Dollar demand dwindles

Demand for dollars has dropped as Vietnam’s trade deficit has ebbed, hitting a 5-year low of $9.5 billion in 2011.

In fact, the trade deficit as a share of export earnings last year was the smallest in 2002-2011.

Though this was encouraging, inbound shipments of production inputs, which took the lion’s share of Vietnam’s important profile (90.6 percent in 2011), dropped.

According to the General Statistics Office, production inputs also experienced a dramatic drop in January 2012, 86.2 percent (vehicles and parts), 56 percent (cotton), 51.8 percent (cooking oil and fat), 53.5 percent (most ordinary metals), 30.9 percent (fabric) and 20.6 percent (materials for apparel and footwear).

Demand for dollars has therefore fallen since the second half of 2011.

Controlling exchange rate fluctuations.

Nguyen Van Binh, governor of SBV, succeeded in keeping exchange rate fluctuations in 2011 within 1 percent as he promised on September 7, 2011.

Consequently, confidence has returned. In early 2012, Binh said in the absence of internal and external shocks, the Vietnam dong/US dollar exchange rate would not change by more than 3 percent.

Binh’s statement is supported by such factors as escalating remittances, sinking trade deficits and high interest rates for dong deposits.

Over the past few weeks, many enterprises and individuals have sold dollars to banks, causing the price at which banks buy the greenback to dip from VND20,930/US dollar to VND20,750/US dollar.

Many people are also continuing to sell foreign currencies to increase their dong deposits, which are offered an interest rate of above 14 percent per annum.

This is further strengthening the dong.

Remittances were on the rise in 2011, reaching $9 billion and offering a good source of foreign currencies for exchange rate stabilization.

In previous years, when exchange rates in the free market were higher than at banks and control of foreign currency trading was not yet tightened, the flow of remittances into banks was extremely limited.

The gap between unofficial and official exchange rates has been reduced substantially.

This, coupled with the harsh penalties imposed on those breaking foreign currency trading rules (VND300-500 million), has paved the way for remittances to flood into banks instead of the realty sector (as they did in 2009 and 2010).

Yet, some are worried that if the current exchange rate persists in the long run, Vietnamese goods will be less competitive.

In fact, some economists have likened Vietnam’s latest approach to exchange rate management a double-edged sword.

That said, exchange rate adjustments this year, if any, will probably be within 3 percent.

Existing circumstances make it easier for SBV to widen the trading band for the dong this year.

It is likely that exchange rate management policies in the future will be in line with inflation control and dong interest reduction.

In late 2011, Tai Hui, regional head of economic research in Southeast Asia at Standard Chartered Bank, forecast that Vietnam’s exchange rate would hit VND21,400 per dollar in the first quarter of 2013 and VND22,000 per dollar in the third quarter of the same year.

If this prediction is true, SBV is likely to start its exchange rate adjustments at the end of the first quarter of 2012.

However, the prospect of such changes is unlikely to stop people from selling dollars for the dong at the moment.

Shares down on scant trading

Shares tumbled on the two national stock exchanges this morning, with the VN-Index and the VN30 on the HCM Stock Exchange losing 1.75 and 2 per cent, respectively.

The VN-Index ended at 424.56 points, while the VN30 declined to 477.32 before the lunch break. Losers overwhelmed gainers by 200-47.

The value of trades was nearly half that of last Friday, reaching just VND851.2 billion (US$40.5 million), on a trading volume of 55.4 million shares.

Ten of the 30 stocks tracked by the VN30 bottomed out, half of which were construction shares. Meanwhile, insurer Bao Viet Holdings (BVH) and logistic firm Gemadept (GMD) were the only two firms to post gains. Both hit their ceiling prices.

Military Bank (MBB) saw the highest trading volume in HCM City, with nearly 5.7 million shares exchanged.

On the Ha Noi Stock Exchange, the HNX-Index shed 3.3 per cent to 69.22 points.

Market value totalled VND398.6 billion ($19 million), a 38.8 per cent decrease over the previous session, on a volume of 41.7 million shares.

The market will resume at 1.00pm.

Major furniture expo opens in HCM City

The Viet Nam International Furniture and Home Accessories Fair (VIFA 2012) opened yesterday at the Sai Gon Convention and Exhibition Centre in HCM City's District 7.

About 137 local and foreign enterprises are displaying a wide range of products in 614 booths, including indoor and outdoor furniture, handicraft items, and wood processing tools.

