Trades slow on weak investor confidence

National stocks continued to tumble yesterday. The coming trend for the two composite indices has been declining, said Kim Eng Securities Co analysts.

"Meagre trading has discouraged speculators and even sellers, as many codes have been declining by 5-10 per cent during the recent two weeks," stated Wall Street Securities Co analysts.

The current downturn in the economy was a great challenge, they added.

Only a few months earlier, the market witnessed around 150-200 million shares change hands with a total value up to VND2-3 trillion (US$95.2-142.8 million) per session, but trading is currently sluggish. "The sudden change made investors uncertain about market prospects," they said.

Statistics show that during 5 years between 2007 and 2011, the Vietnamese stock market in July tumbled three times in 2007, 2010 and last year. The common feature of those declines was low liquidity.

"Therefore, investors were wise to hold cash and stay outside," Wall Street Securities Co analysts said.

Shares fluctuated on the HCM City Stock Exchange yesterday, and the benchmark VN-Index finally closed down nearly 0.7 per cent to 405.39 points.

Market value, however, increased 6.6 per cent over Monday's level, reaching VND474 billion ($22.5 million). Around 28.7 million shares were exchanged, reaching 89.7 per cent of the previous session's volume.

Blue chips continued to lose value. Only food processor Hung Vuong (HVG), Phu Nhuan Jewelry (PNJ) and property developer Quoc Cuong Gia Lai (QCG) of the 30 leading shares tracked by the VN30 advanced.

The VN30 retreated 0.6 per cent to stand at 479.58 points.

On the Ha Noi Stock Exchange, the HNX-Index closed at 67.89 points, off 0.45 per cent on a total turnover of just VND220.9 billion ($6.2 million), declining 16 per cent.

The HNX30 slid 0.7 per cent to close yesterday at 126.46 points.

With some 2.6 million shares changing hands, PetroVietnam Construction Co (PVX) was the most active code. The share remained unchanged at a close of VND8,900.

Shares stop declining, add value

Shares stopped a declining streak during this morning's session. Indices gained Abbott 0.3-1 per cent. However, liquidity did not improve.

On the HCM City Stock Exchange, the VN-Index closed at 406.77 points, a 0.34 per cent increase. Advancers overwhelmed decliners by 110-70.

Twenty-three of the 30 leading shares by capitalisation and liquidity rose. Only Eximbank (EIB) and property and hospitality-services developer Vingroup (VIC) retreated.

The VN30, therefore, edged up 0.35 per cent to 481.27 points.

Market value reached only VND199.6 billion (US$9.5 million), as trading volume fetched nearly 13.3 million shares.

Meanwhile, the HNX-Index on the Ha Noi Stock Exchange added 0.5 per cent to 68.24 points. The HNX30, tracking the bourse's 30 best stocks, rose 1 per cent, hitting 127.78 points.

About 11.76 million shares worth an overall value of VND102.7 billion ($4.8 million) changed hands.

VNDirect Securities Co (VND) was the most active stock nationwide with some 1.9 million shares exchanged. It advanced by 2.2 per cent to conclude the morning session at VND9,300 per share.

Afternoon trading will begin at 1pm.

Nghe An licenses 24 projects in first half

The Nghe An provincial Department of Planning and Investment recently granted licenses to 24 domestic investment projects valued at a total of more than VND1.08 trillion.

These newly-licensed projects are in the mineral, industrial, commercial and medical sectors, and forestation.

Two FDI projects on garments and textiles and electronic components worth US$30.5 million in total were also approved.

Agencies, sectors and authorities in Nghe An are continuing to improve the business and investment environment through “one-stop-shop” mechanisms, hoping to attract more FDI projects. The province expects to attract six more FDI projects with total registered capital of US$100-120 million in 2013.

Nghe An will focus on project quality, investor experience, and the local socio-economic development plan, giving priority to hi-tech projects that will create jobs for many workers.

New rice export contract with Philippines

Vietnam has won a new contract to export large volumes of 5 percent and 25 percent broken rice to the Philippines.

According to the contract, the rice will be shipped from Vietnam in July and August.

The Vietnam Food Association (VFA) says that this new contract is a positive sign for Vietnam’s rice exports from this year’s summer-autumn rice crop, which is predicted to produce up to 2.9 million tonnes of rice.

As of early July, Vietnam’s rice exports have reached more than 3.4 million tonnes, earning US$1.6 billion in revenue.

