Economic

Economic groups – giants with weak feet

2008-05-06T16:31:00.000-07:00

16:47' 06/05/2008 (GMT+7)
Forming economic groups from general corporations seems to be in fashion in Vietnam. However, experts have pointed out that this is not a good thing in all cases.
The director of a Japanese investment fund said that he cannot understand why Vietnamese enterprises like the word ‘economic groups’. The reports of equitised corporations and private companies all say that the corporations aim to form strong economic groups sooner or later.
Meanwhile, the director said that he thinks the most suitable model for Vietnam in particular and Asia in general is the existence of small- and medium-sized enterprises, which can easily adapt to new circumstances and be competitive.
In fact, the model of chaebol (big conglomerates formed and managed by big families, which control main business fields of the national economy) is shaky. Last year, the Hyundai Group chairman was convicted of embezzling public money. This year, the chairman of Samsung Group announced his resignation following his indictment on tax evasion charges.
In South Korea, the 30 biggest chaebols control 40% of the national economy. Meanwhile, in Vietnam, according to the Ministry of Finance, there are 70 economic groups and general corporations. The giant groups and corporations just make up 40% of GDP, but use 60-70% of bank loans and the same proportion of foreign loans.
Most of the said groups and corporations are operating in the most profitable business fields, where they enjoy a monopoly, including petroleum, electricity, coal, and aviation. Though being the sole players on the pitch, the economic groups and corporations often complain that they incur heavy losses and threaten to raise the sale prices of commodities.
These groups and general corporations especially like setting up subsidiaries, which are the playing fields where they can exploit most of the preferences from the monopoly. Many of them have jumped into other business fields, which has raised concerns about their capacities in business management. Audited financial reports by the groups show that many of them have not been making profit, or even causing the state to suffer losses.
Of course, the bad performance of the groups and the risks they meet lead to risks for the national economy.
Dr Le Dang Doanh, a senior economist, said that Vietnamese economic groups and corporations are now like giants with weak feet. They have large bodies but cannot stand firmly on their feet. They always need the support of the state to survive.
However, analysts have warned that monopolies will be removed under the pressure of global economic integration.
It is necessary now to put economic groups under the strict control of the law, and to tidy up the business environment, expert say.

solutions needed to stabilise pharmaceuticals market

2008-05-06T16:30:00.000-07:00

05:28' 07/05/2008 (GMT+7)

According to the Ministry of Health, by the end of the first quarter of 2008, drug prices on the domestic market had risen by 8.93 percent. However, experts said that unforeseeable circumstances in both world and domestic markets had caused the abrupt increase in drug prices similar to what happened in early 2004.

Deputy Minister of Health Cao Minh Quang attributed the failure to control current drug prices to political instability in many countries around the world, the complicated situation in the domestic market, natural disasters and the soaring inflation rate.

In addition, the prices of input materials, which make up 90 percent of businesses’ production costs have driven domestic drug prices up. Meanwhile, imported medicines continue to be dominated by the global market.

The limited import of rare medicines has led to a monopoly on some drugs and difficulties in controlling the prices of others.

According to the Ministry of Health, approximately 20,000 kinds of drugs are sold in Vietnam. However, domestic producers only focus on common medicines at lower prices.

Meanwhile, poor distribution networks have also increased intermediate costs before patients can access the drugs, Mr Quang said

Many businesses prefer to import drugs through go-betweens rather than import directly from foreign producers in order to enjoy a percentage of their profits. Furthermore, more than 39,000 pharmacies have failed to meet the necessary requirements in terms of space and facilities under the Good Pharmacy Practice (GPP) standard. Currently, less than 40 pharmacies meet the GPP standard compared to the set target of having all GPP pharmacies nationwide by 2011.

According to the Pharmaceutical Product Management Administration, bad quality medicines accounted for 3.30 percent of the total drug samples in 2007, higher than the 2006 level of 3.18 percent while poor-quality medicines with a herbal origin made up a rather higher proportion of 10.8 percent.

Director of the Vietnamese National Institute of Drug Quality Control (NIDQC) Trinh Van Lau said that the amounts of low quality and fake drugs, including domestic and foreign drugs is increasing. In particular, imported drugs and oriental medicines which do not reach quality standards account for more than 10 percent. Mr Lau added that any kind of drug, which sells like hot cakes in the market will be copied immediately. The technology used to copy drugs is so sophisticated that even the real producers get fooled. In the past fake drugs appeared in remote areas but now they are available in the big cities. Antibiotic drugs and oriental medicines are the most copied.

Withdrawing from circulation and confiscation fake and low quality drugs has not been implementing in time. Furthermore, supervising the revoking of drugs is weak.

In order to control prices of drugs in the future, at a recent national meeting of the drug sector, deputy Prime Minister Nguyen Thien Nhan suggested setting up a website to list the prices of every drug and the punishments for violations. He urged the relevant agencies to strictly observe the quality of drugs and the distribution network and publicise the prices.

A long-term solution for controlling the price of drugs is to develop the pharmaceutical industry to gradually produce important antibiotic materials and organic pharmaceuticals to ensure enough materials for the domestic drugs industry. In 2008, the sector will also accelerate the production of domestic drugs as well as Generic drugs to supply the public healthcare system.

Mr Quang emphasised that to stabilise the pharmaceuticals market, Vietnam should increase its supplies and apply standards on the preservation and distribution of drugs to 39,016 retail drug sellers all over the country.

Lao Cai vows six-day project approvals

2008-05-04T17:28:00.001-07:00

05:53' 05/05/2008 (GMT+7)
Newly-established firms in the northern mountainous province of Lao Cai can now obtain investment licences in as few as six days.
Three administrative agencies – the Department of Planning and Investment (DPI), the provincial Tax Department and the Department of Public Security– have already taken measures to make business registration easier in order to attract greater investment in the province.
The government of Lao Cai province has pioneered a "three-in-one" approach to the registration process, in which the business registration office within the DPI acts as the single access point for business start-up procedures.
In addition to issuing business registration certificates, the DPI is responsible for interacting with the Tax Department and Public Security Department to assess liability under the tax code and issue an official business licence within just 15 days. "The greatest benefit of this model is that it reduces the time to start up a business," said Vu Kim Quy, head of the Business Registry at Lao Cai’s Department of Planning and Investment. "It now takes only six days for businesses to get all the necessary documentation."
Lao Cai is home to nealy 1,100 firms with a total capital of VND4.5 trillion (US$281.25 million). So far this year, 90 firms have been granted licences, with a total capital of VND929 billion ($58.06 million).

Nine bordergate EZs planned

2008-05-04T17:27:00.001-07:00

23:09' 04/05/2008 (GMT+7)
Lorries carry goods through Lao Cai International Bordergate.
Prime Minister Nguyen Tan Dung has approved a plan to set up nine additional economic zones along the country’s bordergate region by 2020, bringing the total number of EZs in the country to 30.
The scheme, endorsed by the Prime Minister on April 25, is part of a larger economic development plan for the bordergate region up to 2020. It focuses on sustainable development and long-lasting friendship and political security between Viet Nam’s border provinces and neighbouring provinces in China, Laos and Cambodia.
The plan calls for the construction of infrastructure and the setting up of a well-co-ordinated management mechanism, together with policies that would increase the gross import-export revenues with neighbouring border regions to US$43 billion by 2020.
The nine target bordergate economic zones are Mong Cai, Lao Cai and Lang Son in the north, the special economic zone of Lao Bao and another central bordergate economic zone Cau Treo, the largest border economic zone of Bo Y in the Central Highlands, Moc Bai, An Giang, and Dong Thap in the south.
These bordergate economic zones should help strengthen international co-operation and attract domestic and foreign investment into the country, according to the master plan.
Bordergate zone
Located in the East-West Economic Corridor and the Viet Nam-Laos-Cambodia economic triangle, the Bo Y bordergate economic zone occupies 400ha in Ngoc Hoi District in the Central Highlands Province of Kon Tum.
To date, 54 investors have launched projects worth VND11 trillion ($687.5 million), including nine projects in the pipeline and 14 that have already been allocated land.
The zone is now focusing on developing infrastructure to attract investors, said Nguyen The Dat, head of the zone’s State management team.
Another bordergate economic zone on the trans-Asia highway, Moc Bai in southern Tay Ninh Province, also has great potential.
Located 70km from HCM City and some 170km from Phnom Penh, the 21.3ha zone opened in March, 2006 and has a commercial-industrial area and a duty-free supermarket.
Provincial authorities approved 38 projects capitalised at VND5.4 trillion ($337.5 million).
Phuong Trinh Co Ltd, in co-operation with Cambodian partners, has invested $3 million in launching a bus route linking Ben Thanh Market in downtown HCM City with Moc Bai and Tay Ninh town.

BUSINESS IN BRIEF 4/5

2008-05-04T17:25:00.001-07:00

23:48' 04/05/2008 (GMT+7)
Zamil spends $20mil to double its Vietnam steel production
Zamil Industries set to spend US$20 million to increase capacity in Vietnam to 100,000 tons a year from 50,000 tons in a bid to tap Asian demand for the construction material.
Zamil Steel, an affiliate of the Saudi Arabian maker of steel, air conditioners, glass and insulation, came to Vietnam in 1993, operating as a representative office.
Zamil Steel Vietnam, a joint venture between Zamil Steel Industries of Saudi Arabia and Japanese Mitsui, was established in Hanoi in 1997 to design, manufacture and supply top quality pre-engineered steel buildings like warehouses, workshops, distribution centers, showrooms, aircraft hangars, schools, and sports halls.
Its first plant in the city’s outlying Noi Bai Industrial Park has designed, fabricated and supplied buildings to Vietnam, China, Japan, and the South East Asia Region with 4,000-ton monthly outputs.
The manufacturer has recently put its second plant into operation in southern Dong Nai Province’s Amata Industrial Park, 35 km from Ho Chi Minh City.
It also aims to open sales offices in more provinces in Vietnam and enter new markets, including Australia and the US.
US executives to visit Vietnam
Some 50 executives from 23 leading US companies seeking business opportunities in Vietnam will begin a three-day visit to the country Monday, reported the US – ASEAN Business Council Saturday.
The business leaders will hold talks with leaders of the Vietnamese government and the Party.
The delegation – including executives from General Electric, Boeing, Chevron, ConocoPhillips, The Dow Chemical Company, ExxonMobil, Fedex, Ford, IBM, and Qualcomm – is led by Matthew Daley, chairman of the US –
ASEAN Business Council, and Stuart Dean, chairman of General Electric Southeast Asia and chairman of the US – Vietnam Trade Council.
Garments and textiles exports hit 2.6 billion USD
The garments and textiles export turnover for April increased by 50 million USD against the previous month, reaching an estimated 700 million USD, marking a rise of 8 percent on month.
During the first four months this year, the garments and textiles sector earned 2.6 billion USD, an on year increase of 24.5 percent. At present, all the deals for the second quarter of 2008 have been covered and prices have increased 10-15 percent on year.
However, footwear export turnover in April is only equal to that of March, reaching an estimated 330 million USD. In the first four months, the footwear sector only earned 1.35 billion USD. In spite of showing a 15.7 percent increase on year, this figure has only reached 30 percent of the yearly target.
No expansion of coffee areas until 2010
The Ministry of Agriculture and Rural Development has issued a directive asking provinces not to expand coffee growing areas from now to 2010, aiming to ensure the yield and quality of the product.
The ministry has asked its department in charge of the work to promptly complete a project on raising the competitiveness of Vietnamese coffee, taking measures to improve coffee quality and supporting farmers to cultivate new high-quality coffee varieties.
The directive also required Central Highlands provinces to urgently complete the rubber development programming, creating favourable conditions for businesses to lease land and cooperate with farmer households in shifting less-effective areas of perennial industrial plants into rubber areas.

In addition, the ministry has instructed localities to minimise the expansion of cassava acreage, especially in areas earmarked for other crops.

From now till 2010, construction of any cassava processing factory far from materials supply areas will not be permitted. Localities should create favourable conditions for modern processing facilities to purchase cassava for production.

The ministry said that unplanned development of crops and slash-and-burn practice for rubber and coffee planting are increasing in many localities, which not only affect the yield, quality and the market balance of the products, but also cause negative ecological effects.

Rice prices return to the normal

The prices of rice in Ho Chi Minh City have resumed to a stable level on April 30 and May 1 after the city's People's Committee asked supermarkets to provide sufficient supply to consumers.

Prices of different kinds of rice have reduced from VND 2,000 to 6,000. Most consumers chose supermarkets as they provided stable prices and unlimited quantity including 150 tonnes on April 30 and 100 tonnes on May 1.

In addition, rice trading corps and supermarkets sent mobile rice selling trucks to industrial zones, export processing zones and remote areas.

As a result, people in the city are buying rice with normal prices.

MoF okays set-up of airline insurance company

The Ministry of Finance has approved the establishment of the Vietnam Airlines Insurance (VNI) Company with initial charter capital of VND 500 billion (US $31.2 million).

VNI has some major founding shareholders, including Vietnam Airlines, the Vietnam Coal and Mineral Industries Group and Vietnam Machinery Installation Corporation among others.

The company will provide insurance services for air transport as well as marine and land transit, accident insurance and other non-life insurance services.

HCM City’s export value surges 34.6%

Ho Chi Minh City ’s export value soared 34.6% to US $7.48 billion in the first four months of the year.

The rise was mainly fueled by increases in earnings from garment and textile, which raked in US $1.08 billion, up 15%; footwear; US $457 million, up 9.1%; and wooden furniture, US $151 million, up 42.3%.

Crude oil remained the spearhead export line of the city as it brought home US $3.48 billion.

Seafood was the only product experiencing a decline in exports. It grossed over US $173 million in the period, a drop of 7.8% compared with the same time last year.

Seafood producers explained that they have been affected by petroleum price hike, which cost them 15-20% more than the previous period.

In the first four months, the country earned US $18.26 billion, a surge of 24.6% over the same period last year.

Vietnam’s seafood appreciated in EU market

Products of Ho Chi Minh City-based Vinh Hoan Seafood Co. was selected one of the best new products at the 2008 European Seafood Exhibition in Belgium .

According to Truong Dinh Hoe, Secretary General of the Vietnam Association of Seafood Exporters and Processors (VASEP), 44 local seafood companies attended the exhibition, including those who joined the event for the first time.

According to the Vietnam Commerce Office in Belgium , last year, Vietnam earned US $950 million from seafood export to the EU, a year-on-year increase of 27%. The figure is estimated to reach US $1.2 billion this year.

Vietnam’s seafood, especially those made from shrimps and catfish, are favoured by foreign clients, said To Thi Tuong Lan, VASEP’s Vice Secretary General.

Real estate website gets some ink

The US-owned real estate website www.metvuong.com is coming out free of charge in paper format for its customers and partners.

Along with listing properties for rent or sale, the publication covers articles about the market and real estate related services.

The monthly publication gives buyers, sellers, renters, and landlords another option to find or release information on land and houses, according to chairman Paul Song.

CB Rechard Ellis, Savills and Indochina Land are among the company’s partners.

Work starts on biogas plants

Construction on two biogas energy plants for Biogas Tay Ninh, a wholly foreign-owned company, began on Monday in the province.

Completion is expected in 10 months for the plants, worth a total of US$3million, which are being built under the build-operate-transfer (BOT) form.

The plants will use waste water discharge from tapioca processing facilities in Tay Ninh Province.

With an average capacity of 3,000 cubic metres of waste water a day, the plants will be able to produce up to 12,000 cubic metres of biogas.

"The plants will help us save energy and reduce up to 90 percent of pollutants from our waste water," said Khun Umnad, general director of the company Tapico Tay Ninh.

Tay Ninh produces one million tonnes of cassava annually, producing about 300,000 tonnes of tapioca.

Pharma plant opens in Phu Yen

Pymepharco Joint Stock Co has opened a plant to manufacture intravenous drugs in the central province of Phu Yen.

The VND184 billion (US$11.5 million) plant, utilising technology from India, Germany and Spain, will adhere to the strict manufacturing standards of the World Health Organisation. Pymepharco works with Stada Vietnam to produce the oral antibiotic Cefdinir.

Binh Dinh be dammed, with new projects

Construction of three hydropower plants in Vinh Thanh District in the south-central province of Binh Dinh began on Sunday.

Vinh Son Hydro-Electricity Plants 3,4 and 5, all situated upstream on the Kon River, are being built by the Vinh Son-Song Hinh Hydroelectricity Joint Stock Company and Vinh Son Investment Joint Stock Company.

The projects were initiated under a Government plan to develop the national electricity grid between 2006 and 2015.

The Vinh Son project 3 is expected to cost VND660 billion (US$41.5 million) and is funded by the Vinh Son-Song Hinh Hydroelectricity Joint Stock Company. When completed in 2010, it will have a capacity of 32MW.

The 18MW Vinh Son Hydroelectricity Plant 4 will cost VND400 billion (US$25 million) and is scheduled to be completed in 2011.

Vinh Son 5 will cost VND600 billion (US$38 million) and the 28MW plant will be ready by 2010.

Binh Duong’s got the juice

Binh Duong authorities have licensed Kirin Acecook Vietnam Ltd Co to build a fruit-juice bottling plant worth US$60 million in the My Phuoc 2 Industrial Zone in Ben Cat District.

The factory, expected to open in May 2009, will have a production capacity of four million bottles of juice a year.

The venture brings together the Kirin Beverage Group of Japan, the Acecook Group of Japan, and the Acecook Vietnam Joint Stock Co.

New PetroVietnam affiliate bows

PetroVietnam Construction Joint Stock Co, a subsidiary of the Vietnam Oil & Gas Group (PetroVietnam), made its debut at a ceremony in Ha Noi last Thursday.

With charter capital of US$ 32.8 million and nearly 3,000 employees, PVC designs and supplies steel structures, pipelines and petroleum storages for onshore and offshore oil and gas projects.

Thais come to Can Tho garden party

Refrigeration Engineering Joint Stock Co (REE), the Sai Gon Agricultural Joint Stock Co and Siam Orchids Thailand Co will create a tropical flower garden in the Cuu Long (Mekong) Delta City of Can Tho.

The garden, covering 200ha, will be built at a cost of VND150 billion (US$9.37 million), with completion expected in 2011. It will be a centre for the collection, hybridisation and production of flowers adapted to the Delta eco-system.

Sai Gon Cable Co to list

The Sai Gon Cable Co will list more than 29 million shares at the Ha Noi Securities Trading Centre on May 6.

The company, which specialises in the trade and production of electrical and telecom cables, is capitalised at VND300 billion (US$18.7 million), 31.1 per cent of which the State holds.

Vinacontrol revenue hits $1.57m

The Vietnam Superintendence and Inspection Co (Vinacontrol) has announced a net revenue of VND25.2 billion (US$1.57 million) in the first quarter of this year, a year-on-year rise of 43.7 per cent.

The company plans to earn a total revenue of VND100 billion this year and pay its shareholders a dividend of 12 per cent.

Vinacontrol specialises in surveying and judging product quality.

SJE earns $278,000 in Q1

The electrical company Song Da 11 has announced a post-tax profit of VND4.45 billion (US$278,000) in the first three months of the year, an increase of 26.3 per cent year-on-year. Shares in the company, coded SJE, closed at VND22,900 on Tuesday..

POT’s Q1 profit plunges 94.5%

The Post and Telecommunication Equipment Co has revealed a post-tax profit of VND258 million (US$16,100) from the first quarter of the year, a plummet of 94.5 per cent against the same period in 2007.

The company, capitalised at VND194.4 billion, pledges to continue with its planned projects this year in hope of achieving a pre-tax profit of VND45 billion on revenue of VND780 billion.

BVS to issue 30m shares

Bao Viet Securities Co, code share BVS, will issue an additional 30 million shares worth VND300 billion (US$18.7 million) on May 6 at the Ha Noi Securities Trading Centre.

The company said it intends to offer the shares to its existing shareholders at a price of VND32,000 a piece.

Ha Tien 1 buyback

The Ha Tien 1 Cement Co has said it will commission the Bao Viet Securities Co to buy back 300,000 shares from May 5 to July 5. The capital used to initiate the buyback will be mobilised from the company’s investment and development fund.

Hoa Phat earns $144 million

The Hoa Phat Co announced a total revenue of VND2.3 trillion (US$144 million) from the first quarter of this year, 30 per cent of its target for the entire year.

The company expects to earn a post-tax profit of more than VND451 billion, 60 per cent of its target figure. Hoa Phat is mainly involved in the trade and production of structural steel.

HCM City speeds up ODA disbursement

Ho Chi Minh City is speeding up the implementation of 23 projects funded by Official Development Assistance (ODA) official.

Most of the projects, which received over 30 trillion VND in ODA commitments, are large-scale transport works.

Since early this year, the city has disbursed over 896 billion VND (56 million USD) of ODA for the projects, or 27.5 percent of the yearly plan.

To accelerate the disbursement of ODA capital, the city is focusing on removing difficulties in site clearance and rising construction material prices.

HCM City targets growth in mechanical engineering

The Ho Chi Minh City People’s Committee has approved a plan to develop the mechanical engineering industry by 2020.

Under the plan, products with high added value and environmentally efficient will be favoured.

Key products will include autos, waterway transport vehicles, machinery and tools, and electric equipment.

All small mechanical establishments will be moved out of the city’s urban areas and modern ones will be moved to local industrial parks.

BUSINESS IN BRIEF 4/5

2008-05-04T17:25:00.000-07:00

Salt makers rake in the dough on rising prices

2008-05-04T17:24:00.001-07:00

23:03' 04/05/2008 (GMT+7)
A salt worker in Duc Pho District in the central province of Quang Ngai harvests salt.
Sharp increases in the price of salt has compelled salt workers in the Mekong (Cuu Long) Delta region to fill up their aquaculture areas to produce salt again.
Several years ago, the price of salt was low, even falling to VND100,000 (US$6.25) per tonne. Salt makers could hardly make ends meet even while working very hard.
Unable to earn a living from making salt, a lot of farmers in the Mekong Delta shifted to aquaculture. However, earlier this year, the price of salt increased considerably, rising to VND1 to 1.2 million ($62.50 - $75) per tonne.
The increase was due to bad weather-early and long-lasting rainy periods - which caused low yields for salt makers.
Farmers in these areas, who gain little from aquaculture, are shifting back to salt again, hoping to earn more money.
According to estimates by departments of agriculture and rural development nationwide, salt makers in Ben Tre Province’s biggest salt producing area widened their production area to 860ha, and Soc Trang Province’s Vinh Chau District now has 1,400ha for salt production. Meanwhile, farmers in Tra Vinh Province have filled up 100ha of shrimp-raising area to make salt.

