15:25' 30/04/2008 (GMT+7)
VietNamNet Bridge – Vietnam is becoming a more attractive destination for international financial services companies, said a chief executive of Western Union, one of the world leading money transfer companies based in the US.
Vietnam is a market of great potential considering the 3.3 million Vietnamese living overseas now, Western Union President and Chief Executive Officer Christina Gold told Vietnamese Ambassador to the US Le Cong Phung during a recent banquet for the Vietnamese diplomatic mission at the Vail valley, Colorado.
Gold said Western Union has eyed Vietnam as one of its major markets in its future global development plan.
Over the last 14 years, Western Union has cooperated with 30 local banks to develop a network of more than 4,000 payment points in all the 64 cities and provinces in Vietnam.
Wednesday, 30 April 2008
How much gold has Vietnam imported
How much gold does Vietnam import?
17:14' 30/04/2008 (GMT+7)
VietNamNet Bridge – Vietnam imports up to 95% of its demand for gold but there is no answer to the question: “How many tonnes of gold has the country imported?”
For several weeks the gold price fell continuously and stayed at low levels, and then it slightly increased in the world market on April 28, from US$881-883/oz to $891.2 - 983.1/oz. Immediately, the gold price in the domestic market went up slightly. Saigon Jewelery Company’s gold sold for VND17.85 million/tael and it bought at VND17.85 million/tael.
Unmeasured developments
Since early 2008, the global and local gold market has fluctuated strongly while Vietnam’s CPI has remained at a very high level, 11.6% in the past four months, so a large volume of money has been invested in gold.
According to some released reports, more than 82 tonnes of gold have been imported into Vietnam in the past four months, worth $1.56 billion.
In the past four months, the gold price has changed very powerfully, occasionally up to $1,000/oz in the international market and VND19.5 million/tael in the Vietnamese market.
According to the General Statistics Office, the gold price on April 2008 fell by 2.14% compared to March 2008 but it grew by 15.92% over December 2007, 41.02% over April 2007 and 112.99% over 2005.
The price of gold reached its peak on March 17, 2008 when SJC gold was sold for VND19.40 million/tael, the highest level in Vietnam so far; but it has gradually decreased to VND17.8 million/tael at present.
According to the Saigon Jewelry Company, since the SJC gold brand was born in 1988, 11 million taels of SJC gold have been sold in the market. One million SJC taels is equivalent to 37.5 tonnes of gold. Thus, the company has sold around 412.5 tonnes of gold, worth $12.3 billion. In addition, a large volume of gold has been imported to make jewelry. Some experts say around 180-200 tonnes of gold have been processed into jewelry.
Some others say the volume is just 100-120 tonnes, while others say the total volume of pieced gold and gold for processing jewelry imported into Vietnam and other imports totals around 200 tonnes. Thus, the total volume of gold imported by SJC and other firms is around 580-620 tonnes, equivalent to $17.5-18.5 billion.
According to the Vietnam Gold Business Association, commercial banks have raised capital in gold totalling 1-1.5 million taels, equivalent to VND18-24 trillion, compared to VND5 trillion worth of gold two years ago. This volume is modest compared to the volume of gold held by Vietnamese people.
17:14' 30/04/2008 (GMT+7)
VietNamNet Bridge – Vietnam imports up to 95% of its demand for gold but there is no answer to the question: “How many tonnes of gold has the country imported?”
For several weeks the gold price fell continuously and stayed at low levels, and then it slightly increased in the world market on April 28, from US$881-883/oz to $891.2 - 983.1/oz. Immediately, the gold price in the domestic market went up slightly. Saigon Jewelery Company’s gold sold for VND17.85 million/tael and it bought at VND17.85 million/tael.
Unmeasured developments
Since early 2008, the global and local gold market has fluctuated strongly while Vietnam’s CPI has remained at a very high level, 11.6% in the past four months, so a large volume of money has been invested in gold.
According to some released reports, more than 82 tonnes of gold have been imported into Vietnam in the past four months, worth $1.56 billion.
In the past four months, the gold price has changed very powerfully, occasionally up to $1,000/oz in the international market and VND19.5 million/tael in the Vietnamese market.
According to the General Statistics Office, the gold price on April 2008 fell by 2.14% compared to March 2008 but it grew by 15.92% over December 2007, 41.02% over April 2007 and 112.99% over 2005.
The price of gold reached its peak on March 17, 2008 when SJC gold was sold for VND19.40 million/tael, the highest level in Vietnam so far; but it has gradually decreased to VND17.8 million/tael at present.
According to the Saigon Jewelry Company, since the SJC gold brand was born in 1988, 11 million taels of SJC gold have been sold in the market. One million SJC taels is equivalent to 37.5 tonnes of gold. Thus, the company has sold around 412.5 tonnes of gold, worth $12.3 billion. In addition, a large volume of gold has been imported to make jewelry. Some experts say around 180-200 tonnes of gold have been processed into jewelry.
Some others say the volume is just 100-120 tonnes, while others say the total volume of pieced gold and gold for processing jewelry imported into Vietnam and other imports totals around 200 tonnes. Thus, the total volume of gold imported by SJC and other firms is around 580-620 tonnes, equivalent to $17.5-18.5 billion.
According to the Vietnam Gold Business Association, commercial banks have raised capital in gold totalling 1-1.5 million taels, equivalent to VND18-24 trillion, compared to VND5 trillion worth of gold two years ago. This volume is modest compared to the volume of gold held by Vietnamese people.
Nearly 100% of banks raise interest rates
17:12' 30/04/2008 (GMT+7)
VietNamNet Bridge - On April 29, at the same time the Vietnam Banking Association released an announcement on adjusting the negotiated ceiling interest rate among its members, many banks applied new interest rates.
By the end of April 29, most of the banks belonging to the 38 members of the Vietnam Banking Association announced they would raise interest rates to the ceiling level, bringing the interest rate on VND deposits to 11.5%/year for deposits of less than 6 months and 12% for deposits of over 6 months.
12% is the ceiling level defined by the State Bank of Vietnam in late February 2008.
Oriental Commercial Bank (OCB), Viet A Bank (VAB), Saigon-Hanoi Bank (SHB), Southeast Asia Bank (SeABank), Techcombank, VPBank, Sacombank applied the above interest rates.
Notably, state-owned commercial banks quickly joined the game. Vietinbank announced it will increase the interest rates on 7- and 9-month bills to 12% a year as of May 1, 2008.
The Bank for Investment and Development of Vietnam (BIDV) also stated it will apply the maximum interest rate of 12%/year as of April 29.
According to the Vietnam Banking Association, the adjustment of interest rates aims to ensure positive real interest rates under the government’s instruction.
VietNamNet Bridge - On April 29, at the same time the Vietnam Banking Association released an announcement on adjusting the negotiated ceiling interest rate among its members, many banks applied new interest rates.
By the end of April 29, most of the banks belonging to the 38 members of the Vietnam Banking Association announced they would raise interest rates to the ceiling level, bringing the interest rate on VND deposits to 11.5%/year for deposits of less than 6 months and 12% for deposits of over 6 months.
12% is the ceiling level defined by the State Bank of Vietnam in late February 2008.
Oriental Commercial Bank (OCB), Viet A Bank (VAB), Saigon-Hanoi Bank (SHB), Southeast Asia Bank (SeABank), Techcombank, VPBank, Sacombank applied the above interest rates.
Notably, state-owned commercial banks quickly joined the game. Vietinbank announced it will increase the interest rates on 7- and 9-month bills to 12% a year as of May 1, 2008.
The Bank for Investment and Development of Vietnam (BIDV) also stated it will apply the maximum interest rate of 12%/year as of April 29.
According to the Vietnam Banking Association, the adjustment of interest rates aims to ensure positive real interest rates under the government’s instruction.
Tax up, imported cars down
17:10' 30/04/2008 (GMT+7)
The first Lamborghini LP640 imported into VN
VietNamNet Bridge – Nearly 3,000 cars were imported in April, a 50% drop off compared to March, reported the General Statistics Office.
The figure doesn’t include commercial cars and buses, only cars with 15 seats and fewer such as sedans, SUVs and MPVs. Importers brought 1,500 cars into Vietnam in the first half of April and around 1,400 in the second half.
According to the General Statistics Office, the volume of imported cars has decreased because of the new tax rates, 70%, which took effect on April 2, and 83%, on April 22.
“The number of imported cars will continue to fall due to the increase of tax,” said an official of the General Statistics Office.
The director of a big import company in HCM City said car traders imported a large volume of cars in late March to avoid the higher tax so they didn’t sign new contracts in April. However, the number of imported cars in April was equal to that of January and February because many contracts signed in March were carried out in April.
The Ministry of Finance’s moves (increasing import tax rates on cars twice within two months) has created unmeasurable changes. The first move (raising the tax from 60 to 70% on March 11) caused a record high number of imported cars, 6,000 units, which is equivalent to half of the whole 2007.
Tax changes have also created chaos in the market for imported cars by increasing the prices of all models by around 14.4%. For example, a Honda Accord was priced at $60,000 in February but it is $69,000 at present.
The first Lamborghini LP640 imported into VN
VietNamNet Bridge – Nearly 3,000 cars were imported in April, a 50% drop off compared to March, reported the General Statistics Office.
The figure doesn’t include commercial cars and buses, only cars with 15 seats and fewer such as sedans, SUVs and MPVs. Importers brought 1,500 cars into Vietnam in the first half of April and around 1,400 in the second half.
According to the General Statistics Office, the volume of imported cars has decreased because of the new tax rates, 70%, which took effect on April 2, and 83%, on April 22.
“The number of imported cars will continue to fall due to the increase of tax,” said an official of the General Statistics Office.
The director of a big import company in HCM City said car traders imported a large volume of cars in late March to avoid the higher tax so they didn’t sign new contracts in April. However, the number of imported cars in April was equal to that of January and February because many contracts signed in March were carried out in April.
The Ministry of Finance’s moves (increasing import tax rates on cars twice within two months) has created unmeasurable changes. The first move (raising the tax from 60 to 70% on March 11) caused a record high number of imported cars, 6,000 units, which is equivalent to half of the whole 2007.
Tax changes have also created chaos in the market for imported cars by increasing the prices of all models by around 14.4%. For example, a Honda Accord was priced at $60,000 in February but it is $69,000 at present.
Tuesday, 29 April 2008
BUSINESS IN BRIEF 29/4
17:10' 29/04/2008 (GMT+7)
Real estate developer sets for 530 million USD projects
Real estate developer Phat Dat Corporation will begin two major projects this year at a total investment of around 8.5 trillion VND (530 million USD).
The company’s chairman, Nguyen Van Dat, said on April 27 that Phat Dat would break ground for The EverRich 2 building in the next quarter.
Located on more than 11ha of land in Ho Chi Minh City ’s District 7, the project is expected to be completed in early 2013, offering more than 3,200 apartments and commercial space. Another 1 trillion VND will be invested in a five-star hotel and resort project in Cam Ranh in Khanh Hoa province and completion in slated for 2011.
Dat plans to increase his company’s chartered capital to 1.5 trillion VND this year from the current 1.3 trillion VND.
The company also plans to list at the HCM City Stock Exchange next year.
Da Nang city chases foreign investment
The central city of Da Nang has listed 78 projects in search of foreign direct investment (FDI) in the next three years, according to the city’s Department of Planning and Investment.
The projects include information technology, electronics, agriculture and seafood processing, engineering, textiles-garments, real estate and footwear.
To make use of opportunities brought about by Vietnam ’s admission into the World Trade Organisation, Da Nang has taken steps to improve the local investment environment.
This has included accelerating administrative reform by enacting consistent policies and shortening the time for investment registration.
The city has licensed 5 foreign-invested projects – valued at more than 240 million USD – in the first four months of this year, said an official from the department’s Investment Promotion Centre.
They include a 200 million USD commercial, office and serviced-apartment building known as the Jade Residence Complex. It is sited on 8.8ha in Hai Chau district. Financed by Kreves Land Co Ltd, the complex will open later this year.
There are now 126 foreign-invested projects in the city worth more than 2 billion USD.
Ca Mau businesses promote in Germany
Seafood exporters from southernmost Ca Mau province met with their German partners at a forum in Berlin on April 28 to seek further cooperation.
At the Vietnam-Germany Fisheries Forum, Deputy Director of the provincial Trade and Tourism Promotion Centre Tran Van Bo introduced the province’s strength in fisheries development, citing its diverse ecosystem, abundant natural resources and improved infrastructure and road system.
Ca Mau is currently home to 27 seafood processing factories, each with a capacity of between 1,000-1,500 tonnes per year. The application of international food quality and safety standards has meant their products have penetrated the worldwide market, including Japan , the US and European Union.
In 2007, local producers netted 159,000 tonnes of seafood and exported 81,000 tonnes of shrimp.
At the forum, German businesses inquired into aquaculture methods in Vietnam as well as food quality, quarantine works and transportation.
HCM City draws 1.9 billion USD in FDI
Ho Chi Minh City has so far this year attracted 126 Foreign Direct Investment (FDI) projects, worth more than 1.9 billion USD.
Nearly 966 million USD came from 86 wholly-foreign invested projects, accounting for 49.6 percent of total registered capital.
The projects are chiefly invested in real estate, construction and industry.
According to experts, the southern industrial hub of the country is absorbing an influx of real estate projects due to the success of giant corporations in this field over the past year such as Indochina Land Holding and VinaCapital Fund Management Companies.
The policy to allow foreigners to buy and own houses in Vietnam is also considered a key factor behind a recent boom in real estate investment in HCM City.
Largest MDF plant to be built in Binh Phuoc
The construction of a plant manufacturing medium density fiberboard (MDF) in southern Binh Phuoc province was confirmed with the signing of a 124 million USD (2 trillion VND) contract between the Vietnam Rubber Corporation and the Republic of Korea ’s DongWha Holdings Corporation on April 28.
The 30ha plant with a capacity of 300,000c.m per year will be the largest and most modern MDF plant in Southeast Asia .
The Vietnam Rubber Corporation will contribute 49 percent of the total investment.
Once operational at the end of 2009, the plant will provide jobs for more than 100 local people.
Central region must plant rice as planned
Bui Ba Bong, deputy Minister of Agriculture and Rural Development, has ordered the southern central and Central Highlands provinces to plant summer-autumn rice according to their individual cultivation schedule.
The provinces are estimated to plant about 326,000ha of summer-autumn rice crop.
The provinces harvested 1.2 million tones of rice in the winter-spring crop, a drop of 100,000 tonnes compared to last winter-spring crop, according to the Cultivation Department.
Money launderers in the spotlight
Financial analysts from Cambodia , Laos and Vietnam sharpened their skills at a regional workshop in the capital on April 28.
The two day workshop organised by the United Nations Office on Drugs and Crime (UNODC) and the World Bank (WB), focused on different analytical methods and access to information sources in the pursuit of suspected money launderers.
Each of the analysts were from Financial Intelligence Units in their respective countries. In Vietnam , the unit also the State Bank of Vietnam ’s Anti Money laundering Information Centre, which analyses financial reports and investigates suspected money laundering cases.
The financial intelligence unit often works with suspicious transaction reports and large cash transaction reports from banks and other reporting institutes.
The workshop is part of a long term technical assistance programme, provided by UNODC and the WB to tackle money laundering as an organises crime.
Kinh Bac plans to raise 106 million USD
The listed firm Kinh Bac Urban Development Joint Stock Co is planning to offer more shares this year to hike its charter capital to 1.7 trillion VND (106 million USD).
Chairman Dang Thanh Tam made the announcement at a recent Kinh Bac shareholder meeting, saying the company was aiming to make over 1.18 trillion VND (74 million USD) in revenue and 611 trillion VND (38.2 million USD) in after tax profit, and pay a dividend of at least 30 percent in 2008. He also announced that the company would pay a 2007 dividend of 43 percent in shares.
“A growth rate based on a firm foundation will help the company have enough financial capacity to be ready for large projects in the future,” the chairman noted.
Current projects the company is working on include a 100 million USD plan to expand Bac Ninh province’s Que Vo industrial complex to over 600ha, a 200 million USD Yen Phong industrial zone project in the first phase in Bac Ninh and the Phuc Ninh urban zone project coming in at 200 million USD.
This year, the company will joint hands with Taiwanese Foxconn Group to develop the Trang Cat high-tech and new urban area complex in the northern port city of Hai Phong , along with other projects.
Kinh Bac, an affiliate of Saigon Invest Group, specialises in real estate development, trade, financial services, infrastructure construction, investment consulting, power generation and mining.
Real estate developer sets for 530 million USD projects
Real estate developer Phat Dat Corporation will begin two major projects this year at a total investment of around 8.5 trillion VND (530 million USD).
The company’s chairman, Nguyen Van Dat, said on April 27 that Phat Dat would break ground for The EverRich 2 building in the next quarter.
Located on more than 11ha of land in Ho Chi Minh City ’s District 7, the project is expected to be completed in early 2013, offering more than 3,200 apartments and commercial space. Another 1 trillion VND will be invested in a five-star hotel and resort project in Cam Ranh in Khanh Hoa province and completion in slated for 2011.
Dat plans to increase his company’s chartered capital to 1.5 trillion VND this year from the current 1.3 trillion VND.
The company also plans to list at the HCM City Stock Exchange next year.
Da Nang city chases foreign investment
The central city of Da Nang has listed 78 projects in search of foreign direct investment (FDI) in the next three years, according to the city’s Department of Planning and Investment.
The projects include information technology, electronics, agriculture and seafood processing, engineering, textiles-garments, real estate and footwear.
To make use of opportunities brought about by Vietnam ’s admission into the World Trade Organisation, Da Nang has taken steps to improve the local investment environment.
This has included accelerating administrative reform by enacting consistent policies and shortening the time for investment registration.
The city has licensed 5 foreign-invested projects – valued at more than 240 million USD – in the first four months of this year, said an official from the department’s Investment Promotion Centre.
They include a 200 million USD commercial, office and serviced-apartment building known as the Jade Residence Complex. It is sited on 8.8ha in Hai Chau district. Financed by Kreves Land Co Ltd, the complex will open later this year.
There are now 126 foreign-invested projects in the city worth more than 2 billion USD.
Ca Mau businesses promote in Germany
Seafood exporters from southernmost Ca Mau province met with their German partners at a forum in Berlin on April 28 to seek further cooperation.
At the Vietnam-Germany Fisheries Forum, Deputy Director of the provincial Trade and Tourism Promotion Centre Tran Van Bo introduced the province’s strength in fisheries development, citing its diverse ecosystem, abundant natural resources and improved infrastructure and road system.
Ca Mau is currently home to 27 seafood processing factories, each with a capacity of between 1,000-1,500 tonnes per year. The application of international food quality and safety standards has meant their products have penetrated the worldwide market, including Japan , the US and European Union.
In 2007, local producers netted 159,000 tonnes of seafood and exported 81,000 tonnes of shrimp.
At the forum, German businesses inquired into aquaculture methods in Vietnam as well as food quality, quarantine works and transportation.
HCM City draws 1.9 billion USD in FDI
Ho Chi Minh City has so far this year attracted 126 Foreign Direct Investment (FDI) projects, worth more than 1.9 billion USD.
Nearly 966 million USD came from 86 wholly-foreign invested projects, accounting for 49.6 percent of total registered capital.
The projects are chiefly invested in real estate, construction and industry.
According to experts, the southern industrial hub of the country is absorbing an influx of real estate projects due to the success of giant corporations in this field over the past year such as Indochina Land Holding and VinaCapital Fund Management Companies.
