Airliners increase flights for Tet

National carrier Vietnam Airlines (VNA) said it will offer more services at nighttime during the period of high demand around the coming Lunar New Year, when most airports are overloaded during the rush hours.

During the period between January 14 and 22, and January 24 and February 2, VNA will offer 24 hour services on the Ho Chi Minh City – Da Nang – Hanoi route.

The first flight will take off at 5:30am, and the last at 11:30pm every day during those periods, the airliner said.

Phan Ngoc Linh, director of VNA’s Tan Son Nhat Operation Control Centre, said on the busiest days during this season of high demand, there are as many as 284 flights departing and arriving at Ho Chi Minh City’s Tan Son Nhat International Airport.

VNA will increase services to meet demand, with 155,600 more seats offered on its seven largest air routes by demand, the company said.

In particular, the Hanoi – HCMC – Hanoi route will have as many as 7,000 seats offered in each direction per day, a 103 percent increase compared to normal days. Similarly, there will be 5,000 seats offered in each direction each day on the HCMC – Da Nang – HCMC route.

Five air services connecting HCMC with Hai Phong, Buon Ma Thuot, Pleiku, Quy Nhon, and Nha Trang will also have their number of available seats increased by 34 percent.

Meanwhile, Luu Duc Khanh, CEO of low-cost carrier VietJet Air, said his ariline will increase the number of daily flights connecting HCMC and Hanoi to three from the current two as of today (January 10).

For its part, Air Mekong said it has increased the number of flights in the Lunar New Year by around 25 percent compared with normal schedules.

The Lunar New Year falls on January 23.

Shares close the week higher on both exchanges

Almost 50 per cent of codes posted gains on both stock exchanges this morning, lifting the two benchmark indices.

On the HCM Stock Exchange, the VN-Index closed the winning week with an increase of 1.79 per cent to finish today's session at 354.33 points. The trading value rose 15 per cent to VND423 billion (US$20.1 million) but volume of the day's trades dropped 10 per cent to just 22 million shares.

An impressive performance of blue chips continued to push up the market. Three of the most heavyweight stocks, including insurer Bao Viet Holdings (BVH), Vietinbank (CTG) and food giant Masan Group (MSN), continued to hit the ceiling.

Others gained from 1-2.8 per cent.

Sacombank (STB) was again the most active code in HCM City with 1.79 million shares changing hands, closing unchanged at VND17,700 ($0.84).

On the Ha Noi Stock Exchange, the HNX-Index closed today higher at 56.27 points, a gain of another 0.82 per cent over yesterday.

The trading volume grew 20 per cent to over 20.1 million shares, worth VND157.7 billion ($7.5 million).

Kim Long Securities (KLS) and VNDirect Securities (VND) again saw the heaviest trades in Ha Noi, with over 2 million shares traded each. KLS closed up 5.2 per cent at VND8,100 while VND finished 3.3 per cent higher at VND6,300.

Advancers overwhelmed decliners by 125-75 overall.

Key shares slow market plunge

Stocks continued rising on the HCM City Stock Exchange yesterday but slid again on the Ha Noi exchange as investors continued to hold onto cash in the lead-up to the Tet (lunar new year) holiday.

In HCM City, the VN-Index gained 0.2 per cent to close at 348.11 points. The volume of trades dropped by 16 per cent from Wednesday's level to just 24.4 million shares, worth just under VND367 billion (US$17.5 million).

"Yesterday's rally continued to be driven by the gains of heavyweight stocks like Bao Viet Holdings (BVH), Vietinbank (CTG) and Masan Group (MSN)," an FPT Securities Co analyst wrote on the firm's website. "Investor caution has returned, sending many stocks into negative territory."

Three of the 10 leading shares by capitalisation hit their ceiling prices, including BVH, CTG and steelmaker Hoa Phat Group (HPG). MSN also closed up 2.8 per cent. These shares helped rescue the VN-Index from a fall, even as losers outnumbered gainers overall on the HCM City bourse by a margin of 132-82.

Sacombank (STB) continued to be the most-active share on the southern bourse, with 4.4 million traded. STB closed down 1.1 per cent to VND17,700 per share.