"The key highlight of this year's trade event is that while other ASEAN fairs scale down their exhibition space, VIFA, on the contrary, has decided to expand it via outdoor exhibition space of 1,500sq.m.", Nguyen Chien Thang, chairman of the Handicrafts and Wood Industry Association of HCM City (Hawa), said at the opening ceremony.

"It is also conducting factory tours that enable visitors to witness furniture production at HCM City, Dong Nai and Binh Duong Provinces," he said.

Given the current difficult economic conditions, Vietnamese producers have been seeking new export markets. Exports to China, Japan, the Middle East and South America have achieved some growth last year and this trend would continue this year, Thang said.

Huynh Khanh Hiep, deputy director of the HCM City Department of Industry and Trade, said: "It is hard to find customers and even harder to keep them. Therefore, through this event, the exhibitors must take care to learn the need and preference of clients, continue to be creative and make management more effective in order to be at their competitive best in the global market."

"VIFA 2012 will be an effective, important trade facilitation channel for the country, a forum for local and international enterprises to meet, exchange and cooperate," said Nguyen Thanh Bien, deputy Minister of Industry and Trade.

Organised by Hawa, the exhibition will run until March 14.

Prospects for boosting rice exports in 2012

Last year was considered a bumper year for Vietnam’s rice traders having 7.1 million tonnes exported and farmers enjoying a high profit of 50 percent.

Despite Vietnam’s effort to secure its foothold in the global rice market over the past 23 years, experts have warned of challenges facing rice exporters in 2012 as they saw a drop in the bulk orders in the first quarter due to tough competition from other rice exporting countries.

One factor behind this is that the price of Vietnamese rice is US$100 per tonne higher than that of India, Pakistan, and Myanmar.

Expert Nguyen Dinh Bich from the Ministry of Industry and Trade predicts a change in the global rice market in 2012.

Taking advantage of the fluctuations in rice prices, last year, some countries imported large amounts of rice from elsewhere, not just from Vietnam.

According to Samarendu Mohanty from the International Rice Research Institute, many rice importing countries have adopted self-sufficiency policies in the post-crisis period by expanding their cultivation and production to ensure food security.

Bich says rice exporting countries should to be fully aware of their pros and cons.

Since India opened doors for its rice exporters, a huge amount has been kept in stock, ready for both domestic use and export.

Dr Nguyen Tri Ngoc, Director of the Cultivation Department under the Ministry of Agriculture and Rural Development, says the poor maintenance and processing of rice is the biggest challenge for Vietnam’s rice exporters but this will be overcome soon.

 “The Vietnam Food Association reported on March 5 that rice exports to Africa have picked up while the Philippines, one of Vietnam’s major partners, is prepared to import more rice in anticipation of the coming storm season,” he explains.

The Philippines was supposed to import only 860,000 tonnes of rice in 2011, but, in fact, it bought 970,000 tonnes from Vietnam alone, according to the General Department of Vietnam Customs.

The Philippines has announced that they will import 500,000 tonnes of rice in 2012, much lower than both figures estimated by the US Department of Agriculture and the UN Food and Agriculture Organization’s (at 1.5 million tonnes and 1.2 million tonnes, respectively). So, its information is not very accurate.

Bich maintains that with the Philippines resuming its rice imports, Vietnam’s rice, especially 25 percent broken rice, will be much sought after.

Another positive sign for Vietnam is Indonesia plans to buy 1 million tonnes of rice in 2012.

Bich is confident that Vietnamese rice will be able to compete with Indian, Burmese, and Pakistani rice in the Philippine and Indonesia markets thanks to geographical advantage.

What’s more, these countries will never let their traditional partners down, he adds.

Domestic and international experts insist that it would be a mistake for Vietnamese rice exporters to compete with their Thai rivals, which pushed the price of rice to a record high last November and, subsequently, led to a sharp decline in rice exports in early this year.

They are all against Vietnam’s unsustainable programmes which provide short-term support for agricultural production.

In their view, what the country should do is upgrade the irrigation system, supply high-quality varieties, improving rice processing and stockpiling quality, effectively exploit local and national markets and allow free rice trading.

WB provides additional aid to rural transport project

The World Bank will funnel an additional US$97 million into a rural transport project to reduce travel cost and increase market accessibility for five million people in 32 provinces across Vietnam.

