300 businesses attend Saigon Tex 2012

Nearly 300 businesses from 18 countries and territories around the world are showcasing their products and equipment at the 22nd International Fair on “Garment and Textile Equipment and Accessories” (Saigon Tex 2012).

The annual fair was opened in HCM City on April 10 by the Vietnam National Textile and Garment Group (Vinatex), Vietnam Chamber of Commerce and Industry (VCCI)’s Exhibition Service Company and Hong Kong Exhibition JSC.

During the fair which runs until April 14, there will be seminars on global garment and textile - from supplying markets to consuming markets, and solutions for Vietnamese garment and textile enterprises to improve the value of their products.

Nguyen Thi Hong Tin, head of Vinatex’s Domestic Market Department, said the fair helps domestic businesses to keep abreast of the latest market information about new technologies.

Shares rise on rate cut, eased credit

Shares rose on both national stock exchanges with investors upbeat on news that the central bank yesterday cut the deposit interest rate ceiling and eased the real estate market credit policy.

Late on Tuesday, the State Bank of Viet Nam decided to lower the cap on deposit interest rates from 13 per cent per annum to 12 per cent.

In a meeting yesterday morning, Governor Nguyen Van Binh said the move was made to unleash the tie on credit for real estate and consumption activities. Though lending to securities investment was still discouraged, Binh said he believed that without bank loans, the stock market would continue to develop and benefit from economic improvements such as lower interest rates and falling inflation.

"The uptrend on the stock market will not be quick but sustainable," Binh said.

Real estate stocks soared yesterday on the news, with many hitting their daily ceiling prices, including Tan Tao Investment Industry Corp (ITA), Development Investment Construction Corp (DIG), Quoc Cuong Gia Lai Co (QCG), Ha Do Co (HDG) and Ninh Van Bay Travel Real Estate Co (NVT).

On the HCM City Stock Exchange, the VN-Index advanced 1.75 per cent to close yesterday afternoon's session at 458.74, the highest since March 27.

Of the 30 leading shares by market value and liquidity, 27 rallied to drive the VN30 Index up 1.98 per cent to close at 527.63.

Advancers largely outnumbered decliners by 237-26, with 116 codes reaching their daily limit rise of 5 per cent.

Market value climbed 19 per cent to VND1.56 trillion (US$74.3 million) on a total volume of 99.4 million shares.

SACOM Development and Investment Corp (SAM) remained the most active stock by the end of the session with 4 million shares, rising 4.3 per cent to settle at VND7,300.

On the Ha Noi Stock Exchange, the HNX-Index gained 2.78 per cent over Tuesday to conclude yesterday at 77.51 points.

Value of the day's trades increased 10 per cent to VND956.8 billion ($45.6 million) while trading volume of 54.5 million shares rose over 12 per cent to 98.4 million shares.

Of 389 total listings, 257 posted gains while only 43 declined and 39 closed unchanged. Fifty codes were not traded yesterday.

Habubank (HBB) still led trades nationwide with over 11 million shares changing hands, closing up 4.4 per cent at VND7,100.

Unaffected by the central bank's move, foreigners still finished yesterday as net buyers on the HCM City market by a margin of over VND18 billion ($862,000) worth of shares, but they were net sellers on the Ha Noi bourse, unloading only VND6.85 billion ($326,000) worth of shares.

Real estate stocks gain, lifting indices

Stocks continued to soar this morning on both the national exchanges following positive news released yesterday on interest rate cuts and eased credit for the real estate sector.

On the HCM City Stock Exchange, the VN-Index gained another 1.55 per cent to close the morning session at 465.84, with advancers more than tripling decliners.

Value of trades stood at nearly VND1.16 trillion (US$55.2 million) on a volume of 71.8 million shares.

Real estate stocks performed well, with many shares hitting the daily ceiling prices today, including HCM City Infrastructure Investment (CII), Development Investment Construction (DIG), Khang Dien House Trading (KDH), Tan Tao Investment Industry (ITA), Kinh Bac City Development (KBC) and Song Da Urban&Industrial Zone Investment and Development (SJS).

Some 20 of the 30 leading shares by market value and liquidity rallied, lifting the VN30 Index 2.11 per cent to 538.78 points.

Military Bank was the most active stock in HCM City this morning with 6.28 million shares exchanged, edging up 3.9 per cent at VND15,900 ($0.76).

On the Ha Noi Stock Exchange, the HNX-Index also finished the morning 2.05 per cent higher at 79.10 points.

Trading value reached over VND800 billion ($38.1 million), with 82.2 million shares changing hands.

Gainers outnumbered losers by 192-64, with Habubank (HBB), the most active share nationwide on a volume of 20.8 million shares traded, jumping 4.2 per cent to VND7,400.

Vietnam expo on consumer goods opens

Deputy Prime Minister Hoang Trung Hai cut the red ribbon kick-starting the Vietnam international exhibition on consumer goods, handicrafts, farm produce and processed food (VietPo 2012) in Hanoi on April 11.

On display at VietPo 2012 are 500 stalls, including 400 from domestic cooperatives and businesses. The rest are from China, the Republic of Korea, Cambodia, Singapore, Thailand, Malaysia and Pakistan.