The policy to allow foreigners to buy and own houses in Vietnam is also considered a key factor behind a recent boom in real estate investment in HCM City.
Largest MDF plant to be built in Binh Phuoc
The construction of a plant manufacturing medium density fiberboard (MDF) in southern Binh Phuoc province was confirmed with the signing of a 124 million USD (2 trillion VND) contract between the Vietnam Rubber Corporation and the Republic of Korea ’s DongWha Holdings Corporation on April 28.
The 30ha plant with a capacity of 300,000c.m per year will be the largest and most modern MDF plant in Southeast Asia .
The Vietnam Rubber Corporation will contribute 49 percent of the total investment.
Once operational at the end of 2009, the plant will provide jobs for more than 100 local people.
Central region must plant rice as planned
Bui Ba Bong, deputy Minister of Agriculture and Rural Development, has ordered the southern central and Central Highlands provinces to plant summer-autumn rice according to their individual cultivation schedule.
The provinces are estimated to plant about 326,000ha of summer-autumn rice crop.
The provinces harvested 1.2 million tones of rice in the winter-spring crop, a drop of 100,000 tonnes compared to last winter-spring crop, according to the Cultivation Department.
Money launderers in the spotlight
Financial analysts from Cambodia , Laos and Vietnam sharpened their skills at a regional workshop in the capital on April 28.
The two day workshop organised by the United Nations Office on Drugs and Crime (UNODC) and the World Bank (WB), focused on different analytical methods and access to information sources in the pursuit of suspected money launderers.
Each of the analysts were from Financial Intelligence Units in their respective countries. In Vietnam , the unit also the State Bank of Vietnam ’s Anti Money laundering Information Centre, which analyses financial reports and investigates suspected money laundering cases.
The financial intelligence unit often works with suspicious transaction reports and large cash transaction reports from banks and other reporting institutes.
The workshop is part of a long term technical assistance programme, provided by UNODC and the WB to tackle money laundering as an organises crime.
Kinh Bac plans to raise 106 million USD
The listed firm Kinh Bac Urban Development Joint Stock Co is planning to offer more shares this year to hike its charter capital to 1.7 trillion VND (106 million USD).
Chairman Dang Thanh Tam made the announcement at a recent Kinh Bac shareholder meeting, saying the company was aiming to make over 1.18 trillion VND (74 million USD) in revenue and 611 trillion VND (38.2 million USD) in after tax profit, and pay a dividend of at least 30 percent in 2008. He also announced that the company would pay a 2007 dividend of 43 percent in shares.
“A growth rate based on a firm foundation will help the company have enough financial capacity to be ready for large projects in the future,” the chairman noted.
Current projects the company is working on include a 100 million USD plan to expand Bac Ninh province’s Que Vo industrial complex to over 600ha, a 200 million USD Yen Phong industrial zone project in the first phase in Bac Ninh and the Phuc Ninh urban zone project coming in at 200 million USD.
This year, the company will joint hands with Taiwanese Foxconn Group to develop the Trang Cat high-tech and new urban area complex in the northern port city of Hai Phong , along with other projects.
Kinh Bac, an affiliate of Saigon Invest Group, specialises in real estate development, trade, financial services, infrastructure construction, investment consulting, power generation and mining.
MPI Minister: It’s necessary to control outward investments
16:41' 29/04/2008 (GMT+7)
VietNamNet Bridge – Minister of Planning and Investment Vo Hong Phuc emphasized that it is necessary to supervise enterprises’ investments, especially the investments in non-forte business fields of economic groups and general corporations.
He said:
In the market economy, banks are considered the ‘filter’ of enterprises, which means that banks can examine the health of enterprises by analyzing the feasibility of enterprises’ projects. Therefore, if economic groups and corporations establish banks themselves, the banks will not be able to do the function of a filter well.
Many economic groups and general corporations have stated that their outward investments remain very low, which is far from reaching the ceiling level of 30% of total investments. Vinashin, for example, said that its outward investments just account for 4.5% of total investments. What would you say about that?
Minister of Planning and Investment Vo Hong Phuc
The figures of outward investments must be compared with the total capital the economic groups and corporations have invested. The total capital includes the chartered capital, state budget-sourced capital and groups’ loans. The Ministry of Planning and Investment (MPI) has proposed that the National Assembly pay special attention to the supervision over the outward investments by economic groups and corporations.
I think the investments from the state budget are not worth worrying about as much as the investments from economic groups and corporations. While the investment from the state budget is being supervised by local people’s councils, there is no proper mechanism to supervise the investments from groups and corporations.
The leader of the Electric company of Vietnam (EVN) said that EVN has to make outward investments in order to get money for re-investment and offset the loss it is incurring with electricity because it cannot raise the electricity sale prices. What is your comment about that?
I don’t agree with the argument. Investments in power plants prove to be very attractive. Big corporations like PetroVietnam, Lilama, Vinashin, Vinacomin all are rushing to make investments in power plants. EVN still can get profit with power plants if it can find the suitable way to cut expenses and run plants effectively.
EVN’s argument about the need to make outward investment to get profit for re-investment proves to be unconvincing. They will not obtain what they plan when the stock market, banking and real estate markets are facing difficulties.
I think that EVN should reconsider their business development strategy, goals and main tasks rather than seeking business opportunities outside. Vietnam has been facing the electricity shortage in the last four consecutive years.
The Government has been trying to reduce budget funded investments in an effort to curb inflation. What is the viewpoint of MPI in this case?
We have suggested the principles and the criteria based on which relevant ministries can consider weeding out some projects from the list of the construction works for 2008. We have to be determined in canceling the projects which are not really necessary, but we still have to keep implementing the projects which serve the public interests of the localities. For example, in Hanoi, the projects of the transport system, Nhat Tan Bridge, or the road from Nhat Tan bridge to Noi Bai International Airport should be followed, while the project on building museums should be canceled.
It is expected that local authorities will submit the lists of the projects subject to delaying or canceling.
If we aim to keep the interest rate at 12.4% (the same as 2007’s), what percent of public investments does Vietnam needs to cut?
Public investment includes the investments from state budget and state owned enterprises, which regularly accounts for 45% of total investments. However, the public investment will be at some 40% of total investments this year. I cannot say for sure what percent of public investment we have to cut to curb the inflation rate at 12.4%. It is necessary to apply all the eight measures set by the Government at the same time to curb inflation. Reducing public investment is just a measure to help reduce inflation.
VietNamNet Bridge – Minister of Planning and Investment Vo Hong Phuc emphasized that it is necessary to supervise enterprises’ investments, especially the investments in non-forte business fields of economic groups and general corporations.
He said:
In the market economy, banks are considered the ‘filter’ of enterprises, which means that banks can examine the health of enterprises by analyzing the feasibility of enterprises’ projects. Therefore, if economic groups and corporations establish banks themselves, the banks will not be able to do the function of a filter well.
Many economic groups and general corporations have stated that their outward investments remain very low, which is far from reaching the ceiling level of 30% of total investments. Vinashin, for example, said that its outward investments just account for 4.5% of total investments. What would you say about that?
Minister of Planning and Investment Vo Hong Phuc
The figures of outward investments must be compared with the total capital the economic groups and corporations have invested. The total capital includes the chartered capital, state budget-sourced capital and groups’ loans. The Ministry of Planning and Investment (MPI) has proposed that the National Assembly pay special attention to the supervision over the outward investments by economic groups and corporations.
I think the investments from the state budget are not worth worrying about as much as the investments from economic groups and corporations. While the investment from the state budget is being supervised by local people’s councils, there is no proper mechanism to supervise the investments from groups and corporations.
The leader of the Electric company of Vietnam (EVN) said that EVN has to make outward investments in order to get money for re-investment and offset the loss it is incurring with electricity because it cannot raise the electricity sale prices. What is your comment about that?
I don’t agree with the argument. Investments in power plants prove to be very attractive. Big corporations like PetroVietnam, Lilama, Vinashin, Vinacomin all are rushing to make investments in power plants. EVN still can get profit with power plants if it can find the suitable way to cut expenses and run plants effectively.
EVN’s argument about the need to make outward investment to get profit for re-investment proves to be unconvincing. They will not obtain what they plan when the stock market, banking and real estate markets are facing difficulties.
I think that EVN should reconsider their business development strategy, goals and main tasks rather than seeking business opportunities outside. Vietnam has been facing the electricity shortage in the last four consecutive years.
The Government has been trying to reduce budget funded investments in an effort to curb inflation. What is the viewpoint of MPI in this case?
We have suggested the principles and the criteria based on which relevant ministries can consider weeding out some projects from the list of the construction works for 2008. We have to be determined in canceling the projects which are not really necessary, but we still have to keep implementing the projects which serve the public interests of the localities. For example, in Hanoi, the projects of the transport system, Nhat Tan Bridge, or the road from Nhat Tan bridge to Noi Bai International Airport should be followed, while the project on building museums should be canceled.
It is expected that local authorities will submit the lists of the projects subject to delaying or canceling.
If we aim to keep the interest rate at 12.4% (the same as 2007’s), what percent of public investments does Vietnam needs to cut?
Public investment includes the investments from state budget and state owned enterprises, which regularly accounts for 45% of total investments. However, the public investment will be at some 40% of total investments this year. I cannot say for sure what percent of public investment we have to cut to curb the inflation rate at 12.4%. It is necessary to apply all the eight measures set by the Government at the same time to curb inflation. Reducing public investment is just a measure to help reduce inflation.
Tightening monetary policy: tragedy and paradoxes
11:21' 29/04/2008 (GMT+7)
VietNamNet Bridge – Le Xuan Nghia, Director of the Banking Development Strategy Department under the State Bank of Vietnam, has pointed out the paradoxes of the currently applied monetary policy.
VietNamNet would like to introduce the article by Nghia published in Tuoi tre newspaper, discussing the issue.
We are trying to tighten monetary policy in order to fight inflation. This means that the interest rates will go up. Investors will select business projects suitable for them. Those feasible projects, which can bear the interest rates, will be able to survive and develop, if not, they will go bankrupt.
However, those who are trying to tighten the monetary policy, are also the persons who want to set low interest rates in order to support businesses. This is the first paradox.
The second paradox, which is really worrying, is that the tightened monetary policy has been making difficulties for banks, but banks are not allowed to raise deposit interest rates in order to attract more capital. The problem has become more serious as small banks, which have to comply with the ceiling interest rate scheme, have to borrow capital on the inter-bank market at very high interest rates of 18-24% per annum, which are even higher than the ceiling interest rate.
As such, bigger banks now have the opportunity of mobilizing capital at low costs to re-lend on the interbank market at higher interest rates. This is considered a tragedy of the monetary policy. I can call this the failure of the monetary policy, as it has caused the serious liquidity deficiency to banks, especially small banks.
We are now in the process of implementing the commitments on global integration, which means that we have to follow the economic reform in accordance with the market rules and international practice.
However, at the time when the national economy was most healthy, difficulties rushed down, not from outside, but from policies, especially the policies on public investments and monetary policy.
The biggest challenge of the economic integration turns out to be not the competitiveness of enterprises as thought before, but the macroeconomic management capability.
What worries businesses most is not the lack of experience and corporate governance skills in the global integration, but the unsuitable policies which may push them in the disadvantageous position in the integration.
There have been signs which show that foreign direct investment tends to flow to real estate projects, while foreign portfolio investors eye to make profit from the attractive interest rates of Government bonds.
If the current situation remains, not only small and medium businesses, but big economic groups will suffer. All big real estate projects will fall into the hands of foreign businesses and funds.
How should we solve the problems? No one should think of running the market by his will. The market has its flaws, but regrettably, these are not the flaws which we are trying to fix. The administrative intervention would distort the market operation. In fact, all kinds of the administrative intervention, including the ceiling interest rate scheme or credit limit, show very limited effects
VietNamNet Bridge – Le Xuan Nghia, Director of the Banking Development Strategy Department under the State Bank of Vietnam, has pointed out the paradoxes of the currently applied monetary policy.
VietNamNet would like to introduce the article by Nghia published in Tuoi tre newspaper, discussing the issue.
We are trying to tighten monetary policy in order to fight inflation. This means that the interest rates will go up. Investors will select business projects suitable for them. Those feasible projects, which can bear the interest rates, will be able to survive and develop, if not, they will go bankrupt.
However, those who are trying to tighten the monetary policy, are also the persons who want to set low interest rates in order to support businesses. This is the first paradox.
The second paradox, which is really worrying, is that the tightened monetary policy has been making difficulties for banks, but banks are not allowed to raise deposit interest rates in order to attract more capital. The problem has become more serious as small banks, which have to comply with the ceiling interest rate scheme, have to borrow capital on the inter-bank market at very high interest rates of 18-24% per annum, which are even higher than the ceiling interest rate.
As such, bigger banks now have the opportunity of mobilizing capital at low costs to re-lend on the interbank market at higher interest rates. This is considered a tragedy of the monetary policy. I can call this the failure of the monetary policy, as it has caused the serious liquidity deficiency to banks, especially small banks.
We are now in the process of implementing the commitments on global integration, which means that we have to follow the economic reform in accordance with the market rules and international practice.
However, at the time when the national economy was most healthy, difficulties rushed down, not from outside, but from policies, especially the policies on public investments and monetary policy.
The biggest challenge of the economic integration turns out to be not the competitiveness of enterprises as thought before, but the macroeconomic management capability.
What worries businesses most is not the lack of experience and corporate governance skills in the global integration, but the unsuitable policies which may push them in the disadvantageous position in the integration.
There have been signs which show that foreign direct investment tends to flow to real estate projects, while foreign portfolio investors eye to make profit from the attractive interest rates of Government bonds.
If the current situation remains, not only small and medium businesses, but big economic groups will suffer. All big real estate projects will fall into the hands of foreign businesses and funds.
How should we solve the problems? No one should think of running the market by his will. The market has its flaws, but regrettably, these are not the flaws which we are trying to fix. The administrative intervention would distort the market operation. In fact, all kinds of the administrative intervention, including the ceiling interest rate scheme or credit limit, show very limited effects
Fertiliser prices to rise this week, says Vinachem
22:39' 29/04/2008 (GMT+7)
VietNamNet Bridge – State-owned fertiliser producers will raise prices this week, announced Nguyen Duy Sy, deputy director of the Viet Nam National Chemical Corporation (Vinachem).
Workers arrange bags of fertiliser on a barge at Phu My port in the southern province of Ba Ria-Vung Tau. State-run fertiliser companies plan to raise their prices this week.
Vinachem’s fertiliser-making subsidiaries would decide the level of price adjustment on their own, Sy said.
For instance, Binh Dien Fertiliser Co would decide the price it would charge for NPK fertiliser, currently selling VND12.656mil (US$791) per tonne.
Imported raw material costs were cited as the main reason forcing fertiliser producers to increase prices. Costs had risen in many instances by 15% or more in the month of April alone.
On the world market, the price of diammonium phosphate (DAP) has risen $350-400 per tonne to $1,400-1,500 per tonne over the past month, Sy noted. The price of potassium fertiliser has risen $130 to $1,000 per tonne and that of urea $70 to $450 per tonne. All were expected to continue rising.
While it has been possible to control the price of fertilisers which were dependent on domestic raw materials such as coal and ore, it was more difficult to stabilise the price of fertilisers using imported materials without suffering losses, wrote Hoang Manh Tien, head of Vinachem’s planning and marketing department, on the corporation’s website.
Once receiving the parent corporation’s directive to stabilise prices and boost production, many Vinachem subsidiaries complained about higher raw material prices and their impact on production, according to Tien.
Binh Dien Fertiliser Co reported it cost the company about VND1.2mil to produce one tonne of NPK fertiliser, including costs of DAP and ammonium sulphate as well as cost of other materials and inputs such as electricity, packaging, wages and overheads. Meanwhile, the company has been selling NPK fertiliser at a price of VND11.2mil per tonne.
Lam Thao Fertiliser and Chemicals Co and the Long Thanh Fertiliser Plant have reported similar situations since the price of sulphur, a chemical element mainly used in fertiliser, has increased to $700 per tonne, double last year’s price.
Using stored sulphur has allowed prices to remain stable for a time, said Lam Thao deputy director Tran Ngoc Bach, but it would be difficult to maintain the price once production relied on new supplies of imported sulphur.
In addition to higher input costs, fertiliser companies were also reporting problems obtaining bank financing.
Southern Fertiliser Co claimed that commercial banks were facing a shortage of liquidity and had restricted loans to many enterprises.
VietNamNet Bridge – State-owned fertiliser producers will raise prices this week, announced Nguyen Duy Sy, deputy director of the Viet Nam National Chemical Corporation (Vinachem).
Workers arrange bags of fertiliser on a barge at Phu My port in the southern province of Ba Ria-Vung Tau. State-run fertiliser companies plan to raise their prices this week.
Vinachem’s fertiliser-making subsidiaries would decide the level of price adjustment on their own, Sy said.
For instance, Binh Dien Fertiliser Co would decide the price it would charge for NPK fertiliser, currently selling VND12.656mil (US$791) per tonne.
Imported raw material costs were cited as the main reason forcing fertiliser producers to increase prices. Costs had risen in many instances by 15% or more in the month of April alone.
On the world market, the price of diammonium phosphate (DAP) has risen $350-400 per tonne to $1,400-1,500 per tonne over the past month, Sy noted. The price of potassium fertiliser has risen $130 to $1,000 per tonne and that of urea $70 to $450 per tonne. All were expected to continue rising.
While it has been possible to control the price of fertilisers which were dependent on domestic raw materials such as coal and ore, it was more difficult to stabilise the price of fertilisers using imported materials without suffering losses, wrote Hoang Manh Tien, head of Vinachem’s planning and marketing department, on the corporation’s website.
Once receiving the parent corporation’s directive to stabilise prices and boost production, many Vinachem subsidiaries complained about higher raw material prices and their impact on production, according to Tien.
Binh Dien Fertiliser Co reported it cost the company about VND1.2mil to produce one tonne of NPK fertiliser, including costs of DAP and ammonium sulphate as well as cost of other materials and inputs such as electricity, packaging, wages and overheads. Meanwhile, the company has been selling NPK fertiliser at a price of VND11.2mil per tonne.
Lam Thao Fertiliser and Chemicals Co and the Long Thanh Fertiliser Plant have reported similar situations since the price of sulphur, a chemical element mainly used in fertiliser, has increased to $700 per tonne, double last year’s price.
Using stored sulphur has allowed prices to remain stable for a time, said Lam Thao deputy director Tran Ngoc Bach, but it would be difficult to maintain the price once production relied on new supplies of imported sulphur.
In addition to higher input costs, fertiliser companies were also reporting problems obtaining bank financing.
Southern Fertiliser Co claimed that commercial banks were facing a shortage of liquidity and had restricted loans to many enterprises.
Sugar cane farmers aren’t making profit: sugar association
16:50' 29/04/2008 (GMT+7)
VietNamNet Bridge – Millions of sugar cane farmers are weeping as sugar plants have reduced sugar cane material prices. Meanwhile, sugar plants are miserable as they have had to reduce sale prices and struggle with smuggling.
Dr Ha Huu Phai, Secretary General of the Vietnam Sugar Cane and Sugar Association, said that under WTO and AFTA commitments, Vietnam will allow the import of 58,000 tonnes of sugar in 2008 with the tax rates of 40% and 20%, respectively, for WTO and AFTA commitments. Currently, everyday, 400-500 tonnes of sugar are being illegally smuggled through the Southwest and Lao Bao Border Gate, causing the loss of VND500mil to the state budget collection.