A document to this effect was signed in Hanoi on March 9 between representatives from the State Bank of Vietnam and the World Bank.

The sum will be sourced from the International Development Association - the World Bank’s funding resource for low income countries.

The Additional Financing for the Third Rural Transport Project aims to increase the number of communities connected to new and improved roads all year round.

It will help improve the rural road conditions through better management and maintenance of the network and enhance the institutional effectiveness to plan, implement and maintain improvements in the rural transport.

According to a press release of the World Bank, the Third Rural Transport Project has rehabilitated an approximately 2,100km of roads, and completed the maintenance of approximately 13,000km of district roads and bridges.

The improved transport system is expected to benefit up to 5 million people in all 32 participating provinces in central and northern Vietnam, including 14 provinces in the mountainous areas.

 Thanks to heavy investments, Vietnam’s road network has expanded rapidly, from 225,000km in 1999 to 256,000km in 2009. It now includes 196,404km of rural roads and serves around 75 percent of the entire national population and 90 percent of the nation’s poor who live in rural areas.  

However, the general quality of the rural roads in Vietnam is poor. Only about 30 percent of roads have been paved, while most district and commune roads remain gravel or unpaved. Moreover, the budget allocated for maintenance only meets 25 percent of the need.

A foreign fund eyes Vietnam’s real estate

Trinity investment firm, headquartered in Bangkok, Thailand, has established a US$30 million fund to buy distressed entities in Southeast Asia, including Vietnam, and sell their fixed assets for a profit.

Vietnam is ripe for such transactions as many international funds are looking to exit the market after buying real estate at high prices during its boom in the early and mid-2000s, Trinity's chief investment officer Oliver Smith told a news conference on March 8.

"Take the market exits and fund wind ups. If you look at Vietnam, there are a lot of opportunities there," Smith said.

Trinity’s new fund has an estimated amount of US$15 million, mainly sourced from rich investors. It will implement 3-4 transactions worth US$5-15 million each year, bringing profits of 15-20 percent to investors.

Apart from Vietnam, the fund is now seeking opportunities in Thailand, Cambodia and Indonesia.

Retail sales decline 2.5 percent in February

The value of retail sales and services dropped by 2.5 percent last month compared to January to VND186.463 trillion (US$8.8 billion), announced the General Statistics Office (GSO).

February's total brings the value of retail sales and services to VND380.28 trillion ($17.29 billion) in the first two months of this year, a year-on-year increase of 22 percent against the same period last year.

However, when price increases were considered, the growth value was only 4.4 percent against the same period last year, nearly equal to a half of the growth in the first two months of 2011, the GSO said.

GSO Trade Department experts said that the low retail sales growth during the period was due to the high consumer price index (CPI) of 16.85 percent.

To cope with inflation and lower incomes due to the economic crisis, consumers have been forced to tighten their budgets.

Demand for paper and packaging experienced the highest slump at 39.4 percent while consumption of wooden products followed closely with a 38.8 percent decrease.

Demand for footwear, and textiles and garments fell by 21.7 and 14.8 percent, respectively.

The GSO experts said there are no signals to ensure that demand for commodities and services will increase in the near future as incomes will remain stagnant while prices for many products would keep steady or continue rising.

Mining Vietnam 2012 opens in Hanoi

The International Mining and Minerals Recovery Exhibition, “Mining Vietnam 2012” opened in Hanoi on March 7, with 148 companies from 29 countries and territories across the world taking part.

Attending the opening were representatives from the Ministry of Natural Resources and Environment, the Vietnam Chamber of Commerce and Industry (VCCI), the Vietnam National Coal and Mineral Industries Group and domestic and foreign agencies in this field.

Displaying technological products, equipment and services to enhance performance of quarry mining and underground exploitation activities, the three-day event provides participants with access to advanced solutions to solve challenges in the field of mining industry and resources recovery in Vietnam.

Mining Vietnam 2012 is considered as a timely event to further promote mineral exploitation in Vietnam and drive the industry to become a key sector.

Within the framework of the event, workshops and conferences on new trends and knowledge about quarry mine exploitation, mineral processing, transportation in underground mines as well as general information on mineral exploitation will be also organised.

Vietnam lender BIDV plans to list June 26 - paper

BIDV, Vietnam's third-largest lender by assets, will make its share debut in late June on the Ho Chi Minh Stock Exchange, a state-run newspaper said on Wednesday, which will help expand investors' portfolio of bank stocks.