Many farmers in Ninh Thuan Province even borrowed money to invest in making salt. Trinh De Thoai, a resident of Khanh Chu Village in Khanh Hai Commune of Ninh Hai District, borrowed money at a very high interest rate. According to him, the cost of salt production is about VND180,000 ($11.25) per tonne, while the price of salt is currently VND1 million per tonne. Salt makers can profit greatly from making salt this year, earning VND25 to 30 million (up to $1,825) per ha.

According to Chau Thanh Long, deputy director of Ninh Thuan Province’s Department of Agriculture and Rural Development, Ninh Hai District has 800ha of shrimp-raising area. But earlier this year farmers filled up all these area to make salt.

"Though the increase in salt prices can help farmers make better earnings, giving over all cultivation area to salt making will destroy the province’s long-term plan for aquaculture," said Long.

This has become an issue that is hard to control among farmers: whenever a product’s price is high, farmers will immediately widen production area, ignoring the warnings of local authorities and planners.

A good trend or not?

"We cannot ban farmers from making salt. We have warned them not to destroy aquaculture raising areas to make salt, since the price of salt has always been fluctuating and irregular. But farmers all see the short-term profit," said Nguyen Minh Dang, vice chairman of the Long Dien Tay Commune’s People’s Committee in Bac Lieu Province.

Le Hung Hien, head of the Economic Department of Ninh Thuoc District in Ninh Thuan Province, shared the same concerns, saying that if the price of salt comes down again in the coming years, farmers’ lives in these areas would become even harder.

Stable development

With long-term perspective, the application of modern production methods in making salt needs to be carried out so that farmers can carry on with this traditional job.

According to Deputy Minister of Agriculture and Rural Development Diep Kinh Tan, the sector will put priority investment into trial projects for salt production that apply new technologies in order to gradually modernise the salt-making process.

The goal is to improve the productivity of salt making from 50 - 60 tonnes per hectare to 75 - 80 tonnes per hectare, instead of massive widening in production area.

Ben Tre Province has been successful in applying a new production model by covering the surface of the salt making area with plastic canvas. This can help shorten production time as well as increase productivity and salt quality. However, this method is costly, at around VND4.2 million ($260) per ha.

Thus, local authorities are therefore urged to support salt makers in providing preferential borrowing interest or other policies that encourage the adoption of more advanced production methods.

Brokerages seek new market share in nation’s hinterlands

2008-05-04T17:23:00.001-07:00

18:16' 04/05/2008 (GMT+7)
Several securities firms have continued to expand their brokerage offices into provincial rural and urban areas to attract new investor activity despite the stock market downturn.
These securities groups are going on the offensive to grab their share of the growing nationwide demand for access to traded stocks in anticipation of a coming market recovery.
The boom in the number of new brokerage offices has been facilitated at the same time by new, easier administrative procedures for securities companies to establish localised branches.
Securities firms can now open local offices without first having to obtain permission from the State Securities Commission (SSC), and are simply required to report a new branch once it has already opened.
Brokerage houses have cut costs by co-ordinating with local enterprises. While the securities company focuses on personnel and equipment, the local enterprise provides the real estate in which the partnership is housed.

Expansion into the provinces has also been motivated by the mushrooming number of agencies in the trading hubs of Ha Noi, HCM City and Hai Phong City. As these markets approach the point of saturation, firms have begun to look outward in the search for greater transactional capacity.

For example, An Binh Securities Company (ABS) co-operated with Tat Thanh Co Ltd to set up an agency in Thai Nguyen City on April 24. This was the 16th local branch of ABS to open nationwide.

"The opening of this new ABS branch will satisfy the demand of this industrial city’s stock market investors," said an ABS representative.

On the same day, Capital Securities Co (CSC) opened an agency in northern Ha Nam Province. This is the first provincial branch of CSC, and also the first securities firm to open a local office in Ha Nam.

APEC Securities Co (APECS) opened an office in the northern Thai Nguyen Province on April 23 in co-ordination with Tan Cuong Hoang Binh Joint stock Co.

APECS recently opened branches in the four provinces of Long An, Dak Lak, Nam Dinh and Nha Trang City, as well as an office in Ha Noi.

On April 12, VNDirect Securities Co launched a local trading office at Vinh Yen Township in northern Vinh Phuc Province.

Nguyen Manh Hao, director general of APECS, said that since the firm’s inception it had pursued the development of a nationwide network of offices.

Hao expressed reservations about the promise of remote market connectivity, however, saying, "Although the application of modern technologies has made it possible to trade securities via telephone or online, someone still has to be there on the trading floors to make a deposit or withdrawal on an account, or register an account in the first place, so the on-site agency will always be necessary."

To operate such an agency, said Hao, it costs APECS, and other firms like it, tens of millions dong a month. This sum is not small, especially given the current difficult situation with the market as well as the fierce competition between securities firms.

Taking on the added cost of developing a nationwide brokerage network, therefore, is a long-term strategy on the part of APECS with a view towards staking out a dominant position in the market in advance of its rebound in the future, Hao added.

Viet Nam’s stock market is still in its infancy and it has great potential to develop under long-term vision. While the number of private individuals investing in securities throughout the country so far remains modest, analysts predict that the figure will continue rising steadily.

Hoang Van Hiep, a farmer in the central highland province of Lam Dong said: "While real estate prices are high and unstable, investment in securities becomes more attractive."

Another farmer in Lam Dong Province said: "Securities investment is a new and unfamiliar channel of financial activity for me, but definitely one that I intend to look into further and in which I hope to one day participate."

FDI disbursement hits new monthly record

2008-05-04T17:22:00.001-07:00

17:18' 04/05/2008 (GMT+7)
A Tatung Viet Nam Company worker installs refrigerator parts. FDI disbursement reached more than $1.4 billion in April.
VietNamNet Bridge - Foreign investment disbursed in April reached more than US$1.4 billion, the highest amount ever in a single month, according to the Ministry of Planning and Investment’s Foreign Investment Agency (FIA).
Disbursement of foreign direct investment (FDI) refers to actual capital investment made following an earlier commitment by foreign investors in the form of registering for an investment licence.
Disbursement, therefore, is a more accurate measure of the real impact of FDI on the economy than gross FDI totals based on registration of projects.
Disbursement follows all licensing procedures and approvals and reflects actual capital expenditures and commencement of business operations.
For instance, $8 billion was disbursed out of a total registered FDI of $21.3 billion last year, according to the FIA. There were now 8,600 foreign-invested projects pending or in progress nationwide, with $85 billion in registered capital, of which only $30 billion has been disbursed.
South Korea’s Halla Energy & Environment became the latest major foreign investor to disburse capital on Tuesday, breaking ground on a factory for producing heavy industrial equipment in the My Xuan B1 Industrial Park in the southern province of Ba Ria-Vung Tau.
"Having received an investment licence in January, we have now been able to begin construction of the facility from which products should hit the market by the end of this year. It’s unexpectedly fast," said Vina Halla general director Ho Yong Shon.

Le Minh Chau, director of the Ba Ria-Vung Tau industrial zones management board, said the province’s FDI disbursement rates, the ratio of disbursed capital over registered capital, had reached 45 per cent.

"Most foreign-invested pro-jects in the province are implemented on schedule," Chau said.

Dong Nai Department of Planning and Investment director Bo Ngoc Thu boasted that the province’s FDI disbursement rates had reached about 57 per cent.

In the southern province of Dong Nai, two real estate projects covering sites of 366ha and 305ha, had investment licences issued last Friday and saw construction begin only five days later, said Thu.

"We are fully aware of the importance of preparing sites for investors. Most foreign-invested projects in industrial zones can disburse capital as soon as investors receive investment licences," said Foreign Investment Agency director Phan Huu Thang.

Thang said authorities were making great efforts to reduce the lapse between registration and disbursement of capital. Disbursement currently lagged considerably behind registration, he said.

"Our goal is to have disbursement reach up to 50 per cent of last year’s registered capital, with a target to reach disbursement of about $10 billion this year," he said. "But a higher figure could be reached if all localities deal effectively with site clearance."

Dong Nai, besides building resettlement areas, has piloted farmers joining their capital with companies in the form of contributing their land to projects such as the $750 million Dong Nai Waterfront City and $305 million Aqua City.

"Farmers will enjoy direct benefits from their capital contributions, while avoiding disruption to their livelihoods," said the provincial Department of Planning and Investment.

Thang also said projects that fall behind schedule without legitimate reason would have their licences revoked. This month and next, in accordance with Ministry of Planning and Investment directions, authorities would conduct a review of projects in some major cities and provinces, recommending some for revocation of investment licences.

Trade gap narrowed to curb inflation

2008-05-04T17:21:00.000-07:00

17:10' 04/05/2008 (GMT+7)
The Ministry of Finance reported that, in first four months, the excess of import over export reached US $11.1 billion, equivalent to 60.8% of export turnover.

In his message on dealing with difficulties and obtaining sustainable socio-economic development, the PM emphasized that “the trade balance is a very important macro index. Trade deficit which increased in 2007 and kept going up in the first quarter of this year is threatening the macro-economic balance. This problem must be settled through boosting export and controlling import.”

To realise the PM’s directions, some technical barriers have been lifted to reduce the trade deficit. Export tax rate of minerals has been readjusted to control the export of raw materials: coal raised from 10% up to 15%, crude oil to 8%, pure and raw iron-ore to 20%. Import tax and special consumption tax have been raised for some luxury products, including CBU automobiles, spare parts, and electronic products.

Machinery and equipment continue to be imported to serve domestic production

In order to guarantee capital resources for producers and traders of exports, the State Bank confirmed, the credit structure has been readjusted towards increasing loans for effective projects, export and agricultural activities, rural areas, poor households and social policy-beneficiaries.

It was reported that the export turnover in the first four months was US $18.260 billion, up 27.6% as compared to the same period last year. Increases were seen in the turnover of most of exports in comparison with the same period of 2007, such as rice up 72.7%, plastic products 34.1%, tea 34%, textiles 24.5%, rubber 23.7%, wood furniture 22.5 %, and aqua-products 13.6%.

The April import turnover went down 2.8% against March. It was estimated to reach US $29.360 billion in the first four months, up 71% compared to the same period in 2007. The excess of import over export in this period was US $11.1 billion, equivalent to 60.8% of the export turnover.

Ministry urges stronger risk management for stock market

2008-05-04T17:18:00.000-07:00

22:40' 04/05/2008 (GMT+7)
Market regulators need better policies and procedures in place to manage crises and emergencies that may arise on the nation’s stock exchanges, the Ministry of Finance said in a decision earlier this week, recommending a project be set up to create and model such policies.
The measure was one of five economic recommendations that the ministry set forth in the decision.
The decision also said that regulators needed to establish without further delay an over-the-counter (OTC) market under the administration of the Ha Noi Securities Trading Centre, a step formally approved last year to reduce risks to investors in unsupervised OTC trading.
Regulators also needed to establish detailed criteria for listed companies to offer additional shares, the ministry decision stated.
"These things, although not new, will contribute to giving investors more optimism in their trading," said Nguyen Tien Dung, an independent analyst. "They should have been done earlier."
Dung said a project to devise responses to market crises and detailed regulation on additional offers were most needed at this time because they would help the market avoid some of the steep declines of the past.
"As of now, the overload of shares seems to be the main reason for the reversal of the exchange. If we had had an obvious plan to solve it from the outset, the market would not have fallen as deeply as it has."
The decision also addressed mechanisms for foreign investors as well as management of foreign capital inflows to the domestic exchange.
The decision was regarded as good news for investors during this week’s market holiday.
"The market could rebound early next week thanks in part to this news," Dung said. "But, whether it can spur the market depends on how long it takes to implement the proposed project."

India trade to reach $2 billion in 2008

2008-05-04T17:17:00.000-07:00

17:20' 04/05/2008 (GMT+7)
A Dien Quang Light Bulb Co worker controls a compact bulb production line. Bilateral trade with India is set to reach US$2 billion this year.
VietNamNet Bridge - Two-way trade between India and Vietnam is expected to reach US$2 billion in 2008, two years ahead of goals set in the joint statement issued nearly one year ago when the two countries established a strategic partnership.
With a population of 1.1 billion people and the second highest GDP growth rate in Asia, India offers good opportunities for Vietnamese markets, said Vietnam’s ambassador to India, Vu Quang Diem.
Major exported goods from Vietnam to India include pepper, rubber, computer hardware and electronic products, cinnamon bark and spice, and garment and textile products.
According to Diem, Vietnamese goods are competitive in the Indian market, evidenced by a 20 per cent annual growth rate in Vietnam’s exports to India over the past few years.
However, two-way trade between the two countries remains "modest," with the trade balance being in India’s favour.
The economic development gap is one of the major hinderances for trade promotion between India and Vietnam, Diem said.
The ASEAN-India Free Trade Agreement and the Vietnam-India Free Trade Agreement, soon to be signed, should promote trade between the two nations.
These agreements will create more favourable conditions for Vietnamese goods and enhance their market shares in the Indian market, said Diem.
2008 is a transitional year to implement the joint statement on strategic partnership between India and Vietnam.
The Vietnamese embassy in India is preparing campaigns to promote Vietnamese products and tourism. A number of Indian operations will be recommended to Vietnam for business and investment activities.
According to Diem, Prime Minister Nguyen Tan Dung’s visit to India in July 2007 helped bring in big investment projects from India to Vietnam.
These include the $527 million steel refinery project in Ba Ria-Vung Tau Province, the Indian Essar group’s $600 million oil exploration and exploitation project and two big steel projects with a more than $4 billion investment in Tata group in Ha Tinh Province. Last year India ranked sixth in foreign investment in Vietnam.

VietJetAir prepared for competition

2008-05-02T18:24:00.000-07:00

15:12' 02/05/2008 (GMT+7)
The country's third air carrier VietJet Aviation Joint Stock Co. (VietJetAir) is cooperating with PARC Aviation in recruiting senior executives to prepare for its operations in Vietnam. Robert Hughes, managing director of VietJetAir, talks with the Daily how the first private airline in Vietnam has readied itself for the take-off scheduled for late this year. Excerpts follow:
Could you elaborate on the agreement with PARC Aviation and what the Dublin firm can help with employment?
PARC Aviation will provide qualified pilots and officers who have the appropriate licenses and type ratings for the planes hat we will fly. The firm will also help us search for other specialists in aviation including managers with experience in other airline functions such as revenue and yield management. We have already consulted with PARC Aviation in building our business plan.
It is not easy to hire qualified aviation staff at the moment. How could VietJetAir do that only months ahead of the departure?

We have already sourced several qualified staff for our operations, and will train others to fill the short-term demand. For the longer term we will finalize agreements with training institutes for engineers. In addition, we are planning a pilot training scheme to train our own pilots. This is not a short-term easy solution; it will take many years to develop a team of qualified pilots and engineers.

Has VietJetAir signed any contract for aircraft lease or purchase, and how many aircraft does the company plan to have in the initial period of operations?

We are still in negotiations on aircraft, so I cannot divulge any details until the final agreement. Our negotiations involve up to 10 aircraft introduced into the fleet in the first two years while routes and operations are fine-tuned. Given the current economic instability in the global aviation market, we are being conservative, yet taking advantage of opportunities to secure capacity in the market. We will initially lease aircraft, but purchase them as soon as possible to reduce overall costs. Our planes will have approximately 130 economy class seats, and 12 premium-economy seats.

We will only have one type of aircraft, either Boeing 737s or Airbus 320s. We are focused on short-haul operations, between one and five hours, so we do not need a mixed fleet. This will help us control costs since we will only need one type of pilots, only one type of engineers, only one set of spare parts, etc. We expect to begin with two or three planes; add two or three more planes shortly thereafter, and add an additional five in the following year.

Will VietJetAir follow the standards of a low-cost carrier or a full-serviced airline?

Several low-cost carriers have learned that there is demand for a premium economy and have adjusted their offerings for the customer demand. For example, in Asia we have seen Nok Air add a premium economy class; in Australia Virgin Blue has also added a premium economy class; and in the U.S. JetBlue has many features not available in low-cost carriers. We believe there is a market for such an offering and will be fine-tuning our product for the market based on customer demand. Our fares will be competitive, since we will maintain a lean cost structure.

So, when will people be able to book fares for VietJetAir flights?

We will set our fares few months prior to departure, and will allow booking of flights at that time. Since we will initially fly domestically, the international fares will wait for another year or so.

It is said that several low-cost carriers are on the brink of bankruptcy due to soaring fuel prices. Does this problem affect or cause any delay in the take-off schedule of VietJetAir?

We still plan to depart in December 2008. The airline industry is in turmoil because of the fuel prices. The industry must raise fares to stay profitable and we believe this will reduce demand for air traffic somewhat, but we believe there will still be strong demand despite the higher fuel prices and fares. We expect that there will be some stability in the fuel price by the time we commence operations, and we will be able to set our fares at that. We are working to keep all other costs under control so we can keep fares competitive.

Do you think that licensing VietJetAir is an important mark in the opening of Vietnam's aviation industry to private investors?

Yes, this will allow increased mobilization of capital into an important sector of the economy. As the transportation infrastructure and offerings expand, this has indirect benefits to other sectors. Opening up sectors of the economy benefits consumers and service providers.

Vietnam is developing in many ways, with business expanding and tourism increasing. Both of these factors lead to increased demand in air travel. And with the tourism infrastructure that is being developed throughout the country, we see great opportunity for increased air traffic in the future. The challenge will be that other airlines see the same potential. This is the reality of business, and we are prepared to compete.

Vietnam's aviation sector is moving in the same direction that other countries have moved, but in Vietnam's own timeline. Neighboring countries that have opened up the industry have seen benefits from the increased air traffic. We expect the same benefits here in Vietnam.

Vietnam not very keen on rice cartel

2008-05-02T18:23:00.000-07:00

18:00' 02/05/2008 (GMT+7)
“Vietnam is not very keen on this idea. This is not the first time the idea has been proposed by Thailand,” said a senior official from the Ministry of Industry and Trade about a statement by Thai Prime Minister Samak Sundaravej that Vietnam had agreed to join a rice exporters’ cartel.
According to CNN, Samak told press in Bangkok Wednesday that Thailand, Vietnam, Cambodia, Laos and Myanmar had agreed in principle to form an Organization of Rice Exporting Countries, which would attempt to fix the price of rice on the international market.
However, a Deputy Minister of Industry and Trade told VietNamNet that Vietnam, the world’s second largest rice exporter after Thailand, has not yet made any official reaction to the initiative and a delegation from Thailand is coming to Vietnam to discuss it.
“The issue is really sensitive, so we are still carefully considering all aspects of it,” the official said.
The Thai announcement led to concern on the part of rice importing countries, many of them poor, who face the prospect of rice shortages and hunger due to the 80 percent rise in rice prices since the start of the year.
Rising rice prices are part of an overall increase in world food prices which UN’s World Food Programme recently called a tsunami that could drive many of the world’s poorest people to the brink of starvation.
Laos Foreign Ministry spokesman Yong Chanthalansy said Friday the Laotian government would "seriously consider" the idea of creating a cartel to gain "bargaining power," AP reported.
According to AP, Cambodia, which in the past has championed the rice cartel idea, also welcomed the latest proposal and said it was a "necessity" given the current global food crisis.
In early April, the Indian government announced a ban on exports of low-grade rice, which is essentially produced for domestic consumption, in an effort to control a surge in local food prices amid tightening supplies.
Vietnam and Cambodia, other major rice producers, also have placed restrictions on rice exports.
Meanwhile, Thailand recently decided to release more than two million tons of rice to the domestic market in order to maintain the price of rice in the country.

Making money produces more money

2008-05-02T18:21:00.000-07:00

16:50' 02/05/2008 (GMT+7)
Only gold and real estate now can bring positive real interest rates to investors. However, securities deserve to be the investment channel for the long term.
Currently, only gold and real estate can bring positive real interest rates to investors, because the profit these investments can bring is higher than the inflation rate (the real profit for gold investment is 8.5% while real estate 0.7%).
Meanwhile, other investment channels are bringing negative profit. Deposits, for example, have the nominal interest rate of 3%; however, the actual interest rate would be minus if considering the high consumer price index (103%: 109.19% = 94.33%), which means depositors are suffering the actual loss of 5.67% (100% - 94.3% = 5.67%).
As for US dollars and securities, both the nominal and actual profits are negative.
The US$ price by the end of March 2008 had decreased by 1.88% over December 2007, which meant the nominal loss of 1.88%. However, as the consumer price increased by 9.19% during that time, the actual loss US$ investors suffered is even bigger, at 10.14% (98.12%: 109.19% = 89.86% or 100% - 89.86% = 10.14%).
How about investments in securities? The VN Index on March 31, 2008 was 516.85 points, and on December 28, 2007 (the last trading session of 2007) was 927.02 points. This means that the VN Index on March 31 was 55.75% of that on December 28, 2007, or the nominal loss of 44.25%. However, if counting the loss due to the higher consumer price, the actual loss would be higher, at 48.94% (55.75%: 109.19% = 51.06% or 100% - 51.06% = 48.94%).
Three scenarios of CPI
If the CPI increase in the last nine months of the year is equal to the average CPI increase in the last nine months of the last 16 years (3.52%), the CPI increase will be over 13% for the whole year of 2008.
If the CPI increase in the last nine months of the year is equal to the average CPI increase in the last nine months of the last three years, 2005, 2006 and 2007 (4.17%), the CPI increase will be over 13.7% for 2008.
If the CPI increase in the last nine months of the year is equal to the average CPI increase in the last nine months of the last four years 2004-2007 (5.46%), the CPI increase will be 15.2%.
The third scenario seems the most likely. Some experts have even forecast higher inflation rates.
Which investment channels, then?
Though deposits have been bringing negative interest, people will still choose this investment channels thanks to its safety. Making deposits to get positive nominal profit and negative actual profit proves to be a better choice than other investment channels, which have both the nominal and actual profit negative.
Gold deserves to be not only the ‘safe shelter’ in the context of high inflation, but an attractive investment channel. The gold price is forecast to see further increases, since domestic prices are close to the world’s price, which is believed will escalate as a result of the US cutting US$ interest rates to deal with its economic recession.
The US dollar, which was once the No 1 choice of many investors, has become less attractive in the eyes of investors as the dollar has been devaluating against other hard foreign currencies like the euro, pound and Japanese yen. It is wiser to invest in non-dollar currencies instead of relying on the US dollar.
Securities have attracted 300,000 investors with 288 listed companies and the total market capitalisation value of VND315tril. As the VN Index has been falling since the beginning of the year, securities investors have turned their backs on the bourse.
However, some analysts have forecast that the VN Index will rebound to hit the 600 point threshold by the end of this year, an increase of 15%. And if the forecast becomes true, securities investments will bring more profit than deposits.
The real estate market witnessed three fevers (the first one occurred in 1993-1994, the second in 2001-2002 and the third in late 2007, early 2008) before falling now. The tightened monetary policy and the overly high construction material prices both have made real estate prices increase and real estate demand decrease.
However, analysts believe that in the long term, real estate will still be the right investment channel to inject money in. The rapid urbanisation, the policies on allowing Viet Kieu and foreigners to buy homes in Vietnam will make real estate prices increase further. However, the profit from real estate investments will not be high due to the policies on limiting construction areas and tax policies (tentative progressive tax, which aims to limit speculation, and personal income tax).

