Tuyen Quang miners to export barites

The Government has allowed barites ore exploitation and processing enterprises in the northern province of Tuyen Quang to export about 70,000 tonnes of barites this year after meeting domestic demands, said Hoang Quoc Binh, director of the province's Department of Industry and Trade.

Binh expected that exports of barites, used in petrol, chemical and glass production industries, would help the province meet its export target of US$15 million this year.

The province currently has six barites ore producers, whose yearly total output reaches roughly 320,000 tonnes.

Banks flirt with low interest rates

Vietcombank announced on Thursday a reduction of up to 2 per cent in interest rates on loans made in Vietnamese dong, depending on terms.

The bank is now posting lending rates ranging from 16 per cent per year for loans made to exporters and manufacturers to 20 per cent per year for loans made to enterprises in non-productive sectors, including loans made for real estate or securities investment.

The lower rates are aimed at key borrowers involved in agricultural production and exports, as well as small- and medium-sized enterprises (SMEs).

However, Vietcombank has also slashed its rates on short-term consumer loans to 18 per cent, while longer term loans will carry a rate of 18.5-19 per cent.

Since September, the Bank for Investment and Development of Viet Nam (BIDV) has cut lending interest rates five times. BIDV is currently quoting rates as low as 14.5 per cent for strongly-performing businesses involved in agricultural production and exports, as well as SMEs.

Since early last year, commercial bank lending rates have surged as high as 25 per cent due to the central bank's tightened monetary policies brought in to tame inflation.

Due to low liquidity, many small banks have also offered exceedingly high deposit interest rates, exceeding the ceiling rate of 14 per cent per year set by the State Bank of Viet Nam. The high cost of attracting capital in turn caused the banks to charge even higher rates on loans, putting pressures on business needing to finance operations and investments.

Economist Dinh The Hien told Sai Gon Dau tu (Sai Gon Investment) that two requirements had to be met to reduce lending interest rates. First, inflation needed to be brought down to a reasonable level, enabling banks to lure depositors at lower interest rates. Second, the money supply needed to be increased.

The problem, however, was that the first requirement was in conflict with the second one, as a more abundant money supply would increase inflationary pressures, he said.

Last week, the central bank granted permission to five credit institutions to maintain compulsory reserves for Vietnamese dong deposits at below the regulated levels for a five-month period beginning this month. This was intended to help loosen money supplies under stringent conditions while reducing lending rates, Hien said, urging the State Bank to pump additional money into the system via open market operations. Lending policies would then ensure that the additional capital would flow into production, he said.

A report entitled Macro Asian Economics Q1 2012, issued by HSBC Global Research, has forecast that easing inflation would spur the State Bank to decrease its key policy rate from 14 per cent to 13 per cent in the first quarter, further reducing it to 9 per cent by the end of 2012.

Fertiliser imports fall by one quarter
 
The country is expected to import 2.34 million tonnes of fertilisers this year, 560,000 tonnes less than in 2011, according to the Ministry of Industry and Trade.

This includes 700,000 tonnes of Sulphate Amonium (SA) and 900,000 tonnes of potassium. Potassium and SA are not made in Viet Nam and have to be imported.

The total demand this year is expected to be around 9.6 million tonnes while domestic producers can only supply 7.26 million tonnes.

To ensure adequate supply, especially of important fertilisers such as urea, manufacturing plants should operate at full capacity, the ministry said.

They have to step up inspection of urea quality and prices in the market, especially during the peak demand period when the winter-spring rice crop is grown, it said.

The fertiliser industry needs to soon adopt advanced technologies and large-scale production, and set up an efficient distribution network to ensure adequate supply of quality and reasonably priced fertilisers, it added.

The demand for urea in the first quarter is around 570,000 tonnes, the PetroVietnam Fertiliser and Chemicals Corporation (PVFCCo), the country's largest producer, said.

PVFCCo will produce around 300,000 tonnes of urea in the period and has stocks of 250,000 tonnes.

The Viet Nam Fertiliser Association said earlier this month domestic urea supply would stabilise when some large plants start operating regularly in the last quarter.

