Da Nang takes lead in competitiveness index

 

The central city of Da Nang , for the third consecutive year, has secured first place in terms of competitiveness index, which has helped it attract 197 FDI projects capitalised at some $3.9 billion.

 

In the first four months of this year, Da Nang licensed an additional 19 projects with a total capital of over $300 million. In the first quarter alone, the city attracted $424.5 million, including newly-registered and additional capital, for 16 projects, representing a 4.9 fold increase over the same period last year.

 

FDI projects focus on a wide range of areas such as garments and textiles, real estate, information technology, manufacturing and chemicals, of which real estate has garnered the largest number of projects.

 

Apart from real estate, the tourism sector, which is seen as one of the city’s spearhead industries, also attracted a huge amount of investment capital.

 

The city is introducing open and transparent policies to lure more both domestic and foreign attention in the city.

 

Loans to non-production sectors axed

 

Lending to non-manufacturing sectors in HCM City is decreasing sharply thanks to banks' efforts to cap credit growth at 20 per cent as ordered by the State Bank of Viet Nam.

 

A source from the central bank's HCM City branch said that by late April, outstanding loans to non-production sectors in the city totalled VND138 trillion (US$6.7 billion), including VND97 trillion to the property industry and VND34 trillion to retail borrowers.

 

Around VND7 trillion was pumped into the stock market.

 

Personal lending saw the sharpest fall at 7.4 per cent. However, loans for securities were down only 2.8 per cent and to real estate companies by only 1.3 per cent.

 

In April, outstanding loans at city banks rose by a mere VND2.2 trillion because interest rates saw a surge, with some banks demanding up to 26 per cent.

 

Deposits mobilised by banks continued to go down last month, falling by nearly 7 per cent year-on-year though interest rates at many banks exceeded the central bank's 14 per cent cap. Foreign currency deposits remained virtually unchanged after the central bank capped interest at 3 per cent.

 

Many banks said outstanding loans to the real-estate sector reduced slowly (1.3 per cent) because, with no one wanting to pay in advance, repayment is slow.

 

With the property market frozen, developers are unable to sell their products, while most loans to this sector are for terms of more than 10 years, according to the general director of a minor joint-stock bank in District 1.

 

According to the State Bank of Viet Nam, 24 banks have loans to non-manufacturing sectors, particularly real estate, accounting for 25 per cent or more of their total loans.

 

For some of them, the figure is up to 45 per cent.

 

This means several banks will be unable to fulfil the SBV's demand to reduce non-manufacturing loans from 26.7 per cent now to 22 per cent by June and to 16 per cent by year-end, according to analysts.

 

It also means such banks would be forced to double their compulsory reserves and have the scope of their operations restricted in the last six months of 2011 and 2012 as warned by the central bank, they said.

 

After cutting back on property, securities and personal loans, many banks are looking to make up by lending more for production activities. However, this too has been curtailed since the central bank has capped credit growth for the year at 20 per cent.

 

The vice chairman of a city-based joint stock bank said his bank stopped lending to real estate projects two months ago and hiked lending interest rates to 25-26 per cent.

 

Yet it would be hard to reduce outstanding loans to non-manufacturing sectors to 22 per cent by June, he said.

 

The property industry said banks' refusal to lend is piling more pressure on the beleaguered real-estate market, making recovery even harder.

 

Metro starts work on Ha Long outlet

 

METRO Cash & Carry Vietnam yesterday began construction of a wholesale centre in northeastern Quang Ninh Province's Ha Long City.

 

The three-hectare METRO Ha Long will supply more than 25,000 food and non-food items and services tailor-made to the specific business needs of customers in the province and the northeastern port region.

 

"Quang Ninh will be a huge market for the business-to-business wholesale model of METRO. The province is developing a series of national projects in tourism, seaports and marine logistics," said Nhu Thi Hong Lien, deputy chairwoman of the provincial People's Committee.

 

HSBC expands market presence

 

HSBC Viet Nam opened its 16th branch in Giang Vo, Ha Noi yesterday.

 

Thomas Tobin, CEO of HSBC Viet Nam, said: "The opening of the Giang Vo branch reflects HSBC's plan of enhancing its presence in Viet Nam. We want to make sure that customers are able to access our banking services with greater convenience while leveraging HSBC's global connectivity, local knowledge and national outreach to unlock Viet Nam's potential."

 

During April, HSBC inaugurated another new branch at 182 Le Dai Hanh, District 11, HCM City. It was HSBC's 15th branch in Viet Nam and its seventh in HCM City.

