ACB to increase charter capital to over 11 trillion VND

The Asia Commercial Bank (ACB) plans to raise its charter capital to more than 11.25 trillion VND (495 million USD, it said at the annual shareholders meeting in HCM City on April 10.

The bank projects to raise its yearly pre-tax profit by 32 percent to 2.2 trillion VND for 2017, and targets a 16-percent rise in the total assets, credit growth and capital mobilisation and a bad debt ratio of below 2 per cent. In the first quarter of 2017, it earned a pre-tax profit of 595 billion VND.

ACB will pay a 10-percent dividend for last year’s performance by shares. Besides, the bank plans to extract 100 billion VND from the 2017 projected profit to buy back shares.

It also hopes to complete the handling of bad debts caused by six companies of former banking tycoon Nguyen Duc Kien by the end of this year.

Kien, who was the former co-founder of the bank and one of the top bankers in Vietnam, was sentenced to 30 years in jail in 2014 for fraud, tax evasion, illegal trade and deliberate misdeeds resulting in serious consequences.

The bad loans of some companies run by Kien totalled nearly 5.8 trillion VND (257.8 million USD) as of December 31, 2015.

ACB plans to finish collecting all the bad debts from those six firms by 2018, according to the plan that was approved by the State Bank of Vietnam in 2015.

Under the previous plan, ACB planned to collect the debts over four years, starting from 2015, at a rate of 814 billion VND, 2.2 trillion VND, 1.8 trillion VND and 1 trillion VND.

But ACB General Director Do Minh Toan said that the collection was ahead of schedule, with 3 trillion VND collected from those companies in 2016.

With the current progress, Toan hoped that the bank will be able to complete handling all of the bad debts caused by the six companies this year.

In 2016, ACB recorded a post-tax profit of 1.66 trillion VND, an increase of 27 percent from 2015. The bank also recorded returns on total assets (ROA) and returns on total equity (ROE) of 0.61 percent and 9.87 percent.

On December 31, 2016, the bank recorded total assets of 234 trillion VND, a year-on-year increase of 16 percent, and a bad debt of 0.88 percent, down from 1.3 percent at the end of 2015.

Agriculture reform vital for Vietnam to lift growth: ADB

A transformation of Vietnam’s agriculture sector is vital for lifting growth and enabling Vietnam to graduate to upper-middle-income status, the Asian Development Bank (ADB) said in a new report launched Monday.

The Asian Development Outlook (ADO) 2017 forecasts Vietnam’s economy to grow by 6.5% in 2017 and 6.7% in 2018, as a result of rising activity in the manufacturing, construction, wholesale and retail trade, banking and tourism sectors.

The report notes that continued record levels of foreign direct investment will boost domestic manufacturing while at the same time helping to lift Vietnam’s export earnings even though global and regional trade flows will remain depressed. Vietnam’s rapidly expanding middle-class, which is expected to double in size by 2030 to 33 million, will also help to push up consumer spending and boost retail activity.

Agricultural output is expected to pick up modestly in 2017 given the outlook for higher global food prices and a return to more normal weather. However the report highlights that the sector continues to underperform relative to the rest of the Vietnamese economy, dragging down overall growth.

According to ADB Country Director for Vietnam, Eric Sidgwick, agriculture has been a significant driver of growth, poverty reduction, food security, and exports since the government began reforming the sector in the late 1980s. However, in recent years, in the face of growing international competition and low domestic labour productivity, the sector’s growth has slowed to an average of just 2% per annum since 2011.

The report highlights that agriculture output per worker in Vietnam is one-third of Indonesia’s and less than half of Thailand’s and the Philippines’. The report also emphasises that as Vietnam recovers from its most severe drought in a decade, boosting growth in the agriculture sector will be vital for Vietnam to achieve its aspirations of becoming an upper-middle income country.

“While Vietnam continues to address the worsening impacts of climate change on agriculture, deeper reforms and higher investment in the sector will be critical to boost agricultural productivity and long-run growth that is inclusive and environmentally sustainable,” Sidgwick said.

The report stresses that to transform agriculture a number of major policy challenges will need to be addressed—including introducing greater competition into agricultural supply-chains and postharvest processing, developing rural infrastructure to support higher-value adding cash crops, adopting more sustainable natural resource management practices, and better integrating climate change considerations into policy making processes.

China, ASEAN keen to strengthen cooperation

After 25 years of being dialogue partners, China and members of the Association of South East Asian Nations (ASEAN) will boost their strategic partnership by enhancing mutual respect, understanding, trust, support and pragmatic cooperation.

The statement was made by both sides’ officials at the 18th China-ASEAN Joint Cooperation Committee meeting which was held on April 10 at the ASEAN Secretariat headquarters in Jakarta, Indonesia.

