfront City and $305 million Aqua City.
"Farmers will enjoy direct benefits from their capital contributions, while avoiding disruption to their livelihoods," said the provincial Department of Planning and Investment.
Thang also said projects that fall behind schedule without legitimate reason would have their licences revoked. This month and next, in accordance with Ministry of Planning and Investment directions, authorities would conduct a review of projects in some major cities and provinces, recommending some for revocation of investment licences.
A Tatung Viet Nam Company worker installs refrigerator parts. FDI disbursement reached more than $1.4 billion in April.
VietNamNet Bridge - Foreign investment disbursed in April reached more than US$1.4 billion, the highest amount ever in a single month, according to the Ministry of Planning and Investment’s Foreign Investment Agency (FIA).
Disbursement of foreign direct investment (FDI) refers to actual capital investment made following an earlier commitment by foreign investors in the form of registering for an investment licence.
Disbursement, therefore, is a more accurate measure of the real impact of FDI on the economy than gross FDI totals based on registration of projects.
Disbursement follows all licensing procedures and approvals and reflects actual capital expenditures and commencement of business operations.
For instance, $8 billion was disbursed out of a total registered FDI of $21.3 billion last year, according to the FIA. There were now 8,600 foreign-invested projects pending or in progress nationwide, with $85 billion in registered capital, of which only $30 billion has been disbursed.
South Korea’s Halla Energy & Environment became the latest major foreign investor to disburse capital on Tuesday, breaking ground on a factory for producing heavy industrial equipment in the My Xuan B1 Industrial Park in the southern province of Ba Ria-Vung Tau.
"Having received an investment licence in January, we have now been able to begin construction of the facility from which products should hit the market by the end of this year. It’s unexpectedly fast," said Vina Halla general director Ho Yong Shon.
Le Minh Chau, director of the Ba Ria-Vung Tau industrial zones management board, said the province’s FDI disbursement rates, the ratio of disbursed capital over registered capital, had reached 45 per cent.
"Most foreign-invested pro-jects in the province are implemented on schedule," Chau said.
Dong Nai Department of Planning and Investment director Bo Ngoc Thu boasted that the province’s FDI disbursement rates had reached about 57 per cent.
In the southern province of Dong Nai, two real estate projects covering sites of 366ha and 305ha, had investment licences issued last Friday and saw construction begin only five days later, said Thu.
"We are fully aware of the importance of preparing sites for investors. Most foreign-invested projects in industrial zones can disburse capital as soon as investors receive investment licences," said Foreign Investment Agency director Phan Huu Thang.
Thang said authorities were making great efforts to reduce the lapse between registration and disbursement of capital. Disbursement currently lagged considerably behind registration, he said.
"Our goal is to have disbursement reach up to 50 per cent of last year’s registered capital, with a target to reach disbursement of about $10 billion this year," he said. "But a higher figure could be reached if all localities deal effectively with site clearance."
Dong Nai, besides building resettlement areas, has piloted farmers joining their capital with companies in the form of contributing their land to projects such as the $750 million Dong Nai Waterfront City and $305 million Aqua City.
"Farmers will enjoy direct benefits from their capital contributions, while avoiding disruption to their livelihoods," said the provincial Department of Planning and Investment.
Thang also said projects that fall behind schedule without legitimate reason would have their licences revoked. This month and next, in accordance with Ministry of Planning and Investment directions, authorities would conduct a review of projects in some major cities and provinces, recommending some for revocation of investment licences.
Trade gap narrowed to curb inflation
17:10' 04/05/2008 (GMT+7)
The Ministry of Finance reported that, in first four months, the excess of import over export reached US $11.1 billion, equivalent to 60.8% of export turnover.
In his message on dealing with difficulties and obtaining sustainable socio-economic development, the PM emphasized that “the trade balance is a very important macro index. Trade deficit which increased in 2007 and kept going up in the first quarter of this year is threatening the macro-economic balance. This problem must be settled through boosting export and controlling import.”
To realise the PM’s directions, some technical barriers have been lifted to reduce the trade deficit. Export tax rate of minerals has been readjusted to control the export of raw materials: coal raised from 10% up to 15%, crude oil to 8%, pure and raw iron-ore to 20%. Import tax and special consumption tax have been raised for some luxury products, including CBU automobiles, spare parts, and electronic products.
Machinery and equipment continue to be imported to serve domestic production
In order to guarantee capital resources for producers and traders of exports, the State Bank confirmed, the credit structure has been readjusted towards increasing loans for effective projects, export and agricultural activities, rural areas, poor households and social policy-beneficiaries.
It was reported that the export turnover in the first four months was US $18.260 billion, up 27.6% as compared to the same period last year. Increases were seen in the turnover of most of exports in comparison with the same period of 2007, such as rice up 72.7%, plastic products 34.1%, tea 34%, textiles 24.5%, rubber 23.7%, wood furniture 22.5 %, and aqua-products 13.6%.
The April import turnover went down 2.8% against March. It was estimated to reach US $29.360 billion in the first four months, up 71% compared to the same period in 2007. The excess of import over export in this period was US $11.1 billion, equivalent to 60.8% of the export turnover.
The Ministry of Finance reported that, in first four months, the excess of import over export reached US $11.1 billion, equivalent to 60.8% of export turnover.
In his message on dealing with difficulties and obtaining sustainable socio-economic development, the PM emphasized that “the trade balance is a very important macro index. Trade deficit which increased in 2007 and kept going up in the first quarter of this year is threatening the macro-economic balance. This problem must be settled through boosting export and controlling import.”
To realise the PM’s directions, some technical barriers have been lifted to reduce the trade deficit. Export tax rate of minerals has been readjusted to control the export of raw materials: coal raised from 10% up to 15%, crude oil to 8%, pure and raw iron-ore to 20%. Import tax and special consumption tax have been raised for some luxury products, including CBU automobiles, spare parts, and electronic products.
Machinery and equipment continue to be imported to serve domestic production
In order to guarantee capital resources for producers and traders of exports, the State Bank confirmed, the credit structure has been readjusted towards increasing loans for effective projects, export and agricultural activities, rural areas, poor households and social policy-beneficiaries.
It was reported that the export turnover in the first four months was US $18.260 billion, up 27.6% as compared to the same period last year. Increases were seen in the turnover of most of exports in comparison with the same period of 2007, such as rice up 72.7%, plastic products 34.1%, tea 34%, textiles 24.5%, rubber 23.7%, wood furniture 22.5 %, and aqua-products 13.6%.
The April import turnover went down 2.8% against March. It was estimated to reach US $29.360 billion in the first four months, up 71% compared to the same period in 2007. The excess of import over export in this period was US $11.1 billion, equivalent to 60.8% of the export turnover.
Ministry urges stronger risk management for stock market
22:40' 04/05/2008 (GMT+7)
Market regulators need better policies and procedures in place to manage crises and emergencies that may arise on the nation’s stock exchanges, the Ministry of Finance said in a decision earlier this week, recommending a project be set up to create and model such policies.
The measure was one of five economic recommendations that the ministry set forth in the decision.
The decision also said that regulators needed to establish without further delay an over-the-counter (OTC) market under the administration of the Ha Noi Securities Trading Centre, a step formally approved last year to reduce risks to investors in unsupervised OTC trading.
Regulators also needed to establish detailed criteria for listed companies to offer additional shares, the ministry decision stated.
"These things, although not new, will contribute to giving investors more optimism in their trading," said Nguyen Tien Dung, an independent analyst. "They should have been done earlier."
Dung said a project to devise responses to market crises and detailed regulation on additional offers were most needed at this time because they would help the market avoid some of the steep declines of the past.
"As of now, the overload of shares seems to be the main reason for the reversal of the exchange. If we had had an obvious plan to solve it from the outset, the market would not have fallen as deeply as it has."
The decision also addressed mechanisms for foreign investors as well as management of foreign capital inflows to the domestic exchange.
The decision was regarded as good news for investors during this week’s market holiday.
"The market could rebound early next week thanks in part to this news," Dung said. "But, whether it can spur the market depends on how long it takes to implement the proposed project."
Market regulators need better policies and procedures in place to manage crises and emergencies that may arise on the nation’s stock exchanges, the Ministry of Finance said in a decision earlier this week, recommending a project be set up to create and model such policies.
The measure was one of five economic recommendations that the ministry set forth in the decision.
The decision also said that regulators needed to establish without further delay an over-the-counter (OTC) market under the administration of the Ha Noi Securities Trading Centre, a step formally approved last year to reduce risks to investors in unsupervised OTC trading.
Regulators also needed to establish detailed criteria for listed companies to offer additional shares, the ministry decision stated.