Int’l jewel fair to open in HCM City

2008-05-02T18:20:00.000-07:00

17:15' 02/05/2008 (GMT+7)
The inaugural International Jewellery Viet Nam 2008 (IJV 2008) fair will be held in HCM City from today through May 4.
Co-organised by the World Trade Fair Co Ltd and the Viet Nam Chamber of Commerce and Industry's Fair Organisation Co, more than 5,000 enterprises are expected to take part, 100 of which are foreign-based.
Catering to the needs of retailers, store buyers, and private collectors, the fair will cover all aspects of the jewellery market, including tools, displays, and packaging.
The fair's organisers see the event as a good opportunity for domestic jewellers to network and establish relations with foreign partners.
"We hope the fair will become the favoured destination for both wholesale and retail jewellers," said BK Chow, director of the World Trade Fair Co Ltd.
Some products to go on display include diamonds, precious stones, clocks, watches and pearls not to mention support services for enterprises engaged in jewellery production.
Attendees will have the chance to gaze at some of the most finely-crafted jewellery from around the world.
Vietnam at present hosts a high-number of jewellery producers and traders. Yet, their market presence and competitive edge is still relatively weak when compared to other nations. Moreover, domestic enterprises' understanding of the global jewellery market barely exists.
According to the Viet Nam Gemstones and Jewellery Association, Vietnamese demand for gold and jewellery products is about 30-35 tonnes per year, while demand for diamond and precious stones is this year forecast to nudge US$300mil.
No doubt, the domestic jewellery market will develop rapidly in the future as more and more foreign-invested enterprises identify Vietnam's firm potential

Listed companies in good health: VAFI

2008-05-02T18:19:00.000-07:00

16:53' 02/05/2008 (GMT+7)
VietNamNet Bridge – A quick survey by the Vietnam Association of Financial Investors (VAFI) showed that listed companies are operating well despite big difficulties. The association, therefore, has suggested informing investors soon about the good business performances of listed companies to calm them down.
According to Nguyen Hoang Hai, Secretary General of the Vietnam Association of Financial Investors (VAFI), the shocking monetary policy the State Bank of Vietnam has been following recently has had big influences on the stock market and businesses.
In this circumstance, speculators have spread rumours about the poor operations of businesses. The difficulties have been exaggerated to make it seem as though Vietnam was facing an economic crisis.
However, the recent survey by VAFI of some listed companies in the fields of banking, insurance, construction and real estate, transportation, rubber and pharmaceuticals showed that the companies are still maintaining the high growth rates recorded during the fourth quarter of 2007.
Construction companies are facing temporary difficulties. However, right from 2005, they all anticipated the difficulties they would face and price increases, and they all have had the plans to deal with the problems.
Hai said that in such a situation, securities investors may want to know about the ‘health’ of listed companies in the first quarter of 2008 sooner than usual. Therefore, according to him, listed companies should release their business results from the first quarter as soon as possible.
When asked if any mistakes could occur if listed companies announced business results early, Hai said that in order to avoid mistakes, listed companies could release figures equal to or lower than the actual figures. Moreover, listed companies should provide investors with reports which interpret how the inflation has affected their business performance.
Hai called the early announcement an effective measure to help recover the stock market.
Another measure Hai thinks listed companies should take is having their management boards buy more of their companies’ shares while limiting selling shares.
In fact, in the last time, some management boards of listed companies did try to buy shares of their companies, which helped calm investors down.
“The share purchase of management board members shows the responsibility of companies’ managers towards their shareholders,” Hai said

Indian investment wave flows into Vietnam

2008-05-02T18:18:00.000-07:00

17:12' 02/05/2008 (GMT+7)
The lifting of Vietnam-India relations to the level of “strategic partnership” has created a breakthrough with a new wave of Indian investors flowing into the Southeast Asian country, said a Vietnamese diplomat.

India's silicon valley
In an interview printed on Lao dong Newspaper on May 2, Vietnamese Ambassador to India Vu Quang Diem said India had moved to the 28 th place among foreign direct investors in Vietnam in 2006. In 2007, it made an impressive advance to the 6 th among the top ten countries and territories directly investing in Vietnam .

The ambassador said Vietnam and India will strive to increase their bilateral trade turnover to 2 billion USD in 2008, 2 years ahead of schedule. Many made-in-Vietnam products have earned firm foothold in India over the past years, including pepper, rubber, hardware, electronics and garments and textiles.

However, the ambassador noted the trade volume between the two countries remained modest with an average growth rate of India-bound export standing at just 20 percent.

According to the Vietnamese diplomat, the signing of free trade agreement between India and the Association of Southeast Asian Nations (ASEAN) and the Vietnam-India free trade agreement would help to boost commodity exchange between the two countries.

The Vietnamese Embassy in India is carrying out trade and tourism promotion programmes in India in a move to draw giant Indian corporations to operate in Vietnam , said Ambassador Diem.

Interest rate: new ceiling, old story

2008-05-02T18:17:00.000-07:00

16:36' 02/05/2008 (GMT+7)
Most commercial banks have been applying the new ceiling interest rate of 12% instead of 11% after the rate was agreed upon by Vietnam Banking Association members. However, bankers say that the new ceiling interest rate won’t help settle the existing problems.
Interest rates returning to previous levels
The deposit volume, which has been decreasing over the last one month, has not seen any improvement in the last few days, since banks applied the new ceiling interest rate.
The new ceiling interest rate of 12%, though representing a 1% increase over the previously applied level, proves to be nothing compared with the consumer price increase. In April, the CPI increased by another 2.2%, raising the total increase of CPI in the first four months of the year to 11.6%, not attractive enough to lure depositors.
Money escaping from banks to gold shops
Non-bank capital mobilisation and lending activities are developing rapidly, especially in the Cuu Long River Delta. People who have idle money now lend to gold shops instead of banks, and the gold shops use that money for re-lending.
While lending to gold shops, people can get higher interest rates (if they make bank deposits, they can get 12% per annum at maximum). Meanwhile, lenders can get loans from gold shops, since many banks have stopped lending, while just focusing on collecting debts.
In fact, commercial banks want more than the ceiling interest rate increase. They want the ceiling interest rate scheme to be removed. The market interest rates must be decided by the market supply and demand.
“The same interest rates will make banks alike,” the director of a joint stock bank in Hanoi said.
Borrowers seem to get no benefit with the interest rate increase. They want loans, however, as the VND is in shortage because the interest rates are not attractive enough to mobilise capital, they cannot get loans.
Lacking capital, banks cannot sit still
Banks now need capital dearly, but they cannot publicly announce they will raise deposit interest rates in order to lure more capital. However, they cannot just sit still.
Some commercial banks are reportedly trying to persuade big businesses which have a big volume of idle capital to draw money from other banks to make deposits at their banks, promising to pay additional interest rates.
Some corporations, realising that banks need capital but cannot mobilise capital from the public due to the limited interest rates, have been offering to lend to banks at interest rates higher than the ceiling rate
The Deputy General Director of a joint stock bank said that the tricks played by some banks have distressed serious banks. He complained that he is under heavy pressure to ‘do something’ to lure capital to the bank instead of respecting the regulation on the ceiling interest rate.
Some sources say that some insurance companies which have huge capital sources are offering to make deposits at banks if banks agree to pay interest rates of 3-4% higher.
Banks are wise enough to accept to pay interest rates of an additional 3-4%: i.e. they would have to pay 12-13% per annum for the capital. If they do not accept the ‘underground’ interest rates, they would have to borrow money at much higher costs on the interbank market, where the lending interest rate hovers around 20%.
Banks have a lot of methods to legalise the additional interest rates they have to pay. For example, businesses and banks sign contracts on lending authorisation: i.e. businesses give money to banks for banks to lend to clients at different interest rates.
Observers say that borrowers will not benefit from the ceiling interest rate scheme. Banks, of course, calculate all the expenses for capital mobilisation, including the additional interest rates, and require high lending interest rates from borrowers.

Preparations hastened for first nuclear power plant

2008-05-02T18:16:00.000-07:00

17:07' 02/05/2008 (GMT+7)
Preparations for Vietnam ’s first nuclear power plant are underway with an investment report expected for completion before the end of 2008, according to an official from the Electricity of Vietnam (EVN).

Sketch of the nuclear power plant in Phuoc Vinh commune, Ninh Phuoc district, Ninh Thuan province
The investment plan will be submitted to the National Assembly for approval in 2009, said EVN Deputy Director General Nguyen Manh Hung.

Construction of the plant is slated for 2012-2014 in central Ninh Thuan province. The first generator of the nuclear power plant is scheduled to be put into operation by 2020 in order to supply an additional 11,000 MW of nuclear power to the national electricity grid by 2025.

The 12 th National Assembly plans to discuss and adopt a Nuclear Power Law at its upcoming third session in a move to create legal foundation for the construction of the plant.

Investment for nuclear power plant got the go ahead by the Prime Minister as part of a national electricity development plan through 2006-2015.

The Government is guiding the EVN in plans to build two other nuclear power plants with a total capacity of 4,000 MW.

EVN has so far been entrusted to build 25 plants with a total capacity of more than 33,200 MW. However, the EVN noted it is still necessary to invest and put into operation more power plants from now until 2015 to supply a total output of nearly 58,500 MW of electricity in order to meet growing electricity demands.

Construction of 45 power plants are currently underway nationwide with a total capacity of nearly 14.6 MW of electricity, which are expected to be operational from now until the decade-end.

Vinashin ups equitisation to get ahead

2008-05-02T18:15:00.000-07:00

17:05' 02/05/2008 (GMT+7)
The Viet Nam Shipbuilding Industry Group (Vinashin) said it will finalise procedures to equitise its four leading subsidiaries by the end of the second quarter in a bid to sharpen its competitiveness.
Those subsidiaries include the Nam Ha Shipbuilding Co, Can Tho Maritime Transportation Co, Phu Yen Shipbuilding Industry Complex and the Quang Binh Shipbuilding Industry Complex, the country's largest shipbuilder said.
Vinashin, which has already equitised six subsidiaries in the first quarter, said it plans to kick off the equitisation of 12 subsidiaries by the end of the year.
The Ha Noi-based industry giant announced earlier this month that it earned a revenue of VND5.1tril (US$318.7mil) in the first quarter of the year, an increase of 108% over last year.
The nation's largest shipbuilder attributed the boom in business to its strategy of progressive reinvestment, which helped to enhance its production capacity.
In the first three months of the year, Vinashin built as many as 50 large vessels ranging from 4,000 DWT to 105,000 DWT (dead weight tonnes) as well as dozens of smaller vessels for either private use or maritime transport.
The company, which has 40 subsidiaries, recruited an additional 7,000 labourers in the first-quarter. It is now one of the Vietnam's biggest employers with a total workforce of 78,500 employees.
So far Vinashin, which hopes to earn VND40tril this year, has secured contracts with both domestic and foreign clients worth a total of $12bil.
The Ha Noi-based company signed 22 contracts worth $2bil at the shipping exhibition Vietship last month.
The contracts covered-shipbuilding, maritime transport, developing ancillary industries, as well as financing and insurance.
According to Vinashin, sea-related industries represent 53-55% of Vietnam's GDP, and around 60% of total export turnover.
The company is now the fifth largest shipbuilder in the world, according to Fairplay, a UK-based international shipping magazine.
In an effort to maintain its dominant market position, Vinashin, which brought in $2.5bil last year, plans to increase its localisation rate to 65% by 2015.

Retail network large, but not professional: MOIT

2008-05-02T18:14:00.001-07:00

16:30' 02/05/2008 (GMT+7)
With such a market, many retailers but unorganised, the domestic market proves to be fragile, according to Hoang Tho Xuan, Director of the Department for Domestic Market Trade Policies. The rice price fever, which took place several days ago, is an example.
Hoang Tho Xuan, Director of the Department for Domestic Market Trade Policies
Problems exist not only in the rice distribution network, but in the distribution of other products as well. The bad distribution network does not mean that there are few distributors, but it means that the network is not professional. The state should be blamed for this as it still cannot draw up a good scenario for the forming of a healthy and suitable market.
What are the weakest points of the current retail network?
There are two weak points of the current retail network. As there is no pillar, the distribution network proves to be fragile, while the market is controlled by the psychology of sellers and buyers. If there is a rumour that prices will go up, sellers will stop selling in the hope of selling products later to get bigger profit. The ‘wait-and-see’ attitude of sellers creates an artificial fever, which pushes prices up, and prompts speculation.
Do you mean that the market will continue to experience blows as it did some days ago with the rice price until the current way of market organising is improved?
I can say that the distribution network of cement is okay, while the distribution networks of fertiliser, steel and ingot steel have problems. Producers can only make products, while they do not know where their products go.
Steel and fertiliser mills have sales agents, but the agents do not operate as agents in the true sense of the word. That explains why steel and fertiliser have fluctuated so heavily recently. The price increases in the world’s market make up 80% of the domestic price increases, while the improper distribution network makes up another 20% of the domestic price escalation.
Experts say that one problem now is that enterprises do not have large storehouses to store reserves of commodities. Do you think this problem must be settled right now?
In fact, many enterprises once had big land plots for storehouses. However, due to the loose management mechanism, many of them have been renting land to get money or turning the land plots into restaurants. And now, they complain that they do not have land for workshop premises.
How do you think Vietnam’s distribution network should develop in the time to come?
Hapro, Satra, Intimex and Fivimex prove to be good models for developing the retail network. However, the said retailers should still do a lot more work to improve themselves. Their role remained relatively dim in the last commodity fever.
What will the state do to develop the retail network?
The Ministry of Industry and Trade is drawing up a project on developing key distribution networks in order to ensure the sustainable development of the domestic market.
The ministry is going to focus on developing three key networks, the distribution network of strategic material products (petroleum, steel, fertiliser, medicine); the distribution network of general consumer products; and the distribution network of food and foodstuff products.

A ministry to supervise state owned economic groups?

2008-05-02T18:11:00.000-07:00

17:02' 02/05/2008 (GMT+7)
According to Nguyen Dinh Cung, Head of the Macroeconomic Policy Department under the Central Institute for Economic Management (CIEM), it is now the right time to set up an agency at the ministerial level to supervise the operation of state owned economic groups and manage the state owned capital in enterprises.
Economic groups must focus on main business fields
MPI Minister: It’s necessary to control outward investments
What is your comment about the fact that economic groups are now tending to encroach on each other’s business fields, while neglecting their main business fields?
Nguyen Dinh Cung, Head of the Macroeconomic Policy Department under the Central Institute for Economic Management (CIEM)
In theory, the diversification of business that brings optimum profit to shareholders and the owners (the state, in this case) with the minimum cost, should be seen as a good thing.
However, experience shows that businesses should not diversify business spontaneously, but should thoroughly consider their competitive edges. Every business should have a forte business field, where it can gather its strength before thinking of expanding its business into other fields.
In general, the so-called ‘other business fields’ always have close links with main business fields. For example, garment companies think of producing materials, while transport companies think of export services, while they should not think of jumping into the real estate market.
However, in fact, I know some groups are ready to pay VND100bil to set up an online newspaper, a TV channel or media company.
As the owner of the economic groups and general corporations, the state needs to appraise the outward investments by the groups and corporations and make decisions on whether to allow them to implement the projects. This is the right and the responsibility of the owner.
One of the big worries experts have pointed out is that economic groups tend to establish their own banks which will lend to other members in the groups. The government has given the nod to the establishment of PetroVietnam Bank. What do you think about this?
I think that Vietnam is following Japan’s corporate governance model, in which the corporate governance is based on the bank as the centre. However, the difference is that in Japan, the banks are not set up by enterprises, but were established a long time ago by imperial families and are now operating as big joint stock companies.
The banks make very few investments in big corporations and economic groups, just 1-2% of total investments.
Some experts say that the establishment of banks under economic groups should be allowed if the banks can bring profit. Do you agree with the viewpoint?
No, I don’t, because there exist conflicts of interest. Economic groups, as the owners of the banks, have the right to order the banks to provide loans to one project or another, while not considering the efficiency of the capital use. That is the biggest risk of the interest conflict.
I think that private run economic groups can establish their own banks, while state owned groups should not.
What is your viewpoint about the need to separate the roles of the state as management agency and owner of enterprises?
I think that we must separate the two roles of the state. Ministries should not undertake the role of the owner of enterprises. We strongly recommend the establishment of a ministry which takes the responsibility of managing state owned capital in enterprises.
The operational State Capital Investment Corporation (SCIC) does not take on this role well in the current circumstances. I mean that the ministry should have competence, capability and political position to undertake the capital management, but the operation of the ministry does not link to the state management work.

Building powerful domestic economic groups

2008-05-01T15:55:00.003-07:00

13:36' 01/05/2008 (GMT+7)

VietNamNet Bridge - The significance of an economic group lies in its role of institutionally administrating businesses, not only in its name. To develop powerful economic groups, apart from creating a clear legal corridor, businesses should exert a greater effort to secure their own potential.

In the context when the Vietnamese economy is deeply integrating into the world economy, domestic businesses must compete on an equal footing with multinational economic groups at home. Hence, it is essential to establish a number of powerful groups involved in the key economic sectors, which will serve as a driving force behind the development of the national economy.

The concept of the economic group model is nothing new to the development of the global economy. Many major economic groups in the world are currently being restructured with the trend leaning towards merging and buying back stock.

In 2006, the total value of mergers and takeovers of economic groups in the world amounted to more than US$3,600 billion while the figure in 2007 hit a record high of US$4,400 billion, up by 21 percent over 2006. This trend has begun to have a certain impact on Vietnam’s economic development as well as its businesses’ operations.

At present, the establishment of economic groups in Vietnam in reality, means only a change in name and not in operation. Choosing this path, they will face unforeseeable difficulties if the criteria and the nature of the economic entity are not clearly defined. Meanwhile, the common model of a global economic group is based on the fact that affiliated companies have to complement each other in terms of production scale and types of products. This is also a good way of accumulating capital and raising the financial potential of groups.

Over the past five years, the private economic sector in Vietnam has maintained an annual growth rate of 10 percent on average and many private companies’ revenues have increased by more than 50 percent a year. The strong growth of this economic sector over the past decade has contributed a great deal to boosting the country’s economic development. Due to the fact that Vietnam is developing from a planned economy in which State-run businesses play a nearly absolute role, most Vietnamese groups are derived from powerful corporations.

Seven out of eight pilot projects to set up economic groups based on the Government’s Decree 91 have been adopted so far. These are the Post and Telecommunication Corporation, the Coal and Mineral Corporation, the Garments and Textiles Corporation, the Electricity of Vietnam, the Shipbuilding Industry Corporation, the Oil and Gas Corporation and the Rubber Corporation. In addition, there is a project to equitise the Vietnam Insurance Corporation in order to establish the Bao Viet Financial Insurance Group.

However, the slow implementation of such pilot projects has affected the process of equitising State- run enterprises.

As many as 108 corporations have yet to be equitised and the Vietnamese Government is resolved to complete the equitisation of all these corporations to post their shares on the stock market by 2010.

Plastics industry generates $200m in Q1

2008-05-01T15:55:00.001-07:00

13:46' 01/05/2008 (GMT+7)

VietNamNet Bridge - The nation’s plastics industry earned nearly US$200 million in the first quarter, thus is well on the way to meeting its $1 billion 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 hangover. This time around, however, MoIT statistics show that the industry recorded a year-on-year growth rate of more than 35 per cent in the first quarter.

Viet Nam’s plastics exports have firm potential as its growth rates are high, just behind industrial products, pepper and coffee. Last year, plastics had an export growth rate of 135 per cent.

The United Nations said that besides benefiting from comparatively low tariffs, Viet Nam’s plastics exporters were good at exploiting new markets.

Vietnamese plastic products have been exported to Japan, China, India, the Middle East and Africa.

However, industry officials admit that like other industries, plastics producers are confronted with escalating costs.

Deputy chairman of the HCM City Plastics Association, Tran Cong Hoang Quoc Trang, said the industry was hindered by the rising cost of input materials.

Pham Thi Kim Tan of Visingpack plastics, said producers were restricted as they could not afford to import raw materials.

The industry imports nearly 70 per cent of the raw materials necessary for production.

Besides increases of 30 per cent for raw materials and 10 per cent for shipping, producers are now subject to monthly lending interest rates of 1.5-1.6 per cent from 0.85-0.95 per cent earlier in the month.

Tan said producers faced big challenges in the time ahead as they had vowed not to raise their prices in a bid to shield consumers from inflation "Most plastics producers only meet contractual obligations to uphold their reputation."

Le Quang Doanh from Binh Minh plastics Joint Stock Company recommended producers focus on modernising equipment to lift output and cut input costs.

Meanwhile, MoIT suggests plastics producers form alliances to meet large and long-term exporting contracts. Currently, most producers could only meet small orders as most of the nation’s 1,400 plastics producers are small to medium-sized enterprises.