The event showcases consumer goods, arts and handicrafts, agricultural equipment, foodstuff, beverages, machinery, fashion, cosmetics, jewellery, interior decoration, tourism services, advertising and trade promotion products.

Dao Xuan Can, President of the Vietnam Cooperative Alliance, said the exhibition is a good chance for domestic and foreign businesses to advertise their trade names, introduce products, exchange experience and promote cooperation.

VietPo 2012 will be open through April 15.

Cooperatives crucial to national economy

Vietnam’s cooperatives made up 16 percent of the country’s annual GDP in the 2000-2010 period while boosting the development of the household economy and increasing agricultural, forestry, and seafood output.

The information was released by Dao Xuan Can, President of the Vietnam Cooperative Alliance (VCA), at a meeting held in Hanoi on April 11 to celebrate the first anniversary of Vietnam Cooperative Day and to honour excellent cooperatives.

Cooperatives have effectively mobilized social resources to expand production, develop trades, and shift the economic structure in rural areas, Can said.

Meanwhile, Deputy Prime Minister Hoang Trung Hai said at the meeting that cooperatives have helped connect households of cooperative members, produce additional value, and professionalize or specialize social labour.

He suggested the VCA and cooperatives work with Party resolutions on developing agriculture, farmers and rural areas.

Hai said the VCA should get actively involved in introducing the Party’s polices and the State’s laws on cooperatives and cooperative economy, and in strengthening the current cooperatives and preparing for new establishments.

Cooperatives should supply more services to their own members and create conditions for poor people to benefit from these organizations, Hai said.

According to the Deputy Prime Minister, more effort should be put into building more effective, prestigious, and competitive cooperatives in the future.

Garment, footwear makers to enter US market

Vietnamese garment and footwear markers are seeking new opportunities to approach small and medium-sized distributors in the US at a conference in Hanoi on April 11.

They are provided with up-to-date market information and the consumption trend in the US to cater to local consumer tastes.

In recent years, the US has been the main export market for Vietnam’s textile and footwear sector. Last year, export turnover reached US$6.87 billion for textiles and US$2.37 billion for footwear. These figures represent 43.4 and 30.2 percent of each sector’s total export turnover, respectively.

A conference is being held on April 11 in Hanoi by the Vietnam Textile and Apparel Association (Vitas) and the Vietnam Leather and Footwear Association (Lefaso).

The event coincides with a visit by Jessie Zhang, Business Development Manager of Tiger Trade, who is in charge of foreign customers at the US’ Sourcing at MAGIC trade show.

Vietnam aims for trade balance by 2020

Vietnam is striving to achieve a balance of trade by 2020 as well as a total import-export turnover three times higher than in 2010 and an average per capita income of more than US$2,000.

This information was released by Phan Van Chinh, Head of the Import-Export Department under the Ministry of Industry and Trade (MoIT), at a seminar in Hanoi on April 10 held by the “Multilateral Trade Assistance Project Vietnam” (MUTRAP).  

The meeting aimed to discuss the impact of international economic integration on Vietnam’s economy and make recommendations concerning the implementation of the country’s import-export strategy in the 2011-2020 period.

The MoIT will build a roadmap to gradually reduce exports of raw mineral resources and invest in processing technologies to increase the value of exports.

It will re-examine items of low export earnings, but high future growth to make breakthrough in the export sector.

Delegates said it is also important for Vietnam to adjust imports by boosting the production of raw materials, fuels, and accessories for businesses, diversifying import markets and improving the trade deficit with its current import markets.

To date, Vietnam has become involved in Free Trade Agreements (FTAs) with partners such as China, the Republic of Korea, India, Japan, Australia, New Zealand and Chile. It also signed an Economic Partnership Agreement (EPA) with Japan, and is conducting FTA and Trans-Pacific Partnership (TPP) negotiations and preparing to start an FTA agreement with the EU.

This is a good opportunity to promote Vietnamese exports and reduce imports, said Mr Chinh.

At the seminar, economists assessed the impact of the opening of various markets in line with the World Trade Organisation (WTO) commitment and the FTA on Vietnam’s production and trade, and devised measures to perfect the MoIT mechanism to manage import-export activities in the future.

They also emphasized the need to continue tapping into other markets such as India and the RoK, and take full advantage of China’s recent trade policies to shore up exports.

From 2001 to 2010, annual export value grew 17.42 percent, 1.42 percent more than the set target of 16 percent. Imports also increased by 18.42 percent with the import surplus reaching US$62 billion, 15.86 percent more than the export value.

Experts call for stronger prescription for economy

High-profile experts at a forum in Danang City on Monday called for stronger measures to restructure the economy, including suggestions to wipe off privileges for the State sector.

At the two-day Spring Economic Forum 2012, experts analyzed solutions given to the Government’s restructuring schemes of State-owned enterprises, public investments and the banking system for this year and the following years.

Tran Dinh Thien, director of the Vietnam Economic Research Institute, said that Vietnam’s economic reform was now facing more difficulties than it was in 1986 due to the persistent high inflation and economic instability in recent years and uncertainty of the global economy.