When the Ca Mau and Ninh Binh fertiliser plants, with an annual capacity of 800,000 tonnes and 560,000 tonnes respectively, begin operation, the annual national output will top 2.36 million tonnes.

With the full-year demand at around 1.8 million tonnes, the country does not have to depend on imports, the association said.

At the end of this year, the country can even become an exporter, it added.

HCMC prepares for a vibrant Valentine’s Day  

As Valentine’s Day approaches nearer, markets in Ho Chi Minh City begin to bustle with excited activity, displaying various kinds of gift items to gear up for one of the biggest sales of the year. Department stores such as Zen Plaza are offering several promotional sales from 20-50 per cent on an assortment of gift items.  
 
From now until the big day, Coop Mart and Big C supermarket chains are organising special promotional programs called ‘Happy Valentine’ and ‘Enhanced Happiness’, offering hundreds of kinds of romantic products such as stuffed animals, gift boxes, chocolate boxes, trendy clothes, unisex outfits, all for very reasonable rates.

Coop Mart is also planning to carry out a raffle titled ‘Perfect Match’ offering many Apple I-Pad II as prizes.

On Valentine’s Day, customers at Vinatex Supermarket can receive surprise gifts with a purchase of a VND300,000 coupon (approx. US$14.35).

The supermarket is also having a 50 per cent discount sale on over 200 kinds of goods, like couple pullovers and shirts, heart-shaped cushions, and many casual clothes.

However, the highlight this year on Valentine’s Day is the one-week service titled ‘Special Care for Your Lover’, introduced by the Sinh Nhat Joint Stock Company on their website sinhnhat.vn for the first time in Vietnam.

Customers are offered a wide variety of choices for the entire Valentine week, from surprise gifts, to sweet and romantic activities. They can also receive an electronic album to post on Facebook or send as gift at half price.

According to some flower merchants in the highland city of Da Lat, roses are being sold at exorbitant rates by farmers. A single red rose can cost from   VND4,500-5,500 ($ 0.22-0.26), while roses in other colours can cost from VND3,000-4,000 ($0.14-0.19).

This year on Valentine’s day, the Da Lat Flower Forest Biotechnology Corporation has released 40,000 ‘forever in bloom’ roses in the market, mostly of a deep red color. Using Japanese technology of soaking and drying flowers, the company is able to offer fresh flowers on stems along with leaves and thorns, that stay fresh looking and in shape for 3-5 years, costing only VND70,000 each (about US$3.35).

Banks to address liquidity issues
 
The Government asked the State Bank of Viet Nam on Wednesday to address liquidity issues in the domestic banking system by the end of March this year, alongside lowering interest rates.

In recent months, liquidity has been considered one of the biggest challenges to commercial banks due to the central bank's tightened monetary policies to curb inflation.

Meanwhile, Do Ngoc Quynh, an official at the Bank for Investment and Development of Viet Nam (BIDV) told Dau tu Chung Khoan (Securities Investment) newspaper that banks' low liquidity was caused mainly by banks using short-term deposits to lend medium and long-term loans. Also, under pressure to meet credit growth and profit forecasts, banks have lent a significant amount of money to the real estate and securities industries.

Although the central bank has allowed institutions to use a maximum of 30 per cent from short-term deposits to lend medium and long-term loans, many banks and credit institutions have lent up to 70 per cent. Some have lent a large volume to real estate and securities companies, causing difficulties in collecting debts in stagnant markets.

At the monthly Government meeting held in Ha Noi last Saturday, Nguyen Thi Hong, director of the State Bank's monetary policy department, said the liquidity of credit institutions had improved since Tet, with banks and credit institutions attracting a significant volume of deposits.

Meanwhile, several banks holding a large volume of gold have requested permission from the central bank for gold exports in order to improve liquidity.

In recent days, the inter-bank market has experienced a decline in interest rates. The overnight interest rate fell to 13.52 per cent last Saturday, while the one- and three-month term rates were posted at 11.95 per cent and 9.5 per cent, respectively.