Vietnam refinery at full capacity after restart: CEO

Vietnam's only oil refinery reached full capacity on Monday after resuming production on the weekend following an eight-week shutdown for equipment checks, the head of the operator of the Dung Quat facility said.

The plant's closure had prompted domestic distributors to aggressively seek oil products in the spot market due to reduced term supplies from the refinery.

"The plant has been running with 90 percent of crude oil input from the Bach Ho grade," Nguyen Hoai Giang, chief executive officer of Binh Son Refining and Petrochemical Co (BSR) said on Monday.

He added that the 130,500 barrels-per-day refinery, which restarted on Saturday after being shut on May 16, could continue crude imports in the second half of the year.

The operator has said the facility was closed so equipment could be checked, with its builder, French oil services group Technip (TECF.PA), signing off on the process.

BSR had planned to restart the refinery, which supplies around a third of Vietnam's domestic fuel consumption, by the end of June, but the checks took longer than expected, Giang has said.

The plant's owner in March was looking to sell a 49 percent stake to foreign investors to raise funds and boost its capacity by more than half.

Dung Quat needs more than $2 billion of investment to expand its processing capacity by nearly a third to 192,000 barrels per day (bpd), or 9.5 million metric tons (10.5 million tons) per year.

Credit growth edges up 0.76pct in H1: SBV

As of June 30, 2012, total credit growth was up 0.76 percent from the end of 2011, said the State Bank of Vietnam (SBV) at the preliminary conference on banking operations in the first half of this year.

If including the balance of corporate bonds and mandates, the growth was at 1.4 percent.

Earlier, according to a report from the National Financial Supervisory Council (NFSC), till June 12, credit growth was 0.17 percent. The NFSC forecasted that credit growth for the whole year would only be about 8 percent.

Meanwhile, according to a source from the Vietnam Investment Review newspaper, credit till the end of June was virtually unchanged compared to the end of 2011.

However, the newswire also quoted Nguyen Viet Manh, head of the Credit Department under the SBV, as saying that if excluding some “virtual” elements of last year, credit in June 2012 still grew 1-2 percent from the end of 2011.

At a recent regular cabinet press conference, a representative from the central bank said that till the end of June, the total deposits of the entire banking system surged 7.83 percent from the end of 2011, and the total money supply in H1/2012 was also estimated to grow 6.84 percent.

Thus, the total deposits and money supply till the end of June rose 2.61 percent and 2.37 percent from the end of May 2012, respectively.

As of May 2012, these figures were 5.42 percent and 4.47 percent from the end of 2011, respectively.

Although the total deposits and money supply increased significantly, the total outstanding loans in the period still remained low. The lending interest rate, although reduced, still remained high, exceeding enterprises’ reach.

Facing this situation, the government asked the central bank to prepare drastic measures to deal with bad debts, regulate interest rates according to the targeted inflation rate of 7-8 percent, and quickly facilitate money flows for businesses.

The SBV’s report on banking operations in the first six months of this year said that the total deposits and lending in US dollar at credit institutions were lower than the total deposits and lending in dong.

Particularly, as of June 30, 2012, the total capital mobilization from the economy grew 6.49 percent, of which, the total deposits in dong rose 8.62 percent, and that in US dollar fell 2.2 percent.

“The banking system has bought a huge amount of foreign currency from economic institutions and individuals to sell to the central bank, helping increase the national foreign currency reserves,” said the SBV.

“Reasonable and legal foreign currency demands of people and businesses are fully met.”

“The psychology of keeping foreign currency has decreased significantly, the status of dollarization has been pushed back one step, the free forex market has virtually no activity, and the forex rate saw low fluctuations”, the central bank’s report said.

Earlier, while addressing a recent conference to sum up the performance in H1/2012 of the planning and investment sector, Prime Minister Nguyen Tan Dung said that the country’s foreign currency reserves in H1/2012 have increased to$10 billion, up from $9 billion at the end of 2011.

“The current forex reserve is sufficient for 10 weeks of imports, and will meet the international norm of 12 weeks of imports by year-end,” said the PM.

The norm for the safe rate of forex reserves of the World Bank is 10 weeks.

The recent conduct of monetary policy instruments, and foreign exchange rate associated with foreign exchange management policy has helped stabilize the forex rate and increase confidence in the dong, making people gradually change their mobilising-lending relations to buying – selling relations for foreign currencies, said the SBV.

From now until the end of the year, the central bank will ensure forex rate stability with variable rates that will not exceed 2-3 percent.