"These things, although not new, will contribute to giving investors more optimism in their trading," said Nguyen Tien Dung, an independent analyst. "They should have been done earlier."
Dung said a project to devise responses to market crises and detailed regulation on additional offers were most needed at this time because they would help the market avoid some of the steep declines of the past.
"As of now, the overload of shares seems to be the main reason for the reversal of the exchange. If we had had an obvious plan to solve it from the outset, the market would not have fallen as deeply as it has."
The decision also addressed mechanisms for foreign investors as well as management of foreign capital inflows to the domestic exchange.
The decision was regarded as good news for investors during this week’s market holiday.
"The market could rebound early next week thanks in part to this news," Dung said. "But, whether it can spur the market depends on how long it takes to implement the proposed project."
India trade to reach $2 billion in 2008
17:20' 04/05/2008 (GMT+7)
A Dien Quang Light Bulb Co worker controls a compact bulb production line. Bilateral trade with India is set to reach US$2 billion this year.
VietNamNet Bridge - Two-way trade between India and Vietnam is expected to reach US$2 billion in 2008, two years ahead of goals set in the joint statement issued nearly one year ago when the two countries established a strategic partnership.
With a population of 1.1 billion people and the second highest GDP growth rate in Asia, India offers good opportunities for Vietnamese markets, said Vietnam’s ambassador to India, Vu Quang Diem.
Major exported goods from Vietnam to India include pepper, rubber, computer hardware and electronic products, cinnamon bark and spice, and garment and textile products.
According to Diem, Vietnamese goods are competitive in the Indian market, evidenced by a 20 per cent annual growth rate in Vietnam’s exports to India over the past few years.
However, two-way trade between the two countries remains "modest," with the trade balance being in India’s favour.
The economic development gap is one of the major hinderances for trade promotion between India and Vietnam, Diem said.
The ASEAN-India Free Trade Agreement and the Vietnam-India Free Trade Agreement, soon to be signed, should promote trade between the two nations.
These agreements will create more favourable conditions for Vietnamese goods and enhance their market shares in the Indian market, said Diem.
2008 is a transitional year to implement the joint statement on strategic partnership between India and Vietnam.
The Vietnamese embassy in India is preparing campaigns to promote Vietnamese products and tourism. A number of Indian operations will be recommended to Vietnam for business and investment activities.
According to Diem, Prime Minister Nguyen Tan Dung’s visit to India in July 2007 helped bring in big investment projects from India to Vietnam.
These include the $527 million steel refinery project in Ba Ria-Vung Tau Province, the Indian Essar group’s $600 million oil exploration and exploitation project and two big steel projects with a more than $4 billion investment in Tata group in Ha Tinh Province. Last year India ranked sixth in foreign investment in Vietnam.
A Dien Quang Light Bulb Co worker controls a compact bulb production line. Bilateral trade with India is set to reach US$2 billion this year.
VietNamNet Bridge - Two-way trade between India and Vietnam is expected to reach US$2 billion in 2008, two years ahead of goals set in the joint statement issued nearly one year ago when the two countries established a strategic partnership.
With a population of 1.1 billion people and the second highest GDP growth rate in Asia, India offers good opportunities for Vietnamese markets, said Vietnam’s ambassador to India, Vu Quang Diem.
Major exported goods from Vietnam to India include pepper, rubber, computer hardware and electronic products, cinnamon bark and spice, and garment and textile products.
According to Diem, Vietnamese goods are competitive in the Indian market, evidenced by a 20 per cent annual growth rate in Vietnam’s exports to India over the past few years.
However, two-way trade between the two countries remains "modest," with the trade balance being in India’s favour.
The economic development gap is one of the major hinderances for trade promotion between India and Vietnam, Diem said.
The ASEAN-India Free Trade Agreement and the Vietnam-India Free Trade Agreement, soon to be signed, should promote trade between the two nations.
These agreements will create more favourable conditions for Vietnamese goods and enhance their market shares in the Indian market, said Diem.
2008 is a transitional year to implement the joint statement on strategic partnership between India and Vietnam.
The Vietnamese embassy in India is preparing campaigns to promote Vietnamese products and tourism. A number of Indian operations will be recommended to Vietnam for business and investment activities.
According to Diem, Prime Minister Nguyen Tan Dung’s visit to India in July 2007 helped bring in big investment projects from India to Vietnam.
These include the $527 million steel refinery project in Ba Ria-Vung Tau Province, the Indian Essar group’s $600 million oil exploration and exploitation project and two big steel projects with a more than $4 billion investment in Tata group in Ha Tinh Province. Last year India ranked sixth in foreign investment in Vietnam.
Friday, 2 May 2008
VietJetAir prepared for competition
15:12' 02/05/2008 (GMT+7)
The country's third air carrier VietJet Aviation Joint Stock Co. (VietJetAir) is cooperating with PARC Aviation in recruiting senior executives to prepare for its operations in Vietnam. Robert Hughes, managing director of VietJetAir, talks with the Daily how the first private airline in Vietnam has readied itself for the take-off scheduled for late this year. Excerpts follow:
Could you elaborate on the agreement with PARC Aviation and what the Dublin firm can help with employment?
PARC Aviation will provide qualified pilots and officers who have the appropriate licenses and type ratings for the planes hat we will fly. The firm will also help us search for other specialists in aviation including managers with experience in other airline functions such as revenue and yield management. We have already consulted with PARC Aviation in building our business plan.
It is not easy to hire qualified aviation staff at the moment. How could VietJetAir do that only months ahead of the departure?
We have already sourced several qualified staff for our operations, and will train others to fill the short-term demand. For the longer term we will finalize agreements with training institutes for engineers. In addition, we are planning a pilot training scheme to train our own pilots. This is not a short-term easy solution; it will take many years to develop a team of qualified pilots and engineers.
Has VietJetAir signed any contract for aircraft lease or purchase, and how many aircraft does the company plan to have in the initial period of operations?
We are still in negotiations on aircraft, so I cannot divulge any details until the final agreement. Our negotiations involve up to 10 aircraft introduced into the fleet in the first two years while routes and operations are fine-tuned. Given the current economic instability in the global aviation market, we are being conservative, yet taking advantage of opportunities to secure capacity in the market. We will initially lease aircraft, but purchase them as soon as possible to reduce overall costs. Our planes will have approximately 130 economy class seats, and 12 premium-economy seats.
We will only have one type of aircraft, either Boeing 737s or Airbus 320s. We are focused on short-haul operations, between one and five hours, so we do not need a mixed fleet. This will help us control costs since we will only need one type of pilots, only one type of engineers, only one set of spare parts, etc. We expect to begin with two or three planes; add two or three more planes shortly thereafter, and add an additional five in the following year.
Will VietJetAir follow the standards of a low-cost carrier or a full-serviced airline?
Several low-cost carriers have learned that there is demand for a premium economy and have adjusted their offerings for the customer demand. For example, in Asia we have seen Nok Air add a premium economy class; in Australia Virgin Blue has also added a premium economy class; and in the U.S. JetBlue has many features not available in low-cost carriers. We believe there is a market for such an offering and will be fine-tuning our product for the market based on customer demand. Our fares will be competitive, since we will maintain a lean cost structure.
So, when will people be able to book fares for VietJetAir flights?
We will set our fares few months prior to departure, and will allow booking of flights at that time. Since we will initially fly domestically, the international fares will wait for another year or so.
It is said that several low-cost carriers are on the brink of bankruptcy due to soaring fuel prices. Does this problem affect or cause any delay in the take-off schedule of VietJetAir?
We still plan to depart in December 2008. The airline industry is in turmoil because of the fuel prices. The industry must raise fares to stay profitable and we believe this will reduce demand for air traffic somewhat, but we believe there will still be strong demand despite the higher fuel prices and fares. We expect that there will be some stability in the fuel price by the time we commence operations, and we will be able to set our fares at that. We are working to keep all other costs under control so we can keep fares competitive.
Do you think that licensing VietJetAir is an important mark in the opening of Vietnam's aviation industry to private investors?
Yes, this will allow increased mobilization of capital into an important sector of the economy. As the transportation infrastructure and offerings expand, this has indirect benefits to other sectors. Opening up sectors of the economy benefits consumers and service providers.
Vietnam is developing in many ways, with business expanding and tourism increasing. Both of these factors lead to increased demand in air travel. And with the tourism infrastructure that is being developed throughout the country, we see great opportunity for increased air traffic in the future. The challenge will be that other airlines see the same potential. This is the reality of business, and we are prepared to compete.