On the Ha Noi Stock Exchange, the HNX-Index declined by another 0.13 per cent to finish yesterday at 55.81. Volume decreased by 30 per cent to under 16.6 million shares, while the value of trades dropped 19 per cent to VND163.9 billion ($7.8 million).

Decliners edged advancers by a margin 149-56, with nearly half of all decliners hitting the floor.

Kim Long Securities (KLS) and VNDirect Securities (VND), with over 1.5 million shares traded each, were again the most-active shares in Ha Noi. VND lost 6.2 per cent to close at VND6,100, while KLS finished 2.5 per cent lower at VND7,700 per share.

Foreign investors continued yesterday as net buyers on both markets, picking up more than VND42.4 billion ($2 million) worth of shares.

Despite the gloomy market, State Bank of Viet Nam Governor Nguyen Van Binh predicted capital flows would return to the market this year as current policies discouraged investments in foreign currencies, gold and real estate.

But he also denied the possibility of lower interest rates for the time being. "In addition to inflation, reducing interest rates depends on many factors including ensuring the liquidity of the banking system," Binh said.
 
3 scenarios for Vietnam’s 2012 economic growth

Three possible scenarios for the country’s economic growth this year were unveiled yesterday by the National Committee for Financial Supervision.

In the first scenario, which is considered “a good one,” Vietnam’s gross domestic product (GDP) growth will reach 6 to 6.3 percent, while inflation is restricted to 8 to 10 percent. The state budget’s overspending in 2012 is around 4.8 percent of GDP.

With a bright outlook on the global economy, and the stable economic development of the country’s major exporting markets such as the US and Japan, Vietnam’s export turnovers are expected to rise by 12 - 13 percent, while imports post a 13-14 percent increase this year.

The trade deficit would be equal to 11-12 percent of total export revenues. The rate recorded last year was 9.9 percent.

In the second premise, or the “average scenario,” the country’s GDP growth would stand at 5.6 to 5.9 percent, with the state economic sector accounting for up to 37 percent of the total social investment, and the private sector, 41 percent.

With state budget overspending expected to be 4.8 percent of GDP, the government debt would top 59.2 percent GDP.

The National Committee for Financial Supervision said this is the most likely scenario, as the expected growth is close to the country’s real potential.

Finally, in the worst situation, with the global economy likely to be in a depression, Vietnam’s economy would also be greatly affected, in terms of both economic and export growth.

Under such assumptions, the committee said Vietnam’s GDP would only reach 5.2 – 5.5 percent, and government debt would be around 60.4 percent of GDP.

“In case of a real global economic depression, Vietnam’s economy will be adversely affected not only in 2012, but also years afterwards,” concluded the committee.

600 businesses to attend 2012 Spring Fair

Nearly 600 businesses will take part in the 2012 Spring Fair at the Giang Vo Exhibition and Fair Centre in Hanoi from January 12-21.

On display will be 900 stalls showcasing food, beverages, home appliances, garments and textiles, as well as footwear, cosmetics, interior decoration, souvenirs, flowers, and fruit.

The Vietnam Beer, Alcohol & Beverages Association (VBA) will also have a special area to promote its products.

A highlight of the fair will be 120 booths featuring specialities from 35 localities in the northern, central, Central Highland and southeastern regions.

2012 Business Startup festival launched

The Vietnam Chamber of Commerce and Industry (VCCI) launched the 2012 Business Startup Festival in Hanoi on January 7.

The program is to honour young people who have developed the best business projects and call for investment in these projects.

VCCI President Vu Tien Loc stressed that since its launch in 2003 the Business Startup Festival has helped promote creativity and arouse passion for business among young people in order to build a socially responsible and highly competitive business community.   

“To meet the target of developing Vietnam into an industrial nation by 2020, we need more new entrepreneurs, and we have high hopes for university graduates who will have the chance to become successful entrepreneurs in the future,” said Loc.

He expressed his hope that the 2012 festival will attract more young people to show their passion, share ideas and stimulate their innovations to set up highly practical projects.

