Official predicts rally in Q4
 
A recovery in the Vietnamese stock market in the fourth quarter of this year and a strong rebound in July next year has been predicted by vice chairman of the National Financial Supervisory Commission Le Xuan Nghia.

He told a conference in the capital yesterday the domestic market had recently been affected by negative information from the global market.

"However, the European market will not collapse and a double crisis will not happen," Nghia said.

Meanwhile, the Asian market would continue to be the economic centre of the world in the next 5-10 years, Nghia said.

"The toughest period has passed, with inflation and interest rate having declined," he said, estimating inflation in October would increase by only 0.5-0.6 per cent against last month.

Interest rates might also be reduced to 14-15 per cent next year, he said.

Nghia noted that many potential foreign investors showed interest in the Vietnamese stock market but low corporate value and a weak payment system was stopping them from investing.

In addition, bad debts in commercial banks kept increasing, he said. The bad debt ratio jumped from 2.16 per cent last year to 3.13 per cent as of June.

"In the context of tightened monetary policies, the situation will get worse," Nghia said.

It would take time and a lot of money to clear bad debts, but the Government should focus on restructuring the banking system by applying a new financial supervising scheme and pushing mergers and acquisitions, he said.

At the same time, the exchange rate would put the greatest pressure on the stock market. The gap between loans and deposits in foreign currencies remained large, around US$7.5 billion.

"Demand for foreign currencies will become greater without flexible measures. The State Bank will only be able to intervene in exchange rate until the end of this year," Nghia said.

In the securities market, some emerging stocks could generate fresh profits for investors, such as Becamex Infrastructure Co (IJC), Phu Nhuan Jewelry (PNJ), PetroVietnam Southern Gas Co (PGS) and PetroVietnam Drilling Corp (PVC), Vietcombank Securities Co analyst Tran Minh Hoang told the conference.

Brokerages chomp at the bit to begin margin trading

The State Securities Commission has made about 10 stock brokerages eligible to offer their clients margin trading, with a number of other securities companies having submitted applications. The process has been held up, however, as the nation's two stock exchanges have yet to designate which stocks may be traded on margin.

Shortly after the new regulations on margin trading were issued back on August 30, the commission announced that qualified securities companies would be fully entitled to offer the service once the stock exchanges determined a list of ineligible stocks.

However, the criteria to determine this list had yet to be made clear, requiring more time for consideration, said Ha Noi Stock Exchange deputy director Nguyen Vu Quang Trung.

"For instance, how do we handle the case of a business which reports quarterly profits but overall annual losses?" Trung asked.

Head of the HCM Stock Exchange's listing department Tran Thi Anh Dao also said the exchange could not make a list of unqualified shares without detailed guidance from the SSC.

However, a source from the commission, asking to remain anonymous, said a guiding document had been completed and would reach the exchanges soon.

"Securities companies will be required to ensure their financial adequacy and establish a risk management system, as well as a software system compatible with margin operations," the source said.

Inspection and supervision would be strengthened to ensure the compliance of participating securities firms.

"The surveillance will also focus on clarifying whether these companies have settled all of their investment contracts," the source said, noting that the commission would prohibit any margin operations disguised in the form of investment contracts.

"Margin trading is risky but attractive to securities companies, and the issuance of a detailed guiding document will help prevent unhealthy competition," said an representative of Kim Long Securities Co.

Fishing forecasts inaccurate - and late

Viet Nam's fisheries forecasting was both inadequate and inaccurate, heard a meeting organised by the General Fisheries Department earlier this week.

Information provided quarterly by the Fisheries Research Institute to help fishermen know where, what and how much to fish is usually based on outdated statistics, according to former deputy director of the General Department of Fisheries Chu Tien Vinh.

As a result, fishermen were often forced to head offshore relying on their own experience, which led to smaller catches and wasted fuel, he said.

"Fisheries data are poor," said chairman of the Viet Nam Fisheries Society Nguyen Viet Thang. "Before 1975, our fishing area was smaller, and China and Russia helped us compile information that was more accurate than today."