Vietnam's aviation sector is moving in the same direction that other countries have moved, but in Vietnam's own timeline. Neighboring countries that have opened up the industry have seen benefits from the increased air traffic. We expect the same benefits here in Vietnam.
The country's third air carrier VietJet Aviation Joint Stock Co. (VietJetAir) is cooperating with PARC Aviation in recruiting senior executives to prepare for its operations in Vietnam. Robert Hughes, managing director of VietJetAir, talks with the Daily how the first private airline in Vietnam has readied itself for the take-off scheduled for late this year. Excerpts follow:
Could you elaborate on the agreement with PARC Aviation and what the Dublin firm can help with employment?
PARC Aviation will provide qualified pilots and officers who have the appropriate licenses and type ratings for the planes hat we will fly. The firm will also help us search for other specialists in aviation including managers with experience in other airline functions such as revenue and yield management. We have already consulted with PARC Aviation in building our business plan.
It is not easy to hire qualified aviation staff at the moment. How could VietJetAir do that only months ahead of the departure?
We have already sourced several qualified staff for our operations, and will train others to fill the short-term demand. For the longer term we will finalize agreements with training institutes for engineers. In addition, we are planning a pilot training scheme to train our own pilots. This is not a short-term easy solution; it will take many years to develop a team of qualified pilots and engineers.
Has VietJetAir signed any contract for aircraft lease or purchase, and how many aircraft does the company plan to have in the initial period of operations?
We are still in negotiations on aircraft, so I cannot divulge any details until the final agreement. Our negotiations involve up to 10 aircraft introduced into the fleet in the first two years while routes and operations are fine-tuned. Given the current economic instability in the global aviation market, we are being conservative, yet taking advantage of opportunities to secure capacity in the market. We will initially lease aircraft, but purchase them as soon as possible to reduce overall costs. Our planes will have approximately 130 economy class seats, and 12 premium-economy seats.
We will only have one type of aircraft, either Boeing 737s or Airbus 320s. We are focused on short-haul operations, between one and five hours, so we do not need a mixed fleet. This will help us control costs since we will only need one type of pilots, only one type of engineers, only one set of spare parts, etc. We expect to begin with two or three planes; add two or three more planes shortly thereafter, and add an additional five in the following year.
Will VietJetAir follow the standards of a low-cost carrier or a full-serviced airline?
Several low-cost carriers have learned that there is demand for a premium economy and have adjusted their offerings for the customer demand. For example, in Asia we have seen Nok Air add a premium economy class; in Australia Virgin Blue has also added a premium economy class; and in the U.S. JetBlue has many features not available in low-cost carriers. We believe there is a market for such an offering and will be fine-tuning our product for the market based on customer demand. Our fares will be competitive, since we will maintain a lean cost structure.
So, when will people be able to book fares for VietJetAir flights?
We will set our fares few months prior to departure, and will allow booking of flights at that time. Since we will initially fly domestically, the international fares will wait for another year or so.
It is said that several low-cost carriers are on the brink of bankruptcy due to soaring fuel prices. Does this problem affect or cause any delay in the take-off schedule of VietJetAir?
We still plan to depart in December 2008. The airline industry is in turmoil because of the fuel prices. The industry must raise fares to stay profitable and we believe this will reduce demand for air traffic somewhat, but we believe there will still be strong demand despite the higher fuel prices and fares. We expect that there will be some stability in the fuel price by the time we commence operations, and we will be able to set our fares at that. We are working to keep all other costs under control so we can keep fares competitive.
Do you think that licensing VietJetAir is an important mark in the opening of Vietnam's aviation industry to private investors?
Yes, this will allow increased mobilization of capital into an important sector of the economy. As the transportation infrastructure and offerings expand, this has indirect benefits to other sectors. Opening up sectors of the economy benefits consumers and service providers.
Vietnam is developing in many ways, with business expanding and tourism increasing. Both of these factors lead to increased demand in air travel. And with the tourism infrastructure that is being developed throughout the country, we see great opportunity for increased air traffic in the future. The challenge will be that other airlines see the same potential. This is the reality of business, and we are prepared to compete.
Vietnam's aviation sector is moving in the same direction that other countries have moved, but in Vietnam's own timeline. Neighboring countries that have opened up the industry have seen benefits from the increased air traffic. We expect the same benefits here in Vietnam.
Vietnam not very keen on rice cartel
18:00' 02/05/2008 (GMT+7)
“Vietnam is not very keen on this idea. This is not the first time the idea has been proposed by Thailand,” said a senior official from the Ministry of Industry and Trade about a statement by Thai Prime Minister Samak Sundaravej that Vietnam had agreed to join a rice exporters’ cartel.
According to CNN, Samak told press in Bangkok Wednesday that Thailand, Vietnam, Cambodia, Laos and Myanmar had agreed in principle to form an Organization of Rice Exporting Countries, which would attempt to fix the price of rice on the international market.
However, a Deputy Minister of Industry and Trade told VietNamNet that Vietnam, the world’s second largest rice exporter after Thailand, has not yet made any official reaction to the initiative and a delegation from Thailand is coming to Vietnam to discuss it.
“The issue is really sensitive, so we are still carefully considering all aspects of it,” the official said.
The Thai announcement led to concern on the part of rice importing countries, many of them poor, who face the prospect of rice shortages and hunger due to the 80 percent rise in rice prices since the start of the year.
Rising rice prices are part of an overall increase in world food prices which UN’s World Food Programme recently called a tsunami that could drive many of the world’s poorest people to the brink of starvation.
Laos Foreign Ministry spokesman Yong Chanthalansy said Friday the Laotian government would "seriously consider" the idea of creating a cartel to gain "bargaining power," AP reported.
According to AP, Cambodia, which in the past has championed the rice cartel idea, also welcomed the latest proposal and said it was a "necessity" given the current global food crisis.
In early April, the Indian government announced a ban on exports of low-grade rice, which is essentially produced for domestic consumption, in an effort to control a surge in local food prices amid tightening supplies.
Vietnam and Cambodia, other major rice producers, also have placed restrictions on rice exports.
Meanwhile, Thailand recently decided to release more than two million tons of rice to the domestic market in order to maintain the price of rice in the country.
“Vietnam is not very keen on this idea. This is not the first time the idea has been proposed by Thailand,” said a senior official from the Ministry of Industry and Trade about a statement by Thai Prime Minister Samak Sundaravej that Vietnam had agreed to join a rice exporters’ cartel.
According to CNN, Samak told press in Bangkok Wednesday that Thailand, Vietnam, Cambodia, Laos and Myanmar had agreed in principle to form an Organization of Rice Exporting Countries, which would attempt to fix the price of rice on the international market.
However, a Deputy Minister of Industry and Trade told VietNamNet that Vietnam, the world’s second largest rice exporter after Thailand, has not yet made any official reaction to the initiative and a delegation from Thailand is coming to Vietnam to discuss it.
“The issue is really sensitive, so we are still carefully considering all aspects of it,” the official said.
The Thai announcement led to concern on the part of rice importing countries, many of them poor, who face the prospect of rice shortages and hunger due to the 80 percent rise in rice prices since the start of the year.
Rising rice prices are part of an overall increase in world food prices which UN’s World Food Programme recently called a tsunami that could drive many of the world’s poorest people to the brink of starvation.
Laos Foreign Ministry spokesman Yong Chanthalansy said Friday the Laotian government would "seriously consider" the idea of creating a cartel to gain "bargaining power," AP reported.
According to AP, Cambodia, which in the past has championed the rice cartel idea, also welcomed the latest proposal and said it was a "necessity" given the current global food crisis.
In early April, the Indian government announced a ban on exports of low-grade rice, which is essentially produced for domestic consumption, in an effort to control a surge in local food prices amid tightening supplies.
Vietnam and Cambodia, other major rice producers, also have placed restrictions on rice exports.
Meanwhile, Thailand recently decided to release more than two million tons of rice to the domestic market in order to maintain the price of rice in the country.
Making money produces more money
16:50' 02/05/2008 (GMT+7)
Only gold and real estate now can bring positive real interest rates to investors. However, securities deserve to be the investment channel for the long term.
Currently, only gold and real estate can bring positive real interest rates to investors, because the profit these investments can bring is higher than the inflation rate (the real profit for gold investment is 8.5% while real estate 0.7%).
Meanwhile, other investment channels are bringing negative profit. Deposits, for example, have the nominal interest rate of 3%; however, the actual interest rate would be minus if considering the high consumer price index (103%: 109.19% = 94.33%), which means depositors are suffering the actual loss of 5.67% (100% - 94.3% = 5.67%).
As for US dollars and securities, both the nominal and actual profits are negative.