The Hanoi-based bank, which conducted its initial public offering in late December, will soon complete procedures to list on June 26, the Dau Tu Chung Khoan (Securities Investment) newspaper quoted a BIDV official as saying.

BIDV, or the Bank for Investment and Development of Vietnam, raised nearly 1.58 trillion dong ($75 million) in the country's largest IPO last year.

BIDV officials were not immediately available to confirm the expected date of debut but the lender said in December it planned a share debut in the last week of June 2012. IPOs and stock listings are two separate processes in Vietnam.

BIDV shares would join those of VietinBank -- the largest partly private lender -- and Vietcombank on the Ho Chi Minh City market. All of them plus state-owned Agribank are considered Vietnam's top state-run commercial banks.

BIDV plans to get shareholders' approval on the listing plan at a general meeting on Thursday, as it aims to raise transparency in operations and also liquidity for BIDV shares, the bank said in a report to shareholders.

It has projected gross profit this year to jump 36 percent from 2011 to 5.8 trillion dong ($278.6 million), based on a 17-percent annual credit growth to 326.4 trillion dong, with only 2.8 percent of which will be bad debt.

The projections are subject to shareholders' approval, the bank said.

BIDV's targets are in line with the central bank's policy to keep the annual lending expansion among the country's largest banks at 17 percent this year. ($1=20,816 dong)

WB-AusAID partnership supports Vietnam’s development

The Australian Agency for International Development (AusAID) and the World Bank (WB) have recently signed a strategic partnership agreement to jointly support Vietnam’s long-term socio-economic development.

Under the five-year agreement, AusAID will provide AUD58 million to the WB’s investment and advisory program to assist Vietnam.

The partnership aims to foster an enabling environment for improving economic competitiveness, increasing environment sustainability, and broadening access to economic and social opportunity. It will help enhance cooperation between AusAID and the WB in working for development effectiveness in Vietnam.
 
“We are very pleased to have the opportunity to partner with the World Bank in our joint efforts to support Vietnam’s development agenda”, said Allaster Cox, Australian Ambassador to Vietnam, at the signing ceremony. “The analysis in our respective country partnership strategies has identified key constraints to Vietnam’s development and shows a shared view on the responses needed to assist Vietnam with its development efforts.”

Victoria Kwakwa, the WB Country Director for Vietnam noted that the agreement marks a new phase in the partnership between AusAID and the World Bank in support of Vietnam's development.

“The approach is more strategic and proactive while also allowing adequate flexibility to respond to emerging priorities in the Government's reform program,” said Kwakwa. “This stepped up engagement will be mutually beneficial and help deliver stronger development results for Vietnam.”

The proposed engagements are aligned with and directly address the priorities outlined in the Vietnamese Government’s five-year Socio-Economic Development Plan 2011-2015 (SEDP) which is supported by AusAID’s Strategy for Vietnam to 2015, and the Bank’s CPS 2012-2016.

Automobile market remains sluggish

Vietnam’s automobile market looked gloomy in February, with domestically-assembled units dropping by 25 percent compared to the same period last year.

According to the Vietnam Automobile Manufacture’s Association (VAMA)’s statistics, 6,116 cars were sold in February, showing a decrease of 25 percent compared to the same month of last year.

In February, the sale of trucks and commercial vehicles fell by 20 percent over last year’s corresponding period.

Honda Vietnam is at the bottom when only 14 Civic cars sold nationwide and imported CR-V and Accord staying put.

Toyota is taking the lead with 3,400 cars sold, followed by Truong Hai (2,700), and Vinaxuki (1,100). In the past two months, VAMA members sold 10,390 cars, a year-on-year decrease of 44 percent.

Increasing quality of foreign investment capital into Vietnam

A seminar on solutions to improve the quality of foreign investment capital flow into Vietnam will be held in Hanoi on March 15.

The event is co-organized by the Foreign Investment Agency and foreign investment research centres of the National Economics University and the National University in Hanoi.   

By February this year, the total number of valid foreign investment projects in Vietnam was over 13,500, with total registered capital of nearly US$200 billion.

Foreign direct investment activities in Vietnam in recent times have made important contributions to promoting economic development and integration.

However, foreign investment also shows some limitations, such as: low investment in high-technology fields, some projects using outdated technology polluting the environment, the low proportion of localized input materials, and incomplete infrastructure. Solutions for those issues are expected to be raised at the seminar.

