VN-Index soars to 8-month high

The VN-Index soared to an eight-month high on January 9, adding more than 16 points or 2.94 percent to close the session at 569.73 points.

Blue chips led the market rally yesterday as two-thirds of the top 30 shares in terms of market value and liquidity gained value, including Bao Viet Holdings (BVH), Hoang Anh Gia Lai Co (HAG), Saigon Securities Inc (SSI), PetroVietnam Drilling and Wells Service Corp (PVD) and dairy giant Vinamilk (VNM).

VNM led the gainers with a rise of 4.6 percent to finish the session at 103,000 VND (4.81 USD) per share.

Outside the VN30, PV Gas (GAS) hit the ceiling price of 74,000 VND (3.46 USD) following the news that the company would buy back 10 million shares in this quarter at the maximum price of 100,000 VND a share.

The overall market condition was positive as advancers overwhelmed decliners by 110-61 and the other 82 codes closed flat. The VN30, which tracks the top 30 shares here, climbed 1.9 percent to end at 618.41 points.

Stable money inflow throughout the session was one of the biggest market supports. Both market volume and value jumped 40 percent compared with the previous session, totaling 107.5 million shares worth 1.874 trillion VND (87.6 million USD).

FLC Group (FLC) was again the leading share with 10.8 million shares traded, climbing 1.85 percent to close at 11,100 VND a share.

On the Hanoi Stock Exchange, the HNX-Index also added 1.83 percent to finish at 85.65 points. Liquidity also improved here as the trading volume increased 30 percent over January 8, reaching nearly 56 million shares, while the value of trades grew 25 percent to 737 billion VND (34.4 million USD).

Sai Gon-Hanoi Bank (SHB) was the most active stock on January 9 on trades of 9.2 million shares, increasing 4.65 percent to settle at 9,000 VND a share.

Investors became more confident after rumours that the central bank held a January 9 meeting to revise Circular 36. Issued in November, the circular stipulates that banks cannot lend more than 5 percent of their charter capital to stock investments. Investors hoped the authority would ease this lending cap to bring more money into the stock market.

Foreign investors continued to sell local shares in the HCM City market on January 9 but at a slower pace, selling 1.44 billion VND (67,300 USD) worth of shares. They remained net buyers in Hanoi , picking up shares worth more than 14 billion VND (654,200 USD).

Bank shares most traded stocks last week

Bank stocks were the main players throughout last week's trading, with their strong growth pushing the two markets up.

All large cap shares, including those of Vietcombank (VCB), Eximbank (EIB), Military Bank (MBB), Sacombank (STB), Bank for Investment and Development of Vietnam (BID) in Ho Chi Minh City, Saigon-Hanoi Bank (SHB), and Asia Commercial Bank (ACB) in Hanoi, rose substantially following information that the central bank hiked the USD-VND exchange rate by 1 percent on January 6.

This is the first depreciation of the Vietnamese dong this year. According to the State Bank, this move was aimed at bringing the market in line with the international and domestic financial market climates and at stabilising the forex market.

Last month, the governor of the central bank said that the foreign exchange rate would be adjusted by no more than 2 percent this year.

Since late 2014, the value of the greenback has risen strongly, as compared to other major currencies, including the euro, British pound and Japanese yen.

On the Ho Chi Minh Stock Exchange, the VN-Index increased by 4.42 percent during the course of the week, ending at 569.73 points on January 9 session. The VN30, which tracks the top 30 shares by market value and liquidity, also surged by 3.3 percent to close at 618.41 points.

Besides bank stocks, a rebound of oil and gas stocks also contributed to the market rally last week.

The biggest stock in terms of market value, PV Gas (GAS), made gains in the last three sessions, wherein it hit the ceiling price of 74,000 VND (3.46 USD) per share on January 9, following news that the company will buy back 10 million shares with the maximum price of 100,000 VND (4.67 USD) per share this quarter. PetroVietnam Drilling and Wells Service Corp (PVD) also climbed by more than 5 percent on January 9, despite the continued decline of global oil prices last week.

However, liquidity was less as compared to the previous week, with the daily market volume reaching over 101 million shares worth 1.7 trillion VND (79.4 million USD).

Moreover, on the Hanoi Stock Exchange, the HNX-Index rose by 3.21 percent to finish the week at 85.65 points. Nearly 52 million shares worth 669 billion VND (31.3 million USD) per session were traded in the week.

Furthermore, both markets saw a mix of foreign investors over the course of last week. They were net sellers on the HCM City bourse, unloading shares worth some 82 billion VND (3.8 million USD), but remained net buyers throughout the week with a combined net buy value of 43.4 billion VND (2 million USD).

Analysts at the financial company Vietstock predict that the market will see a slight improvement this month, supported by the positive performance of listed companies in the fourth quarter of 2014, which will be released mid-January.

In addition, businesses are expected to benefit from the declining interest expenses and lower fuel costs, and investments will most likely flow in blue chips, particularly stocks in the consumer, real estate and construction sectors.

Dollar rates fall in most commercial banks

The US dollar rates fell in the local commercial banks yesterday, two days after the State Bank of Viet Nam weakened the Vietnamese dong by 1 per cent.

The rates had soared in the market just before the increase, when most banks sold the dollar in the range between VND21,450 and VND21,510. However, the rates fell just two days after the SBV revised its forex rate and committed not to increase it by more than 2 per cent in 2015.

On January 7, SBV increased the inter-bank exchange rate from VND21,246 to VND21,458 for each US dollar. With an effective exchange rate with 1 per cent margin, the ceiling rate was VND21,673 per dollar.

