Stocks dip again on heavy sales
 
The fuel price cut announced late on Wednesday failed to rescue stocks from further declines on the HCM City Stock Exchange yesterday, with the benchmark VN-Index closing the afternoon session down 0.32 per cent from the previous day to 486.07 points.

Sell pressures continued to build, driving the value of trades up 28.3 per cent to VND2.3 trillion (US$110 million) on a total volume of nearly 134.7 million shares. Trades were mixed, with 137 codes advancing and 128 declining. The VN30-Index, tracking top shares by market capitalisation and liquidity, closed off by 0.47 per cent to 554.74 points.

Real estate companies were the day's biggest gainers, and Investment and Trading Co (ITC), Hoang Quan Consulting-Trading-Service Real Estate (HQC), Tu Liem Urban Development (NTL), Khang Dien House Trading and Investment (KDH), and Thu Duc Housing Development (TDH) all soared to their ceiling prices.

Construction firm Licogi 16 (LCG) was the most-active share, with 4.3 million traded, closing up by nearly 3 per cent to VND13,900 per share, after the company announced it would pay a 5-per-cent cash dividend. The deadline to register for participation in the payout was set at May 24.

Chau Thien Truc Quynh, director of Viet Capital Securities Co's securities brokerage department, noted that particularly sectors, e.g., banking or real estate, were taking turns to enter a rising wave, which then spread out to other, more speculative shares.

On the Ha Noi Stock Exchange, the HNX-Index also lost 0.63 per cent yesterday to conclude the session at 83.23 points. Advancers outnumbered decliners by 177-136, while volume increased by 18 per cent to over 101 million shares, worth a total of VND1.1 trillion ($52.6 million).

Takeover target Habubank (HBB) continued to be the most-active share nationwide, with 12 million shares changing hands, but HBB shares sank by another 3.1 per cent to VND6,100.

Foreigners returned to being net sellers on both exchanges yesterday after a long run of net buys, unloading shares worth a combined net of VND11.3 billion ($540,000) on both bourses.

Firms urged to be honest when applying for credit
    
Enterprises should be more transparent and honest, and have more realistic business plans in order to access bank loans, banking experts said.

They noted that while currently high interest rates are still a major obstacle to accessing credit, banks remained hesitant to lend in the current circumstance due to risk.

According to the Asia Commercial Bank (ACB)’s recent survey, between 30% and 35% of small and medium-sized enterprises (SMEs) have accessed bank loans while 30% of them find it difficult to borrow from banks, and around 30% have been outright refused bank loans.

Le Xuan Hai, ACB General Director, said the survey was aimed at finding the reasons why firms found it so difficult to access bank loans.

The survey showed that 70% of questioned enterprises said cumbersome procedures were the main obstacle to credit. 50% of them found it difficult to meet requirements for collateral and 50% could not demonstrate their capacity to repay their debts, Hai shared.

Due to high interest rates, competent firms or those with realistic projects have opted to delay their plans to get bank loans in light of falling demand.

Hai attributed the situation to the fact that many banks have poor quality staff which has been prolonging the processing of loans to eligible clients.

However, a majority of SMEs have failed to meet credit requirements due to their poor management. Many companies don’t have sufficiently well developed investment plans when seeking credit, he noted.

Hai added, in order deal with difficulties related to collateral, borrowers needed to improve their credit rating while banks should enhance their business assessment capacity.

Huynh Buu Quang, Deputy General Director of HSBC said enterprises should improve their exchange of information with banks as well as display their goodwill in order to get extended debt repayments and access new loans.

According to Quang, most businesses simply hide from banks when they have outstanding loans, negatively affecting banks and unsurprisingly making them less willing to offer credit.

Dr. Cao Sy Kiem, former Governor of the State Bank of Vietnam (SBV), who is currently a member of DongA Bank’s Board of Directors, said that high interest rates have been the major barrier for SMEs to get bank loans.

In order to deal with the problem, it was vital to further lower the ceiling for deposit interest rates, which would pave the way for decreases in lending rates, he noted.