 

Capital hosts medical exposition

 

As many as 300 domestic and foreign companies will showcase their products at the 18th Viet Nam International Medical and Pharmaceutical Expo which will be run in Ha Noi during May 11-14.

 

With more than 400 booths, Viet Nam Medi-Pharm 2011 will display a wide range of medical products, equipment, devices, materials, technologies and production lines.

 

Organisers said the event would serve as a platform for both foreign and domestic companies to co-operate while providing both with business and investment opportunities as each promotes its products, brand names and technologies.

 

The expo will include seminars spotlighting Viet Nam's pharmaceutical and medical equipment market with regards to new regulations on medicine registration, taxes, trade policies and incentives to attract foreign investment to the healthcare sector.

 

Ocean Bank wins US award

 

Ocean Bank Viet Nam has been awarded the Straight-Through-Processing Award, a leading US bank award, for its payment services by the Wells Fargo Bank.

 

The award was given in recognition of efforts in improving the quality of Ocean Bank services in accordance with international banking standards.

 

STP is used to assess the quality of implementation regarding international payments conducted by banks. So far, Ocean Bank has developed banking relationships with nearly 200 prestigious banks in Viet Nam and around the world.

 

Surge in new mobile subscribers

 

Up to 200,000 new mobile subscribers registered during April, bringing the total number of mobile subscribers, as recorded during the first four months of 2011, up to 157.8 million, a 28.2 per cent year-on-year increase, according to the General Statistics Office.

 

Currently, the Viet Nam Post and Telecommunications Group owns half of the country's total mobile phone subscribers at 84.3 million.

 

Innovation Forum website launched

 

The Open Innovation Forum website was launched in Ha Noi on Wednesday by the Ministry of Science and Technology, the Finnish Embassy and the Innovation Partnership Programme.

 

The forum is the first bilingual website on innovation in Viet Nam and aims at supporting the National Innovation System (NIS) of Viet Nam by providing enterprises, non government organisations, authorities, universities and research institutions with better access to knowledge, experience and other information regarding innovation, match-making and partnership building.

 

Supermarkets do big trade during holiday

 

Supermarkets in HCM City reported a rise in sales during the long holiday weekend but traditional markets saw sales dip since regular customers were apparently away vacationing.

 

Nguyen Thanh Nhan, general director of the Co.opMart supermarket chain, said sales doubled during the holidays from last Saturday to Tuesday.

 

Lotte Mart, Zen Plaza, Vincom and other shopping malls also reported higher sales, Sai Gon Giai Phong (Liberated Sai Gon) newspaper reported.

 

Most supermarkets launched promotions during the holiday period, including 5-50 per cent cuts in the prices of many goods.

 

They also had higher stocks compared to normal days.

 

Big C, for instance, increased stocks by 30 per cent.

 

Electronics shops like Thien Hoa, Cho Lon, Nguyen Kim and Hoan Long also saw sales increase by 30-50 per cent.

 

Many of them unveiled promotional programmes that will go on for a couple more weeks.

 

However, at Ben Thanh Market in District 1, sales remained normal, even slightly lower, with the market management board attributing this to regular customers going away on tours.

 

An Dong Market in District 5 and Binh Tay Market in District 6 also reported low sales.

 

A shopkeeper in An Dong said in fact, she had never seen sales so low during the Reunification Day and Labour Day holidays.

 

Technology expo to open in HCMC

 

More than 200 domestic and foreign exhibitors will present the latest technology, machinery, equipment and other products in the fields of plastics, rubber, printing, packaging and industrial automation at the 19th International Industrial Machinery Exhibition that will open next Tuesday.

 

Germany, US, UK, Japan, Italy, Russia, Turkey, Hong Kong, Korea, Thailand and Singapore are among foreign exhibitors at the four-day event that will be held at the Saigon Exhibition & Convention Centre in HCM City's District 7.

 

IIME Viet Nam 2011 will link global industrial technology, machinery and equipment providers with potential buyers in Viet Nam, organisers said.

 

Product highlights include electrical and mechanical products for railroads, 3D printers, production systems, diesel engines, multi-functional air compressors and screw-air compressors.

 

The annual event is co-organised by VCCI International Fair and Exhibition Centre, Hien Dat Exhibition & Trading Service Co Ltd, and Hong Kong-based Top Repute Co Ltd.

 

Bank partners to have $20b assets

 

Any foreign institution wishing to become a strategic partner with a State-owned commercial bank must have at least US$20 billion in assets, under a new circular that comes into effect in June.

 

The foreign institution must also have positive ratings on its financial capacity by a leading organisation such as Moody's, Standard&Poor or Fitch Rating.