Vietnam-made sugar cannot compete with Thailand-made products, which have lower production costs thanks to lower sugar cane prices and more modern production technology. Thailand-made sugar is always VND300/kg lower than domestic products.
Domestic sugar plants have had to reduce sale prices and sugar cane purchasing prices, making millions of farmers suffer. A lot of sugar plants have been working perfunctorily, and some of them have had to shut down workshops.
In fact, all sugar plants in the north and central region have signed contracts on consuming all sugar cane of farmers. However, with the current purchasing price of VND350-450,000/tonne, farmers cannot get profit with more expensive fertiliser, fuel and labour costs. Meanwhile, sugar plants cannot raise the material purchasing price, since the sugar price remains low.
Currently, the production cost of every kilogramme of white sugar is VND7-7,500/kg in the north and VND7.5-8,000/kg in the south. The high production cost and low sale price of sugar (less than VND8,000/kg) have made many sugar plants incur losses.
Explaining the high price of sugar cane production costs, Phai said that sugar cane productivity and quality both are worse than those of regional countries. Vietnam’s sugar cane productivity is 54.8 tonnes/ha (the figure is expected to reach 65 tonnes/ha by 2010), while China’s productivity is 70-80 tonnes/ha, and Thailand’s the same. The commercial cane sugar (CCS) of Vietnam’s sugar cane is just 8-10 CCS, while China’s 12-14 and Thailand’s 14-16.
Phai has called on state management agencies to keep stricter control over sugar imports in order to stop illegal smuggling of sugar through border gates.
Moreover, Phai thinks that the state should programme the development of material growing areas for sugar plants, ensuring sugar cane output for sugar plants to run at full capacity.
It is expected that four state owned sugar plants, including Kon Tum, Tra Vinh and Soc Trang, will be equitised.
VietNamNet Bridge – Millions of sugar cane farmers are weeping as sugar plants have reduced sugar cane material prices. Meanwhile, sugar plants are miserable as they have had to reduce sale prices and struggle with smuggling.
Dr Ha Huu Phai, Secretary General of the Vietnam Sugar Cane and Sugar Association, said that under WTO and AFTA commitments, Vietnam will allow the import of 58,000 tonnes of sugar in 2008 with the tax rates of 40% and 20%, respectively, for WTO and AFTA commitments. Currently, everyday, 400-500 tonnes of sugar are being illegally smuggled through the Southwest and Lao Bao Border Gate, causing the loss of VND500mil to the state budget collection.
Vietnam-made sugar cannot compete with Thailand-made products, which have lower production costs thanks to lower sugar cane prices and more modern production technology. Thailand-made sugar is always VND300/kg lower than domestic products.
Domestic sugar plants have had to reduce sale prices and sugar cane purchasing prices, making millions of farmers suffer. A lot of sugar plants have been working perfunctorily, and some of them have had to shut down workshops.
In fact, all sugar plants in the north and central region have signed contracts on consuming all sugar cane of farmers. However, with the current purchasing price of VND350-450,000/tonne, farmers cannot get profit with more expensive fertiliser, fuel and labour costs. Meanwhile, sugar plants cannot raise the material purchasing price, since the sugar price remains low.
Currently, the production cost of every kilogramme of white sugar is VND7-7,500/kg in the north and VND7.5-8,000/kg in the south. The high production cost and low sale price of sugar (less than VND8,000/kg) have made many sugar plants incur losses.
Explaining the high price of sugar cane production costs, Phai said that sugar cane productivity and quality both are worse than those of regional countries. Vietnam’s sugar cane productivity is 54.8 tonnes/ha (the figure is expected to reach 65 tonnes/ha by 2010), while China’s productivity is 70-80 tonnes/ha, and Thailand’s the same. The commercial cane sugar (CCS) of Vietnam’s sugar cane is just 8-10 CCS, while China’s 12-14 and Thailand’s 14-16.
Phai has called on state management agencies to keep stricter control over sugar imports in order to stop illegal smuggling of sugar through border gates.
Moreover, Phai thinks that the state should programme the development of material growing areas for sugar plants, ensuring sugar cane output for sugar plants to run at full capacity.
It is expected that four state owned sugar plants, including Kon Tum, Tra Vinh and Soc Trang, will be equitised.
Banks gearing up for financial investments
16:44' 29/04/2008 (GMT+7)
VietNamNet Bridge – Though commercial banks have been warned that they will face a lot of difficulties this year caused by the tightening monetary policies, banks still move ahead with their plans to push up financial investments.
Sacombank, in its plan to use capital in 2008, will use VND650bil to buy stakes of potential companies. The bank is also planning to set up several new subsidiaries with the total capital of VND1,110bil.
In 2007, Sacombank made a lot of financial investment deals in Truong Hai Auto Company, Huu Lien A Chau Stee, Sacombank’s investment company. In early March 2008, Sacombank injected VND25bil more in Yersin Da Lat University.
In 2008, Sacombank will pour money into the gold, silver and gemstone company which has the operation license already, into an insurance company and a card joint venture with ANZ. All these moves will lead to the Sacombank Financial Group taking shape by mid 2008. The bank’s profit in 2007 proved to be very satisfactory, a part of which was brought about by the financial investment deals.
Meanwhile, Asia Commercial Bank (ACB) has announced it would spend more money to expand the scale of its existing subsidiaries. It is estimated that the bank would inject VND1tril more in subsidiaries to raise the total investments in the companies to VND2tril.
ACB is also planning to set up several new companies in 2008, including ACB Capital, ACB Card, ACB Gold and Silver Companies. With the establishment of the new companies, ACB will push up the purchase of stakes of economic institutions in 2008.
As planned, ACB will purchase some VND1,130bil worth of stakes this year, raising the total investment value to VND1,400bil.
According to Nguyen Thanh Toai, Deputy General Director of ACB, the bank’s financial investments this year will be carried out through subsidiaries, especially ACB Securities. Toai said that ACB is considering injecting money in the companies with large development potential and financial health, especially after the companies make IPOs.
Being a new bank with a modest operation scale, Pacific Bank is also making plans on diversifying business activities. Instead of focusing on credit, the bank will also expand financial investments. It is considering setting up several subsidiaries operating in different business fields.
The bank believes that the financial investments and the close relationships with financial institutions will help the bank get more capital for operations and help raise the turnover from banking services.
Planning to raise capital from VND2,800bil to VND7,400bil in 2008, Eximbank will use a part of the capital to be mobilized to expand the business scale and increase financial investment items.
The noteworthy thing is that banks are very expectant about make financial investments, despite the big difficulties they are facing, and the current lackluster stock market.
VietNamNet Bridge – Though commercial banks have been warned that they will face a lot of difficulties this year caused by the tightening monetary policies, banks still move ahead with their plans to push up financial investments.
Sacombank, in its plan to use capital in 2008, will use VND650bil to buy stakes of potential companies. The bank is also planning to set up several new subsidiaries with the total capital of VND1,110bil.
In 2007, Sacombank made a lot of financial investment deals in Truong Hai Auto Company, Huu Lien A Chau Stee, Sacombank’s investment company. In early March 2008, Sacombank injected VND25bil more in Yersin Da Lat University.
In 2008, Sacombank will pour money into the gold, silver and gemstone company which has the operation license already, into an insurance company and a card joint venture with ANZ. All these moves will lead to the Sacombank Financial Group taking shape by mid 2008. The bank’s profit in 2007 proved to be very satisfactory, a part of which was brought about by the financial investment deals.
Meanwhile, Asia Commercial Bank (ACB) has announced it would spend more money to expand the scale of its existing subsidiaries. It is estimated that the bank would inject VND1tril more in subsidiaries to raise the total investments in the companies to VND2tril.
ACB is also planning to set up several new companies in 2008, including ACB Capital, ACB Card, ACB Gold and Silver Companies. With the establishment of the new companies, ACB will push up the purchase of stakes of economic institutions in 2008.
As planned, ACB will purchase some VND1,130bil worth of stakes this year, raising the total investment value to VND1,400bil.
According to Nguyen Thanh Toai, Deputy General Director of ACB, the bank’s financial investments this year will be carried out through subsidiaries, especially ACB Securities. Toai said that ACB is considering injecting money in the companies with large development potential and financial health, especially after the companies make IPOs.
Being a new bank with a modest operation scale, Pacific Bank is also making plans on diversifying business activities. Instead of focusing on credit, the bank will also expand financial investments. It is considering setting up several subsidiaries operating in different business fields.
The bank believes that the financial investments and the close relationships with financial institutions will help the bank get more capital for operations and help raise the turnover from banking services.
Planning to raise capital from VND2,800bil to VND7,400bil in 2008, Eximbank will use a part of the capital to be mobilized to expand the business scale and increase financial investment items.
The noteworthy thing is that banks are very expectant about make financial investments, despite the big difficulties they are facing, and the current lackluster stock market.
Senior trade official says rice abundant
05:04' 30/04/2008 (GMT+7)
VietNamNet Bridge - A senior trade official said Vietnam will not be short of rice supply as the country plans to export just 3.2 million tonnes of rice by the end of the third quarter.
“There will be no rice shortage,” affirmed Deputy Trade and Industry Minister Nguyen Cam Tu, adding that local businesses have so far signed contracts to export around 2.8 million tonnes of rice.
According to a forecast of the Ministry of Agriculture and Rural Development, the rice supply sources will be plentiful as harvest time is coming in May and June.
Northern provinces are expected to reap around 6.5 million tonnes of winter-spring rice, equalling the previous rice crop’s output, while the output in the Mekong delta is expected to hit 9.3 million tonnes, 300,000 tonnes more than the previous crop.
These advantages will soon help stabilise the rice market and rice prices will be reduced in the next few days, said Tu.
Regarding an unexpected increase in rice prices in almost cities and provinces over the past days, Deputy Minister Tu pointed out rice speculation by several businesses due to news about food crisis in many countries as the main reason.
The Ministry of Trade and Industry has asked trade and industry departments in cities and provinces to work with relevant agencies to supervise rice trading activities and strictly punish violators to ensure a stable market.
VietNamNet Bridge - A senior trade official said Vietnam will not be short of rice supply as the country plans to export just 3.2 million tonnes of rice by the end of the third quarter.
“There will be no rice shortage,” affirmed Deputy Trade and Industry Minister Nguyen Cam Tu, adding that local businesses have so far signed contracts to export around 2.8 million tonnes of rice.
According to a forecast of the Ministry of Agriculture and Rural Development, the rice supply sources will be plentiful as harvest time is coming in May and June.
Northern provinces are expected to reap around 6.5 million tonnes of winter-spring rice, equalling the previous rice crop’s output, while the output in the Mekong delta is expected to hit 9.3 million tonnes, 300,000 tonnes more than the previous crop.
These advantages will soon help stabilise the rice market and rice prices will be reduced in the next few days, said Tu.
Regarding an unexpected increase in rice prices in almost cities and provinces over the past days, Deputy Minister Tu pointed out rice speculation by several businesses due to news about food crisis in many countries as the main reason.
The Ministry of Trade and Industry has asked trade and industry departments in cities and provinces to work with relevant agencies to supervise rice trading activities and strictly punish violators to ensure a stable market.
Monday, 28 April 2008
Plastic industry generates $200mil in Q1
17:18' 28/04/2008 (GMT+7)
VietNamNet Bridge – The nation's plastics industry earned nearly US$200mil in the first quarter, thus is well on the way to meeting its $1bil export target for 2008, according to the Ministry of Industry and Trade (MoIT).
Previously the industry has performed sluggishly in the first quarter, owing to a lunar New Year hang-over. This time around, however, MoIT statistics show that the industry recorded a year-on-year growth rate of more than 35% in the first quarter.
Vietnam'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%.
The United Nations said that besides benefiting from comparatively low tariffs, Vietnam'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% of the raw materials necessary for production.
Besides increases of 30% for raw materials and 10% for shipping, producers are now subject to monthly lending interest rates of 1.5-1.6% from 0.85-0.95 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.
VietNamNet Bridge – The nation's plastics industry earned nearly US$200mil in the first quarter, thus is well on the way to meeting its $1bil export target for 2008, according to the Ministry of Industry and Trade (MoIT).
Previously the industry has performed sluggishly in the first quarter, owing to a lunar New Year hang-over. This time around, however, MoIT statistics show that the industry recorded a year-on-year growth rate of more than 35% in the first quarter.
Vietnam'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%.
The United Nations said that besides benefiting from comparatively low tariffs, Vietnam'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% of the raw materials necessary for production.
Besides increases of 30% for raw materials and 10% for shipping, producers are now subject to monthly lending interest rates of 1.5-1.6% from 0.85-0.95 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.
People keeping gold again, traders seeking fat profit
16:55' 28/04/2008 (GMT+7)
VietNamNet Bridge – The Vietnamese habit of hoarding gold in order to save money has come back, and this has been bringing new opportunities to banks and gold traders.
Higher demand for gold…
Nguyen Thi Kim Xuyen, Deputy General Director of East Asia Bank, said that injecting money in gold has again become the No 1 choice of the majority of Vietnamese people. The conclusion is proved by the nearly 50 tonnes of gold imported in the first four months of the year.
According to Huynh Trung Khanh, Senior Advisor of the World Gold Council in Vietnam, on peak trading days, the total trading gold volume may reach 500,000 taels of gold, or 19 tonnes, while the figure is 13 tonnes for Shanghai gold trading floor. The demand for gold transactions has increased by ten-fold compared to 2007 (approximately 2 tonnes a day).
In fact, keeping gold has for a long time been a habit of Vietnamese people, but caught people’s attention less when the fevers of land and stocks arose. However, nowadays, as the real estate and stock market keep falling, people have returned to their traditional habit of hoarding gold.
Experts, after considering the gold imports in the last 10 years, have estimated that the total volume of gold being kept among the public is about 500 tonnes, worth $15bil, or VND240,000bil.
…bringing fat profit to bankers and traders
It is estimated that the number of accounts opened to make transactions at the Saigon Gold Trading Floor owned by Asia Commercial Bank has doubled in the last one month, to 3,500-3,700. The everyday trading volume hovers between 200-400,000 taels and the trading value ranges from VND4-7,000bil.
According to Tran Phuong Binh, General Director of East Asia Bank (EAB), 95% of people walking onto gold trading floors are seeking business opportunities. This has prompted bankers and investors to establish several more gold trading floors with four floors to be opened in the time to come. These will be trading floors run by Sacombank; Viet A Bank; the joint venture of SJC, Ha Thanh Securities Company, SJC Securities Company and Eximbank; and the joint venture of EAB, PNJ and Intergold. Additionally, the Vietnam Gold Business Association is also planning to set up two more gold trading floors in Hanoi and HCM City this year.
Investors at the trading floors will have to pay a security deposit of only 7% of the transaction value before placing orders; therefore, the floors are expected to attract a lot of investors.
Analysts say that the profit the gold trading floor runners will get proves to be very attractive. This would be fat profit if noting that the runners can get VND4,000 of fee for every tael traded, and that there will be several hundreds of thousands of taels of gold traded every day.
VietNamNet Bridge – The Vietnamese habit of hoarding gold in order to save money has come back, and this has been bringing new opportunities to banks and gold traders.
Higher demand for gold…
Nguyen Thi Kim Xuyen, Deputy General Director of East Asia Bank, said that injecting money in gold has again become the No 1 choice of the majority of Vietnamese people. The conclusion is proved by the nearly 50 tonnes of gold imported in the first four months of the year.
According to Huynh Trung Khanh, Senior Advisor of the World Gold Council in Vietnam, on peak trading days, the total trading gold volume may reach 500,000 taels of gold, or 19 tonnes, while the figure is 13 tonnes for Shanghai gold trading floor. The demand for gold transactions has increased by ten-fold compared to 2007 (approximately 2 tonnes a day).
In fact, keeping gold has for a long time been a habit of Vietnamese people, but caught people’s attention less when the fevers of land and stocks arose. However, nowadays, as the real estate and stock market keep falling, people have returned to their traditional habit of hoarding gold.
Experts, after considering the gold imports in the last 10 years, have estimated that the total volume of gold being kept among the public is about 500 tonnes, worth $15bil, or VND240,000bil.
…bringing fat profit to bankers and traders
It is estimated that the number of accounts opened to make transactions at the Saigon Gold Trading Floor owned by Asia Commercial Bank has doubled in the last one month, to 3,500-3,700. The everyday trading volume hovers between 200-400,000 taels and the trading value ranges from VND4-7,000bil.
According to Tran Phuong Binh, General Director of East Asia Bank (EAB), 95% of people walking onto gold trading floors are seeking business opportunities. This has prompted bankers and investors to establish several more gold trading floors with four floors to be opened in the time to come. These will be trading floors run by Sacombank; Viet A Bank; the joint venture of SJC, Ha Thanh Securities Company, SJC Securities Company and Eximbank; and the joint venture of EAB, PNJ and Intergold. Additionally, the Vietnam Gold Business Association is also planning to set up two more gold trading floors in Hanoi and HCM City this year.
Investors at the trading floors will have to pay a security deposit of only 7% of the transaction value before placing orders; therefore, the floors are expected to attract a lot of investors.
Analysts say that the profit the gold trading floor runners will get proves to be very attractive. This would be fat profit if noting that the runners can get VND4,000 of fee for every tael traded, and that there will be several hundreds of thousands of taels of gold traded every day.
Tax rises, auto market becomes chaotic
16:57' 28/04/2008 (GMT+7)
VietNamNet Bridge – State management agencies are resigning themselves to remaining powerless in the chaotic car market, where prices are escalating day by day as a result of the ever-changing tax policies.
Though car importers say that they still have some cars imported when the import tax rate was at 70%, car showrooms have all raised the sale prices. In some cases, sale prices are 7% higher than previously levels.
For example, a Kia Morning, which had the sale price of $19,000 when the tax rate was 70%, is now selling at $21,000. Meanwhile, with the new tax rate of 83%, the car should be sold at $20,000 only (+ $1,000). A Toyota Camry 2,4L, which should be sold at $58-59,000 with the new tax rate, is now selling at $60,000, or $1-2,000/unit higher than previously.
Hyundai Santa Fe model has seen the increase of $5,000/unit, and no car is still selling at levels calculated on the previous tax rate of 70%.
Sales agents all say that car prices keep rising due to the higher tax rate. Moreover, as car importers will not import cars anymore (the high taxes make imports unprofitable), import cars will be scarcer. That explains why many sales agents are not selling cars at this moment, intending to sell later when prices go up further.
As for locally assembled cars, no local manufacturer has officially announced price increases, but information has been leaked from their sales agents that sale prices will increase. A salesman at the Mercedes Benz An Du showroom said that Mercedes cars will be $1-3,000 more expensive as the car part import tax rates have been raised.
Meanwhile, salesmen at Honda My Dinh showroom say that the contracts on purchasing Civic cars include provisions which say that clients will have to pay more money if prices increase, VND5mil at maximum.
If clients want to get deliveries right now, they have either to buy Mercedes cars, or accept paying additional money.
A reader told VietNamNet that he has to pay $3,000 more to get a Toyota Innova. He said clients have become discouraged with the day-by-day price increases.
“The government is trying to force prices down in an attempt to curb inflation, while it closes its eyes to the car price increases,” the reader said.
The uncertainties of the car market are being attributed to the unsuitable tax policies followed by the Ministry of Finance.
The ministry has five times changed car import tax rates in the last 16 months, which has made tax policies unpredictable and caused difficulties for manufacturers and importers
The changing tax policies show that state management agencies do not have a long-term vision when making policies, while they just make decisions to deal with problems at different moments.
The Ministry of Finance has been criticised for creating a chaotic car market, where some subjects can get fat profit from clients.