Fears grow about more price rises
 
The prices of many kinds of goods are expected to increase from the middle or end of this month, according to supermarkets in HCM City.

Several supermarket chains including Co.opMart and Maximark say they have received announcements about price increases from many producers and providers, Lao Dong (Labour) reports.

Currently, the supermarkets are offering discounts on many products to boost sales on the occasion of International Women's Day, and they will apply new prices when their inventory is sold out.

The price increase this time would focus mainly on cosmetics, consumer goods and powdered milk, they said.

Among cosmetic products, fabric softener, shampoo, shower cream and detergents will have the highest increase in prices of 5-10 per cent.

A Maximark representative said some producers were attributing the increases on higher cost of raw materials and other input costs, but in most cases, they had launched new products with higher prices.

This way, consumers would not realise the increase in prices very soon, he said.

Apart from cosmetics, the prices of some powdered milk products have also increased.

According to Co.opmart, the distributor of the Dumex brand powdered milk has raised product prices by 5-10 per cent, starting this month.

Nutifood brand milk will cost 5 per cent more starting from the middle of this month.

Most catering services providers in HCM City, from common shops to restaurants had raised their prices during the Tet holiday, and have continued to maintain the new prices up since.

Retailers struggle to renew leases

The Ministry of Industry and Trade (MoIT) has asked the Ministry of Planning and Investment to revise a decree on investment incentives for retailers and distributors to improve the domestic retail system, said Vo Van Quyen, director of MoIT's Domestic Market Department.

Under current regulations, retailers and distributors did not get priority when it came to accessing retail space. Therefore, it was difficult for them to develop sustainably, Quyen said.

Quyen cited the example of the Fivimart supermarket chain. Nhat Nam Co, which owns 13 Fivimart supermarkets, had to close the fourth outlet it opened in HCM City late last month because it lost its rental lease.

Representatives from Nhat Nam Co said that after the company's lease expired, it failed to negotiate a new lease price with the landlords and had to shut down the supermarket.

It has also been difficult for retailers and distributors to directly lease retail space from landlords, meaning they often had to go through intermediaries. Retailers complain that when leases expire it is often difficult to renegotiate contracts, and that prices are usually hiked.

According to MoIT, there were 638 supermarkets and 117 shopping centres in the country by the end of 2011.

MoIT plans to develop the domestic distribution network to make it more professional and modern.

Viet Nam is considered an attractive retail market. The total retail value of goods and services is estimated to be US$100 billion this year.

In the period 2011-20, it is forecast the local retail market will grow by 10 per cent annually, with domestic goods accounting for 20 per cent of the GDP.

Revenue surges for GE affiliate

Earnings of GE Viet Nam increased last year by 127 per cent compared to the previous year, and the company promises another year of dramatic growth in 2012.

GE's US$61 million wind turbine manufacturing plant has established a strong footprint in the northern city of Hai Phong after a full year in operation and has become one of the top export earners in the city.

Contributing to Viet Nam's renewable energy potential, GE recently supported local wind-power developer Cong Ly Co Ltd in building the first wind farm in the Cuu Long (Mekong) Delta province of Bac Lieu. GE has also joined hands with the national power sector to improve power transmission.

Credit policies destabilise stocks

State Bank Directive No 01, under which the State Bank regulates commercial lending and allocates credit growth quotas to different financial institutions, has stirred debate, including about how likely it is to affect the nation's stock market. Securities investment remains categorised in the regulation as an "unencouraged sector" for loans.

The directive divides banks into four different groups, with "healthy banks" allocated a maximum credit growth for the year of 17 per cent. Loans to "unencouraged sectors", including securities and real estate investors, could only increase by 16 per cent.

Yet, since the directive was issued on February 13, benchmark indices on the HCM City Stock Exchange and Ha Noi Stock Exchange have risen by nearly 20 per cent each.

"Although Directive No 01 did not meet the expectations of the market, it reflected a major effort by the central bank," said a State Securities Commission official who asked to remain anonymous.

"Directive No 01 is an effective tool for restructuring credit institutions, boosting the operation of already strong banks," the official said. "With monetary policies being required to serve the primary target of curbing inflation, and with credit primarily intended to promote the growth of agriculture, exports and support industries, credit growth of 16 per cent for the ‘unencouraged sectors' is significant support."