The meeting was chaired by Chinese Ambassador to ASEAN Xu Bu and Chen Han-cheng, Permanent Representative of Singapore to ASEAN. 

Two-way trade between China and ASEAN reached 452.2 billion USD in 2016, said  Ambassador Xu Bu. 

He added that China is ASEAN’s largest trade partner while ASEAN is China’s third largest trading partner.

People-to-people exchanges have been greatly enhanced thanks to rapid expansion of direct flights serving China and ASEAN countries, with about 2,700 flights per week, he said.

ASEAN remains a priority in China’s diplomacy, said Xu Bu, pledging that China will continue to support ASEAN’s central role in regional cooperation and its greater role in regional and international affairs.

For his part, Singapore representative Chen Han-cheng lauded the development of China-ASEAN relations and cooperation in different areas in 2016.

He also spoke highly of China’s support for the development of ASEAN and the ASEAN Community.

Permanent representatives of ASEAN countries also praised China-ASEAN cooperation in various sectors, hoping the two sides will enhance pragmatic cooperation.

APEC to promote women-owned firms

The 21 member countries of the Asia-Pacific Economic Co-operation will meet in September in central Thừa Thiên-Huế Province to discuss ways to develop the competitive and creative capacity of women-owned micro-, small- and medium-sized (MSMEs) enterprises.

Women-owned MSMEs account for 97 per cent of the total number of MSMEs in the Asia-Pacific region.

Women-owned MSMEs contribute 20-50 per cent of gross domestic product (GDP) in APEC economies, according to the APEC Secretariat. However, these enterprises account for only 35 per cent of direct exports.

As many as 500 representatives from the APEC 2017 Women and Economy Forum are expected to attend the forum from September 26 to 29.

Deputy Minister of Labour, Invalids, and Social Affairs, Nguyễn Trọng Đàm, said that the members should focus on making a detailed action programme to provide enterprises with updated information on global trade agreements.

Đàm spoke yesterday at a workshop in HCM City that gathered opinions from the private sector on an action plan for women-owned businesses to be presented at the forum.

He said that regulations that cause barriers for women-led businesses should be reviewed and that professional training on leadership and management skills should be offered to women who own MSMEs.

“These skills are very important to help them develop in a sustainable way,” he said, adding that a network of people who can provide counselling on brand-building and legal advice was also important.

Tôn Nữ Thị Ninh, chairwoman of HCM City’s Peace and Development Foundation, said that it was vital to build a brand name for enterprises and that women-owned MSMEs should use social media.

“They should have a comprehensive vision to optimise their businesses,” she added.

Nguyễn Thị Tuyết Minh, chairwoman of Việt Nam Women Entrepreneurs Council, said that many MSMEs had yet to take part in programmes that Việt Nam had already set up for such enterprises.

She said that Government agencies in charge of commercial promotion should help MSMEs have better access to these programmes.

Prudent monetary policy helps control inflation in Q1

The State Bank of Vietnam (SBV)’s continuation of a prudent monetary policy is a reason for the slight year-on-year decrease of the core inflation in the first quarter of 2017.

The assessment was made by Director of the Vietnam Institute for Economic and Policy Research (VEPR) Nguyen Duc Thanh at a meeting in Hanoi on April 10 to release a report on Vietnam’s macro-economy in Q1.

The VEPR research team cited the SBV as saying that money supply in the first three months of 2017 increased 3.52 percent from the end of 2016, slightly lower than that in the same period last year.

The first quarter posted the fastest credit growth rate in many years, 4 percent compared to the end of 2016, indicating businesses’ stronger absorption of capital.

However, the modest rise in the mobilised capital led to a gap between capital mobilisation and lending which might be the cause of the recent slight disturbance in inter-bank interest rates.

VEPR researchers said although the pressure on inflation showed signs of easing in Q1, it remains big, especially when the economic growth between January and March (5.1 percent) is much lower than the 6.7-percent target for the whole year set by the National Assembly.

It is hard to control inflation at below 4 percent in the next months since the domestic consumption demand and global prices of basic commodities will rebound while prices of public services will be adjusted as scheduled, they said.

Expert Truong Dinh Tuyen said if the US’s Federal Reserve continues to hike interest rates, the US dollar will get stronger, putting more pressure on the VND/USD exchange rate and inflation.

Grab Vietnam asks premier for help as taxi app rejected by Danang

With the central Vietnamese city of Danang consistently saying no to Grab, an app-based taxi service, a representative of the Singapore startup has sought help from Prime Minister Nguyen Xuan Phuc.