The ministry also advises producers to apply new technology to churn out high-tech products, which can be used in automobiles, motorbikes, electronics, toys and consumer plastic products, in a move to augment added value.

Phat Dat set for $530m real estate projects

2008-05-01T15:54:00.001-07:00

13:40' 01/05/2008 (GMT+7)

VietNamNet Bridge - Real estate developer Phat Dat Corporation will begin two major projects this year at a total investment of around VND8.5 trillion (US$530 million).

The company’s chairman, Nguyen Van Dat, said on Sunday that Phat Dat would break ground for The EverRich 2 building in the next quarter.

Located on a more than 11 ha of land in District 7, the project is expected to be completed in early 2013, offering more than 3,200 apartments and commercial space. Another VND1 trillion will be invested in a five-star hotel and resort project in Cam Ranh in Khanh Hoa Province and completion is slated for 2011.

Dat plans to increase his company’s chartered capital to VND1.5 trillion this year from the current VND1.3 trillion.

He also talked about issuing project bonds to raise funds for the projects.

Phat Dat has developed a list of projects that will begin next year.

They include The EverRich 3 apartment project, also in District 7, the office building The EverRich Plaza in District 5, two five-star hotel and resort projects on Phu Quoc Island and Hoi An. Its first The EverRich apartment project began in 2006 with an investment of VND1.1 trillion. When completed by the end of next year, it will have more than 300 units and five floors for a trading centre.

Last year Phat Dat achieved a turnover of almost VND17 billion and netted a profit of VND5.9 billion. Turnover is expected to be VND64 billion and the deputy general director, Nguyen Thi My Hao, said the profit growth rate would be much higher than that of turnover. The company also plans to list at the HCM City Stock Exchange next year.

Renovation of State-run enterprises needs a breakthrough

2008-05-01T15:53:00.000-07:00

13:35' 01/05/2008 (GMT+7)

- Vietnamese State-run enterprises, economic groups and corporations need reforms to become more effective and competitive, said Deputy Prime Minister Nguyen Sinh Hung.

At a recent conference on renovating the completely state-owned enterprises, it was reported that in 2007, 271 enterprises were reshuffled, raising the number of enterprises of this kind to more than 5,300, including nearly 4,000 equitised enterprises.

Reports from over 1,600 enterprises that have been equitised for more than one year show that there have been considerable increases in their registered capital, revenues, profits, contributions to the state budget, workers’ incomes and dividends. However, up to 109 enterprises (or 7.1 percent of the total) have suffered losses.

In the 2007-2010 period, more than 1,500 enterprises need to be reformed but only 271 have been reshuffled, accounting for one fifths of the set target.

The ministries and sectors have attributed this situation to the fact that most of target enterprises are in the public sector, facing limited capital and concerning land and financial problems.

Phi Thai Binh, Vice Chairman of the Hanoi city People’s Committee, said equitisation policies have led to new issues relating to land prices.

Reports also say that as much as nearly VND500,000 billion has been mobilized by firms themselves, which helps eased the burden on the state.

In fact, a number of corporations have high financial liability, such as the transport construction companies, the Vietnam Shipbuilding Industry Group (Vinashin) and the Vietnam Machinery Erection Corporation (Lilama). This may pose a risk to payment and reduce the efficiency of investment due to a large volume of bank’s interest rates.

It’s worth noting that pouring financial sources and getting involved in the stock market have become quite popular. Vinashin alone invested up to VND3,323 billion (1.1 time higher than its asset) into securities trading, banking, insurance and real estate sectors. Obviously, this group spent its loans on these activities. According to Vinashin General Director Pham Thanh Binh, since the group’s establishment, its total assets have now increased to VND80,000 billion from only VND200 billion 12 years ago, while its revenue rose from VND100 billion at the beginning up to VND40,000 billion at present. The group’s liability is currently estimated at nearly VND50,000 billion, he added.

Explaining why Vinaship spent a large amount of money on other sectors, Mr Binh said that it is impossible to make profits from the shipbuilding sector in a short period of time as it is a heavy industry. Therefore, the group must think of other way to earn money in the immediate period by investing in high-income sectors such as banking and insurance in order to serve its long-term strategy. However, he said this type of investment is banned by the Government.

In addition, the restructuring of agro-forestry farms is also facing many difficulties. Central Highland Dak Lak province planned to restructured and renewed eight agro-forestry farms. Up to now, only one of these farms has been restructured as most of them are suffering losses and seeking loans from banks.

Speaking at the conference, Deputy Prime Minister Nguyen Sinh Hung highly valued achievements of equitised businesses thanks to increases in revenue, profits, labour force and investment capacity. This has demonstrated the correctness of the Party and State’s policies and businesses should persist with the equitisation process.

Mr Hung also asked businesses, sectors and localities to review and boost the restructuring and renewing of State-owned enterprises so as to complete the etuitisation process by 2010. For State-owned agro-forestry farms, the Government has not yet mapped out equitisation plans, but will restructure and renew them, the Deputy PM added.

Standard Chartered advises exchange-rate caution

2008-05-01T15:51:00.000-07:00

VietNamNet Bridge - Vietnam should ensure the exchange rate for the dong is balanced against the need to reduce its burgeoning trade deficit, warns Standard Chartered Bank in its latest report.

"We expect the USD/VND to move sideways in coming months until the trade deficit situation improves," the bank’s senior Southeast Asian researcher, Tai Hui, writes in the report.

The economist forecasts a USD/VND surge to 16,500, or a 2.35 per cent depreciation of the dong, by the end of this year.

Depreciation of the dong could be expected to make imports more expensive and so prevent a balance of payments crisis amid the priority effort to defeat inflation.

But an Economic Management Institute senior economist told Viet Nam News that devaluation of the dong was unlikely to reduce the import bill.

Viet Nam had to buy refined petroleum, fertiliser, construction materials, and spare parts to maintain and develop its economy, he said.

As a developing country, it could not reduce its demand for these imports.

Viet Nam’s first-quarter trade deficit grew by an astonishing 66 per cent to US$7.4 billion against the three months of last year.

Oil, steel and capital goods were responsible for the jump.

The growth in exports was 23.3 per cent.

Standard Chartered warns that any sharp reversal in capital inflow could make Viet Nam – with its modest foreign exchange reserves of about $20-25 billion – vulnerable to an external payment crisis.

Any weakening of the dong will be similar to China’s action to help reduce its trade deficit of late 1993 and early 1994, the report says.

"This is an extreme measure and would cause significant volatility in the economy," says Tai Hui.

Catch-22

The trade deficit is a catch 22 for the Viet Nam Government.

A weakened dong might narrow the widening trade deficit and prevent an external payment crisis with any sharp reversal of capital inflows.

But a strong dong is needed to curb the price of imports and control inflation.

Year-on-year inflation was at 21.42 per cent for April against a year-on-year increase of 19.39 per cent for March.

The Standard Chartered report argues that while exchange-rate policy is used as the first defence against inflation in many countries, in Viet Nam the central bank uses it to signal intent rather than to control commercial lending rates.

The bank believes that the exchange rate is no longer an exclusive tool to fight inflation.

It says further hikes in the base interest rate and bank reserve requirements; an open market with strict investment management; higher agricultural output and stabilised prices for primary commodities such as food, petroleum, medicines, steel and fertiliser was likely to be more effective.

Open policy promises positive changes in human resource development

2008-05-01T15:50:00.002-07:00

22:56' 01/05/2008 (GMT+7)

VietNamNet Bridge - The Vietnamese Government’s decision to abolish its previous decree to cap the foreign workforce at 3 percent at businesses is considered as a move aiming at creating a new generation of managers in Vietnam.

As the country is facing a serious shortage of managers of medium and high level, it is necessary to take a policy wide open for foreign experts, Walter Blocker, CEO of Gannon Co. said.

Those Vietnamese who are holding high-level posts at enterprises had been either trained or worked at foreign firms for periods. Hence, the open policy for foreign managers will help improve the quality of local experts, Blocker elaborated.

Sharing the same view with Walter Blocker, Phan Thi Thuy Duong, an expert of Pricewaterhouse Cooper in Vietnam , said the lifting of the three-percent cap on foreign workforce will enable enterprises to be more active in their human resource strategy.

The new policy provides enterprises with more chances in recruiting their employees in the context that many local job-seekers are not qualified enough, and eases the shortage of managers in some sectors, pundits said.
Regarding the worry about a possible wave of foreign managers seeking jobs in Vietnam in the near future, Doan Mau Diep, Director of the Labour and Social Institute under the Ministry of Labour, War Invalids and Social Affairs, pointed out the fact that enterprises always prefer local employees due to their deep understanding of the local culture, their relations at their native country as well as low cost.

At the same time, enterprises are working out long-term strategy for local personnel development with the hope in the future, these well-trained people will fill almost all the posts previously held by foreigners. “A Vietnamese, who was trained in a multi-cultural and modern environment to get good work skills is a dream of many enterprises, an expert said.

According to the website vietnamworks.com, foreign workers recruited by Vietnamese enterprises in the first quarter this year increased 67 percent compared against late 2007. This trend is forecast to continue in the coming time.

Danang faces glut of homes

2008-05-01T15:50:00.001-07:00

23:32' 01/05/2008 (GMT+7)

VietNamNet Bridge - Concerns have been raised over the possible sales glut of homes in Danang as developers flock to the central city.

Although local authorities and developers claim the future is bright for real estate development in the city, which is the economic spearhead of the central Vietnam, some industry insiders point out demand remains modest while the market is in danger of being oversupplied.

“With so many projects planned for Danang it is a big question of how to sell,” said Nguyen Quang Ninh, business development director of Indochina Land, the real estate division of Indochina Capital.

Ninh is concerned over developers building a dozen of residential, hotel, office and new townships in Danang at a time when sales of other properties are slow.

VinaCapital has broken ground for construction of a 9-hectare estate by the Han River, which will be completed in the next 10 years, featuring high-end apartments, hotels, offices, shopping mall and international school. The development cost is around $325 million.
Korean firm Daewon is building two estates, including the $250 million Da Phuoc International City and $30 million Cantavil apartment complex.

Local firms such as Vien Dong Land and Dong A Real Estate are building two large complexes downtown with investment capital of $180 million and $60 million respectively. Vu Chau Long Real Estate Joint Stock Company recently broke ground for construction of two properties costing some $235 million.

Resorts under construction along the coast, include villas and apartments incorporated in resort such as Hyatt Regency, Raffles, Son Tra Resort and Spa and the second phase of Furama.

Ninh said it would not be easy for these properties to sell as local demand for hotels, offices and apartments was still small, which was reflected through the sales of 95 apartments at the Indochina Riverside Towers.

Sales of these condominiums have been slow over the last two years and the developers were only able to sell out all recently when the market heated up late last year and early last year. Only 20 per cent of customers are locals.

Indochina Riverside Towers is the first condominium in Danang. The other, Danang Plaza at No.6 Nguyen Du street, is still under construction.

Ninh said as demand was weak, it would be challenging for developers to pre-sell their properties and as a result, construction might be put on ice in case developers were not financially strong enough. There is also a lack of flights to bring tourists to Danang and local hoteliers are asking for more flights from South Korea and Hong Kong.

“It will be very difficult for us to sell because demand is too weak,” said a developer, who is building a new township in the city.
“However, we can not abandon the project because we have spent quite a lot on compensation and land clearance.”

However, some others remain bullish over the future of Danang. Dam Quang Tuan, chairman of Investment and Construction Joint Stock Company 579 said Danang had potential to become a service and tourist hub of the Southeast Asia.

“There is no adequate information to have an accurate assessment of local real estate market. But, I am confident Danang can be developed in the way Singapore has done,” said Tuan.

HCM City’s export value surges 34.6 percent

2008-05-01T15:49:00.001-07:00

22:49' 01/05/2008 (GMT+7)

VietNamNet Bridge - Ho Chi Minh City ’s export value soared 34.6 percent to 7.48 billion USD in the first four months of the year.

The rise was mainly fueled by increases in earnings from garment and textile, which raked in 1.08 billion USD, up 15 percent; footwear; 457 million USD, up 9.1 percent; and wooden furniture, 151 million USD, up 42.3 percent.

Crude oil remained the spearhead export line of the city as it brought home 3.48 billion USD.

Seafood was the only product experiencing a decline in exports. It grossed over 173 million USD in the period, a drop of 7.8 percent compared with the same time last year.

Seafood producers explained that they have been affected by petroleum price hike, which cost them 15-20 percent more than the previous period.

In the first four months, the country earned 18.26 billion USD, a surge of 24.6 percent over the same period last year.

BUSINESS IN BRIEF 1/5

2008-05-01T15:47:00.001-07:00

23:18' 01/05/2008 (GMT+7)

Workshop on principles of success for high-ranking leaders opens in Hanoi

A workshop on building business culture with emotion intelligence and self-control, with the participation of the famous lecturer Mike George, was launched on April 29, in Hanoi.

The workshop titled “principles of success for high ranking leaders” was co-organized by the Trade and Business Information Center (TBIC), the Hanoi Young Business Association, Thai Ha Books and the UNESCO Center.

Mike George, one of the five most famous lecturers in management in the world, taught in more than 30 countries and is the author of 8 bestseller books, translated in 15 languages. He shared his knowledge and skills with Vietnamese businesses and participants for better living and working.
According to Mike George, good leaders in management can be summarized in six words or three abilities “create vision, inspire people, and make decisions”.
Also on this occasion, Thai Ha Books will publish the books “The Pocket Book of Coolness” and “Know your true nature”, written by Mike George and sign a copyright contract for two more of his books named “Learn to relax” and “In the light of meditation”.Far more foreigners working in VietnamThe number of foreigners employed in Vietnam has soared by more than two-thirds in the past few months after the government dumped the restriction on how many foreigners a company could employ.
By the end of March, according to www.vietnamwork.com, there were 67% more foreigners working for enterprises in Viet Nam compared to December.
The trend is likely to continue now that employers can recruit as many foreigners as they wish.
Understandably, the biggest centers of foreign recruitment are Ho Chi Minh City, Ha Noi and Da Nang in that order, above all for the stock market, the securities industry and the financial sector generally.
City sees US$5 billion invested in business in first four months
More than VND90, 000 billion (US$5 billion) was invested in business affairs by private companies in the first four months of 2008. With 6,400 newly established enterprises and 10,200 entrepreneurs increasing their investment capital for production expansion. It is projected that the development of Viet Nam’s socio-economy is not in bad situation, said the Chairman of the People’s Committee of HCMC, Le Hoang Quan.
The speed of the increase of the price in April (accounting for 1.82 percent) is lower than March (1.92 percent). The highlights are increases of FDI and foodstuff, said Director of the Statistical Office of HCMC, Du Quang Nam.
”The city can not keep the price of construction materials including cement, steel and iron, but foodstuff, particularly rice is expected to slightly rise. The main reason is the increase in the price of petrol that has brought with it an increase in freight charge” said the Deputy Director of the Department of Trade in HCMC, Truong Trung Viet.
The Government implemented many measures to control the speed of the increase in prices in April. The loser is the education industry and the gainers are the industries of transport, post, communication, and foodstuff.
The city should apply the best preferential policies to all forms of investment and create the best conditions for investors and enterprises, and keep the speed of the GDP this year equal to last years (accounting for 12.6 percent), stressed the Chairman of the People’s Committee of HCMC, Le Hoang Quan.

One-third of Vietnam companies want takeovers

A recent global survey by the Grant Thornton Group has shown that about 30% of Viet Nam businesses plan expansions by buying other companies.

The survey also says that only 3% of Viet Nam companies said they would sell their firms in the next three years.
The result may mean quite a few companies in the country are seeing expansion opportunities ahead.
However, the Grant Thornton survey says up to 44 percent of businesses worldwide have plans to buy other companies. They said takeover or merger was a strategic tool for expansion.

Vietnam considered an attractive market for financial services companies

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.

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.

Production up 16.4 percent in four months

Vietnam’s industrial production for April was valued at 54.988 trillion VND (3.43 billion USD), reports the General Statistics Office.

This took the total value for the first four months to 215.5 trillion VND (13.5 billion USD), a year-on-year increase of 16.4 percent.

The figure is slightly higher than the 16.3 percent of the first quarter and well above the National Assembly’s target of 5 percent.

Industrial production value would have been higher but for a 4.3 percent fall in crude oil output. Total production was 5.2 million tonnes. Natural and liquefied gas production also fell.

The highest growth – 16.8 percent - was in the foreign-invested sector which earned 5.7 billion USD.

The value of non-State sector production increased by 22.1 percent (4.73 billion USD) and the State-owned by 7.9 percent (3.40 billion USD).

High value goods such as passenger vehicles, tyres, tractors, processed aquaculture produce, garments and household appliances, including TV sets and washing machines, all recorded high growth.

The value of coal, fertiliser, crude oil, natural and liquefied gas, cement, powdered milk, beer, glass, fabric and adult footwear fell against the same months of last year, say the statistics office.

The value of industrial production was higher in Hai Duong, Binh Duong, Ha Tay and Dong Nai provinces as well as the cities of Hai Phong and Can Tho.

But the figure for Hannoi, 15.2 percent, and Ho Chi Minh City , 14.6 percent was lower than the national average.

Economic zone construction kicks off in Quang Tri

Work started on a 950 billion VND economic zone in the central Quang Tri province on April 30.

The economic zone, the second largest project in Quang Tri province in terms of investment capital, will accommodate a tourism-trade area, a vocational training area, a primary school, a sports area, clinics and kindergartens.

The construction of the 63.63ha economic zone is scheduled for completion by 2013.

Border economy master-plan targets friendship also

Sustainable development, long-lasting friendship and political security with China, Laos and Cambodia are focus of a recent master-plan on border gate economy development until 2020.

The scheme, that was approved by Prime Minister Nguyen Tan Dung on April 25, clarifies that there will be additional seven border-gate economic zones up to 2020, bringing their total number to 30 by the end of the next decade.

It calls for construction of a systematic infrastructure, management mechanism and policies towards nine major border economic zones in an effort to increase the gross import-export revenues of commodities and services with neighbouring countries across border-gates up to 43 billion USD by 2020.

The nine target border-gate economic zones are Mong Cai, Lao Cai, Lang Son in the north, the special economic zone of Lao Bao and another central border-gate economic zone of Cau Treo, the largest border economic zones of Bo Y in the Central Highalnds and Moc Bai, An Giang and Dong Thap in the south.

These border-gate economic zones will help strengthen international cooperation and attract domestic and foreign investment into the country, emphasised the master-plan.

RoK investment in heavy industry kicks off

Construction of a heavy industry factory at a cost of 450 billion VND started in the oil-field province of Ba Ria-Vung Tau on April 29 with full investment from the Vina-Halla Company Ltd of the Republic of Korea.

Vina-Halla company CEO Shon Ho Yong said the factory has a design annual capacity of producing 85,000 tonnes of industrial fans, 5,000 tonnes of pressure bottles and 10 units of heavy cranes all made of steel.

The project will also manufacture incinerators to deal with steel wastes, steel facilities for environmental protection and liquid waste treatment and other machines and steel equipment for cement, energy and steel-rolling factories.

Its products will be largely exported to Asian countries, said the RoK factory chief executive.

The factory is scheduled to become operational in the next four months with a licensed operation term of 40 years and provide jobs for 500 workers.

300 enterprises take part in Vietnam’s 2008 High-Quality Products Fair

Vietnam’s High-Quality Products Fair 2008 entitled “Connection and Integration” opened on April 29 in the Phu Tho Sport Complex, Ho Chi Minh City.

The fair attracted over 300 enterprises occupying 1,000 stalls displaying high-quality products from all over the country, including new products and marketing programmes.

Businesses considered to have “the best services in 2008”, have plenty of opportunity to approach consumers, while connecting with big distributors and banks to establish funds for workers to study and maintain their standard of living.

Visitors also have the chance to take part in the various entertainments that are on offer.

The fair will last until May 4.

350 businesses to take part in Mekong Expo 2008

The Mekong Expo 2008 entitled “To develop industry, trade, irrigation, rural communications in the Mekong Delta during the country’s industrialisation and modernisation process” is taking place in Can Tho city from April 29-May 5.

So far, more than 350 international and domestic businesses have registered to join the expo, focusing on the fields of rural transport, manufacturing, equipment, industrial production, electronics, electricity, cosmetics, chemicals, handicraft, telecommunications, garments and textiles and processed food.

The focus will be on trade promotion, business cooperation and trademark advertising. Seminars will also be held to discuss measures to develop wholesale markets and distribution network in the Mekong Delta, as well as combating blue-ear pig disease and the bird flu epidemic.

On the occasion, many entertainment activities will take place, such as a Chinese chess competition, art performances and culinary festival.

Central Quang Binh province builds network of cultural houses

To meet people’s demand for local cultural activities, the central province of Quang Binh is carrying out a project building a system of cultural institutions and developing grassroots cultural lifestyle in the 2006-2010 period.

Despite difficulties, the culture and information sector encouraged people to contribute to building grassroots level cultural institutions such as cultural houses, children entertainment areas and sport fields.

This helps improve the spiritual life of people and preserve the specific cultural identity of each community.

By the end of 2007, the province had built 885 cultural houses. In addition, the national objective programme on culture provided essential equipment for 50 cultural houses. The culture and information sector is encouraging enterprises and individuals to buy televisions, generators, tables, books and newspapers to improve local people’s cutlural life.

Thai Nguyen province preserves cultural value

In recent years, the northern mountainous province of Thai Nguyen has carried out several projects to preserve cultural values in the province.

They are projects to protect cultural features in safe zones, to promote tourism and cultural heritage, to preserve and promote traditional cultural practices of ethnic minority groups in the province in the 2007-2010 period, and a plan for the development of culture and information in the 2008-2015 period and orientation until 2020.

Kinh Bac plans to raise $106 million

The listed firm Kinh Bac Urban Development Joint Stock Co is planning to offer more shares this year to hike its charter capital to VND1.7 trillion (US$106 million).

Chairman Dang Thanh Tam made the announcement at a Kinh Bac shareholder meeting on Sunday, saying the company was aiming to make over VND1.18 trillion ($74 million) in revenue and VND611 billion ($38.2 million) in after tax profit, and pay a dividend of at least 30 per cent in 2008. He also announced that the company would pay a 2007 dividend of 43 per cent 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 plan to expand Bac Ninh Province’s Que Vo industrial complex to over 600ha, a $200 million Yen Phong industrial zone project in the first phase in Bac Ninh and the Phuc Ninh urban zone project coming in at $200 million.