Over the past 9 years, the Business Startup Festival has attracted tens of thousands of students developing more than 1,700 projects.

At the ceremony, the organization board presented first, second, third and consolation prizes to 11 best projects in 2011.

Firms granted inadequate support for trade promotion

Running counter to the increasing export turnovers, the government budget aimed at assisting local businesses to organize trade promotion campaigns has steadily declined.

In comparison to other countries, Vietnam’s state budget earmarked for trade promotions is extremely low , newswire VnEconomy reported.

Particularly, according to a World Bank reported titled “Export Promotion Agencies: What Works and What Doesn’t,” most of the countries in the world allocate 0.11 percent of their export turnovers for trade promotion activities.

Meanwhile, the rate for Vietnam last year was only 0.0036 percent of the export revenues, or only one third of the world’s average. Such financial allocation was only enough to meet 13.6 percent of demand by local businesses.

Ta Hoang Linh, deputy head of the Trade Promotion Agency, said government financial aid given to businesses via the national trade promotion program in 2011 was too modest.

In particular, the Ministry of Industry and Trade last year received 272 trade promotion projects from 72 institutions, calling for financial aid worth VND405.6 billion (US$19.4 million).

However, the total supports granted by the Ministry of Finance for the whole year was only VND55 billion, down 54.62 percent compared to 2010.

This modest support made it difficult for the Ministry of Industry and Trade to approve trade promotion projects.

“In fact, many well-planned projects that could greatly contribute to boosing exports and ensuring social welfare and securities cannot be implemented due to the lack of capital,” Linh said.

“In the longer term, the low budget appropriated to trade promotion activities will affect the country’s targets to increase exports and expand to new markets.”

The financial allocation given to businesses’ trade promotion campaigns is currently stipulated by Circular No 88, which was issued by the Ministry of Finance. Both the Ministry of Industry and Trade, as well as the Trade Promotion Agency, said this regulation is both inefficient and intricate.

For instance, the circular stipulates that the maximum monetary aid for a company to participate in a trade exhibition held domestically is only VND6 million, a rate which is only enough for leasing half of a booth at a fair in Hanoi or Ho Chi Minh City.

It also states that businesses can receive support worth at most VND700,000 each for registering to receive export and trade data and information. However, with such a small amount of money, businesses can only receive sparse information, which is of no good use to them, they said.

Moreover, businesses wishing to attend overseas trade fairs will receive maximum support worth VND40 million.

This aid is even not enough to cover return airfares to the EU, the US, or Africa, businesses said.

According to the Ministry of Industry and Trade, it has so far received 236 trade promotion projects to be implemented this year, with total expenses of VND316 billion.

The ministry said it would initially call on the government for a financial allocation of VND150 billion for these projects.

In the longer term, as of next year, the ministry will petition for the allocation to be hiked to 0.01 - 0.05 percent of total export turnovers, it said.

Increasing withdrawal makes banks short of cash

As enterprises are withdrawing money to settle debts, payrolls and bonuses ahead of the Lunar New Year, many small banks are trying to mobilize capital to overcome liquidity shortage.

Many banks have deployed all possible means, including mobilizing gold and different foreign currencies as collateral for borrowing funds on the inter-bank market.

Gold has been gradually mobilized at a higher interest rate from time to time over the past 3 months.

Most banks offered gold interest rate of below 1 percent per year in the middle of last October but it now tops 2 percent, or even 3.5 percent, for one-month term.

Local media has also reported a bank pushing the gold interest rate to a sky-high 4.35 percent for gold deposits longer than 6 months.

Aside from gold, the interest rate on foreign currencies such as Euro, and Australian and Canadian dollars has climbed up to 4 percent per annum compared to the previous rate ranging from 0.1 percent to 0.5 percent per annum.

According to many banking specialists, gold and foreign currencies interest rates surge because small banks use gold and foreign currencies as mortgage to borrow Vietnam dong on the inter-bank market.

“Since numerous banks have delayed settling their debts on the inter-bank market, several major banks now request their peers to mortgage assets in gold,” said the general director of a HCMC-based bank.