Danang is among five localities Grab is permitted to operate in under a two-year pilot scheme, allowing mobile users to flag a taxi via Grab Taxi or a private car via Grab Car, according to a directive signed by Prime Minister Phuc in October 2015.

The other locales are Hanoi, Quang Ninh, Khanh Hoa and Ho Chi Minh City.

In February 2016, the Ministry of Transport, following the PM’s directive, officially began the pilot operation of Grab Taxi and Grab Car in Hanoi, Ho Chi Minh City and Danang.

However, in November of the same year, the Danang transport department sent a document to Grab Vietnam, asking the company to “stop contracting with local transportation companies," pending a decision from the municipal administration.

The suspension in Danang has prompted Yen Hock Lim, an authorized representative of Grab Vietnam, to file a petition to PM Phuc, asking him to urge the central city's administration to allow the service to resume operating.

Grab Vietnam has resorted to seeking help from the highest authority in the country after a previous intervention from the transport ministry was largely ignored by Danang officials.

According to the company, on December 23, 2016 the transport ministry sent a document to the Danang administration, requesting them to create favorable conditions and provide guidance for Grab Vietnam to run their busines as per the PM’s order.

However, the Danang administration has since refused to give a green-light to Grab’s services, according to Lim.

The representative claimed Danang authorities had rejected Grab under pressure from local transportation companies, particularly taxi operators, who had seen their business dwindle owing to competition from the app-based rival.

The Danang administration has requested an indefinite suspension of Grab services, which Lim said goes against the government’s resolution on supporting enterprises from now through to 2020.

The decision in Danang not only adversely affects existing investors in Vietnam, but also deters those planning to expand their business here, according to the Grab representative.

In addition to defying the orders of the premier and the transport ministry, the Danang administration, by acting on complaints by local taxi operators, does not comply with the law on competition, Lim added.

Competition law bans any agreement that leads to the prevention or restriction of other enterprises from entering a specific field of business.

Finally, Lim said, the service suspension in Danang has had an adverse impact on Grab operations in Hanoi, Ho Chi Minh City, and de-motivated thousands of Grab drivers in both cities.

Grab Vietnam is calling on the prime minister to insist that Danang follow his order by allowing the company to continue operating in the central city.

The firm has also demanded that the justice ministry review the suspension decision by the Danang transport department and determine whether it is justified or not.

Coal consumption improves in Q1

The Vietnam National Coal and Mineral Group (Vinacomin) sold 8.6 million tonnes of coal in the first quarter of 2017, up 3 percent compared to the same period last year.

Of the total, 185,000 million tonnes were shipped overseas.

Vinacomin released the figures while reviewing its operation in the first three months at a conference in the northern province of Quang Ninh on April 10.

The group reeled in nearly 13 trillion VND (572 million USD) from coal sales and contributed more than 4.3 trillion VND (189.2 million USD) to the State budget.

However, combined coal inventories came to 9.3 million tonnes, higher than the regulated amount of 8.5 million tonnes.

Vinacomin Deputy General Director Nguyen Ngoc Co said the group has faced challenges selling its coal products due to high cost and coal imports from foreign countries.

The business strategy for the next quarter will prioritise production restructuring with a focus on technology and adjust output according to market demand, he noted. 

Goals set for the coal sector in the second quarter included the exploitation of 8 million tonnes and selling of at least 9 million tonnes. 

At the conference, alumina business was also mentioned as a highlight of Vinacomin’s performance in the first quarter, with the total output of over 312,000 tonnes, which was sold out.

Demand for power up 12 percent in dry season peak

The demand for electricity in the second quarter of this year will increase by 12 percent as the peak of the dry season comes.

According to the Electricity of Vietnam (EVN), the power load can reach 600 million kWh per day, while the biggest capacity of the whole system can be 31,800 MW.

To meet the demand, EVN will continue tapping coal and gas turbine sources, while using reservoirs reasonably to ensure enough water for lowlands and stably run coal turbines, including the Vinh Tan 2, and Duyen Hai 1, 3 thermoelectric plants.

If necessary, the group will operate oil turbines to ensure supply. It will propose the Ministry of Industry and Trade assign the Vietnam National Oil and Gas Group (PVN) and related units to ensure enough gas for power generation during the dry season.

The group will also request the National Power Transmission Corporation to ensure safe operation to serve continuous transmission, especially the 500kV North-South transmission line.

It is also necessary to raise public awareness of saving energy when the heat occurs in the three regions, especially in central and southern localities.

In the first quarter, the total produced and imported electricity output was 44 billion kWh, up 7.7 percent year-on-year. The biggest capacity of the whole system reached 27,066 MW, up 10.6 percent from the same period last year.