The US$ price by the end of March 2008 had decreased by 1.88% over December 2007, which meant the nominal loss of 1.88%. However, as the consumer price increased by 9.19% during that time, the actual loss US$ investors suffered is even bigger, at 10.14% (98.12%: 109.19% = 89.86% or 100% - 89.86% = 10.14%).
How about investments in securities? The VN Index on March 31, 2008 was 516.85 points, and on December 28, 2007 (the last trading session of 2007) was 927.02 points. This means that the VN Index on March 31 was 55.75% of that on December 28, 2007, or the nominal loss of 44.25%. However, if counting the loss due to the higher consumer price, the actual loss would be higher, at 48.94% (55.75%: 109.19% = 51.06% or 100% - 51.06% = 48.94%).
Three scenarios of CPI
If the CPI increase in the last nine months of the year is equal to the average CPI increase in the last nine months of the last 16 years (3.52%), the CPI increase will be over 13% for the whole year of 2008.
If the CPI increase in the last nine months of the year is equal to the average CPI increase in the last nine months of the last three years, 2005, 2006 and 2007 (4.17%), the CPI increase will be over 13.7% for 2008.
If the CPI increase in the last nine months of the year is equal to the average CPI increase in the last nine months of the last four years 2004-2007 (5.46%), the CPI increase will be 15.2%.
The third scenario seems the most likely. Some experts have even forecast higher inflation rates.
Which investment channels, then?
Though deposits have been bringing negative interest, people will still choose this investment channels thanks to its safety. Making deposits to get positive nominal profit and negative actual profit proves to be a better choice than other investment channels, which have both the nominal and actual profit negative.
Gold deserves to be not only the ‘safe shelter’ in the context of high inflation, but an attractive investment channel. The gold price is forecast to see further increases, since domestic prices are close to the world’s price, which is believed will escalate as a result of the US cutting US$ interest rates to deal with its economic recession.
The US dollar, which was once the No 1 choice of many investors, has become less attractive in the eyes of investors as the dollar has been devaluating against other hard foreign currencies like the euro, pound and Japanese yen. It is wiser to invest in non-dollar currencies instead of relying on the US dollar.
Securities have attracted 300,000 investors with 288 listed companies and the total market capitalisation value of VND315tril. As the VN Index has been falling since the beginning of the year, securities investors have turned their backs on the bourse.
However, some analysts have forecast that the VN Index will rebound to hit the 600 point threshold by the end of this year, an increase of 15%. And if the forecast becomes true, securities investments will bring more profit than deposits.
The real estate market witnessed three fevers (the first one occurred in 1993-1994, the second in 2001-2002 and the third in late 2007, early 2008) before falling now. The tightened monetary policy and the overly high construction material prices both have made real estate prices increase and real estate demand decrease.
However, analysts believe that in the long term, real estate will still be the right investment channel to inject money in. The rapid urbanisation, the policies on allowing Viet Kieu and foreigners to buy homes in Vietnam will make real estate prices increase further. However, the profit from real estate investments will not be high due to the policies on limiting construction areas and tax policies (tentative progressive tax, which aims to limit speculation, and personal income tax).
Only gold and real estate now can bring positive real interest rates to investors. However, securities deserve to be the investment channel for the long term.
Currently, only gold and real estate can bring positive real interest rates to investors, because the profit these investments can bring is higher than the inflation rate (the real profit for gold investment is 8.5% while real estate 0.7%).
Meanwhile, other investment channels are bringing negative profit. Deposits, for example, have the nominal interest rate of 3%; however, the actual interest rate would be minus if considering the high consumer price index (103%: 109.19% = 94.33%), which means depositors are suffering the actual loss of 5.67% (100% - 94.3% = 5.67%).
As for US dollars and securities, both the nominal and actual profits are negative.
The US$ price by the end of March 2008 had decreased by 1.88% over December 2007, which meant the nominal loss of 1.88%. However, as the consumer price increased by 9.19% during that time, the actual loss US$ investors suffered is even bigger, at 10.14% (98.12%: 109.19% = 89.86% or 100% - 89.86% = 10.14%).
How about investments in securities? The VN Index on March 31, 2008 was 516.85 points, and on December 28, 2007 (the last trading session of 2007) was 927.02 points. This means that the VN Index on March 31 was 55.75% of that on December 28, 2007, or the nominal loss of 44.25%. However, if counting the loss due to the higher consumer price, the actual loss would be higher, at 48.94% (55.75%: 109.19% = 51.06% or 100% - 51.06% = 48.94%).
Three scenarios of CPI
If the CPI increase in the last nine months of the year is equal to the average CPI increase in the last nine months of the last 16 years (3.52%), the CPI increase will be over 13% for the whole year of 2008.
If the CPI increase in the last nine months of the year is equal to the average CPI increase in the last nine months of the last three years, 2005, 2006 and 2007 (4.17%), the CPI increase will be over 13.7% for 2008.
If the CPI increase in the last nine months of the year is equal to the average CPI increase in the last nine months of the last four years 2004-2007 (5.46%), the CPI increase will be 15.2%.
The third scenario seems the most likely. Some experts have even forecast higher inflation rates.
Which investment channels, then?
Though deposits have been bringing negative interest, people will still choose this investment channels thanks to its safety. Making deposits to get positive nominal profit and negative actual profit proves to be a better choice than other investment channels, which have both the nominal and actual profit negative.
Gold deserves to be not only the ‘safe shelter’ in the context of high inflation, but an attractive investment channel. The gold price is forecast to see further increases, since domestic prices are close to the world’s price, which is believed will escalate as a result of the US cutting US$ interest rates to deal with its economic recession.
The US dollar, which was once the No 1 choice of many investors, has become less attractive in the eyes of investors as the dollar has been devaluating against other hard foreign currencies like the euro, pound and Japanese yen. It is wiser to invest in non-dollar currencies instead of relying on the US dollar.
Securities have attracted 300,000 investors with 288 listed companies and the total market capitalisation value of VND315tril. As the VN Index has been falling since the beginning of the year, securities investors have turned their backs on the bourse.
However, some analysts have forecast that the VN Index will rebound to hit the 600 point threshold by the end of this year, an increase of 15%. And if the forecast becomes true, securities investments will bring more profit than deposits.
The real estate market witnessed three fevers (the first one occurred in 1993-1994, the second in 2001-2002 and the third in late 2007, early 2008) before falling now. The tightened monetary policy and the overly high construction material prices both have made real estate prices increase and real estate demand decrease.
However, analysts believe that in the long term, real estate will still be the right investment channel to inject money in. The rapid urbanisation, the policies on allowing Viet Kieu and foreigners to buy homes in Vietnam will make real estate prices increase further. However, the profit from real estate investments will not be high due to the policies on limiting construction areas and tax policies (tentative progressive tax, which aims to limit speculation, and personal income tax).
Int’l jewel fair to open in HCM City
17:15' 02/05/2008 (GMT+7)
The inaugural International Jewellery Viet Nam 2008 (IJV 2008) fair will be held in HCM City from today through May 4.
Co-organised by the World Trade Fair Co Ltd and the Viet Nam Chamber of Commerce and Industry's Fair Organisation Co, more than 5,000 enterprises are expected to take part, 100 of which are foreign-based.
Catering to the needs of retailers, store buyers, and private collectors, the fair will cover all aspects of the jewellery market, including tools, displays, and packaging.
The fair's organisers see the event as a good opportunity for domestic jewellers to network and establish relations with foreign partners.
"We hope the fair will become the favoured destination for both wholesale and retail jewellers," said BK Chow, director of the World Trade Fair Co Ltd.
Some products to go on display include diamonds, precious stones, clocks, watches and pearls not to mention support services for enterprises engaged in jewellery production.
Attendees will have the chance to gaze at some of the most finely-crafted jewellery from around the world.
Vietnam at present hosts a high-number of jewellery producers and traders. Yet, their market presence and competitive edge is still relatively weak when compared to other nations. Moreover, domestic enterprises' understanding of the global jewellery market barely exists.
According to the Viet Nam Gemstones and Jewellery Association, Vietnamese demand for gold and jewellery products is about 30-35 tonnes per year, while demand for diamond and precious stones is this year forecast to nudge US$300mil.
No doubt, the domestic jewellery market will develop rapidly in the future as more and more foreign-invested enterprises identify Vietnam's firm potential
The inaugural International Jewellery Viet Nam 2008 (IJV 2008) fair will be held in HCM City from today through May 4.
Co-organised by the World Trade Fair Co Ltd and the Viet Nam Chamber of Commerce and Industry's Fair Organisation Co, more than 5,000 enterprises are expected to take part, 100 of which are foreign-based.