SBV said that the adjustment in the forex rate was among the measures being taken to implement the national plans for socio-economic development and State budget operations this year, following government resolution 01/NQ-CP, issued on January 3.

Yesterday, Vietcombank reduced the dollar rate by VND80 over yesterday's rate, with the buying and selling rates being VND21,340 and VND21,440 respectively.

The buying and selling rates at BIDV were VND21,350 and VND21,400 per dollar respectively, down VND70 and VND80 over yesterday's rate.

Techcombank reduced the buying rate of each dollar by VND50 to VND21,320 and the selling rate by VND60 to VND21,400.

At Eximbank, the buying and selling rates per dollar were VND21,320 and VND21,390 respectively, a reduction of VND70 each.

Reduced by VND80 each, the dollar buying and selling rates in ACB were VND21,320 and VND21,390 respectively. In Vietinbank, which reduced the rates by VND75, they were VND21,325 and VND21,395 respectively.

Meanwhile, the local gold prices slipped by VND10,000 ($0.4) for each tael (one tael is equal to 1.205 ounces). The state-owned SJC gold was listed at VND35.21 million ($1,653) per tael at the Saigon Jewellery Company.

On the global gold trading floor Kitco.com, the price of gold was listed at $1,211.6 per ounce or $1,460 per tael. Each tael of gold in Viet Nam was $193 higher than in the world market. 

Housing supply increases in HCM City

As many as 1,100 villas and attached houses across 11 projects are scheduled to hit the real estate market in the first and second quarter of 2015, said Savills Vietnam, the largest property company in the country, on January 8.

A total of 53,000 houses from 138 projects will be available for purchase in the next eight years, a Savills representative said, attributing their thriving business to reasonable prices and financial support provided to buyers.

The fourth quarter of 2014 witnessed a flourishing real estate market, with 990 new houses for sale in District 2, District 9, and Binh Chanh District, a 43 percent increase from the previous quarter.

Overall, the retail space market fared well in the last three months of 2014, according to the head of Savills Vietnam’s Research and Consultancy department Nguyen Khanh Toan, adding that although supply has increased, average occupancy has remained steady at 92 percent, indicating increasing demand.

In 2014, the municipal retail space market recorded 655 trillion VND (31.2 billion USD) in revenue, an annual increase of 12.5 percent, Toan revealed.

He also predicts 1.3 million square meters from 62 projects will become operational in the retail space market, of which 65 percent will be in District 7.-

HSBC, ANZ positive about adjusted VND/USD reference rate

HSBC and ANZ gave positive reviews on the State Bank of Vietnam (SBV)’s decision to raise the VND/USD daily reference rate by 1 percent starting from January 7.

Under the decision, the rate is up from 21,246 VND to 21,458 VND per USD, around which VND/USD is allowed to trade within a +/- 1 percent range.

The research department of the Hong Kong and Shanghai Banking Corporation Limited (HSBC) said the SBV’s early move is in line with a much stronger growth of USD against other emerging market (EM) currencies since the beginning of 2015 and with the US dollar-Vietnamese dong having been closing in on the topside of the band for the past few weeks.

HSBC experts viewed the reference rate adjustment as a catch-up with other EM currencies. A one percent fall in Vietnamese dong versus the US dollar actually represented a continued outperformance versus most other Asian currencies since the start of the first quarter last year, they said.

None notable deterioration that could lead the SBV to devaluate the Vietnam Dong, has been recorded recently. Despite the 900-million-USD deficit in December 2014, foreign direct investment flows maintained its momentum with total registered FDI worth 2.3 billion USD within the same month.

Besides, inflation continued to decrease in Vietnam, pushing real interest rates into positive territory. Higher interest rates can help ease some USD demand pressures following the shift of the VND/USD reference rate, but creating a monetary policy challenge.

Based on their market research, HSBC experts expected the VND to continue depreciating by one percent, resulting in the rate of around 21,750 VND per USD by the end of 2015.

Sharing the same opinion with HSBC, Australia and New Zealand Banking Group Limited (ANZ) noted this was the first adjustment of the VND seen in the last six months and forecast a new VND/USD daily reference rate (22,050 VND per USD) by the year’s end.

Bright prospects for foreign investment in 2015

Government economists have forecast that the overall improvement in the global economy would create more favourable conditions for foreign direct investment (FDI) in Vietnam in 2015.

According to the Binh Dinh provincial Economic Zones’ Management Board, the province has already seen an upswing in registered capital for the year and has plans to grant an investment licence to the Victory Nhon Hoi-Binh Dinh oil refinery super-project in the first quarter.

If the plan materializes this year’s FDI in the project would be much higher than last year’s figure as the oil refinery super-project alone has an investment of US$22 billion and the province has many other project applications on file.

Head of the Management Board Man Ngoc Ly said the province has lately been working with two significant investors – Vietnam-Singapore Industrial Park (VSIP) and Thailand’s Amata – to locate suitable places to build industrial zones.

Ly said that if everything goes on the right track, the province would be listed among the top localities in the nation in terms of garnering FDI for 2015.

Ngo Sy Bich, Head of the Bac Ninh provincial Economic Zones’ Management Board, said the province has been negotiating with Singaporean investors in the field of software and expects to grant licenses totalling US$100 million in January.

It has also been discussing incentives with investors from Germany involving hundreds of millions of US dollars, Bich said.

Bac Ninh has already attracted many of the world’s renowned hi-tech groups like Canon and Sumitomo from Japan, Samsung from the Republic of Korea, Foxcom and Mictac from Taiwan, Tyco Electronics from the US, ABB from Sweden and Nokia from the US.