Bank loans inaccessible to small, medium businesses

At a significant meeting on Friday, representatives of several banks in Ho Chi Minh City met with 200 small and medium enterprises, in which most of the businesses voiced their concern on inaccessibility of bank loans for lack of collateral and a continued fear of solvency.

According to the above enterprises, although banks have offered attractive credit packages with preferential interest rates, accessibility to loans is complicated.

The yet three-year-old Song Tan Company, dealing in e-commerce, has turned to several banks for loan in the last few months but has been refused on grounds that the company is in a high-risk business.

Dai Long Company, producing electric wires, needs capital to buy new equipment for production but they have no property to mortgage. The company is operating on lease hold land from the HCMC Department of Natural Resources and Environment.

Pham Linh, deputy director general of Phuong Dong Bank, said that not only in Vietnam but also in other countries, e-commerce is regarded as risky business. If enterprises want to avail of bank loans, they must set up a mortgage.

Nguyen Van Dung, deputy director of the State Bank in HCMC, said that businesses are now facing many difficulties like capital shortage and high inventory. This has contributed to an increase in bad debts and as a result banks are hesitant to lend.

Banks are also businesses, and thus must secure their status first just like any other business not wanting to face losses, he said.

The Government and the State Bank have implemented some credit and interest policies to help businesses in need. However, they must also find other measures to help themselves, Dung added.

An Khang Food Company asked if banks will loosen their lending so that businesses can access credit packages.

Mr. Dung said that banks will not loosen lending and businesses will have to meet lending regulations set by the State Bank. For instance, they must be financially sound, have feasible projects, be clear of any bad debts and own property as collateral.

However, banks will only offer preferential policies on capital and interest rates.

Mr. Dung added that within a month of the City People’s Committee asking for VND30 trillion (US$1.44 billion) as credit package at 13 percent interest to assist businesses, banks have released the amount of VND20 trillion and the remaining amount will be released in July.

Dong A Bank now coordinates with Young Entrepreneurs Association in HCMC to assist small and medium companies with upto VND1 trillion ($48 million). Part of the capital is loan without mortgage, said Luong Ngoc Quy, bank deputy director general.

Those businesses that are in need can contact directly with the association to submit necessary documents.

The State Bank in HCMC said that businesses can also submit to the HCMC Business Association or the Department of Industry and Trade, with valid addresses, codes, concerned problems and purpose of loan.

The above organizations will then forward their papers to the State Bank, which will then coordinate with commercial banks to process their request.

Firms need help to cut inventory, restore production

Slashing value-added-tax and allowing the use of inventory as collateral for bank loans are among several measures that can help firms restore production and trading in a sluggish economy, experts say.

Rising inventory is one of the biggest obstacles firms are facing as they struggle to recover and stabilise their business. It is the main culprit behind the closure of thousands of enterprises, low credit growth in the banking sector, and unemployment of thousands of people.

According to a report prepared by the Ministry of Industry and Trade, the inventory rate at domestic enterprises in May was still at a high level.

Stockpiles in the vegetables and fruits processing and preserving industry increased 123.2 per cent; metal products, 62.8 per cent; cement, 52.3 per cent; motorbikes, 42.3 per cent; furniture, 10.4 per cent, and pharmaceutical products, 9.6 per cent.

The increasing inventories were stifling production, enterprise leaders said.

For instance, the Viet Nam Steel Association said that the industry's output in May was just 410,000 tonnes, down 50,000 tonnes over April.

However, its steel inventory still stood at 320,000 tonnes by late May, up by 65,000 tonnes over the previous month.

Consequently, many steel plants are running at between 50 and 60 per cent of their capacity.

Le Huy Hoang, director of the Binh Dinh Tunnel Brick Company, said his company still had nearly five million bricks in stock so its capacity now has been cut to 60 per cent.

The market's consumption of clothing has been very low, forcing his company's production down by between 30 and 40 per cent compared to the same period last year, according to Nguyen Huu Toan, deputy general director of the Sai Gon Garment Company No 2.

Distributors have also had to cope with the inventory problem. They have tried to reduce it by launching several sales promotion programmes, but consumption has not picked up as expected.

Enterprises have implemented several measures to deal with rising inventories, many of which are aimed at cutting product prices in order to encourage consumption, said Nguyen Dinh Cung, deputy director of the Central Institute of Economic Management.

Lowering product prices was the right action, but it was difficult to do it in such a way that the market's purchasing power improved, he said.

Recently, many producers and distributors have repeatedly launched several sales promotion programmes, but consumption at the enterprises as well as trade centres had not improved strongly.