Catering to the needs of retailers, store buyers, and private collectors, the fair will cover all aspects of the jewellery market, including tools, displays, and packaging.
The fair's organisers see the event as a good opportunity for domestic jewellers to network and establish relations with foreign partners.
"We hope the fair will become the favoured destination for both wholesale and retail jewellers," said BK Chow, director of the World Trade Fair Co Ltd.
Some products to go on display include diamonds, precious stones, clocks, watches and pearls not to mention support services for enterprises engaged in jewellery production.
Attendees will have the chance to gaze at some of the most finely-crafted jewellery from around the world.
Vietnam at present hosts a high-number of jewellery producers and traders. Yet, their market presence and competitive edge is still relatively weak when compared to other nations. Moreover, domestic enterprises' understanding of the global jewellery market barely exists.
According to the Viet Nam Gemstones and Jewellery Association, Vietnamese demand for gold and jewellery products is about 30-35 tonnes per year, while demand for diamond and precious stones is this year forecast to nudge US$300mil.
No doubt, the domestic jewellery market will develop rapidly in the future as more and more foreign-invested enterprises identify Vietnam's firm potential
Listed companies in good health: VAFI
16:53' 02/05/2008 (GMT+7)
VietNamNet Bridge – A quick survey by the Vietnam Association of Financial Investors (VAFI) showed that listed companies are operating well despite big difficulties. The association, therefore, has suggested informing investors soon about the good business performances of listed companies to calm them down.
According to Nguyen Hoang Hai, Secretary General of the Vietnam Association of Financial Investors (VAFI), the shocking monetary policy the State Bank of Vietnam has been following recently has had big influences on the stock market and businesses.
In this circumstance, speculators have spread rumours about the poor operations of businesses. The difficulties have been exaggerated to make it seem as though Vietnam was facing an economic crisis.
However, the recent survey by VAFI of some listed companies in the fields of banking, insurance, construction and real estate, transportation, rubber and pharmaceuticals showed that the companies are still maintaining the high growth rates recorded during the fourth quarter of 2007.
Construction companies are facing temporary difficulties. However, right from 2005, they all anticipated the difficulties they would face and price increases, and they all have had the plans to deal with the problems.
Hai said that in such a situation, securities investors may want to know about the ‘health’ of listed companies in the first quarter of 2008 sooner than usual. Therefore, according to him, listed companies should release their business results from the first quarter as soon as possible.
When asked if any mistakes could occur if listed companies announced business results early, Hai said that in order to avoid mistakes, listed companies could release figures equal to or lower than the actual figures. Moreover, listed companies should provide investors with reports which interpret how the inflation has affected their business performance.
Hai called the early announcement an effective measure to help recover the stock market.
Another measure Hai thinks listed companies should take is having their management boards buy more of their companies’ shares while limiting selling shares.
In fact, in the last time, some management boards of listed companies did try to buy shares of their companies, which helped calm investors down.
“The share purchase of management board members shows the responsibility of companies’ managers towards their shareholders,” Hai said
VietNamNet Bridge – A quick survey by the Vietnam Association of Financial Investors (VAFI) showed that listed companies are operating well despite big difficulties. The association, therefore, has suggested informing investors soon about the good business performances of listed companies to calm them down.
According to Nguyen Hoang Hai, Secretary General of the Vietnam Association of Financial Investors (VAFI), the shocking monetary policy the State Bank of Vietnam has been following recently has had big influences on the stock market and businesses.
In this circumstance, speculators have spread rumours about the poor operations of businesses. The difficulties have been exaggerated to make it seem as though Vietnam was facing an economic crisis.
However, the recent survey by VAFI of some listed companies in the fields of banking, insurance, construction and real estate, transportation, rubber and pharmaceuticals showed that the companies are still maintaining the high growth rates recorded during the fourth quarter of 2007.
Construction companies are facing temporary difficulties. However, right from 2005, they all anticipated the difficulties they would face and price increases, and they all have had the plans to deal with the problems.
Hai said that in such a situation, securities investors may want to know about the ‘health’ of listed companies in the first quarter of 2008 sooner than usual. Therefore, according to him, listed companies should release their business results from the first quarter as soon as possible.
When asked if any mistakes could occur if listed companies announced business results early, Hai said that in order to avoid mistakes, listed companies could release figures equal to or lower than the actual figures. Moreover, listed companies should provide investors with reports which interpret how the inflation has affected their business performance.
Hai called the early announcement an effective measure to help recover the stock market.
Another measure Hai thinks listed companies should take is having their management boards buy more of their companies’ shares while limiting selling shares.
In fact, in the last time, some management boards of listed companies did try to buy shares of their companies, which helped calm investors down.
“The share purchase of management board members shows the responsibility of companies’ managers towards their shareholders,” Hai said
Indian investment wave flows into Vietnam
17:12' 02/05/2008 (GMT+7)
The lifting of Vietnam-India relations to the level of “strategic partnership” has created a breakthrough with a new wave of Indian investors flowing into the Southeast Asian country, said a Vietnamese diplomat.
India's silicon valley
In an interview printed on Lao dong Newspaper on May 2, Vietnamese Ambassador to India Vu Quang Diem said India had moved to the 28 th place among foreign direct investors in Vietnam in 2006. In 2007, it made an impressive advance to the 6 th among the top ten countries and territories directly investing in Vietnam .
The ambassador said Vietnam and India will strive to increase their bilateral trade turnover to 2 billion USD in 2008, 2 years ahead of schedule. Many made-in-Vietnam products have earned firm foothold in India over the past years, including pepper, rubber, hardware, electronics and garments and textiles.
However, the ambassador noted the trade volume between the two countries remained modest with an average growth rate of India-bound export standing at just 20 percent.
According to the Vietnamese diplomat, the signing of free trade agreement between India and the Association of Southeast Asian Nations (ASEAN) and the Vietnam-India free trade agreement would help to boost commodity exchange between the two countries.
The Vietnamese Embassy in India is carrying out trade and tourism promotion programmes in India in a move to draw giant Indian corporations to operate in Vietnam , said Ambassador Diem.
The lifting of Vietnam-India relations to the level of “strategic partnership” has created a breakthrough with a new wave of Indian investors flowing into the Southeast Asian country, said a Vietnamese diplomat.
India's silicon valley
In an interview printed on Lao dong Newspaper on May 2, Vietnamese Ambassador to India Vu Quang Diem said India had moved to the 28 th place among foreign direct investors in Vietnam in 2006. In 2007, it made an impressive advance to the 6 th among the top ten countries and territories directly investing in Vietnam .
The ambassador said Vietnam and India will strive to increase their bilateral trade turnover to 2 billion USD in 2008, 2 years ahead of schedule. Many made-in-Vietnam products have earned firm foothold in India over the past years, including pepper, rubber, hardware, electronics and garments and textiles.
However, the ambassador noted the trade volume between the two countries remained modest with an average growth rate of India-bound export standing at just 20 percent.
According to the Vietnamese diplomat, the signing of free trade agreement between India and the Association of Southeast Asian Nations (ASEAN) and the Vietnam-India free trade agreement would help to boost commodity exchange between the two countries.
The Vietnamese Embassy in India is carrying out trade and tourism promotion programmes in India in a move to draw giant Indian corporations to operate in Vietnam , said Ambassador Diem.
Interest rate: new ceiling, old story
16:36' 02/05/2008 (GMT+7)
Most commercial banks have been applying the new ceiling interest rate of 12% instead of 11% after the rate was agreed upon by Vietnam Banking Association members. However, bankers say that the new ceiling interest rate won’t help settle the existing problems.
Interest rates returning to previous levels
The deposit volume, which has been decreasing over the last one month, has not seen any improvement in the last few days, since banks applied the new ceiling interest rate.
The new ceiling interest rate of 12%, though representing a 1% increase over the previously applied level, proves to be nothing compared with the consumer price increase. In April, the CPI increased by another 2.2%, raising the total increase of CPI in the first four months of the year to 11.6%, not attractive enough to lure depositors.
Money escaping from banks to gold shops
Non-bank capital mobilisation and lending activities are developing rapidly, especially in the Cuu Long River Delta. People who have idle money now lend to gold shops instead of banks, and the gold shops use that money for re-lending.
While lending to gold shops, people can get higher interest rates (if they make bank deposits, they can get 12% per annum at maximum). Meanwhile, lenders can get loans from gold shops, since many banks have stopped lending, while just focusing on collecting debts.
In fact, commercial banks want more than the ceiling interest rate increase. They want the ceiling interest rate scheme to be removed. The market interest rates must be decided by the market supply and demand.
“The same interest rates will make banks alike,” the director of a joint stock bank in Hanoi said.