This year, the company will join 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.

Textile maker sets sights on real estate, securities business

The Thanh Cong Textile Garment-Investment-Trading Joint Stock Company (TCM) plans to expand its business into real estate and securities brokerage. It is already listed on the HCM City Stock Exchange.

Chairman Dinh Cong Hung announced at last Saturday’s shareholder meeting that construction of the Thanh Cong Tower apartment complex would begin on a 10,000 sq.m. plot in Tan Phu District before June.

Also in Tan Phu District, the construction of the 6.4. ha Thanh Cong Tower 2 is set to begin next year. It will include houses, a vocational training school, a conference centre, office buildings and a cultural centre.

Other residential projects are in the works, including Thanh Cong Tower 3 in Dist. 4, Bui Huu Nghia apartment building in Dist. 5 and a 20-ha service and commercial area in the northern Bac Ninh Province.

Based in HCM City, TCM is cooperating with several partners on a 200-ha industrial park and a 3-ha residential area in neighboring Long An Province, a 17-ha bonded warehouse at Phu My Port in Ba Ria-Vung Tau Province and a 10-ha resort in the coastal province of Phan Thiet.

The Thanh Cong General Clinic, on Thanh Cong Tower 2’s grounds, will begin operation later this quarter. It is capable of receiving 1,000 patients a day.

In May, Thanh Cong Securities Company will become a trading member of the HCM City Stock Exchange.

The company intends to issue 10 million convertible bonds with a face value of VND100,000 each to raise funds for its real estate projects this year alone.

Binh Duong strives for better training, support industries

Training more skilled workers and creating more support industries are among key measures to maintain sustainable economic growth in Binh Duong province, according to chairman of the province’s People’s Committee, Nguyen Hoang Son.

Despite an existing industry growth rate of more than 34 per cent, Son claims that more growth is needed to drive Binh Duong’s future economic success.

Statistics from the province’s Investment and Planning Department show that last year, Binh Duong’s industrial output reached VND66 trillion (US$4.12 billion), a five-fold increase on 2001.

However, although many industry sectors achieved high growth, this has brought its own problems, such as worrying fluctuations in business.

Present concerns include a lack of synchronised relations between the production of raw materials from the province and processing industries.

At present, industries making such goods as textiles, footwear and timber products use high numbers of labourers, but products are very basic.

Labour-intensive industries, such as textiles and footwear, now employ about 40 per cent of the province’s 200,000 labourers.

Therefore, to create sustainable industrial growth, it will be necessary to focus on developing work and special training for the large labour pool, said Tran Van Lieu, head of the province’s Industrial Zone management board.

Under Binh Duong’s draft development plan, textiles, leather footwear, agricultural products and pharmaceuticals will be promoted as the province’s main industries up until the year 2020.

The province has high economic expectations for the next two years. In its Exports Development Plan, it has targeted turnover of $2.8 billion for timber products and has plans for this to increase at a rate of about 38 per cent a year.

For textiles, it has targeted $1.2 billion in exports increasing by about 27 per cent a year; $1.8 billion for footwear (30.9 per cent a year) and $282 million for handicrafts (16.5 per cent a year).

Robots star in Ha Noi exposition

The country should prepare to get automated as robots will be starring at this year’s Manufacturing Viet Nam 2008 taking place from May 8-10 at the Ha Noi International Exhibition Centre.

Organised by Reed Tradex Company, all that’s left to do is co-ordinate the shipping of the equipment according to Kino Chiharu, Robotics Department Sales and System Engineering Manager, Yaskawa.

The exhibition will be divided into five industrial sectors, including shows on electronics manufacturing technology, plastics and rubber, general machinery, automotive parts manufacturing, factory automation, and electrical and power transmission and material handling technology.

A major highlight for investors and manufacturers in Viet Nam will be the first robot show in Viet Nam and Southeast Asia – Industrial Robots in Concert. The show will feature three industrial robots showing off their different capabilities.

"The Yaskawa robots are manufactured in our factory in Japan, and can be applied to all types of industries — large, medium and small, depending on the type of application," said Chiharu. "The application must be repetitive, or it must be an application that uses strength. Today the automobile industry is the biggest user of robots. But robots are also suitable for other applications such as in the food industry which is beginning to use robots."

Chiharu added that Yaskawa’s objective in the Vietnamese market for the first one to three years will be to build brand awareness, and seek a partnership for their marketing. While Viet Nam is beginning to use robots in manufacturing, the practice is still not widespread, so opportunity is plentiful.

City halts projects to curb inflation

The HCM City authority has called off 399 minor public projects in an attempt to save VND382 billion (US$23.8 million) and curb inflation.

During an online meeting between the central Government, ministries and provincial authorities on Sunday, the chairman of HCM City People’s Committee, Le Hoang Quan, said the projects accounted for 6.5 per cent of the total capital of US$367 million budgeted this year for 1,971 proposed public projects by the People’s Committee.

The city authority has instructed all local agencies to review and halt unessential public projects in order to concentrate capital for more important projects and to curtail public spending.

The city will cut off 10 per cent of spending at city agencies for the rest of the year, as set out by the central Government.

Quan said a price stabilisation fund of VND1 trillion ($62 million) would soon be created to help businesses maintain prices of essential goods such as grains and other foods.

For the rest of the year, there will be no increases on fees and costs for city services, such as school and hospital fees, bus tickets, road and bridge tolls, water bills, and car and motorbike parking fees.

Vietnam’s seafood appreciated in EU market

Products of Ho Chi Minh City-based Vinh Hoan Seafood Co. was selected one of the best new products at the 2008 European Seafood Exhibition in Belgium .

According to Truong Dinh Hoe, Secretary General of the Vietnam Association of Seafood Exporters and Processors (VASEP), 44 local seafood companies attended the exhibition, including those who joined the event for the first time.

According to the Vietnam Commerce Office in Belgium , last year, Vietnam earned 950 million USD from seafood export to the EU, a year-on-year increase of 27 percent. The figure is estimated to reach 1.2 billion USD this year.

Vietnam ’s seafood, especially those made from shrimps and catfish, are favoured by foreign clients, said To Thi Tuong Lan, VASEP’s Vice Secretary General.

Vietnam’s cultivated pearls promising good income

With a long history of more than 100 years searching for natural pearls from see beds and recent pearl cultivation and export, Vietnam has a firm position on the map of world pearl producers.

One company tapping the potential of Vietnam ’s 3,200km coastline of high-quality natural pearls is Japanese-owned company Taiheiyo Shinju Vietnam Co. Ltd. Established in 2000 and with a current capital investment of 2 million USD, the company’s products – known under the trademark of Spica - have earned firm status in tough markets like the US , Japan and the European Union.

The company has been successful in cultivating high-quality pearls by breeding two oyster species in a farm in Van Don island, Bai Tu Long gulf in northern Quang Ninh province.

Taiheiyou Sinju Vietnam is the sole pearl producer to have received the Vietnam Gold Star award which is aimed at honouring premier products and brands.

In 2007, the company exported 400kg of pearls, fetching around 16 billion VND. For 2008, it has set a target of exporting 500 kg of pearls, worth around 20 billion VND.

In addition to breeding oysters for pearls, the company has also been active in producing jewellery. It is currently opening its business to the domestic market, to provide more options for local customers who previously have used low quality, imported pearls.

According to Director of Taheiyo Shinju Vietnam Nguyen Thanh Trung, the company has not yet met the huge demand of the domestic market. He said his company plans to open an international pearl transaction floor in Vietnam , which will also create more jobs for local workers.

Since the 1990s, Japanese experts have come to Vietnam to work with the Ministry of Fisheries in raising oysters for pearl cultivation.

Craft village information centre operational

A Craft Village Information Centre under the Vietnam Trade Village Association has become operational in Hanoi on April 30.

The centre will provide information on the state’s policies as well as legal documents relating to the planning and development of Vietnam’s craft villages, news of market and training programmes.

It will also hold forums to help associations and non-governmental organisations participate in activities to support craft villages such as poverty reduction, environmental protection, traditional craft preservation and tourism development

Larger projects divulge resources risks

2008-05-01T15:45:00.000-07:00

23:24' 01/05/2008 (GMT+7)

Photo: hiendaihoa.com

VietNamNet Bridge - More foreign direct investment capital is expected to flow into Vietnam but larger projects also bring bigger challenges to the country, economists have said.

The Ministry of Planning and Investment’s General Statistics Office (GSO) recently reported that Vietnam welcomed more than $5 billion in committed foreign direct investment (FDI) in the first three months of 2008, up 31 per cent on-year.
The GSO showed that less than a third of FDI commitments were disbursed but reflected positive investor outlook. “The outlook for FDI inflows looks promising given Vietnam’s still competitive labour costs, large potential domestic markets, robust growth, geographical proximity to China, and political and social stability,” said Daniel Hui, an HSBC economist.
Ayumi Konishi, ADB Vietnam’s country director, said the country’s on going structural reforms, the potential of the large market and its commitment to improving the business environment were other key factors attracting investment to Vietnam.
“Given the country’s medium to long-term economic strong growth prospects, I do strongly believe that Vietnam is a good FDI destination,” said Konishi.
According to the United Nations Conference on Trade and Development’s World Investment Report 2007, Vietnam ranked above India, Indonesia, the Philippines, Korea and Taiwan and came in at only 10 places behind China.
Vietnam is expected to maintain its 2007 momentum and is on target for around $20 billion in commitments for this year, said Hui.
Economists however said that larger projects are placing a huge burden on the country’s scarce resources.

“These projects have created huge supply bottlenecks for skilled labour and scarce raw materials such as cement and steel,” an economist said, adding that larger FDI projects such as the $670 million Samsung mobile-phone plant and the $1 billion Intel plant would demand more workers.
Daniel Hui warned that actual FDI inflows failed to keep up with reported commitments and the improvement of FDI absorption.
“Reasons include insufficient infrastructure, regulatory uncertainty and bottlenecks,” he said, adding that the resulting massive inflows into Vietnam have hurt exports through the dong’s appreciation.
Ayumi said it was important for Vietnam to accelerate its reform efforts as well as infrastructure and human resource development, simplify administrative procedures for greater transparency, accountability and efficiency.

Vietnam eyed as rosy market for money transfer firm

2008-04-30T17:59:00.001-07:00

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.

How much gold has Vietnam imported

2008-04-30T17:57:00.000-07:00

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.

Nearly 100% of banks raise interest rates

2008-04-30T17:56:00.000-07:00

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.

Tax up, imported cars down

2008-04-30T17:54:00.000-07:00

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.

BUSINESS IN BRIEF 29/4

2008-04-29T16:52:00.000-07:00

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.

MPI Minister: It’s necessary to control outward investments

2008-04-29T16:50:00.000-07:00

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.

Tightening monetary policy: tragedy and paradoxes

2008-04-29T16:49:00.000-07:00

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

Fertiliser prices to rise this week, says Vinachem

2008-04-29T16:47:00.000-07:00

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.

Sugar cane farmers aren’t making profit: sugar association

2008-04-29T16:45:00.001-07:00

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.

Banks gearing up for financial investments

2008-04-29T16:43:00.000-07:00

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.

Senior trade official says rice abundant

2008-04-29T16:42:00.000-07:00

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.

Vietnam Stock Market News: Tien Phong Plastic pays 30% dividend

2008-04-28T21:54:00.000-07:00

Vietnam Stock Market News: Tien Phong Plastic pays 30% dividend

Plastic industry generates $200mil in Q1

2008-04-28T17:34:00.000-07:00

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.

People keeping gold again, traders seeking fat profit

2008-04-28T17:33:00.000-07:00

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.

Tax rises, auto market becomes chaotic

2008-04-28T17:32:00.000-07:00

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.

Cracking down on coal smugglers

2008-04-28T17:31:00.000-07:00

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.

Dilemma: IPOs unable to find customers

2008-04-28T17:30:00.000-07:00

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.

Rice fever to be stamped out in some days

2008-04-28T17:28:00.000-07:00

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.

Banks not allowed to offer promotion programmes?

2008-04-28T17:26:00.000-07:00

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.

Ministry keen to make southern economic zone a business hub

2008-04-27T16:46:00.001-07:00

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.

Temporary halt on rice exports until end of June

2008-04-27T16:45:00.001-07:00

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.

Diverse investment to up EVN’s role

2008-04-25T18:02:00.001-07:00

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.

Market falls, companies cancel listing plans

2008-04-25T17:19:00.000-07:00

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.

Economic groups must not deviate from main business fields

2008-04-25T17:17:00.000-07:00

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.

Airport service rates stay the same, for now

2008-04-23T17:33:00.000-07:00

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.

Vung Tau expected to regain lost FDI lead

2008-04-23T17:32:00.001-07:00

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.

Seminar mulls sustainable urban development

2008-04-23T17:28:00.001-07:00

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.

Northern banks vote to maintain 11% ceiling interest rate

2008-04-23T17:26:00.000-07:00

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.

Choosing strategic partners: Vietcombank at disadvantage

2008-04-23T17:20:00.000-07:00

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.

Paper fever anticipated

2008-04-22T17:09:00.001-07:00

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.

Vietnam hikes car import tax to 83 percent

2008-04-22T16:30:00.000-07:00

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.

Eight circumstances keeping cash away from banks

2008-04-22T16:26:00.000-07:00

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.

Tightening monetary policies, but pumping capital into rural areas

2008-04-21T17:08:00.000-07:00

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.

Time to return to hoarding gold

2008-04-21T17:07:00.000-07:00

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.

Swiss create jobs, opportunity in Vietnam

2008-04-21T17:06:00.001-07:00

17:25' 21/04/2008 (GMT+7)
VietNamNet Bridge - Switzerland now ranks 17 th among countries and territories in terms of foreign direct investment in Vietnam , reported Vietnam ’s Commerce Bureau in Bern .
Following that, there are about 90 Swiss enterprises currently running in Vietnam , providing 2,500 jobs for locals.
Vietnam is the destination of many leading Swiss companies, including food and beverage giant Nestle, vegetation pharmaceutical producer Novartis and IT services company Elca.
Credit Suisse, one of the leading banks in Switzerland , has considered Vietnam as an attractive market
Credit Suisse, one of the leading banks in Switzerland , has considered Vietnam as an attractive market, and is inquiring into building a strategy for operations in Vietnam in the fields of banking services and insurance.
Meanwhile, SwissRe, one of the world’s largest reinsurance companies, has bought 25 percent of the Vietnam National Reinsurance Company’s (VinaRe) shares.
Two-way trade between Switzerland and Vietnam reached 498 million CHF (500 million USD) in 2007, 133 million CHF (133.5 million USD) more than in 2006, according to the Swiss customs’ statistics. Of this figure, Vietnam earned 259 million CHF (260 million USD) from export turnover.
By 2007, Switzerland had invested over 744 million USD in 42 valid projects throughout Vietnam .
Since becoming a member of the World Trade Organisation, Vietnam has set future targets in economic growth from 8 to 9 percent per annum, achieving 1,000 USD per capita income by 2010, said Prime Minister Nguyen Tan Dung.
Dung also said that the government would supply the best conditions for foreign investors in general and Swiss ones in particular when investing in Vietnam.

Dong A Bank leads in money transfer service

2008-04-21T17:04:00.000-07:00

BUSINESS IN BRIEF 21/4
17:29' 21/04/2008 (GMT+7)
The Dong A Money Transfer Company of the Dong A (East Asian) Joint-Stock Commercial Bank obtained a revenue of 1 billion USD in 2007, holding a market share of 20 percent.
According to the State Bank of Vietnam ’s statistics, in 2007 Vietnam received a total of 5 billion USD in foreign currencies remitted by overseas Vietnamese and guest workers from abroad.
Dong A has maintained the leading position in money transfer service over the past 8 years by expanding its network to 100 offices in 44 provinces and cities nationwide. Its customers may receive remittances from over 170 countries via the company’s worldwide partners.
The Dong A Company has also developed its cooperation with foreign partners to bring the services to Vietnamese people living and working in the US, Canada, Australia, France, Germany, Malaysia and Taiwan.
Global Summit to bring international business women to Vietnam
Vietnam will host the 18th Global Summit of Women from June 5-7, which is expected to attract more than 1,200 delegates from over 100 countries.
The summit will be themed “Woman and Asia - Driving the Global Economy” said Vice Chairperson of the Vietnam Chamber of Commerce and Industry (VCCI) Tran Thi Thuy, who is head of the summit organising board, at a seminar in Danang city on April 21.
She said more than 70 countries had already registered for the event.
The topics of discussion at the summit will include “Vietnam - an emerging dynamic economy”, “enterprise development in Asia”, “dialogue with female enterprises” “young people’s forum on business”, “women trafficking prevention”, and so on.
The summit will also see female CEOs and successful business women share their experiences, and networking between the participants encouraged.
Thuy said the summit would provide an opportunity for Vietnam to promote its international image, draw more investment, develop tourism and introduce its business environment to foreign friends.
The launch seminar in Danang city, which drew business women from Danang city, Thua Thien-Hue, Quang Nam and Binh Dinh provinces, will be followed by two more similar seminars in Hanoi and Ho Chi Minh City before the main event in June.
Phu Yen develops with foreign investment influx
The south-central province of Phu Yen has attracted major foreign investment projects after years of lagging behind other parts of the country.
In 2007, the province attracted a record 2.3 billion USD in FDI, accounting for 7.9 percent of the country’s total foreign direct investment and ranking fifth among the country’s investment destinations.
Chairman of Phu Yen Province People’s Committee Pham Ngoc Chi attributed the rapid growth to investments in petro-chemical projects, particularly the Vung Ro oil refinery plant. Technostar Management Ltd (UK) and Russia ’s oil company Telloil invested 1.7 billion USD into the refinery, which is expected to have a capacity of 4 million tonnes a year.
The 380-ha project in Ong Hoa District will be operational in 2011 and reach a turnover of 2.23 billion USD a year.
Other major projects involve building infrastructure for a 2,600 ha petro-chemical industrial park in Dong Hoa District and a deep seaport in Bai Goc to accommodate ships of 250,000 DWT.
These projects will be completed in 2024, with an investment capital of 11 billion USD including 5 billion USD from Naptha Cracking oil complex. They will provide jobs for 15,000-20,000 people and have a combined turnover of 20 billion USD a year.
Chi said the investment success stemmed from the province’s promotiion efforts. In 2007, an investment conference organised by provincial officials in Singapore led to an agreement to invest in the petrochemical industrial park and the oil complex.
Investors from the US , Canada , Japan , Australia , the Republic of Korea and Middle East have also flocked to Phu Yen to explore investment opportunities.
Taking advantage of its favourable geological conditions with highway, railway and seaport networks linking the central and the Central Highlands provinces, Phu Yen officials are cooperating with other central provinces to develop major transport infrastructure projects.
These projects involve the railway linking Tuy Hoa (the town of Phu Yen ) with the Central Highlands , an underground tunnel through Ca Pass, and the upgrading of highways between the province and the Central Highlands.
Chi said the province will further invest in building Phu Yen into a gateway for the area bordering Vietnam , Laos and Cambodia via road, railway, waterway and air networks.
The Prime Minister recently approved a plan to establish an economic zone in southern Phu Yen. The 20,370-ha zone will house industrial parks and link up with Vung Ro seaport, Tuy Hoa airport and Van Phong economic zone in central Khanh Hoa province.
Leading producer imports fertilizers to cut price hike
The PetroVietnam Fertilizer and Chemical Co. (PVFCCo), the country’s leading fertilizer producer, has signed contracts to import 106,000 tonnes of fertilizers in an effort to cut the price hike.
PVFCCo forecast that the country will need about 660,000 tonnes of fertilizer by the end of the second quarter of the year, but local producers can supply only 500,000 tonnes.
PVFCCo’s Phu My Fertilizer Plant has so far this year produced 197,825 tonnes of urea fertilizer.
US group plans to build textile factory in Tien Giang
The A&E group of the US has announced they intend to invest in building a textile and dyeing factory in the southern province of Tien Giang.
During a recent visit to the province to study investment opportunities, A&E officials had a working session with the Chairman of the provincial People’s Committee Nguyen Huu Chi.
The American businessmen said if an agreement could be reached, A & E will rent 3.5 ha of land in Tan Huong industrial zone to build a textile and dyeing factory.
The environmental friendly factory will have an estimated initial capital of 12.5 million USD.

Gov’t money at state owned banks: VND52tril or VND30tril?

2008-04-21T17:02:00.000-07:00

06:23' 22/04/2008 (GMT+7)
VietNamNet Bridge – A source at the State Bank of Vietnam said that to date, the total sum of money deposited at state owned banks has reached VND30tril only, not VND52tril as local newspapers reported.
The source said that the State Bank of Vietnam and State Treasury met two weeks ago and came to an agreement that the money transfer from the state owned banks to central bank branches will be completed by September or November 2008 at the latest.
The transfer will be carried out step by step in order to avoid shocks to the banking system as they will not be able to use such a big volume of capital any longer.
However, the two organs still could not agree on how much money to withdraw from state owned banks.
An official from the State Bank of Vietnam said that the central bank wants to withdraw all VND30tril from state owned banks in order to be able to control the money supply on the market more effectively.
The official said that currently, the government’s money is being used for credit operations, which has been making it hard for the central bank to control the money supply. Moreover, the withdrawal of money is believed will help ease the pressure of inflation.
Meanwhile, an official of the Ministry of Finance said that the ministry only wants to transfer VND10,000bil to the central bank for management. The ministry thinks the money transfer should only be carried out in localities where there are branches of the central bank. As for the localities where there are no branches, the money should stay deposited at branches of state owned banks.
According to the Ministry of Finance, 600 districts and communes nationwide still do not have central bank branches.
In the localities where there are no central bank branches, it would be time consuming to transfer money from treasury branches to central bank branches (and vice versa, in case it is necessary to spend state budget funds) due to the long distances.
It is expected that the Ministry of Finance and State Bank of Vietnam will discuss and come to an agreement on the sum of money to be transferred this month, and the transfer start in May 2008.
The director of a state owned bank said that the money transfer will make banks lose a cheap and profuse source of capital (banks have to pay 3% only for the capital). The money withdrawal, though carried out gradually, will still make banks face a capital shortage.
The inter-bank market last week saw the interest rate skyrocket to over 20% per annum.
Joint stock banks applaud the money transfer as state owned banks will not have the cheap source of capital anymore. This will create a fair playing field for both state owned and joint stock banks. However, they have said that the money transfer will have bad impacts on them as well, as state owned banks will have no excessive capital to lend to joint stock banks anymore.