 

The company is not allowed to be a major or strategic shareholder or to have founded a credit institute in Viet Nam. The foreign firm must also make a long-term commitment.

 

The SBV said the new regulations would help State-owned banks select the right partners to support their business strategies and boost competition among banks and financial institutions.

 

However, Nguyen Quang Huy, a securities analyst, said the circular would not by itself ensure the banking industry was equitised, as the Government wants.

 

Huy added that the Government on April 7 increased the permitted level of foreign ownership in a commercial bank from 15 to 20 per cent. "The Government also approved the equitisation of the Mekong Housing Bank and the Bank of Agriculture."

 

The circular was designed to protect commercial banks' assets when stocks dipped, Huy said.

 

According to the circular, a local enterprise wishing to be a partner of a State-owned commercial bank must have at least VND3 trillion (US$142.9 million) in assets, a return-on-equity (ROE) ratio of 15 per cent and return-on-asset (ROA) ratio of 1 per cent and to have been in profit for three consecutive years prior to the tie up.

 

The company must also not have traded shares from the commercial bank for at least five years before the acquisition.

 

For a domestic credit institution that wants to acquire stakes from a State-owned commercial bank, it must also have a Capital Adequacy Ratio (CAR) higher than 10 per cent in the year prior to the strategic partnership and a bad debt of less than 2 per cent.

 

Meanwhile, the domestic institution was not allowed to buy a stake in a State-owned commercial bank which has shares in the institute, the circular said.

 

The State Bank also requires commercial banks to set up a detailed equitisation plan, which it must submit to the Government.

 

Vinashin's Development Bank loan extended

 

The Government green-lighted a plan that will extend the loan payment period for Viet Nam Shipbuilding Industry Group (Vinashin).

 

According to the Government Office, a new dispatch signed by Deputy Prime Minister Nguyen Sinh Hung said the Government agreed with the Ministry of Finance's proposal to extend the loan payment period for export credits. Vinashin has failed to make payments on a loan that was provided by the Viet Nam Development Bank.

 

The group will now have less than two years to repay the loan.

 

According to the dispatch, Hung said Vinashin had to review their plans for production and business. The group must also find partners who will be willing to purchase the ships built for previous clients who backed out of their contracts after Vinashin began experiencing financial difficulties.

 

In May 2010, chairman of Vinashin's board Nguyen Ngoc Su said the group's total debt was VND86.6 trillion (US$4.1 billion).

 

The company's debts was invested in several construction projects and partially built vessels.

 

After handing over these vessels to the National Oil and Gas Group and Viet Nam National Shipping Lines, the group's debt now stands at VND63 trillion ($3 billion).

 

Vinashin has 130 existing shipbuilding contracts worth $ 2.1 billion, of which 57 will be exported and 73 are being built for Vietnamese clients.

 

The Government published Dispatch No 2611/VPCP-KTTH last month after receiving proposals from the Ministry of Finance, Ministry of Industry and Trade, Ministry of Transportation and Ministry of Planning and Investment.

 

Ca Mau seeks $57.5m to boost infrastructure

 

The Cuu Long (Mekong) Delta province of Ca Mau will need a total investment of VND1.185 trillion (US$57.5million) in the next six years to upgrade urban infrastructure of its capital Ca Mau City, according to the provincial People's Committee.

 

The investment will be spent on replacing poor infrastructure in underdeveloped neighbourhoods, relocating residents living along banks of canals or in unsafe zones, and improving the management capacity of land, house and urban planning.

 

The project, which is expected to give a much-needed facelift to the city, involves roads, alleys, sewage systems, water supplies, electricity grids, housing, waste treatment and disposal.

 

It will also aim to reduce pollution and flooding, create more jobs, raise locals' incomes, eradicate poverty and relieve disease.

 

It is estimated that more than 5,000 local households in low-income neighbourhoods in the city's nine wards will benefit directly from the project. An additional 25,000 households will be affected indirectly.

 

The project is part of the national urban upgrade scheme approved by Prime Minister Nguyen Tan Dung two years ago.

 

It aims to eradicate poor living conditions and improve living standards in low-income neighbourhoods in cities across the country.

 

Apart from Ca Mau City, other cities in the Cuu Long (Mekong) Delta selected for the scheme are Can Tho, Tien Giang Province's My Tho, Dong Thap Province's Cao Lanh, Kien Giang's Rach Gia and Tra Vinh City in Tra Vinh Province.

 

The cities altogether need a total investment of $600 million, 35 per cent of which will come from the provinces' budget and the rest to be lent by the World Bank.