Some other banks even mobilize Vietnam dong exceeding the 14 percent ceiling interest rate despite strict enforcement.

The director of an agro-product company said 2 banks had offered him an interest rate of 16 percent – 18 percent for deposits of over VND500 million at one-month term.

However, the deal must be kept secret. Normally, a bank executive will cut the deal with customers at the formal rate of 14 percent, and give the difference to the client as soon as deposits are made.

As of last October, total capital mobilization increased by 8.4 percent compared to the year before, or an average monthly increase of 0.84 percent, which is only one-fourth of the 3.1 percent month increase in the preceding year.

Finance leasing firms found in troubled waters

With the bad debt ratio of 45.38 percent as of June, 2011, finance leasing companies are in trouble, Vice Chairman Ha Huy Tuan of the National Financial Supervisory Committee has said.

As of the end of last year’s first half, the total assets of finance leasing firms reached VND19.2 trillion with negative equity of VND2.1 trillion and the capital adequacy ratio (CAR) at minus 10.92 percent , Tuan said in his recent speech on Vietnam’s credit institutions.

Meanwhile, financial companies have total equity of VND21.3 trillion, total assets of VND156.6 trillion, CAR of 15.98 percent and bad debt ratio of over 2 percent.
There are currently 18 finance companies and 12 finance leasing companies operating in Vietnam.

Preliminary statistics show that 3 finance companies had smaller revenues than expenditures in the first 10 months of last year, while 2 finance leasing firms violated the minimum CAR regulation.

“Finance companies and finance leasing firms have witnessed their credit market share shrink to 3.35 percent (as of end-June 2011) due to inefficient businesses and huge losses,” Tuan said.

Meanwhile, as of last June, the credit market share of State-owned commercial banks fell from 58.15 percent in 2008 to 49.09 percent, while commercial joint-stock banks saw their share increase from 26.52 percent to 37.78 percent.

Credit institutions as well as their branches and transaction offices have been expanding strongly in the past 10 years, bringing the total number of credit institutions nationwide to 130 with over 9,600 branches and transaction offices as of the end of last June.

Given the harsh competition for market share with the strong rise of commercial joint-stock banks, the capital mobilization market share of finance companies and finance leasing firms declined from 3.64 percent in 2008 to 0.87 percent last year.

Commercial joint-stock banks jumped from the second place in 2010 to the leading position last year, holding 47.7 percent of the system’s capital mobilization market share.

On the other hand, State-owned commercial banks saw their share drop by 5.21 percent against 2010, accounting for 43.86 percent of the entire system’s market share as of last June compared to 56.88 percent at the end of 2008.

According to the report, a tense liquidity situation was also occurring at several credit institutions due to rising bad debts, insufficient provision for risks, declining asset quality and out-of-control credit risks.

Some credit institutions faced high client-related risks because of poor management and violations of corporate governance and risk management.

Stiff competition awaits local rice exporters

The country’s rice exporting sector will encounter tough competition from Indian and Pakistani rivals with their low-cost products this year, industry insiders warned at a meeting last weekend.

At the meeting to review rice exporting operations in 2011, Pham Van Bay, deputy chairman of the Vietnam Food Association, said the competition will get more severe since prices are likely to slump, as most of the major importing markets now have large rice stocks.

Bay said that in the first half of this year, Indian exporters will sell at low prices to reduce their unsold inventories, while Pakistani and Myanmarese companies will send low-quality, cheap rice into the market.

“With competition from these supplies, Vietnamese and Thai rice will see consumption slow down, and unsold inventories increase,” Bay warned.

Meanwhile, Truong Thanh Phong, VFA chairman, expressed concern that the local low-quality rice market in Africa, accounting for 20 percent of total rice exports, is likely to be held by India and Pakistan, due to the latter’s low-cost exports policies.

Meanwhile, many traditional markets for Vietnamese rice exporters have also cut import volumes.

Vietnam used to contract with Indonesia and Bangladesh on large quantities of rice exports at this time of the year, but this year Indonesia stopped buying from Vietnam since it has enough supply, Phong said.