"As the SBV plans to allocate credit growth rates to banks and credit institutions this year, liquidity in the domestic banking system is expected to improve significantly," senior economist Nguyen Tri Hieu said.

Accordingly, commercial banks and credit institutions will be allocated growth based on the health of the organisation and their performance last year. Institutions will be classified into four groups based on SBV criteria, with well-performing lenders classed in group A and weaker lenders in group D.

However, he also said that to mobilise more resources from money deposits, the macro economy must be stable with reasonable inflation rates.

According to Government Resolution No 3, the central bank is also urged to co-operate with other relevant bodies to roll out solutions in helping credit institutions lend more loans to agricultural production, rural development, production for exports, processing and supporting industries and small and medium-sized enterprises employing a huge number of local workers.

Prices of dairy products increase in Vietnam  

Friesland Campina Vietnam, a company that offers consumers a wide range of quality dairy products under brand names Dutch Lady, Friso, Fristi and Yo Most, on February 9 officially announced an increase of 5 per cent on several of its products.

The hike in price on fresh and sweetened condensed milk will be effective from February 13. The company explained the hike on increased cost of raw materials and production overheads that have skyrocketed compared to the same period last year.

On the same day, most of the milk agencies were informed of new prices for formulas.

A dozen dairy products of Fonterra Brands in Vietnam, including Anlene, which is a formula for adults to help maintain optimal bone health and Anmum, which helps boost health of both mothers and babies, will increase by 10 per cent from February 13.

Nguyen Muoi, a shop owner on 1 Nguyen Thong Street in District 3, said that only Vinamilk dairy products had increased their prices reasonably and maintained a standard price level throughout the year, while other companies just needed a pretext to increase rates.

Ha Noi funds price stabilisation effort

The People's Committee of Ha Noi on Tuesday decided to advance VND94 billion (US$4.5 million) from the city financial reserve fund for the third phase of price stabilisation of essential goods after Tet (lunar new year).

Five enterprises are permitted capital with a zero per cent interest rate, including VND54 billion ($2.6 million) for the Ha Noi Trading Corporation, and VND10 billion ($476,200) for each of Lan Chi Business Ltd Company, Vinh Anh Food Technology Ltd Company and Minh Hien Ltd Company. The enterprises must pay off the capital by April.

The committee asked the enterprises to stock essential goods to stabilise prices on the city market, such as rice, pork, chicken, beef, seafood, cooking oil, and vegetable.

Since June 2011, the city has twice advanced VND465.5 billion ($22.2 million) for 15 enterprises to stockpile essential goods and sell stabilised-price goods at 665 shops in the city.

After Tet, prices of food and vegetable have been reduced to normal rates, said the Ministry of Industry and Trade.

The ministry said that the domestic market demands in the days after Tet holidays focused on vegetable, fresh food and goods for traditional festivals. Prices of those goods stood at high rates for the first few days after Tet and now, they have fallen due to a higher supply of those goods.

In Ha Noi, prices of vegetable are back to normal rates, including VND6,000 per bundle of water dropwort, VND10,000 per kilo of cabbage and VND7,000 per kilo of Chinese cabbage.

But the prices of food still stand high. Prices have increased by 20-30 per cent compared to normal, now reaching VND120,000-150,000 per kilo of pork, VND240,000-250,000 per kilo of beef, VND70,000-100,000 per kilo of fish and VND400,000 per shrimp.

The price of vegetables fell after Tet because of the high and stable supply, according to traders at markets in Ha Noi. Advantages in weather and control of disease have helped farmers promote poultry and cattle development so a shortage of food supply has not happened.

Quang Ninh chooses pits over open-cast mines

Enterprises at Vinacomin (Vietnam National Coal, Mineral Industries Group) coal commenced investment projects at pits Quang Ninh Province in a move to reduce coal mining at open-cast mines.