VietNamNet Bridge – State management agencies are resigning themselves to remaining powerless in the chaotic car market, where prices are escalating day by day as a result of the ever-changing tax policies.
Though car importers say that they still have some cars imported when the import tax rate was at 70%, car showrooms have all raised the sale prices. In some cases, sale prices are 7% higher than previously levels.
For example, a Kia Morning, which had the sale price of $19,000 when the tax rate was 70%, is now selling at $21,000. Meanwhile, with the new tax rate of 83%, the car should be sold at $20,000 only (+ $1,000). A Toyota Camry 2,4L, which should be sold at $58-59,000 with the new tax rate, is now selling at $60,000, or $1-2,000/unit higher than previously.
Hyundai Santa Fe model has seen the increase of $5,000/unit, and no car is still selling at levels calculated on the previous tax rate of 70%.
Sales agents all say that car prices keep rising due to the higher tax rate. Moreover, as car importers will not import cars anymore (the high taxes make imports unprofitable), import cars will be scarcer. That explains why many sales agents are not selling cars at this moment, intending to sell later when prices go up further.
As for locally assembled cars, no local manufacturer has officially announced price increases, but information has been leaked from their sales agents that sale prices will increase. A salesman at the Mercedes Benz An Du showroom said that Mercedes cars will be $1-3,000 more expensive as the car part import tax rates have been raised.
Meanwhile, salesmen at Honda My Dinh showroom say that the contracts on purchasing Civic cars include provisions which say that clients will have to pay more money if prices increase, VND5mil at maximum.
If clients want to get deliveries right now, they have either to buy Mercedes cars, or accept paying additional money.
A reader told VietNamNet that he has to pay $3,000 more to get a Toyota Innova. He said clients have become discouraged with the day-by-day price increases.
“The government is trying to force prices down in an attempt to curb inflation, while it closes its eyes to the car price increases,” the reader said.
The uncertainties of the car market are being attributed to the unsuitable tax policies followed by the Ministry of Finance.
The ministry has five times changed car import tax rates in the last 16 months, which has made tax policies unpredictable and caused difficulties for manufacturers and importers
The changing tax policies show that state management agencies do not have a long-term vision when making policies, while they just make decisions to deal with problems at different moments.
The Ministry of Finance has been criticised for creating a chaotic car market, where some subjects can get fat profit from clients.
Cracking down on coal smugglers
22:03' 28/04/2008 (GMT+7)
Thousands of tonnes of illegally-mined coal already confiscated
Deputy Prime Minister Hoang Trung Hai has ordered government authorities in the northern province of Quang Ninh to tighten controls to prevent rampant, illegal exploitation and export of coal.
Illegal mining has been reported on a large scale since the end of last year in Quang Ninh Province. Local authorities and enterprises are blamed for lax management, which caused irregularities in coal production and export.
Hai said illegal mining had been reported on a large scale since the end of last year. This had led to criminal activities and other social evils, although provincial authorities had been strict about fining violators.
Hai said hundreds of mines had been closed and tens of thousands of tonnes of coal had been confiscated.
While the illegal trade had largely been controlled, there was a danger it would re-occur in the province if authorities did not close ranks to stop it.
Hai blamed the Viet Nam Coal and Mineral Industries Group (Vinacomin) for lax management that enabled member companies to sign contracts with many private enterprises to exploit and carry coal.
The group was required to suspend the operations of one company, the Joint Stock Company of Investment, Trade and Service, and define the responsibilities of organisations and individuals who had let illegal coal exploitation flourish.
Hai said he wanted the Industry and Trade Ministry to complete a national strategy for coal development up to the year 2015 – with a vision extending to 2025 – and submit this to the Prime Minister in the next few weeks.
The Natural Resources and Environment Ministry has been asked to co-ordinate with Quang Ninh Province, Vinacomin and relevant ministries and sectors to check mine boundaries before granting or re-issuing licences.
The Deputy PM said the Finance Ministry should order the Customs Office to closely inspect coal exports, while the Public Security Ministry would have to guide police in investigating and prosecuting those breaking the law.
And he ordered the Defence and Public Security Ministries to support provincial police and border guards by strengthening road, sea and border-gate checks.
Lax management
Quang Ninh has already begun mobilising government departments in a crackdown on illegal coal exploitation. It has said it will resolutely punish violators, some of whom have been arrested.
Provincial Party Secretary Nguyen Duy Hung blames lax management by local authorities and enterprises for irregularities in coal production and export.
He even said some State officials, coal-production managers and trade enterprises had closed their eyes or joined hands with illegal coal exploiters.
"If the province fail to stamp this out, natural resources will be lost and the environment will be harmed," he said.
Hung also warned that the corruption of officials would create social disorder and break down security.
Inspections of coal movements by police, customs’ officers, border guards and port authorities have been strengthened in many areas, including Van Gia Port, to find those smuggling coal to China.
The director of Quang Ninh Police, Nguyen Huu Tuoc, said Cam Pha Township was one of the "hot" areas for illegal activities. For the past fortnight, officials had been examining all documents relating to coal production and transport.
So far they have seized more than 4,420 tonnes of coal of unspecified origin and 350 tonnes of coal without official owners, said Tuoc. At one storage place owned by the Hong Gam Company, inspectors had found another 3,000 tonnes of coal of unknown origin.
Many checkpoints had been set up in Dong Trieu District to inspect the transporting of coal in the area. About 3,000 tonnes of illegal coal was found in Hong Thai Tay Commune.
Tuoc said provincial police had closed down 92 mines and 38 open cuts where coal was being illegally removed. Already, 11 cases of theft had been uncovered and 21 alleged criminals brought before the courts.
Police have so far reported 190 cases of coal being illegally transported and nearly 5,500 tonnes of coal worth more than VND1.6bil (US$100,000) has been confiscated.
Chairman of the Vinacomin executive board, Doan Van Kien, said he proposed that provincial authorities stop exporting coal through Van Gia border gate from June 1 to minimise illegal exports.
Deputy commander of Quang Ninh Border Guard’s Headquarters, Dinh Van Tuan, said his group had inspected 104 coal ships since the middle of April and, 46 of which had been found to carry 47,000 tonnes of illegal coal.
Thousands of tonnes of illegally-mined coal already confiscated
Deputy Prime Minister Hoang Trung Hai has ordered government authorities in the northern province of Quang Ninh to tighten controls to prevent rampant, illegal exploitation and export of coal.
Illegal mining has been reported on a large scale since the end of last year in Quang Ninh Province. Local authorities and enterprises are blamed for lax management, which caused irregularities in coal production and export.
Hai said illegal mining had been reported on a large scale since the end of last year. This had led to criminal activities and other social evils, although provincial authorities had been strict about fining violators.
Hai said hundreds of mines had been closed and tens of thousands of tonnes of coal had been confiscated.
While the illegal trade had largely been controlled, there was a danger it would re-occur in the province if authorities did not close ranks to stop it.
Hai blamed the Viet Nam Coal and Mineral Industries Group (Vinacomin) for lax management that enabled member companies to sign contracts with many private enterprises to exploit and carry coal.
The group was required to suspend the operations of one company, the Joint Stock Company of Investment, Trade and Service, and define the responsibilities of organisations and individuals who had let illegal coal exploitation flourish.
Hai said he wanted the Industry and Trade Ministry to complete a national strategy for coal development up to the year 2015 – with a vision extending to 2025 – and submit this to the Prime Minister in the next few weeks.
The Natural Resources and Environment Ministry has been asked to co-ordinate with Quang Ninh Province, Vinacomin and relevant ministries and sectors to check mine boundaries before granting or re-issuing licences.
The Deputy PM said the Finance Ministry should order the Customs Office to closely inspect coal exports, while the Public Security Ministry would have to guide police in investigating and prosecuting those breaking the law.
And he ordered the Defence and Public Security Ministries to support provincial police and border guards by strengthening road, sea and border-gate checks.
Lax management
Quang Ninh has already begun mobilising government departments in a crackdown on illegal coal exploitation. It has said it will resolutely punish violators, some of whom have been arrested.
Provincial Party Secretary Nguyen Duy Hung blames lax management by local authorities and enterprises for irregularities in coal production and export.
He even said some State officials, coal-production managers and trade enterprises had closed their eyes or joined hands with illegal coal exploiters.
"If the province fail to stamp this out, natural resources will be lost and the environment will be harmed," he said.
Hung also warned that the corruption of officials would create social disorder and break down security.
Inspections of coal movements by police, customs’ officers, border guards and port authorities have been strengthened in many areas, including Van Gia Port, to find those smuggling coal to China.
The director of Quang Ninh Police, Nguyen Huu Tuoc, said Cam Pha Township was one of the "hot" areas for illegal activities. For the past fortnight, officials had been examining all documents relating to coal production and transport.
So far they have seized more than 4,420 tonnes of coal of unspecified origin and 350 tonnes of coal without official owners, said Tuoc. At one storage place owned by the Hong Gam Company, inspectors had found another 3,000 tonnes of coal of unknown origin.
Many checkpoints had been set up in Dong Trieu District to inspect the transporting of coal in the area. About 3,000 tonnes of illegal coal was found in Hong Thai Tay Commune.
Tuoc said provincial police had closed down 92 mines and 38 open cuts where coal was being illegally removed. Already, 11 cases of theft had been uncovered and 21 alleged criminals brought before the courts.
Police have so far reported 190 cases of coal being illegally transported and nearly 5,500 tonnes of coal worth more than VND1.6bil (US$100,000) has been confiscated.
Chairman of the Vinacomin executive board, Doan Van Kien, said he proposed that provincial authorities stop exporting coal through Van Gia border gate from June 1 to minimise illegal exports.
Deputy commander of Quang Ninh Border Guard’s Headquarters, Dinh Van Tuan, said his group had inspected 104 coal ships since the middle of April and, 46 of which had been found to carry 47,000 tonnes of illegal coal.
Dilemma: IPOs unable to find customers
17:07' 28/04/2008 (GMT+7)
VietNamNet Bridge – IPOs have become less and less attractive to investors. Experts believe that the main reason behind the problem is overvalued shares.
The quiet IPOs
In the first quarter of 2008, only 10 IPOs were organised at the HCM City Stock Exchange (HOSE), 1/3 of which failed as there were few participants.
The situation was even worse at the Hanoi Securities Trading Centre (HASTC), where many IPOs were cancelled as there was no interested investor. The IPO of the big company Habeco saw investors register to buy only 13% of total shares offered. Habeco’s and Vietcombank’s share prices have been decreasing sharply on the OTC market since their IPOs, which is another reason why investors are less interested.
It is very likely that “quiet” will appropriately refer to the IPOs of big names slated for 2008. A lot of big corporations are planning to make IPOs in 2008, including the Bank for Investment and Development of Vietnam (BIDV), Vietinbank, MobiFone, and Mekong Housing Bank
A lot of reasons have been cited to explain the failure of IPOs, among which the biggest reason is the fall of the stock market, which has been making investors turn their backs on shares. Some experts have suggested delaying IPOs in order to reduce supply in order to rescue share prices from continuously sliding.
However, the suggestion has not received the support of many other experts, who believe that the delay of IPOs would slow down the equitisation process, which should be sped up instead.
Dr Le Tham Duong, Head of the Business Administration Faculty under the HCM City Banking University, said that the main problem of the failed IPOs was unsuitable prices.
“Investors would certainly be interested if the share issuer offers suitable prices,” Duong said, adding that enterprises should provide transparent information to the public in order to gain the confidence of investors in enterprises.
Changing the way of making IPOs?
Currently, enterprises, especially big ones, always make IPO first, and then negotiate with partners to select strategic shareholders. The basis for negotiations is the average IPO price, and the sale stake prices applied to strategic shareholders must not be lower than the average IPO price.
Experts say that the high starting prices of Sabeco, Vietcombank and Habeco made the P/E of the companies’ shares much higher than the average market’s P/E right at the moment of making IPO. As a result, none of the three companies have finished selecting strategic partners.
It is obvious that the state, as the owner of enterprises and the seller of stakes, aims to optimise the profit gained from IPOs. However, EuroCapital, a securities company, thinks that the government should declare a main purpose of IPOs: renovate equitised enterprises’ corporate skills or try to get as much money as possible from selling stakes.
The government should select strategic investors first and set specific requirements on the minimum time of holding stakes (in order to avoid speculation) and set requirements on partners in renovating enterprises. The IPO should be made later, and be carried out at s suitable moment in order to avoid possible shocks and supply & demand imbalance.
Experts have also advised investors to buy shares of equitising enterprises at this moment, as they can have opportunities to own big enterprises at low prices.
VietNamNet Bridge – IPOs have become less and less attractive to investors. Experts believe that the main reason behind the problem is overvalued shares.
The quiet IPOs
In the first quarter of 2008, only 10 IPOs were organised at the HCM City Stock Exchange (HOSE), 1/3 of which failed as there were few participants.
The situation was even worse at the Hanoi Securities Trading Centre (HASTC), where many IPOs were cancelled as there was no interested investor. The IPO of the big company Habeco saw investors register to buy only 13% of total shares offered. Habeco’s and Vietcombank’s share prices have been decreasing sharply on the OTC market since their IPOs, which is another reason why investors are less interested.
It is very likely that “quiet” will appropriately refer to the IPOs of big names slated for 2008. A lot of big corporations are planning to make IPOs in 2008, including the Bank for Investment and Development of Vietnam (BIDV), Vietinbank, MobiFone, and Mekong Housing Bank
A lot of reasons have been cited to explain the failure of IPOs, among which the biggest reason is the fall of the stock market, which has been making investors turn their backs on shares. Some experts have suggested delaying IPOs in order to reduce supply in order to rescue share prices from continuously sliding.
However, the suggestion has not received the support of many other experts, who believe that the delay of IPOs would slow down the equitisation process, which should be sped up instead.
Dr Le Tham Duong, Head of the Business Administration Faculty under the HCM City Banking University, said that the main problem of the failed IPOs was unsuitable prices.
“Investors would certainly be interested if the share issuer offers suitable prices,” Duong said, adding that enterprises should provide transparent information to the public in order to gain the confidence of investors in enterprises.
Changing the way of making IPOs?
Currently, enterprises, especially big ones, always make IPO first, and then negotiate with partners to select strategic shareholders. The basis for negotiations is the average IPO price, and the sale stake prices applied to strategic shareholders must not be lower than the average IPO price.
Experts say that the high starting prices of Sabeco, Vietcombank and Habeco made the P/E of the companies’ shares much higher than the average market’s P/E right at the moment of making IPO. As a result, none of the three companies have finished selecting strategic partners.
It is obvious that the state, as the owner of enterprises and the seller of stakes, aims to optimise the profit gained from IPOs. However, EuroCapital, a securities company, thinks that the government should declare a main purpose of IPOs: renovate equitised enterprises’ corporate skills or try to get as much money as possible from selling stakes.
The government should select strategic investors first and set specific requirements on the minimum time of holding stakes (in order to avoid speculation) and set requirements on partners in renovating enterprises. The IPO should be made later, and be carried out at s suitable moment in order to avoid possible shocks and supply & demand imbalance.
Experts have also advised investors to buy shares of equitising enterprises at this moment, as they can have opportunities to own big enterprises at low prices.
Rice fever to be stamped out in some days
19:13' 28/04/2008 (GMT+7)
VietNamNet Bridge – Rice trading companies are bringing rice to HCM City in an effort to stamp out the rice price fever, according to Nguyen Thi Nguyet, Secretary General of the Vietnam Food Association (VFA).
Rushing to buy rice, prices skyrocketing
Food supplies sufficient for both consumption and export, assures PM
The rice price has doubled in the last few days, now staying firmly at the highest-ever peak in history. Do you think the high prices will last for a long time?
Scrambling to buy rice at a rice shop on To Hien Thanh street in HCM City (Photo taken at 10 am April 27)
I can affirm that the rice fever on the domestic market will be stamped out in some days, when rice export companies sell rice to the market. The Southern Food Corporation said that on April 27 it began bringing rice to the HCM City market, and it will bring more rice after considering the market demand.
I have to say that we don’t lack rice, because the rice volume in stocks of VFA member companies proves to be relatively big. Some companies have reported they have 20-30,000 tonnes in stock after fulfilling export contracts.
Many rice exporters contacted us on April 27 after hearing of the short supply of rice on the domestic market, pledging to provide rice immediately to the localities that have demand. Kien Giang and An Giang-based companies say they can provide tens of thousands of tonnes of rice right now.
Why has the supply shortage been occurring while rice companies, as you have said, still have much rice in stocks?
It originated with unfounded rumours and information, as well as speculation.
A lot of businesses, which have been specialising in some farm produce like pepper or cashew nuts, and enterprises, which have been operating in the real estate sector, have also jumped into rice trading recently, because they think the job can bring high profit. Meanwhile, husking workshops and private rice suppliers have been storing rice for speculation.
Do you think that the high volume of exports in the last time have led to the price increases on the domestic market?
To date, Vietnamese enterprises have signed contracts to export over 2.2mil tonnes of rice, and have delivered 1.1mil tonnes, both of which figures are lower than those of the same period last year. Therefore, it is illogical to say that exports have badly affected the domestic supplies. Moreover, rice exporters now have a big inventory volume of 1.1mil tonnes.
Vietnam plans to export 3.5-4mil tonnes or rice in 2008. Do you think that the domestic market will face a rice shortage by the end of the year with the exports?
I can say for sure that a rice shortage will never occur. Cuu Long River Delta had a bountiful winter-spring crop with the total output of 9.4-9.6mil tonnes. Meanwhile, the region is expected to harvest 7.3-7.5mil tonnes this summer-autumn crop. The total output of the two crops alone is 16.5-17mil tonnes, equal to 8.5-9mil tonnes of rice. If Vietnam exports 3.5-4mil tonnes of rice, the volume of rice left will still be very big.
The Cuu Long River Delta will begin harvesting the summer-autumn crop in early June. Meanwhile, Thailand will also harvest at the same time (the country has the inventory level of 4mil tonnes). It is likely that the rice price on the world’s market will decrease. It would be risky to speculate rice at this moment.
Trang Hieu Dung, Head of the Planning Department under the Ministry of Agriculture and Rural Development (MARD)
We cannot see any abnormal thing in the rice supply and demand. Vietnam absolutely is not lacking rice. The government and MARD anticipated the rice shortage in the world’s market and thought of long-term measures to stabilise the market. The government has ordered businesses to not sign new contracts in order to ensure domestic food security and prevent food prices from rising.
Prof Dr Vo Tong Xuan, Rice Expert
When the rice price began increasing, speculators began buying rice in large quantities for speculation, which has led to the ‘virtual’ rice shortage. Urban local residents rush to buy rice for fear that rice is in serious shortage.
The thing that the government can do now is release an order to prohibit speculation. Local authorities well know how many hectares of rice fields their localities have and how many tonnes of rice their farmers will get. Individuals and enterprises who are found speculating rice will be heavily punished.
Moreover, the state should resume rice exports in order to help reduce speculation and stabilise domestic prices.
HCM City authorities: the city will not lack rice
Deputy Mayor of HCM City Nguyen Thi Hong on April 27 in the afternoon said that some 2,000 tonnes of rice were being marketed through the city’s distribution network.
On the same day, Nguyen Ngoc Hoa, General Director of Saigon Co-op, said that after the urgent meeting with the HCM City’s People’s Committee, the HCM City Food and Foodstuff Company and Vinh Phat Company agreed to provide 2,000 tonnes of rice to Saigon Co-op, so that the Co-op chain could maintain the distribution of rice to local residents.