Thang added that many fishermen refused to reveal information about their fishing grounds, so the General Fisheries Administration could not compile complete figures.

New fund to help fishermen

A fund will be established to assist fishermen who have to brave risky conditions out at sea, according to the Ministry of Agriculture and Rural Development and the Viet Nam Fisheries Society (VINAFIS).

The new fund was announced at a joint press conference held in HCM City on Wednesday.

Chairman of VINAFIS Nguyen Viet Thang said there were 130,000 Vietnamese fishing vessels operating off the coast, and 4 million people who relied on fishing to make a living. These people often put their lives at risk during adverse weather conditions due to a lack of accurate information.

VINAFIS has appealed to the public to donate money to the fund. The General Fisheries Administration will also co-ordinate with HCM City Television to broadcast a programme on HTV9 in December to promote contributions to the new fund. — VNS
 
Le Tan Ban, director of Khanh Hoa's Department of Marine Resources, said his department had asked for a budget of VND600 million (US$28,600) a year to collect fishing data but had never been successful.

Fishermen in this coastal province have instead teamed up into groups of 5-7 vessels to share information.

Huynh Quang Huy, director of Ninh Thuan's Department of Marine Resources, also said: "A big budget is needed to provide fishermen with accurate reports and forecasts. If it is done, the people will benefit."

Safe vegetable scheme starts to falter

While farmers are struggling to find markets for safe and organic vegetables, residents of the capital still find it difficult to find places that sell them.

The paradox has continued since the Ha Noi People's Committee approved a VND900 billion (US$43 million) project to promote the production and consumption of safe vegetables during 2009-15.

Under the project, Ha Noi targeted placing 5,000-5,500ha under cultivation with safe vegetables. Funding would be used for improving infrastructure for production areas, instructing farmers on the latest technology and methods, and creating a market network that would encompass Ha Noi and neighbouring provinces.

The scheme would connect with major safe vegetable producers to main transportation and distribution routes, with farmers receiving support for the expense of shipping produce in the city, said Nguyen Thi Hoa, head of Ha Noi Plant Protection Department.

But, so far, Ha Noi has only about 3,200ha under cultivation with safe vegetables, mostly in the outlying districts of Dong Anh, Thanh Tri, Gia Lam and Hoai Duc, where farmers follow so-called VietGap standards setting strict requirements and procedures for the use of chemicals in farming.

Under the plan, Ha Noi would designate one to three shops to sell safe vegetables in each principal residental area, and these shops would qualify for funding of up to VND520 million ($25,000). However, to date, only about 100 retail locations in the city have been certified to sell safe vegetables, mostly supermarkets and convenience stores.

Nguyen Viet Huong, who lives on Tran Duy Hung Street, said she used to buy safe vegetables at a market near her home but it has since closed. She now buys safe vegetables from a convenience store, which often runs out.

Co-operatives in Ha Dong and Hoai Duc districts report that they are able to find markets for only about 30 per cent of their produce and cite the high costs of transporting the vegetables into town and their ongoing inability to create a distribution network.

Farmers in Yen My and Duyen Ha villages in Thanh Tri District, Thanh Xuan village in Soc Son, and Tay Dang and Chu Minh villages in Ba Vi, were reportedly returning to growing vegetables by normal methods, after participating in the safe vegetables programme.

Nguyen Thi Ha, a member of the Dao Duc Co-operative Agricultural Services in Dong Anh District's Van Noi village, said her co-operative could not afford the rental fees to operate a stall in a market in downtown Ha Noi, which could reach VND5-7 million ($240-$340) per month.

Ha Noi People's Committee vice chairman Tran Xuan Viet recently signed off on a revision to the project, which would focus on developing 25-30 areas designated specifically for growing safe vegetables, with 3-4 areas piloting high technology production techniques. The city would also devote VND180 billion ($8.6million) to support growers in finding end markets for their produce.

Entrepreneurs have their day
 
The capital has highlighted three new main industrial products at a meeting with representatives from city businesses on Vietnamese Entrepreneurs Day held in Ha Noi yesterday.