Two recently opened pit mines belonging to Ha Lam Coal Company, which allows coal mining to a depth of 300 metres. In early February, the Nui Beo Coal Company officially began a project at a pit coal mine, with its capacity of 2 million of tonnes of coal per year and a total investment of more than VND5,300 billion (US$ 254 million).

These are the first projects in a plan to cease coal exploitation at open-cast mines in Ha Long City, according to a commitment between Vinacomin and Quang Ninh Province.

Vinacomin will also begin projects to build new pit mines Khe Cham II and IV and to further explore coal mining in Nam Mau, Vang Danh and Ha Long.

Deep pit mines are more effective and environmentally friendly than open-cast mines, and as demand for coal increases Vinacomin seek to use technology to enhance mine yields. -

Business look to stay ahead of the curve

Firms are taking prudent steps to stay afloat amid a current harsh business climate.

One of leading firms in the cement sector, Hoang Thach Cement Company - based in northern Hai Duong province, set a business target of posting VND415 billion ($19.7 million) in profits in 2012, slightly lower than $425 billion ($20.2 million) in 2011. Other business targets are almost similar to those in 2011.

According to the company’s general director Dao Ngoc Binh, a sharp increase in cement consumption this year was unlikely when big construction works and public investment projects faced delays.

“Businesses flexibly revising production and trading plans to match actual practices would be a viable way-out in current context,” said Binh.

Apart from adopting modest production and consumption indexes, the company’s management has urged production managers to strictly apply cost-saving measures. Accordingly, specific norms in energy, fuel and coal consumption are rendered to different production workshops to curtail expenses.

The firm has also set close eyes on supervising product quality from selecting materials to making end products, and re-planned limestone extraction to boost efficiency.

Bac Ninh province’s Dong Binh Joint Stock Company aims to achieve VND45 billion ($2.1 million) in revenue and VND3.5 billion ($169,000) in profits in 2012 against VND36 billion ($1.7 million) revenue and VND2.65 billion ($126,000) profits in 2011.

The company’s managing director Tran Thi Nhan said this year the firm would slash production expansion and investment plans to abate risks since consumption in US market and Europe would even darken this year.

The company then focused on raising work efficiency and strictly applying Lean technology which promotes the wise use of software and other systems to eliminate waste at every point in a manufacturing or business process to cut down expenses.

For its part, Ho Chi Minh City-based An Phuoc Garment Company set to boost development in the home market targeting medium-range customer segment.

“Products should be of more affordable prices to customers in current difficult market,” said the company’s general director Nguyen Thi Dien.

An Giang Province to allocate VND35 billion for investments

The Mekong delta province of An Giang is planning to set aside around VND35 billion for investments in the province for 2012, about VND22-23 billion of which will come from local firms; VND7 billion from the provincial budget; VND3-4 billion from the local budget of its districts and towns; and VND2-3 billion from the state budget.

In 2011, promotional efforts made by the province saw positive results whereby the province succeeded in attracting more investors. By the end of 2011, the province had granted investment licenses for 59 projects worth more than VND8.4 trillion, of which six were foreign investments worth more than VND825 billion.

By actively promoting investments and trade, retail sales and services in the province reached $3 billion in 2011, up by 28 per cent over the previous year. Exports topped $830 billion, an increase of 18.6 per cent compared to the previous year and border trade was around $770 billion, up by 32 per cent.

Poor Jan sales signal rocky road for auto industry

Sales of all Vietnam Automobile Manufacturers Association (VAMA) members in January fell by up to 60% year-on-year to 4,274 units, signaling a rocky road ahead for the local auto industry, automakers said.

The association attributed the sharp fall in auto sales last month to higher registration and number plate fees. Sales by VAMA members make up almost all the domestic market now that auto imports have been restricted.

Effective from January 1, the registration fee rose to 15% and 20% in HCMC and Hanoi respectively, from the previous 10% and 12%, while the number plate fee soared by ten times to VND20 million. These two cities normally account for some 60% of the total car sales of the country.

VAMA’s members in January sold out merely 1,492 commercial cars, a year-on-year drop of 59%, and 1,782 sedans and 929 multi-purpose vehicles, dropping 56% and 67% year-on-year, respectively.