Rice volume contracted for exports in the first quarter of this year dropped by around 700,000 tons compared to the same period last year, he said, citing figures from VFA.

“VFA should develop a plan to stockpile rice to stabilize domestic prices,” urged Le Viet Hai, director of the Can Tho-based Mekong Co.

This idea was shared by many other rice exporters, who said local rice stockpiles should be increased to avoid price drops, which will affect farmers’ rights.

In response, Phong said VFA has already developed a plan to buy rice from local farmers in case prices fall.

VFA will order local exporters to buy rice at prices no less than VND5,000 a kilogram from farmers, he said.

Phong added that in case prices fluctuate so severely that farmers’ profits are affected, VFA will call on the government to provide exporters incentives in borrowing bank loans to buy rice for stockpiles.

“In any circumstances, VFA and rice businesses will ensure that farmers’ profits will not fall to below 30 percent,” Phong promised.

Though forecasting certain likely difficulties, Phong said the Vietnamese rice exporting industry still has many chances for growth this year.

He said rice supplies in Vietnam’s major exporting markets can be affected by natural disasters, or food policies.

“Meanwhile, Thailand is likely to lose its market share in the high-class and aromatic rice segment due to increased prices, and competition from the Indian rivals, leaving room for Vietnamese products to replace it,” he said.

Motorbike market gloomy as customers tighten spending

The Vietnamese motorbike market has been growing for some years, but the financial situation has changed the outlook for the coming year.

Despite various promotion and advertisement programmes, motorbike companies have seen a sharp drop in sales. Many staff remain idle at their dealerships, waiting around for customers to arrive, while most shops claim to have been taking large losses.

During the last few years, motorbike prices have been on the rise, often increasing towards the end of the year for Tet. This year, however, even discounts have failed to lure the hope for year-end sales boom.

Le Truong Giang, Director of Ha Giang Motorcycle Ltd. Company, said that normally this time of year they would be sold out, but this year has been quite slow.

"We've been offering prices as low as VND1-2 million ($47.6-95.2) under the sticker value,” Giang said.

Nguyen Thi Nham, a customer, shared, “I'd like to buy a motorbike, but am shopping around for the best price. In the end, the amount of my Tet bonus will be the key to my decision.”

According to dealers in Danang, the number of people who buy high-end motorbikes, such as the SH and the Vespa Lx, has fallen considerable. More people are tending to buy cheaper models. The Lead and the Honda Vision have both become popular, priced between VND30-40 million ($1,428-1,904).

Retailers have reported that sales this year are about half of what they were during this time last year. Most customers are those who are in need of transportation, instead of those who simply want to update to a newer model.

Most people who deal in the business blame the inflation rate for causing customers to tighten their purse strings.

Ambitious seafood export target within reach  

The seafood industry is hopeful of achieving the Government's export target of US$6.5 billion this year despite the many difficulties it anticipates.

Speaking at a review meeting in HCM City last week, Truong Dinh Hoe, general secretary of the Viet Nam Association of Seafood Exporters and Producers (VASEP), said the industry expected to earn $2.5 billion from shrimp exports since global demand, especially in large markets like Japan, the US, mainland China, and South Korea, remained high.

It targeted another $1.8-2 billion from tra exports and $2 billion from other products, he said.

But to achieve the targets, the industry had to adopt measures to overcome challenges like the shortage of materials for processing and to improve quality, food hygiene, and safety, and expand export markets, he said.

VASEP chairman Tran Thien Hai warned that the ongoing economic crisis could affect global seafood demand, while importing countries could increase food hygiene and safety requirements.

Thus, expanding market share would be a big challenge, he said, adding that businesses must prepare to cope with the challenges.

The association sought Government support for setting up a quality control system for the whole production chain and implementing trade promotion programmes in overseas markets.

Hoe said the country should have a zoning plan for aquaculture development, ensure environmental protection and better oversight of breed stock, feed quality, and ban indiscriminate use of veterinary drugs to ensure hygiene and safety and stable supply of raw materials.

Use of modern technologies was imperative to increase supply and quality of raw materials to reduce costs and add value to exports, he said.