“The cap on lending rates is an effective solution for the current situation. However, in the long-term, it would be a good idea to remove the cap and float interest rates. Measures must be worked out to help production firms survive. SMEs face their most challenging period. If they can overcome these current difficulties, it will help boost the national economy. When interest rates fall, enterprises will have more chance to access capital and this will help stir up demand,” he added.

ADB to help fund urban railway project    

The project on developing an urban railway in Hanoi was approved to receive USD1.1 million in support from the Asia Development Bank (ADB).

Deputy Prime Minister Hoang Trung Hai has approved of the technical support plan to strengthen sustainable urban transport from ADB.

Previously, the Ministry of Planning and Investment, State Bank of Vietnam, Ministry of Finance, Transport and Construction gave their opinions and agreed on the technical support plan proposed by the ADB. The urban railway development plan will get USD1.1 million, USD1 million of which is in non-refundable aid.

Hai directed Hanoi authorities to co-ordinate other departments to assist with finalisation procedures. The State Bank of Vietnam will sign the contract with the ADB to receive the funds.

The urban railway plan no.3 connect Nhon to Hanoi Station, with USD1 billion in investment, started in September 2010. The line is expected to be 12.5 kilometres long, with 8.5 kilometres on land (from Nhon to Thu Le Park) and 4 kilometres underground (from Thu Le Park to Hanoi Station). Four of the stations will below ground, with the rest situated on the surface.

According to the current schedule, it is set to be put into operation in 2015. The train will run at a maximum speed of 80 km per hour and service five districts, including Tu Liem, Cau Giay, Ba Dinh, Dong Da and Hoan Kiem.

Half of IPs in city offer accommodation benefits

Nearly half of all export processing and industrial zones in HCMC offer boarding houses to workers, according to the city’s government.

At present, the city is home to 10 industrial zones and three export processing zones employing around 260,000 laborers. Six out of that comprising Tan Thuan, Linh Trung 1, Tan Binh, Tan Tao, Hiep Phuoc and Vinh Loc offer workers accommodation benefits.

The city authorities are focusing on developing housing projects for low-income earners so as to improve living standards for manual employees and limit strikes over low benefits.

As of now, the city has 1.4 million square meters of floor space used for building low-cost apartment projects accommodating over 455,000 workers.

The city continues to offer incentives in tax, land use fees, credit loans to developers who are keen on constructing boarding houses, houses for rent serving accommodation demand of workers.

Currently, the policy has lured several enterprises to start building low-cost housing projects for their labor forces. For instance, Nissei Electric Co. is building two five-storey blocks accommodating 1,520 workers.

Palace Co. has developed a boarding house for 1,012 laborers while a six-storey building accommodating 416 workers is under construction by Duc Bon Co.

Also to help ease difficulties for workers, the city’s government has recently proposed the central government to map out management mechanism to ensure that enterprises pay wages to worker in due time.

The city suggests that central authorities take a closer watch on financial capacity of enterprises in a bid to timely detect enterprises facing financial constraints and are unlikely to cover workers’ salaries and social insurance premiums.

HCMC authorities have also sought approval from the central government to auction off the properties of bankrupt companies to pay off salary debts when the firm leaders take flight as recently seen in the city.

Banks to select borrowers for new lending rate cap

The 15 percent cap on lending interest rates the State Bank of Vietnam imposed to aid four preferential sectors was officially applied yesterday, but banks said they have yet to implement the regulation as there are too many borrowers qualified for the low rate.

Borrowers operating in the four sectors subject to the ceiling rate, including the supporting industry, exporting and agriculture sectors, and small- and medium-sized enterprises, are estimated to account for as much as 60 – 70 percent of banks’ total outstanding loans, they said.

Hence, commercial banks said they will have to work together to develop a particular requirement for businesses which are able to access loans at the ceiling rate.

“We cannot let every business from the targeted sectors borrow at 15 percent a year,” they said.