In Hai Phong province, a centre for heavy industrial projects has been formed by world’s leading groups like G.E, Kyocera, Bridgestone, Fuji Xerox and Toyota.

In Vinh Phuc province, FDI projects have helped accelerate technology transfer, positively affecting other economic sectors in the province. After Toyota and Honda companies invested in the province, many suppliers of support products for automobile and motorbike industries followed suit.

However, to turn FDI attraction capital into reality, localities should choose the proper promotion methods and strictly adhere to commitments made to investors, Bich said.

Mexico reveals new tariffs for rice imports

Mexico has adjusted the import tariffs to 20% on Vietnamese rice imports and 9% on paddy imports effective January 9, 2015.

According to the Vietnam Food Association (VFA), Vietnam’s rice exports to Mexico achieved an impressive growth rate in 2014 with Vietnam surpassing the US to become the largest rice exporter to Mexico.

The Vietnamese Trade Office in Mexico recommended rice exporters recalculate export prices and inform partners to avoid risks and disputes.

Restructuring efforts yield limited results

The economic re-structuring process has been implemented with "strong determination" but has had few results, the head of the Viet Nam Institute of Economics, said at a conference held yesterday in HCM City.

Tran Dinh Thien said the scale of bad debt was still high and increasing, and the plan to equitise State-owned companies would not reach the goals for the 2014-15 period, as only 126 companies, or 58 per cent, were equitised in 2014.

The conference, organised by the Viet Nam Institute of Economics and International Business Knowledge Corporation, was attended by more than 150 economic experts and businesspeople, many of whom noted that the 2011 Party Resolution 13 on the re-structuring process had been carried out in many sectors, including banking, public investment and the state-owned economy.

However, the service and agriculture sectors have not developed well, and there was still no support industry to encourage domestic production, experts said.

In addition, more than 60 per cent of foreign direct-invested companies announced losses for long periods. However, FDI was the sector with the biggest increase in investment, Thien said.

Other experts said that many people and businesses carrying out the re-structuring process did not understand it.

"They don't know what re-structuring is, as well as how to and what to re-structure, so they were wrong from the beginning," an expert said.

To improve re-structuring, experts recommended new solutions and suggested that leaders take new approaches.

An expert said that companies should make better use of talented human resources who have high productivity.

A businessmen at the meeting noted that the Government should develop the private sector and not just join in projects and jobs that the private sector cannot do.

He emphasised that the private sector must be the core of the economy.

Meanwhile, a businesswoman from the fisheries sector suggested strengthening the role of business associations.

She said that associations could represent companies and fight for them, but the leaders of the associations should not be members of state-owned agencies.

Other restructuring solutions included the study of other countries' experiences and development of long-term plans.

HCM City retail space looks promising

The 2015 outlook for retail property in HCM City is promising thanks to a rise in consumer demand and the large population, an industry executive told a market review seminar in the city yesterday.

Nguyen Khanh Toan, research manager of real estate services provider Savills Vietnam, said total retail turnover in the city last year was VND655 trillion (US$30 billion), up 12.5 per cent from 2013.

"If excluding the inflation factor, however, the growth stood at 8 per cent, a slight fall from 8.6 per cent the previous year," Toan said, adding that the overall national growth rate was 6.5 per cent.

Fewer tourists from China and Russia was a contribution to the smaller value as hotel occupancy rates dipped.

But HCM City has a large population of around nine million and many people prefer modern markets to traditional or wet ones and the trend is consolidating, he said.

In the fourth quarter the average occupancy rate was 92 per cent, increasing by one percentage point (ppt) q-o-q but 11 ppts y-o-y, the highest in the last five years.

Retail podium saw average occupancy of 84 per cent, up 3 ppts q-o-q, while for department stores it was 97 per cent and for shopping centres, 91 per cent, up 1 ppts q-o-q and 10 ppts y-o-y in both cases.

Rents were stable compared to q3 but were down y-o-y — 2 per cent for shopping centres, 3 per cent for department stores and 15 per cent for retail podiums. Promotions by new projects and five supermarkets and one shopping centre entering the market contributed to the falls.

The average rent was almost VND1.4 million per square metre for shopping centres, over VND1.2 million for department stores and VND0.8 million for retail podiums.

In 2015 and 2016, 362,000sq.m are expected to enter the market, two-thirds of them in District 7.

This year Viet Nam is set to open up its retail market due to its WTO agreement as wholly foreign-owned businesses are expected to enter.

Fewer international visitors in the fourth quarter meant lower occupancy for HCM City hotels — at 68 per cent for three- to five-star hotels, down 4 ppts y-o-y though it meant a q-o-q gain of 11 per cent .

Toan said direct international flights to places other than HCM City had also reduced the city's share.

Average rent was US$87 per room per night, down 2 per cent y-o-y, though 7 per cent up q-o-q.

Nine new hotels are expected to become operational by the end of 2017 with a total of 1,700 rooms. This year's first half will see two new five-star hotels in District 1 with 580 rooms enter the market.

Banking sector's assets climb

Latest data from the State Bank of Viet Nam revealed that the total assets of the country's credit institutions was up 1.67 per cent in November-end from the previous month.

The assets was pegged at more than VND6,277.9 trillion (US$291.99 billion), at the end of November in 2014, the central bank reported.

Compared with December 2013, the total assets rose to VND522.035 trillion ($24.28 billion) or 8.12 per cent, data showed.

During the month, the assets of all State-owned, joint venture and joint stock commercial banks, as well as People's credit funds, financial and leasing companies had expanded, of which joint venture banks reported the highest growth rate of 3.41 per cent month-on-month to VND714.699 trillion ($33.241 billion).