Borrowers seem to get no benefit with the interest rate increase. They want loans, however, as the VND is in shortage because the interest rates are not attractive enough to mobilise capital, they cannot get loans.
Lacking capital, banks cannot sit still
Banks now need capital dearly, but they cannot publicly announce they will raise deposit interest rates in order to lure more capital. However, they cannot just sit still.
Some commercial banks are reportedly trying to persuade big businesses which have a big volume of idle capital to draw money from other banks to make deposits at their banks, promising to pay additional interest rates.
Some corporations, realising that banks need capital but cannot mobilise capital from the public due to the limited interest rates, have been offering to lend to banks at interest rates higher than the ceiling rate
The Deputy General Director of a joint stock bank said that the tricks played by some banks have distressed serious banks. He complained that he is under heavy pressure to ‘do something’ to lure capital to the bank instead of respecting the regulation on the ceiling interest rate.
Some sources say that some insurance companies which have huge capital sources are offering to make deposits at banks if banks agree to pay interest rates of 3-4% higher.
Banks are wise enough to accept to pay interest rates of an additional 3-4%: i.e. they would have to pay 12-13% per annum for the capital. If they do not accept the ‘underground’ interest rates, they would have to borrow money at much higher costs on the interbank market, where the lending interest rate hovers around 20%.
Banks have a lot of methods to legalise the additional interest rates they have to pay. For example, businesses and banks sign contracts on lending authorisation: i.e. businesses give money to banks for banks to lend to clients at different interest rates.
Observers say that borrowers will not benefit from the ceiling interest rate scheme. Banks, of course, calculate all the expenses for capital mobilisation, including the additional interest rates, and require high lending interest rates from borrowers.
Most commercial banks have been applying the new ceiling interest rate of 12% instead of 11% after the rate was agreed upon by Vietnam Banking Association members. However, bankers say that the new ceiling interest rate won’t help settle the existing problems.
Interest rates returning to previous levels
The deposit volume, which has been decreasing over the last one month, has not seen any improvement in the last few days, since banks applied the new ceiling interest rate.
The new ceiling interest rate of 12%, though representing a 1% increase over the previously applied level, proves to be nothing compared with the consumer price increase. In April, the CPI increased by another 2.2%, raising the total increase of CPI in the first four months of the year to 11.6%, not attractive enough to lure depositors.
Money escaping from banks to gold shops
Non-bank capital mobilisation and lending activities are developing rapidly, especially in the Cuu Long River Delta. People who have idle money now lend to gold shops instead of banks, and the gold shops use that money for re-lending.
While lending to gold shops, people can get higher interest rates (if they make bank deposits, they can get 12% per annum at maximum). Meanwhile, lenders can get loans from gold shops, since many banks have stopped lending, while just focusing on collecting debts.
In fact, commercial banks want more than the ceiling interest rate increase. They want the ceiling interest rate scheme to be removed. The market interest rates must be decided by the market supply and demand.
“The same interest rates will make banks alike,” the director of a joint stock bank in Hanoi said.
Borrowers seem to get no benefit with the interest rate increase. They want loans, however, as the VND is in shortage because the interest rates are not attractive enough to mobilise capital, they cannot get loans.
Lacking capital, banks cannot sit still
Banks now need capital dearly, but they cannot publicly announce they will raise deposit interest rates in order to lure more capital. However, they cannot just sit still.
Some commercial banks are reportedly trying to persuade big businesses which have a big volume of idle capital to draw money from other banks to make deposits at their banks, promising to pay additional interest rates.
Some corporations, realising that banks need capital but cannot mobilise capital from the public due to the limited interest rates, have been offering to lend to banks at interest rates higher than the ceiling rate
The Deputy General Director of a joint stock bank said that the tricks played by some banks have distressed serious banks. He complained that he is under heavy pressure to ‘do something’ to lure capital to the bank instead of respecting the regulation on the ceiling interest rate.
Some sources say that some insurance companies which have huge capital sources are offering to make deposits at banks if banks agree to pay interest rates of 3-4% higher.
Banks are wise enough to accept to pay interest rates of an additional 3-4%: i.e. they would have to pay 12-13% per annum for the capital. If they do not accept the ‘underground’ interest rates, they would have to borrow money at much higher costs on the interbank market, where the lending interest rate hovers around 20%.
Banks have a lot of methods to legalise the additional interest rates they have to pay. For example, businesses and banks sign contracts on lending authorisation: i.e. businesses give money to banks for banks to lend to clients at different interest rates.
Observers say that borrowers will not benefit from the ceiling interest rate scheme. Banks, of course, calculate all the expenses for capital mobilisation, including the additional interest rates, and require high lending interest rates from borrowers.
Preparations hastened for first nuclear power plant
17:07' 02/05/2008 (GMT+7)
Preparations for Vietnam ’s first nuclear power plant are underway with an investment report expected for completion before the end of 2008, according to an official from the Electricity of Vietnam (EVN).
Sketch of the nuclear power plant in Phuoc Vinh commune, Ninh Phuoc district, Ninh Thuan province
The investment plan will be submitted to the National Assembly for approval in 2009, said EVN Deputy Director General Nguyen Manh Hung.
Construction of the plant is slated for 2012-2014 in central Ninh Thuan province. The first generator of the nuclear power plant is scheduled to be put into operation by 2020 in order to supply an additional 11,000 MW of nuclear power to the national electricity grid by 2025.
The 12 th National Assembly plans to discuss and adopt a Nuclear Power Law at its upcoming third session in a move to create legal foundation for the construction of the plant.
Investment for nuclear power plant got the go ahead by the Prime Minister as part of a national electricity development plan through 2006-2015.
The Government is guiding the EVN in plans to build two other nuclear power plants with a total capacity of 4,000 MW.
EVN has so far been entrusted to build 25 plants with a total capacity of more than 33,200 MW. However, the EVN noted it is still necessary to invest and put into operation more power plants from now until 2015 to supply a total output of nearly 58,500 MW of electricity in order to meet growing electricity demands.
Construction of 45 power plants are currently underway nationwide with a total capacity of nearly 14.6 MW of electricity, which are expected to be operational from now until the decade-end.
Preparations for Vietnam ’s first nuclear power plant are underway with an investment report expected for completion before the end of 2008, according to an official from the Electricity of Vietnam (EVN).
Sketch of the nuclear power plant in Phuoc Vinh commune, Ninh Phuoc district, Ninh Thuan province
The investment plan will be submitted to the National Assembly for approval in 2009, said EVN Deputy Director General Nguyen Manh Hung.
Construction of the plant is slated for 2012-2014 in central Ninh Thuan province. The first generator of the nuclear power plant is scheduled to be put into operation by 2020 in order to supply an additional 11,000 MW of nuclear power to the national electricity grid by 2025.
The 12 th National Assembly plans to discuss and adopt a Nuclear Power Law at its upcoming third session in a move to create legal foundation for the construction of the plant.
Investment for nuclear power plant got the go ahead by the Prime Minister as part of a national electricity development plan through 2006-2015.
The Government is guiding the EVN in plans to build two other nuclear power plants with a total capacity of 4,000 MW.
EVN has so far been entrusted to build 25 plants with a total capacity of more than 33,200 MW. However, the EVN noted it is still necessary to invest and put into operation more power plants from now until 2015 to supply a total output of nearly 58,500 MW of electricity in order to meet growing electricity demands.
Construction of 45 power plants are currently underway nationwide with a total capacity of nearly 14.6 MW of electricity, which are expected to be operational from now until the decade-end.
Vinashin ups equitisation to get ahead
17:05' 02/05/2008 (GMT+7)
The Viet Nam Shipbuilding Industry Group (Vinashin) said it will finalise procedures to equitise its four leading subsidiaries by the end of the second quarter in a bid to sharpen its competitiveness.
Those subsidiaries include the Nam Ha Shipbuilding Co, Can Tho Maritime Transportation Co, Phu Yen Shipbuilding Industry Complex and the Quang Binh Shipbuilding Industry Complex, the country's largest shipbuilder said.
Vinashin, which has already equitised six subsidiaries in the first quarter, said it plans to kick off the equitisation of 12 subsidiaries by the end of the year.
The Ha Noi-based industry giant announced earlier this month that it earned a revenue of VND5.1tril (US$318.7mil) in the first quarter of the year, an increase of 108% over last year.
The nation's largest shipbuilder attributed the boom in business to its strategy of progressive reinvestment, which helped to enhance its production capacity.
In the first three months of the year, Vinashin built as many as 50 large vessels ranging from 4,000 DWT to 105,000 DWT (dead weight tonnes) as well as dozens of smaller vessels for either private use or maritime transport.