According to a central bank circular, the maximum interest rate slapped on short-term loans in Vietnamese dong will be equal to the maximum deposit interest rate as required by SBV for terms from one month and above, plus3 percentage points a year.

Banks said the 3-percentage point gap between input and output interest rates is too low, so they have to calculate carefully on the loans to offer.

Vietnam attends green business forum in Congo

Vietnam has joined other Asian, European, African and American countries at the third International Green Business Forum in Pointe-Noire, Congo, from May 8-10.  

The meeting brought together more than 500 delegates from across the world, including 14 from Vietnam. The Vietnamese delegation was accompanied by eight businesses specialising in wood product processing.

The forum aims to combine growth opportunities, share experiences and fight against poverty through the Green Economy model.

Delegates were introduced to opportunities for green business in Congo and other African countries, attended business to business (B to B) meetings, and honoured environmentally friendly businesses.

With its largest acreage of forests in Africa, estimated at 25 million hectares, Congo is seeking foreign investment in woodwork processing, the country’s second largest economic sector after crude oil.

By participating in the forum, Vietnamese businesses had the chance to explore Congo’s market information and woodwork import-export regulations, and meet businesses from Congo and other countries in Central and Western Africa.

They also visited workshops, inquired into distribution networks, and exchanged information on market demand and product prices in Congo.

Chinese province boosts trade ties with Vietnam

China’s Zhejiang province will showcase its products at a trade fair to be held at the Hanoi International Centre for Exhibition on May 16-18.
     
On display are 200 stalls from 150 leading Chinese companies in the fields of machinery, electricity, electronics, building materials, interior decoration, garment accessories and household commodities.

The stalls are expected to highlight the potential and advantages of businesses from Zhejiang province, which is placed 4th in China in terms of economic development.

In particular, the fair offers the chance for Vietnamese’s garment makers to choose high-quality materials at competitive prices. It also provides a good opportunity for trade exchange between Vietnamese and Chinese businesses.

So far, 153 businesses from Zhejiang province have invested in Vietnam, with total capital of US$390 million. Meanwhile, Vietnamese businesses have 23 investment projects in the Chinese province, worth US$22 million.

Zhejiang mainly exports cotton fibre, garment accessories, and pharmaceutical products to Vietnam, and imports coal, crude oil, and natural rubber.

Farm produce prices fall due to heat wave, animal diseases

At a conference organised by the Ministry of Agriculture and Rural Development on May 5 in Hanoi, to discuss spread of cattle and poultry diseases, the Department of Livestock Husbandry stated that prices of several kinds of produce had fallen drastically due to the ongoing heat wave and various animal diseases.

Even though the hoof-mouth and bird flu has been contained nationwide, the blue-ear disease in pigs has appeared in the northern regions, killing thousands of pigs and causing huge losses to farmers.

Meanwhile, the current ongoing scorching heat wave is driving down prices of farm and aqua produce, with the hot weather killing animals in breeding farms rapidly.

Chickens are now selling at VND25,000 per kilo (approx. US$1.2) while pork is at VND46,000 per kilo ($2.21), and carp at VND65,000 per kilo ($3.12), instead of VND100,000 per kilo ($4.8) just a few months ago.

According to Hoang Kim Giao, head of the Department of Livestock Husbandry, the heat wave has greatly affected the food demand of the consumer, besides demand has also fallen for many kinds of farm produce compared to the same period last year.

Right now, the Department of Livestock Husbandry is assigning inspection teams to various areas in the country to examine the real situation as well as deliver timely guidance to farmers to fight the current heat wave and curb diseases in animals.

River port allows container freight to reach HCM City

The first stage of the Thanh Phuoc Port in the southern province of Binh Duong, opened yesterday, making it possible to transport container cargo to HCM City by boat.

Located on the Dong Nai River in Tan Uyen District's Thanh Phuoc Commune, the new port has 37,000sq.m of warehouses and two piers which can handle 312,500 tonnes of goods per year.

The first stage, to be completed in 2014, will cost VND780 billion (US$37.5 million) and have eight piers that can handle 2.5 million tonnes of cargo.