The primary factor affecting the flows of capital into the stock market might not be the credit squeeze but the fact that investors and securities companies were not using their own financial leverage due to concerns over market risks and high interest rates.

"In this case, only an improved economic picture can help increase bank liquidity, lower interest rates and free up lending," the official said.

But Bao Viet Securities Co said that Directive No 1 has adversely affected investor psychology.

"The stock market will not be lifted by direct infusions of capital to improve liquidity," said the Viet Nam Chamber of Commerce and Industry in a statment, adding that stronger measures were needed to unfreeze capital flows into the stock market, including shorter transaction settlement periods.

Only a few major brokerages were offering margin lending, and they were doing so only on a limited basis, said Saigon Securities Inc deputy director Nguyen Hong Nam. "At our company, the total value of margin trading in the recent rally was only moderate," Nam said.

Some cash has shifted from other investment channels such as gold and foreign currency, which have proven to be unprofitable, said Kim Eng Securities Co analyst Phan Dung Khanh. "However, this is an unstable source of capital."

"The market has to improve its intrinsic factors to be able to attract investment," said State Securities Commission chairman Vu Bang at a recent commission meeting.

Search for skills to continue

Recruitment and consulting firm Robert Walter has issued a survey, which predicts that the development of a highly skilled workforce will be a key priority for Viet Nam in coming years.

According to the report, the country's current human resources are relatively inexperienced and its professionals will require time to gain relevant experience.

Thus, sourcing professionals will become increasingly challenging.

Pile Corp ups stake in Phan Vu

Japan Pile Corporation has increased its stake in Phan Vu Investment Corp to 30 per cent from its first investment of 5 per cent in 2010.

According to the chairman of Phan Vu Corp, Phan Khac Long, a US$10 million project on a new foundation pile will begin in October, using Japan Pile's advanced technology that is good for soft soil terrain.

Phan Vu runs six plants in the provinces of Hai Duong, Quang Ngai, Dong Nai, Binh Duong, Can Tho and Long An, targets this year's turnover at a minimum of VND800 billion ($38 million), up 15 per cent over 2011.

HCM City to host pharmacy fair

More than 450 local and foreign companies will showcase their products at the seventh Pharmaceutical and Healthcare Viet Nam 2012 fair to be held at the Sai Gon Exhibition and Convention Centre in HCM City's District 7 from September 26 to 29.

Organised by Adpex Joint-Stock Co, the Viet Nam Pharmaceutical Companies Association, the Central Health Communication and Education Centre, and the Viet Nam Vimedimex Co, the event will feature over 550 booths exhibiting medicine, drug ingredients, production and packaging equipment, laboratory diagnostic equipment and others.

Can Tho aims for trade surplus

Can Tho has set itself a target of achieving US$1.5 billion in exports and a surplus of $1 billion this year.

The city's trade surplus was around $900 million last year, with agricultural and aquatic produce making up most of the exports.

Despite the tough global economic situation, its exports topped $1.3 billion, a jump of 24.2 per cent over 2010, with rice accounting for $416 million and aquatic produce for $506 million.

But with 2012 expected to be a more difficult year because of the slow recovery of the global economy and public debt crisis, Le Van Hung, a deputy director of the department, said exporters had to further explore markets and improve quality.

Conference eyes business strategies

A conference that focuses on "big picture issues that impact strategic business decisions including investment, financial management, legal and tax practices," will be held next month in HCM City.

Leading foreign and domestic consultants and legal experts will make presentations on how best to optimise businesses' investments in Viet Nam.

These include business analysts, CEO/ CFO/Chief of Investment of foreign invested enterprises, subsidiaries of multinational corporations, banks and financial institutions as well as legal, taxation and accounting specialists.

Taxmen blamed for ineffective transfer pricing fight

Tax officials’ lack of skills is partly to blame for the ineffective fight against transfer pricing at foreign-invested firms, said Do Nhat Hoang, head of the Foreign Investment Agency (FIA).

Transfer pricing is actually happening at foreign direct investment (FDI) enterprises, but authorities lack information, he said.

Speaking at a press briefing in Hanoi on Thursday to introduce a seminar on solutions to improve the quality of FDI, he said the Government had picked FIA, a unit of the Ministry of Planning and Investment, to lead the fight against transfer pricing. The agency has had several meetings with the Ministry of Finance and other relevant agencies to map out an action plan but the job is far from simple when put into practice.