Can Tho city hopes for French investment in agriculture

Officials of the Mekong Delta city of Can Tho introduced the local potential and advantages to French companies and called for their investment, especially in agriculture, during a meeting on April 10.

They highlighted Can Tho’s potential of agricultural production such as rice, fisheries and fruit, along with hi-tech agricultural projects that need investment. They expressed their hope that French businesses will come to seek investment opportunities here.

Chairman of the Can Tho municipal People’s Committee Vo Thanh Thong said agriculture is a strength of his city as well as other Mekong Delta localities. Many products made in Can Tho have been imported by France and other European countries like agricultural and aquatic products, apparel and handicrafts.

French firms should come to the city to invest in those areas in order to increase trade between Vietnam and France, he noted.

There are six French-invested projects worth nearly 6 million USD in Can Tho. Meanwhile, bilateral trade has been on an upward trend. The city earned about 31 million USD from exports, mostly aquatic products, garments and handicrafts, to France in 2016. Its imports from the EU nation include pharmaceuticals, fertilizers, and agricultural medicine, Thong added.

Can Tho has also carried out numerous cooperation activities in culture, education and health care with France. It expects bilateral relations will be intensified in the future, the official said.

Martine Fumey, vice chairwoman of the World’s No 1 Club, said the club gathers exporting companies in various industries of France, and they want to bolster partnership with Vietnamese businesses. 

Their visit to Can Tho this time aims to enhance connections with local firms and seek investment opportunities, thereby gradually turning French enterprises into a key trade partner of the city, said Fumey – chairwoman of the Ares company, which specialises in security device production.

Jacques Aurin, secretary general of the club and president of the Baron de Madaillan AE company, said they are also interested in educational cooperation with Can Tho-based universities since education is a basis for economic development.

After the working session, the French delegation visited some rice, fishery and fruit processing companies in Can Tho.

Forum focuses on women and the economy

The Ministry of Labour, Invalids and Social Affairs held a conference in Ho Chi Minh City on April 10 to mull over a draft action plan on women and the economy in Asia-Pacific Economic Conference (APEC) in 2017.

The event aims to prepare for the APEC Women and the Economy Forum scheduled to take place in Vietnam latter this year to enhance women’s integration and economic capacity in a technological changing world.

Deputy Minister of Labour, Invalids and Social Affairs Nguyen Trong Dam said the forum is expected to draw 500 delegates from 21 member economies as well as big companies and organisations.

The event will focus on promoting gender equality for inclusive economic growth, increasing competitiveness and creativity for female-owned  businesses, and narrowing gender gaps in human resources development.

Chairwoman of the Vietnam Women Entrepreneur Council under the Vietnam Chamber of Commerce and Industry (VCCI) Nguyen Thi Tuyet Minh said Vietnam needs specific and detailed legal documents on gender equality in businesses as well as a monitoring mechanism on businesses’ female recruitment and training for female workers every year.

A representative from HCM City’s Department of Labour, Invalid and Social Affairs held that it is necessary to eliminate gender prejudice, especially in the labour recruitment.

Participants called on the State to devise more policies supporting female-owned enterprises to start business and access to financial resources.

President of HCM City’s Peace and Development Foundation Ton Nu Thi Ninh advised female entrepreneurs to optimise business models to improve vocational skills for workers and increase their competitive edge in the period of integration.

Binh Duong records positive export growth

Export turnover of southern Binh Duong province reached 6.36 billion USD in the first quarter of 2017, a year-on-year rise of 16.1 percent, according to the provincial Department of Industry and Trade.

Of the amount, the domestic economic area contributed 1.14 billion USD, up 8.4 percent, while the foreign-invested economic sector accounted for 5.22 billion USD, up 16.8 percent. 

Main export products seeing high exports included wooden products (894.6 million USD), garment (741 million USD) and leather and footwear (575 million USD).

In March alone, the province’s export earnings rose 9.5 percent to 2.15 billion USD. The domestic economic sector contributed 359.2 million USD and the foreign-invested sector was 1.79 billion USD.

Meanwhile, Binh Duong imported 4.66 billion USD of goods in the January-March period, up 14.9 percent. In March alone, import was valued at 1.6 billion USD.

Mid, high-end segments dominate real estate sales in Q1

Real estate prices remained stable in the first three months of 2017 with mid- and high-end segments dominating the market, according to the Housing and Real Estate Market Management Agency.

The agency said the mid- and high-end products still accounted for the majority of new launches while there is a limited supply of low-cost housing projects.

Vietnam’s leading property developer, Vingroup, unveiled the affordable housing project Vincity on the outskirt areas of Hanoi last year in order to satisfy the increasing demand from local mid- and low-income buyers in the near future.