Products are set to include compact fluorescent lamps made by the Rang Dong Electric Bulbs and Vacuum Flask JSC, Thien Phu Industrial Group's fire-proof electric cables and Ha Noi Plastic JSC's plastic moulds.

The municipal People's Committee in turn also recognised current 21 key products.

Vice chairman of the People's Committee Nguyen Van Suu praised the efforts made by businesses and entrepreneurs in overcoming difficulties in maintaining growth.

Suu hailed their contributions to social activities such as supporting poor people and promoting the city's socio-economic development.

He added that several enterprises, including the Dong Xuan Knitwear Company and the Thang Long Metallic JSC, had managed to retain their export markets alongside positive growth rates.

Foreign-invested companies such as the Yamaha Motor Viet Nam Company, Canon Viet Nam, the GM Auto Viet Nam Company and INAX Viet Nam Porcelain Products Company also experienced relatively high growth.

Businesses operating in the city have been paying specific attention to improving the lives of workers, supporting income increases in the context of rising prices.

Pledged FDI down, but disbursement goes well

Vietnam’s pledged foreign direct investment (FDI) capital dropped 28 percent year on year to $9.89 billion, while disbursed FDI capital increased 2 percent year on year to $8.2 billion in the first 9 months of this year.

So, it is unlikely that Vietnam would not reach this year's target of $20 billion FDI capital attraction this year, according to newswire Vneconomy.

However, disbursed FDI capital in the same period increased slightly, showing that the improvement of FDI inflow quality is on the right track.

The disbursed FDI capital this year may reach $11-11.5 billion as targeted, said Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.

The country’s FDI capital disbursement was estimated to reach $900 million in September, bringing the total figure in the first 9 months of this year to $8.2 billion.

Vietnam granted investment licenses for 675 new FDI projects with a total pledged capital of $8.23 billion and allowed 178 existing projects to increase the investment by $1.66 billion in January-September.

Statistics also showed foreign investors have been more interested in processing and manufacturing industry, production and distribution of electricity, and construction. The FDI inflow into industry and manufacturing sectors increased 50 percent year on year, while that into real estate and service sector saw a significant reduction.

Licensed FDI projects in Vietnam in January-September were also certified to be capable in potential and performance, said Do Nhat Hoang, head of FIA.

Vietnam targets to draw about $17 billion pledged FDI and $9-11 billion disbursed FDI capitals next year.

38 corporations and 9 largest investment funds from the US headed by JP Morgan have expressed little interests in the Vietnam economy given the current health of its stock market.

If the market’s shortcomings are not addressed in the short- and medium-term, the opportunity for foreign indirect investment (FII) capital may slip away, Le Xuan Nghia, Deputy Chairman of The National Financial Supervisory Committee, told Dau Tu Chung Khoan newspaper.

It is the small scale stock market and its poor quality products that has deterred the US largest corporations from coming up with a specific disbursement plan, Nghia said.

With the impossibility in purchasing listed shares totaling $50 billion and withdraw capitals in a single trading session, the opportunities for big investors were dimmed.

But these investors were not taken by surprise by fact given by Nghia since their initial survey had showed that it was hard to uncover any opportunities in the Vietnam’s stock market.

As a result, since assuming that the improvement in the market scale, liquidity and commodity quality could not be realized in the short-run, they would almost give up plan to purchase listed shares and turn to potentially capitalized large corporations in aviation, telecoms and mining.

However, this opportunity could hardly be realized if only a modest stake proportion of 5-10 percent was allowed to be offered.

It would mean insignificant improvement in post-equitization stage with lower-than-expected business efficiency as well as higher risks due to state-controlling ownership at those joint stock companies, Nghia said.

The proper ratio of stake can be offered to foreign investors would differ, but it should range from 30-40 percent. Prospective investors would also expect equitization to be carried out via listing on the stock market for transparency reason.

Also, the abolition of price management and monopoly should strongly be required during the state-owned enterprises reform process with the application of international standards in corporate management coupled with the orientation of readiness for international competition.

Vietnam would lose a golden opportunity to attract substantial FII particularly given the promising forecast for the US and Europe strong economic recovery starting in 2014 if moving on this way, Nghia said.