State-owned commercial banks also reported a 1.36 per cent rise to VND2,749 trillion ($127.86 billion) and the increasing figure of joint stock commercial banks was 1.55 per cent to VND2,664.878 trillion ($123.947 billion).

The equity for the entire banking industry also jumped by VND1.845 trillion ($85.81 million) to VND499.081 trillion ($23.21 billion) by the end of November. The appreciation was mainly due to a VND1.843 trillion ($85.72 million) increase in the equity of joint stock commercial banks.

Charter capital for the entire banking sector also inched up VND44 billion ($2.04 million) to VND435.287 trillion ($20.245 billion) by the end of November after a decline of VND298 billion ($13.86 million) in October.

Though the loan-to-deposit ratio (LTD) and the ratio of short-term capital for medium- and long-term loans by the end of November stood at 83.63 per cent and 19.66 per cent, respectively, the central bank said it will still remain within allowable limits.

The capital adequacy ratio (CAR) of the banking system by the end of November was also reported to be 13.05 per cent.

Companies optimistic about 2015

The majority of enterprises and business associations in Viet Nam feel that the business environment will be better in 2015.

Director of the Viet Nam Chamber of Commerce and Industry (VCCI) Vu Tien Loc said this at an end-of-the-year meeting of southern associations and businesses.

Loc asserted that the Government's efforts to maintain macro-economic stability and rein in inflation have worked, enhancing business confidence and helping enterprises to better design their production strategies to overcome difficulties.

However, experts warned that Vietnamese firms still face competitiveness, while private companies, especially small- and medium-sized enterprises, are still facing difficulties.

Vice Chairman and Secretary General of the Viet Nam Cashew Association Dang Hoang Giang said that businesses share the hope that in 2015, the Government will continue to roll out effective measures to remove obstacles in tax and customs policies.

They also expect a more favourable investment environment and more support in settling trade disputes to better protect the legitimate rights of Vietnamese firms and goods in the international arena.

Meanwhile, Nguyen Thi Anh Thu from the HCM City Mechanics Association stressed that enterprises are in need of a fair and level playing ground, as well as consultations on improving their competitiveness for global integration.

At the same time, Chairman of the HCM City Business Association Huynh Van Minh proposed that associations and firms should evaluate both the economic prospects and challenges for 2015, thus mapping out suitable development strategies.

Minh also said that business circles should give more feedback on policies to promote their efficiency.

VCCI leader Loc noted that since the introduction of the Viet Nam Enterprise Law, more than 700,000 firms have been set up. However, only 500,000 companies maintain their operations, with 40 per cent of them making profit.

UPS launches worldwide express freight in Vietnam

UPS® (NYSE:UPS) has launched its UPS Worldwide Express Freight™ service in Vietnam for urgent, time-sensitive and high-value international heavy weight shipments.

The firm now offers the service, which is ideal for product launches, inventory shortages or equipment failure replacement parts, to 50 origin and 51 destination countries and territories throughout the world. In the Asia-Pacific region, UPS Worldwide Express Freight has been extended as an origin and destination service in Indonesia, New Zealand and Vietnam, making the service available to and from a total of 13 markets within the region.

Outside of the Asia-Pacific region, countries adding origin service include: Chile, Greece, Israel, Liechtenstein, Luxembourg, Portugal, Puerto Rico, Slovakia and Turkey while countries adding destination service include: Chile, Israel, Lichtenstein, Luxembourg, Saudi Arabia and Turkey.

“UPS Worldwide Express Freight is an air freight offering that has enabled many businesses in Asia to expand internationally and engage in global commerce,” said Jim O’Gara, president of South Asia District, UPS Asia Pacific Region. “We are pleased to further extend its reach within Asia, allowing businesses in Indonesia, New Zealand and Vietnam to leverage the speed, reliability and visibility that UPS offers for their urgent freight shipments. This service enables businesses of all sizes to better compete on a global scale while getting their products faster to more destinations than ever before.”

For customers in the industrial manufacturing, automotive, high-tech, retail and healthcare segments with palletised shipments over 70 kilogrammes, UPS now offers the guaranteed, day-definite and door-to-door service in more lanes than any other carrier, and with some of the fastest transit times in the industry. For shipments originating from Asia-Pacific, delivery can be as fast as overnight to cities within Asia and just three days to Europe and the Americas.

UPS Worldwide Express Freight™ service offers many of the same features as UPS's Worldwide Express® package service, including automated shipment preparation, online tracking and proactive notification technology. In addition, both express freight and package shipments are consolidated into one bill for easier reading by customers.

Vietnam telecom giant allays concerns over sudden area code change

While many local firms have complained that the unanticipated change of the area codes for almost all of Vietnamese provinces and cities would hurt their business, the executive of a telecom giant asserted on Wednesday there are solutions to the issue.

With the area codes of 59 cities and provinces set to change as of March 1, Vietnamese businesses will have to reprint any documents that include their phone numbers. They will also have to change their brand banners, ad signs, and product packaging.

Tran Manh Hung, general director of state-run telecom VNPT, said the company is “working on solutions to ensure the rights and interests of customers” when the new area codes are applied.

“We will allow the old area codes to be valid simultaneously with the new ones for three to six months,” Hung told Tuoi Tre (Youth) newspaper.

This means people can dial either the old or the new area code to make a phone call, which helps them get used to the new codes, he added.

“After this period of dual codes, if people still dial a number with the old code, they will be informed through the phone of the area code change, and instructed to make the correct phone call,” Hung said.