Though inflation was reduced significantly, prices of many kinds of products have not fallen accordingly, hence consumers were not encouraged to buy, Cung said.

Senior economist Vu Dinh Anh suggested that the value-added tax (VAT) be slashed since it would help cut prices significantly, encourage market demand, and therefore reduce inventories.

Echoing Anh, economist Bui Kien Thanh also said the Government should have consumption stimulation policies in which enterprises would be exempted from paying VAT so that they can lower production costs and thus make it easier to sell their inventory.

Thanh also advised banks to allow enterprises to use their inventory as collateral for loans to help them have capital to recover production.

Limiting imports of the kinds of products that could be produced domestically would also support domestic enterprises in partly settling their inventory problem, he said.

National sales promotion programmes should focus on measures to fully utilise the domestic market, while enterprises should give priority to making quality products at reasonable prices since these are most favoured by consumers, said Vu Tien Loc, chairman of the Viet Nam Chamber of Commerce and Industry.

Loc said many Vietnamese businesses had not yet paid due attention to the domestic market as well as markets in the ASEAN region and China. These places had large populations that needed commodities of "standards suitable to Vietnamese products."

If Vietnamese enterprises could exploit these markets, their inventory problem would be settled effectively and in a stable manner, he said. 

HCM City infrastructure overloaded
 
HCM City needs to address infrastructure shortcomings and the quality of human resources in order to boost growth and competitiveness, Party General Secretary Nguyen Phu Trong told a Politburo meeting in Ha Noi on Friday.

In the meeting, held to review the progress of the nation's largest city pursuant to Resolution 20/NQ-TW of the 9th Party Central Committee, Trong emphasised the city's role as an important hub of trade, culture, education, science and technology, international exchange and national development.

However, poor competitiveness, overloaded infrastructure and shortcomings in urban planning and management were hindering the city's sustainable development, he said.

HCM City currently accounted for over 21 per cent of the nation's GDP and nearly 30 per cent of State budget revenues, Trong noted. In over 25 years of renewal, it has recorded comprehensive achievements, including an average economic growth rate of over 11 per cent per year, 1.5 times the national pace. The city also generated 28 per cent of the nation's export turnover and nearly 44 per cent of its tourism revenues. Per capita income in HCM City was 2.4 times higher than the national level.

HCM City has targeted annual per-capita GDP of US$8,500 by the year 2020, as with improved transportation infrastructure and healthcare services and an expansion of rural areas.

Appreciating the city's creativity and dynamism, Trong encouraged the city to try new ideas to deal with newly-emerging issues during the development process. At the same time, he urged the city to preserve and promote the national cultural identity and local characteristics.

He also called on HCM City leaders to narrow the gap between the rich and poor in the city and ensure social security and safety.

At the meeting, the Politburo agreed to draft a new resolution on orientations and tasks for HCM City development through 2020.

VN is third largest investor in Laos
 
Viet Nam invested US$3.45 million in Laos during the first six months this year, ranking third in the list of leading investors in Laos, said deputy minister of Viet Nam's Planning and Investment Cao Viet Sinh.

The deputy minister made the comments at the Viet Nam-Laos Co-operation and Investment Conference in Da Nang City on Saturday.

The conference, which was hosted by the ministries of Planning and Investment of Laos and Viet Nam, reviewed the effectiveness of co-operation and investment between the two countries in recent years and discussed ways to improve it.

The event was held to mark the 50th anniversary of diplomatic relations between the two countries.

Sinh said Laos has granted business licenses to 214 projects, including hydro-power plants, rubber plantations and projects related to minerals exploitation and energy.

"It's a considerable figure," said Sinh. "Hoang Anh Gia Lai group, Dau Tieng and Dak Lak Rubber companies have begun their 50,000ha rubber plantation projects in Champasak and Sekong provinces."

Sinh added that Vietnamese businesses needed further help from the Lao Government in boosting projects during coming years.

Businesses from Da Nang alone has promoted investment and co-operation projects in education, agriculture, transport and tourism with a total capital of $50 million in Laos.

Speaking at the conference, Politburo member and Deputy Prime Minister Nguyen Xuan Phuc said: "The current strong investment growth will help reach the target of $2 billion in bilateral trade turnover by 2015," he said.

However, he complained that some Vietnamese companies had delayed their investment projects.

He also requested the two ministries to bolster co-operation to solve difficulties for businesses as well as improve opportunities and policies on trade and investment.