The company, which has 40 subsidiaries, recruited an additional 7,000 labourers in the first-quarter. It is now one of the Vietnam's biggest employers with a total workforce of 78,500 employees.
So far Vinashin, which hopes to earn VND40tril this year, has secured contracts with both domestic and foreign clients worth a total of $12bil.
The Ha Noi-based company signed 22 contracts worth $2bil at the shipping exhibition Vietship last month.
The contracts covered-shipbuilding, maritime transport, developing ancillary industries, as well as financing and insurance.
According to Vinashin, sea-related industries represent 53-55% of Vietnam's GDP, and around 60% of total export turnover.
The company is now the fifth largest shipbuilder in the world, according to Fairplay, a UK-based international shipping magazine.
In an effort to maintain its dominant market position, Vinashin, which brought in $2.5bil last year, plans to increase its localisation rate to 65% by 2015.
The Viet Nam Shipbuilding Industry Group (Vinashin) said it will finalise procedures to equitise its four leading subsidiaries by the end of the second quarter in a bid to sharpen its competitiveness.
Those subsidiaries include the Nam Ha Shipbuilding Co, Can Tho Maritime Transportation Co, Phu Yen Shipbuilding Industry Complex and the Quang Binh Shipbuilding Industry Complex, the country's largest shipbuilder said.
Vinashin, which has already equitised six subsidiaries in the first quarter, said it plans to kick off the equitisation of 12 subsidiaries by the end of the year.
The Ha Noi-based industry giant announced earlier this month that it earned a revenue of VND5.1tril (US$318.7mil) in the first quarter of the year, an increase of 108% over last year.
The nation's largest shipbuilder attributed the boom in business to its strategy of progressive reinvestment, which helped to enhance its production capacity.
In the first three months of the year, Vinashin built as many as 50 large vessels ranging from 4,000 DWT to 105,000 DWT (dead weight tonnes) as well as dozens of smaller vessels for either private use or maritime transport.
The company, which has 40 subsidiaries, recruited an additional 7,000 labourers in the first-quarter. It is now one of the Vietnam's biggest employers with a total workforce of 78,500 employees.
So far Vinashin, which hopes to earn VND40tril this year, has secured contracts with both domestic and foreign clients worth a total of $12bil.
The Ha Noi-based company signed 22 contracts worth $2bil at the shipping exhibition Vietship last month.
The contracts covered-shipbuilding, maritime transport, developing ancillary industries, as well as financing and insurance.
According to Vinashin, sea-related industries represent 53-55% of Vietnam's GDP, and around 60% of total export turnover.
The company is now the fifth largest shipbuilder in the world, according to Fairplay, a UK-based international shipping magazine.
In an effort to maintain its dominant market position, Vinashin, which brought in $2.5bil last year, plans to increase its localisation rate to 65% by 2015.
Retail network large, but not professional: MOIT
16:30' 02/05/2008 (GMT+7)
With such a market, many retailers but unorganised, the domestic market proves to be fragile, according to Hoang Tho Xuan, Director of the Department for Domestic Market Trade Policies. The rice price fever, which took place several days ago, is an example.
Hoang Tho Xuan, Director of the Department for Domestic Market Trade Policies
Problems exist not only in the rice distribution network, but in the distribution of other products as well. The bad distribution network does not mean that there are few distributors, but it means that the network is not professional. The state should be blamed for this as it still cannot draw up a good scenario for the forming of a healthy and suitable market.
What are the weakest points of the current retail network?
There are two weak points of the current retail network. As there is no pillar, the distribution network proves to be fragile, while the market is controlled by the psychology of sellers and buyers. If there is a rumour that prices will go up, sellers will stop selling in the hope of selling products later to get bigger profit. The ‘wait-and-see’ attitude of sellers creates an artificial fever, which pushes prices up, and prompts speculation.
Do you mean that the market will continue to experience blows as it did some days ago with the rice price until the current way of market organising is improved?
I can say that the distribution network of cement is okay, while the distribution networks of fertiliser, steel and ingot steel have problems. Producers can only make products, while they do not know where their products go.
Steel and fertiliser mills have sales agents, but the agents do not operate as agents in the true sense of the word. That explains why steel and fertiliser have fluctuated so heavily recently. The price increases in the world’s market make up 80% of the domestic price increases, while the improper distribution network makes up another 20% of the domestic price escalation.
Experts say that one problem now is that enterprises do not have large storehouses to store reserves of commodities. Do you think this problem must be settled right now?
In fact, many enterprises once had big land plots for storehouses. However, due to the loose management mechanism, many of them have been renting land to get money or turning the land plots into restaurants. And now, they complain that they do not have land for workshop premises.
How do you think Vietnam’s distribution network should develop in the time to come?
Hapro, Satra, Intimex and Fivimex prove to be good models for developing the retail network. However, the said retailers should still do a lot more work to improve themselves. Their role remained relatively dim in the last commodity fever.
What will the state do to develop the retail network?
The Ministry of Industry and Trade is drawing up a project on developing key distribution networks in order to ensure the sustainable development of the domestic market.
The ministry is going to focus on developing three key networks, the distribution network of strategic material products (petroleum, steel, fertiliser, medicine); the distribution network of general consumer products; and the distribution network of food and foodstuff products.
With such a market, many retailers but unorganised, the domestic market proves to be fragile, according to Hoang Tho Xuan, Director of the Department for Domestic Market Trade Policies. The rice price fever, which took place several days ago, is an example.
Hoang Tho Xuan, Director of the Department for Domestic Market Trade Policies
Problems exist not only in the rice distribution network, but in the distribution of other products as well. The bad distribution network does not mean that there are few distributors, but it means that the network is not professional. The state should be blamed for this as it still cannot draw up a good scenario for the forming of a healthy and suitable market.
What are the weakest points of the current retail network?
There are two weak points of the current retail network. As there is no pillar, the distribution network proves to be fragile, while the market is controlled by the psychology of sellers and buyers. If there is a rumour that prices will go up, sellers will stop selling in the hope of selling products later to get bigger profit. The ‘wait-and-see’ attitude of sellers creates an artificial fever, which pushes prices up, and prompts speculation.
Do you mean that the market will continue to experience blows as it did some days ago with the rice price until the current way of market organising is improved?
I can say that the distribution network of cement is okay, while the distribution networks of fertiliser, steel and ingot steel have problems. Producers can only make products, while they do not know where their products go.
Steel and fertiliser mills have sales agents, but the agents do not operate as agents in the true sense of the word. That explains why steel and fertiliser have fluctuated so heavily recently. The price increases in the world’s market make up 80% of the domestic price increases, while the improper distribution network makes up another 20% of the domestic price escalation.
Experts say that one problem now is that enterprises do not have large storehouses to store reserves of commodities. Do you think this problem must be settled right now?
In fact, many enterprises once had big land plots for storehouses. However, due to the loose management mechanism, many of them have been renting land to get money or turning the land plots into restaurants. And now, they complain that they do not have land for workshop premises.
How do you think Vietnam’s distribution network should develop in the time to come?
Hapro, Satra, Intimex and Fivimex prove to be good models for developing the retail network. However, the said retailers should still do a lot more work to improve themselves. Their role remained relatively dim in the last commodity fever.
What will the state do to develop the retail network?
The Ministry of Industry and Trade is drawing up a project on developing key distribution networks in order to ensure the sustainable development of the domestic market.
The ministry is going to focus on developing three key networks, the distribution network of strategic material products (petroleum, steel, fertiliser, medicine); the distribution network of general consumer products; and the distribution network of food and foodstuff products.
A ministry to supervise state owned economic groups?
17:02' 02/05/2008 (GMT+7)
According to Nguyen Dinh Cung, Head of the Macroeconomic Policy Department under the Central Institute for Economic Management (CIEM), it is now the right time to set up an agency at the ministerial level to supervise the operation of state owned economic groups and manage the state owned capital in enterprises.
Economic groups must focus on main business fields
MPI Minister: It’s necessary to control outward investments
What is your comment about the fact that economic groups are now tending to encroach on each other’s business fields, while neglecting their main business fields?
Nguyen Dinh Cung, Head of the Macroeconomic Policy Department under the Central Institute for Economic Management (CIEM)
In theory, the diversification of business that brings optimum profit to shareholders and the owners (the state, in this case) with the minimum cost, should be seen as a good thing.
However, experience shows that businesses should not diversify business spontaneously, but should thoroughly consider their competitive edges. Every business should have a forte business field, where it can gather its strength before thinking of expanding its business into other fields.