Four northern provinces, Phu Tho, Vinh Phuc, Hoa Binh, and Ha Giang, will see their area codes remain unchanged as 210, 211, 218 and 219, respectively, when a new decree issued by the Ministry of Information and Communications takes effect on March 1.

The other 59 provinces and cities will have new area codes, which have little similarity to the old ones, making it hard for people to remember them.

The area code of the central city of Da Nang, for instance, will be 236 instead of the current 511, while the respective numbers for Hai Phong in the north and Can Tho in the Mekong Delta will be 225 and 292, from the current 31 and 710.

The code for Hanoi will be 24 instead of 4, and Ho Chi Minh City, 28 instead of 8.

The sudden change of the area codes has left businesses in shock as most of them have completed their plans for the new year.

“This means we have to change our banners and product packaging,” said Lam Ngoc Minh, general director of Lien A Co., a Ho Chi Minh City-based mattress maker.

Minh said he will have to make 1,000 new banners for stores and dealerships countrywide and the company’s newly-printed packaging will become useless.

“We are only given two months to do all of these things. It is really too fast to handle,” he lamented.

Minh added that there will be other intangible damage when the area code is changed.

“Our partners and customers may face difficulty contacting us, and what if our foreign partners cannot reach us?” he said.

The area code change was unveiled at a time when landline phone subscribers are steadily declining, the Ministry of Information and Communications said in a press release on Wednesday.

“The total number of landline and mobile phone subscribers is around 130 million, and the landline phone only accounts for nearly seven million of these,” the ministry said.

Hung, from VNPT, also said mobile phone to mobile phone calls account for 97 percent of the total traffic of Vinaphone, one of the country’s largest network operators.

“Only about three percent are calls made from mobile phones to landline numbers, and there are very few home phone to home phone calls,” he said.

Landline phones are now mostly used by state offices and businesses, whereas most individual subscribers have switched to mobile phones, he added.

New HCM City system to process investment certificates

HCM City's Department of Planning and Investment is expected to implement the use of an electronic ISO system for processing investment certificates before January 15.

On January 7, People's Committee Vice Chairman Le Manh Ha asked the municipal department of information and communications, in co-operation with the department of planning and investment, to complete the general design of the foreign investment management system, and implement the electronic ISO application.

The government agencies were also asked to process registrations for business licences and work permits online.

The city's Investment and Trade Promotion Centre will be responsible for giving information to investors regarding the issue of work permits and business registrations online that is being implemented from January 1.

Deal signed to provide loans for Mekong rice farmers, traders

The HCM City Housing Development Bank (HDBank) and the Viet Nam Southern Food Corporation (Vinafood 2) signed an agreement on January 7 to provide loans to stakeholders involved in large-scale rice field projects in the Cuu Long Delta.

Huynh The Nang, general director of Vinafood 2, and Nguyen Huu Dang, general director of HDBank, sign an agreement in HCM City on January 7 to provide loans to rice farmers and traders involved with the large-scale rice field model in the Mekong Delta. - VNS Photo

Under the deal signed in HCM City, farmers and processing and trading businesses will be able to obtain loans via Vinafood 2, the country's largest rice producing, trading and exporting company.

The co-operation promises to create close links between farmers and businesses and the bank under the large-scale rice field model in the country's granary, which is expected to spark an improvement in rice production and trading.

Binh Dinh Province set for USD22bn mega oil complex

Final details are being worked out on whether Binh Dinh Province will get a USD22bn oil refinery expected to provide a major boost to Vietnam's economy and deliver on the Vietnam government's oil and gas master plan to 2020.

The Environment Institute under the Vietnam National University-HCMC is completing its assessment on environmental impacts before submitting report on the Nhon Hoi Mega Oil Complex to the Ministry of Environment and Natural Resources.

Nhon Hoi Mega Oil Complex will be a huge boost to the economy of Binh Dinh Province as well as the central region. The project is expected to contribute three-to-four percent of total GDP of Vietnam and provide jobs to at least 30,000 workers.

Authorities of Binh Dinh Province are upgrading the infrastructure such as Phu Cat Airport and carrying out ground clearance work.

The mega oil complex is expected to cost USD22bn, with capacity of 400,000 barrels of oil. The complex is expected to produce 12 million tonnes of refined oil at EURO-V standards, and 4.9 million tons of petrochemical products a year. The main markets will be Vietnam, Japan, China and other regional countries.

Some experts are sceptical about the ability of the project's investor, Thai energy firm PTT Pcl, to finance the project, as well as the environmental impact of the refinery and its feasibility.

A visit by Prime Minister Nguyen Tan Dung to Thailand in late 2014 led experts to believe the Nhon Hoi refinery will proceed. The prime minister listed the project in his oil and gas development master plan to 2020. The project's investors may receive preferential incentives.

The Saudi Arabian Oil Company (Aramco), which will be the main crude oil supplier and strategic investor, promised to use the most modern technology.

"If everything goes smoothly, we'll give the license to investors by Tet Holiday," one senior official said.

Tet bonuses range from two month's wage to nothing

Annual bonuses for Tet this year rage from up to two-month's salary to nothing at some large state-owned groups in Vietnam.

An official from Civil Engineering Construction Corporation No.4 JSC (Cienco 4), one of the biggest companies in the transporation industry, said they have yet to determine this year’s Tet bonus, but it intends to leave the bonus unchanged from 2014 at the equivalent to two-month's salary.

“In 2014, Cienco 4’s employees’ monthly incomes averaged more than VND10m. This means that employees may receive a Tet bonus of more than VND20m each,” the official said.

Vietnam National Oil and Gas Group (PetroVietnam)’s deputy general director, Le Minh Hong, said the group’s Tet bonus for this year is expected at about 1.5-month's salary, averaging about VND22m per employee.