On April 27 in the afternoon, a member of the Southern Food Corporation brought 50 tonnes of rice to HCM City to deliver to Co-op Mart.
VietNamNet Bridge – Rice trading companies are bringing rice to HCM City in an effort to stamp out the rice price fever, according to Nguyen Thi Nguyet, Secretary General of the Vietnam Food Association (VFA).
Rushing to buy rice, prices skyrocketing
Food supplies sufficient for both consumption and export, assures PM
The rice price has doubled in the last few days, now staying firmly at the highest-ever peak in history. Do you think the high prices will last for a long time?
Scrambling to buy rice at a rice shop on To Hien Thanh street in HCM City (Photo taken at 10 am April 27)
I can affirm that the rice fever on the domestic market will be stamped out in some days, when rice export companies sell rice to the market. The Southern Food Corporation said that on April 27 it began bringing rice to the HCM City market, and it will bring more rice after considering the market demand.
I have to say that we don’t lack rice, because the rice volume in stocks of VFA member companies proves to be relatively big. Some companies have reported they have 20-30,000 tonnes in stock after fulfilling export contracts.
Many rice exporters contacted us on April 27 after hearing of the short supply of rice on the domestic market, pledging to provide rice immediately to the localities that have demand. Kien Giang and An Giang-based companies say they can provide tens of thousands of tonnes of rice right now.
Why has the supply shortage been occurring while rice companies, as you have said, still have much rice in stocks?
It originated with unfounded rumours and information, as well as speculation.
A lot of businesses, which have been specialising in some farm produce like pepper or cashew nuts, and enterprises, which have been operating in the real estate sector, have also jumped into rice trading recently, because they think the job can bring high profit. Meanwhile, husking workshops and private rice suppliers have been storing rice for speculation.
Do you think that the high volume of exports in the last time have led to the price increases on the domestic market?
To date, Vietnamese enterprises have signed contracts to export over 2.2mil tonnes of rice, and have delivered 1.1mil tonnes, both of which figures are lower than those of the same period last year. Therefore, it is illogical to say that exports have badly affected the domestic supplies. Moreover, rice exporters now have a big inventory volume of 1.1mil tonnes.
Vietnam plans to export 3.5-4mil tonnes or rice in 2008. Do you think that the domestic market will face a rice shortage by the end of the year with the exports?
I can say for sure that a rice shortage will never occur. Cuu Long River Delta had a bountiful winter-spring crop with the total output of 9.4-9.6mil tonnes. Meanwhile, the region is expected to harvest 7.3-7.5mil tonnes this summer-autumn crop. The total output of the two crops alone is 16.5-17mil tonnes, equal to 8.5-9mil tonnes of rice. If Vietnam exports 3.5-4mil tonnes of rice, the volume of rice left will still be very big.
The Cuu Long River Delta will begin harvesting the summer-autumn crop in early June. Meanwhile, Thailand will also harvest at the same time (the country has the inventory level of 4mil tonnes). It is likely that the rice price on the world’s market will decrease. It would be risky to speculate rice at this moment.
Trang Hieu Dung, Head of the Planning Department under the Ministry of Agriculture and Rural Development (MARD)
We cannot see any abnormal thing in the rice supply and demand. Vietnam absolutely is not lacking rice. The government and MARD anticipated the rice shortage in the world’s market and thought of long-term measures to stabilise the market. The government has ordered businesses to not sign new contracts in order to ensure domestic food security and prevent food prices from rising.
Prof Dr Vo Tong Xuan, Rice Expert
When the rice price began increasing, speculators began buying rice in large quantities for speculation, which has led to the ‘virtual’ rice shortage. Urban local residents rush to buy rice for fear that rice is in serious shortage.
The thing that the government can do now is release an order to prohibit speculation. Local authorities well know how many hectares of rice fields their localities have and how many tonnes of rice their farmers will get. Individuals and enterprises who are found speculating rice will be heavily punished.
Moreover, the state should resume rice exports in order to help reduce speculation and stabilise domestic prices.
HCM City authorities: the city will not lack rice
Deputy Mayor of HCM City Nguyen Thi Hong on April 27 in the afternoon said that some 2,000 tonnes of rice were being marketed through the city’s distribution network.
On the same day, Nguyen Ngoc Hoa, General Director of Saigon Co-op, said that after the urgent meeting with the HCM City’s People’s Committee, the HCM City Food and Foodstuff Company and Vinh Phat Company agreed to provide 2,000 tonnes of rice to Saigon Co-op, so that the Co-op chain could maintain the distribution of rice to local residents.
On April 27 in the afternoon, a member of the Southern Food Corporation brought 50 tonnes of rice to HCM City to deliver to Co-op Mart.
Banks not allowed to offer promotion programmes?
18:13' 28/04/2008 (GMT+7)
VietNamNet Bridge – The Ministry of Industry and Trade and the State Bank of Vietnam have agreed not to grant more licences to commercial banks to carry out promotion programmes at this moment, in order to protect the current ceiling interest rate, according to Secretary General of the Vietnam Banking Association Duong Thu Huong.
Stopping promotion programmes to maintain ceiling interest rate
Huong said that banks can continue the promotion programmes for which they got licences before. However, they will not be able to launch other promotion programmes in order to attract capital.
Promotion programmes have been used by banks as an effective tool to call for more capital from the public, especially as they are ordered not to offer deposit interest rates higher than 11% per annum. Banks have been trying to dodge the regulations by offering attractive gifts or bonus interest rates to clients, which have made actual deposit interest rates higher than 11% per annum.
However, the State Bank of Vietnam and VNBA, who believe that high deposit interest rates will harm the national economy at this moment, have decided that promotion programmes should not continue.
Depositors want promotion programmes
Nguyen Thi Minh, a retired woman in district 3 in HCM City, said that with the interest rates offered by commercial banks all the same, the thing that helps her make a decision about which bank to deposit money in are promotion programmes, which means that promotion programme show the competitiveness of banks at this moment.
A recent survey made by a big joint stock bank shows that attractive promotion programmes can sway up to 50% of depositors, especially clients between the ages of 35-60.
That explains why the decision to stop licencing promotion programmes has been facing strong opposition from banks.
Stopping licencing promotion programmes? It’s illegal!
According to experts, VNBA setting the 11% ceiling interest rate proves to come contrary to the Competition Law, and may cause depositors losses.
If VNBA and the Ministry of Industry and Trade plan to stop licencing promotion programmes, they will, once again, be violating the rules of market liberalisation. The experts say that the two organs should think through the legal considerations before stopping licencing promotion programmes.
Lawyer Nguyen Van Hau, Head of the Information and Propaganda Division under the HCM City Bar Association, said that the State Bank of Vietnam and the Vietnam Trade Promotion Agency would violate laws if they stopped licencing promotion programmes.
Promotion activities are considered legal activities under the Commercial Law. Competent agencies only have the right to prohibit promotion programmes if promotion programmes runners violate current regulations. If the prohibition by state management agencies can cause losses to enterprises, they can initiate legal proceedings against the agencies.
VietNamNet Bridge – The Ministry of Industry and Trade and the State Bank of Vietnam have agreed not to grant more licences to commercial banks to carry out promotion programmes at this moment, in order to protect the current ceiling interest rate, according to Secretary General of the Vietnam Banking Association Duong Thu Huong.
Stopping promotion programmes to maintain ceiling interest rate
Huong said that banks can continue the promotion programmes for which they got licences before. However, they will not be able to launch other promotion programmes in order to attract capital.
Promotion programmes have been used by banks as an effective tool to call for more capital from the public, especially as they are ordered not to offer deposit interest rates higher than 11% per annum. Banks have been trying to dodge the regulations by offering attractive gifts or bonus interest rates to clients, which have made actual deposit interest rates higher than 11% per annum.
However, the State Bank of Vietnam and VNBA, who believe that high deposit interest rates will harm the national economy at this moment, have decided that promotion programmes should not continue.
Depositors want promotion programmes
Nguyen Thi Minh, a retired woman in district 3 in HCM City, said that with the interest rates offered by commercial banks all the same, the thing that helps her make a decision about which bank to deposit money in are promotion programmes, which means that promotion programme show the competitiveness of banks at this moment.
A recent survey made by a big joint stock bank shows that attractive promotion programmes can sway up to 50% of depositors, especially clients between the ages of 35-60.
That explains why the decision to stop licencing promotion programmes has been facing strong opposition from banks.
Stopping licencing promotion programmes? It’s illegal!
According to experts, VNBA setting the 11% ceiling interest rate proves to come contrary to the Competition Law, and may cause depositors losses.
If VNBA and the Ministry of Industry and Trade plan to stop licencing promotion programmes, they will, once again, be violating the rules of market liberalisation. The experts say that the two organs should think through the legal considerations before stopping licencing promotion programmes.
Lawyer Nguyen Van Hau, Head of the Information and Propaganda Division under the HCM City Bar Association, said that the State Bank of Vietnam and the Vietnam Trade Promotion Agency would violate laws if they stopped licencing promotion programmes.
Promotion activities are considered legal activities under the Commercial Law. Competent agencies only have the right to prohibit promotion programmes if promotion programmes runners violate current regulations. If the prohibition by state management agencies can cause losses to enterprises, they can initiate legal proceedings against the agencies.
Sunday, 27 April 2008
Ministry keen to make southern economic zone a business hub
07:31' 27/04/2008 (GMT+7)
VietNamNet Bridge - A zoning plan submitted by the Ministry of Construction to Prime Minister Nguyen Tan Dung envisages developing the southern key economic zone into a gateway for international trade and a national and regional business hub.
A corner in the center of Ho Chi Minh City
The zone includes Ho Chi Minh City and the seven neighboring provinces of Binh Duong, Binh Phuoc, Tay Ninh, Long An, Dong Nai, Ba Ria – Vung Tau and Tien Giang, and measures 30,404 square kilometers.
The plan earmarks zones for shopping malls and other commercial facilities within a 30km radius of the hub’s center.
It also proposes building two belt roads around the zone’s center to link different areas, and expressways linking HCM City - Trung Luong - Can Tho; HCMC - Moc Bai; HCMC - Long Thanh - Dau Giay - Da Lat; and HCMC - Bien Hoa - Vung Tau.
The ministry has also recommended setting up an agency in charge of developing the southern key economic zone, and urged HCMC and the provinces to review their urban plans to ensure they dovetailed with the zoning plan.
The zone is expected to have a population of 20--22 million by 2020, with 16–17 million living in urban areas.
In 2050 the urbanization rate is likely to rise to 90 percent, and the total population to 30 million.
VietNamNet Bridge - A zoning plan submitted by the Ministry of Construction to Prime Minister Nguyen Tan Dung envisages developing the southern key economic zone into a gateway for international trade and a national and regional business hub.
A corner in the center of Ho Chi Minh City
The zone includes Ho Chi Minh City and the seven neighboring provinces of Binh Duong, Binh Phuoc, Tay Ninh, Long An, Dong Nai, Ba Ria – Vung Tau and Tien Giang, and measures 30,404 square kilometers.
The plan earmarks zones for shopping malls and other commercial facilities within a 30km radius of the hub’s center.
It also proposes building two belt roads around the zone’s center to link different areas, and expressways linking HCM City - Trung Luong - Can Tho; HCMC - Moc Bai; HCMC - Long Thanh - Dau Giay - Da Lat; and HCMC - Bien Hoa - Vung Tau.
The ministry has also recommended setting up an agency in charge of developing the southern key economic zone, and urged HCMC and the provinces to review their urban plans to ensure they dovetailed with the zoning plan.
The zone is expected to have a population of 20--22 million by 2020, with 16–17 million living in urban areas.
In 2050 the urbanization rate is likely to rise to 90 percent, and the total population to 30 million.
Temporary halt on rice exports until end of June
10:23' 27/04/2008 (GMT+7)
VietNamNet Bridge - Despite high rice export prices and the Mekong delta experiencing a bumper winter-spring rice crop with more than 9.3 million tonnes of rice, the Ministry of Industry and Trade (MoIT) will temporarily halt rice exports until the end of June.
MoIT Deputy Minister Nguyen Thanh Bien said enterprises nationwide have so far this year exported more than 1 million tonnes of rice for almost 403 million USD. The average rice export price was 400 USD per tonne, accounting for 57 percent of the current price.
However, the deputy minister says postponing rice exports until the end of June is an export management measure to reduce quantity and increase value while ensuring national food security and the State’s interest.
Deputy Minister Bien forecasted that world rice prices will continue rising from now until 2010, saying Vietnam recently made a record rice export price to the Philippines at 1,200 USD per tonne. He predicted the price may hit 1,500 USD per tonne next month.
To ensure the interest of export businesses and farmers, the government has instructed banks to provide financial assistance to businesses to buy rice for storage.The measure is expected to keep unprocessed rice prices at 4,550 VND per kilo and processed rice prices at between 8,300-8,500 VND per kilo.
VietNamNet Bridge - Despite high rice export prices and the Mekong delta experiencing a bumper winter-spring rice crop with more than 9.3 million tonnes of rice, the Ministry of Industry and Trade (MoIT) will temporarily halt rice exports until the end of June.
MoIT Deputy Minister Nguyen Thanh Bien said enterprises nationwide have so far this year exported more than 1 million tonnes of rice for almost 403 million USD. The average rice export price was 400 USD per tonne, accounting for 57 percent of the current price.
However, the deputy minister says postponing rice exports until the end of June is an export management measure to reduce quantity and increase value while ensuring national food security and the State’s interest.
Deputy Minister Bien forecasted that world rice prices will continue rising from now until 2010, saying Vietnam recently made a record rice export price to the Philippines at 1,200 USD per tonne. He predicted the price may hit 1,500 USD per tonne next month.
To ensure the interest of export businesses and farmers, the government has instructed banks to provide financial assistance to businesses to buy rice for storage.The measure is expected to keep unprocessed rice prices at 4,550 VND per kilo and processed rice prices at between 8,300-8,500 VND per kilo.
Friday, 25 April 2008
Diverse investment to up EVN’s role
22:57' 25/04/2008 (GMT+7)
VietNamNet Bridge – Electricity of Viet Nam (EVN)’s investment in other industries outside the electricity sector is aimed at compensating for a shortage of financial sources for electricity investment, said Dao Van Hung, Head of EVN’s management board.
He made the comments following criticism of EVN’s operations as a monopoly and its expansion to areas outside the electricity sector.
Hung was referring to EVN’s investment in telecommunications and banking, while the corporation was assigned by the Government as the key electricity investor and supplier in Vietnam.
"Corporations have to implement the State’s socio-economic development strategy," said Hung.
"In the current context of a high inflation rate, the Government asked that the prices of essential goods does not increase, and this has led to an imbalance in our expenditure and revenue, especially after input material costs increased.
"To compensate for this imbalance, corporations have to do business in other industries which are allowed to and earn high profits such as banking and real estate."
Hung affirmed that EVN has not invested more than 2% of its total charter capital in other industries, and that the legality and prospect for profits were carefully considered for any investment.
EVN’s investment in other industries has been questioned, as while the corporation invests in outside sectors, they also claim to lack enough capital for major investment in new electricity sources, such as new power plants.
Experts and economists have argued against EVN’s monopoly as the role of single buyer and single seller of electricity.
EVN currently has a monopoly in all four parts of the nation’s electricity sectors, including electricity generation, transmission, distribution and regulation.
Senior economist Le Dang Doanh argued that currently, there’s no effective way for people to calculate EVN’s production cost for one KW/h.
Doanh urged for the establishment of a monopoly supervision organisation, which ensures for transparent operation of monopoly corporations.
While considering the corporations’ multi-industry investment as normal, Doanh urged for EVN to only invest in outside projects after they were more effectively carrying out their primary role.
"EVN was established to be responsible for the nation’s electricity generation and distribution but not to invest in other industries," said Doanh.
"The Government and National Assembly have to push EVN to report on the effectiveness of their investment in terms of playing their main role."
Serious electricity shortages during the past months were also attributed to the slow progress on completing several electricity generation plants, including Ca Mau and Uong Bi thermo-electricity.
"Someone must be responsible for the slow progress on completing the plants," said Doanh.
"Why do people complain about late trains and late buses but there’s no criticism for late electricity?"
EVN deputy general director Dinh Quang Tri said that although EVN, the major investors of these projects, will treat violations according to the contracts, it’s necessary to have co-operation between investors and bidders to tackle problems related to completing the work on time.
"I think it doesn’t help to mete out punishment when the project is being carried out as the most important target is the fast completion of the project," said Tri.
Nguyen Quang A, Head of the Institute for Development Research said that electricity shortages and lack of proper investment could only be solved after the monopoly is broken.
Tran Viet Ngai, President of Viet Nam Energy Investment Association and former EVN General Director said he had put forward proposals on how to tackle the EVN monopoly issue to the Government many times.
"In my opinion, it’s urgent to establish an independent corporation responsible for electricity transmission," said Ngai.
"The regulator must be completely assigned to the Ministry of Trade and Industry’s Electricity Regulatory Authority of Vietnam."
The issue of EVN’s shortage in electricity supply has become more pressing than ever as there have been many blackouts in both households and production sectors during the past weeks. EVN even predicted a more serious shortage in the coming months.
VietNamNet Bridge – Electricity of Viet Nam (EVN)’s investment in other industries outside the electricity sector is aimed at compensating for a shortage of financial sources for electricity investment, said Dao Van Hung, Head of EVN’s management board.
He made the comments following criticism of EVN’s operations as a monopoly and its expansion to areas outside the electricity sector.
Hung was referring to EVN’s investment in telecommunications and banking, while the corporation was assigned by the Government as the key electricity investor and supplier in Vietnam.
"Corporations have to implement the State’s socio-economic development strategy," said Hung.
"In the current context of a high inflation rate, the Government asked that the prices of essential goods does not increase, and this has led to an imbalance in our expenditure and revenue, especially after input material costs increased.
"To compensate for this imbalance, corporations have to do business in other industries which are allowed to and earn high profits such as banking and real estate."
Hung affirmed that EVN has not invested more than 2% of its total charter capital in other industries, and that the legality and prospect for profits were carefully considered for any investment.
EVN’s investment in other industries has been questioned, as while the corporation invests in outside sectors, they also claim to lack enough capital for major investment in new electricity sources, such as new power plants.
Experts and economists have argued against EVN’s monopoly as the role of single buyer and single seller of electricity.
EVN currently has a monopoly in all four parts of the nation’s electricity sectors, including electricity generation, transmission, distribution and regulation.
Senior economist Le Dang Doanh argued that currently, there’s no effective way for people to calculate EVN’s production cost for one KW/h.
Doanh urged for the establishment of a monopoly supervision organisation, which ensures for transparent operation of monopoly corporations.
While considering the corporations’ multi-industry investment as normal, Doanh urged for EVN to only invest in outside projects after they were more effectively carrying out their primary role.
"EVN was established to be responsible for the nation’s electricity generation and distribution but not to invest in other industries," said Doanh.
"The Government and National Assembly have to push EVN to report on the effectiveness of their investment in terms of playing their main role."
Serious electricity shortages during the past months were also attributed to the slow progress on completing several electricity generation plants, including Ca Mau and Uong Bi thermo-electricity.
"Someone must be responsible for the slow progress on completing the plants," said Doanh.
"Why do people complain about late trains and late buses but there’s no criticism for late electricity?"
EVN deputy general director Dinh Quang Tri said that although EVN, the major investors of these projects, will treat violations according to the contracts, it’s necessary to have co-operation between investors and bidders to tackle problems related to completing the work on time.