Earlier, Truong Dinh Tuyen, former Minister of Industry and Commerce, member of the National Monetary and Financial Advisory Council, has proposed to the Prime Minister that the recent provision on initial public offerings (IPO) with 5-10 percent proportion of stake can be sold out would hardly bolster the reform process of state-owned enterprises due to the failure in supplementation of high quality commodities to the stock market.

As a result, business management improvement along with operational efficiency enhancement would probably beyond the reach.

Unless timely remedies to speed up the capitalization process as well as to increase the stock market scale and liquidity are available, FII capital could hardly be fully absorbed.

Foreign indirect investment into Vietnam's stock market and through purchases of stakes in Vietnamese companies in the January to September period totalled $1 billion, according to Bloomberg.

Tourism firms fear demand slump

Many tour operators are being worried about a fall in international visitor arrivals though the high season has started, as the global economic slump has taken its toll on the hospitality industry.

The high season for inbound tourism lasts from October to March, but the number of customers from Asian markets this season is estimated to fall 20 percent -30 percent year-on-year at Lac Hong Voyages Co., Ltd. Similarly, Vietravel has recorded a sharp fall in the number of tourists from Europe and the United States.

Some other tour operators forecast a slump of up to 30 percent in arrivals from Europe.“Sometimes, we receive no bookings from customers even though we have done our best to attract them,” said Vietravel’s general director Nguyen Quoc Ky.

The global crisis has forced many travelers to cut down on spending, he said.Europe known as the main visitor-generating market for Vietnam is now mired in the sovereign debt crisis, while Japan is suffering from heavy damages caused by natural disasters.

Travel firms also attributed the fall in foreign visitors to the uncompetitive price on the local tourism market coupled with unexciting tourism products.

Most travel agencies reported a price hike of at least 15 percent -25 percent for package tours compared to the same period last year.

Consequently, the local industry players find it hard to compete with foreign rivals who offer customers better prices.

“In other countries, when the price of gasoline increases, members in the tourism industry join forces to overcome the difficulty, which hasn’t been seen in Vietnam so far,” Ky of Vietravel complained.

Another setback of the domestic tourism industry is poor products, said Tran Vinh Loc, director of Lac Hong Voyages. Local travel agencies have merely offered tours based on natural attractions along with shopping venues only, instead of arranging attractive entertainment services and other night programs for visitors.

Loc took the case of South Korea and Thailand as examples, in which the former offers a wide selection of shows to travelers and the latter often enriches its artistic programs with the participation of foreign art troupes to attract tourists.

“Given poor programs, we have failed to satisfy our customers who are offered only the Cu Chi Tunnels-Binh Tay Market-Ben Thanh Market route for one-day travel,” Loc said.

Woodwork exporters expand into new markets

Local wood exporters are expanding their presence in the U.S. and China, the biggest importers of the wood processing industry, with more showrooms and warehouses.

According to Bui Thi Thanh An, chief representative of the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade member woodwork and handicraft exporters of the Handicraft and Wood Industry Association of Ho Chi Minh City (Hawa) would have a showroom at an exhibition center in the southern city of Guangzhou next month.

The showroom has an area of 2,000 square meters, placed at the center of the most well-known locations of China’s wood processing industry.

According to Hawa, the Chinese partner will support Vietnam and other countries with renting costs to encourage them to participate in the grand opening in November.

Dang Quoc Hung, vice chairman of Hawa, said that the site is just the starting point of a long-term goal for local wood and handicraft product exporters in the Chinese market.

The Chinese market became the second largest importer of Vietnamese wood and wood products by the middle of this year.

According to the Ministry of Industry and Trade, the export value to China in July surpassed European markets and Japan to become the largest importer of Vietnamese wood at US$344 million after the US at $744 million.

“We want to be sure that our products are different from Chinese goods, so we can compete with them in this market as China is also the largest woodwork exporter in Asia,” he said.

Tran Quoc Manh, vice chairman of Hawa, who has just returned from a furnishing fair in Las Vegas, told the Saigon Times Daily that a member of the association has opened a showroom there, targeting the retail market that is worth billions of dollars.