"The two ministries should check on the operation of investment projects of the two countries to ensure the effectiveness of the investment," the Deputy Prime Minister said.

"I also ask the Lao Government to create favourable conditions for Vietnamese businesses to speed up their projects in Laos. Meanwhile, Viet Nam will offer more opportunities for Lao businesses considering investment in Viet Nam."

Industrial zones target investors
 
More preferential investment promotion policies were needed to attract investors to industrial zones (IZs) and economic zones (EZs) in Viet Nam.

IZs and EZs had encountered many difficulties in fully carrying out their expected roles in the socio-economic development of the country in the past 20 years of development, according to head of Club of northern IZs and EZs' Management Boards Pham Thuyen.

Thuyen pointed out that one of the difficulties was the overlap in the management and the inconsistency of decentralised administration of IZs and EZs throughout the country.

The report of the Ministry of Investment and Planning pointed out that problems in IZs and EZs planning, environment pollution and a lack of infrastructure, especially accommodation for workers, also hindered the development of IZs and EZs throughout the country.

In addition, inefficient land use at IZs and EZs was also headache. The average percentage of land left fallow at IZs and EZs was reported to be about 30%.

According to deputy director of Ha Noi Management Board of Industrial and Processing Zones Ngo Chi Hung, a consistent and transparent management mechanism was critical for the development of IZs and EZs.

He added that preferential loans should be given to develop and improve the infrastructure system of IZs and EZs together with lowering the land lease fees and offering land use tax exemptions for worker housing projects.

In addition, incentives should be offered to attract more investments into IZs and EZs, which would help raise the efficiency of land use and also the infrastructure system.

Experts at a recent meeting held by the club of management boards also called for the institution of a law for economic zones and industrial zones to maintain consistent and adequate legal frameworks for development.

There are 276 IZs, 15 coastal EZs and 28 border EZs throughout the country, covering a total area of more than 1.3 million ha. EZs and IZs contribute more than 30 per cent of the annual industrial production value and 25 per cent of the export turn-over and provide jobs for more than 1.6 million people.

Experts call for corporate tax cut
 
A lawyer for the Viet Nam International Arbitration Centre has recommended that the government cut corporate income taxes by 5 per cent to 20 per cent in order to help enterprises lower costs on future investmens.

Lawyer Truong Thanh Duc said that high lending interest rates were not the only cause behind many closures of companies this year.

Even though loan interest rates have been cut to 13-14 per cent, most companies still are reluctant to take out loans.

Speaking to Tuoi Tre newspaper, Duc said other factors, including taxation, inventories, higher expenses for transport and electricity and decreasing purchasing power had affected business growth.

According to a report from the Policy and Development Institute, 4,105 enterprises were dissolved in the first six months of the year, up 35.4 per cent compared with the same period last year. At least 22,219 enterprises had to suspend operations, up by 1.3 per cent.

Duc said that although Viet Nam's current 25 per cent corporate income tax was not that high, if compared with the 28-per cent rate in other countries, Vietnamese businesses were paying higher taxes because many expenses were not deducted before tax payments were made.

Costs for advertising and marketing activities were limited to only 10 per cent of companies' total turnover, while there was no limitation for this kind of expense in many other countries, he said.

According to the General Statistics Office (GSO), enterprises'production and business activities were affected by various factors, including lending interest rate, inflation, erratic economic changes and high expenses.

Only 28 per cent of enterprises that were shut down because of a shortage of capital. Twelve per cent closed because of difficulties caused by business locations and the remainder due to too high input costs such as taxation, transport and electricity, according to the GSO.

To improve the situation, the Government should reduce enterprises'contributions to the State Budget (corporate income tax) so they can recover financially.

In addition to cutting the corporate income tax, the Government should also develop measures to ensure a stable business environment, and keep prices of essential materials unchanged to ensure that input costs for businesses do not rise, according to the GSO.

Experts from the Ministry of Planning and Investment suggested that both the government and enterprises focus efforts to develop the domestic market in order to improve its purchasing power.

With a population of more than 86 million, the country has a large market in which businesses can sell their products, particularly standing inventories that are now one of their biggest problems.

To do this, the Government should create policies to encourage people's spending as well as change their spending habits, with priorities given to buying domestically produced goods.

Experts, however, said that the immediate tasks now to improve enterprises' health were to settle bad debts, reduce corporate income tax to 20 per cent and value-added tax to 7 per cent, and create conditions for enterprises to get access to long and medium-term capital resources, such as Official Development Assistance.