Hoang said more than half of the current 13,500 FDI enterprises in Vietnam had reported continued losses but surprisingly had steadily expanded operations.

Many taxmen do not meet the requirements in terms of expertise and capability and this has made it hard to crack down on transfer pricing practices, he said. Even taxmen with 20-30 years’ experience, he added, have found themselves helpless since they have not been able to gather sufficient data.

“We do not have a database on materials which can be used a basis to accuse an enterprise of tax evasion. All their imports have sufficient documentation,” Hoang said.

 “We deemed a chip only worth US$10 but the enterprise put it at US$20 and submitted sufficient evidence. Even the supplier when contacted confirmed the price in order to protect the interests of their partner.”

To cope with transfer pricing, Hoang called for thorough preparations. Earlier, Deputy Minister of Finance Do Hoang Tuan Anh described the anti-transfer pricing drive as a hard nut to crack for tax authorities.

According to the General Department of Taxation, the tax authorities last year inspected 921 foreign-invested enterprises that were suspected of transfer pricing. The inspectors disclaimed total losses of over VND6.6 trillion, 3.5 times higher than in 2010, and collected arrears and penalties worth VND1.6 trillion, four times higher than the preceding year.

The seminar on solutions to improve the quality of FDI will take place in Hanoi next Thursday. The event is co-organized by Dau tu newspaper, FIA, Kinh te va Du bao magazine and Foreign Investment Research Center. Some 250 high officials, specialists and investors will attend the event.
 
BIDV stock price believed to rise when on bourse

Bank for Investment and Development of Vietnam (BIDV) has expressed confidence that its stock would rise sharply when it is traded on the southern bourse this June.

The bank’s chairman, Tran Bac Ha, told shareholders at a meeting in Hanoi on Thursday: “We promise that when listed on the bourse, BIDV shares will rise by an average of 150%, buoyed by prospective market prices and dividends.”

The bank’s shares attracted an average auction price of VND18,583 per share at the initial public offering (IPO) in December last year and will be officially traded on the Hochiminh Stock Exchange on June 26.

As the ceiling deposit rate will fall by one percentage point as announced by the central bank governor, Ha believed, the long-dormant stock market will recover, thus propping up the BIDV stock price. The VN-Index had picked up 34% since last December when BIDV launched its IPO, after suffering a year-on-year decline of 30%, he said.

The experience gleaned from the equitization of State-owned banks Vietcombank and Vietinbank helps consolidate Ha’s confidence on a high share value. Vietcombank’s stock price has jumped to VND31,000 versus VND18,500 per share in December, while VietinBank shares have marked up a hefty 75%.

Ha added over 30 foreign investors had shown interest in becoming strategic shareholders. BIDV will select competent and prestigious investors by year-end.

Phan Duc Tu, deputy general director of BIDV, said the Vietnam Shipbuilding Industry Group (Vinashin) still owes BIDV some VND6.6 trillion, but the lender still offers loans to the debt-laden shipbuilder to finalize customers’ orders. He explained BIDV is holding secured assets, so the bank’s business would be unscathed even if its debtors got further mired in trouble.

After transferring VND1.6 trillion to Vietnam National Shipping Lines (Vinalines), Vinashin’s debts at BIDV are down to VND5 trillion, 2.4% of the total outstanding loans.

Under Decision 2124 on equitization of BIDV, the State will hold a 78% stake in the first phase, which will shrink to 65% in the second phase. The equitized State-owned banks will continue playing a major role in ensuring macro-economic stability.

BIDV this year is looking at a bad debt ratio of less than 2.8%, 17% growth in outstanding loans and a 36% pre-tax profit increase over 2011.

The Prime Minister on Wednesday decided to adjust up BIDV’s chartered capital to VND23 trillion, 95.7% owned by the State, 0.56% by staff, and 3.68% to be auctioned on the Hanoi stock exchange.
 
Pork prices cut to spur falling demand

The consumption of pork has been slowing down, forcing food processors and retailers to offer discounts to reverse slackened sales.

HCMC-based meat processor Vissan is giving customers 10% discounts on pork products until March 15 at Vissan, Co.opMart, Vinatext and Maximark and Co.op Food stores in HCMC.