Therefore, specific solutions need to be adopted with the inflation control and macro economic stabilization as the top priority. If no strong measures are taken, the economy this year cannot be brighter.

“The key point is to lower the lending rate until enterprises can recover. The top-priority aim now should not be a softer inflation rate but the number of enterprises achieving recovery, and this is the final goal,” Thien said.

Many experts at the forum also stressed the need of quick implementation of strict policies on credit, interest rates and taxes for remove difficulties for enterprises.

If strong solutions to inflation control and economic growth are provided, the targets of obtaining the gross domestic product (GDP) growth of 5.5-5.8% and lowering the inflation rate to 8-9% are achievable, they said.

Speaking at the forum, Nguyen Duc Kien, deputy head of the National Assembly’s Economic Committee, proposed to set up an agency tasked with management of capital and assets in Vietnam that operates fairly independently of the Government.

Nguyen Dinh Cung, deputy head of the Central Institute for Economic Management (CIEM), pointed out five privileges of State-owned enterprises that need a rethink.

Specifically, such enterprises face little likelihood of bankruptcy despite suffering long-lasting losses, while in several cases they even turn State monopoly over certain industries into their own monopoly. These State-owned enterprises also have privileges when accessing credit loans, and are not subject to inspections as regularly as needed, he said.

Regarding the restructuring solutions for State-owned enterprises, Cung said that the imposition of the competitive market’s regulations on State conglomerates and corporations would help boost the restructuring.

However, experts said that there could not be fairness for State and non-State enterprises when there was still a separation between the two sectors as State enterprises not only hold the monopoly over certain industries but also are not put under the profit-making pressure.

Besides, experts agreed that State enterprises should not be regarded as a tool for the Government to manage the macro economy.

According to Tran Van Linh, vice chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP) and director of Thuan Phuoc Seafoods and Trading Corporation, Vietnam’s economic growth in the 2001-2010 declined from the previous period due to increasing inflation and high lending rates which firms cannot bear.

Meanwhile, the labor productivity is declining with huge energy consumption as Vietnam is using outdated technologies. Besides, the low competitiveness of local enterprises, the low cost-effectiveness of State firms and the lack of new resources for the next-stage development have showed the weaknesses of Vietnam’s economy.

The forum was held for experts and officials to discuss economic restructuring and to look for the growth model for the coming years.

When selling at a loss doesn’t even help

At a time when most consumers are practicing thrift, consumer goods manufacturers have had no choice but to see their sales constantly dip, despite their willingness to sell products at a loss.

Meanwhile, the skyrocketing lending interest rates only deepen the sorrow of many local electronics, processed food, and beverage producers, as well as confectioners.

Lan, an attendant at the HM electronics center on Ho Chi Minh City’s Hoang Van Thu Street, said the center has around 300 unsold air-conditioners which were imported earlier this year to prepare for the coming high demand of summer.

“But customers have mainly come to just look and then leave,” said Lan.

Dinh Anh Huan, director of dienmay.com, said that while electronics businesses traditionally hiked prices by 10 – 18 percent at this time of the year, they have now had to offer promotional programs, or even sell at a loss due to low demand.

“Even the food commodities suffer low consumption if they are sold without promotions,” said Nguyen Phuong Thao, director of Maximark Cong Hoa.

Meanwhile Truong Minh Thuan, director of Seaspimex food manufacturer, said unsold stock now accounts for 30 percent of the company’s registered capital.

“Since food commodities have expiry dates, all unsold products have to be disposed of,” he said.

Nguyen Thi Thanh Lam, deputy director of Saigon Food, also admitted that sales have dropped by 30 percent against the same period last year.

Cosmetics and confectionary producers have also failed to attract customers with their promotions, which have been offered on almost every possible occasion, from Valentine’s Day to the supermarkets’ birthdays.

“The supermarkets sometimes demanded to buy at so low a price that I would certainly incur losses, but I had no choice,” said an owner of a sheet and pillow facility in Tan Binh District.

“Selling at a loss will help reduce the unsold stock, and give me money to clear bank interest.”

Nguyen Xuan Hai, managing director of the southern Big C chain, admitted that manufacturers have been more enthusiastic in cooperating with supermarkets in the shopping campaign than in previous years.

C, the director of a food processor in suburban Cu Chi District, said he is seeking buyers for the company’s production line, which is worth nearly $1 million (roughly VND21 billion), after importing it two years ago.

“The more I use the line, the larger the loss becomes,” said C, who is selling the assembly for only a few billion dong.

Since the end of last year, a number of electronics retailers have gradually shut their doors, despite their slashed prices and efforts to empty unsold stock.

Consumption of air-conditioners and TVs has slumped by 81.8 percent, and 6.1 percent, respectively, according to figures from the Ministry of Industry and Trade.

The latest player to hang the white flag is the Best Caring supermarket in Phu My Hung, District 7.

“The number of electronics retailers to shut down operations will continue to soar in the second quarter, with the market remains frozen and rental contracts come due,” said the director of an electronics center in Go Vap District.

ADB asked to fund Moc Bai Urban Zone

Southern Tay Ninh Province yesterday called on the Asian Development Bank (ADB) to provide financial assistance of US$40 million for the construction of the Moc Bai Urban Zone.