Steel industry to miss growth target
 
The steel industry will find it difficult to match its targeted growth of 3-4 per cent for this year because of low consumption and large inventories, according to the Viet Nam Steel Association (VSA).

Nguyen Tien Nghi, Deputy Chairman of VSA, told Viet Nam News that the tough economic conditions, including a stagnant real estate market, was having strong impacts on the steel industry.

He said steel consumption in June was just 290,000 tonnes, down by nearly 50 per cent over "normal times."

"For the first half of 2012, consumption went down by 8 per cent, while production declined by 9 per cent over the same period last year," Nghi said.

Meanwhile, he added, unsold inventory as of the end of June was 370,000 tonnes, up by more than 10 per cent over May.

Nghi explained that real estate market, a main consumer of steel, was still in recession with fewer transactions and many delayed projects, while exports were not strong enough to help the industry overcome challenges.

"The world market is also facing tough conditions. Even China, a big steel producer and exporter, is having to deal with large inventories," Nghi said.

The latest hike in electricity prices has also affected the industry as it accounts for 6-7 per cent of steel production cost.

"We totally agree that power prices have to increase. However, this is not the time to do it," Nghi said.

The VSA said that the industry needed the Government's help to overcome the current challenges it is facing. "In the new Government resolution to help companies overcome difficulties, there is not much for the steel industry," Nghi said, adding that he hoped the Government would cut down the value-added tax on steel from 10 per cent to 5 per cent to stimulate consumption.

"This cut was done once in 2009 and it was really effective. However, the rate of 10 per cent has reimposed in 2010," he said.

A policy to help the real estate market get back on track was also needed to boost development of the steel industry, he said.

Despite the stiff challenges, Nghi said there is still a "small hope" that the steel industry meets its growth target.

"The Government has not changed its prediction regarding the national gross domestic product, so I hope steel consumption improves and gets better at the end of this year," he said.

Property market to overcome difficulties

The property market could not be stimulated and real estate enterprises and construction material producers would continue coping with difficulties in the second half of this year.

The Minister of Construction, Trinh Dinh Dung, made the statement at a conference held in Ha Noi yesterday on reviewing the construction industry in the first half and tasks for the remaining months of this year. The industry reached a total industrial production valued at VND283.3 trillion (US$13.49 billion) in the first half, up 5.2 per cent against the same period last year.

Cement consumption hit nearly 23.9 million tonnes and the companies exported 3.2 million tonnes of cement during the period. Ceramic tile output was 61.3 million square metres, 3 per cent lower than the corresponding time, according to the ministry's reports.

Property prices of almost all market segments decreased and a number of transactions also slumped in the first half.

"The industry's businesses will continue facing impediments on production, sales, financial resources," the minister said.

The firms that could neither balance their debts and capital nor retain production would go bankrupt. These problems had not only negatively impacted business effectiveness but also lives of labourers, he said.

To deal with the problems, the minister affirmed that the ministry would restructure the property market and focus on real estate segments which were suitable to consumers' demand.

The ministry will ask provinces, cities and localities to implement housing development programmes this year and undertake the national housing development strategies by 2020 and orientations by 2030 in a bid to support the consumption of construction materials.

The ministry would manage to support the firms in resolving their financial problems, he said.

In addition, it would more strictly control construction projects using the State budget in all progresses from project establishment to appraisals, design, and licences for construction in order to avoid losses, the ministry said.

Property trading floors need reinforcing

Real estate trading floors established in HCM City to make transactions more transparent have failed badly, forcing the city administration to ask related agencies to strengthen management of the sector.

The People's Committee of HCM City has said that it wants the property market to develop in a more transparent, stable and sustainable manner. It has asked the Department of Construction to promulgate more effectively legal documents relating to the real estate market and services among property companies, especially real estate trading floors.

"Currently, many real estate trading floors have not worked effectively as predicted because they did not clearly know and understand all the regulations," said Le Hoang Chau, chairman of the HCM City Real Estate Association.

"Moreover, they are not frequently updated about new rules and legal documents relating to urban development, water treatment and the environment," he said.

The HCM City People's Committee has also asked the Department of Construction to monitor more closely the operations of individuals and organisations trading in real estate.

It has asked for more frequent reports on the operations of trading floors and the violations that are taking place.

The construction department has also been asked to review and perfect policies towards making the real estate trading floors more effective.

Meanwhile, the Department of Planning and Investment has been told to provide timely information about companies investing in property development. It should submit to the city, every six months, a list of companies that have just received investment licenses or had existing licenses withdrawn.