The association urged firms to co-operate with foreign partners to exploit fisheries sources and store them abroad before shipping to Viet Nam for processing.

Nguyen Thi Thu Sac, director of the Binh Thuan-based Hai Nam Company, said with near-shore natural resources becoming exhausted, the Government should support fishermen to shift to offshore fishing.

Seafood exports reached a record $6.1 billion last year, following a rise of 21 per cent, exceeding the target of $5.7 billion, the association reported.

Shrimp exports fetched $2.4 billion compared to $2 billion in 2010.

Viet Nam exported shrimp to 91 countries and territories, with the US, Japan, and the EU being the main markets, accounting for more than 65.8 per cent of revenues from shrimp.

Exports to Russia, South Korea, and ASEAN member-countries increased sharply last year.

Viet Nam also exported more than 600,000 tonnes of tra fish for $1.8 billion, a year-on-year increase of 26.5 per cent in value.

Exports of tuna, cuttlefish, and octopus also spurted.

But Tran Van Linh, director of the Thuan Phuoc Seafood Company, said the higher exports last year were due to the rise in global prices.

"We must review the quality of our growth," he said, referring to the fact that margins plunged despite the record exports.

Luxury mall opens doors in HCM City

A luxury mall built at a cost of over VND2.3 trillion (US$110 million) officially opened late last week in the Phu My Hung Urban Area in HCM City's District 7.

Crescent Mall, the first retail project in the country for the Taiwanese Phu My Hung Corp, has leased out 45,000 square metre of space to 113 tenants, including 13 global brands that have come for the first time to Viet Nam.

It had a soft opening on November 30 last year and now has 90 shops including Giant Superstore, a food court, and Happy 100 entertainment zone.

Indonesian airline names local agent

Carrier Garuda Indonesia has appointed the HCM City-based TransViet Promotion as its local representative to manage its sales, marketing, and reservation activities in Viet Nam.

Through this partnership, passengers travelling to Indonesia can benefit from code-share flights offered by TransViet to the Indonesian national airline's domestic hubs in Jakarta, Denpasar, and Makassar for connections to other destinations within the country and beyond.

"Viet Nam is one of the world's fastest growing travel destinations and is becoming an increasingly important market for us," said Risnandi, senior general manager, Area Asia, Garuda Indonesia.

Hong Kong invites SMEs to trade fairs

Vietnamese enterprises, particularly small- and medium-sized, are being encouraged to take part in international trade fairs in Hong Kong.

Johnny Wan, senior exhibitions manager at the Hong Kong Trade Development Council (HKTDC) said showcasing products in Hong Kong was a quick way to promote brands and build business links

Wan said the island enclave was Asia's trade-fair capital, holding more than 110 annually.

"To advertise Vietnamese goods to the world market, participation in Hong Kong's international trade fairs is one of the fastest route," Wan said.

According to HKTDC figures, every year more than 10 trade commissions from Viet Nam visited Hong Kong. Last year, 54 Vietnamese exhibitors joined Hong Kong's fairs while the number of Vietnamese trade buyers reached nearly 2,200.

Vietnamese companies have a keen interest in exhibitions, including jewellery, stationery, houseware, gifts, fashion, toys and games, electronics, medical devices and supplies, lighting and information technology.

However, Wan said that as garments, textiles and tea were key exports from Viet Nam, exporters should increase their presence in regional exhibitions.

He claimed Hong Kong was the freest economy in the world with zero tax for most products, adding that Hong Kong was the doorstep to southern China.

Hong Kong is among top 30 trade partners with Viet Nam, according to HKTDC . Two-way trade value during January-November last year totalled US$7.52 billion, a year-on-year increase of 33.7 per cent, it said.

Of this, Viet Nam's imports totalled $5.28 billion, while its exports fetched $2.23 billion. Re-exports were valued at $1.1 billion.

Wan encouraged the Vietnamese Government to spend more money to support SMEs to attend the fairs.

Companies fail to recognise WTO membership benefits
 
Viet Nam has been slack about meeting its commitments to the World Trade Organisation, while local firms are failing to make the most of the opportunities membership affords, said Vu Nhu Thang, chief of the Financial Strategies Institute.