Manh said he was in talks with an American partner to build a warehouse to store his and other Vietnamese companies’ products.

“After a long time exporting to the US, we want to make something more sustainable. In this expansion plan, we aim to create a supply chain for Vietnamese products in the US, reducing the reliance on local importers and distributors. If we succeed, our price can be much more competitive,” Manh said.

But the vice chairman also said that the expansion plan is not easy and it requires time as well as a good strategy.

According to the ministry, in the first eight months of this year, wood and wood product exports of Vietnam earned US$2.4 billion, up 18 percent year-on-year.

The industry targets an export value of US$4 billion this year.

Tariff cut considered for automobile imports from ASEAN

The Ministry of Finance is mulling over a draft on a tariff reduction schedule for automobiles imported from ASEAN countries, as part of the ASEAN Trade in Goods Agreement (ATIGA) during the 2012-2014 period.

According to the draft, an import tax rate of 70 per cent would be imposed on all Completed-Building-Unit passenger cars imported from ASEAN countries by 2012. The tax rate would be reduced by 60 per cent and 50 per cent by 2013 and 2014, respectively.

Special vehicles would enjoy a zero tax rate while trucks would face a 5 per cent tax rate during the next three years.

An import tax rate of 75 per cent would also be imposed on motorbikes and electrical bikes by 2012. The rates would be slashed by 60 per cent and 50 per cent by 2013 and 2014.

Coffee dips on crisis, oversupply

The economic crisis and a bumper Robusta coffee crop in Viet Nam have dragged down coffee prices on both the international and domestic markets.

The price on the London International Financial Futures and Options Exchange (Liffe) came down below the psychological level of US$2,000 per tonne last Monday.

Vietnamese exporters have been reluctant to sell at the low level due to the uncertainty with the weather, the start of the coffee crop harvest, and banks' refusal to provide credit.

Nguyen Minh Ban, director of the Dong Nai-based Minh Huy coffee company, said: "The bid is too low to sell. Even at minus $70 per tonne FOB, I cannot sell for the moment because of wet weather in coffee-growing provinces for many days."

The continuous rains in the Central Highlands in the past week have had a certain influence on Liffe Robusta prices.

Three weeks ago, experts believed that the new harvest would bring coffee beans to the market by mid-October.

However, four storms one after the other have brought more rains and the harvest is likely to be delayed.

Some farmers said the new beans would only reach the market by the end of November or early December if the sun starts to shine again within a week.

The late arrival of the new harvest last week helped slow down the price fall in the local market. Robusta coffee grade two with 5 per cent black and broken beans for delivery in December fetched VND35,000-36,000 per kilogramme, VND3,000 higher than 10 days before.

The 2011-12 coffee crop began on October 1 and will be harvested in September 2012.

Global coffee output next year is estimated by the International Coffee Organisation (ICO) at 130 million bags (60kg per bag) and by the US Department of Agriculture at 135 million bags.

It is down from this year because Brazilian Arabica production will fall following the bumper crop this year as the coffee trees will be "tired" and must have a year's hiatus.

The Viet Nam Coffee&Cocoa Association (Vicofa) estimates the country's output at 18 million bags.

But others like the ICO, Reuters news agency, and ABN Amro bank estimate varying levels rising all the way to 23.5 million bags.

All of the estimates place the output equal to or higher than previous forecasts.

But Nguyeãn Nam Hai, director of HCM City-based coffee surveyor Cafecontrol, pointed out that Vicofa chairman Luong Van Tu had made a wrong prediction about this year's exports, estimating it at 18 million bags, or 3.5 million bags less than it actually turned out to be.

Steelmakers face bankruptcy

The Viet Nam Steel Association has forecast that a significant number of steel firms will shut down next year due to insufficient investment.

Firms using out-of-date technologies and with small capacities would be among those facing the chop, the association said.

Only a small number of steel producers use modern technology, nearly 30 per cent applying old mechanisms while 40 per cent manage to sit the fence.

Association vice chairman Dinh Huy Tam said that steel consumption was anticipated to surge by only 4 per cent next year, a much lower figure compared to previous years.