No change in PIT calculation: MOF

2008-04-18T17:06:00.000-07:00

16:18' 18/04/2008 (GMT+7)
VietNamNet Bridge – The Ministry of Finance (MOF) has confirmed that there will be no change in the calculation of personal income tax (PIT) in the ministry’s circular guiding the implementation of the PIT law.
The PIT Law, ratified by the National Assembly, stipulates the exemption of VND4mil/month per tax payer, VND1.6mil per dependent (spouse, child and relative). However, arguments have been raised recently that the exemption level is out of date in the context of skyrocketing price increases. Some people have proposed the MOF reconsider the exemption level.
Nguyen Van Phung, Deputy Director of the Tax Policies Department under MOF, has confirmed that there will be no change with the tax rates and exemption amounts.
Phung said that taxpayers have nothing to complain about as the exemption amounts prove to be suitable in Vietnam’s condition. In principle, PIT should be assessed on the first VND of income, but Vietnamese taxpayers enjoy exemption on the first VND4mil of income and the deduction of VND1.6mil/dependent.
The PIT Law stipulates that the threshold for PIT is VND4mil/month, but in many cases, PIT payers are those who have monthly incomes much higher than VND4mil/month. If a labourer has the monthly income of VND5.6mil and he has one dependent child, he will not have to pay tax because he can enjoy the deduction of VND4mil for himself and VND1.6mil for the child.
Phung said that people will prefer the PIT Law to the currently applied High Income Tax Ordinance, as a lot of people who have to pay tax under the currently applied ordinance may not have to pay tax under the PIT Law.
For example, a labourer who has the monthly income of VND6mil/month and two children, now has to pay VND100,000 in tax.
However, under the new PIT tax, the labourer will only have to pay tax if he has the monthly income of over VND7.2mil (VND4mil deduction for himself and VND 1.6mil x 2 = 3.2mil for two children).
Phung stressed that the tax exemption amounts prove to be very ‘generous’, and are rarely found elsewhere in the world. The taxable income deduction is allowed for relatives as well (grandparents, aunts, uncles), provided that these people are not able to work or invalids.
Phung has also said that some taxpayers will make use of the loopholes to evade tax (two taxpayers declare deductions for the same children). However, he said that the tax payment will be supervised by the whole of society. Every member of society has to raise his voice when he finds someone refusing to pay tax.

Lacking electricity, rushing to build hydropower plants

2008-04-18T17:04:00.000-07:00

16:20' 18/04/2008 (GMT+7)
VietNamNet Bridge – Lack of electricity has become the chronic problem of the national economy, which has also prompted investors to jump into the power sector.
According to the Lao Cai People’s Committee, there are 21 hydropower plants now under construction in the northern mountainous province which will have the total capacity of 465MW once operational, capitalised at VND8tril.
In the short period of 2002-2007, big corporations, including the Vietnam Construction Import-Export Corporation (Vinaconex), Song Da Construction Corporation, Electricity of Vietnam, went to Lao Cai to initiate hydropower plants Ngoi Phat (72 MW), Minh Luong (23MW), Seo Choong Ho in Sa Pa district (22 MW).
Most recently, the construction of Nam Pung Hydropower Plant on an area of 31.8 ha in Bat Xat district also kicked off. The plant, which has the total investment capital of VND134bil, is expected to have the capacity of 108.4 MW once operational.
The movement of building hydropower plants in the central region and Central Highlands has also been growing rapidly in recent years. Quang Nam province alone has 57 power plant projects, including 46 ones kicked off in 2006.
Dak Nong province, which has plentiful water resources, is also planning to build 64 hydropower plants from 2004 to 2010 which it hopes will connect to the national grid.
An official of the Energy Department under the Ministry of Industry and Trade said that Vietnam was striving to use hydropower effectively together with gas and coal to ensure electricity for socio-economic development.
The wide-scale construction of hydropower plants has been supported by management agencies and applauded by people as they are believed will help ease electricity shortages. However, experts say that hydropower plants are not the best solution in all cases.
Nguyen Quoc An, Assistant to the Chairman of the Vietnam Energy Association, said that in fact, the capacity of small hydropower plants is very low, just ‘grains of salt in the sea’.
An said that hydropower plants only run well during the rainy season, when the demand for electricity is not high. Meanwhile, in the dry season, when the electricity demand increases, the plants do not have enough water to run at full capacity.
He added that injecting money in small hydropower plants proves to be not the optimum solution.
In the past, Vietnam focused on building big hydropower plants, but now, as there are no more big water sources for big hydropower plants, investors have turned to building small hydropower plants. However, as said above, the small capacity of the plants cannot help settle the electricity shortage, while they require heavy investment.
An said that investors and local authorities should consider other types of energy sources, including wind, solar and other kinds of energy. If investors can make power with these types of energy sources, they will have sustainable and long-term power.
There is another worry about the construction of a massive number of hydropower plants, that the plants will badly affect agriculture. In principle, hydropower plants have big impacts on natural conditions, as they change the flow of rivers.

Vietcombank going ahead with listing

2008-04-18T17:03:00.000-07:00

17:04' 18/04/2008 (GMT+7)
VietNamNet Bridge – Finally, Vietcombank has announced it will hold its first shareholders’ meeting on April 26, the first move in its plan to list on the bourse. The long silence of the bank since its IPO in December 2007 has made people think it forgot its promise to list.
Listing shares: big cheeses may miss appointments?
The new stage in Vietcombank’s 45-year operation period will be marked on April 26, when Vietcombank holds its first shareholders’ meeting.
At the meeting, Viecombank’s shareholders will vote on the bank’s operation regulations, the number of management board and supervision board members. They will also approve the business plan for 2008-2013 and the business plan for 2008.
The plan to list Vietcombank shares at the HCM City Stock Exchange will also be discussed.
The listing is a part of the plan approved by the government to improve the position of Vietcombank in the capital market, heighten the transparency in corporate governance as well as to create liquidity for Vietcombank shares.
Vietcombank’s management board is expected to be authorised to go ahead with the listing plan, from selecting consultancy firms to following necessary procedures as stipulated by the laws.
The plan to list on the bourse will be made public after it gets approval from shareholders at the meeting. The listing, as previously planned, is expected to occur in June 2008.
After listing at the HCM City Stock Exchange, Vietcombank will also list its shares on foreign bourses. This issue will also be raised at the shareholders’ meeting on April 26, together with the issue of selecting foreign strategic partners for the bank.
After that shareholders’ meeting, Vietcombank, which has been known in Vietnam as a state owned bank, will shift to become operational under the mode of a joint stock bank.
Vietcombank has announced satisfactory business results for the first quarter of 2008, despite the big difficulties due to the tightened monetary policies. Its pre-tax profit was VND1,222bil, fulfilling 40% of the yearly plan.
In related news, Vietinbank, which was previously known as Incombank, is also moving ahead with its plan to make IPO.
JP Morgan has been chosen as the consultant for building up Vietinbank’s equitisation plan. It is expected that 25% of Vietinbank’s stakes will be sold to domestic and foreign investors at the IPO.
After the IPO, Vietinbank’s total assets are expected to reach VND180,000bil, including VND100,000bil worth of state owned capital. The bank may sell 24% more of stakes to the public by 2010 to reduce the state owned capital proportion to 51%.

Tax up, used cars have no way into Vietnam

2008-04-18T16:59:00.000-07:00

16:17' 18/04/2008 (GMT+7)
VietNamNet Bridge – The tax increases of $300-3,000/unit on used imports effective as of April 2, 2008 have really closed off all ways for used cars to enter Vietnam.
Car importers say that the high taxes on used imports have made them more expensive and not attractive in the eyes of consumers any more, except super luxury cars.
With the lowest increase of $300/unit (increasing from $2,700/unit to $3,000/unit) on models with cylinder capacities of less than 1,000 cc, the prices of used Kia Morning and Daewoo Matiz after tax will be $500/unit higher on average. Meanwhile, 2,500-3,000 cc models, which see the tax rising from $12,000/unit to $15,000/unit (+ $3,000), will have prices up by $5,000/unit.
The tax rate remains unchanged for 4,000-5,000 cc models. However, if compared to the days prior to November 3, 2007, tax rates have increased by 20% (tax rates rose from $22,000 to $26,400 for 4-5,000 cc and from $26,250 to $30,000 for over 5,000 cc models as of November 3, 2007). With the 20% tax increase, every car of these types has become $15,000 more expensive.
Previously, a 1-year used Kia Morning had the sale price of $16-17,000. With the new tax rate, it will have the sale price of 16,500-17,500, equal to the price of a brand new Morning assembled by Truong Hai Auto, which means that used imports will not be able to compete.
Imported 2,500-3,000 cc models will also not be able to compete with locally made products as they will see price increases of $5,000. A used Toyota Camry 3.0L, for example, will have the sale price of over $50,000, which proves to be uncompetitive.
Car traders have given up used car imports. A representative of Vinh Hoang Company said that used cars do not attract consumers anymore due to the overly high prices.
However, the fixed tax rates on super luxury models ($30,000 for cars with over 5,000 cc in cylinder capacity) are considered very low, and car traders are ready to import these models if they can find customers.
Most luxury models like Maybach and Phantom all have cylinder capacities of over 6,000 cc. The import prices of these models are very high, over $300,000 for brand new units, and the import taxes are also high at $210,000. Therefore, customers would rather buy used luxury cars than brand new. It is estimated that the gap between the post tax prices of brand new and used imports may reach $300,000.
In 2007, an imported used 6,749 cc Phantom was taxed $189,900, and it had the post tax price of $405,900. Meanwhile, the brand new car, which had the import price of $333,350 (quoted on Internet), had the sale price of $879,000.
The fixed tax rates on used imports, effective as of April 2, 2008
The tax rates for cars carrying five persons at maximum
Cylinder capacity
Tax rates (US$/unit)
Less than 1,000 cc
3,000
1,000-less than 1,500 cc
7,000
1500cc – 2,000cc
9,000
Over 2000cc – less than 2,500cc
13,500
2,500cc – 3,000cc
15,000
Over 3,000cc -4,000 cc
18,000
Over 4,000 cc- 5,000 cc
26,400
over 5,000cc
30,000
Tax rates on cars carrying 6-9 persons
Cylinder capacity
Tax rates (US$/unit)
Less than 2,000 cc
8,100
Over 2,000 – 3,000 cc
12,600
Over 3,000 cc-4,000 cc
16,000
over 4,000cc
24,000

Economic forecasts: dangers come from false figures

2008-04-17T17:24:00.000-07:00

14:48' 17/04/2008 (GMT+7)
VietNamNet Bridge – Foreign experts all said that Vietnam’s economic information syste remains very weak. In all reports about ASEAN economies, the columns for Vietnam’s indices are always left blank because there is no updated information.
The Ministry of Planning and Investment (MPI) announced the total disbursed volume foreign direct investment (FDI) capital in 2007 at $8bil
Two months ago, the Ministry of Planning and Investment (MPI) announced the total disbursed volume foreign direct investment (FDI) capital in 2007 at $4.6bil, and the figure has been used by the State Bank of Vietnam for setting up macroeconomic management policies.
However, the ministry later released another figure of the FDI disbursed capital in 2007, at $8bil, or $4bil higher than the previously announced level. The huge gap between the two figures has put State Bank’s policy makers into the dilemma as they don’t know how to deal with the foreign exchange policy.
It is clear that the two figures will lead to two different foreign exchange rate scenarios. If the disbursed volume was $4.6bil, while the trade deficit reached $14bil, the situation would be worrying as Vietnam may lack foreign currencies as the dollars it spent were more than the dollars it received.
If the disbursed volume was $8bil, the situation would be better, as the $14bil worth of trade deficit could be offset by other foreign currency sources: $6bil worth of overseas remittance and $8bil worth of FDI disbursement. Meanwhile, the foreign portfolio investment can be seen as the surplus capital which can support the payment balance.
The figure of $4.6bil worth of FDI disbursement initially released by MPI actually raised the worry about the big trade deficit. The foreign currencies obtained from exports cannot offset the big volume of foreign currencies paid for imports. Meanwhile, the deficit cannot be covered by overseas remittance and FDI disbursement. In fact, the foreign portfolio investment can help ease the foreign currency shortage, if it occurs. However, portfolio investment should be seen as the short term investment capital, which inflows to Vietnam today, and may flow out tomorrow.
In this case, the State Bank of Vietnam did not have any better choice than to make up trade deficits by controlling imports and adjusting exchange rates. The foreign exchange policy of the State Bank should be built up in a way that stimulates exports and limits imports, in order to get more foreign currencies and reduce spending foreign currencies.
However, the MPI finally released another figure of FDI disbursement, $8bil. An official from the State Bank said that with such a high disbursement rate, the trade deficit would not be the urgent problem any more. This also means that the foreign exchange policy can be amended to stimulate exports and reduce the difficulties of importers as well
As such, the wrong figure led to the wrong prescription and overdose.
It is easy to change the statistics, but it is not so easy to settle the problems caused by the different figures.
Foreign experts all said that Vietnam’s economic information system in Vietnam remains very weak. In all reports about ASEAN economies, the columns for Vietnam’s indices are always left blank because there is no updated information. However, Vietnamese ministries and branches seem to pay inappropriate attention to forecasts. Weak forecasting certainly led to wrong policies, which may harm the national economy.

Interest rate controls must be minimised, co-ordinated

2008-04-17T17:23:00.000-07:00

00:25' 18/04/2008 (GMT+7)
VietNamNet Bridge - The State Bank on April 16 decided to lift the ceiling of 12 per cent in place on the interest rates commercial banks can offer to depositors. Meanwhile, banks continue to charge rather high lending interest rates to the detriment of borrowers. The general secretary of the Viet Nam Banks Association, Duong Thu Huong, spoke about interest rate policy.

How co-ordinated are Government bodies in implementing interest rate policy?

I cannot emphasize enough the importance of co-ordination in implementing effective monetary policies. We must attempt to form a united front in the battle against inflation as segmentation leaves us vulnerable. Regrettably, until now co-ordination has been patchy.

Banks are now offering high lending interest rates. Will VNBA look to capping lending interest?

VNBA only tries to tame the cost of mobilising deposits for banks. We shouldn’t impose a ceiling rate for lending interest as banks have different ways of operating and different capital structures. For example, banks which receive more deposits from large enterprises than from individuals often charge lower lending rates than other banks.

The Asian Development Bank and the International Monetary Fund predict that inflation could exceed 15 per cent by year-end. How would it affect the real interest rates?

Suppose their predictions come true, and if banks choose to offer real deposit rate above zero, then nominal rates should be 18 per cent per annum, not 11 or 12 per cent. However, we ought not to pursue positive real interest at the moment.

If people want positive real interest, enterprises will pay dearly in increased production costs as lending interest will be over 20 per cent. Around 85 per cent of local producers rely on credit loans, and it’s these firms that stand to lose the most from positive real interest.

A recent government report stated "looking forward to a positive real interest", not "ensuring positive real interest" as previously stated.

Banking experts warn that administrative interference may distort the market. Do you share this view?

I agree with them as our economy has come a long way in terms of integrating into the world economy. A truly independent banking sector needs little market control. However, occasionally an economy does require a certain degree of "manipulation".

Inflationary spiral is rife in other Southeast Asian countries too, as the price of commodities rises worldwide. Certain administrative intervention is necessary to stabilise prices on the local market. Such intervention will be gradually phased out once inflation cools.

Scrap steel, to import or not?

2008-04-17T17:22:00.000-07:00

16:45' 17/04/2008 (GMT+7)
VietNamNet Bridge – 7,000 tonnes of scrap steel have been detained at Hai Phong and HCM City ports by competent agencies, though the government asked the agencies to clear the import consignments to serve steel mills’ production. What should Vietnam do, allow the import of scrap steel or not?
In September 2007, consignments of scrap steel, comprising metal cans which were pressed into blocks, worth $2.5mil, imported by HCM City Metalware Company, Anh Trang Company Ltd, Techmart Steel, Hoa Phat and Dinh Vu Steel Company arrived in Hai Phong and HCM City ports. However, the consignments were detained at ports as state management agencies decided the cans were a kind of waste, which must not be imported to Vietnam under the Law on Environmental Protection.
The government, after considering the appeal from importers, instructed management agencies to clear the 7,000 tonnes of scrap steel, putting an end to the prolonged arguments among state agencies and enterprises about whether to clear the consignments.
However, the case was not resolved with the government’s decision.
Tran Hong Ha, Head of the Environmental Protection Agency, sent a document to six importers, asking them to present plans to deal with the imported scrap. The plans must be submitted to the agency prior to April 15. The consignments will be cleared after the agency finds the plans reasonable.
However, the problem lies in the fact that agencies have set requirements which prove to be impossible for enterprises to implement. For example, they asked the importers to cut the blocks of steel and weed out the impurities.
“I think that it is impossible to do that. Meanwhile, the impurities will automatically disappear when the scrap steel is melted at a high temperature,” said Pham Chi Cuong, Chairman of the Vietnam Steel Association.
However, state agencies do not think so.
Deputy Prime Minister Hoang Trung Hai promised that the case will be settled soon to help enterprises to return to normal production.
Meanwhile, Prime Minister Nguyen Tan Dung in a recent meeting with enterprises, discussing measures to fight inflation, said that Vietnam is still very poor and it has to accept buying scrap steel, though the material is not as clean as other kinds of material.
Steel mills still like importing scrap steel to make finished steel products because of the low cost. The scrap steel price is $200/tonne cheaper than ingot steel. While ingot steel prices have soared to $900/tonne from $700/tonne late last year, scrap steel proves to be an acceptable source of materials. Cuong said that Japan and Taiwan are also laminating steel from scrap steel.
The Prime Minister assigned the Ministries of Natural Resources and the Environment and Industry and Trade to promulgate regulations on the quality of scrap steel to be imported to Vietnam. However, no considerable progress has been made over the last three months, while the tardiness will affect enterprises’ business.

Veterinary medicine producers afraid of… GMP

2008-04-15T17:56:00.000-07:00

06:00' 15/04/2008 (GMT+7)
VietNamNet Bridge – The Vietnam Veterinary Medicine Producers’ Association (VVPA) has sent a petition to the government, proposing a delay of the deadline for obtaining GMP (good manufacturing practice) certificate to 2012 instead of 2008 in order to rescue 90% of producers from being eliminated.
At the end of March 2008, VVPA and 37 enterprises, representing veterinary medicine producers, signed a document, asking the Ministry of Agriculture and Rural Development (MARD) and the Vietnam Veterinary Agency to delay the implementation of GMP for four years so that producers have more time to arrange capital, expand production scale to obtain a GMP certificate.
The story originated from a document released earlier this year by the Vietnam Veterinary Agency, which said that veterinary producers must apply GMP for their production of injectable drugs and solution-formed orally administered drugs by the end of 2008 at the latest.
Meanwhile the production of medicinal powders for taking orally or adding into cattle food must get the GMP certificate by the end of 2010. The producers which cannot obtain GMP certificates by then will be able to circulate their products until the end of December 31, 2010 only.
The deadline for getting GMP for the production of other types of medicine is 2012.
In Vietnam, the Ministry of Health began applying GMP requirements on medicine in 1996. MARD announced the roadmap for implementing GMP on veterinary products, stipulating that GMP implementation must begin in 2004 and producers must get GMP certificates by 2006. However, as producers were not prepared for this, the deadline was delayed to 2008.
According to Vu Huy Tan, Chairman of VVPA, only 7 of 177 veterinary medicine companies nationwide have GMP certificates so far, all of which are big producers and joint ventures with foreign partners.
The other 170 companies, though having agreed to implement GMP, still find it difficult to meet the requirements of GMP. According to VVPA, GMP requirements prove to be too strict for Vietnamese companies. Therefore, though MARD delayed the deadline for GMP application to 2008, only 2-3 more companies were able to get the certificate.
Tan said that producers must have VND17bil at least to build workshops and train staffs, overly high capital for these companies, most of which are small- and medium-size. Companies which have the capital of VND7bil and less now account for 50% of total companies.
If MARD insists on applying GMP by the end of 2008, it will push 90% of existing producers into a corner. If these companies go bankrupt, thousands of labourers will become jobless.
Tan said that in 2006 and 2007, the husbandry industry was afflicted with blue ear and bird flu epidemics. Cattle and poultry were slaughtered in big quantities, and veterinary producers were involved in the misfortune as they could not sell products. Some companies have reported 40% decreases in sales. The producers need more time to recover their production and save more money for re-investment and GMP application.
“We need some more time to get stronger. The companies that cannot get GMP certificates after four years of grace will have to accept dissolution.”
Head of the Vietnam Veterinary Agency Bui Quang Anh on April 10 said that it has received the petition on delaying the application of GMP. Anh said that the agency has reported to the MARD for final decision.
“The viewpoint of the agency is to ‘accept pains’ to restructure the market. However, if the government decides to delay the deadline, we will follow the instruction,” Anh said.
He added that the market of veterinary medicine is now in chaos with too many workshops, which provide many bad-quality products. GMP would serve as a tool to filter the companies, as only good manufacturers would be able to survive.
Anh also said that GMP is the only solution to help Vietnam-made products survive, develop and successfully compete with foreign made products.