"I think it doesn’t help to mete out punishment when the project is being carried out as the most important target is the fast completion of the project," said Tri.
Nguyen Quang A, Head of the Institute for Development Research said that electricity shortages and lack of proper investment could only be solved after the monopoly is broken.
Tran Viet Ngai, President of Viet Nam Energy Investment Association and former EVN General Director said he had put forward proposals on how to tackle the EVN monopoly issue to the Government many times.
"In my opinion, it’s urgent to establish an independent corporation responsible for electricity transmission," said Ngai.
"The regulator must be completely assigned to the Ministry of Trade and Industry’s Electricity Regulatory Authority of Vietnam."
The issue of EVN’s shortage in electricity supply has become more pressing than ever as there have been many blackouts in both households and production sectors during the past weeks. EVN even predicted a more serious shortage in the coming months.
Market falls, companies cancel listing plans
17:12' 25/04/2008 (GMT+7)
VietNamNet Bridge – The prolonged falls of the stock market have made many companies shrink. They are considering cancelling or delaying their listing plans.
One of the topics of discussion at the shareholders’ meeting of a bank in Hanoi recently was the listing of the bank at the Hanoi Securities Trading Centre (HASTC).
Many shareholders asked if the share issuance would make the situation worse, since share prices have been decreasing dramatically since the beginning of the year.
Though the bank has fulfilled the procedures for listing at HASTC, its management and supervision board still worry about the feasibility of the plan as the market now shows unfavourable conditions.
The bank’s shareholders had two different viewpoints. Some of them, fearing that share prices will drop further, which will make their assets smaller, did not advocate the listing plan. Meanwhile, some others said that the listing will help improve the liquidity of shares, and those who want to give up investments, can easily sell shares on the bourse. The bank is planning to raise its chartered capital to VND4tril, double the current level.
The leader of the bank, contacted by reporters, declined to answer the question about his viewpoint on the listing plan, saying that this is really a very sensitive issue at this moment.
The same situation is being faced by two other banks in Hanoi. Sources say that one of the two has even decided to withdraw its application for listing on the bourse even though it has fulfilled all necessary procedures and all it has to do now is wait for an official licence.
Nguyen Son, Head of the Market Development Division under the State Securities Commission, said that businesses have the right to decide whether to list or not. However, he stressed that listing on the bourse means bringing shares of businesses into transactions on the market, while the companies’ business will not see any changes (chartered capital, volume of shares…).
Son has reminded companies that share liquidity will be improved if the shares can be transacted on the official market. Moreover, transparent information will create favourable conditions for more investors to access and buy shares of the company.
SSC has only advised companies to delay their plans to issue more shares to raise capital, while it does not think that companies have to delay their listing plans due to the market’s falls.
Meanwhile, according to General Director of Bao Viet Securities Nguyen Quang Vinh, the companies consulting Bao Viet are still ready for listing.
“It is quite a wrong viewpoint that companies should only list on the bourse when the market is hot,” Vinh said, adding that the companies which can meet the requirements for listing should still follow their listing plan.
Nguyen Van Dung, General Director of Tan Viet Securities Company, also said that the listing will not much affect companies’ business. Share prices are decreasing not because companies list or don’t list on the bourse.
Dung has reminded the companies which have decided to cancel their listing plans that share liquidity is a very important thing.
“It would be very dangerous if your shares cannot be sold or purchased. Investors will also not have opportunities to sell shares to get money to invest in other fields,” he said.
He added that the companies that got licences already but still hesitate to list will have their licences revoked. If so, they will have to follow the procedures again later when they change their minds, and it will take time.
VietNamNet Bridge – The prolonged falls of the stock market have made many companies shrink. They are considering cancelling or delaying their listing plans.
One of the topics of discussion at the shareholders’ meeting of a bank in Hanoi recently was the listing of the bank at the Hanoi Securities Trading Centre (HASTC).
Many shareholders asked if the share issuance would make the situation worse, since share prices have been decreasing dramatically since the beginning of the year.
Though the bank has fulfilled the procedures for listing at HASTC, its management and supervision board still worry about the feasibility of the plan as the market now shows unfavourable conditions.
The bank’s shareholders had two different viewpoints. Some of them, fearing that share prices will drop further, which will make their assets smaller, did not advocate the listing plan. Meanwhile, some others said that the listing will help improve the liquidity of shares, and those who want to give up investments, can easily sell shares on the bourse. The bank is planning to raise its chartered capital to VND4tril, double the current level.
The leader of the bank, contacted by reporters, declined to answer the question about his viewpoint on the listing plan, saying that this is really a very sensitive issue at this moment.
The same situation is being faced by two other banks in Hanoi. Sources say that one of the two has even decided to withdraw its application for listing on the bourse even though it has fulfilled all necessary procedures and all it has to do now is wait for an official licence.
Nguyen Son, Head of the Market Development Division under the State Securities Commission, said that businesses have the right to decide whether to list or not. However, he stressed that listing on the bourse means bringing shares of businesses into transactions on the market, while the companies’ business will not see any changes (chartered capital, volume of shares…).
Son has reminded companies that share liquidity will be improved if the shares can be transacted on the official market. Moreover, transparent information will create favourable conditions for more investors to access and buy shares of the company.
SSC has only advised companies to delay their plans to issue more shares to raise capital, while it does not think that companies have to delay their listing plans due to the market’s falls.
Meanwhile, according to General Director of Bao Viet Securities Nguyen Quang Vinh, the companies consulting Bao Viet are still ready for listing.
“It is quite a wrong viewpoint that companies should only list on the bourse when the market is hot,” Vinh said, adding that the companies which can meet the requirements for listing should still follow their listing plan.
Nguyen Van Dung, General Director of Tan Viet Securities Company, also said that the listing will not much affect companies’ business. Share prices are decreasing not because companies list or don’t list on the bourse.
Dung has reminded the companies which have decided to cancel their listing plans that share liquidity is a very important thing.
“It would be very dangerous if your shares cannot be sold or purchased. Investors will also not have opportunities to sell shares to get money to invest in other fields,” he said.
He added that the companies that got licences already but still hesitate to list will have their licences revoked. If so, they will have to follow the procedures again later when they change their minds, and it will take time.
Economic groups must not deviate from main business fields
16:57' 25/04/2008 (GMT+7)
VietNamNet Bridge – Replying to criticism from the public that economic groups and general corporations have been making heavy investments in non-forte business fields, the enterprises insist that they need to get short-term profit from the investments to serve long-term business.
Many thousands of billion dong at risk
Vinashin had 43 more subsidiaries in 2007
Pham Thanh Binh, Chairman of the Vietnam Shipbuilding Industry Group (Vinashin), said that Vinashin’s outward investments are ‘not worth mentioning’.
“Vinashin has never thought of making investments in real estate. We have only been building some welfare construction works, like turning guest houses into hotels,” Binh said.
Binh admitted that since 1997, Vinashin has added 43 subsidiaries and 11 associated and joint venture companies. However, he affirmed that Vinashin has not injected any VND in the companies, while it only made capital contributions with its brand name.
“95% of our strength, or VND47tril, has gone into our business field, shipbuilding,” Binh affirmed.
Explaining why Vinashin needs to make investments in non-shipbuilding fields, Binh said that shipbuilding requires long-term investment, which takes a long time to recover capital. Vinashin needs to earn profit from short-term investment deals to serve its long-term business strategy.
Answering VietNamNet’s question about the information that the government has asked the Ministry of Transport to examine the efficiency of $750mil worth of international bonds, Binh said that investment efficiency won’t be able to be measured for 10 more years.
Binh has warned that if the government stops allotting capital to economic groups, unimaginable consequences will follow.
“We have to borrow money from banks at high commercial interest rates. We have been seeking permission to issue bonds for the last six months, but the plan has not been approved,” Binh complained.
However, Deputy Prime Minister Nguyen Sinh Hung has denied the opinion that the government has stopped allocating capital to economic groups and general corporations. “The government won’t let economic groups’ and corporations’ operations stagnate due to lack of capital,” he stated.
Chairman of the Vietnam Textile and Garment Group (Vinatex) Le Van An also said that the group has been trying to find the most suitable investment portfolio. 85% of its strength has gone into its main business field, garments and textiles, while the other 15% has been reserved for the group’s financial company, for making capital contributions to banks, securities companies, and five industrial zones.
Meanwhile, General Director of the Electricity of Vietnam Dao Van Hung said that the government should allow economic groups and general corporations to make investments in other fields if the investments prove to be feasible in order to help them seek profit. Hung said that EVN operations serves public interest, and the group has been facing a lot of difficulties as it has been ordered to maintain the current electricity prices in order to help curb inflation.
Dinh La Thang, Chairman of PetroVietnam, talked to the press about the multi-field business of economic groups and corporations:
How many companies and how many non-oil and gas projects has PetroVietnam injected money in?
We now have over 10 subsidiaries, mostly corporations, including electricity-petroleum, tourism and finance companies.
We have also injected money in real estate and securities sectors, but we just hold low percentages of stakes: 11% in real estate and 30% in media. Investment in electricity should not be seen as outward investment because this is the gas-run power plant
We have been seeking permission to make capital contributions to the establishment of a bank, but we still cannot get the nod.
The investments in other business fields of PetroVietnam prove to be very low, at some 3% of total investments.
You may hear that a lot of enterprises now inject money in real estate and banking to seek fast profit. What would you say about this?
I absolutely agree that enterprises should not deviate from their main business fields.
Regarding the suitable proportions of their investments in other business fields, I think the proportions vary, depending on different groups. The most important thing is that the investments must bring profit. Malaysia’s Petronas, as far as I know, has 50% of its turnover coming from non-oil and gas sectors (real estate, banking and securities). It jumps in all projects it thinks it can get profit from.
Petronas would be a good model for PetroVietnam to follow. PetroVietnam hopes to catch up with Petronas in turnover by 2015. Last year, PetroVietnam got the turnover of $14bil, while Petronas, $52bil. However, by 2015, the situation will be different as Dung Quat, Nghi Son and Long Son oil refineries will be operational by that time, and will bring very high turnover.
VietNamNet Bridge – Replying to criticism from the public that economic groups and general corporations have been making heavy investments in non-forte business fields, the enterprises insist that they need to get short-term profit from the investments to serve long-term business.
Many thousands of billion dong at risk
Vinashin had 43 more subsidiaries in 2007
Pham Thanh Binh, Chairman of the Vietnam Shipbuilding Industry Group (Vinashin), said that Vinashin’s outward investments are ‘not worth mentioning’.
“Vinashin has never thought of making investments in real estate. We have only been building some welfare construction works, like turning guest houses into hotels,” Binh said.
Binh admitted that since 1997, Vinashin has added 43 subsidiaries and 11 associated and joint venture companies. However, he affirmed that Vinashin has not injected any VND in the companies, while it only made capital contributions with its brand name.
“95% of our strength, or VND47tril, has gone into our business field, shipbuilding,” Binh affirmed.
Explaining why Vinashin needs to make investments in non-shipbuilding fields, Binh said that shipbuilding requires long-term investment, which takes a long time to recover capital. Vinashin needs to earn profit from short-term investment deals to serve its long-term business strategy.
Answering VietNamNet’s question about the information that the government has asked the Ministry of Transport to examine the efficiency of $750mil worth of international bonds, Binh said that investment efficiency won’t be able to be measured for 10 more years.
Binh has warned that if the government stops allotting capital to economic groups, unimaginable consequences will follow.
“We have to borrow money from banks at high commercial interest rates. We have been seeking permission to issue bonds for the last six months, but the plan has not been approved,” Binh complained.
However, Deputy Prime Minister Nguyen Sinh Hung has denied the opinion that the government has stopped allocating capital to economic groups and general corporations. “The government won’t let economic groups’ and corporations’ operations stagnate due to lack of capital,” he stated.
Chairman of the Vietnam Textile and Garment Group (Vinatex) Le Van An also said that the group has been trying to find the most suitable investment portfolio. 85% of its strength has gone into its main business field, garments and textiles, while the other 15% has been reserved for the group’s financial company, for making capital contributions to banks, securities companies, and five industrial zones.
Meanwhile, General Director of the Electricity of Vietnam Dao Van Hung said that the government should allow economic groups and general corporations to make investments in other fields if the investments prove to be feasible in order to help them seek profit. Hung said that EVN operations serves public interest, and the group has been facing a lot of difficulties as it has been ordered to maintain the current electricity prices in order to help curb inflation.
Dinh La Thang, Chairman of PetroVietnam, talked to the press about the multi-field business of economic groups and corporations:
How many companies and how many non-oil and gas projects has PetroVietnam injected money in?
We now have over 10 subsidiaries, mostly corporations, including electricity-petroleum, tourism and finance companies.
We have also injected money in real estate and securities sectors, but we just hold low percentages of stakes: 11% in real estate and 30% in media. Investment in electricity should not be seen as outward investment because this is the gas-run power plant
We have been seeking permission to make capital contributions to the establishment of a bank, but we still cannot get the nod.
The investments in other business fields of PetroVietnam prove to be very low, at some 3% of total investments.
You may hear that a lot of enterprises now inject money in real estate and banking to seek fast profit. What would you say about this?
I absolutely agree that enterprises should not deviate from their main business fields.
Regarding the suitable proportions of their investments in other business fields, I think the proportions vary, depending on different groups. The most important thing is that the investments must bring profit. Malaysia’s Petronas, as far as I know, has 50% of its turnover coming from non-oil and gas sectors (real estate, banking and securities). It jumps in all projects it thinks it can get profit from.
Petronas would be a good model for PetroVietnam to follow. PetroVietnam hopes to catch up with Petronas in turnover by 2015. Last year, PetroVietnam got the turnover of $14bil, while Petronas, $52bil. However, by 2015, the situation will be different as Dung Quat, Nghi Son and Long Son oil refineries will be operational by that time, and will bring very high turnover.
Wednesday, 23 April 2008
Airport service rates stay the same, for now
16:52' 23/04/2008 (GMT+7)
VietNamNet Bridge – The plans by airports to raise airport fees have been facing strong opposition from airlines. As a result, airports have decided not to raise fees at this moment.
Monopoly exists, airport service fees gallop
The Central Region’s Airport Complex informed Vietnam Airlines and Pacific Airlines that it would apply new service fees as of April 1. Under the plan, nine services would have seen sharp increases of 2.5-10 times.
The fees for carrying passengers from landing areas to waiting rooms was expected to increase from VND450,000/trip to VND4.3mil, or by 9.5 times, while the fee for hiring luggage conveyor belt from 700,000/hour to VND1mil, and the fee for hiring a desk for check-in procedures from VND900,000 to VND5.8mil.
However, as airlines protested the new fee levels, Nguyen Van Lien, Deputy Chief Secretariat of the Central Region’s Airport Complex, said that the complex has temporarily shelved its plans to raise fees.
Lien said that airports will negotiate with clients and the agreements reached between the two sides will be submitted to the Civil Aviation Administration of Vietnam (CAAV) and the Ministry of Finance for final approval.
Nguyen Van Hong, Chief Accountant of the Northern Airport Complex, said that airports are intending to raise service fees they are providing for domestic and international airlines. However, Hong confirmed that the complex has just announced tentative increases; it has not applied new rates yet.
Hong said that airports cannot maintain the service fees which have been applied since 2000. Since that time, airfares have increased by many times (the airfare for Hanoi-Dien Bien flights has risen by 237%), while the prices of other commodities have also increased sharply (electricity by 200%, water 350-375%, and petrol 181%). Therefore, it would be fair to raise service fees.
He said that if airports maintain the current fee levels, they would incur heavy losses, while the state would also suffer as airports are all 100% state owned.
The fee increases will only make service fees equal for both domestic and international airlines. To date, the rates have been different, with domestic airlines enjoying preferences.
The discriminatory treatment proves to come contrary to WTO rules. In 2005, the government released Instruction No 22, stipulating that fees must be gradually adjusted to become equal for all airlines, no mater domestic or international.
However, Hong stressed that as per request of the government and the Ministry of Transport, airports will not apply the new rates until there are new rates agreed upon and approved by competent agencies.
VietNamNet Bridge – The plans by airports to raise airport fees have been facing strong opposition from airlines. As a result, airports have decided not to raise fees at this moment.
Monopoly exists, airport service fees gallop
The Central Region’s Airport Complex informed Vietnam Airlines and Pacific Airlines that it would apply new service fees as of April 1. Under the plan, nine services would have seen sharp increases of 2.5-10 times.
The fees for carrying passengers from landing areas to waiting rooms was expected to increase from VND450,000/trip to VND4.3mil, or by 9.5 times, while the fee for hiring luggage conveyor belt from 700,000/hour to VND1mil, and the fee for hiring a desk for check-in procedures from VND900,000 to VND5.8mil.
However, as airlines protested the new fee levels, Nguyen Van Lien, Deputy Chief Secretariat of the Central Region’s Airport Complex, said that the complex has temporarily shelved its plans to raise fees.
Lien said that airports will negotiate with clients and the agreements reached between the two sides will be submitted to the Civil Aviation Administration of Vietnam (CAAV) and the Ministry of Finance for final approval.
Nguyen Van Hong, Chief Accountant of the Northern Airport Complex, said that airports are intending to raise service fees they are providing for domestic and international airlines. However, Hong confirmed that the complex has just announced tentative increases; it has not applied new rates yet.
Hong said that airports cannot maintain the service fees which have been applied since 2000. Since that time, airfares have increased by many times (the airfare for Hanoi-Dien Bien flights has risen by 237%), while the prices of other commodities have also increased sharply (electricity by 200%, water 350-375%, and petrol 181%). Therefore, it would be fair to raise service fees.
He said that if airports maintain the current fee levels, they would incur heavy losses, while the state would also suffer as airports are all 100% state owned.
The fee increases will only make service fees equal for both domestic and international airlines. To date, the rates have been different, with domestic airlines enjoying preferences.
The discriminatory treatment proves to come contrary to WTO rules. In 2005, the government released Instruction No 22, stipulating that fees must be gradually adjusted to become equal for all airlines, no mater domestic or international.
However, Hong stressed that as per request of the government and the Ministry of Transport, airports will not apply the new rates until there are new rates agreed upon and approved by competent agencies.
Vung Tau expected to regain lost FDI lead
17:26' 23/04/2008 (GMT+7)
VietNamNet Bridge - After losing its number two spot in the country’s foreign direct investment (FDI) ranking last year, Ba Ria-Vung Tau province has regained the second position in the first quarter of this year and is expected to reach the pole position for all of 2008, said an official.
In Vung Tau
It ranked fifth in 2007, behind after Ho Chi Minh City , Hanoi , Dong Nai and Binh Duong provinces.
Only HCM City got more FDI in the first quarter of the year, said Le Kim Huong, director of the Ba Ria-Vung Tau Province Planning and Investment Department.
This quarter saw 14 new foreign-invested projects with a total registered capital of 2.12 billion USD, get their investment licenses in the southern coastal province.
So far this year, Vietnam has attracted 5.4 billion USD in FDI, a 31 percent increase over the same period last year, according to the Foreign Investment Department under the Ministry of Planning and Investment.
With its current second position in attracting FDI, Ba Ria-Vung Tau could well rank first by year’s end, as the province is expected to grant investment licences for a total of 18-20 foreign invested projects, Huong said. That would put its total registered capital for 2008 at 10 billion USD.
Among foreign-invested projects expected to be licensed this year are the 520-million-USD Cai Mep Port Project and the 1.3-million-USD Bau Trung Vung Tau Tourism Project.
Huong said the province has implemented several measures to attract FDI.