"It will cause steel firms a lot of potential trouble," Tam said.

He added that steel consumption in the first nine months of this year had decreased over the same period last year and that the decline was expected to continue.

Although many steel plants currently run at half capacity, most have retained large volumes of stock.

Tam said that many producers had roughly 500,000 tonnes of steel in stock, double the safety net level, which cost nearly VND150 billion (US$7.14 million) per month to store.

The association attributed the sharp decline in steel consumption to Government measures aimed at cutting public investment and rampant investment in steel production over the past few years which has caused an excess in supply over demand.

According to the Ministry of Industry and Trade, the country has 65 steel production projects in 30 provinces with capacities of more than 100,000 tonnes each. However, up to 32 projects have been licensed illegally and fall outside official development plans. According to current regulations, provincial authorities are allowed to license projects with registered capital of less than VND1.5 trillion ($71.4 million). However, they must consult relevant ministries and report to the Ministry of Planning and Investment before doing so.

According to the industry development plan, annual national steel demand will have reached roughly 15 million tonnes by 2015 and 20 million tonnes in 2020. Meanwhile, plant capacities are set to increase by up to 26 million tonnes (Indian Tata and Ba Ria-Vung Tau will have a combined capacity of 7 million tonnes).

With many firms facing the risk of closure, in the northern port city of Hai Phong alone, credit institutions have revealed that the total amount of steel production debt, including a large volume of bad debt, currently reached roughly VND4 trillion ($190.5 million).

However, association chairman Pham Chi Cuong said that trouble meant a chance for the industry to restructure and produce high quality products to better compete with imported goods.

The Government also needed to manage steel industry development planning to avoid rampant investment and an excess of supply while supporting the continued export of domestic products to the US, the EU and the Middle East in stead of to only Laos and Myanmar.

Viettel launches Mozambique network

Movitel , a joint venture between Viettel Global Investment Joint Stock Company and Mozambique's SPI and Invespar, was successfully connected last week.

Movitel officially launched its first of nine based transceiver stations in Mozambique.

Viettel won a licence to become the third mobile service provider in Mozambique and committed to reach a mobile coverage of 80 per cent of the population.

The country is Viettel's fourth foreign licence following Cambodia, Laos and Haiti. Movitel is expected to bring the total of 2G and 3G BTSs in Mozambique to nearly 1,000 by the end of this year.

Investment conference planned

The Ministry of Planning and Investment, in co-ordination with the provincial People's Committee, will hold an investment promotion conference for north-central provinces in Nghe An Province's Vinh City on October 17.

The meeting is aimed at assessing potential in luring investment and developing an infrastructure strategy of the provinces.

Da Nang residential tower approved

The People's Committee of the central city of Da Nang has approved a detailed construction plan for the Da Nang Diamond Tower project in the city's Bach Dang Street.

The project, owned by Foodinco Investment and Trading will cover more than 2,400sq.m. The tower will have 35 storeys containing 374 high-class apartments and a trade centre.

Sapporo brewery to open in Long An

A 100-million-litre-beer factory would be set up as the first stage in Viet Hoa – Duc Hoa 3 Industrial Zone, southern Long An Province on November 24, according to Long An Economic Zone Authority (LEAZA).

With a total of US$100 million in investment capital, this factory coves an area of 64,450sq.m. Up to now, this project is the biggest investment capital of Japan in the zone.

The Viet Nam Sapporo Beer Ltd, a company under Sapporo Holdings of Japan, is the main investor of the project.

Tu Liem to get five-storey car park

The municipal People's Committee has handed over 4,500sq.m of land in Tu Liem District's My Dinh New Urban Area to FLC Investment Finance and Real Estate Joint Stock Company to build a five-storey car park.

Plans call for trees to be planted on about 3,600sq.m of the land with the rest to be allocated for a road project.

The Committee has asked the investor to complete the project, the first under the transport development plan for the 2011-15 period, and open it for business within 12 months.

HCM City firms propose 30sq.m flats

The city's Real Estate Association (Horea) has proposed developing 30sq.m apartments in an effort to stimulate demand for housing and help investors let go of thousands of unsold flats.

The association said such flats would be priced reasonably and offered to young families earning average incomes. It added that the real estate market had failed to meet the growing need for housing while building an abundance of large and expensive apartments.

Vietnamese goods fair opens in city

An exhibition of domestic goods opened last Saturday at the Phu Tho Indoor Sports Stadium in HCM City's District.

The exhibition, titled Honour Vietnamese Goods, brings together 200 domestic companies displaying garments, footwear, processed foods, beverages, cosmetics, electronic and electrical products, household utensils and handicrafts.

Organised by the city's Department of Industry and Trade and the HCM City Union of Business Associations, the fair will close its door on Thursday.

Cambodia to host HCM City Expo

Nearly 150 Vietnamese enterprises with 250 booths will showcase their products at the HCM City Expo 2011, due to be held on November 24-28 in Cambodia's northestern province of Battambang.

Processed food, plastic household appliances, agricultural materials, interior decoration, textiles and footwear, as well as electronic appliances and construction materials are among products on display at the fair.

The event aimed to help Vietnamese enterprises increase their market share in the neighbouring country's northern region as well as promote bilateral trade between the two countries.

Chu Lai Open Economic Zone

The People's Committee of Quang Nam Province announced that 68 projects in the Chu Lai Open Economic Zone had been licensed with a total investment capital of US$1.7 billion.

Around 20 projects have been set up with foreign direct investment (FDI) worth $200 million. However, only 45 projects will operate with investment of over $600 million.

VSIP to invest in integrated township

The Viet Nam-Singapore Industrial Park (VSIP) has signed a memorandum on investing in 1,020ha of industry, service and urban space in the central province of Quang Ngai.

The project will include a 500ha industrial park located within the Dung Quat Economic Zone and 520ha of commercial and residential areas near downtown Quang Ngai City. The VISP's fifth project is scheduled to begin in 2012.

JPMorgan to adjust charter capital

State Bank of Viet Nam Governor Nguyen Van Binh has approved JPMorgan Chase in HCM City to adjust its charter capital to US$77 million. The bank had initial capital of $15 million.

Number of dissolving firms surges

Nearly 49,000 compaies closed down during the first nine months of this year due to economic difficulties and high lending interest rates (up 21.8 per cent), according to Minister of Planning and Investment Bui Quang Vinh.

He said that among the enterprises, 5,803 had dissolved, 11,421 had closed down, and 31,477 had stopped paying taxes, having not ceased operations yet.

The ministry said that enterprise production and trading had faced considerable difficulties in the context of domestic monetary tightening and global economic turmoil. Limited credit and high lending interest rates had additionally caused numerous enterprises to decrease production and business activities due to loss.

Deputy Director of the Department of Industry and Trade of southern Can Tho Province Duong Nghia Hiep said that high lending interest rates remained the largest challenge to the survival of enterprises, having caused a high rise in production costs and a sharp reduction in competitiveness.

Commercial banks have pledged to cut lending interest rates to 17-19 per cent per year since earlier last month, however, most enterprises, especially the small- and medium-sized, still had to borrow at 21-23 per cent.

Director of the Hoan Cau Garment Co Bui Van Chinh said that his firm could not access lending interest rates at 17-19 per cent, adding that the lowest rate a bank had offered them was 21.5 per cent, provided that the enterprise having been proven solvent and a regular bank customer.

Enterprises throughout the industrial production sector focused on engineering, plastics and electronics, also confirmed having to borrow at a rate of 22-23 per cent.

Nguyen Van Binh, director of the Hoang Tan Engineering Production Company, said that production currently struggled against rising input costs related to labour, material and interest rates. Despite suffering losses, many enterprises still had no choice but to maintain production to hang on to customers, he added.

Experts said that enterprises specialising in agricultural production and trading were the most vulnerable as profits gained were often three to four times lower than that of other industries.

According to the Government, 57,800 firms licensed business certificates in the first nine months of the year with total registered capital of over VND363.7 trillion (US$17.3 billion), down 7.8 per cent and 4 per cent in volume and value compared to the same period last year.

PV