About 1,000 successful transactions of mid- and high-end apartments were reported in Hanoi in March, up 17.6 percent from a month earlier, most of which are from projects Vinhomes Skylake Pham Hung in Cau Giay district, Gelexia Riverside and Sunshine Palace in Hoang Mai district, and Vinhomes Thang Long in Hoai Duc district.

Ho Chi Minh City had about 1,100 mid- and high-range units sold in March, an increase of 22 percent from February.

There have been few new launches in the southern economic hub since the beginning of this year, thus most of the supply relied on those that went on sale in 2016. High-end projects with big sales last month included Charmington La Pointe in District 10, Jamona Apartment in District 7, Lakeview City in District 2, and Vinhomes Centre Park Tan Cang in Binh Thanh district.

Nguyen Tran Nam, Chairman of the Vietnam National Real Estate Association, has warned of an imbalance between supply and demand in the country’s housing market. The demand for low-cost apartments is very high but it is not easy for people to find those sold less than 20 million VND per sqm. 

There are still a poor real estate database and limited market forecast, he said, adding that these were also behind the real estate crisis from 2009-2013.

Ba Ria-Vung Tau: One more port receives large container ships

The Tan Cang Cai Mep – Thi Vai port in the southern province of Ba Ria – Vung Tau successfully received a 160,000 tonne container ship on April 10.

This is the second port in the Thi Vai – Cai Mep port complex receiving 160,000-tonne ship. 

Earlier, Cai Mep International Terminal (CMIT) welcomed ships with capacity of 160,000 tonnes and over.

Tan Cang Cai Mep – Thi Vai is a deep-water port in Tan Thanh district. It is allowed to receive ships of 160,000 tonnes starting from February 20 by the Vietnam Maritime Administration. 

Vu Kim Duan, Director of the port said the first welcome of a 160,000-tonne ship showed the port’s capacity to receive and provide loading and unloading services for international container ships.

Soaring tra fish prices entice Mekong farmers

With prices of tra skyrocketing, farmers in the Cuu Long (Mekong) Delta are scrambling to breed the fish, paying little heed to warnings from experts.

The price of the fish has been rising since before Tet (Lunar New Year) at the end of January and now stands at 27,000 VND (1.2 USD) per kilogramme, thought to be the highest level in the last few years.

Tuoi Tre (Youth) newspaper quoted P., tra breeder in Soc Trang province’s Ke Sach district who farms them in three ponds, said he and his friends are looking for more ponds to breed more fish.

“One of my friends in HCM City, who has no experience in tra farming, wants to lease seven or eight ponds to breed the fish.”

According to Pham Thanh Nhi, head of the Hong Ngu district Agriculture and Rural Development Bureau in Dong Thap province, because the prices of snakehead fish are falling, many local farmers have switched from it to tra.

With so many farmers switching to tra, not surprisingly there is a shortage of juveniles for breeding.

Their price has risen by 20,000 VND per kilogramme from a year ago to 40,000-50,000 VND.

Another cause for the short supply is that several breeders of tra juveniles switched to other fishes after suffering losses a couple of years ago, Vo Hung Dung, Vice President of the Vietnam Association of Seafood Producers and Exporters (VASEP), told the media at a seminar on Vietnamese seafood in Can Tho city last month.

The prices of adult tra are also rising because of the increasing purchase by China, he said.

China accounted for 18 per cent of Vietnam’s tra exports last year, 15 percent higher than five years earlier.

Nguyen Minh Nhi, a former chairman of the An Giang province People’s Committee, said the volatility in tra fish prices is nothing new to fish farmers, but told them to be cautious since no one can be sure where the prices are heading.

Some analysts said though increasing imports by China are driving prices up, there is no guarantee this trend would continue, and farmers could suffer big losses if the imports stop.

The An Giang Department of Agriculture and Development has encouraged farmers to team up with processing companies to ensure their fish is sold.

According to VASEP, in the first quarter of this year, farmers in the delta bred 739ha of tra and harvested 672ha, which yielded 210,000 tonnes.

They have been making handsome profits thanks to the high prices.

But authorities have been warning farmers of uncontrolled expansion because historically tra fish prices have been volatile.

Budget revenues up 15 per cent in Q1     

Budget revenues were estimated at VND280.9 trillion (US$12.4 billion) in the first quarter of this year, up 15.2 per cent compared to the same period in 2016 and meeting 23.2 per cent of the annual estimate, the Ministry of Finance (MoF) said yesterday.

Domestic collection for the period was VND232 trillion, equivalent to 23.4 per cent of the projected revenues, and 13.3 per cent higher than the same period last year.