A number of HCMC-based retailers of Toyota Motor Vietnam and Ford Vietnam complained their business had experienced a hard time. They attributed the difficulty to the fact that people had rushed to buy cars before the increase in vehicle registration and number plate fees took effect.

Such auto retailers have not seen any positive change in the first week of this month in spite of multiple promotional programs launched by auto producers to lure buyers. Most retailers decline to reveal their business information but the Daily found out that their performance at this time is over 50% lower than last year.

Toyota Motor Vietnam (TMV), the company that has always led the domestic auto market over the past few months, last month only sold out 1,549 units, down about 50% over the same period last year and a fall of 40% against one month earlier.

Similarly, the sales of Vinastar (Mitsubishi) was recorded at 79 units, a 83% drop compared to the same period last year, while that of Sanyang was a mere four units, or a year-on-year decrease of 90%.

GM Vietnam had 560 units consumed last month, a year-on-year decrease of 44% while Honda Vietnam, Mercedes-Benz Vietnam and Ford Vietnam only sold out 33, 71 and 176 units respectively.

The business of imported cars incurred the same problem as the Ministry of Industry and Trade reported a strong fall in the number of imported cars last month.

Domestic auto manufacturers are still worried about failing to achieve this year’s targets despite the presence of Circular 20 issued by the industry ministry to restrict imported cars.

Apart from a sharp rise in registration and number plate fees in the two key markets of HCMC and Hanoi, the Ministry of Transport proposed imposing vehicular circulation fee on vehicles traveling to city centers during rush hours at a high level.

According to automakers, vehicle owners will be burdened with higher costs if such a proposal is approved. This will discourage clients from buying new cars and thus causing bad results for this year’s business, especially in the first half of the year, said automakers.

Gaurav Gupta, general director of GM Vietnam, believed the number of cars his firm sells this year will definitely plunge under the current climate. TMV’s general director Akito Tachibana said his company will surely review this year’s production plan.
 
Stock trading to be put under stricter supervision: SSC
 
The State Securities Commission (SSC) said this year it will evaluate the financial situation and performances of securities firms with an aim of supporting restructuring activities and improving effectiveness at these companies.

SSC announced in its website it will apply periodic checks on financial and payment capacity of industry players, especially those having received capital contribution from banks, state-owned groups and insurance companies.

The authority will carry out periodic inspections and checks at fund management companies, focusing on the compliance and asset management in order to protect customers’ benefits and assets.

To prevent market manipulation and insider trading, SSC will sooner or later study setting up a cooperation mechanism between the central bank and related ministries including finance, post-telecommunication and public security.

In addition, SSC will inspect and check organizations and individuals involved in unfair transactions to ensure a healthy competitive business environment at home.
 
Trade promotion budget dwindles

The Ministry of Industry and Trade will petition the Government to increase the trade promotion budget for this year as the approved VND15-billion amount is too small for promotions on the local and foreign markets.

Bui Thi Thanh An, chief representative of the Vietnam Trade Promotion Agency in HCMC, told the Daily that the national trade promotion budget this year has dropped to only VND15 billion from VND50 billion last year and from over VND170 billion in each of 2009 and 2010.

“This small amount has barred effective trade promotion as the promotion budget is often increased to support enterprises if production conditions are in difficulties,” said An.

The national trade promotion program has for long focused on promoting products on foreign markets for export as well as on the domestic market. Promotion activities are rather long-term as some activities for this year can only take effect a couple of years later.

Normally, to get promotion supports, business associations and enterprises submit their promotion schemes for next year in every July. There will be a committee to judge these schemes and allocate the money based on the viability of each scheme.

Tran Quoc Manh, vice chairman of the Handicraft and Wood Industry Association of HCMC, said that trade promotion was an ideal way to boost product consumption.

Manh stressed the need of accelerating trade promotion activities and encouraging consumption to support enterprises. The wood export turnover last month dropped by 12.7% year-on-year, and the next few months will remain tough for exporters due to current difficulties in foreign markets, he added.