Thang was speaking at a conference entitled "Taxation and financial services after five years since Viet Nam joined the WTO", last week in Ha Noi.

The most significant failures relate to taxation and financial services, he added.

Dang Ngoc Minh, chief of the General Department of Taxation's Large-enterprise Tax Management Office, said Viet Nam needed to do more when it came to pricing policies, customs' valuation and customs' costs. Viet Nam is committed to reducing the export tax on steel and iron waste and non-ferrous metals by half. In addition, the import tariffs on 10,600 commodities will have to drop by 23 per cent.

The tax reductions will put pressure on the State budget, but "budget safety is still assured," Minh said.

Meanwhile, Le Thi Thuy Van, from the institute, said, following Viet Nam's admittance to the WTO, more than 1,700 foreign investors and 14,000 individuals had joined the stock market, while indirect investment capital had reached US$7.6 billion.

She also said the number of accounting, auditing firms and taxation consultants in the country had risen sharply.

Financial experts said the country had focused too much on creating the right legal framework for WTO admittance and not enough on creating opportunities for local firms.

They also said financial and monetary policies had not adequately controlled exchange-rate fluctuations.

Get tough on economy: experts
 
A Vietnamese financial expert yesterday predicted an economically gloomier year for 2012 as the recession bottomed out.

"Stronger measures must be taken to restructure the economy," director of the Viet Nam Institute of Economics, Tran Dinh Thien, told a conference held by the National Financial Supervisory Committee.

"The world is on eve of a financial crisis and this has revealed the instabilities of Viet Nam in the global economy. It will be a very hard year for Viet Nam and the recession will reach its bottom."

Thien said the nation entered the year with a more fragile economic base following the economic downtrend, high inflation and the trade and State budget deficits that took root many years ago.

He added that stagnation combined with high inflation posed a great danger to the economy that worried economists about a trade-off between growth and stability.

If the Government prioritised curbing inflation, economic stagnation would grow worse, and if focus was put on curing economic stagnation, inflation would continue climbing up and be out of control.

Thien said the best scenario for this year's economic development, in which it was hoped GDP growth would reach 6 per cent, would be if the world economy grew by about 4 per cent and there was an increase of about 8 per cent in private investment.

But the 6 per cent GDP growth, the goal set by the National Assembly, would be far from reach, said the director of the Viet Nam Centre for Economic and Policy, Nguyen Duc Thanh.

Thanh said that he did not expect any economic recovery this year.

Although the goal of curbing inflation from more than 22 per cent to below 10 per cent could be achieved, the interest rate would remain high and enterprises would continue undergoing a stormy time for, at least, the first six months of the year, he added.

According to deputy director of the National Financial Supervisory Commission, Le Xuan Nghia, bank liquidity was the biggest headache that had to be solved this year for the survival of the economy.

He said the banking system had been weakened by rising bad debts, overdue debts and soaring potential risks in liquidity after several years of rapid growth.

If bank liquidity was not improved, the interest rate would not be lowered, the real estate and stock market would stay frozen and bad debts unresolved. This would mean the restructuring of the economy had failed.

"It is time to take strong measures to raise bank liquidity before things get out of control," Nghia said.

However, he added that it was questionable if 12 months was long enough to lower loan interest rates or to remove the ceiling interest rate - or to stabilise the gold price.

Meanwhile director of the Viet Nam Institute of Economics Vu Viet Ngoan said that the ceiling loan interest rate must be reduced by 4-5 per cent this year to help the nation overcome its difficulties.

Other financial commentators said that to improve the situation, the Government should continue to tighten fiscal and financial policies while enhancing the restructuring of public investment, the banking system and the State-owned enterprise sector.

Meanwhile, Thanh said the restructuring of the economy would take a long time and be costly, and required strong steps to "purify" the system of State-owned enterprises. A representative from Lien Viet Bank said even bankruptcy must be accepted for long-term development.

According to Thien, salary reform in the State sector was necessary, adding that curbing inflation should only be the short-term goal and the GDP growth rate should be set at less than 5 per cent instead of 6 per cent.