The Department of the Natural Resources and Environment has been ordered to guide district and commune administrations in issuing land-use and house ownership certificates to those who buy real estate products through trading floors. The lower level administrations have been told to co-operate with concerned agencies in exerting greater control over property transactions and services in their localities.

A report prepared by the Department of Construction says that as of 2011, the city had about 356 real estate trading floors, accounting for 50 per cent of the nation-wide total. However, these have been established with a focus on quantity rather than quality, and were poorly managed for the most part, the report said.

About 50 per cent of real estate transactions in the market were taking place outside the trading floors because most investors established their own trading floors to sell projects.

Manufacturers urged to study consumer trends

Consumer goods manufacturers need to develop a better understanding of the changing retail market situation in order to ensure what they produce is consumed, experts say.

For instance, it is not enough to focus merely on producing good quality products. The firms also need to research and find out what the consumer is looking for and improve their packaging if their products are to be stocked on supermarket shelves.

Hoang Trong, research director of the Pathfinder, a HCM City-based business consultancy, said at a conference yesterday that modern retailing had developed very quickly and would gradually predominate traditional retail channels in the near future.

The conference was organised by the High Quality Vietnamese Products Business Association.

"More and more consumers are opting to buy products at supermarket since it has several advantages over traditional channels.

"They sell goods of clear origin, have convenient timings because they close their doors late, saving time because buyers can buy many kind of products under one roof and create conditions for men to share family responsibilities," Trong said.

"Consumers choose food based on many factors, but in general, food safety is a deciding factor, followed by reasonable price and promotions," he noted.

Local enterprises should work with supermarkets and have their goods sold at these outlets even though it might not be easy to negotiate favourable deals with them, he said.

Le Thi Thanh Lam, deputy general director of the Saigon Food Company, agreed that "bringing products to supermarkets is hard."

Because it is more difficult to survive and develop their products in such a setting because of fierce competition, firms should have "concrete strategies to invest methodically in developing their distribution via supermarkets," Lam said.

She echoed Trong's advice that while produce goods of consistent quality to maintain their prestige, firms should carry out "relentless research" and turn out new products that meet meeting customers' demands.

Renovation pushes small traders to hardship   

The life of small traders in Hanoi's Dua Market has become harder over the last seven years because of the renovation of the market.

At the O Cho Dua junction, near De La Thanh Street a huge karaoke bar is located, but the old locals can still remember the bustling Dua Market that was once located here.

Seven years ago, the market was rebuilt, to be more clean and organised. But seven years later, a bank and the karaoke bar have appeared, while temporary markets are scattered nearby. The area that was was slated for a market is now a parking lot.

Thuy, a trader who has worked at the market for 20 years, said she rented a place near the Kim Lien Dyke for VND3.5 million (USD167) per month. Her customers have followed her there.

"We couldn't afford a place inside the building, and even if we could afford it, they don't allow us to sell fresh meet. Some people have pooled money together to buy stalls, but usually it doesn't last long because business is so slow. Many of them had to sell their stalls at half price," Thuy said.

The market near the dyke is smaller but still provides most of the goods of the previous market.

"There were complaints that the temporary markets caused traffic jams, so they built a permanent one. But since then the mobile markets have reappeared more. Where else are we supposed to do business?" she added.

Some other traders gathered at an alley far behind the new building, but it lacks the open-air feel.

Another trader said, "They told us 'We're opening a new market for you.' And then they chased us away."

There was no compensation provided to traders from the old market.

Vietnam's bad debt at 4.47 pct as of May -cbank

Bad debts from outstanding loans in Vietnam's banking system rose to 4.47 percent at the end of May from 4.14 percent a month earlier as businesses could not settle loans due to their high inventory, the central bank said on Saturday.

The State Bank of Vietnam said in a statement that 84 percent of non-performing loans were mortgage-based and the value of the mortgages was equivalent to 135 percent of the bad debts.

Lenders had made provisions worth 67 trillion dong (3.2 billion) by the end of May to deal with the bad debts, the statement said.

Last month, state media reported non-performing loans rose to 4.14 percent of total lending to 108.6 trillion dong ($5.18 billion) as of April as economic difficulties prevented businesses from settling debts and getting new loans.

Governor Nguyen Van Binh had been previously reported as saying non-performing loans had risen to 10 percent from 6 percent of total loans, without giving a timeframe for the figure.

Non-performing loans stood at 3.07 percent at the end of last year, the central bank said.