The project would cover an area of 7,400ha with a population of 70,000 by 2020.

Infrastructure construction will be a priority to attract investment and create job for about 58,000 labourers.

Initiatives will include the upgrade of the water supply system, to increase capacity from 7,000 cu.m to 30,000 cu.m per day, the waste treatment system and the construction of roads, waste landfills and an inland port system.

Total capital needed to finish the work was estimated at $54 million.

According to the Tay Ninh Economic Zone Management Board, implementation of construction encountered difficulties because of the current lack of infrastructure and human resources.

Moc Bai Urban Zone will be a satellite city of the Southern Key Economic Zone as well as a border-gate economic centre promoting trade between Viet Nam and some of the Greater Mekong sub region countries.

The ADB would review documents, conduct fieldwork and work with local authorities in consideration of funding the project.

Seafood processor faces massive debt problem

The Binh An Seafood Joint Stock Co (Bianfishco) owes a total of VND1.6 trillion (US$76.2 million) to banks, the social insurance fund, farmers and several companies, according to a representative of the Can Tho People's Committee.

The debt is based on 2010's audit result. According to the 2010 figure, the total value of the company was around VND2 trillion ($100 million).

The representative from the Can Tho People's Committee, speaking at a recent press meeting, said that since April 2007 when the company was established to 2011, Binh An company had developed well.

It had $42.8 million in export turnover in 2010 and $47.6 million in 2011.

However, in the middle of last year, the company faced financial difficulties due to limited credit, and banks refused to lend.

"The company used short-term capital for long-term investments," said Vo Thanh Hung, head of a task force that investigated the company.

"However, the company hasn't been brought to court because police haven't found any criminal evidence," the chairman of the Can Tho People's Committee, Nguyen Thanh Son, was quoted as saying in Tuoi Tre (Youth) newspaper.

Son also said that enterprises operated under the Business Law and the court should decide if Binh An company was bankrupt.

The company said it wished to delay debt payments from banks and reset prices to get a bigger loan.

"We would like to help the company but Binh An company does not co-operate. They must submit the 2011 audit results in order to get the best solution," Son reportedly added.

The People's Committee representative declined to reply to a question about the health of Pham Thi Dieu Hien, general director and president of the company, who is in California. The representative also refused to talk about Hien's assets in the US.

Early last month, Bianfishco was repeatedly asked to pay back its loans to banks, its partners and local farmers.

Hien has gone abroad to seek treatment for an "incurable disease". Her husband, Tran Van Tri, is temporarily managing the company during her absence.

The representative said she might be asked to return so that all of the financial problems could be solved.

Regulations issued on independent auditing

Under regulations issued by the Ministry of Finance on March 13 and taking effect on May 1, enterprises with foreign capital, all credit institutions (including foreign bank branches), all enterprises in the financial sector (including insurers, reinsurers and brokers), and all companies with shares listed on the stock market must have their financial statements audited annually by a licensed auditing company.

The audit company can also be a branch of a foreign auditing company operating in Viet Nam. All audit companies authorised to conduct these audits must have legal capital of at least VND3 billion (US$143,000), to rise to VND5 billion ($238,000) in 2015.

Audit companies operating in the form of limited liability companies must maintain balance sheet equity of not less than legal capital and must have at least two registered auditors practising in the company.

Extending foreign currency loans to resident borrowers

The State Bank of Viet Nam issued Circular No 03/2012/TT-NHNN on March 8 governing foreign currency loans made by domestic credit institutions and foreign bank branches to domestic borrowers. The new circular aims to reduce demand on foreign currency supplies and pressure on the foreign exchange rate.

Under the circular, domestic credit institutions and foreign bank branches licensed to provide foreign exchange services may extend foreign currency loans to resident borrowers for the purpose of making overseas payment for imported goods and services when such borrowers have sufficient foreign currency from production and business with respect to repayment.

They may also extend short-term loans to cover overseas payments for imports of petrol, with written approval from the State Bank. The State Bank may also approve loans on the basis of foreign currency demand for implementing the projects and business plans in areas prioritised by the Government, or in the case of feasible projects with borrowers' demonstrable ability to make timely repayment of principal and interest.

Under Circular No 03/2012/TT-NHNN, borrowers may not receive a loan in foreign currency against a future stream of foreign revenue from exports. Previously, under Circular No 07/2011/TT-NHNN of March 24, 2011, such borrowers could obtain a foreign currency loan on the condition that it sold subsequent foreign currency revenue to credit institutions in form of SPOT.

Circular No 03 takes effect on May 2 and replaces Circular No 07/2011/QD-NHNN.

Exports to France rise 55.4% in first quarter

The country's export turnover to France rose during the first quarter of the year, reaching 224.9 million euros (US$294 million).

Export turnover registered a 55.4 per cent rise during the first quarter over the same period last year.

Electronic products topped the list of exports, earning a turnover of 64 million euros (US$83 million), a 161 per cent increase over the same period last year.

Most traditional Vietnamese products recorded strong export growth, including garments and textiles, furniture and seafood, said Nguyen Canh Cuong, Viet Nam's Commercial Counsellor to France.