The province has recently streamlined its administrative procedures to attract FDI, Huong said. For example, a one-door policy in granting investment licences to investors is now in place. The province’s geographic location as a prime spot for beach tourism is also an asset to lure port-related foreign invested projects.
Ba Ria-Vung Tau has also implemented several new measures in tandem to attract FDI, such as offering incentive polices for FDI while developing its infrastructure. Provincial officials also solicited advice from consultants to make prompt adjustments to its FDI policies, Huong said.
VietNamNet Bridge - After losing its number two spot in the country’s foreign direct investment (FDI) ranking last year, Ba Ria-Vung Tau province has regained the second position in the first quarter of this year and is expected to reach the pole position for all of 2008, said an official.
In Vung Tau
It ranked fifth in 2007, behind after Ho Chi Minh City , Hanoi , Dong Nai and Binh Duong provinces.
Only HCM City got more FDI in the first quarter of the year, said Le Kim Huong, director of the Ba Ria-Vung Tau Province Planning and Investment Department.
This quarter saw 14 new foreign-invested projects with a total registered capital of 2.12 billion USD, get their investment licenses in the southern coastal province.
So far this year, Vietnam has attracted 5.4 billion USD in FDI, a 31 percent increase over the same period last year, according to the Foreign Investment Department under the Ministry of Planning and Investment.
With its current second position in attracting FDI, Ba Ria-Vung Tau could well rank first by year’s end, as the province is expected to grant investment licences for a total of 18-20 foreign invested projects, Huong said. That would put its total registered capital for 2008 at 10 billion USD.
Among foreign-invested projects expected to be licensed this year are the 520-million-USD Cai Mep Port Project and the 1.3-million-USD Bau Trung Vung Tau Tourism Project.
Huong said the province has implemented several measures to attract FDI.
The province has recently streamlined its administrative procedures to attract FDI, Huong said. For example, a one-door policy in granting investment licences to investors is now in place. The province’s geographic location as a prime spot for beach tourism is also an asset to lure port-related foreign invested projects.
Ba Ria-Vung Tau has also implemented several new measures in tandem to attract FDI, such as offering incentive polices for FDI while developing its infrastructure. Provincial officials also solicited advice from consultants to make prompt adjustments to its FDI policies, Huong said.
Seminar mulls sustainable urban development
17:23' 23/04/2008 (GMT+7)
VietNamNet Bridge - Domestic and foreign experts in urban development, architecture, housing, transport, finance and environment fields have convened in Hanoi on April 22 for a seminar on sustainable urban development.
The seminar initiated by the Construction Ministry is aimed to help Vietnam better deal with problems caused by the ongoing urbanisation process.
Foreign experts from the Republic of Korea and Australia spoke of their experiences in urban development, before the focus turned to how Vietnam should work towards sustainable development in the coming years.
Participants discussed and laid out targets and criteria on the issues of training personnel for urban management and development, urban economy and housing development, society development and opportunities for urban low-income people, infrastructure development, and environment quality improvement.
According to the Construction Ministry, the urbanisation process in Vietnam is developing so fast with differences between urban and rural areas growing quickly.
The ministry gave one example of disorderly development, that the country has about 200 industrial, export processing and border gate economic zones operational but 70 percent of them have not built and put into use their waste water treatment systems.
The infrastructure development has not kept pace with the economic development due to the fact that investment capital is dependent on the State budget or foreign aids, said the ministry. There were big challenges in large cities, such as lack of housing, traffic jams, epidemics, natural disaster and environmental pollution.
Harmony between socio-economic development and environment protection was necessary to obtain a sustainable development, said Deputy Minister of Construction Nguyen Van Lien.
The Government strategy on Vietnam’s sustainable development is a framework of directions for ministries, agencies and localities to implement, as well as Vietnam ’s commitment to the target, he said.
Under the instruction of the Prime Minister, the Ministry of Construction will build up a master plan for urban development by 2025.
VietNamNet Bridge - Domestic and foreign experts in urban development, architecture, housing, transport, finance and environment fields have convened in Hanoi on April 22 for a seminar on sustainable urban development.
The seminar initiated by the Construction Ministry is aimed to help Vietnam better deal with problems caused by the ongoing urbanisation process.
Foreign experts from the Republic of Korea and Australia spoke of their experiences in urban development, before the focus turned to how Vietnam should work towards sustainable development in the coming years.
Participants discussed and laid out targets and criteria on the issues of training personnel for urban management and development, urban economy and housing development, society development and opportunities for urban low-income people, infrastructure development, and environment quality improvement.
According to the Construction Ministry, the urbanisation process in Vietnam is developing so fast with differences between urban and rural areas growing quickly.
The ministry gave one example of disorderly development, that the country has about 200 industrial, export processing and border gate economic zones operational but 70 percent of them have not built and put into use their waste water treatment systems.
The infrastructure development has not kept pace with the economic development due to the fact that investment capital is dependent on the State budget or foreign aids, said the ministry. There were big challenges in large cities, such as lack of housing, traffic jams, epidemics, natural disaster and environmental pollution.
Harmony between socio-economic development and environment protection was necessary to obtain a sustainable development, said Deputy Minister of Construction Nguyen Van Lien.
The Government strategy on Vietnam’s sustainable development is a framework of directions for ministries, agencies and localities to implement, as well as Vietnam ’s commitment to the target, he said.
Under the instruction of the Prime Minister, the Ministry of Construction will build up a master plan for urban development by 2025.
Northern banks vote to maintain 11% ceiling interest rate
16:25' 23/04/2008 (GMT+7)
VietNamNet Bridge – Twenty-two of 23 banks, members of the Vietnam Banking Association (VNBA), promised to maintain the 11% ceiling interest rate, which has been applied since April 2, 2008, after four hours of arguing.
This was really a difficult decision by the banks as many of them have been facing low liquidity and finding it hard to mobilise capital.
Finally, banks decided to maintain the ceiling interest rate scheme, as the interest rate war in February 2008, in which interest rates escalated day by day, was a useful lesson.
The General Director of a Hanoi-based joint stock bank said that if the ceiling interest rate scheme is removed, the market will be chaotic as some banks may offer abnormally high interest rates of 15-16%.
A representative of a state owned bank said that if the ceiling interest rate scheme is removed, the banking system will have safety problems.
However, some bankers have expressed concerns that if they do not raise deposit interest rates they will not be able to mobilise capital. Meanwhile, they cannot borrow money in the interbank market due to high interest rates. A banker revealed that in the last few days, if a client deposited VND5bil and demanded the interest rate of 14% per annum, he had to accept the high rate.
Three solutions were put up for discussion: 1. Maintaining the agreed ceiling interest rate 2. Raising the ceiling interest rate to 12% as stipulated by Decision 02 by the State Bank of Vietnam (the 11% ceiling interest rate was the voluntary rate agreed upon by VNBA’s members) 3. Applying three different ceiling interest rates for three groups of banks (different in operation scale; the smaller banks could apply higher interest rates).
At first, many banks advocated the second solution, saying that the 11% interest rate is not high enough to attract depositors anymore. Therefore, it would be better to raise the ceiling interest rate by 1% in the immediate time and make adjustments later if necessary.
However, big banks (Vietinbank, Military Bank and Techcombank), said that the ceiling interest rate should be maintained in order to avoid chaos in the monetary market.
Finally, the majority of the banks at the meeting yesterday voted to maintain the ceiling interest rate of 11% after the Director of the Monetary Policy Department under the State Bank of Vietnam Nguyen Ngoc Bao made strong commitments to help banks improve their liquidity.
Bao said that the demand for selling valuable papers from commercial banks will be met by the State Bank through open market operations. Banks which do not have valuable papers but need support to improve liquidity will also get support from the State Bank, which will give specific solutions with required conditions. In all cases, banks must promise that they will only use the loans from the State Bank for ensuring liquidity, not for expanding credit.
Bao also said that his department will give necessary support provided that VNBA releases an official document to the State Bank, stating that its members need support.
VNBA will convene a similar meeting in the south on April 25. If the southern members agree with northern members, the notice about maintaining the 11% ceiling interest rate will be sent to all members on April 26. If not, northern members will have to gather again and re-discuss the issue.
VietNamNet Bridge – Twenty-two of 23 banks, members of the Vietnam Banking Association (VNBA), promised to maintain the 11% ceiling interest rate, which has been applied since April 2, 2008, after four hours of arguing.
This was really a difficult decision by the banks as many of them have been facing low liquidity and finding it hard to mobilise capital.
Finally, banks decided to maintain the ceiling interest rate scheme, as the interest rate war in February 2008, in which interest rates escalated day by day, was a useful lesson.
The General Director of a Hanoi-based joint stock bank said that if the ceiling interest rate scheme is removed, the market will be chaotic as some banks may offer abnormally high interest rates of 15-16%.
A representative of a state owned bank said that if the ceiling interest rate scheme is removed, the banking system will have safety problems.
However, some bankers have expressed concerns that if they do not raise deposit interest rates they will not be able to mobilise capital. Meanwhile, they cannot borrow money in the interbank market due to high interest rates. A banker revealed that in the last few days, if a client deposited VND5bil and demanded the interest rate of 14% per annum, he had to accept the high rate.
Three solutions were put up for discussion: 1. Maintaining the agreed ceiling interest rate 2. Raising the ceiling interest rate to 12% as stipulated by Decision 02 by the State Bank of Vietnam (the 11% ceiling interest rate was the voluntary rate agreed upon by VNBA’s members) 3. Applying three different ceiling interest rates for three groups of banks (different in operation scale; the smaller banks could apply higher interest rates).
At first, many banks advocated the second solution, saying that the 11% interest rate is not high enough to attract depositors anymore. Therefore, it would be better to raise the ceiling interest rate by 1% in the immediate time and make adjustments later if necessary.
However, big banks (Vietinbank, Military Bank and Techcombank), said that the ceiling interest rate should be maintained in order to avoid chaos in the monetary market.
Finally, the majority of the banks at the meeting yesterday voted to maintain the ceiling interest rate of 11% after the Director of the Monetary Policy Department under the State Bank of Vietnam Nguyen Ngoc Bao made strong commitments to help banks improve their liquidity.
Bao said that the demand for selling valuable papers from commercial banks will be met by the State Bank through open market operations. Banks which do not have valuable papers but need support to improve liquidity will also get support from the State Bank, which will give specific solutions with required conditions. In all cases, banks must promise that they will only use the loans from the State Bank for ensuring liquidity, not for expanding credit.
Bao also said that his department will give necessary support provided that VNBA releases an official document to the State Bank, stating that its members need support.
VNBA will convene a similar meeting in the south on April 25. If the southern members agree with northern members, the notice about maintaining the 11% ceiling interest rate will be sent to all members on April 26. If not, northern members will have to gather again and re-discuss the issue.
Choosing strategic partners: Vietcombank at disadvantage
17:00' 23/04/2008 (GMT+7)
VietNamNet Bridge – Vietcombank is thought to be at a disadvantage in negotiating with foreign investors to choose strategic partners, especially in relation to share prices.
Vietcombank's headquarter
One of the most important topics to be raised at the shareholders’ meeting of Vietcombank, slated for April 26, will be the selection of foreign partners.
In fact, there is one special thing in Vietcombank’s equitisation process: the government decided to make IPO first and then look for strategic partners. The change ‘at the last minute’ originated from difficulties in negotiating about stake sale prices with candidates.
As Deputy Prime Minister Nguyen Sinh Hung instructed, the stake prices for strategic partners must not be lower than the average IPO price. And the instruction has been putting big difficulties on Vietcombank.
Vietcombank’s shares are selling at VND53-55,000/share only on the OTC market, much lower than the average IPO price at VND107,572/share, and even lower than the preferential price level at which stakes were sold to Vietcombank’s staffs.
A question has been raised for Nguyen Hoa Binh, Chairman of Vietcombank: if the low price of Vietcombank’s shares on the market puts Vietcombank at a disadvantage when negotiating with candidates, could candidates take advantage of this to force the price down?
Binh said that Vietcombank has anticipated this, but declined to give an answer, reasoning that the issue was not listed among the issues he was authorised to provide information about.
However, Binh said that the low price of Vietcombank’s shares on the OTC market would be an advantage to the sellers. He said that share price decreases are undeniable, and that the price is decided by the market’s supply and demand.
Binh declined to give information about the prices candidates offered.
Besides sale prices, the time to sell stakes is also a problem for Vietcombank, indirectly creating advantages for candidates. It is clear that in the first shareholders’ meeting, Vietcombank will still not have foreign strategic partners, and it is highly possible that it will not have them when it lists on the bourse.
The prolonged process of selecting foreign strategic partners will affect shareholders’ thoughts, as shareholders want to inject money in a company where everything is ready. Therefore, the presence of strategic partners at the listing moment has significance.
However, Binh said that Vietcombank will settle the problems step by step, with the priority to be given to urgent matters.
Binh said that Vietcombank will not get strategic partners at any cost. He said that the selection of strategic partners must serve the benefit of Vietcombank’s shareholders and the country, while the bank will not aim to seek short-term financial sources.
No exact date has been set about when Vietcombank must finish selecting strategic partners; therefore, the time to sell stakes is not an issue at the negotiating table. However, Binh has revealed that the bank wants to complete the work in 2008.
In fact, many foreign investors have expressed interest in buying Vietcombank stakes. Besides the negotiations with existing candidates, Vietcombank is also working with new names.
Binh has confirmed that despite the difficulties, Vietcombank will not ease the requirements on strategic partners.
VietNamNet Bridge – Vietcombank is thought to be at a disadvantage in negotiating with foreign investors to choose strategic partners, especially in relation to share prices.
Vietcombank's headquarter
One of the most important topics to be raised at the shareholders’ meeting of Vietcombank, slated for April 26, will be the selection of foreign partners.
In fact, there is one special thing in Vietcombank’s equitisation process: the government decided to make IPO first and then look for strategic partners. The change ‘at the last minute’ originated from difficulties in negotiating about stake sale prices with candidates.
As Deputy Prime Minister Nguyen Sinh Hung instructed, the stake prices for strategic partners must not be lower than the average IPO price. And the instruction has been putting big difficulties on Vietcombank.
Vietcombank’s shares are selling at VND53-55,000/share only on the OTC market, much lower than the average IPO price at VND107,572/share, and even lower than the preferential price level at which stakes were sold to Vietcombank’s staffs.
A question has been raised for Nguyen Hoa Binh, Chairman of Vietcombank: if the low price of Vietcombank’s shares on the market puts Vietcombank at a disadvantage when negotiating with candidates, could candidates take advantage of this to force the price down?
Binh said that Vietcombank has anticipated this, but declined to give an answer, reasoning that the issue was not listed among the issues he was authorised to provide information about.
However, Binh said that the low price of Vietcombank’s shares on the OTC market would be an advantage to the sellers. He said that share price decreases are undeniable, and that the price is decided by the market’s supply and demand.
Binh declined to give information about the prices candidates offered.
Besides sale prices, the time to sell stakes is also a problem for Vietcombank, indirectly creating advantages for candidates. It is clear that in the first shareholders’ meeting, Vietcombank will still not have foreign strategic partners, and it is highly possible that it will not have them when it lists on the bourse.
The prolonged process of selecting foreign strategic partners will affect shareholders’ thoughts, as shareholders want to inject money in a company where everything is ready. Therefore, the presence of strategic partners at the listing moment has significance.
However, Binh said that Vietcombank will settle the problems step by step, with the priority to be given to urgent matters.
Binh said that Vietcombank will not get strategic partners at any cost. He said that the selection of strategic partners must serve the benefit of Vietcombank’s shareholders and the country, while the bank will not aim to seek short-term financial sources.
No exact date has been set about when Vietcombank must finish selecting strategic partners; therefore, the time to sell stakes is not an issue at the negotiating table. However, Binh has revealed that the bank wants to complete the work in 2008.
In fact, many foreign investors have expressed interest in buying Vietcombank stakes. Besides the negotiations with existing candidates, Vietcombank is also working with new names.
Binh has confirmed that despite the difficulties, Vietcombank will not ease the requirements on strategic partners.
Tuesday, 22 April 2008
Paper fever anticipated
16:06' 22/04/2008 (GMT+7)
VietNamNet Bridge – The paper market has been witnessing the fever attack for the last several months: the prices have been skyrocketing, while the supply has fallen short.
After the paper price increase in March, the paper prices have increased by VND400,000/tonne. Some newspaper offices in the North even once considered reducing the circulation due to the paper price increase.
In January 2008, the price of printing paper and writing paper (70g/m2) were at VND15.1mil/tonne. However, the price later skyrocketed twice to VND17mil/tonne, the record high in the paper history.
Cartridge papers have also risen by 10% over the beginning of 2008, now selling at VND17.3mil/tonne. Van Duc Hieu, Business Director of An Binh Paper Joint Stock Company, said that since October 2007, cartridge papers have witnessed six price increases.
The price fever has not only been occurring with finished paper products, but with waste paper as well, including both imports and locally collected waste. In January 2007, one ton of waste paper cost VND2mil only, while producers now have to pay VND3.5mil (+75%) to buy one ton of scrap paper.
Meanwhile, it is not easy to buy paper at this moment as the supply has been falling short. The director of a paper plant said that enterprises all have to queue to purchase paper. It is because of the short supply of materials, both from domestic sources and imports from ASEAN countries.
Ten days ago, leaders of newspapers were warned about the shortage of newsprint if the situation would not be improved. Newspaper offices all said that they have never seen such a serious shortage, adding that they have to consider reducing the circulation and the numbers of pages for advertisements.
Vu Van Binh, Deputy Editor-in-Chief of Tuoi tre Newspaper, complained that since the beginning of the year, the paper prices have increased three times by 12.9%, or VND1.32mil/tonne.
Students are the biggest sufferers from the paper price increases. According to Nguyen Minh Trung, Marketing Director of Vinh Tien Paper Joint Stock Company, as the material prices increase, the company has twice raised the sale prices in early March and mid April with the increase of VND150/notebook (+9%).
Vinh Tien and other workshops are entering the high production season for the new academic year, to begin in early May.
Trung said that paper makers have been pushed into a dilemma. If they raise the sale prices, the sale volume may decrease as enterprises are fiercely competing with each other. If they do not raise the sale prices, they would suffer heavy losses.
However, analysts all have forecast that the price of notebooks will increase by 5% at least in the time to come.
Trung said that paper makers have been informed by material suppliers that the material prices would keep increasing in the time to come.
Analysts said that Vietnam has been relying on import materials. As for newsprint, in 2007, Vietnam needed 110,000 tonnes in total, but only 45,000 tonnes were provided locally byTan Mai Paper Company, while the remaining volume must be fed by imports.
Though the investments in the paper industry increased sharply recently with a lot of big projects, the total paper output is expected to reach 2.5mil tons only, or 1.2-1.3mil tons higher than currently.
An official from the Vietnam Paper Corporation said that Vietnam-made products prove to be less competitive compared to import products due to the backward technologies and equipments. As for packing paper, though the import products are $25-30/tonne higher than locally made products on average ($460/tonne), local. That explains why the local enterprises that make these types of paper, are running at 60-70% of the designed capacity only.
The deputy General Director of An Binh Paper Company said that if Vietnamese enterprises maintain the current backward technologies and small investments, they will completely lose the domestic market.
VietNamNet Bridge – The paper market has been witnessing the fever attack for the last several months: the prices have been skyrocketing, while the supply has fallen short.
After the paper price increase in March, the paper prices have increased by VND400,000/tonne. Some newspaper offices in the North even once considered reducing the circulation due to the paper price increase.