Work on the second stage will then begin. When it is completed in 2018, the port will have 16 piers that can accommodate vessels of up to 2,000 tonnes and handle 5 million tonnes, a wastewater treatment system, and other support facilities.

It is expected to cost VND1.45 trillion (US$70 million).

The port would enhance the capacity of HCM City's deep-water ports and curb congestion on roads entering the city, Thanh Phuoc Port Corporation, its developer, said.

Hitherto, all goods transported between Binh Duong and HCM City's ports had to be taken by road.

Thanh Phuoc Port Corporation is jointly owned by the Binh Duong Construction, Consulting and Investment JSC, Nam Tan Uyen Industrial Park JSC, and U&I Logistics JSC.

Nguyen Hoang Minh, its CEO, said the port would contribute significantly to Binh Duong's socio-economic development and enable it to attract more investments.

By reducing the transport time for imports-exports, the port would help boost foreign trade from Binh Duong, he said.

Businesses could stop worrying about delays when they send their cargo to seaports, he added.

Bianfishco back in business

Debt-ridden Binh An Seafood Joint Stock Co (Bianfishco) has resumed operations yesterday after closing in February with VN D1.5 trillion (US$73.2 million) in debt to financial institutions and suppliers.

The company had a new backer, said Bianfishco acting general director Tran Van Tri. The 1,200 workers were back on the job and the firm had inked contracts to export to Canada, France and the United States.

Initially it would produce 100-150 tonnes of tra fish a day, he said.

The re-opening is the direct result of a decision by the HCM City-based Transport Engineering Construction and Business Investment Company to pump VND500 billion ($23.8 million) into Binafishco.

The investment company's chairman-cum-general director Tran Kim Minh told the online news website VnExpress that Bianfishco had a $100 million contract with US wholesaler Cosco Supermarket to provide 1,000 containers of tra fish by the end of the year.

With Bianfishco's good reputation in the US, it made sense to inject investment in Bianfishco and lock in the contract, Minh told VnExpress.

Bianfishco had paid 30 farmers and other businesses a total of VND47 billion ($2.24 million) and cleared up VND300 billion ($14.3 million) in bank debts.

Through a Debt and Asset Trading Co arrangement under the Ministry of Finance, the company would this month continue to pay off its debt, worth VND240 billion ($11.43 million), Tri said.

Bianfishco was established in 2007 and functioned strongly until the middle of last year when banks refused to extend its financing arrangements.

Miner delisted for violation

The HCM City Stock Exchange will delist Cavico Viet Nam Mining and Construction (MCV) tomorrow due to the company's violations of the information disclosure regulations. To date, the company has not published financial reports for last year.

Sovereign fund to divest

The State Capital Investment Corporation (SCIC) has just published the list of 245 enterprises from which they will make capital divestment this year. Some are listed companies on the HCM City Stock Exchange, including entertainment services provider Royal International Corp (RIC) and An Giang Fisheries Import and Export (AGF). SCIC will also sell 355,000 shares of S. Pharm Pharmaceutical Co, with a deadline for making deposits on May 29.

HBC announces dividend

Hoa Binh Construction & Real Estate (HBC) will pay its shareholders a 30-per-cent dividend in both cash and shares. The company will use nearly VND17 billion (US$810,000) from its undistributed profits in 2011 to pay a 10-per-cent cash dividend, while shareholders will receive another 20 per cent in the form of bonus shares. These payouts will be made in the second and third quarters of this year.-

Settlement period shrunk

The State Securities Commission announced on Tuesday that it had shorterned the period for settling securities transactions from 3pm on the third day (T+3) to 9am, in order to enable shares to be traded on the third day.

"The shortening of the payment period will let investors sell securities on the T+3 date instead of waiting for the morning of the following day, thereby increasing market liquidity," said Nguyen Son, head of the commission's market development division. Son said the change would take effect on September 4, giving foreign depository banks time to adjust their settlement systems before the official application.-

Businesses cut costs, restructure to survive global economic recession
 
Many enterprises have had to restructure debt, consider mergers and cut down on costs and product prices to improve their competitiveness in the economic downturn.