Cuong said that during the first month of this year, export value of furniture products reached 21.9 million euros ($37.2 million), a 41 per cent hike compared to the same period last year. Seafood exports reached 8.7 million euros ($11,3 million), a 25 per cent rise ($2.8 million), while footwear earned 50 million euros ($65 million) in export sales, a 22 per cent increase ($14 million) compared to the same month last year.

Also in the first quarter of the year, Viet Nam's import turnover from France reached 45.7 million euros ($60 million), a 26 per cent rise against the same period last year.

The first quarter also saw an increase in machinery, mechanical products and pharmaceutical imports, totalling 24 million euros ($31 million), while imports of chemicals and aviation equipment remained stable.

Forum gives business advice

Building and maintaining relationships is key to success and growth in business, a financial expert told participants at a forum held yesterday in HCM City.

J Brian Potts, president of US' Fiduciary Trust Company, speaking at a FAST500 forum, said that success required both technical skills and good personal relationships.

Different industries require distinct technical skills but good personal relationships are essential for success in every endeavour.

"Developing good personal relationships is often overlooked or neglected as many CEOs concentrate on the complex tasks of running their business," he said, adding that strategic relationships can ease burdens and grow businesses more efficiently than anything done solely by yourself.

In January, the Viet Nam Report found that more than 70 percent of private enterprises in the rankings planned to increase their investment and production activities in 2012.

However, he said that "although businesses were committed to invest in their business operations, they should set a feasible target that aims to avoid being overly optimistic and underestimates risks."

Businesses should focus on re-organising their operations to improve effectiveness rather than expand the production, particularly during an economic downturn.

Matthew McGarvey, manager at PricewaterhouseCoopers Beijing, China, said success during changing times required disciplined people, disciplined thought, disciplined action, and accountability.

For instance, businesses must try to learn how they can achieve the best results over the long term, and they should build relationships and promote their trademarks. However, a fast growth rate must be sustainable.

At the ceremony, the Viet Nam Report Joint Stock Company in collaboration with VietnamNet announced the second FAST500 list, comprising 500 of the fastest-growing companies in Viet Nam. The private sector accounted for 71. 6 per cent and state-owned businesses 22.2 per cent.

Nguyen Minh Hong, deputy minister of Information and Communications, said that FAST500 forum had been held for two consecutive years. The forum is seen as a bridge for exchanging information between domestic and foreign experts and experience.

The top 500 companies had an average growth rate of 57 per cent during 2007-10 and 54 percent in 2011.

The top 50 companies hit a growth rate of 127 percent, and the top 100 with 94 percent.

Northern province lures new foreign projects

The authority of northern Hung Yen Province granted investment certificates for four foreign-invested projects with a total registered capital of US$47.5 million in the first quarter of this year, announced Dang Ngoc Quynh, Director of the provincial Planning and Investment Department.

The figure represent a 33 per cent rise in volume and a 200 per cent increase in value against the same period last year.

Another 11 foreign-invested projects in the province got approval for adjustments to their investment certificate and licences.

There are currently 217 foreign-invested projects operating in the province with a total registered capital of $1.969 billion.

The provincial authority revoked the licence for the Hor Dar Co Ltd project, which was valued at $4.5 million, during the first quarter due to delays in investment and construction.

Textile, leather companies circle US market

A conference titled "New opportunities to approach the US market" is being held today in Ha Noi by the Viet Nam Textile and Apparel Association (Vitas) and the Viet Nam Leather and Footwear Association (Lefaso).

The event is being organised to coincide with a visit by Jessie Zhang, Business Development Manager of Tiger Trade, who is in charge of foreign customers at the US' Sourcing at MAGIC trade show.

Vietnamese enterprises operating in textiles and footwear will be provided with updated US market information, purchasing trend reports and new opportunities to approach small and medium sized distributors in the US.

In recent years, the US has been the main export market for Viet Nam's textile and footwear sector. Last year, export turnover reached US$6.87 billion for textiles and $2.37 billion for footwear. These figures represent 43.4 and 30.2 per cent of each sector's total export turnover, respectively.-

Vacation properties seen as effective investment

Tourism real estate would likely become an effective investment channel for investors considering the country's tourism sector had developed significantly in recent years, said Nguyen Thanh Trung, director of Archi Land Viet Nam.

During a press conference held late last week, Trung predicted that medium and low-cost segments of the sector would attract the attention of many investors in the coming time.

Archi Land Viet Nam is the sole distributor of Dien Vien Thon, a component of the 53ha Zen Resort project in Ba Vi District, west of Ha Noi. Invested by Thang Long Xanh Investment Co, the 3.2-ha Dien Vien Thon comprises 66 villas, covering an average area of 80sq.m each.

It is slated for completion in the first quarter of next year.-

Looser bank risk rules to boost market

Possible changes in regulations governing prudential ratios applicable to banks have given a boost to the securities market.

"The expectation of investors on changes to Circular No 13 on prudential ratios, issued by the State Bank of Viet Nam in 2010 – particularly the reduction in credit risk ratios applied to real estate and securities loans from 250 per cent to 150 per cent – has been a primary supporting factor for the market lately," said Bao Viet Securities Co analyst Nguyen Xuan Binh.