Wood firms have now prepared to participate in a wood exhibition in Vietnam next month and another one in the U.S. in August.

Manh also proposed the Ministry of Industry and Trade to boost the domestic trade promotion and financially support wood firms to join local exhibitions.

Vinachem invests $450m in Laos

The Viet Nam Chemical Group (Vinachem) has signed a US$450 million project to exploit and process kali salt in Laos' Khammouan Province.

The project was sealed yesterday between Vinachem General Director Nguyen Dinh Khang and Lao Planning and Investment Minister Bounthavi Sisouphanthong in Vientiane and was witnessed by Vietnamese President Truong Tan Sang and his Laotian counterpart Chummalay Saynhasone.

Vinachem will therefore exploit kali salt across an area of 10sq.km for 20 years. A factory to process kali salt will be built with a designed capacity of 320,000 tonnes of kali per year and will run for 50 years. The factory is the first module in the Vinachem's complex for exploiting and processing kali salt in Laos.

The Laos Government also granted the group 196.5sq.km of land to survey for possible kali salt mines.

The project is expected to contribute to Khammouan Province's economy as well as provide kali for Viet Nam's market.

Vietnam becomes world’s top frontier market

Vietnam is the leading frontier market in the world, according to a Bloomberg Markets Magazine survey.

In its March issue, Bloomberg Markets reports that the Southeast Asian economy ranked first among the most 15 promising frontier markets for investors, scoring a total of 71.4 points.

The United Arab Emirates came in second with 66.9 points and Bulgaria and Romania tied for third place with 61.4 points.

The rankings were based on data and forecasts of GDP growth, inflation, government debt levels and investment from the International Monetary Fund (IMF), World Bank (WB) and Bloomberg.   

Vietnam is expected to achieve accumulative GDP growth of 31.4 percent from 2012-2016, maintain an annual inflation rate of 6.8 percent and keep public debts at 46.3 percent of total GDP.

Although the IMF forecast that its inflation is likely to be one of the highest among the 15 surveyed countries, Vietnam ranked first in part because of its rapid economic expansion.

Several Middle East nations such as the UAE, Kuwait and Qatar came behind Vietnam as their economies greatly rely on oil exports.

In its survey, Bloomberg Markets Magazine also announced the list of the most promising emerging markets for investors. China took the lead, followed by Thailand and Peru.

ACB, Eximbank, Sacombank rumored to form new alliance: paper

The current alliance of Asia Commercial Joint Stock Bank (ACB)-the Vietnam Export-Import Commercial Joint Stock Bank (Eximbank) and other related individuals holds enough of a stake in Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) to call for an irregular shareholder meeting to form a new alliance.

A reliable source of Saigon Tiep Thi newspaper said that though Sacombank’s board of shareholders has chosen the board of directors and inspectors for the latest term, lasting until 2015, the ACB-Eximbank alliance could still have the legal power to do so.

Some insiders told Saigon Tiep Thi that ACB would transfer its current chief executive officer (CEO) Ly Xuan Hai to Sacombank to hold the same position.

But Nguyen Thanh Toai, ACB deputy general director cum spokesperson, told the newspaper that it is unlikely to happen.

The spokesperson for Eximbank, of which ACB is a strategic partner, said he has no information about it, but added that he would not be surprised if it happens.

A senior ACB officer told Saigon Tiep Thi the same thing, and added that ACB is in the process of choosing a new CEO to replace Ly Xuan Hai, who has held his post for 7 years.

Sacombank, which has a charter capital of about VND10.74 trillion ($515.1 million), doubled the price of its shares when it started its initial public offering.

Dang Van Thanh, Sacombank chairman, his family members and related individuals, hold a 23.12 percent stake of Sacombank , while Huynh Que Ha and her husband hold a 5.22 percent stake.

So, the current share of Sacombank owned by its top leaders is 28.34 percent.

Thanh has told the press that as of August 2011, no one owned up to a 30 percent share of Sacombank.