The economic recession has caused bankruptcies, closed operations and increased tax debts.

A Ministry of Finance report showed in the first quarter of this year there were more than 18,700 new registered businesses, 10 per cent lower than the same period last year. However, the number of firms ceasing operations matched the number of new ones.

The ministry reported 65 per cent of dissolved enterprises had been operating for only one or two years, meaning new firms had found the situation difficult.

The majority of businesses ceasing operations were in real estate and construction. Almost all businesses saw decreased turnover in the first three-month period compared with the same period last year.

Ha Noi's Industry and Trade Department said firms had struggled with high interest rates, increased input prices, exchange rate fluctuations and difficulties accessing bank loans.

Businesses in key production sectors which used a large number of labourers – such as garment and textile, electronics and mechanics – had suffered a worker shortage.

Enterprises producing building materials and electronic appliances had low sales because of the frozen real estate market.

Commerce had faced with the same difficulties.

Trang An Joint Stock Company had only VND180 billion (US$8.5 million) turnover in the first four months of this year, down 20 per cent on the same period last year, while its annual growth rate was 150 per cent in previous years.

The company's products had not been sold because both input prices and basic salaries increased while product prices remained unchanged.

Duong Van Binh, general director of October 10 Weaving Company, said the market had become more narrow.

In the four-month period, the company's turnover was VND600 billion ($28 million), 60 per cent of the same period last year, he said.

It had to reduce its workforce from 2,800 to 2,100; its contracts were half its production capacity.

February 3 Automobile Mechanics Joint Stock Company, reduced its workforce by 8 per cent; May 1 Automobile Company by 10 per cent; Gia Lam Mechanics Company by 20 per cent; Gold Star Rubber Company by 12 per cent.

Do Duc Oanh, general secretary of the Viet Nam Cement Association, said the biggest difficulty of the sector was its huge inventory.

"The industry was forecast to consume around 47 million tonnes of cement and export 7 million tonnes. It means that the sector would have an inventory of 10 million tonnes," Oanh said.

He said the association's 100 businesses had faced difficulties. Cam Pha Cement Plant in northeastern Quang Ninh Province reported debt of VND1.2 trillion ($57 million), Ha Long Cement Plant lost VND982 billion ($46 million) and Dong Banh Cement Plant VND149 billion had lost ($7 million).

In responding to the challenges, businesses had cut down on water, electricity, labour and transport.

Trinh Sy, general director of Trang An Joint Stock Company, said it had stopped some projects to expand and improve production. It would focus on expanding its market.

A representative from a real estate company said they restructured 80 per cent of their short-term debt into mid-and long-term debt after the State Bank of Viet Nam lowered interest rates.

The company also sold its small projects to increase capital and was considering a merger to restructure investment categories and enhance competitiveness.

The ministry's Institute of Strategy and Policy director Vu Nhu Thang said the ministry had assessed business difficulties through a macroeconomic lense, including import-export, GDP growth rate, inventory and the number of newly established and bankrupt firms.

"We have seen that businesses, especially those in construction, cement, steel, production, assembly, leather shoes and cotton sectors are having a hard time," Thang said.

This year would be a year for restructuring the economy as well as providing chances for enterprises to restructure their production in combination with financial, monetary and banking policies.

"Businesses have had their biggest difficulties: low consumption, high inventories and increasing input prices," he said

One of the solutions was to accelerate public investment to help firms resolve their inventories, such as cement and steel.

He asked enterprises to renew their business strategies and management methods to fit with the new situation.

Rubber strategy gets approval

The Prime Minister has approved the Viet Nam Rubber Group's business plan by 2015, which calls for an annual increase in turnover by 15 per cent and pre-tax profits of 22 per cent a year.

If the plan's expectations are met, the group would likely contribute an annual estimate of VND3.5 trillion (US$168 million) to the State's budget.