In March, revenues from crude oil exports were estimated at VND3.95 trillion, down nearly VND400 billion compared to the previous month due to large redundant supply, the MoF said. However, budget revenues from crude oil exports in the whole quarter reached roughly VND11 trillion, meeting 28.9 per cent of estimates, up 15.9 per cent against 2016.

Import-export activities contributed VND66.8 trillion to the State budget, totaling 18.5 per cent higher than the same period last year, and equalling 23.4 per cent of targeted revenues.

Budget collections from production and business activities grew strongly compared with last year, with 25.4 per cent collected from the private sector, 30.3 per cent from personal income tax and 35.2 per cent from housing and real estate tax.

The MoF attributed the robust results to the close and effective coordination between central and local authorities. The results represent the sound leadership of the Government, the directions of the finance ministry and the efforts of tax authorities who strengthened budget collection measures early this year to prevent shortfalls in the middle and end of the year.

The increase in revenue may also be attributed to the vigorous economic growth in the last quarter of 2016, with GDP growth in the fourth quarter estimated at 6.68 per cent, the MoF said.

Meanwhile, budget expenditure reached nearly VND285 trillion in the first quarter, up 7.8 per cent from the same period last year and equivalent to 20.5 per cent of the annual plan. Expenditures for development investment were recorded at VND44.1 trillion, while debt payment and interest expenses totalled VND29.1 trillion, and regular spending reached VND 211.2 trillion.

Overspending stood at over VND4 trillion, 2.27 per cent of the yearly estimates, the MoF said. In terms of capital mobilisation for the State budget, as of March 31 MoF issued roughly VND56.5 trillion worth of Government bonds to offset excessive budget spending and to cover investment and development expenditure. 

Dong liquidity cools down     

Liquidity of the Vietnamese dong in the banking system has shown signs of cooling down over the past week.

This has helped the central bank withdraw money from the banking system, a new report from the Saigon Securities Company (SSI) revealed.

In its weekly report on the monetary market, SSI said the central bank last week withdrew VND8 trillion (US$352.4 million) from the banking system following four consecutive weeks of having to consecutively pump in a significant amount of money to support liquidity.

However, interest rate in the inter-bank market last week still stood at a high level. The overnight rate closed the week at 4.55 per cent per year, inching down by only 0.83 percentage points against the end of the previous week.

After rising in mid March, deposit rates listed at commercial banks last week remained unchanged, of which the rate for six-month deposits averaged 6 per cent per year and for 12-month deposits averaged 7 per cent, SSI reported.

SSI forecast that interest rate could be kept stable and could even be reduced in the coming months if credit growth and capital mobilisation were balanced. The central bank is capable of managing this, SSI said.

Lending from January to March 23 rose by 3.14 per cent against the end of last year while capital mobilisation rose 3.07 per cent, the central bank reported.

In a meeting to assess the interest rate in Q1 2017, held last week, both the central bank and commercial banks said the interest rate has been steady so far this year and there was no pressure on interest rate hike.

Rising import value caused rates to fluctuate: NFSC

The fluctuation of foreign exchange in the first quarter was due to a sharp rising import value, according to the National Financial Supervisory Commission (NFSC).

Statistics from the General Department of Customs indicated that the country’s trade deficit in the first quarter of this year was roughly US$1.9 billion, compared with a trade surplus of roughly $1 billion in the same period in 2016. The trade deficit in Q1 of  2017 was equal to 4.4 per cent of the country’s total export revenue in the period.

Experts said that the main reason for the rising import value was the strong increase in the demand for imported machinery and equipment, due to stronger economic growth prospects in 2017.

The NFSC, the Government’s financial watchdog, said that after declining in the first month of the year, the VNĐ/US$ exchange rate at commercial banks has risen significantly since mid-February and often approached the cap listed by the central bank. By March 20, the dollar was quoted at VNĐ22,820 per dollar, up roughly 0.13 per cent against early this year.

In the unofficial market, the dollar also accelerated to hit VNĐ23,000 per dollar in the first half of February. It has cooled down since and is now close with that listed by commercial banks.

The central bank’s reference exchange rate by March 20 was also adjusted up 0.47 per cent, the NFSC said.

The NFSC also forecast that the country’s foreign currency supply source in the entire 2017 could be at a disadvantage compared with last year due to the trade deficit. Last year, the country’s trade surplus hit an 11-year-high of more than $2.52 billion. However, a high trade deficit was forecast for 2017. The government has planned a trade deficit that was to equal roughly 3.5 per cent of the country’s total export value.

The country’s foreign currency supply source this year was also forecast to reduce in the wake of a restriction of official development assistance (ODA) sources from July this year. According to released itineraries, the World Bank is due to stop the preferential ODA sources for Việt Nam from July this year.