In general, the so-called ‘other business fields’ always have close links with main business fields. For example, garment companies think of producing materials, while transport companies think of export services, while they should not think of jumping into the real estate market.
However, in fact, I know some groups are ready to pay VND100bil to set up an online newspaper, a TV channel or media company.
As the owner of the economic groups and general corporations, the state needs to appraise the outward investments by the groups and corporations and make decisions on whether to allow them to implement the projects. This is the right and the responsibility of the owner.
One of the big worries experts have pointed out is that economic groups tend to establish their own banks which will lend to other members in the groups. The government has given the nod to the establishment of PetroVietnam Bank. What do you think about this?
I think that Vietnam is following Japan’s corporate governance model, in which the corporate governance is based on the bank as the centre. However, the difference is that in Japan, the banks are not set up by enterprises, but were established a long time ago by imperial families and are now operating as big joint stock companies.
The banks make very few investments in big corporations and economic groups, just 1-2% of total investments.
Some experts say that the establishment of banks under economic groups should be allowed if the banks can bring profit. Do you agree with the viewpoint?
No, I don’t, because there exist conflicts of interest. Economic groups, as the owners of the banks, have the right to order the banks to provide loans to one project or another, while not considering the efficiency of the capital use. That is the biggest risk of the interest conflict.
I think that private run economic groups can establish their own banks, while state owned groups should not.
What is your viewpoint about the need to separate the roles of the state as management agency and owner of enterprises?
I think that we must separate the two roles of the state. Ministries should not undertake the role of the owner of enterprises. We strongly recommend the establishment of a ministry which takes the responsibility of managing state owned capital in enterprises.
The operational State Capital Investment Corporation (SCIC) does not take on this role well in the current circumstances. I mean that the ministry should have competence, capability and political position to undertake the capital management, but the operation of the ministry does not link to the state management work.
According to Nguyen Dinh Cung, Head of the Macroeconomic Policy Department under the Central Institute for Economic Management (CIEM), it is now the right time to set up an agency at the ministerial level to supervise the operation of state owned economic groups and manage the state owned capital in enterprises.
Economic groups must focus on main business fields
MPI Minister: It’s necessary to control outward investments
What is your comment about the fact that economic groups are now tending to encroach on each other’s business fields, while neglecting their main business fields?
Nguyen Dinh Cung, Head of the Macroeconomic Policy Department under the Central Institute for Economic Management (CIEM)
In theory, the diversification of business that brings optimum profit to shareholders and the owners (the state, in this case) with the minimum cost, should be seen as a good thing.
However, experience shows that businesses should not diversify business spontaneously, but should thoroughly consider their competitive edges. Every business should have a forte business field, where it can gather its strength before thinking of expanding its business into other fields.
In general, the so-called ‘other business fields’ always have close links with main business fields. For example, garment companies think of producing materials, while transport companies think of export services, while they should not think of jumping into the real estate market.
However, in fact, I know some groups are ready to pay VND100bil to set up an online newspaper, a TV channel or media company.
As the owner of the economic groups and general corporations, the state needs to appraise the outward investments by the groups and corporations and make decisions on whether to allow them to implement the projects. This is the right and the responsibility of the owner.
One of the big worries experts have pointed out is that economic groups tend to establish their own banks which will lend to other members in the groups. The government has given the nod to the establishment of PetroVietnam Bank. What do you think about this?
I think that Vietnam is following Japan’s corporate governance model, in which the corporate governance is based on the bank as the centre. However, the difference is that in Japan, the banks are not set up by enterprises, but were established a long time ago by imperial families and are now operating as big joint stock companies.
The banks make very few investments in big corporations and economic groups, just 1-2% of total investments.
Some experts say that the establishment of banks under economic groups should be allowed if the banks can bring profit. Do you agree with the viewpoint?
No, I don’t, because there exist conflicts of interest. Economic groups, as the owners of the banks, have the right to order the banks to provide loans to one project or another, while not considering the efficiency of the capital use. That is the biggest risk of the interest conflict.
I think that private run economic groups can establish their own banks, while state owned groups should not.
What is your viewpoint about the need to separate the roles of the state as management agency and owner of enterprises?
I think that we must separate the two roles of the state. Ministries should not undertake the role of the owner of enterprises. We strongly recommend the establishment of a ministry which takes the responsibility of managing state owned capital in enterprises.
The operational State Capital Investment Corporation (SCIC) does not take on this role well in the current circumstances. I mean that the ministry should have competence, capability and political position to undertake the capital management, but the operation of the ministry does not link to the state management work.
Thursday, 1 May 2008
Building powerful domestic economic groups
| 13:36' 01/05/2008 (GMT+7) | ||
In the context when the Vietnamese economy is deeply integrating into the world economy, domestic businesses must compete on an equal footing with multinational economic groups at home. Hence, it is essential to establish a number of powerful groups involved in the key economic sectors, which will serve as a driving force behind the development of the national economy. The concept of the economic group model is nothing new to the development of the global economy. Many major economic groups in the world are currently being restructured with the trend leaning towards merging and buying back stock. In 2006, the total value of mergers and takeovers of economic groups in the world amounted to more than US$3,600 billion while the figure in 2007 hit a record high of US$4,400 billion, up by 21 percent over 2006. This trend has begun to have a certain impact on Vietnam’s economic development as well as its businesses’ operations. At present, the establishment of economic groups in Vietnam in reality, means only a change in name and not in operation. Choosing this path, they will face unforeseeable difficulties if the criteria and the nature of the economic entity are not clearly defined. Meanwhile, the common model of a global economic group is based on the fact that affiliated companies have to complement each other in terms of production scale and types of products. This is also a good way of accumulating capital and raising the financial potential of groups. Over the past five years, the private economic sector in Vietnam has maintained an annual growth rate of 10 percent on average and many private companies’ revenues have increased by more than 50 percent a year. The strong growth of this economic sector over the past decade has contributed a great deal to boosting the country’s economic development. Due to the fact that Vietnam is developing from a planned economy in which State-run businesses play a nearly absolute role, most Vietnamese groups are derived from powerful corporations. Seven out of eight pilot projects to set up economic groups based on the Government’s Decree 91 have been adopted so far. These are the Post and Telecommunication Corporation, the Coal and Mineral Corporation, the Garments and Textiles Corporation, the Electricity of Vietnam, the Shipbuilding Industry Corporation, the Oil and Gas Corporation and the Rubber Corporation. In addition, there is a project to equitise the Vietnam Insurance Corporation in order to establish the Bao Viet Financial Insurance Group. However, the slow implementation of such pilot projects has affected the process of equitising State- run enterprises. As many as 108 corporations have yet to be equitised and the Vietnamese Government is resolved to complete the equitisation of all these corporations to post their shares on the stock market by 2010. |
Plastics industry generates $200m in Q1
| 13:46' 01/05/2008 (GMT+7) | ||
Previously the industry has performed sluggishly in the first quarter, owing to a lunar New Year hangover. This time around, however, MoIT statistics show that the industry recorded a year-on-year growth rate of more than 35 per cent in the first quarter. Viet Nam’s plastics exports have firm potential as its growth rates are high, just behind industrial products, pepper and coffee. Last year, plastics had an export growth rate of 135 per cent. The United Nations said that besides benefiting from comparatively low tariffs, Viet Nam’s plastics exporters were good at exploiting new markets. Vietnamese plastic products have been exported to Japan, China, India, the Middle East and Africa. However, industry officials admit that like other industries, plastics producers are confronted with escalating costs. Deputy chairman of the HCM City Plastics Association, Tran Cong Hoang Quoc Trang, said the industry was hindered by the rising cost of input materials. Pham Thi Kim Tan of Visingpack plastics, said producers were restricted as they could not afford to import raw materials. The industry imports nearly 70 per cent of the raw materials necessary for production. Besides increases of 30 per cent for raw materials and 10 per cent for shipping, producers are now subject to monthly lending interest rates of 1.5-1.6 per cent from 0.85-0.95 per cent earlier in the month. Tan said producers faced big challenges in the time ahead as they had vowed not to raise their prices in a bid to shield consumers from inflation "Most plastics producers only meet contractual obligations to uphold their reputation." Le Quang Doanh from Binh Minh plastics Joint Stock Company recommended producers focus on modernising equipment to lift output and cut input costs. Meanwhile, MoIT suggests plastics producers form alliances to meet large and long-term exporting contracts. Currently, most producers could only meet small orders as most of the nation’s 1,400 plastics producers are small to medium-sized enterprises. The ministry also advises producers to apply new technology to churn out high-tech products, which can be used in automobiles, motorbikes, electronics, toys and consumer plastic products, in a move to augment added value. |
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