Doan Duy Hoach, deputy general director of Vietnam Railway Corporation (VRC), said the group would direct part of its VND180bn profit this year on paying Tet bonus for its employees. Most of employees will receive a Tet bonus of more than VND10m.

An official from the Vietnam Garment and Textitle Group (Vinatex) said, “Commonly employees are given a one-month salary Tet bonus.”

An official from the Electricity of Vietnam Group (EVN) said they often pay a Tet bonus of from VND2m to VND3m to its employees each and this is just considered a support to them during the traditional festival.

But employees at the Vietnam National Petroleum Group (Petrolimex) may be in for some bad news this Tet. Tran Ngoc Nam, Petrolimex’s deputy general director, said the group will announce its Tet bonus plan for this year on February 2, but warned that Petrolimex losses over the past year may mean there will be no bonus.

Project to increase Vietnam-Laos goods transport

Deputy Prime Minister Nguyen Xuan Phuc has approved the basic contents of a joint project proposed by the Ministry of Transport on increasing goods transport between Vietnam and Laos.

The project outlines solutions to facilitate the movement of land vehicles between the two countries, helping to improve the efficiency of trans-national transport of goods and make full use of the current road networks of the two countries.

The project is expected to help raise two-way trade to USS$2 billion in 2015 and USS$5 billion by 2020, as well as increase trade between the Greater Mekong Sub-region (GMS) countries and attract more goods from Laos transiting Vietnam for export and vice versa.

Vietnam and Laos have seen their transport co-operation expand ever since they signed an agreement facilitating cross-border road transport in 2009 and a protocol to implement the deal in 2010.

The two countries are also members of a multilateral agreement on facilitating cross border transport of passengers and goods among the GMS nations.

New motivation for fishery sector

With the nation’s aquaculture export turnover in 2014 to reach US$7.8 billion, a range of Government policies on developing the fishing industry, implemented in 2014, promise to continue to assist the development of the nation’s strategy export item in 2015.

According to the Ministry of Agriculture and Rural Development, total export surplus of the agricultural sector by the end November 2014 was at US$8.2 billion, of which fishery contributed the most with more than US$5 billion dollars.

The spectacular figure is recognition of the outstanding contribution of the fishery sector, in which strategic shrimp and tra fish commodities took the lead.

Breaking forecasted figures of early to mid-2014, shrimp exports for the whole year are expected to reach their highest peak yet of US$3.8 billion, up 22% compared to 2013, and accounting for over 50% of total exports throughout the fishery sector. The EU market recorded the highest growth among the major markets of Vietnam’s shrimp industry.

In the context of challenges and barriers the shrimp industry has faced, it’s products have made a significant rebound. Specifically, in the US market, US Department of Commerce has announced the highest-ever anti-dumping tariff on Vietnamese shrimp imports of 6.37%.

The duty has a direct negative impact on Vietnamese shrimp exports to the US in the fourth quarter of 2014. Also in Japan, Vietnamese shrimp exporters have faced difficulties with antibiotics barriers. Yet another challenge faced is the fierce competition with shrimp products from Indonesia, India, and Ecuador as shrimp production rose sharply this year in those countries.

Therefore, with exports hitting US$3.8 billion, shrimp has become a remarkable highlight in the fishery sector.

In addition to shrimp, tra fish is also among strategic export commodities, ranking second after shrimp with 2014 expected revenue to reach US$1.8 billion. The figure is the same in comparison with 2013 but surpassed the forecast of US$1.65 billion in early 2014, due to negative consequences of the tra fish industry in 2013 in terms of production, processing and exports.

Farmers suffered heavy losses from previous years, leading to a high rate of ‘abandoned ponds’, causing a decline in tra fish production. Processing and export enterprises faced difficulties of capital and management capacity and would be less likely to create major breakthroughs in business expansion and trade promotion.

However, the price of tra fish exports in 2014 is uncertain. Meanwhile, purchasing power decline arising in the two major EU and US markets is yet another concern to the industry.

Keeping the figure at U$1.8 billion in 2013 it is a remarkable effort of the tra fish industry, contributing significantly to the increase of exports and trade surplus for the entire fishery sector.

The fishery sector in 2014 also bears a remarkable stamp with the introduction of important legal documents related to aquaculture production and exploitation, including Government’s Decision No. 540/QĐ-TTg on incentive credit policy for shrimp and tra fish farmers and Decree No. 36/2014/NĐ-CP supporting farming, processing and export of tra fish products.

The two documents are expected to create a legal framework and a foundation for stable and sustainable development of shrimp and tra fish products, not to mention Decree No. 67/2014/NĐ-CP related to fishery development policies.

Under Decree No. 67, one of the most notable features is the credit policy offering loans to fishermen for the construction of steel-hulled vessels with the highest level of up to 95% of the total investment for ship building at an yearly interest rate of 7%, of which ship-owners have only to pay 1% per year while the State budget subsidies for the remaining 6%.

For the construction of wooden ships, ship-owners can borrow up to 70% of the total investment with an interest rate of 7% a year, of which ship-owners pay 3% and the State budget covers 4%. The loan term will last for 11 years and interest is not paid in the first year. Ship-owners can mortgage properties formed from loans to be eligible for the loans. Interest rates remain steadily at 7% a year.

The decree was drafted, consulted and issued within four months, proving its importance and urgency on the issue. It is also the first synchronous and comprehensive decree offering support for both fishermen and businesses to promote maritime economic development on various fields of aquacultural exploitation, service development, infrastructure investment and reorganisation of operations and service delivery.