Co.opMart and Co.op Food stores, which are owned by Saigon Co.op, is joining hands with Vissan to keep customers through 10% discounts on pork and chicken products from March 15 to 23, and another discount program on other pork products from March 15 to April 1.

Lotte Mart stores are also following suit by giving a discount of over 10% on some pork items.

There are numerous reasons behind the pork price fall and one of them is a steady drop in live-pig prices.

A trader said the price of high-quality live pigs supplied for meat processors was VND47,500 per kilo early this week but that of pigs from small farms was lower, at between VND43,000 and VND48,000 per kilo. These prices were lower than those during the Tet (lunar new year) period.

Hoang Kim Giao, head of the Livestock Husbandry Department under the Ministry of Agriculture and Rural Development, said an oversupply was behind the price slide. Demand for pork has been running low since the end of Tet while herds of pigs remain large, he added.

In addition to the oversupply, another factor that has contributed to the lower consumption is public concern over the abuse of chemicals, especially clenbuterol, by certain farms to produce super-lean pigs.

Other fresh foods like fish and poultry have also marked down on poor consumption as economic woes have continued to bite.

At traditional wet markets in HCMC, snakehead fish retailed for VND45,000-55,000 per kilo early this week, down by VND5,000-15,000 from the pre-Tet period, while farmed chicken sold for VND45,000-50,000 per kilo.

Pham Thi Ngoc Ha, director of San Ha Co., told the Daily that recent bird flu outbreaks were the culprit of the poultry price decline. “At traditional markets, our sales have dipped 20-25% recently.”

Unsold chicken has piled up due to poor sales.

The HCMC Department of Finance has lowered the chicken price in the price stabilization program by VND2,000 per kilo. Similarly, the egg price has been cut by VND1,000-2,000.
 
Long An revokes slow-moving golf course project

Long An Province’s authorities will soon revoke the license of a golf course project registered by Viet Han Corporation, according to Long An Province’s Department of Planning and Investment.

Covering 240 hectares in Can Giuoc District, the golf course project was planned to include an entertainment area and a high-end residential area, but the project has stalled due to the investor’s weak financial capacity, said a source from the department.

The project is to be cancelled after a proposal by inspectors tasked with looking into foot-dragging foreign-invested projects in Long An.

The inspection team reported the project investor had made little, if no, progress on the project. The department agreed to withdraw its license and will call for other investors to replace Viet Han in developing the golf course, Nguyen Minh Ha, director of the Department of Planning and Investment, told the Daily on the phone on Thursday.

The only golf course project covering 200 hectares in Duc Hoa District and developed by C.S.Q Investment Joint Stock Co. is underway in Long An.

As for six other golf course projects, local government has revoked the 200-hectare course invested by a venture between Tan Thanh Long An Co. and Genuwin D&C Co. while the others have been scrapped.

Long An since 2007 had planned to hand over land to investors to develop eight residential areas and new urban areas with golf courses included.

However, under the golf course development scheme approved by the Prime Minister in late 2009, the province is allowed to develop two golf courses in the districts of Can Giuoc and Duc Hoa between now and 2020.
 
Trung Thuy opens third rest stop for tourists

The HCMC-based Trung Thuy Joint Stock Company has officially opened its third rest stop for tourists  on National Road 51 in Tam Phuoc Commune, Long Thanh District in Dong Nai Province.

Duong Thanh Thuy said that the Mekong Rest Stop covers 7,000 square meters with services such as car parking, restaurants, handicrafts products area, and rest-rooms.

“We’ve spent VND100 billion on the projects, aiming to attract guests with our quality services and green environment,” she said.

Trung Thuy operates the Miss Aodai chain of shops to sell handicraft products, traditional Vietnamese dress (ao dai), coffee and other products for tourists in HCMC and Hanoi along with two tourist stops in Tien Giang Province and Danang City.

Dong Nai Province to begin new industrial park project  

Long Duc Company, a joint venture of three Japanese Companies-- Sojitz Corporation, Daiwa House Industry and Kobelco Eco-Solution with the Vietnamese Donafood Company, will kick off the construction of the Long Duc Industrial Park in the southern province of Dong Nai on March 19.

The Long Duc Industrial Park will cover an area of 281 hectares in Long Duc Commune in Long Thanh District and will cost US$100 million.

The construction of the industrial park is estimated to be complete by the beginning of the third quarter of 2013.

So far, there are about 30 industrial parks in Dong Nai Province which cover more than 9,500 hectares.