In the banking system reform plan published in March, the State Bank of Vietnam said it would resolve non-performing loans by selling mortgaged bad debts to the Finance Ministry's Debt and Asset Trading Co and allowing banks to turn their loans into the stakes in borrowers' firms.

The government will consider buying property projects which were used as the mortgages for loans and use them for social welfare purposes and state agencies' use, the plan said.

The central bank also aims to establish a national asset management firm to speed up resolving bad debts, state media has reported.

The total loans in the banking system rose 0.76 percent in June from the end of last year while the money supply was up 5.57 percent versus the government's estimate of 6.84 percent, the statement said.

Vietnam's economy slowed to a 4.38 percent growth in the first half this year from 5.57 percent in the same period last year. Businesses had high inventories and were reluctant to borrow while lending rates were high, leading to a negative credit growth in the first four months this year.

In late May, the government shifted its priorities to stimulating expansion and Prime Minister Nguyen Tan Dung told banks with surplus funds to boost lending, after the inflation rate fell to below 10 percent for the first time since October 2010.

The central bank said it plans to bring the credit growth to 8-10 percent in the second half of the year.

The total deposits in the banking system rose an estimated 6.49 percent in the first half of the year, the central bank said.

It has completed the plans to restructure two ailing lenders and will build the consolidation schemes for four remaining weak banks, the statement said, without naming the banks.

Chinese traders use old trick on Aussie mango

After deploying their infamous method of buying seafood and certain agricultural products from local farmers at high prices and then suddenly stopping the purchase, Chinese traders have been doing the same thing with farmers who grow Australian mangoes in the coastal province of Khanh Hoa.

Duong Ton Doan, deputy CEO of the EMU Vietnam Co, a 100 percent invested Australian company and the sole exporter of Aussie mango in the province, said some Chinese traders, assisted by their local counterparts, have been collecting a large quantity of the fruits in Cam Lam District and exported them across the borders.

“[The Chinese] offered to buy at an exorbitant price, and paid no attention to the fruit quality, sending a number of local farmers into scrambling to sell to them,” said Doan.

Doan said the Chinese mass purchase has messed up the market and put his processing facilities in trouble.

“This crop we only managed to buy some 240 tons of Australian mangoes, which is less than a half of the harvest of local farmers,” he said.

He added that the company has also discovered that Australian mangoes grown in Vietnam are being on sale in Hong Kong, but most of the fruits are of poor quality.

“This will affect the Vietnamese mango reputation, and international consumers may boycott the products, while our company will lose many exporting markets,” he said.

Following the company’s concern, the provincial People’s Committee has ordered the Department of Agriculture and Rural Development to caution farmers against the trick of Chinese traders.

In related news, the People’s Committee of Phu Yen Province has recently called on the Ministry of Agriculture and Rural Development to order the Directorate of Fisheries to stop licensing Chinese boats to enter the waters of Vung Ro to buy seafood.

“Vung Ro is not zoned for aquaculture production so if Chinese traders buy seafood there, local farmers will rush to run illegal fish farms,” the committee’s deputy chairman Le Van Truc said, adding the foreign boats will also affect the national defense activities of the province.

Earlier local authorities detected the Chinese 8366 ship as repeatedly entering the waters of Vung Ro to buy groupers from local companies to export back to China.

HDBank arranging capital for $550 mln Ha Long property complex

Ho Chi Minh City-based HDBank has become the bookrunning mandated lead arranger for the US$550 million Ha Long Star property complex by Ha Long Bay in the northern province of Quang Ninh.

The Vietnamese lender signed the capital arrangement deal on July 5 with project developer Limitless Vietnam, a member of Dubai-based Limitless, a global integrated real estate master developer.

HDBank will arrange credit for the whole project and make disbursements by phase. It will immediately make the first disbursement of US$10 million for Limitless Vietnam.

Located 200m above Ha Long Bay, Ha Long Star will accommodate up to 4,000 residents and guests in three hotels, serviced villas, townhouses, apartments, complemented by leisure and retail facilities, all with extensive views of the world renowned bay.

As agreed, Limitless Vietnam will use HDBank’s capital services related to the development of the project such as domestic and international payments from customers, capital for contractors, funding for secondary investors and clients of the project .

Limitless Dubai CEO Faisal Al Raisi said,“ We strongly believe that the project will meet the timeline and soon bring more benefits to home and abroad travelers coming to Quang Ninh, as to be deserved its name Ha Long Star.”