It could be said that the Decree has created a motivation for authorities from central to local levels and especially fishermen on every part of the country whose goals of heading to seas are barred by the lack of capital. On the other hand, in terms of national security and defence, the Decree is an important ‘relay’ to protect the country’s sovereignty over its seas and islands.

The 2014 production and exports of the fishery sector have almost reached expected targets. However, realising the dream of sustainable development is still a concern.

Policies have not yet created enough momentum for the development of aquacultural farming, exploiting, processing and exports. For example, Decision No. 540/QĐ-TTg was issued in due time but complicated eligible conditions made it difficult to farmers to access loans. Or Decree No. 36/2014/NĐ-CP was issued in April 2014 but so far no guidance circulars have been provided implementing the document, confusing businesses and farmers.

Specifically, Decree No. 67/2014/NĐ-CP regarding fishery development policies, including providing loans for steel-hulled fishing vessel construction came into effect in August 2014 with more than ten implementation guidelines, yet no fishermen or organisations have accessed to loans so far.

The cause for this delay stems from related stakeholders, from local governments, commercial banks, insurance companies to Fisheries Societies. Most localities still stay at the stage of evaluating the list for eligible fishermen for loans.

Differences also appear in some localities between local governments and banks in determining the criteria for eligible farmers, simply because offshore fishing is still considered by banks an industry with risks and difficulties in repayment. If these problems are not resolved in the near future, the programmes effectiveness will be small.

For years, the fishing industry has been a key division not only for agriculture but also for the entire economy. Shrimp and tra fish farmers have enormously contributed to the sector exports worth billions of dollars. They are not just labourers of the sea but also an important force to protect the nation’s maritime sovereignty.

For that reason, investing in the development of the fishery sector is critically essential, requiring joint efforts and co-ordination between related agencies, localities, banks, Fisheries Societies and fishermen to bring leveraged policies into life.

The export value of aquacultural products by the end of November 2014 reached US$7.22 billion, up 19.3% compared with the same period in 2013. The US is still the leading importer of Vietnam aquacultural products, accounting for 21.85% of the total export value.

Exports to this market in the first ten months last year reached US$1.43 billion, up 19.97% from previous years. During that period, seafood exports to most other markets also saw remarkable increase, such as Japan, the Republic of Korea and China with respective increases of 8.47%, 37.49% and 16.17%.

Green light given to KSA titanium plant

Binh Thuan Mineral Industry JSC (KSA) on December 26 last year was given the investment certificate to start construction on a 60,000 tonne per year Titanium slag processing plant.

The plant, located on 10.5 hectares in the Thanh Hai Industrial Cluster, plans to produce titanium slag for export to Japan and South Korea, both of which have huge demand.

KSA has been building the infrastructure for the project for four years, from basic design and equipment selection to researching markets and preparing an appraisal for submission to the prime minister.

To ensure material input, KSA acquired shares in companies that have existing mines or were already co-operating with existing mines.

Thang Hai Industrial Cluster was the first in the country to specialise in titanium processing and is considered Vietnam’s first titanium industry hub.

Outlook bright for domestic market recovering in 2015

Many experts have forecast bright prospects for the Vietnamese stock market this year.

Last year was quite a stormy year for stocks, owing to the effects of the East Sea disputes and the state of the domestic and global economy. "However, the market is still gaining and on track to become one of the world's fastest growing markets," said State Securities Commission Chairman Vu Bang.

Market capitalisation rose 19 per cent, compared with 2013, while transaction volume doubled.

Vietnamese securities watchdogs had urgently adopted measures to restructure the market in 2014 and created new products, such as new indices and domestic exchange-traded funds, in preparation for the development of a derivative market.   

Bang expects to see many of these opportunities for investors this year. Viet Nam's economic data is also signalling growth, paving the way for many activities in the market, including the equitisation of State-owned enterprises.

Tran Van Dung, chairman of the Ha Noi Stock Exchange, also said the stock market will see an uptrend this year, due to a stable inflation and interest rate platform.

In addition, Bang believes that if the aforementioned positive steps are taken, foreign investors will return to the Vietnamese market.

Meanwhile, Duong Van Thanh, general director of the Viet Nam Securities Depository, pledged to offer both policy and technical changes to boost the accuracy and convenience of transactions, as well as expand liquidity.

Securities firms shared the same view.

According to VNDirect Securities, investment opportunities will be available in shares that dipped late in 2014. In addition, real-estate, banking and logistics shares will also recover.

Vietnam’s economy eyes many risks

Although showing signs of recovery through Gross Domestic Product (GDP) Growth rate, Vietnam’s economy was still facing a lot of risks, said head of Vietnam Institute of Economics Tran Dinh Thien in Ho Chi Minh City yesterday.

Speaking at a seminar on risks from economic restructuring and development, Mr. Thien said that the country’s economic restructuring has brought limited results.

GDP growth rate shows that the economy has recovered but does not fully reflected the economy’s nature, meaning it is just a bit better, he added.

Economist expert Vo Dai Luoc from the Vietnam Asia-Pacific Economic Center agreed that Vietnam’s economic restructuring would meet with a lot of risks and barriers such as slow institutional reform, complicated administrative procedures...

Experts at the seminar said that the key solution for the Vietnam’s economy is to reform growth modals basing on productivity and effectiveness and improve competitiveness.

Most delegates affirmed that private sector always play a basic role deciding internal resource for development in all modern market economies. The implementation of polices for the development of this sector should be sped up to increase the internal strength of Vietnam’s economy.

At the seminar, experts focused on discussing economic restructuring and state-own enterprises (SOEs) equitization.