With the plan, the group would spend VND15 trillion ($720 million) a year for its development and recruit 70,000-80,000 workers for its facilities in Viet Nam and in other countries, increasing the total workforce to 200,000 by 2015.

The plan calls for expanding the total cultivation area to 500,000ha by developing 60,000ha of newly cultivated area in Viet Nam and 60,000ha in other countries. The group also operates facilities in Laos and Cambodia.

The VRG has already set up programmes to increase the production capacity of its processing facilities in order to meet the increasing need from new cultivation areas. Expected total processed production by 2015 would reach 400,000 tonnes.

The group also plans to increase its rubber-processing capacity to target a production of 400,000 cu. m of wood by 2015.

It has developed a strategy to create industries that use rubber materials, with targeted production of one million tyres and 15,000 tonnes of mattresses and other products each year.

The VRG is a partly State-run group that operates in various sectors, including rubber cultivation, raw rubber processing, rubber product manufacture, agriculture, mechanics and construction.

It has more than 25 facilities in Viet Nam covering 263,627ha and other facilities covering a total of 70,608ha in Cambodia and Laos.

Viet Nam is the fifth largest rubber producer in the world.

VN, South Korean firms join business matching event

Some 80 Korean and Vietnamese firms have joined a business matching event in Ho Chi Minh City.

The event, “The Vietnam-Korea Business Matching”, have been jointly held by Korea Industrial Complex Corp (KICOX) and the Vietnam Chamber of Commerce and Industry (VCCI).

KICOX, an industrial complex management and supervision agency, was established in 1964 after integrating five regional industrial complex management corporations.

The 14 Korean firms joining the event operate in industrial machinery, information technology, electronics, semi-conductor production, solar energy, foodstuffs, fashion and cosmetics.

“They are the most outstanding ones who have joined the latest event,” said Chae Byeong Yong, KICOX general director and senior director of Chungcheong Areas Headquarter.

“This is the fourth of such business matching event organized by KICOX recently, aiming at boosting bilateral trade and deeper bilateral market penetration,” he said.

“Bilateral deals signed in the last 3 events totally amounted to some $7.7 million, of which the value reached $5.6 million in the first time, and slipped to $1 million and $1.1 million in the next two events.”

“The reduction in deal value was caused by the world economic turbulence.”

“Korean businesses not only want to increase trade promotion and export-import activities, but also develop trademarks and relations with Vietnamese partners,” he added.

The two countries’ businesses should share information on products and market prices to seek customers and strategic partners, said Nguyen Doan Thong, representative of the VCCI branch in HCMC.

“In the last two years, Korea has become Vietnam’s second largest supplier, surpassing Japan, with main export commodities including garment materials, leather and footwear, machinery, equipment, spare parts and plastics,” he said.

“The Korea has also Vietnam’s fourth largest importer in the world, with key products like farm produce and footwear worth nearly 4 per cent of Vietnam’s total annual exports,” he added.

Regarding difficulties Korean firms are facing when doing business in Vietnam, Chae Byeong Yong said the biggest thing to concern is the slow progress of infrastructure projects.

Minor things include different culture in working, like Vietnamese often takes a nap in the afternoon, while Korean does not, he said.

“We are getting used to have a brief lunch to have time to work in the afternoon.”
“Another disadvantage of Vietnamese business sector is the lack of technologies.”

“But, above all, Vietnam has a good annual growth rate and a young and dynamic demographic.”

“So, the country should focus on improving its infrastructure and simplifying bureaucratic procedures,” he added.

Borrowing at 15 pct still beyond firms’ reach

Although they were happy to learn of the new rate cap of 15 percent slapped on lending interest rates for four preferential sectors, many businesses eligible for the incentive have been disappointed, as their loan applications were rejected for various reasons.

“The banker told me that the lending rate will be 18 percent a year, and in response to my questions she said there is no guidance on implementing the new rate ceiling yet,” says N, who runs a small fabric and garment firm in Ho Chi Minh City’s Binh Tan District.

N. was one of the first borrowers to seek the cheap bank loans on the first day that the 15 percent ceiling was set on loans for small- and medium-sized enterprises (SME), and businesses operating in the supporting industry, and exporting and agriculture sectors.

Meanwhile T., the sales executive of a company in District 9, says she has also failed to obtain a VND2-billion loan from a bank, as the latter has assessed her collateral at a much lower rate than its real value.

“They said the land plot the company wanted to mortgage has such a low value that it cannot meet the requirement for a loan,” laments T.

“The bankers also said frankly that even if my company could access a loan, the interest rate would be 18 percent a year, instead of the ceiling rate,” she adds.

“Not all businesses can access the affordable loans as stipulated by the State Bank of Vietnam, especially the SMEs, even when they are operating in the preferential sectors,” says Truong Chi Thien, director of Vinh Thanh Dat footwear manufacturer.

What matters most is the complex procedure borrowers have to complete before actually accessing the money, businesses complain.

Meanwhile, many bank chiefs tell Tuoi Tre that the central bank’s regulation on the lowered ceiling rate is too general to be applied.

SMEs are included in the preferential borrowers, but as much as 97 percent of local firms are a SME, they say.

“Since the central bank failed to set a particular requirement on which of these SMEs are eligible for the cheap loans, we have to do it ourselves,” banks say.

Consequently, banks have set different requirements for borrowers to access the loans.

At Maritime Bank, for instance, borrowers, despite their involvement in the four target sectors, are also required to meet certain criteria such as having no bad debts over the last 12 months, finishing an audit report, or have an A rating under the banks’ evaluating system to be subject to the 15 percent rate.

With the difference between the lending and deposit rate now only 3 percentage points, instead of the ideal rate of 3.5 – 4 percentage points, many banks said they will carefully select borrowers to save costs and avoid bad debts.

Meanwhile, some have pushed their capital to consumer loans, where they can levy higher lending rates on customers.

HSBC on Wednesday announced a rate cut between 1 and 2 percentage points on consumer loans for buying a house or vehicle.

Other banks also offered promotional programs with lower rates or discounted rates in the first months of this year to boost individual loans.

“Consumer loans are an escape route for banks at a time when lending rates are low, and businesses do not tend to borrow loans due to their high unsold inventory,” banks said.

Australia announces new round of assistance

The Australian Government will provide around 150.4 million AUD (3.2 trillion VND) in official development aid to Vietnam for the 2012-2013 fiscal year.

The Australian embassy in Hanoi said on May 9 that with this ODA, Vietnam has become Australia ’s fifth largest bilateral ODA recipient.

The Australian Government’s aid programme in Vietnam , which is under the management of the Australian Agency for International Development (AusAID), focuses on five priority fields, namely human resource development, infrastructure development, reduction of negative impacts of climate change, increasing community health through safe water and sanitation, and assistance with economic reform.

In the 2012-2013 fiscal year, Australia will assist Vietnam in helping poor districts of the country gain access to safe water and sanitation, roads and key economic regions and complete the design of Cao Lanh bridge in the Mekong delta.

Also in 2013, Australia will provide 245 scholarships to Vietnamese students.

Favoring Vinalines too much is wasteful: experts

Following the Ministry of Transport’s proposal to sink VND100 trillion, or US$1.8 billion, into modernizing the fleet of the Vietnam National Shipping Lines, or Vinalines, maritime experts have said it is a huge waste for the government to favor this unprofitable giant.

Loss-making Vinalines, most of whose ships have been operating ineffectively, are docked dormant, or have been detained, is expected to receive massive capital to purchase 152 new vessels by 2020.

The Ministry of Transport also demanded that the government support and provide incentives in taxes, personnel, and mechanism for the state-run shipping line to industrialize and modernize its infrastructure.

That makes too many incentives for Vinalines, experts said.

“Sinking such a whopping sum into a state enterprise during these hard times for the shipping sector poses very high risks,” said a former official of the Vietnam Maritime Administration.

He said many state-run shipping lines have been exploiting their vessel fleets inefficiently.

“Vinalines’ subsidiaries all share a disease – buying old, downgraded vessels, which results in losses,” he said.

“Many firms bought ships not for their own use but for putting them on lease, only to see the vessels downgraded when the contracts ended.”

There are cases when the leased vessels were seized in overseas ports, while the lessees refused to take responsibility, and Vinalines had to pay to get the ships back.

“In 2011, Vinalines had to spend $800,000 to release a detained ship an Idian partner had leased,” he said.

A maritime expert said Vinalines should make full use of its current fleet before getting the huge incentive from the government.

“The government shouldn’t release thousands of billions of dong for Vinalines to buy new ships while their vessels are doing nothing in foreign ports or are being leased,” he pressed.

Maritime experts said the government should support privately-owned shipping lines instead of sinking too much money in Vinalines.

“The government can provide tax or loan incentives for the private companies to develop their vessel fleets,” they said.

Meanwhile, Chu Quang Thu, former head of the Vietnam Maritime Administration, said frankly that the Vietnamese fleet does not only include Vinalines.

“Vinalines’ ships are not the main force of the national fleet.

“So why do we have to focus investment merely on Vinalines?” he said.

“In order to develop the national shipping fleet, we need to create mechanism to attract participants from other sectors to the shipping industry, rather than focus on feeding one ‘big shot’,” he added.

In the case of Vinalines, Thu said, the best solution is for the government to divest from its subsidiaries.

Vinalines currently holds a 60 percent stake of the Vietnam Ocean Shipping JSC (Vosco) and the Vietnam Sea Transport and Chartering Joint Stock Company (Vitranschart).

According to Vietnam Registry, within less than the first four months of this year, there have been as many as seven Vinalines vessels detained in overseas ports in China and Australia.

The figure last year was 40 vessels in China, India, and Japan, including ‘well-known’ names such as the Hoa Sen, Vinalines Star, Cai Lan 4, Vinalines Glory, and Vinalines Global.

The ships were seized for their failure to meet technical requirements due to their old ages, while some were involved in debt and financial disputes, Vietnam Registry said.

Ministry mulls using toll to expand national highway

The Ministry of Transport has sought permission from the Prime Minister to expand the part of the National Highway No 1 (NH1) connecting Thanh Hoa and Can Tho, with capital for the project funded from the fees collected to limit personal vehicle use it has already proposed.

The fee collection will be added to funds from other investors to expand the 1,050km roadway, Minister of Transport Dinh La Thang said in his petition submitted to the PM.

According to the proposal to levy yearly traffic fees on personal cars and motorbikes to reduce their use, which was submitted to the government last December, cars with fewer than nine seats will pay a traffic fee of VND20 million – 50 million ($950) a year, depending on their cylinder capacity.

Meanwhile, motorbike users will pay a fee of $24-48.

Total investment needed for the project is around VND91 trillion (US$4.36 billion), and the state budget -- sourced from the personal vehicle fee collection -- can cover VND45-60 trillion, said Thang.

“The project will be implemented under the BOT (build-operate-transfer) scheme, and there will be 18 subprojects, while toll booths will be built to recoup investment,” he added.

“There will be one toll booth every 70km in each subproject, with a toll fee of VND750 per PCU (passenger car unit) per kilometer, which is only 75 percent of the fee levied on the Ho Chi Minh City – Trung Luong expressway.”

“With the state budget expected to contribute VND45-60 trillion to the project, we suggest using the collection of fees to limit personal vehicle usage for this contribution.

“The capital source from this fee collection is the main factor for the implementation of the project,” the transport ministry said.

The ministry said it will petition the PM to seek approval from the National Assembly for the proposal to collect the fee, which will create budget input for use in BOT projects to expand NH1.

It also said that since the project will be implemented at a time of high risk traffic infrastructure investment, it needs a guarantee from the government in order to mobilize capital from foreign investors.

“The Ministry of Transport petitioned that the PM allow capable state-run constructors to join in the NH1 expansion project, while also backing the project’s revenue in case real revenues do not meet the planned figures,” it said.