During the past four year, the economy of Viet Nam has been on a downtrend as macro-economic instabilities increased.

Average inflation in the period was 14.4 per cent, fluctuating from 6.9 per cent to 23 per cent.

The average GDP growth rate also witnessed a decrease from 8 per cent in 2002-07 to 6 per cent.

Joint venture launches Celadon City

Saigon Thuong Tin Tan Thang Investment Real Estate Joint Stock Company (TTJSC) on Saturday started marketing its large Celadon City project underway in HCMC’s Tan Phu District, over a year after the project got off the ground.

TTJSC, a joint venture between Gamuda Berhad’s property development arm Gamuda Land and Saigon Thuong Tin Real Estate Joint Stock Co. (Sacomreal), is offering apartments of the project’s Ruby precinct with a promotional package starting from VND19 million per square meter.

The developer woos buyers with a special payment method that requires a deposit equivalent to 30% of the total value of the apartment with the balance to be paid in the first quarter of 2013 upon the project’s completion. Homebuyers can also own a package of furniture worth up to VND60 million during the launch event.

“The official launch is considered the promising start to begin a new year with much more success for Celadon City,” Dang Hong Anh, TTJSC’s chairman said at the launching event of the township project.

The two partners have set aside some US$215 million to turn an 82-hectare site into a greenery township with some 7,000 apartments to accommodate some 25,000 people.

The project will also have offices for lease, shops and a supermarket, as well as amenities such as schools, area for children, and cultural and sport facilities.

The launch event saw TTJSC and Aeon, a leading retailer in the Asia Pacific region, signing a commercial section nestled in the Celadon City project.

The Japanese retailer will invest US$100 million in Aeon Shopping Center to serve future residents in the township. This is the first project to be developed by Aeon in Vietnam.

Asked about the timing of the project launch, Chow Chee Fan, general director of TTJSC, said the local property market is still in difficulty but the company keeps investing to develop the project as a long term investment. “We are here for a long term investment, so whether the market is up and down we will continue the project development.”

The township project, he added, requires some seven years for the development; and with the launch, the company wants to compete with other developments.

Regardless of the gloomy market, Chow feels confident about the market, saying that there is a huge housing demand in Vietnam. The township offers not only apartments for accommodation but also a lifestyle, an environment living community.

Anh seconded his partner’ ideas, saying that although Celadon City was broken ground at a time of global economic downturn and tough local property market conditions, the township is being developed as planned.

Anh said Celadon City is being built based on Gamuda Land’s rich experience as an urban township developer and Sacomreal’s deep understanding about the local property market.

For Gamuda Land, Celadon City is the first township that the Malaysian company had invested in HCMC and the second big property project in Vietnam. In collaboration with Sacomreal, Gamuda Land owns 60% of the joint venture.

Around two years ago, Gamuda had its multi-million-dollar property project getting off the ground at Yen So Park in Hanoi’s Thanh Tri District. The project includes commercial and office centers, luxury houses, and recreational works among others.

Gamuda Land has developed six townships in Malaysia, and Vietnam is seen as the second market in Asia where the company had got involved in property development projects.
 
Vietnam set to start coffee stockpiling plan

The Vietnam Association of Coffee and Cacao (Vicofa) has said the Government will approve a plan to stock up on 300,000 tons of coffee in the coming time, effectively denying international news reports that the plan has been shelved.

Recently foreign news agencies have reported there is a high possibility that the Government of Vietnam will not approve the coffee stockpiling plan proposed by Vicofa.

The reports said local coffee growers have sold out a great deal of beans to earn money for the upcoming Lunar New Year holiday, or Tet, thus sending the local coffee price plunging by VN1.8 million a ton last week.

According to the reports, the lack of transparency in the 300,000 tons of coffee retention scheme has also contributed to the price slide.

In fact, Vicofa proposed the plan in early August last year and its members have bought coffee for stockpiling since October the same year, when farmers began harvesting the 2011-2012 coffee crop.

Nguyen Viet Vinh, general secretary of Vicofa, told the Daily that the local coffee price slump over the past few days would be short-lived.