According to statistics by the end of last October, the country had equitized 143 SOEs, far behind the plan of 432 businesses in the period of 2014-2015.

Government’s reports showed that parent companies of SOEs still invested VND957 billion in the stock market, VND549 billion in investment funds, VND1,498 billion in insurance, VND16,101 billion in banking and finance, and VND13,176 billion in real estate field at the end of 2013.

State-own groups and corporations have withdrawn VND4.4 trillion out of VND21 trillion in 2013 and the first ten months of 2014. According to plan the capital withdrawal will reach VND16,367 billion this year, which experts said a big challenge.

Australian investment in Vietnam exceeds 1.65 bln USD

Australia had 320 valid foreign direct investment (FDI) projects worth over 1.65 billion USD in Vietnam by the end of 2014, ranking 19th among 101 countries and territories investing in the country, according to the Ministry of Planning and Investment’s Foreign Investment Agency (FIA).

In 2014 alone, Australia funnelled 142.84 million USD into Vietnam through 24 new projects and 6 existing projects.

FIA’s Director Do Nhat Hoang said Australia has become an important investment partner of Vietnam, adding that the two governments should work to create more favourable policies so as to enable the respective business communities to forge strong links, further promoting trade and investment cooperation between the two nations.

Economic experts are forecasting increasing amounts of foreign capital flow into Vietnam in the coming years, including additional projects from Australia.

As of December 15, 2014, Australian investors have invested in 18 of 21 national economic sectors in Vietnam, though they have focused primarily on the processing and manufacturing industry with 119 projects totalling 1.03 billion USD, or 62.7 percent of the country’s total investment in Vietnam.

Australian investors are currently operating in 39 of the 63 provinces nationwide, most notably in the southern province of Ba Ria-Vung Tau with 11 projects valued at 252.17 million USD, or 15.3 percent of Australia’s total registered capital in Vietnam.

Amr Nickel Limited is the largest Australian investor in Vietnam, with a 136 million USD project in the northern mountainous province of Son La, specialising in exploring, exploiting, processing, and exporting ores. FBG Vietnam Holding Pty Ltd., is closely following with a beer and beverage production project worth 126.4 million USD in the Mekong Delta province of Tien Giang.

SBV devalues dong to underpin exports, growth

The State Bank of Vietnam (SBV) adjusted the VND/USD exchange rate up by one percent effective January 7 in a move aimed at buttressing exports and economic growth by increasing the purchasing power of the US dollar in the domestic market.

The average interbank exchange rate was adjusted to increase from VND21,246 to VND21,458 per dollar.

In making the announcement the SBV said the devaluation was appropriate given the developments in the global and domestic financial markets, after the exchange rate stayed unchanged for more than six months.

The adjustment is among measures being taken to give effect to the national plan for socio-economic development and State budget operations this year, following Government Resolution 01/NQ-CP issued January 3.

Many of the nation’s leading economists have welcomed the weakened dong as a positive development considering the favourable macroeconomics, monetary market and banking activities over the past year.

They said that a weaker dong reference rate is the appropriate policy to maintain exports as the engine driving the Vietnamese recovery.

They also said the move by the SBV is reasonable and in line with similar movements in other local and international currency markets such as the Republic of Korea’s Won, Japanese Yen, Philippine Peso and Thai Baht.

The adjustment helps increase the competitiveness for Vietnamese exports in the global market by making them less expensive, an economist from HCM City said, adding that on the flip side it will cause a small increase the cost of imports.

Nguyen Tuan Nam, deputy director of Muoi Day Steel Trading Co, Ltd. in turn said the cost of its imports has not been affected much.

At a recent banking conference, SBV Governor Nguyen Van Binh said that exchange rates will rise by two per cent maximum this year.

Tuesday's increase is the first adjustment of the rates in 2015.

Northwest region attracts US$1.73 billion FDI

By early 2015, foreign businesses have invested US$1.73 billion in 106 projects in the northwest region, according to latest statistics released by the Foreign Investment Agency (FIA) under the Ministry of Planning and Development.

Foreign direct investment (FDI) in the region focuses on the processing and manufacturing industries with 68 projects which are capitalised at US$90.5 million (accounting for 78% of total registered FDI capital). Following are the mining industry with three projects worth US$151.1 million and the entertainment industry with three projects worth US$86 million.

China topped the 18 foreign investors in the region with 40 projects capitalising at US$890 million (making up 51.4% of total FDI capital). Coming after are Japan and Australia with an investment capital of US$147.8 million and US$136 million, respectively.

Lao Cai took the lead among six northwestern provinces with 35 projects worth US$875 million (accounting for 50.5% of total registered capital), followed by Hoa Binh with 33 projects worth US$435.4 million, Son La with 10 projects worth US$280 million, Yen Bai with 23 projects worth US$137.6 million, Lai Chau with 5 projects worth US$4 million.

According to FIA, tough mountainous terrain, difficult transportation and poor infrastructure hinder investors from coming to the northwest region.

Vinalines to sell Hai Phong Port shares to foreign investor

The Prime Minister has authorised the Vietnam National Shipping Lines Corporation (Vinalines) to sell a portion of its Hai Phong Port shares to foreign investor Vietnam-Oman Investment Joint Stock Company (VOI).

According to the terms of the deal, Vinalines will be permitted to sell a minimum of 19.68% of its holdings up to a maximum 29.58%.

Vinalines currently owns 94.68% of the total outstanding shares of the port.

In other terms of the agreement, VOI must pledge to hold its shares for at least 10 years and provide technical assistance and training of human resources.

A representative from Vinalines said both sides are speeding up the necessary formalities to sign the agreement in the near future.

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