 

For Ca Mau City, the project is set for appraisal next month and approval by the end of the year. It is expected to kick off early next year.

 

The project aims to help the southern most city reach Class 1 status by 2020.

 

Criteria for a Class 1 city require it to function as a socio-economic, political, cultural, technological and tourism hotspot while promoting socio-economic development throughout the region. Non-agricultural employment should incorporate 85 per cent of the total provincial work-force. City infrastructure should be developed and population size should be at least 500,000. Average population density should be no more than 12,000 people/sq.km.

 

Ca Mau City, with a population of more than 200,000, is one of the largest cities in the delta. The city is also among the country's most vulnerable to climate change and rises in sea level.

 

Since August 2010, Ca mau City has been a second class city, of which the population must be at least 250,000 and non-agricultural employment makes up no less than 80 per cent of the work-force.

 

Managed funds offer option for investors

 

The stock market gloom has had its impact on their performance, but a demand exists to acquire large stakes in fund management firms, market observers say.

 

In March, the executive board of the Hoa Binh Securities Company approved a plan to take a 51 per cent stake in An Phu Fund Management, established in 2006 with a charter capital of VND25 billion (US$1.2 million)

 

Meanwhile, the Maritime Joint Stock Bank is close to completing the purchase of Tin Phat Fund Management Co after which the company will be renamed. Tin Phat was set up in 2008, mostly by individuals, with a charter capital of VND26 billion ($1.24 million). Although details of the deal are not available at the moment, it is said that the founders are making significant losses on the sale.

 

Hoang Minh Son, general director of OTC Viet Nam, a joint-stock company, said the website, sanotc.com had many purchase orders for stakes in small fund management firms with less than VND40 billion ($1.9 billion) in charter capital.

 

"Three companies wanted to sell their stakes in 2008 because it was not easy to mobilise capital due to the financial crisis then, and the Ministry of Finance then increased the minimum charter capital requirement," said Phan Xuan Can, general director of the Viet Nam Financial Investment Company.

 

He said another reason for the desire to sell was that the founders of these companies were not experienced in the field. The sale failed.

 

Since late last year, demand had increased and successful deals had been struck, mostly with banks as buyers and individual shareholders of fund management firms as sellers, Can said.

 

The chairman of a HCM City-headquartered fund management company, who did not want to be named, said he was negotiating a deal at higher-than-par prices. He told Viet Nam News that banks were looking to expand their business into fund management.

 

With such fund management firms as affiliates, the banks would be able to mobilise capital for other activities, like real estate development projects, for instance, he said.

 

Commercial banks are not directly allowed to raise funds for such projects.

 

He also said that the Government was set to tighten requirements for the establishment of fund management firms.

 

The chairman said the pervading stock market gloom would make the deals (to acquire stakes in fund management firms) cheaper and thus more attractive to buyers.

 

One more attraction was that, under the draft decree that will guide the implementation of the amended Securities Law, fund management companies would have additional functions, among others, of setting up securities companies, mobilising capital for property investment funds and managing property investment funds.

 

New rules on gold trading proposed

 

Specific regulations on gold trading will be issued soon to ensure the rights and benefits of people who keep assets in the precious metal, says Nguyen Dong Tien, deputy governor of the State Bank of Viet Nam (SBV).

 

The Lao Dong (Labour) newspaper yesterday quoted Tien as saying strict controls would however be maintained over gold transactions as part of efforts to stabilise the economy.

 

The newspaper cited experts as saying they were concerned the SBV circular banning gold deposit mobilisation and lending operations that took effect on May 1 would freeze a large volume of assets kept by the people, preventing it from being used to serve the economy.

 

Gold mobilisation was highest in HCM City, accounting for nearly 76 per cent of national total, with Ha Noi a distant 11.7 per cent and 31 other localities making up the reminder, he said.

 

Tien said the decision to ban gold lending and acceptance of deposits by commercial banks would not have any impact on most people in the countryside, because the majority of them did not make savings in the precious metal, and had little demand to trade in it.

 

As far as credit organisations were concerned, the SBV has made sure they had enough time to adjust their operations in an effort to prevent business risks. They have agreed with the decision and support it, Tien said.

 

He said the central bank would strictly monitor the market to ensure compliance with the decision by banks.

 

Tien said the central bank's decision was prompted by unpredictability and fluctuations in gold prices, which had led to increased speculation and illegal import of the precious metal. This, in turn, had negative impacts on the monetary and foreign exchange markets, he added.