NFSC also noted the volatility of the yuan and stated that a sharp devaluation in the currency would make a big negative impact on Việt Nam’s economy due to the country’s rising trade deficit with China. The trade deficit rose to $28 billion in 2016 from $23.7 billion in 2013.

If compared with the GDP, Việt Nam’s trade deficit with China was 14 per cent, which was much higher than the 2 per cent trade deficit of the United States (US) and China, the NFSC noted.

The committee forecast that the US Federal Reserves (Fed)’s interest rate hike has not caused any pressure on the foreign exchange in 2017 as the interest rate of đồng deposits are still more attractive than the dollar deposits.

According to the central bank, interest rate averages between 4.8 per cent and 5.4 per cent per year for đồng deposits below six months, 5.6 per cent to 6.7 per cent per year for 6- to 12-month đồng deposits and 6.7 per cent to 7.4 per cent per year for đồng deposits above 12 months. The interest rate for dollar deposits is zero per cent.

March auto sales up 52%

Total automobile sales in March rose 52 per cent compared to February, to nearly 27,000 units, despite people waiting for prices to further decline, according to the latest data from the Vietnam Automobile Manufacturers’ Association (VAMA). 

The Vietnam News Agency cited the data in reporting that sales of completely-built-unit (CBU) vehicles increased 114 per cent, reaching 8,484, while more than 18,388 completely-knocked-down (CKD) vehicles were sold, up 35 per cent.

Of the total, 16,805 units were passenger cars, up 67 per cent, 8,278 units were commercial vehicles, up 31 per cent, and 1,789 units were special-purpose vehicles, up 45 per cent.

Domestic manufacturer the Truong Hai Auto Corporation led VAMA members, with 9,468 units sold, representing a market share of 45 per cent.

Toyota Vietnam followed, with 4,679 units, or 20.5 per cent, and Ford Vietnam, with 2,501 units, or 11 per cent.

Total automobile sales in the first quarter of 2017 saw a year-on-year increase of 8 per cent to 64,729 units, with passenger cars up 23 per cent while commercial and special-purpose vehicles fell 10 per cent and 13 per cent. respectively.

The number of CBUs sold rose 41 per cent while the number of CKDs fell 1 per cent.

Coteccons reaps $176.2mn in Q1

The Coteccons Construction JSC (Coteccons, stock code CTD) has announced that its business results in the first quarter of the year totaled VND4 trillion ($176.2 million), up 27 per cent year-on-year.

The growth was in line with expectations, according to Deputy General Director Tran Quang Tuan.

Total contracts were valued at VND8.7 trillion ($383.4 million), including in the second stage of the Ho Tram project, the Paihong factory, A&B Central Square Nha Trang, Dragonbay Ha Long, and Vinhomes Metropolis.

Coteccons was also named among the best places to work in Vietnam’s building sector, being in the Top 5 in leadership and compensation / welfare.

Mr. Tuan also announced the establishment of Covestcon Ltd, with charter capital of VND26 billion ($1.1 million). A wholly owned subsidiary of Coteccons, its main business lines are brokerage and trading. These are the first steps by Coteccons in carry out its investment activities announced last year.

Covestcon will directly research and conduct real estate projects such as offices and resorts and will also take over potential projects announced by Coteccons in the past.

Coteccons has also announced the postponement of its 2017 Annual General Meeting (AGM). Scheduled for April 13 at the New World Hotel in Ho Chi Minh City, the meeting has been postponed due to preparations by the Board of Directors and the Board of Supervisors for the new term not being completed.

The AGM is expected to be held sometime in the second quarter.

KPMG OnDemand service launched

KPMG, one of the Big4 and the leader in audit and professional services, has launched a new service to provide corporations and organizations with access to highly-trained professionals for short-term secondments.

Aimed at helping to balance the level of business demand with workforce supply, KPMG Vietnam’s OnDemand service gives corporations and organizations a reliable solution in the form of short-term secondments at competitive rates. Without going through the time-consuming recruitment and training processes, corporations and organizations will immediately have access to KPMG’s worldwide professional knowledge, diverse skills, expertise, technology, and best practices.

“We are very excited about this offering, which will complement the range of our services provided in Vietnam,” said Mr. Warrick Cleine, KPMG Vietnam’s Chairman and CEO. “With the launch of KPMG OnDemand, we have moved another step ahead to become a truly one-stop shop for the business needs companies may struggle with, irrespective of their size and complexity. As a group of professionals who work with passion and purpose, we are here to help our clients anticipate tomorrow and deliver today.”

One major concern for many businesses nowadays is seasonality and unexpected demands that cannot be effectively managed through the regular recruitment process. These include the need for extra resources during end of month or year-end deadlines, periods of leave, or simply filling a gap between one employee finishing and another starting. These needs may vary from week to week and often require immediate short-term human resources.