The decrease in credit risk ratios would improve the capital adequacy ratios (CAR) of banks, which would in turn help them increase their lending to the non-manufacturing sector, including securities investors, explained ACB Securities Co analyst Nguyen Thi Lan Huong.

Reducing the risk factor would also reduce opportunity costs for securities and real estate loans, helping lower borrowing interest rates for these loans as well, Huong said.

Although credit growth for unencouraged sectors – including securities and real estate investment – had been capped at 16 per cent, recent trading sessions had demonstrated the positive influences on the market of this news, commented Petrovietnam Securities Co analysts.

The draft circular would also eliminate a number of regulations related to securities lending, such as a ban on loans by banks to affiliated or subsidiary brokerages, a ban on unsecured loans for securities investment, and a requirement that total outstanding loans and discounts of valuable papers for securities investment not exceed 20 per cent of the bank's charter capital.

"These are very good signs for the financial market," Huong said.

However, she added, with the poor quality of credit pervasive throughout the banking system, increasing bad debt remained a great concern for banks.

"The revised circular will therefore probably show limited effectiveness," she said.

"We cannot hope that money flows into the market will surge if these amendments are approved," agreed analysts for the financial information website vietstock.vn. While anticipation of the changes has already helped unfreeze cash flows, the said, they "will not bring about as many effects as expected."

A higher loan-to-deposit ratio was also expected to slow any increase in lending.

Ministry targets tripled exports
 
Viet Nam wants to triple exports during 2010-20 with the aim of bringing the average level per capita to more than US$2,000 and balancing the trade books.

Phan Van Chinh, general director of the Ministry of Industry and Trade (MoIT)'s Import-Export Department, made the statement at a workshop held in Ha Noi yesterday to look at the impacts of international economic integration on Viet Nam's economy and import-export strategy for the 2011-20 period.

Chinh said the country would diversify its import and export markets and join production networks and value chains while focusing on developing high-value goods and brandnames.

He said the ministry would adopt a roadmap to to reduce ore exports and invest in technology to increase exports of processed products while making use of favourable markets and opportunities to raise export value.

Ore accounted for 11.2 per cent of exports in 2010, but under the strategy, that figure would fall to 4.4 per cent by 2020.

Agricultural, forestry and fishery exports would be restructured towards modern processing using advanced scientific applications.

Goods with low value but high growth potential will also be developed.

He said the import strategy would be adjusted while the production of materials, raw materials and accessories to serve domestic enterprises would be increased to meet the demand and reduce the need for imported goods, helping to reduce the trade deficit.

Deputy Minister Nguyen Thanh Bien said Viet Nam's integration into the global economy and accession to the World Trade Organisation (WTO) had exposed the country's economic shortcomings.

Bien said they would focus on developing export items which played to the country's strengths such as natural resources and cheap labour costs including seafood, garment and textiles and electronics.

"In the period of 2016-20, Viet Nam will focus on high value items to attract production investment from both inside and outside of the country," Bien said.

He added that the proportion of electronics, telecommunications and building materials exported would increase under the strategy.

Former minister of trade Truong Dinh Tuyen reviewed the impacts of joining the WTO, with average annual economic growth of 7 per cent from the 2006-10 period and a gradual shift from agro-forestry to industrial-construction.

Tuyen said exports had increased on average by 18.4 per cent from 2001-06 and by 15.8 per cent from 2008-10, due to global trade liberalisation and improved competitiveness.

However, he said trade policy was not cohesive with other macro policies while legislative formulation, review and amendments had not caught up with market development.

Viettel helps connect Cambodia researchers with the world

Local telecom giant Viettel said it has provided a data transmission line connecting the Trans-Eurasia Information Network (TEIN3), the pan Asian Research and Education Network and the Institute of Technology of Cambodia (ITC).

The network, to which Cambodia is the latest connection, brings the number of Asian countries benefiting from the high speed network to 17, the Military-run telecom provider said.

The new link initially connects the ITC in Phnom Penh as well as potentially connecting Cambodia's 35,000 researchers with scientists around the world.

The move will improve the quality and quantity of research conducted in Cambodia's higher education institutes and research centres, Viettel said.

The development of Cambodia's national research and education network (CamREN) will be boosted by its link to TEIN3, as it works to strengthen national and international research collaboration.

To achieve the l connection, CamREN worked closely with VinaREN, the national research and education network organisation of neighbouring Viet Nam, VinaREN helping arrange a dedicated link from its network in Ha Noi to ITC and providing access to its existing TEIN3 connection.

'When the TEIN2 programme began in 2004 VinaREN was similarly starting from scratch and appreciated the support," said Ta Ba Hung, director general of VinaREN

"VinaREN has quickly established research connectivity across Viet Nam and we are very pleased to help Cambodia start out along this road," he added.

The successful connection to TEIN3 was driven by the Network Startup Resource Centre (NSRC) based at the University of Oregon, which worked with CamREN technicians to provide the equipment and technical assistance at the ITC campus to complete the connection.

Viet Nam top destination for international investors
 
A recent survey conducted by the ASEAN Business Advisory Council (ABAC) revealed Viet Nam ranked the second most attractive regional investment destination.

Released last week, the survey, the second since 2010, questioned 405 businesspeople and industry leaders, 50 per cent selecting Indonesia as ASEAN's best investment destination, followed by Viet Nam with 46 per cent.

Third place went to Singapore with 43 per cent, followed by Thailand and Malaysia with 42 per cent, the Philippines with 27 per cent, Laos and Cambodia with 26 per cent, Myanmar with 25 per cent and Brunei with 17 per cent.

"Results resemble those of the ASEAN Business Outlook 2011-12 survey, which showed that 85 per cent of American firms questioned were planning to expand into ASEAN in the next two years," a press release issued by ABAC said.

The ABAC survey measured investment attractiveness on a scale of zero to 10. Indonesia received the highest rating at 6.89, followed by Viet Nam (6.29), Singapore (6.07), Thailand (6.04) and Malaysia (5.69).

One-fourth of those questioned came from Indonesia, while Singapore, Viet Nam, Thailand and the Philippines together accounted for 47 per cent.

"That the composition of respondents was higher from these countries was intentional because they represent the largest economies in terms of population and GDP," the release said.

As a region, ASEAN was rated as an attractive destination for investment, with 88 per cent of those questioned saying they planned to expand their business into at least one or more of the grouping's countries in the next three years.

"Half of these business groups want to invest in Indonesia while more than 40 per cent want to invest in Viet Nam, Singapore, Thailand and Malaysia," the statement said.

ASEAN was further rated as a more attractive investment destination than China in terms of commodity market and production location.

Financial reform key to restructuring economy

Rationalising State-owned enterprises and the financial sector were key to restructuring the country's economy, according to leading Vietnamese economists.

During the two-day Spring Economics Forum, which took place in the central Da Nang City from Sunday, top economists expressed their views about the long-term targets for national economic stability.

State-owned enterprises, investments and financial and monetary systems were key areas that needed to be addressed, they said.

One consensus arrived at after the two-day meeting was that the key factors for economic restructuring – the main task for this year – should be State-run groups and corporations and public investments along with commercial banks and credit institutions.  

"Key areas of business should co-ordinate to facilitate a smooth development of the economy," said Cao Sy Kiem, chairman of the Viet Nam Association of SMEs.

Tran Dinh Thien, director of Viet Nam's Institute of Economics, said that this year's growth would be unlikely to match that of previous years.

While experts affirmed that controlling inflation and the general stabilisation of the economy were still priorities for the strategy through to 2015, though they might play a lesser role than what was previously thought.

Previously, he said, growth was the priority in economic plans. But now, restructuring shouldn't stop with cutting back on public investments and equitising State-run enterprises, but should actively respond to demand in international markets as well as the nation's natural resources.

He stressed the necessity to reform wages and budget systems in the State-run sector, as well as to speed up revision of the Land Law, which, he said, lagged behind current practices.

"We can't avoid ineffective investments without focus if we continue to allocate the State budget and devolve investment management like we do at present," said Tran Du Lich, deputy head of the National Assembly member delegation from HCM City.

Nguyen Dinh Cung from the Central Institute for Economic Management agreed, saying that changes should be made in both the business environment and firms' internal management systems in order to improve resource utilisation as well as operating efficiency in State-owned enterprises.

National Assembly Economics Committee vice chairman Nguyen Duc Kien said that in order to generate breakthroughs in socio-economic development, an important issue was to mobilise the strength and resources of all economic sectors.

Meanwhile, Thien said economic difficulties, particularly the slowdown in production and prolonged high inflation and interest rates, had had a considerable negative effect on the business environment.

He quoted a recent Ministry of Planning and Investment report which pointed out that, from the beginning of this year to March 21 around 2,200 companies dissolved and over 9,700 others had not paid taxes or ceased operations altogether.

The combined number of businesses that had to stop operations was up 6 per cent from last year, he said, adding that this trend would be likely to continue as long as interest rates remained high.

"We believe that much more can be done to help the situation. The key now is to find a way to lower interest to rates that will make it possible for businesses to recover. This should be our ultimate aim," he said.

Thien also suggested that the development of key coastal economic zones, including Quang Ninh, Da Nang-Chan May, Phu Quoc and Vung Tau, should be prioritised.

The forum was co-organised by the National Assembly's Economics Committee, the Viet Nam Academy of Social Science and the Viet Nam Chamber of Commerce and Industry.

The Government is scheduled to submit a general economic restructuring scheme to the National Assembly at the 3rd parliament meeting session, slated for next month.

Pepper trade to gain volume, value
 
The Ministry of Agriculture and Rural Development expected pepper exports this year to increase in volume and value against last year.

The exports were expected to show a year-on-year increase of 6.1 per cent in volume to 101,400 tonnes and 3.7 per cent in value to US$742.3 million this year due to a low supply from India on the world market, said Nguyen Viet Chien, director of the ministry's Informatics and Statistics Centre.

India, the second largest pepper producer in the world, is tipped to show a year-on-year decline of 5,000 tonnes to 43,000 tonnes of pepper this year.

The latest forecast for Viet Nam is higher than that predicted in December 2011, which was a year-on-year decline of 17.8 per cent in pepper export volume but a year-on-year increase of 1.7 per cent in export value.

Meanwhile, the Viet Nam Pepper Association said the total national output of pepper would reach 95,000-100,000 tonnes of pepper this year, 10 per cent lower than in 2011. It was previously forecast the output decline would be 15 per cent, Chien said.

The expectation of low output in Viet Nam and India, the two largest pepper producers in the world, has pushed pepper prices up on the global market after a fall in January 2012.

Chien said that in the first quarter this year export prices of Vietnamese pepper jumped to $6,816 per tonne or 42.4 per cent over the same period last year.

Therefore, in the first quarter, Viet Nam's pepper exports saw a year-on-year surge of 30 per cent in value to $164 million though a decline of 7.5 per cent in volume to 24,000 tonne against the same period last year.

The Ministry of Agriculture and Rural Development wants to expand the pepper crop to 150,000ha with exports of $1 billion by 2015.

The association said the country needed a comprehensive strategy to add value in pepper products to achieve ambitious targets.

The strategy would have to focus on encouraging pepper producers to invest in processing technologies to add value and build brand names for Vietnamese pepper products.

It also said export companies should hire capable marketing staff to promote Vietnamese pepper products at prices close to world rates.

The country had 50,000ha under pepper last year and exported 120,000 tonnes worth $720 million.

Rice exports increase following sluggish months

Viet Nam targets 2 million tonnes of rice exports in the second quarter of the year, with 650,000 tonnes to be exported this month, according to the Viet Nam Food Association.

Speaking to the press in HCM City yesterday, Pham Van Bay, VFA deputy chairman, said that businesses had exported 1.08 million tonnes of rice for a free-on-board (FOB) value of US$529.8 million in the first quarter of the year.

This was a fall of 41.19 per cent in volume and 40.15 per cent in value compared to the same period last year.

The number of export contracts in the first two months of the year had fallen considerably compared to the same period last year.

However, exports picked up in March, with export contracts increasing by 12 per cent compared to March last year.

Asian countries have been the main buyers of Vietnamese rice during this period.

An increase in rice imports from China in the past few months has helped local exporters, with the figure expected to remain high until the end of the year, due to high demand.

Exports to Africa in the first three months accounted for 20 per cent of the country's total rice exports, as stock fell in a number of countries there.

In addition, the price and quality of Vietnamese rice has been more competitive than other exporters, including India and Pakistan.

Contrary to last year, when the market mostly imported low-grade rice, African countries are demanding a higher quality of rice.

That is true for other traditional markets for Vietnamese rice as well, according to Bay.

He said that Vietnamese farmers should limit growing low-grade paddy IR50404 because demand had dropped for this kind of rice.

However, the market for fragrant rice is still good, and farmers have been urged to grow more rice for the autumn-winter crop.

Bay said fragrant rice should not be planted for the summer-autumn crop because the weather is unfavourable.

As for the national programme to stockpile one million tonnes of rice, he said enterprises had bought 693,894 tonnes of rice as of April 6. The programme is expected to end on April 15 instead of April 30 as previously scheduled.

Production inventory up by 35% last month

The inventory index of the manufacturing and processing industries increased by 34.9 per cent over the same month last year, as reported by the General Statistics Office (GSO).

According to the office, the sectors with the highest inventory growth included fruits and vegetables, which rose by 87 per cent, fertilisers and nitrogen compounds by 62.7 per cent, iron and steel by 59.1 per cent, tobacco by 58 per cent, cement, lime and mortar by 55 per cent and motor vehicles by 38.7 per cent.

GSO economists blamed the situation on declining purchasing power, which hampered production and distribution systems. The office reported that the consumption index only increased by 0.5 per cent over the same period last year.

The inventory index has remained relatively high for a number of months, alarming many economists, and proving that inventory is too high across many sectors.

Because of increased overhead, particularly coming from rising the price of energy, petrol, wages and higher interest rates, many enterprises feel compelled to sell off inventory at cut-rate prices.

Cao Sy Kiem, Chairman of the Viet Nam Association of Small- andMedium-Sized Enterprises (SMEs), said that Government measures to control inflation and stabilise the economy over last months have had some positive results. However, he added, they have also added unforeseen obstacles for businesses.

He said access to capital was one of the biggest problems confronting Vietnamese SMEs, along with rising interest rates. He warned that as long as the current situation continues, there will remain a looming threat of the dissolution or bankruptcy of a large number of businesses.

Truong Phu Cuong, Chairman of the Construction and Building Materials Association, commented that, despite the recent 1 per cent reduction in interest rates, many businesses were still struggling to continue their operations.

He said that last year's inventory growth of 34.9 per cent posed a problem for the economy as a whole, as year-on-year inventory growth was usually around 12 to 15 per cent in normal economic conditions.

Vu Duc Dam, Minister and Chairman of the Government Office, said that the Government was exploring measures to foster both exports and domestic trade.

"The State Bank of Viet Nam is working on ways to stabilise the financial market and improve the credit situation for SMEs in a bid to boost the country's economic growth," he said.