SCB raises funds at high interest rates, ceiling interest rate broken

2008-04-15T17:54:00.000-07:00

05:29' 15/04/2008 (GMT+7)
VietNamNet Bridge – There have been widespread and inconclusive discussions about the fact that Saigon Commercial Bank (SCB) has issued promissory notes at an interest rate higher than the ceiling rate stipulated by the Vietnam Banking Association’s (VNBA) members. The ceiling interest rate scheme has been broken.
Deposit interest rates may go up again
Just five days after banks began applying the ceiling deposit interest rate of 11% per annum, SCB launched the programme on mobilising VND3tril worth of promissory notes at the interest rate of 1%/month, or 12%/year, higher than the ceiling rate of 0.916%/month or 11%/year. Moreover, the bank also offers attractive gifts to depositors.
Depositors need to deposit VND10mil at least to get a voucher for a lucky draw, where the lucky winners may get a gift worth 2kg of gold.
VNBA has immediately sent a letter to SCB about the issue and to the government, asking the government to stop the issuance.
Yet, it remains unclear how SCB will be ‘judged’. In fact, the ceiling interest rate of 11% per annum is just an agreement among VNBA members; it does not have a legal basis. Commercial banks say that if SCB is not repudiated, another interest rate race will break out.
Meanwhile, SCB’s leaders said that they are not in the wrong. In February 2008, the State Bank set the ceiling interest rate at 12% per annum. At that time, the bank asked for permission to issue promissory notes at the interest rate of 12%, equal to the set ceiling rate. The plan was approved by the Ministry of Industry and Trade. Meanwhile, the State Bank of Vietnam did not protest the bank’s plan, and SCB understood that its plan was accepted.
However, in an unexpected move, VNBA at the end of March came to the agreement on lowering the deposit interest rate to 11%, applied as of April 2. The agreement was reached after SCB registered the promotion promissory note plan.
SCB stated that it cannot adjust the interest rate of the promissory notes, because the rate was approved by the Ministry of Industry and Trade.
Questions have been raised about if the bank is ‘bogged down’ in investment projects and now it has to raise interest rates to raise enough funds to ensure liquidity.
Reporters tried to contact Le Quang Nhuong, Chairman of SCB, to ask him. Nhuong said that the bank is not facing any problem in liquidity, saying that the capital to be mobilised from the promotion programme will be used for operations from April 2008. Nhuong added that SCB has mobilised VND40bil from the programme.
What’s behind SCB’s promissory note issuance?
It seems that state management agencies have not cooperated well in their management work.
First, the State Bank stipulated that banks must not apply the capital mobilisation interest rate of more than 12%, while not specifying the types of capital mobilisation (bond, promissory note or deposit). Therefore, SCB is able to evade the laws to mobilise capital at high interest rates.
Second, VNBA once proposed that the Monetary Policy Department under the State Bank of Vietnam ask the Ministry of Industry and Trade (MOIT) to stop licencing promotion programmes, which are thought to cause uncertainties in the monetary market. However, no reply has been made by the department.
Third, while the State Bank is trying to withdraw money from circulation to curb inflation, the Vietnam Trade Promotion Agency (Vietrade) under MOIT still licences a lot of promotion programmes of banks.
Fourth, doubts have been raised about the State Bank of Vietnam’s report that banks’ liquidity has improved. If banks have profuse capital and they do not lack capital seriously, they will not accept paying high interest rates like SCB.
Fifth, while waiting for a final decision on how to treat SCB, the Government’s Office on April 7 released a document, announcing the Prime Minister’s opinions on the implementation of measures to curb inflation. It said the ceiling deposit interest rate scheme should be halted.
Experts have also pointed out that the ceiling interest rate scheme is a step back, diminishing the achievements in interest rate liberalisation Vietnam has made.
While the State Bank is trying its best to fight inflation, it refuses to use the most effective tool to curb inflation – the interest rate policy. High interest rates would attract more money to banks and help curb inflation. European countries, for example, have been applying high interest rates on the euro to curb inflation.

First low-cost airline established in Vietnam

2008-04-15T17:52:00.000-07:00

10:32' 15/04/2008 (GMT+7)
Officials from Jetstar and Pacific Airlines announce the establishment of Jetstar Pacific on Monday in HCM City. (Photo: Tran Duy)
VietNamNet – The second largest air carrier Pacific Airlines Vietnam will be renamed “Jetstar Pacific” as of May 2008, said a Pacific Airlines senior executive officer on Monday.
“Jetstar Pacific will be Vietnam’s first low cost airline which is established under a Business Service Agreement (BSA) between the Australian airline Jetstar and Pacific Airlines”, said Pacific Airlines CEO, Luong Hoai Nam who is also the new CEO of Jetstar.
The wide reaching Agreement for Jetstar Pacific includes the renaming of the airline, operating future flights within Vietnam and across Asia under the Jetstar brand, providing every day low fares and a standardized customer experience.
Vietnam Civil Aviation Department’s Deputy Chief, Lai Xuan Thanh, confirmed the BSA to form Jetstar Pacific is totally accordant with the country’s Civil Aviation Law and this will be the first airline in Vietnam to involve foreign partners.
The State Capital Investment Corporation (Vietnam) takes 74,42% of the Jetstar Pacific and Quantas Asia Investment (Singapore) invests 18%.
The CEO said under the BSA the implementation of the Jetstar brand would apply to all aspects of Jetstar Pacific, including marketing and advertising, aircraft livery, sales channels and employee uniforms.
He said the new airline would use a fleet of up to 30 Airbus A320 aircraft by 2014.
The first A320 is proposed to enter Jetstar Pacific’s operations in August 2008, supporting the ongoing development of a comprehensive domestic network within Vietnam, before undertaking future international expansion from late this year into markets likely to include Thailand, Singapore, Malaysia and Cambodia.
Qantas Group CEO Geoff Dixon said Jetstar would be one of the largest and fastest growing airlines brands in the region.
The Qantas Group, which made an investment of 18 per cent in Pacific Airlines in July 2007, will increase its investment in the airline to a 30 per cent holding in 2010.
“Jetstar Pacific will be able to access and leverage the significant expertise and resources within the Qantas Group that will help enable its planned future growth,” Mr Dixon said.
Jetstar CEO Alan Joyce said the establishment of this Agreement placed the Vietnamese carrier in a strong position to leverage the successful Jetstar brand and business model.
“We have repositioned the airline as Vietnam’s first low cost carrier to enable its future sustainable expansion within Vietnam and into many international markets,” Mr Joyce said.
Jetstar CEO Alan Joyce and Jetstar Chief Financial Officer David Hall currently represent the Qantas Group on Jetstar Pacific’s six-member Board of Directors.
Key management roles in Jetstar Pacific now filled by Qantas and Jetstar executives. Over time most of these positions will be transferred to Vietnamese managers.
Jetstar is one of the most profitable and fastest growing airlines in Asia. It was voted in 2007 the World’s Best Low Cost Airline and Best Low Cost Airline in the Asia Pacific by SkyTrax World Airline Star Rating.

Car market heating up before day dawns on tax increase

2008-04-15T17:51:00.000-07:00

07:20' 15/04/2008 (GMT+7)
VietNamNet Bridge – Buyers are rushing to car salons these days, trying to purchase cars before the tax increase comes into effect.
Since local newspapers reported that the Ministry of Finance was consulting with relevant ministries about the tentative tax increase to 80-85%, people have been rushing to buy cars for fear that car prices will increase.
Most of the car sales agents in Hanoi say that the number of clients has increased sharply by 50% these days as they have heard about the Ministry of Finance’s plan to raise the tax. The salesmen here say that most of the clients seeking to buy cars now are individual clients, while there are few clients buying cars for state agencies. Explaining this, the salesmen said that only clients who have to pay for cars with their own money feel bad about paying more money.
“It remains unclear when and how much the tax will increase, but it is certain that the tax increase will occur. If I do not buy a car right now, I will have to pay tens of thousands of dollars more for a car worth over $100,000 in the future, when the decision on the tax increase comes into effect,” said the owner of an electronics company in Hai Phong city.
The most impatient clients are those who plan to buy luxury models. It is because the more luxurious the cars, the more additional money buyers have to pay.
Meanwhile, sellers do not intend to sell cars in big quantities at this moment, while they tend to limit sales, and will only sell later, when the decision on the tax increase become effective.
“Two months ago, if you called a car agent and said you wanted a car, the seller promised to deliver the car you wanted very soon and give you a valuable gift. But if you want to buy a car now, you will be told that cars are now very scarce,” a client, who was at T.L salon on Nguyen Van Luong street, said.
If a company imports 40 cars which have the taxable value of VND12bil now, they will have to pay the total tax of VND8.4bil (70%). Meanwhile, the tax they have to pay when the tax rate is raised, for instance, to 80%, will be VND9.6bil. If delaying the sale of 40 cars, the importer will be able to apply the new sale prices, higher than the current price, while they still have to pay the current tax rate. That explains why car importers are ready to pay high fees for storage, and do not intend to boost sales now.

ACB Q1 assets up 17 percent at $6.3 billion

2008-04-13T17:34:00.001-07:00

A customer makes a transaction at a HCMC’s ACB branch
Vietnam’s fifth-largest lender, Asia Commercial Bank (ACB), said asset growth accelerated in the first quarter, rising 17 percent from end of 2007 to VND100 trillion (US$6.3 billion).
The Ho Chi Minh City-based bank nearly doubled its assets from a year ago to VND50.33 trillion ($3.1 billion).
ACB reported unaudited gross profit of VND501 billion ($31 million) in the first three months of this year, or 20 percent of its earnings forecast for the whole of 2008, it said in a statement on the bank’s website (www.acb.com.vn).
The statement gave no annual percentage change for first quarter profit but last year ACB reported pretax profit of VND413 billion for the first quarter of 2007.
Shares in ACB closed down2.9 percent at VND93,700 ($5.81) Friday, valuing the bank at $1.54 billion, the largest among 132 companies listed on the Hanoi stock exchange.
Standard Chartered owns 8.56 percent of ACB, the largest stake of four foreign shareholders which together hold a combined 30 percent.
ACB, the sole listed bank on the Hanoi market, has projected its total assets will increase 69.8 percent to VND145 trillion ($8.99 billion) and loans will grow 85 percent to VND59 trillion ($ 3.66 billion) this year.
Earlier this week the bank published its audited results for 2007, showing net profit more than tripling to VND1.76 trillion ($110 million) as loans jumped 87 percent to VND31.81 trillion ($1.97 billion)

French business keen on Vietnam

2008-04-13T17:32:00.001-07:00

Christian Pepineau (R) meets with businesses in HCMC last Thursday
The leaders of the Paris Chamber of Commerce and Industry (CCIP) spoke with Thanh Nien about bringing investors to Vietnam and helping locals enter European markets.
Thanh Nien Daily: What are the key sectors in Vietnam that French businesses are interested in?
Christian Pepineau, Vice President of the Paris Chamber of Commerce and Industry (CCIP): There are many French businesses working in diversified fields here and some are among the world’s largest companies.
I would say all the industries in your country are of our interest.
I always tell French entrepreneurs that Vietnam has some of the best investment potential for us.
Jean-Lou Blachie
So all kinds of French businesses will come to Vietnam?
CCIP is honored to act as the bridge between Vietnamese and French businesses.
We try to create cooperative opportunities for both.
For the next few years, CCIP is focusing on bringing medium-sized enterprises to Vietnam.
Why does CCIP focus on medium-sized enterprises?
We see that Vietnam has many advantages that our middle-sized businesses can benefit from.
The most visible and best points are good, cheap human and natural resources and a large market of over 80 million people.
CCIP SNAPSHOT
■ CCIP is a public institution providing services to more than 300,000 businesses in and around Paris. Among its activities, the CCIP advises entrepreneurs and helps them find new opportunities - most notably in foreign markets.
■ In its 12 schools and 13 training centers, the CCIP is educating 14,000 students as well as 40,000 CEOs, and other employees in France and around the world.
Once French businesses invest in the country, they can produce high-quality products at low prices not only for export but also for local Vietnamese consumption.
Do you have any advice for Vietnamese businesses entering the European and French markets?
Of course, Vietnamese businesses have great opportunities in Europe and France.
Many Vietnamese have been living in France and they do good business.
Jean-Lou Blachie, CCIP’s Vice President of Seine-Saint-Denis: We always welcome Vietnamese entrepreneurs and their products.
As for advice, I think any enterprises which want to live long in Europe must provide customers with high quality products at reasonable prices.
But many Vietnamese complain that the European authorities are strict on made-in-Vietnam products to protect their EU companies?
Jean-Lou Blachie: Any assessment should be considered in various ways and by several parties.
It is common for governments to support national industries and companies.

But you see, many made-in-Japan products are favorites in Europe because they are of high-quality.

Your neighbors, the Chinese, also sell their goods everywhere.

How do you feel about the Vietnamese business environment?

Well, this is my first visit to Vietnam and I have not had much time to evaluate the business environment.

But I am very impressed by the young and dynamic atmosphere of Ho Chi Minh City.

I have been to China and several other Southeast Asian countries, and I think infrastructure plays such an important role in giving businesses the level of comfort they need to invest.

Vietnam should improve its infrastructure to meet the demands of foreign investors.

Have you heard any comments from French entrepreneurs who have done business in Vietnam?

Christian Pepineau: They say “Come…come to Vietnam!” Your country is a fertile land with qualified people.

French entrepreneurs are also impressed by the country’s law improvements.

We believe with increasingly favorable laws for foreign investors, Vietnam will take off.

What have the French businesses you are traveling with on this trip said about Vietnam?

Jean-Lou Blachie: They think the prospect of doing business in Vietnam is good.

You know, the word “Vietnam” is popular because there are lots of Vietnamese living in France.

The two countries have been linked to each other for more than a century.

Vietnam has been facing high inflation since it became a member of the World Trade Organization. Do you think the inflation hurts Vietnamese businesses and French enterprises doing business here or intending to invest in the country?

Inflation makes made-in-Vietnam exports cheaper and more appealing to foreigners.

I think Vietnam usually uses the Vietnam dong to US dollar rate to assess inflation.

But that’s not the case this time.

Regarding the VND-Euro rate, I think it will be stable for a long time.

Either way, any developing country entering the international marketplace for the first time will have to meet many challenges.

Vietnam is no exception but it has great strength and may stabilize to develop more rapidly in the near future.

Posco plans work on $5 bln Vietnam mill in 2009

2008-04-13T17:30:00.000-07:00

Posco, Asia’s third-biggest steelmaker, plans to begin construction work for a proposed US$5 billion steel mill in Vietnam before April next year.
The Korean steelmaker will submit the result of its feasibility study to the Vietnamese government in May, Kim Jin Il, executive vice president in charge of the project at the Pohang, South Korea-based company, told reporters Friday.
Posco joins Malaysia’s Lion Group and rivals in building steel plants in Vietnam as the country makes more appliances, machinery and erects more buildings.
Demand could jump to 9 million tons this year from 1 million tons a decade ago, Lion Group said this week.
The proposed Vietnam plant could have an annual production capacity of 4 million metric tons, Kim said.
Posco hopes to win approval from the government in November, he said.
The company last May said it had signed an agreement with Vietnam Shipbuilding Industry Group to examine building a mill in the Southeast Asian nation.
The Korean steelmaker also announced a further delay to the start of construction at its $12 billion steel plant in India to September.

It had planned to start building this month.

Construction of Posco’s Indian mill was agreed with the Orissa state government in June 2005, and originally was meant to start last April.

Delays in securing a mining permit and relocating residents have pushed back work.

Bureaucratic obstacles need removing to attract more FDI

2008-04-13T17:29:00.001-07:00

14:47' 13/04/2008 (GMT+7)
VietNamNet Bridge - In the first quarter of this year, foreign businesses poured more than US$1.68 billion into investment projects, a year-on-year increase of 24 percent. However, economists said that Vietnam could attract more foreign investment if the legal environment and administrative procedures were simplified.
In March alone, 75 projects were licensed with a combined investment capital of US$2,627 million, bringing the total number of new projects in the first quarter of this year to 147 with a total registered capital of US$5,156 million.
The registered capital has increased by 43 percent over the same period last year because many big projects were licensed. They include a project to build five-star hotels and resorts in southern Ba Ria-Vung Tau province with an investment capital of US$1.299 billion from the US Good Choice group.
A US$610.3-million project to build offices, produce software products and supply human resources by three Japanese companies, and a project to build five-star hotels, villas and houses capitalised at US$298.4 million in central Thua Thien-Hue province by the Singaporean Lap An Investment and Development Company.

Phan Huu Thang, head of the Overseas Investment Department said that foreign direct investment (FDI) in the first quarter of this year was high and FDI businesses have been actively implementing projects since the start of this year.

Many big projects have been granted licenses, especially projects to build offices and flats for sale and rent as well as luxury hotels and resorts. However, some certain obstacles need removing.

First, Vietnam must check the implementation of its commitment to an opening the door for foreigners in the fields of goods and services in accordance with WTO commitments.

It is essential to publicise the relevant ministries and sectors’ legal requirements on invsetment conditions or businesses’ operations in order to make them conform to the State’s commitments. Meanwhile, provincial People’s Committees should issue transparent and clear information on foreign investment management in terms of timetables and lists of investment items.
Secondly, continuing to implement a one-stop shop mechanism at investment permit granting and investment management agencies, enhancing relevant agencies’ capability of controlling foreign investment and mechanisms for supervising investment activities. They also must continue to deal with procedures on land, tax, export-import and customs in order to facilitate foreign investment in Vietnam.
In addition, it is imperative to accelerate the disbursement and the implementation of major projects, which were granted investment permits in 2006 and 2007 by simplifying administrative procedures and resolving land acquistion-related issues.
According to foreign experts, apart from the above-mentioned work, Vietnam should make a greater effort to ensure the clarity and transparency of investment policies and procedures by publicizing the process of granting investment permits on the Internet and adjusting all sectors in line with Vietnam’s international commitments in the integration process.
More attention should also be given to forecasting activities to increase the quality of zoning work. If such issues are resolved properly, the national investment promotion programme in the 2007-2010 period adopted by the Prime Minister on January 1, 2008 will be implemented on schedule and in an effective manner.

FPT first-quarter pre-tax profits climb by 46.6 percent

2008-04-13T17:28:00.001-07:00

21:04' 13/04/2008 (GMT+7)
VietNamNet Bridge - The Corporation of Financing and Promoting Technology (FPT) on April 11 announced a pre-tax profit of 303 billion VND (18.9 million USD) in the first quarter of the year, a year-on-year increase of 46.6 percent.
The software and services accounted for 63.6 percent of the figure with 193 billion VND.
Deputy Chairman of the FPT board Bui Quang Ngoc said: “We will continue to focus on software and services this year as its earning potential is undeniable.”
FPT has also inked a 3.5 million USD contract with US-based Agilis Solution to export software to the United States .
The corporation earned 4.3 trillion VND (274.5 million USD) in revenue in the first three months of the year, an increase of 58.9 percent against the corresponding period last year.
It plans to attain profit of 1.4 trillion VND (90.68 million USD) for the entire year on revenue of 18.4 trillion VND (1.15 billion USD).

Ngoc also announced that FPT Commercial Bank would receive its operating licence next week, an effective channel for the corporation to mobilize money for future endeavours.

“We’re considering whether to buy back shares later in the year as we intend to offer shares to staff as a reward for their hard work,” he added. “But, it might be one or the other, because it’s hard to do both.”

During the FPT stockholders meeting last week, the corporation revealed it will pay a dividend of 36 percent in cash to stockholders at their request.

Restructuring export products remains irrational

2008-04-13T17:27:00.001-07:00

20:56' 13/04/2008 (GMT+7)
VietNamNet Bridge - Vietnamese products’ trade marks are still unpopular on the world market due to their low quality, poor design and high transport and customs costs.
In the current economic situation, how to boost exports and reduce the trade deficit is seen as one of key measures to curb inflation and ensure a sustainable economic growth.
Thai Doan Tuu, Deputy Head of the Trade and Services Department under the Ministry of Planning and Investment (MPI) said that economic efficiency and restructuring of export items are key issues facing Vietnam’s export sector. Over 60 percent of export turnover comes from crude products with a low value while industrial products such as garments and textiles and footwear have a high proportion of manufactured goods for export.
In the balance of trade since 2006, import growth rate has been always higher than export growth rate. In 2007, import surplus reached US$14.2 billion, nearly three times higher than the level of US$ 5.07 billion recorded in 2006. In the first quarter of this year, trade deficit hit US$ 7.4 billion, equivalent to 56.5 percent of export turnover.
According to former Minister of Trade Truong Dinh Tuyen, this dangerous figure is likely to destablise the economy and reduce the proportion of manufactured and assembled products for export leading to a drop in the country’s export earnings.

Restructuring export items

It is essential to restructure export products by providing mechanisms and promoting trade activities. The most important thing is to restructure products rather than focus on export mechanisms, said Mr Tuyen.

At present, all economic sectors can engage in export activities, even private businesses can also export their products across the border to China, Laos and Cambodia. However, Vietnam’s restructuring of export products remains irrational and unchanged for years. Vietnam has a relatively stable and high export growth compared to Thailand as its export growth rate has increased to 35 percent.

Six ASEAN member countries including Thailand, Singapore, Malaysia, the Philippines, Indonesia and Brunei have listed 20 highly valued export products in which electronic components of each country account for up to 17.9 percent or US$5 billion of their export turnover.

Meanwhile, Vietnam earned merely US$2.1 billion from exporting electronic components in 2007.

Mr Tuyen stressed that if long-term reforms are not implemented, it will be very difficult to increase export turnover. In particular, with its WTO commitments, Vietnam cannot change the mechanisms. It is also essential to pay due attention to simplifying administrative procedures in exporting products, especially tax and customs procedures. Over the previous period, although remarkable progress has been made in simplifying procedures, they still cause obstacles and waste in terms of time and money, he said.

The former Trade Minister also said that it is necessary to further promote the reform process in order to reduce fees for exporters during business transactions.

Making full use of advantages

According to Mr Tuyen, as production and trade manager, the Ministry of Industry and Trade should have a strategy to develop supporting industries. It is important to review all supporting industries to select the most competitive industries to allocate investment.

“We should boost export promotion and invest in developing products which have achieved high export turnover and growth in recent years”, he said.

Mr Tuyen affirmed that it is impossible to shift the export structure if we do not have a proper understanding about each specific product category. He suggested that Vietnam should focus on developing its creative industry, including communications, fashion design, trade and advertising. Globally, this industry now has an estimated transaction value of about US$3,000 billion.

“Vietnamese people’s character is suitable to this industry,” said Mr Tuyen. Currently, Vietnam’s fashion industry is developing dramatically. Investment in this industry is not high, and the industry mostly explores the creativity of people”.