Furthermore, KPMG Vietnam provides access to professionals with a wide range of capabilities, ranging from analyzing and transforming data to designing more efficient and effective reporting, and assisting in administrative management tasks such as project support, logistics and functional reporting, to enable on-time and on-budget project delivery.

Indebted banks may receive State support

Weak credit institutions that were compulsorily acquired may receive funding from the government to increase their charter capital with zero long-term interest rates.

The State Bank of Vietnam (SBV)’s draft law on supporting credit institutions to restructure and resolve bad debts, which is now seeking public opinion, is the first law to officially legalize the use of State funds to settle bad debts - a topic that has been controversial over recent months.

“It’s the same as taking from the poor to give to the rich,” said Mr. Truong Van Phuoc, Vice Chairman of the National Financial Supervisory Commission (NFSC). “Bad debt settlement is imperative as bad loans pose challenges to the economy, pushing lending rates to 9-10 per cent per annum though inflation stays at 5-6 per cent.”

Vietnam needs an estimated $25 billion for bad debt settlement in the next five years. The amount includes $10 billion to deal with bad debts bought by the Vietnam Asset Management Company (VAMC). The remaining $15 billion will be used by banks for asset liquidation and risk provisions.

The use of State funds to settle bad debt runs counter to the five-year financial plan to 2020, which was approved by the National Assembly (NA) in November last year. “State funds are not to be used for restructuring State-owned enterprises (SOEs), settling bad debts of State-owned commercial banks, increasing charter capital at credit institutions, or buying stakes in international financial institutions,” the associated NA resolution stated.

In 2015, the central bank found itself shoring up ailing institutions three times, turning VNCB, GPBank, and Ocean Bank into wholly State-owned entities in a move to negate any concern over the health of other banks.

One point in the draft laws that may trigger conflicts of interest is that those involved in the restructuring process of weak credit institutions do not have any legal responsibility for the result of the process. They include central bank executives, members of the special supervisory board, and State-owned bank executives who were appointed by the central bank to assist weak credit institutions during the restructuring process.

Senior executives from State-owned banks have become leaders of these distressed banks, with Vietinbank executives appointed to manage Ocean Bank and GPBank, while Vietcombank Deputy CEO Nguyen Van Tuan joined VNCB in March 2015. 

Other than receiving zero long-term lending rates from the government, banks that were acquired compulsorily will also be able to take out special loans from the central bank also with zero per cent interest rates, and receive deposits or borrow from assisting banks. For example, VNCB can borrow from Vietcombank at zero per cent interest rates.  

The draft law also proposes bankruptcy as an option for weak credit institutions. “The government will decide the special lending rate upon the request of the central bank to pay depositors the remaining amount of their deposits (after they receive compensation from the deposit insurance system),” the draft law stated.

Including bad debts managed by VAMC, the bad debt ratio in the banking system likely stands at around 8.86 per cent; three times higher than reported, the SBV’s latest figures reveal.

As at the end of 2016, the ratio of bad loans on balance sheets, those bought by VAMC from banks, and loans that may turn sour had reached 8.86 per cent of all outstanding loans, given the difficulties in dealing with assets used as collateral for bank loans and settling bad debts. On September 30, 2012, bad debts were put at 17.21 per cent.

EVN to launch new turbines in Q2 2017

The Electricity of Vietnam (EVN) will put into operation several key electricity generation projects in the second quarter 2017 to ensure power supply.

The first turbine of the Thai Binh thermo power plant will be launched in May.

The EVN has also completed the Thac Mo hydropower plant expansion project, which will begin generating electricity in July 2017.

The work on Quang Trach I thermal plant is expected to start in December while construction of the Vinh Tan 4, Vinh Tan 4 expanded, Duyen Hai 3 and Duyen Hai 3 expanded projects will be kept on schedule.

In addition, the EVN will focus on urgent projects to provide electricity for the south and the capital of Hanoi, along with launching construction of the 500kV power line Vung Ang – Doc Soi – Pleiku 2 in September.

Constructions of 26 new power lines have been launched, with four 500-220kV lines and 22 lines of 110kV.

The EVN is also taking measures to protect the environment and use sustainable environment solutions for coal-fired power plants.

According to the group, the demand for electricity in the second quarter of this year will increase by 12 percent as the peak of the dry season comes. The power load can reach 600 million kWh per day, while the biggest capacity of the whole system can be 31,800 MW.

In the first quarter, the total produced and imported electricity output was 44 billion kWh, up 7.7 percent year-on-year. The biggest capacity of the whole system reached 27,066 MW, up 10.6 percent from the same period last year.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR