Moon cake shops face slow sales   

Many moon cake shops in Ho Chi Minh City, which have opened for more than two weeks, have had a hard time with sales, despite having kept prices largely unchanged from last year.

Moon cake producers have tried to save on production costs and have even been willing to accept reduced profits to maintain their prices at the same level as the last year. Many companies have only increased their prices by 5-10%, while a number of others have offered discounts in order to attract customers. This year the selection of moon cakes is not as diverse, especially in the luxury range.

The high-end moon cakes at Kinh Do are priced at around VND630,000-2.2 million (USD30-104.7) per box, while a traditional one would cost from VND35,000-330,000 (USD1.6-15.7). The products of other brands, such as Dong Khanh and Bibica, are cheaper, at VND25,000-200,000 per cake.

Most shop owners complained that the number of customers is much lower than this time last year, and they believe it is due to customers tightening their purse strings.

This year, the majority of moon cake businesses have not raised their production from last year, and in previous years; they have increased production by from 20-30%.

Le Thanh Huyen, owner of a moon cake shop on Truong Chinh Street, in HCM City, said, “In previous years, we saw a very exciting atmosphere with a lot of sales, especially from companies who bought cakes for their staff. But this year is definitely not as good. Many customers are waiting for the promotions that will come as the mid-autumn festival nears."

Shop owners have been worried about stagnant sales and having to invest in transport fees and pay for their workers.

Truong Dai Nguyen, an owner of a shop in District 6, said he has only been selling around five moon cake boxes a day, and worries about not being able to cover his costs.

Another owner Nguyen Thi Thu Cuc said, “I have hired five staff members, but our shop has only received few customers over the past two weeks. Our profits have not even been enough to cover staff pay."

Petroleum prices may see record highs

A number of petroleum wholesalers proposed a price hike of VND1,300 per litre of perol to the Ministry of Finance on September 7, which, if approved, would bring prices to a record high.

The proposal was confirmed to DTiNews by a representative from a petroleum firm based in the south.

If the ministry approves the proposal, retail prices of A92 grade petrol will set a new record high, exceeding VND24,000 per litre. This will be also the 5th consecutive petrol and oil price increase over the last month and a half, bringing the average frequency of price increases to one every ten days since the date when petroleum traders were allowed to set their own prices.

“The increase of VND1,300 per litre is based on the average of petrol and oil prices over the last 30 days. We are waiting for the ministry’s feedback,” he said.

The proposal comes in the wake of volatility in global petrol and oil prices, which remain at high levels. Over the past month petrol prices in Singapore saw their lowest levels, USD118.7USD per barrel. However, two days later, the price bounced back to USD122.39, keeping the monthly average price for A92 petrol high.

According to the Ministry of Finance, “Allowing petroleum traders to decide their own prices is an attempt at creating healthy competition, but it does not mean that the Government will give up management of the industry. They are only permitted to adjust the prices by 7%. They also have to register with management agencies before any price adjustment.”

Petroleum traders continue to complain over losses, although oil and petrol prices have been raised four times just since July 20.

They have said they now suffer from a loss of between VND500-800 per litre of petrol or oil, and that the support of the Petroleum Price Stabilisation Fund, with subsidies of VND500 per litre of petrol and VND300 per litre of oil, is not sufficient to cover those losses.

Speculators pounce on rice market as prices rise   

Speculators have been selling rice to Thailand via Cambodia for over a month despite domestic prices rising VND1,000/kg.

At the meeting of Vietnam Food Association (VFA) on September 7 in HCM City, Director of An Giang Export Company Nguyen Van Tien said the amount of rice in provinces near the south-west border are ready to be transferred to Cambodia has reached 400,000 tonnes in the last month.

At My Thoi Port in An Giang Province, 570,000 tonnes of rice has been recorded, of which only 100,000 tonnes has been officially traded.

"Although the summer-autumn crop has ended, they’re still trying to collect rice for sale to Thailand." Tien said.

VFA President Truong Thanh Phong said the rice would be transported to Thailand via Cambodia. Up to 5,000 tonnes of rice per day is currently being traded across the border via An Giang Province. In northern provinces, Chinese traders are buying rice straight from the farms.

According to Phong, Vietnam’s rice export figures are looking good. In July and August, enterprises have signed contracts for 1.7 million tonnes of rice. Africa nations have also signed deals to accept 1.6 million tonnes of the grain. In the near future, Indonesia, Philippines and China will buy more rice from Vietnam as their domestic prices are too high.

Severe droughts have lowered US and Russian food outputs and limited exports from two countries. Moreover, Russia has also considered limiting the export of other food products.

Phong said Thailand’s rice inventory currently stands at 11 million tonnes. Thailand was hoping to sell three million tonnes of rice but in fact only 230,000 tonnes has been sold due to its high price. India’s inventory has also reached 28 million tonnes that needs to be sold by the next crop.

The Ministry of Agriculture and Rural Development said Vietnam will be able to export 8.3 million tonnes in 2012 including 7.2 million tonnes of the 2012 crop and 1.1 million tonnes from stockpiles.

However, VFA said due to the rise of global prices and limited domestic sources, people have been hoarding rice. Rice mills still have full stockpiles and traders are exploiting this opportunity to hoard rice. Some firms from construction and marine industry have also jumped into the rice market to speculate, causing trouble for export companies.

Electricity giant granted VND22.5 trillion in loans  

The Electricity Group of Vietnam (EVN) is completing procedures to access an additional loan of VND22.5 trillion (USD1.07 billion) to carry out its projects.

EVN has finished procedures to receive a VND2.5 trillion (USD119 million) loan from the Vietnam Development Bank (VDB). The bank has also instructed its branches to provide VND421 billion (USD20 million) for EVN’s Dong Nai 3 Hydro-power project and VND449 billion (USD21.3 million) for its Ban Ve Hydro-power Plant.

Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) is seeking the State Bank of Vietnam’s approval for giving VND6.2 trillion (USD295.2 million) loan to EVN. The agreement is expected to be signed this month.

EVN will work with Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) to borrow VND4.2 trillion (USD200 million) for its Duyen Hai Thermo-power Centre project.

For urgent projects, VDB has given approval in principle to offer a loan of around VND3.05 trillion (USD145.2 million) to EVN’s Vietnam National Power Transmission Corporation (NTP) for site clearance.

Meanwhile, the Bank for Investment and Development of Vietnam (BIDV) said that it will provide a maximum loan of VND3 trillion (USD142.8 million) for NPT to implement nine urgent power projects.

NPT is preparing to sign a loan agreement worth VND200 billion with Vietnam Bank for Agriculture and Rural Development (Agribank) for 220kV Vung Ang-Ha Tinh power transmission line. The centre has also proposed the bank for an additional loan of VND2.45 trillion (USD116.6 million).

In the coming time, EVN will continue arranging capital for its urgent projects from local commercial banks and foreign partners.

In the coming years, EVN will have to add 11,600 MW to the national electricity system. Total capital demand for electricity infrastructure for the 2011-2015 period will total VND501.47 trillion (USD23.8 billion).

Keeping credit growth in harmony with inflation

There is growing concern about the central bank’s recent announcement that a new credit mechanism will allow commercial banks to expand their credit growth.    

The State Bank of Vietnam (SBV) says they will have the maximum credit growth of up to 30 percent in response to market demands as long as they ensure the security of the financial index.

However, the new mechanism may also affect targets to maintain the credit growth at 8-10 percent by the end of this year.

By the end of June 2012, the bad debt ratio in the banking sector had increased significantly, causing many banks to focus on restructuring their loans and raising service quality, in lieu of expanding their credit facilities.

There is hope that the current decline in interest rates will stimulate the credit growth in the remaining months of this year.

As Vietnam is still confronted with numerous difficulties such as slow production, weak purchasing power and high inventory levels. The credit growth of the banking sector will depend much on the recovery of the national economy, as well as the results of settling bad debts.

In the first seven months of this year, the banking sector’s credit growth remained relatively low, just at around 1.06 percent.

In the face of increasing bad debt ratios, the banking system will have to make greater efforts to ensure credit growth at 8-10 percent as expected.

Judging by the 4 percent GDP growth rate in the first half of 2012, both domestic and foreign economists forecast that the credit growth will likely be in single-digit figure and inflation will be kept below 10 percent in the second half, even into the new year.

The SBV said that its recent decision on credit growth expansion will not affect measures to curb inflation. Whether the set target for credit growth can be achieved or not depends on how to attract investment, stimulate consumption power and reduce inventory levels.

Bond market develops well in Vietnam

Vietnam has the fastest growing bond market in the second quarter of 2012, according to an Asian Development Bank (ADB) report.

The Asia Bond Monitor showed that by the end of June there was VND455.9 trillion (US$21.8 billion) in outstanding Dong-denominated bonds, 10.5 percent more than at the end of March and 28.5 percent more than at the end of June 2011.

Thailand, Singapore and Malaysia were the nest fastest growing on an annual basis, up 17.7 percent, 15.8 percent, and 15 percent, respectively.

The impressive growth in the Vietnamese market was driven by a 42 percent growth in treasury bonds outstanding and the resumption of the central bank’s bill issuance in March.

This was partly offset by a 4.4 percent year-on-year contraction in State-owned enterprise bonds and an 8.7 percent drop in corporate bonds outstanding.

Strong government issuance in the first and second quarters of 2012 followed a sharp reduction in issuance in the final three months of 2011 when the government reduced investment spending, raised interest rates, and took other measures to address high inflation issues.

Dien Bien hosts Vietnam-Lao tourism and trade fair

The 2012 Vietnam-Lao tourism and trade fair opened in the north-western province of Dien Bien on September 10.
    
Involved in the week-long event are 150 businesses with a total of more than 200 booths showcasing their latest products, mostly on garment and textile, footwear, electronics, home appliances, cement, timber, cosmetics, beverage, handicrafts, rice, coffee, tea, coffee, and various kinds of food.

The fair aims to create a good opportunity for local businesses to strengthen cooperation with Lao counterparts, especially those from northern provinces such as Phongsali, Luang Prabang, Oudomxai, Bokeo, Luang Namtha and Xayabouri.

Le Thanh Do, Deputy Chairman of the Dien Bien provincial People’s Committee, said that Dien Bien has many advantages to boost trade and tourism cooperation with Lao localities. The province is co-ordinating with Lao neighbouring localities to organize numerous activities during two countries’ friendship year 2012.

Vietnam, Russia State audits boost ties

A delegation of the State Audit led by its Deputy General Le Minh Khai paid a working visit to Russia from September 5-9.

Khai held talks with Sergey Stepashin, Chairman of the Russian State Audit Agency, to discuss measures to enhance future cooperation between the two agencies.

They signed an agreement on bilateral auditing for the Ninh Thuan 1 nuclear power plant investment project to facilitate its construction.

Khai is scheduled to meet with leaders of the State Duma to report on cooperation results between the two state audit agencies and put forward proposals to boost bilateral cooperation.

Nestle to purchase more coffee from Vietnam

Nestle, the world’s largest food company, plans to increase its direct purchases of coffee from Vietnamese farmers by fivefold in the next five years.    

According to Bloomberg, Nestle Vietnam Ltd may buy about 60,000 tonnes of coffee from Vietnamese farmers each year, compared with 12,000-14,000 tonnes this year.

Managing Director Rashid Qureshi affirmed this in a recent interview, saying that the Switzerland-based company started buying coffee directly from farmers late last year.

Qureshi said at present, Nestle buys 200,000-250,000 tonnes of Vietnamese coffee a year.

Experts forecast the 2011-2012 harvest was a record 1.55 million tonnes, according to a Bloomberg survey.

The International Coffee Organisation (ICO) forecast Vietnam’s production in the season ending this month may gain 7.9 percent to 21 million bags (60-kilogram bags.

Nestle invested in a procurement centre in Dak Lak, the main coffee-growing region, and set up a mill there to process beans, Qureshi said. Coffee consumption in Vietnam may double over the next decade, and Nestle’s sales of coffee products may see double-digit growth every year in the period.

Nestle will start producing soluble coffee, mainly for local sale, at a US$270 million plant in Dong Nai province in November after a first phase of construction is completed, Qureshi said. A second phase will be finished next year, with production of decaffeinated coffee planned for export, he said.

Vietnam learns US experience in public investment management

Local authorities play an important role in providing public services and creating a favourable environment for the private sector to boost economic growth, said US economist Jean Christopher Charlier.
   
Charlier made the comment at a seminar held in the northern province of Ninh Binh on September 20 by the Ministry of Planning and Investment (PMI) to gather opinions for the Government’s draft decree on mid-term investment plan.

Charlier said that the US and other developed countries concentrate on three key factors in public investment, including politics, administration and financial management.

He stressed the need to increase transparency in the national economy and identify responsibility of organizations and individuals.

Regarding PPP, PMI official Tran Thanh Long said that from 1990 to 2009 more than 1,300 PPP contracts, worth over 5 million Euro each, were signed in the European Union (EU). This investment model makes a positive impact on promoting public services, increasing investment sources and preventing over-spending of State budget.

Participants focused their discussions on mid-term spending proposal, State management of public investment projects, public-private partnership (PPP), and the Research Triangle Park (RTP) in North Carolina, the US.

Most of them agreed on the Government’s draft decree on mid-term investment plans. However, they said, it is necessary to clarify the purpose of State investment restructuring and increase inspection work at national level.

Agricultural fair to be held in Ninh Binh

A wide range of agriculture products from the Red River delta will be displayed at a trade fair, due to take place in the northern province of Ninh Binh from September 22-26.
    
The fair aims to help Red River localities advertise their trademarks and potential for trade and investment in the fields of agriculture and rural development.

During the fair, a trade promotion forum will be held for domestic and foreign businesses to share experience and seek cooperation partners, especially in high-tech agriculture.

TPP negotiations progressing in US

Negotiators of the Trans-Pacific Partnership (TPP) agreement, including Vietnam, have shown their resolve to complete the pact in an effort to facilitate trade and investment liberalisation in the region.
   
In a statement released on September 10, the negotiators, who are conducting the 14th round of talks in Virginia, the US, expressed their confidence in concluding talks in the near future, offering bright prospects for trade liberalisation.

They vowed to exert a greater effort to end the negotiation process so that TPP member economies will benefit from the pact at the earliest possible time.

At the current round of talks, parties concerned discussed a wide range of issues, including technical barriers to trade, rules of origin, e-commerce, and intellectual property rights. The round is scheduled to last through September 15.

The original agreement was signed by Brunei, Chile, New Zealand, and Singapore in 2005 to increase trade and investment ties, boost economic growth, and generate jobs between the participating countries.

Vietnam, the US, Australia, Malaysia, and Peru are currently negotiating to join the grouping.

Vietnam will benefit a lot from the agreement once it enters into force. Its major export items such as garments, footwear, seafood and woodwork will enjoy tax exemptions or reductions when they are imported into the US, Australia and other TPP member economies.

The Trans-Pacific Partnership (TPP) agreement is expected to generate US$36 billion for Vietnam, or 15.5 percent of the country’s GDP in 2025, according to US experts.

Preparations for Vietnam-Customs Union FTA negotiations complete

Vietnam and the Customs Union of Russia, Kazakhstan and Belarus have completed the feasibility study of a free trade agreement, paving the way for formal negotiations to start.    

A document to this effect was signed recently between Vietnamese Trade Minister Vu Huy Hoang and his Russian counterpart A.A. Slepnev.

The Vietnamese Ministry of Trade (MoIT) quoted the joint study group of parties concerned as saying there will be great potential for developing economic and trade ties between Vietnam and countries of the Customs Union once the FTA is signed.

Both sides stressed the need to establish a mechanism for durable and comprehensive cooperation in trade, economics and investment, and committed to expanding trade cooperation within the Asia-Pacific region.  

They expressed their belief that the FTA will increase strategic cooperation between the parties concerned.

FTA negotiations are expected to begin in the first quarter of 2013 after parties concerned complete necessary procedures.

Both sides said they are aware that the FTA must conform to international norms, including regulations of the World Trade Organisation, and that negotiations will be conducted alongside the implementation of their projects.

Chinese animal food plant inaugurated in Hai Duong

An animal food processing plant officially went to operation on September 8 in northern Hai Duong province.    

The plant, covering 30,000 sq.m in Cam Giang district, was built by Chinese Tongwei Company at a cost of US$10 million to produce 200,000 tonnes of animal food per year.

The Company’s General Director Tang Ming, says the plant aims to supply high quality animal food to the domestic market.

Currently, it has 110 employees.

Salt import quotas tipped to rise
 
The Ministry of Industry and Trade will grant import quotas for salt this month under the Ministry of Agriculture and Rural Development's proposals.

This month, the ministry would license traders to import 53,000 tonnes of salt, including 51,000 tonnes of industrial salt and 2,000 tonnes of pure salt, out of the import quotas at 102,000 tonnes of salt throughout 2012, Deputy Minister of Industry and Trade Nguyen Thanh Bien said.

This year, the ministry would allocate an import volume of 100,000 tonnes of industrial salt out of the 102,000-tonne salt import quota to enterprises who use the industrial salt to produce chemical products, Bien said.

Meanwhile, import quotas of 2,000 tonnes of pure salt would be allocated to enterprises to make medicine and health care products.

The two ministries had asked enterprises to import the salt for production, not for trading, he said. The Ministry of Industry and Trade also requires importers to produce monthly and quarterly reports on how much salt they import.

The 102,000-tonne quota for salt imports this year was in line with the country's World Trade Organisation (WTO) commitments, said Bien, adding that Viet Nam only needed to import high-quality salt for use by some processing industries.

Dao Quang Tuyen, director of Viet Tri Chemical Joint Stock Company, said since early this year, the company must purchase 17,000 tonnes of salt for its production with an import tax rate of 50 per cent because the company was not yet allocated this year's salt import quotas.

Under the existing regulations, the import tax rate for salt under import quotas was 10 per cent.

The company needed 25,000 tonnes of industrial salt for a production line of 20,000 tonnes of chemical products, Tuyen said. It expected to be allocated a 10,000-tonne salt import quota for its production by this year end and reserve by the end of the first quarter next year.

Together with allocation of salt import quotas for local traders, the Industry and Trade Ministry would supervise imports of salt to ensure it was used for production, not for local sales.

According the Ministry Agriculture and Rural Development, this year the country's total salt supply would reach 1.52 million tonnes, including locally-produced salt, stockpiled salt and imported salt. Meanwhile, salt consumption was estimated to stand at around 1.45 million tonnes. As a result, salt supply would exceed demand by 70,000 tonnes.

This year, around 2,000 tonnes of salt would be used by the health care sector and 51,000 tonnes would be needed for production of chemicals.

Under the country's commitment to the WTO, Viet Nam is allowed to import 191,000 tonnes of salt under a tariff quota that can increase by a maximum of 5 per cent per year.

Rules tightened on re-exporting

Temporary-import goods can now only be kept in Viet Nam for 45 days before they must be re-exported. One 15-day extension is allowed.

The Prime Minister issued Directive 23/CT-TTg last week to make State management of temporary importing and re-exporting more efficient. The goal was also to prevent smuggling, which was reported recently to have reached alarming levels.

Previously, goods could be kept in the country for up to 120 days with two 30-day extensions. The long storage duration caused difficulties in management and meant that temporary-import goods might be sold in the domestic market instead, according to the General Department of Customs. Under the directive, when the storage duration was over, the goods would be forcibly re-exported from Viet Nam through the border gate of temporary import. If not, they would be seized and handled as regulations specify.

Regarding the loopholes in the regulations on temporary import and re-export that importers could take advantage of to seek illegal profits, the Prime Minister also ordered the Ministry of Industry and Trade to review the current regulations to eliminate those no longer appropriate and propose amendments for better management.

The ministry would issue, within this month, lists of goods banned and temporarily halted from temporary import for re-export or transhipment, together with conditions for the temporary import of goods on which an excise tax was imposed, including wine, beer, tobacco and cigars.

Regulations on the temporary import and re-export of petrol must also be tightened to stop smuggling and tax fraud through temporary import.

The General Department of Customs proposed petrol be added to the list of products on which importers could not enjoy tax deferrals and must pay taxes immediately.

Relevant ministries and organisations would enhance management, especially in border and coastal provinces.

The department also urged the Government to lift its strict regulations on the importation of luxury goods, saying this would help increase trade value, boost domestic consumption and generate more tax.

Garment exports reach $10.8b

The country's textile and garment sector achieved a trade surplus of US$5.3 billion in the first eight months of 2012, a year-on-year increase of 24 per cent.

According to the Viet Nam Textile and Garment Association (VITAS), in the first eight months of the year, the sector achieved an export turnover of $10.8 billion, an increase of 6 per cent compared with the same period last year.

The textile and garment sector has taken the lead of the country's top 10 export products.

VITAS attributed the decrease in input materials to an increase in trade surplus enjoyed by the sector this year.

In addition, the sector has reached a localisation rate of materials and equipment of 49.5 per cent, up by 7 per cent compared with the same period last year.

VITAS said the sector's export turnover to major overseas markets had increased sharply.

In the first seven months of 2012, exports to the US reached $4.2 billion, up 10.6 per cent; to Japan, more than $1 billion, up 23 per cent; to the US, $452 million; and to South Korea, an increase of more than 19 per cent compared with the same period last year.

These increases will make up for the decrease in the sector's export turnover to the European Union markets, which was $1.3 billion, down by nearly 4 per cent over the same period last year.

As a result, the sector is expected to reach its 2012 targets of attaining an export turnover of $15 billion earlier this year, according to Dang Phuong Dung, VITAS' Secretary General.

HCM City hosts hi-tech agricultural fair

HCM City will hold its first international hi-tech agriculture and food processing fair next month.

Organisers said that the Hi-Tech Agro 2012, which will be held from October 24 to 28, will create conditions for the agriculture sector of HCM City, the Cuu Long (Mekong) Delta and southeastern provinces to access the latest technological advances and offer opportunities for domestic and foreign firms to exchange experiences and information.

The five-day fair will also promote Vietnamese agricultural brands and help attract investment into the agriculture and food processing industry, they said.

Pho Nam Phuong, director of the HCM City Investment and Trade Promotion Centre, main fair organiser, said there are plenty of hi-tech agricultural products from HCM City and the Cuu Long Delta and southeastern provinces in the market at present. The products include vegetables, seafood, animal and poultry meat, flowers, ornamental trees, ornamental fish and tanned leather.

However, the promotion of these products on a large scale has not been done regularly to increase consumer awareness of hi-tech agricultural products and introduce the country's increasing agricultural production capabilities to importers, she said.

HCM City is the country's major consumer and exporter of many agro-forestry and seafood products while the Cuu Long Delta and southeastern provinces are the major suppliers.

Many farmers and companies in HCM City, the Cuu Long Delta and eight southeastern provinces have evidenced keen interest and registered to attend the fair, organisers said.

Vinachem casts green eyes towards Laos

State-owned Vinachem, the biggest fertiliser producer in Vietnam, is mulling an investment plan in a Laos-based  $522 million kalium salt mining and processing project.

According to Vietnam’s Ministry of Industry and Trade (MoIT), Vinachem recently asked the Vietnamese government to grant it an investment certificate to implement the project covering 10 square kilometres in Laos.

Vinachem said that after the project got the government’s thumbs-up, it would be kicked off in 2013 with an annual production output of 320,000 tonnes. In February this year, Vinachem signed an investment agreement with Laos’ Ministry of Planning and Investment to start works on mining and processing kalium salt on the 10 square kilometres site in Khammouan province’s Nongbok district.

Vinachem said that the group had completed studies on 196.5 square kilometres in Khammouan province’s Nongbok district and Savannakhet province’s Xaibouli district, also for kalium salt mining and processing. The studies were licenced by Laos government in 2008.

Kalium salt is an important element to produce the potassium fertiliser. At present, Vietnam has to import all of the potassium fertiliser needed for agricultural production and Laos-based proposed kalium salt processing plants will help Vietnam have a stable potassium fertiliser supply.

According to the MoIT, Vietnam imported 612,000 tonnes of potassium fertiliser in 2009, 900,000 tonnes in 2010 and 920,000 tonnes in 2011. The import volume of potassium fertiliser this year is estimated at around 920,000 tonnes.

General Mills signs franchise partner

One of the world's leading food companies, US – based General Mills, announced its franchise partnership with International Lifestyle Joint Stock Co by launching its first Haagen-Dazs ice-cream shop in mid-September in HCM City.

The shop is located in a French-colonial three-storey concept space.

Wuthichai Ratanasumawongs, managing director of General Mills, said this would help create a new segment of Haagen-Dazs advocates in Asia Pacific.

The brand's ice cream is available in retail locations, upscale hotels and at 900 Haagen-Dazs shops in 50 countries.

Developer denies stake in Western Bank

Real estate developer Kinh Bac City Development Holding Co (KBC) formally denied in a filing with the State Securities Commission last Thursday a number of media reports that the enterprise holds a direct or indirect ownership stake in Western Commercial Bank.

KBC confirmed that it remained a major shareholder in Sai Gon Telecommunications & Technologies (SGT), but it noted that SGT no longer held any Western Commercial Bank shares. Previously, SGT had held a 6.27-per-cent interest in bank.

KBC also reported that it was a minority shareholder in Binh Dinh Energy Joint Stock Co but that Binh Dinh had also divested itself of a 6.57-per-cent stake in Western Bank.

Complex cross-ownership relationships between enterprises and commercial banks were increasingly common, with affiliated banks frequently extending credit on preferential terms to close partners, according to a recent economic report released by the National Assembly Economic Committee.

In late August, local media reported that a group of shareholders of Western Bank had conducted negotiations to sell shares to other investors and had reached a deal to sell 90 per cent of shares to PetroVietnam Finance Co (PVF). It was rumoured that the agreement was waiting on approval from regulators.

However, KBC's report on Thursday denied rumours that the developer had lent its chairman, Dang Thanh Tam, VND110 billion ($5.2 million) and lent Sai Gon Invest Group VND91 billion ($4.3 million).

Under its consolidated financial statements for 2011, KBC showed that it had borrowed VND110 billion from Dang Thanh Tam and VND91 billion from Sai Gon Invest Group and that recent disbursements to KBC constituted repayment of loans.

Textile sector aims for US$15 billion in 2012

The local garment and textile sector is likely to achieve its target of earning US$15 billion from exports in 2012 ahead of schedule, said Dang Phuong Dung, Secretary General of the Vietnam Textile and Apparel Association (Vitas).
   
Dung said that garment exports in August fetched US$1.59 billion, bringing the total export turnover in eight months to US$10.8 billion, a year-on-year increase of 6 percent.

One of Vietnam’s 10 leading export items, garment exports since early this year have produced a surplus of over US$5.3 billion, up 24 percent against the same period last year.

Dung said there is high hope that the garment sector will soon over fulfil its yearly target if local producers step up production and expand markets to the Pacific, EU and other overseas markets.

The Ministry of Trade and Industry (MoIT) is launching trade promotion campaigns in Hong Kong (China), Thailand, Malaysia and many other countries.

Tax incentives total VND14 trillion

Tax cuts, exemptions and deferrals for local enterprises nationwide totalled VND14 trillion (US$672 million) as of September 7, according to the Ministry of Finance (MOF).

Over 190,280 enterprises were allowed to defer VND11 trillion (US$528 million) in value added tax payments in April, May and June, while another 70,300 businesses were allowed to defer 2.87 trillion (US$137.76 million) in tax arrears, the MOF reported.

Around 33,500 fishing and salt-making household businesses were exempt from a total of VND10 billion (US$480,000) in business taxes and more than 2,400 enterprises had their land lease fees for 2012 cut by half, amounting to a total of VND250 billion (US$12 million).

The Government adopted measures known as Resolution 13 in May to support struggling enterprises and boost the local market.

VietJet Air offers more flights, big promotions

VietJet Aviation Joint Stock Company ( VietJet Air) announced on September 9 that from October 14 the airline will increase the number of flights on many domestic routes.

Accordingly, there will be two round-trip flights daily on the Ho Chi Minh City-Nha Trang route; three round-trip flights daily on the HCMC-Da Nang route; and three daily round trip flights on the Hanoi-Da Nang route.

The budget carrier will also offer a huge promotional program in which it will offer tickets for only VND99,000 (US$4.5). 10,000 promotional tickets will be available on the HCMC-Nha Trang, HCMC-Da Nang and Hanoi-Da Nang routes from this October 14 until March 31, 2013.

VietJet Air currently flies Airbus A320 aircraft to four major hubs of Vietnam -- HCMC, Da Nang, Nha Trang and Hanoi. VietJet Air will now offer 10 return flights a day between HCMC-Hanoi, Hanoi-Da Nang, HCMC-Da Nang and HCMC-Nha Trang. The route linking HCMC and the northern city of Hai Phong will commence on October 1, with one return trip a day.

In late 2012, with the arrival of three more A320 aircraft, VietJet Air expanded its fleet to six aircrafts adding new routes to more destinations in Vietnam as well as Southeast Asia. Routes currently under consideration include Hanoi-Phu Quoc, Hanoi-Dalat, HCMC-Hue and HCMC-Vinh.

Desmond Lin, director of business development at VietJet Air, said “As always VietJet Air makes great efforts to serve passengers by introducing more flights and offering even lower cost fares this time. With VietJet Air becoming both a domestic and international carrier, we believe that passengers will soon enjoy a wider choice of routes for private travel and business purposes both domestically and internationally.”

Businesses in District 11 offered low-interest loans

The business association of HCMC’s District 11 and four member enterprises received VND614 billion worth of loans from Vietinbank with interest rates of 9-13% per year.

The loan contracts were signed at a meeting between the district’s leaders and businesses last Friday.

Of the total VND614 billion, the district’s business association was given VND500 billion, ABC Bakery VND36 billion, Loi Tuong Trading Co. VND30 billion, Viet Huong Production and Trade Co. VND40 billion, and Phu Gia Loi Hotel Restaurant Service and Trading Co. VND38 billion.

Tran Thi Bich Tram, deputy head of the economic division of District 11, said 269 out of the 350 enterprises in the district had raised their voice on in production and business operations.

Companies in District 11 have sent several petitions to the district’s government, seeking tax reductions and subsidized loans with interest rates lowered to 8-10%.

Hang Vay Chi, chairman of the District 11 business association, said the business supporting programs should be more practical. Instead of tax payment extensions, tax cuts will be better, he suggested.

In response to the petitions of businesses, the District 11 government announced to provide small and medium enterprises with a 30% tax reduction. Enterprises renting State land will also enjoy a 50% tax cut.

Meanwhile, lodging, catering and daycare service providers will be exempt from tax, provided that they keep prices unchanged from last year.

* Through programs to connect banks and businesses, the HCMC government helped the city-based firms access VND31.5 trillion of soft loans in the past three months, says a report on Jan-Aug socio-economic situation in HCMC.

Vietnam dong loans with preferential interest rates of 12-15% and U.S. dollar loans with rates of 4.5% were provided by 14 banks in the city. Bank-business connection programs have been carried out since June, in which small and medium enterprises in Tan Binh, Go Vap and Tan Phu districts were lent over VND300 billion to serve as working capital.

As such, credits in HCMC are estimated at VND767 trillion in the first eight months, up 0.39% year-on-year, while the city’s credit growth had still been negative at end-May.

According Nguyen Hoang Minh, deputy director of the central bank’s branch in HCMC, several banks have given out unsecured loans, a type of loan that they were previously afraid to grant due to high risks. Outstanding unsecured loans now account for 12.5% of the total, some 2% higher than three months ago.

In addition, loans mortgaged by accounts receivable have also been offered by many banks. These lending forms make it easier for businesses to access capital, especially those with no collateral.

Minh informed more programs to connect businesses and banks will be launched in the coming time to help businesses overcome their difficulties. Specifically, a program will be rolled out in Can Gio District this month.

However, regarding a credit growth of 8-10% for the whole year, he deemed such a target difficult to obtain, as the absorptive capacity of the economy was now very low. With an estimated growth of 0.39% in eight months, it will not be easy for credits to pick up by 2% every month in the remaining four months.

Local-global gold price gap widens

Local gold prices continued surging sharply on Thursday, causing the difference between local and global prices to widen to over VND3 million per tael.

At the end of the day, Saigon Jewelry Holding Co. (SJC) sold the yellow metal at VND46.1 million per tael, up VND750,000 against a day before, and bought it at a price some VND200,000 lower than the selling rate.

Over the past one month, local gold has picked up VND3.8 million per tael, or 9%, while world prices only increased 6%. A tael equals 1.2 troy ounces.

SJC had a busy gold trading day on Thursday, with more than 5,500 taels bought, said Nguyen Cong Tuong, deputy sales manager of SJC. Since August 21, SJC has bought some 55,000 taels, equivalent to over two tons.

Gold buying demand remains high, so the possibility of an undersupply is high, according to Tuong.

Among the gold bars recently processed by SJC, at some 50,000 taels, SJC gold only makes up a small proportion and the remainder belongs to other traders, said Tuong. SJC’s processing plant provides only a few hundred taels every day, which Tuong said was inconsiderable.

Nguyen Hoang Minh, deputy director of the central bank’s branch in HCMC, who is also head of the SJC gold bar processing supervision group, said no other trader had been granted a gold bar processing certificate so far.

Several firms are seeking permission for gold import to boost supply, Minh added. The central bank will consider this petition based on Decree 24 on gold trading management.

Surging demand at home has led the local gold price to be higher than the world level. The domestic price on Thursday was VND3 million per tael higher than on the world market.

Global gold prices quoted at www.kitco.com at 5 p.m. on Thursday was US$1,708.3 an ounce, up US$15 against the closing level in the New York market the night before.

In the 2012 macro-economy report released on Tuesday, the National Assembly (NA) Economic Committee suggests Vietnam should develop a modern gold market so as to make it possible to raise 300 to 500 tons of gold from the public, foster economic development and prevent gold trading practices that affect the exchange rate.

The report points out physical gold trading and speculation as a major cause. According to the report, the majority of Vietnamese people buy gold for speculation through physical gold transactions with intermediary shops.

To eliminate the impact of gold speculation on the flow of gold, the central bank should issue gold certificates and establish a national gold trading floor, says the report.

Regarding the issuance of gold certificates, gold export and import is simply for those in need of physical gold and those producing jewelry and other items. Meanwhile, the tentative gold trading floor will help reduce speculation by issuing gold certificates.

Banks raise gold deposit rates

Although there are only two months left until the end of gold mobilization through gold certificates, many banks are still mobilizing gold with higher deposit rates.

Specifically, Asia Commercial Bank (ACB) quotes deposit rates for 1-2 month certificates of deposit in gold at 1.4% per year. If more than ten taels are deposited, clients will earn an extra 0.2% percentage point.

Such a rate is high compared to the average gold deposit rate, whereas ACB earlier announced to mobilize gold with a deposit rate of 0.8% per annum, with maturity dates prior to November 25, under the regulations of the central bank.

The annual interest rate of 1.6% for gold deposits of over ten taels is also applied at Eximbank. Those depositing fewer than ten taels are subject to a rate of 1.4% per year, which is applicable since last Thursday.

On the same day, Sacombank raised its gold deposit rate to 1.6% for 1-2 month terms, applicable to all deposit volumes.

On the other hand, several banks are offering very low gold deposit rates. For example, at Southern Bank, the rate is 1% per year for SJC gold deposits with terms of one, two and three months.

Similarly, Nam A Bank is also mobilizing gold with 1-3 month terms, offering an interest rate of 0.8% a year.

Meanwhile, many banks have already stopped gold mobilization, and some others are providing a gold-keeping service, such as DongA Bank. In addition, not so many banks are still issuing certificates of deposit in gold.

Nguyen Thanh Toai, deputy general director of ACB, said the bank had returned a large amount of gold to depositors in late August, so the bank’s gold reserve was affected. Therefore, ACB has increased both gold buying price and gold deposit rate to mobilize more gold to supplement the reserve.

According to a banker, as gold prices pick up while gold deposit rates stay low, people tend to withdraw their gold savings from banks to sell for Vietnam dong. Moreover, citizens’ confidence in the banking system has been damaged, so they would rather withdraw gold to keep at home.

As such, gold supply of banks is greatly impacted, urging them to seek additional sources, through buying gold from SJC and raising gold deposit rates to weaken withdrawing energy and encourage clients to deposit again.

According to the banker, this is just a temporary fluctuation caused by the sudden gold price hike, and citizens will be calmer when the gold upheaval passes. However, “the central bank should import gold when necessary, so that banks can buy gold and balance their position, avoiding affecting the market, and to avoid affecting foreign reserves, banks will transfer their foreign currencies to the central bank, because the foreign currency sources of the banks in need of gold are still abundant,” said the banker.

Meanwhile, a source told the Daily that the central bank has not considered gold importing yet. The agency is closely following the developments of the market to make timely intervention.