Reportedly, there are unknown groups of investors spending some trillions of dong to buy Sacombank shares when they were recently traded at around VND12,000-13,000 a share for the last 1.5 years.

But, Saigon Tiep Thi said it is possible for a new alliance between ACB-Eximbank-Sacombank.

Some insiders told the newspaper that the “unknown groups of investors” are all “acquaintances” of ACB and Eximbank officers.

The stakes ACB has in Sacombank are still unannounced, but late last year, Eximbank bought a 9.6 percent stake of the latter to increase its stakes in Sacombank to 10.81 percent.

Eximbank general director, Truong Van Phuoc, told Saigon Tiep Thi late last year that the bank is financially and manageably capable of making good use of the acquisition.

As a leading commercial bank, Eximbank knows very clearly the pros and cons of Sacombank and thus, will join the management board to build a long-term strategic development scheme for the bank, he said.

Eximbank’s pretax profit in 2011 was VND3.9 trillion, up 11 percent over initially predicted. Sacombank’s total assets are equal to that of ACB, but in 2009, the return on equity of the former was 15.8 percent, while that of the latter was 21.78 percent. The equivalent rates in 2010 were 16.74 percent and 20.5 percent.

The pretax profits of Sacombank and Eximbank in 2009 were VND2.175 trillion and VND2.838 trillion, rising to VND2.56 trillion and VND3.1 trillion in 2010 respectively. The projected profits for 2011 are VND2.73 trillion and VND4.1 trillion.

Some five to eight Vietnamese banks will merge in the first quarter of 2012 as the State Bank of Vietnam pursues further restructuring of the banking sector, central bank Governor Nguyen Van Binh said on January 11.

"I think in the first quarter of 2012 there will be about five to eight banks that will be merged," Binh told an economic conference then.

Merger and acquisition (M&A) in Vietnam's banking industry is expected to boom between now until 2015, providing a golden opportunity for foreign banks to gain market shares in Vietnam, according to The ASEAN Banker Forum 2011 held in Hanoi in December 2011.

The State Bank of Vietnam (SBV) was developing detailed plans for reducing weak banks at the lowest cost, said SBV Governor Nguyen Van Binh at the Consultative Group of donors for Vietnam early December.

This showed that the SBV is very supportive of M&A, or consolidation of banks.

Many economists forecast that, after the first merger of three banks, Saigon Commercial Bank, TinNghia Bank, and Ficombank, into a new bank (still bearing the name Saigon Commercial Bank), M&A activities in the banking sector will be extremely exciting from now until 2015.

This is an opportunity not only for local banks, but also for other foreign banks.

Vietnam, India cooperate in increasing quality of goods

A business delegation from India has attended a seminar on regulations to examine the quality of Indian exports to Vietnam.

The event took place in Ho Chi Minh City on February 9 as part of the scheme to ensure the good quality of products imported from India after the detection of low-quality Indian foodstuff for animals, corn and wheat.

Indian businesses introduced the plant quarantine system of India and pledged to cooperate with Vietnamese management agencies to solve problems relating to batches of unqualified agricultural products.

A large number of Indian goods has been brought into Vietnam via seaports in HCM City. Some of 34 imported items, which failed to meet requirements, have been sent back to India.

Vietnam cuts reserve levels to lift agriculture loans

Vietnam's central bank on Friday cut the compulsory reserves level for banks with large agriculture lending to one-fifth the regular rate from February through July.

The reserve requirement adjustment was likely aimed at curbing soaring food inflation and, while unlikely to have a major impact on the economy overall, could help raise living standards in rural areas.

"By allowing more credit to circulate in this sector, Vietnam probably hopes to bolster the sector's output both for domestic and export purposes," said Trinh Nguyen, an economist at HSBC in Hong Kong.

"Increased production, which could come from having more access to credit, could ease some of the price pressures... As most of Vietnamese labor force is still in the agriculture sector, a boost to this sector would have a large impact on the welfare of Vietnamese people."

The favourable reserve requirement rates have been given to Agribank, Lien Viet Post Bank, Mekong Housing Bank, Me Kong Development Bank, the State Bank of Vietnam said in a statement.