In 2007, Vietnam earned US$7.8 billion from garment exports, or US$450 million higher than the set target and up 31 percent compared to the previous year. This year, the garment and textile sector aims to export products worth US$9.5 billion, up 21.8 percent over 2007.

According to economists, Vietnamese garment products exported to the US market have to face supervision mechanisms on the price, not the quality. Hence, domestic garment businesses should increase the quality and value of products in order to achieve a high export turnover and avoid anti-dumping lawsuits. In addition, they should also intensify measures to monitor cheap garment products.

Using export supporting measures means changing the export structure towards exporting manufactured goods with high added value so as to increase the economic efficiency and export quality.

VP Bank’s 2007 net profit doubles

2008-04-11T16:44:00.001-07:00

A motorbike-driver passes by a VP Bank branch in HCMC
Vietnam’s VP Bank, 10 percent owned by Singapore’s OCBC Bank, has said that it doubled its net profit in 2007 to VND226.7 billion (US$14.2 million) from the previous year.

Total assets jumped 79.4 percent to VND18.14 trillion ($1.12 billion) last year, the Hanoi-based VP Bank, the 12th largest partly private bank in Vietnam, said in its annual report for 2007.

VP Bank has said it would sell a further 5 percent stake to OCBC, Singapore’s third-largest lender, but no date has been announced.

OCBC said in January it planned to open a fully-owned banking unit in Vietnam, where booming growth and a freeing up of the economy is fuelling demand for financial services.

In January, the unlisted VP Bank, or Vietnam Bank for Private Enterprises, said it raised nearly VND15.5 trillion ($962 million) of deposits at the end of 2007, up 125 percent from 2006, and loans also reached more than VND13 trillion ($807 million).

The Southeast Asian country’s credit growth was 54 percent last year, prompting the central bank to tighten money supply in the first quarter of 2008 as inflation in March hit 19.3 percent from a year earlier, the highest in more than 12 years.

Source: Reuters

Formosa plastics group to build steel facility

2008-04-11T16:43:00.000-07:00

Formosa Plastics Group, Taiwan’s biggest diversified industrial company, plans to spend US$2.57 billion to set up a steelmaker in Vietnam and take a 95 percent stake in the venture.

A new company may start building the mill with annual capacity of 7.5 million metric tons by the end of the year, K. H. Wu, president of Formosa Heavy Industries Corp., said in an interview.

Wu’s company, a unit in Formosa Plastics Group, will own 5 percent of the mill, he added.

Formosa Plastics, based in Taipei, is expanding in Vietnam to cut costs and tap the Southeast Asian market.

The group set to spend $600 million in the country to boost output of textiles and other products, Chief Executive William Wong said last November.

“We’re looking at demand from the Association of Southeast Asian Nations,” Wu said Wednesday.

Production from the mill will probably start three years after construction begins, he said.

Source: Bloomberg

Vinapco, Pacific Airlines to start talks on fuel fee

2008-04-11T16:35:00.001-07:00

06:26' 12/04/2008 (GMT+7)

VietNamNet Bridge – Executives of Vietnam Air Petrol Co. (Vinapco) and Pacific Airlines are planning a round of negotiations next week on new fuel charging fee that has hurt their long-established relationship following a supply disruption 10 days ago.

Vinapco director Tran Huu Phuc told the Daily on Wednesday that the firm has got a request from Pacific's chief executive officer Luong Hoai Nam for negotiations on the new fuel charging fee rise to VND750,000 per ton of petrol from the current VND593,000.

Nam confirm with the Daily over the phone on Wednesday that Pacific planned to meet Vinapco next week but did not go further whether the carrier will accept the new rate proposed by Vinapco.

"We cannot make any decision until we meet Vinapco," he told the Daily.

Vinapco want a higher fuel charging fee for Vietnam's first low-cost carrier in what it said will help offset losses incurred in the transport and storage process and given the world's increasing price of crude oil.

"We agreed on a fuel charging fee of VND593,000 for Pacific when crude oil was traded at around US$75 per barrel on the world market but the price has soared to more than US$100 a barrel today," Phuc said.

Therefore, Vinapco has to take measures to cope with losses as the company had not received Government subsidy for air petrol imports although the Government has agreed on a budget of VND12.7tril (over US$788mil) to cover losses for other fuel importers.

Phuc said he wanted Pacific to share the current burden of losses with the company.

"We have to cover many costs including for transport and storage, not mentioning a 1.52% loss rate for petrol in the process of transport, storage and pumping," Phuc said.

Phuc did not say anything about the chance for Vinapco to apply new fuel charging fee of VND750,000 per ton or even VND779,000 per ton, a rate that the company is seeking for approval of the big customer Viet Nam Airlines, which is also the parent firm of Vinapco.

It is expected that Vinapco will sit down with Pacific to discuss a proper charging fee though Phuc told the Daily last week that the firm did not find any season to negotiate with Pacific as the airline admitted higher rate was sound in the current situation.

"The practices for trade negotiations should be based on a cooperative spirit," Phuc said.

Experts said Vinapco would choose bilateral negotiations rather than a meeting for the two parties arranged by relevant agencies because it did not want to face any legal action.

Lawyers said there was evidence for Pacific to sue Vinapco for its unilateral disruption of fuel supply for a domestic Pacific plane for hours on April 1, resulting in the delay of some 30 Pacific flights and affecting more than 5,000 passengers.

But, Nam said Pacific had not had any decision. The carrier wants to focus on bilateral negotiations to reach an agreeable fuel supply cost in line with the current regulations and the Government's moves to curb inflation.

Pacific will only ask the Ministry of Finance to arrange negotiations for the two parties if it fails to strike a deal with Vinapco, which is under the umbrella of Vietnam Airlines.

Experts said legal actions may worsen the already-hurt relationship between Pacific and the State-run Vinapco as the latter is the country's sole air fuel supplier.

Phuc said Vinapco on Wednesday submitted to the Competition Administration Department a dossier explaining why the company interrupted fuel supply to a Pacific plane as requested by the agency last week.

The administration looked into the case as there were signs that Vinapco abused its advantage as the country's sole air fuel supplier and the fact that the dispute between Pacific and Vinapco was not their own case any more as it affected the interest of customers.

Phuc said Vinapco did not take advantage of its monopoly and denied any wrongdoing.

He stressed that Vinapco had sent at least four documents to Pacific demanding higher fuel charging fee and negotiations before the fuel supply interruption.

However, Pacific turned down the demand as the carrier would have to pay big extra money for fuel bills, which account for more than 50% of the carrier's flight costs.

Asked what will happen to Vinapco, the competition administration's deputy head Tran Anh Son told the Daily that "it is too early to comment on the case. We need more time for investigation and talk to the two parties before coming to a conclusion."

The administration will follow the set procedures, based on the two laws, the Competition Law and the Ordinance on Protecting Consumers.

Now, Vinapco has resumed pumping fuel for Pacific planes as ordered by the Ministry of Transport despite the absence of an agreement with Pacific, Vietnam's second largest airline after the national flag carrier Vietnam Airlines.

MOF: Vinapco must apply single air petrol sale price

2008-04-11T16:34:00.001-07:00

16:45' 11/04/2008 (GMT+7)

VietNamNet Bridge – The Ministry of Finance (MOF) has sent a dispatch to Vietnam Airlines Corporation, asking it to instruct the Vietnam Air Petrol Company (Vinapco), one of its subsidiaries, to apply a single petrol sale price.

30 flights delayed because of no fuel?

MOF said that in order to implement the 10th Communist Party Congress’s resolution on removing all discriminatory treatments on different types of ownership, Vinapco must apply a one sale price policy to all clients, air carriers.

The dispatch was sent eight days after Vinapco unilaterally interrupted providing air petrol to Pacific Airlines, causing the delays of 30 flights, as a result of which 5,000 passengers suffered.

The problem lay in the fact that Pacific Airlines did not accept the higher price of air petrol suggested by Vinapco.

Meanwhile, Pacific Airlines says that Vinaco is acting unfairly by selling air petrol to Vietnam Airlines at a lower price than to Pacific Airlines.

In reply, Vinapco says that it has the right to set prices for its clients, and that Vietnam Airlines, which consumes a volume of petrol 10-11 times higher than Pacific Airlines, and is also the strategic partner of Vinapco, can enjoy lower prices.

However, MOF has decided that the price at which Vinapco sells petrol to Vietnam Airlines must be applied to Pacific Airlines as well.

As Vinapco is the only petrol supplier now on the market, it must not unilaterally stop providing air petrol to airlines without the permission of competent agencies.

Prior to that, the Competition Administration Department (CAD) under the Ministry of Industry and Trade asked Vinapco to explain why it interrupted providing air petrol to Pacific Airlines.

In an interview with VietNamNet, Tran Anh Son, Deputy Head of CAD, said that if Vinapco is found abusing its monopoly to harm other businesses, it may face the fine of 10% of its 2007 turnover.

PetroVietnam to make its own jack-up rigs

2008-04-10T17:40:00.001-07:00

An offshore oil-drilling platform in southern Vung Tau Province
State-run oil and gas PetroVietnam will start to produce its own jack-up rigs to meet increased oil and gas exploration demand, Vietnam’s government said Wednesday.

It said in a directive that this was one of the country’s “priority engineering projects.”

Initially the project will make jack-up rigs for water depth of up to 60 meters, an official from the state oil group’s drilling arm PV Drilling said.

Petro Vietnam’s subsidiary, OilRigs Manufacturing JSC, will implement the project, the government directive said.

Until now PetroVietnam has had to rent or purchase rigs from foreign companies such as Singapore’s Keppel Corp. to meet its offshore exploration requirement.

PetroVietnam has been stepping up efforts to explore for oil and gas both in Vietnam and abroad with projects underway in Algeria, Tunisia, Mongolia, Laos and Indonesia.

Source: Reuters

Freeing forecasts from fettered interests

2008-04-10T17:39:00.001-07:00

Forecasts, such as those on the impact of unpegging the prices of monopoly products like gasoline, are often inaccurate
More than ever now, economic forecasts need to be objective and made without deference to politics, writes Nguyen Minh Phong of the Hanoi Institute of Economic and Social Development.

In Vietnam, economic forecasts seem to have become a tool to illustrate, repeat and reassure government officials in their efforts to achieve more or less subjective economic goals, rather than being a barometer of market fluctuations.

An example is the forecast for price levels and inflation by the government’s Price Management Committee.

When it comes to predicting the consumer price index, the committee seems to be hesitant to give too pessimistic a figure.

Its estimates have often been widely different from final performance.

Yet, there have been cases when relatively accurate forecasts were not heeded by authorities simply because they did not fit their expectations.

Vested interests

Forecasts tend to be one-sided. We have paid and are continuing to pay dearly for forecasts colored by our protectionist view towards the local manufacturing industry, especially the auto industry.

Our forecasts on the impact of unpegging the prices of monopoly products like electricity, gasoline and oil products are also one-sided.

The premises on which these forecasts rested are not convincing since letting prices float while not allowing market competition would only give monopolies a double benefit.

Additionally, these forecasts were conducted either by the monopolies themselves or by others authorized by them - like in the case of electricity last year, or coal this year.

Public feedback and forecasts by professional and independent researchers have not been given consideration.

It is, therefore, an urgent need for the government to set up economic forecasting and policy research agencies to provide balanced and objective research.

Standardizing data collection, management

Unsystematic collection and management of economic data and information is another challenge to researchers.

More importantly, information is not often accessible to the public who would have to spend much time and money to acquire the data they need.

So it is time the government develops data collecting managing systems at all levels and ensure data can be easily accessed.

The importance of good data collection and management can not be overestimated.

Systematic data collection and management itself has inherent forecast values.

Need for selectivity

Economic forecasts should not be entrusted to agencies lacking knowledge, human resources, infrastructure or professional tools.

It is a complicated task that requires the cooperation of different government agencies, and combination of different analytical tools and methods, especially for the collection and deduction processes.

Complete reliance on computers is not advisable, nor would a forecast be adequate without taking into account non-economic factors.

Close cooperation is particularly needed between forecast agencies and those charged with managing the economy.

Need for social context

The dynamic interaction between forecasts and policies cannot be reiterated enough.

Government policies, the legal framework and other elements of the social context that are changing quickly in this period of renovation and integration determine the accuracy of forecasts, especially short- and medium-term.

For instance, a speech or decision by a senior official may have an unexpected impact on the markets, particularly the financial markets, rendering previous forecasts inaccurate.

Failing to take into consideration the intricate web of social factors will make forecasts inaccurate, irrelevant and especially a waste of time and money.

BUSINESS IN BRIEF 9/4

2008-04-09T17:36:00.000-07:00

17:08' 09/04/2008 (GMT+7)
US group plans five billion USD resort in Danang
The US-based Oak Tree Group has revealed a plan to build a five billion USD resort in Lien Chieu district, central Danang city.
The group presented the project, the biggest of its kind in Vietnam so far, to leaders of the municipal People’s Committee on April 7.

The 500 ha Sunrise resort will house a golf course, a therapeutic centre, villas, high-end hotels, a marina, a telpher route, a heliport and a casino.

Once fully operational, the project will generate jobs for more than 10,000 local workers, according to the group’s leaders.

Modern injectable drug plant begins operation

The Pymepharco Joint Stock Company has opened an 11.5 million USD (184 billion VND) plant producing injectable drugs in the central province of Phu Yen .

The plant with technologies from India , Germany and Spain will adhere to the quality system of GMP-WHO (Good Manufacturing Practise of the World Health Organisation).

Pymepharco is cooperating with Stada Vietnam to produce the antibiotic of third generation Cefdinir.

In 2003, Pymepharco built a plant producing 160 medicinal products.

Gerber Technology inaugurates first showroom in HCM City

The US-based Gerber Technology, a world-leading supplier of automated CAD/CAM/PLM solutions for industries opened its Advanced Technology Centre (ATC) in Ho Chi Minh City on April 8.

The 750-square-metre facility was developed to provide product demonstration and training and to showcase the company’s systems. The centre also offers product testing and training for customers, engineers, designers and industry students nationwide.

It is the first centre of its kind in Southeast Asia , and will serve the needs of such industries as apparel, aerospace, composites, furniture, automotive, aerospace, marine and industrial fabrics in neighbouring countries.

Da Nang exports earn 206.4 million USD in first quarter

The central city of Da Nang earned 206.4 million USD in export turnover in the first quarter of this year.

The city’s Department of Industry and Trade has targeted a yearly export of 905 million USD by focusing on high-turnover industries such as garments, footwear, seafood, processed food and wood products, as well as services that generate foreign currency such as tourism, banking and finance, and telecommunications.

Trademarks chosen for State promotion

Thirty brand names have been selected to participate in the National Brand Name Programme, announced Trade Promotion Agency director general Do Thang Hai at a press conference on April 8 in Hanoi .

Brands hail from finance, food and beverage, garment and electronic industries, among others.

Included in the programme are SJC, Agifish, Vietcombank, Viettien, VNPT, Vinaconex, Biti’s Kinh Do, Cadivi, Phong Phu, Nha Be, Vinacafe and Saigon Tourist.

The programme is the only one of its kind, created by the Government to help establish a national image based on the value of innovations: creativity, quality and leadership. The programme seeks to further develop Vietnam ’s reputation for diverse and high-quality goods and services.

“The programme is not an award for having a famous brand name,” said Hai, explaining that selecting suitable brand names was just the beginning for business partnership.

Selected candidates possessed trusted brands, plans for sustainable and long-term brand development and adequate resources for development, he noted.

After joining the programme, candidates will receive assistance in building action plans to enhance competitiveness of their brands on domestic and international markets and finding distributors via exhibitions.

They will also receive consultation on building, developing and protecting their brand name.

Vinacafe sets Guinness record for large cup

For a cup containing 3,613 litres of coffee, Vinacafe has received the Guinness World Record (GWR)’s certificate as the world’s biggest cup of coffee.

Vinacafe has broken the old record set by a Panama coffee company by over 204 litres.

The world’s biggest cup of coffee began its trans-national trip from Ho Chi Minh City on March 30 and arrived in Hanoi on April 8 to receive the certificate from the GWR representative, Lucia Sinegagliesi, en route to Phu Tho province, the holy land dedicated to Vietnamese ancestors Kings Hung.

The cup is scheduled to show up at the opening ceremony on April 9 of the Kings Hung’s death anniversary, which falls on the 10 th of the lunar March every year.

Cacao industry aims sustainable development

A workshop aimed to work out measures to turn cacao to be one of Vietnam ’s key plants was held in the resort city of Da Lat , Central Highlands Lam Dong province on April 8.

The workshop, focusing on sustainable development for the cacao industry, discussed a plan to develop Vietnam ’s cacao industry and a World Wildlife Fund (WWF) project to encourage cacao plantation in Vietnam .

It also mentioned the development of cacao trees combined with bio-diversification protection.

Participants at the workshop, including representatives from cacao growing areas in Vietnam , non-governmental organisations and foreign cacao trading companies, were given introduction to a WWF pilot project on cacao sustainable development being implemented in Lam Dong.

French businesses urged to accelerate investment

Deputy Minister of Planning and Investment Cao Viet Sinh called on French businesses to continue investment in Vietnam .

The official made the appeal at the Vietnam-France Business Forum in Ho Chi Minh City on April 8, adding that it will help raise France ’s position among foreign investors in the Southeast Asian country.

Co-President of the High-level Council for Vietnam-France Economic Development and Honourable MP, Jacques Oudin said France can cooperate with Vietnam in high-technology, information technology, material technology, new energy, petrochemical, farm, forestry and fisheries processing, infrastructure development, transport, environment as well as tourism, medical, education and human resource training.

The forum held by the High-level Council for Vietnam-France Economic Development was attended by about 300 businesses from both countries. They discussed the cooperation of marine economy, farm produce safety and hygiene and finance for infrastructure construction.

According to the Ministry of Planning and Investment, France has 198 operating projects in Vietnam worth 2.38 billion USD in capital. This means it holds second ranking among EU member countries and 10th among 82 countries and territories with operations in Vietnam .

France is also Vietnam ’s third largest partner from the EU, with a trade turnover of 2 billion USD in 2007.

Ho Chi Minh City will host a French economic and commercial exhibition from April 9-11 as part of a France Week in Vietnam . The exhibition will draw 136 enterprises of various sectors from France.

Huge number of stock brought onto the market

Both the Ho Chi Minh City and Hanoi bourses saw sharp increases in their transaction volumes on the second day of the broadened trade band.

The Ho Chi Minh City Stock Exchange (HoSE) witnessed the trade of around 25 million shares compared to 2 million the day before.

The transaction value at the bourse also increased more than 10 times compared with the April 7 session, reaching 1.2 trillion VND.

The HoSE’s VN-Index closed the April 8 trading session at 548.56 points, up 6.23 points or 1.149 percent.

At the Hanoi Securities Trading Centre, more than 13 million shares were traded, up by more than 11 million from the previous day.

However, the HaSTC-Index dropped 0.78 points or 0.39 percent to stand at 197.55 points by the end of the session.

Power plant seeks investors

2008-04-09T17:35:00.000-07:00

17:03' 09/04/2008 (GMT+7)
VietNamNet Bridge - Tan Tao Group (ITA Group) is seeking investors to join in a 7.7 billion USD project to build the 4,400MW Kien Luong Thermal Power Centre and Nam Du deep-sea port complex in the southern province of Kien Giang .
On April 8, the group signed contracts with US-based Black & Veatch , China ’s FHDI Engineering Co, Ltd and Vietnam ’s Power Engineering Consulting Co No 2 to provide consulting and assist in the call for capital.
“The capital requirements for this project are enormous,” said ITA Group deputy director Nguyen Tuan Minh. “As the key investor, we will contribute 20 percent of total capital for the project. The rest will be mobilised from foreign investors as well as from domestic investors through the issuance of stocks and bonds.”
Construction of the 6.7 billion USD power plant and 1 billion USD port would begin in the last quarter of next year, said Minh.
“The coal-fired thermal power centre is expected to start generating electricity in 2013 at a capacity of 1,200 MW,” he said. “The full capacity will be met in 2016.”
The port complex, including the Nam Du and Kien Luong ports, would be built to serve the power plant, facilitating delivery of coal imported from Australia and Indonesia . “We plan to import 10 million tonnes of coal annually from Indonesia and Australia to run the thermal power centre,” Minh said.
The electricity generated by the Kien Luong Thermal Power Centre would be sold to ITA Group industrial zones and Electricity of Vietnam (EVN). Thirty percent of initial capacity is committed to the industrial zones, while the amount of power to be purchased by EVN was still in negotiation, Minh said.
Kien Luong Thermal Power Centre would become the largest thermal power project authorised by the Prime Minister to a privately-owned company. The project was approved by the Ministry of Industry and Trade in January.
ITA Group has operated for more than 11 years developing infrastructure and industrial zones in Vietnam and has 20 member companies working in a number of fields.

DOC to reconsider anti-dumping taxes on Vietnamese shrimp companies

2008-04-09T17:34:00.001-07:00

17:26' 09/04/2008 (GMT+7)
VietNamNet Bridge – The Vietnam Association of Seafood Exporters and Producers (VASEP), quoting Intrafish, has announced that hundreds of Vietnamese shrimp suppliers have been named on the list of companies subject to tax reconsideration by the US Department of Commerce (DOC).
The shrimp association of Louisiana state of the US and private owned companies have asked DOC to reconsider the tax rates imposed on shrimp suppliers from Vietnam, China, India, Thailand, Ecuador and Brazil.
DOC will first reconsider the tax rates imposed on Chinese and Vietnamese shrimp export companies, and then 366 Indian, 165 Thai, 81 Ecuadorian and 43 Brazilian suppliers.
It remains unclear about the number of Vietnamese companies and the names of the companies on the list.
The said numbers of companies subject to the administrative review are not the final as DOC has the right to limit the number of companies for review.
DOC will check the imports from countries in the period of between February 1, 2007 and January 31, 2008. As for Ecuador, the review time will be between February 1, 2007 and August 14, 2007.
Listed companies will have 30 days to prove to DOC that they did not export shrimp at dumping prices in the said review period.

Prior to that, DOC released a preliminary conclusion on the administrative review of the anti-dumping tax on Vietnam’s warm-water frozen shrimp during the period between February 1, 2006 and January 31, 2007. The tax rate on 28 Vietnamese companies was slashed to 0% in the second administrative review.