 

Under Circular 11 issued by the State Bank of Viet Nam that took effect as of May 1, 2011, credit organisations cannot provide gold loans to customers and other credit organisations or fulfill gold credit contracts already signed but not yet disbursed or partially disbursed.

 

Commercial banks are also not allowed to deposit gold with other other credit organisations.

 

In terms of gold mobilisation, banks cannot accept gold savings, but they can mobilise gold by issuing short-term certificates of deposits to repay depositors if they do not have enough of the precious metal in store.

 

However, these short-term certificates can only be issued until May 1 next year.

 

Banks cannot convert mobilised gold into other currencies. The amount of gold that they have used to make dong loans has to be retrieved no later than June 30 this year.

 

Managed funds offer option for investors

 

The stock market gloom has had its impact on their performance, but a demand exists to acquire large stakes in fund management firms, market observers say.

 

In March, the executive board of the Hoa Binh Securities Company approved a plan to take a 51 per cent stake in An Phu Fund Management, established in 2006 with a charter capital of VND25 billion (US$1.2 million)

 

Meanwhile, the Maritime Joint Stock Bank is close to completing the purchase of Tin Phat Fund Management Co after which the company will be renamed. Tin Phat was set up in 2008, mostly by individuals, with a charter capital of VND26 billion ($1.24 million). Although details of the deal are not available at the moment, it is said that the founders are making significant losses on the sale.

 

Hoang Minh Son, general director of OTC Viet Nam, a joint-stock company, said the website, sanotc.com had many purchase orders for stakes in small fund management firms with less than VND40 billion ($1.9 billion) in charter capital.

 

"Three companies wanted to sell their stakes in 2008 because it was not easy to mobilise capital due to the financial crisis then, and the Ministry of Finance then increased the minimum charter capital requirement," said Phan Xuan Can, general director of the Viet Nam Financial Investment Company.

 

He said another reason for the desire to sell was that the founders of these companies were not experienced in the field. The sale failed.

 

Since late last year, demand had increased and successful deals had been struck, mostly with banks as buyers and individual shareholders of fund management firms as sellers, Can said.

 

The chairman of a HCM City-headquartered fund management company, who did not want to be named, said he was negotiating a deal at higher-than-par prices. He told Viet Nam News that banks were looking to expand their business into fund management.

 

With such fund management firms as affiliates, the banks would be able to mobilise capital for other activities, like real estate development projects, for instance, he said.

 

Commercial banks are not directly allowed to raise funds for such projects.

 

He also said that the Government was set to tighten requirements for the establishment of fund management firms.

 

The chairman said the pervading stock market gloom would make the deals (to acquire stakes in fund management firms) cheaper and thus more attractive to buyers.

 

One more attraction was that, under the draft decree that will guide the implementation of the amended Securities Law, fund management companies would have additional functions, among others, of setting up securities companies, mobilising capital for property investment funds and managing property investment funds.

 

Foreign reserves disclosure eyed

 

The State Bank of Viet Nam will work with Government members to discuss the possibility of disclosing national foreign exchange reserves, central bank governor Nguyen Van Giau told the Asian Development Bank's 44th Annual Meeting of the Board of Governors in Ha Noi this week.

 

Although Giau admitted that publishing information regarding a bank's activities was a normal practice in many other countries, disclosing such information in Viet Nam would be a different story.

 

Such procedures not only involved the State Bank of Viet Nam, but also the Ministry of Industry and Trade as well as the Prime Minister, Giau said.

 

According to the March 2011 ADB Development Outlook, Viet Nam held low foreign exchange reserves, estimated at around US$12.4 billion (about 1.9 months of the country's import cover) at the end of last year. Other foreign financial institutions estimated that Viet Nam held $24 billion in foreign reserves during 2008.

 

Responding to concerns regarding the independence of the central bank, Giau affirmed that the SBV was part of the Government, which makes it very different to banks in other countries. According to a State Bank Law from 2010, the SBV still has certain independent powers regarding its monetary management.

 

Governor Giau said that the central bank would strictly control credit growth during 2011, keeping figures below 20 per cent to help tackle soaring inflation.

 

Credit growth rose in the first quarter of this year to above 5 per cent from the end of 2010. Current outstanding loans equal 1.2 times the Gross Domestic Product (GDP).

 

GDP in Q1 of this year grew by 5.43 per cent (worth VND441.707 trillion or $21.03 billion) from 7.34 per cent in the last quarter of 2010, according to the General Statistics Office.

 

During 2010, credit growth reached 27.65 per cent, overshooting the target of 25 per cent and pushing outstanding loans to 140 per cent of the GDP.

 

Viet Nam's GDP reached $104.6 billion during 2010.