Central bank governor Nguyen Van Binh has said agriculture lending should be the banking system's top priority this year. Over-lending in recent years to sectors such as real estate and stocks has stoked inflation and caused bad debt levels to rise.

Vietnam is the world's leading exporter of robusta coffee and the second largest rice exporter, after Thailand. Between 70 and 80 percent of the Vietnamese population of about 87 million live in rural areas.

Binh has stipulated that state-run Agribank, the country's biggest bank by assets, extend 75-80 percent of its total lending to agriculture while other lenders should devote at least 20 percent of their credit to the sector.

Lenders who devote 40-70 percent of their loans to agriculture in the latest fiscal year will be eligible for a reduction in their reserves requirement, the central bank statement said.

The current reserve requirements that apply for the banks getting their levels reduced until July was not clear. The central bank has been requiring reserves levels of up to 3 percent for dong deposits and up to 8 percent for foreign exchange deposits, depending on the terms.

The central bank has targeted total credit growth this year at between 15 and 17 percent, compared with an expansion of 10.9 percent in 2011.

Vietnamese guest workers back to Libya

Prime Minister Nguyen Tan Dung has allowed the Ministry of Labour, Invalids, and Social Affairs (MoLISA) to send back a number of guest workers to Libya on a trial basis.

The ministry was assigned to sign labour contracts with reliable partners and work closely with the Ministry of Foreign Affairs and other relevant agencies in this connection.

The MoLISA said guest workers from many countries have returned to Libya.

It has been informed by several businesses that their partners wish to recruit Vietnamese workers for a number of projects in Libya.

Vietnam leads Cambodian investment in 2011

Vietnam led other ASEAN nations investing in Cambodia in 2011, with US$631 million out of the total of $880 million from the bloc.

Malaysia came second with $235 million and Singapore third with $14 million, the Cambodian Development Council (CDC) said on Feb. 9.

CDC said Vietnam has 17 projects focusing on rubber plantations and processing and mining, while Malaysia invests in property, garment and textiles and rice milling, and Singapore focuses on developing five-star hotels.

Over the past 17 years, Malaysia, Vietnam, Thailand and Singapore have been key investors in Cambodia.

ADB assists Vietnam’s development process

The Asian Development Bank (ADB) has pledged to help Vietnam strengthen legal frameworks of the financial sector, develop a well-functioning money market, and promote a deeper Government bond market.

The three pillars of reform identified by the Vietnamese Government are certainly appropriate, and if successful, they will help Vietnam achieve sustainable economic growth, said Stephen P. Groff, ADB Vice President in East Asia, Southeast Asia and the Pacific, in an interview granted to local media on February 9.

Groff said that the restructuring of State-owned enterprises and the financial sector requires carefully designed roadmaps that are implemented in a sequenced manner over time, with sustained and unwavering political commitment to reforms during 2012 and beyond.

In the medium term, ADB’s new Country Partnership and Strategy for 2012–2015 will fully align with Vietnam’s socio-economic development plan for 2011–2015 in terms of promoting sustainable and inclusive growth, while maintaining macroeconomic stability. ADB expects to continue its level of commitment at approximately US$1.4 billion per year, subject to each project’s readiness, Groff said.

Regarding regional economies in 2012, Groff said ADB will continue to support efforts for high and sustainable growth to create productive jobs, supporting measures to ensure equal access to economic opportunities and resources, strengthening social safety nets to protect against economic shocks and prevent extreme poverty, and supporting good governance and strong institutions.

As for recommendations to governments in East Asia, Southeast Asia and the Asia Pacific, he said Asia needs to continue pursuing the prudent and responsible fiscal policies that have proven helpful in buffering the region against impacts of the crisis, and actively participate in the process of strengthening global and regional financial safety nets.

ADB is backing attempts to rebalance growth, helping Asian and Pacific countries to strengthen their own sources of growth and dynamism, especially given the ongoing public debt and financial crisis in the Eurozone, Groff said.