In January 2008, the price of printing paper and writing paper (70g/m2) were at VND15.1mil/tonne. However, the price later skyrocketed twice to VND17mil/tonne, the record high in the paper history.
Cartridge papers have also risen by 10% over the beginning of 2008, now selling at VND17.3mil/tonne. Van Duc Hieu, Business Director of An Binh Paper Joint Stock Company, said that since October 2007, cartridge papers have witnessed six price increases.
The price fever has not only been occurring with finished paper products, but with waste paper as well, including both imports and locally collected waste. In January 2007, one ton of waste paper cost VND2mil only, while producers now have to pay VND3.5mil (+75%) to buy one ton of scrap paper.
Meanwhile, it is not easy to buy paper at this moment as the supply has been falling short. The director of a paper plant said that enterprises all have to queue to purchase paper. It is because of the short supply of materials, both from domestic sources and imports from ASEAN countries.
Ten days ago, leaders of newspapers were warned about the shortage of newsprint if the situation would not be improved. Newspaper offices all said that they have never seen such a serious shortage, adding that they have to consider reducing the circulation and the numbers of pages for advertisements.
Vu Van Binh, Deputy Editor-in-Chief of Tuoi tre Newspaper, complained that since the beginning of the year, the paper prices have increased three times by 12.9%, or VND1.32mil/tonne.
Students are the biggest sufferers from the paper price increases. According to Nguyen Minh Trung, Marketing Director of Vinh Tien Paper Joint Stock Company, as the material prices increase, the company has twice raised the sale prices in early March and mid April with the increase of VND150/notebook (+9%).
Vinh Tien and other workshops are entering the high production season for the new academic year, to begin in early May.
Trung said that paper makers have been pushed into a dilemma. If they raise the sale prices, the sale volume may decrease as enterprises are fiercely competing with each other. If they do not raise the sale prices, they would suffer heavy losses.
However, analysts all have forecast that the price of notebooks will increase by 5% at least in the time to come.
Trung said that paper makers have been informed by material suppliers that the material prices would keep increasing in the time to come.
Analysts said that Vietnam has been relying on import materials. As for newsprint, in 2007, Vietnam needed 110,000 tonnes in total, but only 45,000 tonnes were provided locally byTan Mai Paper Company, while the remaining volume must be fed by imports.
Though the investments in the paper industry increased sharply recently with a lot of big projects, the total paper output is expected to reach 2.5mil tons only, or 1.2-1.3mil tons higher than currently.
An official from the Vietnam Paper Corporation said that Vietnam-made products prove to be less competitive compared to import products due to the backward technologies and equipments. As for packing paper, though the import products are $25-30/tonne higher than locally made products on average ($460/tonne), local. That explains why the local enterprises that make these types of paper, are running at 60-70% of the designed capacity only.
The deputy General Director of An Binh Paper Company said that if Vietnamese enterprises maintain the current backward technologies and small investments, they will completely lose the domestic market.
Vietnam hikes car import tax to 83 percent
Last Updated: Tuesday, April 22, 2008 09:46:44 Vietnam (GMT+07)
Customers will have to shell out more for imported cars following a fresh hike in tariffs
The tariff on cars went up from 70 percent to 83 percent and on components from 3 percent to 5 percent, according to a Finance Ministry's decision which took effect today.
It is for the second time in the last two months that the government has tweaked the tariff on automobiles.
Last month it raised the import duties on new cars to 70 percent from 60 percent.
Car traders were not surprised by the ministry’s decision.
Nguyen Minh Hung, the owner of a car showroom in Hanoi, said, “We knew about the increase a week ago. We just didn’t know when the decision would be signed.”
Automobile importers had continued to buy cars heavily after last month’s increase since they had foreseen a further increase.
Figures from the Ho Chi Minh City Customs Department show that the number of cars imported in the first three months rose year-on-year from 422 to 2,593.
“The prices of cars increased by 6 to 8 percent following the hike in the tariff last month,” Ha Minh Tuan, Hyundai Motor Vietnam’s general director, said, adding the prices would go up again.
Traders said prices were likely to go up by US$1,000-3,000.
Customers will have to shell out more for imported cars following a fresh hike in tariffs
The tariff on cars went up from 70 percent to 83 percent and on components from 3 percent to 5 percent, according to a Finance Ministry's decision which took effect today.
It is for the second time in the last two months that the government has tweaked the tariff on automobiles.
Last month it raised the import duties on new cars to 70 percent from 60 percent.
Car traders were not surprised by the ministry’s decision.
Nguyen Minh Hung, the owner of a car showroom in Hanoi, said, “We knew about the increase a week ago. We just didn’t know when the decision would be signed.”
Automobile importers had continued to buy cars heavily after last month’s increase since they had foreseen a further increase.
Figures from the Ho Chi Minh City Customs Department show that the number of cars imported in the first three months rose year-on-year from 422 to 2,593.
“The prices of cars increased by 6 to 8 percent following the hike in the tariff last month,” Ha Minh Tuan, Hyundai Motor Vietnam’s general director, said, adding the prices would go up again.
Traders said prices were likely to go up by US$1,000-3,000.
Eight circumstances keeping cash away from banks
05:51' 23/04/2008 (GMT+7)
VietNamNet Bridge – Since mid February, mobilised capital growth has been slowing down though commercial banks have offered high interest rates and launched big promotion programmes. Why?
Statistics show that by the end of the first quarter of 2008, the total mobilised capital of the whole banking system had increased by 5.48%, and total outstanding loans had increased by 10.8% over the end of 2007. The figures were 11.76% and 6.4% at the same period of last year.
At the Saigon Joint Stock Bank (SCB), the total mobilised capital saw a decrease of VND300bil in the last two weeks of March, and a further decrease of VND450bil in the first two weeks of April.
State owned banks, which have the biggest advantages in capital mobilisation thanks to their wide operation networks, prestige, are also facing the same situation.
In Hanoi, the total capital mobilised by state owned banks by early April had decreased by nearly 4% compared to December 31, 2007.
The Vietnam Bank for Agriculture and Rural Development (Agribank) and Vietnam Bank for Foreign Trade (Vietcombank), which always lead in capital mobilisation, have reported the decreases of 13% and 6%, respectively, in mobilised capital.
State owned banks, which were once the biggest lenders on the interbank market, now have become borrowers. By the end of March 2008, state owned banks in Hanoi had borrowed 55% more money through the interbank market over the end of February.
In HCM City, by April 16, 2008, the banks’ mobilised capital had dropped by VND9,225bil over the end of March, of which the deposits of state owned banks had decreased by 1.74%, and of joint stock banks, by 0.28%.
Eight reasons have been cited to explain the problems
First, the tightened monetary policies have been making it difficult for businesses to access bank loans. As a result, many businesses which have deposits at banks have drawn money out to lend to other businesses to get higher interest rates. People who have idle capital are not making deposits at banks anymore, but lending to their relatives and friends to serve those people’s investment projects.
Second, banks may face a capital shortage as the State Treasury is planning to withdraw VND52,000bil worth of government money from state owned banks
Third, many institutions that are founding shareholders of other institutions to be organised have drawn money from banks to transfer to accounts to prove their financial capability.
Fourth, as the stock market keeps falling, OTC share prices are descending, which has made a lot of investors incur losses. Therefore, they have no money left to deposit at banks. Moreover, the deposits of securities companies at banks have been decreasing due to 1/ the losses incurred by the companies and 2/ lower balances in investors’ accounts at securities companies.
Fifth, as the gold price keeps increasing and the CPI remains high, people tend to inject money in gold instead of bank deposits. It is estimated that some 40 tonnes of gold have been imported to Vietnam so far this year, worth $1.2bil. 60% has been sold on the market.
Sixth, as the real estate market has cooled down, investors cannot sell properties to take back capital; therefore, they do not have money to make bank deposits.
Seventh, people, hearing about the car import tax increase, have drawn money from banks to buy cars before the tax increase decisions become effective.
Eighth, the idle money among the public is nearly exhausted. People deposited at banks when the interest rates were high, at 13% per annum, and now they do not have more money to deposit.
VietNamNet Bridge – Since mid February, mobilised capital growth has been slowing down though commercial banks have offered high interest rates and launched big promotion programmes. Why?
Statistics show that by the end of the first quarter of 2008, the total mobilised capital of the whole banking system had increased by 5.48%, and total outstanding loans had increased by 10.8% over the end of 2007. The figures were 11.76% and 6.4% at the same period of last year.
At the Saigon Joint Stock Bank (SCB), the total mobilised capital saw a decrease of VND300bil in the last two weeks of March, and a further decrease of VND450bil in the first two weeks of April.
State owned banks, which have the biggest advantages in capital mobilisation thanks to their wide operation networks, prestige, are also facing the same situation.
In Hanoi, the total capital mobilised by state owned banks by early April had decreased by nearly 4% compared to December 31, 2007.
The Vietnam Bank for Agriculture and Rural Development (Agribank) and Vietnam Bank for Foreign Trade (Vietcombank), which always lead in capital mobilisation, have reported the decreases of 13% and 6%, respectively, in mobilised capital.
State owned banks, which were once the biggest lenders on the interbank market, now have become borrowers. By the end of March 2008, state owned banks in Hanoi had borrowed 55% more money through the interbank market over the end of February.
In HCM City, by April 16, 2008, the banks’ mobilised capital had dropped by VND9,225bil over the end of March, of which the deposits of state owned banks had decreased by 1.74%, and of joint stock banks, by 0.28%.
Eight reasons have been cited to explain the problems
First, the tightened monetary policies have been making it difficult for businesses to access bank loans. As a result, many businesses which have deposits at banks have drawn money out to lend to other businesses to get higher interest rates. People who have idle capital are not making deposits at banks anymore, but lending to their relatives and friends to serve those people’s investment projects.
Second, banks may face a capital shortage as the State Treasury is planning to withdraw VND52,000bil worth of government money from state owned banks
Third, many institutions that are founding shareholders of other institutions to be organised have drawn money from banks to transfer to accounts to prove their financial capability.
Fourth, as the stock market keeps falling, OTC share prices are descending, which has made a lot of investors incur losses. Therefore, they have no money left to deposit at banks. Moreover, the deposits of securities companies at banks have been decreasing due to 1/ the losses incurred by the companies and 2/ lower balances in investors’ accounts at securities companies.
Fifth, as the gold price keeps increasing and the CPI remains high, people tend to inject money in gold instead of bank deposits. It is estimated that some 40 tonnes of gold have been imported to Vietnam so far this year, worth $1.2bil. 60% has been sold on the market.
Sixth, as the real estate market has cooled down, investors cannot sell properties to take back capital; therefore, they do not have money to make bank deposits.
Seventh, people, hearing about the car import tax increase, have drawn money from banks to buy cars before the tax increase decisions become effective.
Eighth, the idle money among the public is nearly exhausted. People deposited at banks when the interest rates were high, at 13% per annum, and now they do not have more money to deposit.
Monday, 21 April 2008
Tightening monetary policies, but pumping capital into rural areas
17:07' 21/04/2008 (GMT+7)
VietNamNet Bridge – In order to deal with high inflation, other countries in the world are trying to develop agriculture. Meanwhile, Vietnam is trying to tighten monetary policies everywhere, in big cities and rural areas.
In China, together with measures to tighten monetary policies, the government is trying to control the domestic market, push up agriculture production and support low income earners.
On March 27, 2008, Chinese Prime Minister Wen Jia Bao announced that the government approved the financial aid package of $3.5bil, which will be added to the budget of $562.5bil approved before for agriculture and rural development. The sum of money is equal to 1/3 of the total money the government of China injected in agriculture in the previous five years.
The sum of money will be given directly to farmers to help them purchase materials, fuel, plant varieties and stud animals.
In the Republic of Korea, the government decided to exempt import tax on the grains used for processing food for cattle, provide $1bil to farmers to give them capital to maintain production.
Meanwhile, in Vietnam, the measures taken by the State Bank of Vietnam seem to aim to tighten the credit to agriculture and rural development.
The state owned Vietnam Bank for Agriculture and Rural Development (Agribank), which is considered the main bank serving agriculture and rural development in Vietnam, has set the credit growth rate for 2008 at 16-18% over 2007. The goal proves to be much lower than the targeted growth rate of 30% set for the whole banking system, and just equal to ½ of the 36.2% growth rate obtained in 2007.
In order to maintain the low credit growth rate within the Agribank system, the bank has set low credit limits for all branches.
Some branches have been asked to keep outstanding loans at the same level as the level reached by November 30, 2007. This means that the branches can only provide new loans if they can collect old debts. As a result, many Agribank branches have to refuse loans for farmers.
The Bank for Investment and Development of Vietnam (BIDV), which has the second largest operation network in Vietnam after Agribank, has also set limits on credit growth rates for their branches, including ones in mountainous and highlands areas, which will surely affect agriculture development and food production.
As planned, VND52tril worth of government money now deposited at state owned banks will be transferred to State Bank branches for management. It is estimated that some 40tril is being deposited at Agribank, which also means that the bank will lose VND40tril worth of capital, or VND20,000bil worth of capital which can be lent
As the capital is decreasing, Agribank will have to reduce loans, which means that agriculture production will have less capital to develop.
Analysts have pointed out that tightening monetary policies proves to be a necessary thing these days in order to fight inflation, but it is also necessary to create the best conditions to develop agriculture, which help curb food price increases and ensure food security.
VietNamNet Bridge – In order to deal with high inflation, other countries in the world are trying to develop agriculture. Meanwhile, Vietnam is trying to tighten monetary policies everywhere, in big cities and rural areas.
In China, together with measures to tighten monetary policies, the government is trying to control the domestic market, push up agriculture production and support low income earners.
On March 27, 2008, Chinese Prime Minister Wen Jia Bao announced that the government approved the financial aid package of $3.5bil, which will be added to the budget of $562.5bil approved before for agriculture and rural development. The sum of money is equal to 1/3 of the total money the government of China injected in agriculture in the previous five years.
The sum of money will be given directly to farmers to help them purchase materials, fuel, plant varieties and stud animals.
In the Republic of Korea, the government decided to exempt import tax on the grains used for processing food for cattle, provide $1bil to farmers to give them capital to maintain production.
Meanwhile, in Vietnam, the measures taken by the State Bank of Vietnam seem to aim to tighten the credit to agriculture and rural development.
The state owned Vietnam Bank for Agriculture and Rural Development (Agribank), which is considered the main bank serving agriculture and rural development in Vietnam, has set the credit growth rate for 2008 at 16-18% over 2007. The goal proves to be much lower than the targeted growth rate of 30% set for the whole banking system, and just equal to ½ of the 36.2% growth rate obtained in 2007.
In order to maintain the low credit growth rate within the Agribank system, the bank has set low credit limits for all branches.
Some branches have been asked to keep outstanding loans at the same level as the level reached by November 30, 2007. This means that the branches can only provide new loans if they can collect old debts. As a result, many Agribank branches have to refuse loans for farmers.
The Bank for Investment and Development of Vietnam (BIDV), which has the second largest operation network in Vietnam after Agribank, has also set limits on credit growth rates for their branches, including ones in mountainous and highlands areas, which will surely affect agriculture development and food production.
As planned, VND52tril worth of government money now deposited at state owned banks will be transferred to State Bank branches for management. It is estimated that some 40tril is being deposited at Agribank, which also means that the bank will lose VND40tril worth of capital, or VND20,000bil worth of capital which can be lent
As the capital is decreasing, Agribank will have to reduce loans, which means that agriculture production will have less capital to develop.
Analysts have pointed out that tightening monetary policies proves to be a necessary thing these days in order to fight inflation, but it is also necessary to create the best conditions to develop agriculture, which help curb food price increases and ensure food security.
Time to return to hoarding gold
17:09' 21/04/2008 (GMT+7)
VietNamNet Bridge – Commercial banks fear that under the pressure of high inflation people are now buying gold to keep under their pillows. They have every reason to worry about that: deposits at banks have decreased by several thousand billion VND, while $1.5bil has been spent in recent months to import gold.
Viet A Bank late last week announced it will raise interest rates for gold deposits to 4% per annum for 12-month term and 4.5% for 18-month term deposits.
Tran Thi Hao, living in district 3, HCM City, related that she bought gold last year and got the profit of 30% thanks to the gold price increases. Recently, as the gold price slightly decreased, she bought some more gold and decided to deposit all the gold she has at banks.
A leader of the Saigon Jewellery Company said that a big volume of gold was imported in the first months of 2008, much higher than the imports in 2007.
Also during that time, SJC processed 1mil taels of gold to launch onto the market, or 40 tonnes of gold, worth VND18tril.
Hao said that the 4% interest rate for gold deposits proves to be attractive. If you make deposits in dollars, you will get 5.5% per annum in interest, but the dollar price will not increase as sharply as the gold price.
The director of a joint stock bank said that deposits at banks have decreased as big sums of money have been converted to gold. Therefore, commercial banks have been trying to attract capital in gold.
An official of Eximbank said that individual clients who keep their money in gold tend to make long-term deposits. Meanwhile, investors tend to make shorter-term deposits so that they can sell gold when prices increase.
At Asia Commercial Bank (ACB), people can make deposits with 0.2 taels of gold, while at other banks people have to make deposits of one tael at least.
In fact, few people choose to get loans in gold for fear of price fluctuations. Borrowers incur losses if the gold price increases by 10%, because in this case, it is more costly to borrow in gold than to borrow in VND.
ACB officials say that borrowers mostly are real estate traders who have earnings in gold and gold traders. Moreover, there are also clients who borrow gold to purchase houses.
Currently, in order to help clients avoid risks from gold price increases, banks provide financial instruments, including options. However, bankers say that the operation has not been used by many clients.
VietNamNet Bridge – Commercial banks fear that under the pressure of high inflation people are now buying gold to keep under their pillows. They have every reason to worry about that: deposits at banks have decreased by several thousand billion VND, while $1.5bil has been spent in recent months to import gold.
Viet A Bank late last week announced it will raise interest rates for gold deposits to 4% per annum for 12-month term and 4.5% for 18-month term deposits.
Tran Thi Hao, living in district 3, HCM City, related that she bought gold last year and got the profit of 30% thanks to the gold price increases. Recently, as the gold price slightly decreased, she bought some more gold and decided to deposit all the gold she has at banks.
A leader of the Saigon Jewellery Company said that a big volume of gold was imported in the first months of 2008, much higher than the imports in 2007.
Also during that time, SJC processed 1mil taels of gold to launch onto the market, or 40 tonnes of gold, worth VND18tril.
Hao said that the 4% interest rate for gold deposits proves to be attractive. If you make deposits in dollars, you will get 5.5% per annum in interest, but the dollar price will not increase as sharply as the gold price.
The director of a joint stock bank said that deposits at banks have decreased as big sums of money have been converted to gold. Therefore, commercial banks have been trying to attract capital in gold.
An official of Eximbank said that individual clients who keep their money in gold tend to make long-term deposits. Meanwhile, investors tend to make shorter-term deposits so that they can sell gold when prices increase.
At Asia Commercial Bank (ACB), people can make deposits with 0.2 taels of gold, while at other banks people have to make deposits of one tael at least.
In fact, few people choose to get loans in gold for fear of price fluctuations. Borrowers incur losses if the gold price increases by 10%, because in this case, it is more costly to borrow in gold than to borrow in VND.
ACB officials say that borrowers mostly are real estate traders who have earnings in gold and gold traders. Moreover, there are also clients who borrow gold to purchase houses.
Currently, in order to help clients avoid risks from gold price increases, banks provide financial instruments, including options. However, bankers say that the operation has not been used by many clients.
Subscribe to:
Posts (Atom)