Indolent credit growth puzzle

The central bank’s recent move to cap lending at 15 per cent, per year for four priority areas was appreciated by the public. However, it did not mean more credit would be pumped into the economy, according to industry insiders.

ACB chairman and former Minister of Planning and Investment Tran Xuan Gia said capping lending rate in four priority areas did not mean all firms could access bank loans.

Firms with poor development plans would still find it hard to access loans, despite the State Bank slashing the mobilising rate to 12 per cent per year a month ago and banks rolling out preferential credit packages with more affordable lending rates at 14-15 per cent per year.

However, few packages have been fully disbursed due to banks’ failure to find ‘good’ customers.

Before the State Bank capped the lending rate to four priority areas at 15 per cent per year, LienVietPostBank had launched a 14 per cent, per year concessionary credit package which was not fully disbursed though the bank was active in finding customers, according to its deputy chairman Nguyen Duc Huong.

Eximbank’s general director Truong Van Phuoc said the bank could just disburse VND600 billion ($28.5 million) out of its VND1,400 billion ($66.6 million) preferential package to support firms buying food with 14 per cent, per year interest rates.

Huong attributed sinking consumption and firms’ unsold stock as to why firms did not want to borrow more.

Industry experts and firms, however, assumed low credit growth resulted from banks not wanting to lend because of bad debt fears.

In fact, many banks restricted lending and used available capital to buy treasury promissory notes with modest 5 per cent, per year yield to ensure safety.

Senior financial expert Nguyen Tri Hieu said lowering interest rates would not be an issue of prime importance.

Since banks were cautious about lending, the government needed to soon establish a body to assist traders or at least create a trust fund whose function would be guaranteeing firms to procure bank loans, said Hieu.

Deputy head of Central Institute for Economic Development Nguyen Dinh Cung said priority should be given to dealing with bad debts and weak banks in a swift manner parallel to removing ceiling mobilising and lending.

Cung argued that even with the ceiling on lending, few many firms could access loans.

8th Talent contest launched

The 8th Vietnamese Talent contest was officially launched earlier this week, focusing on awards in IT, applied science and pharmaceuticals.

The organising board said the contest this year would be focused on finding solutions for urgent issues.

The annual contest, organised by VNPT Group, Viet Nam Television and Dan Tri online newspaper, has become a popular event for IT lovers, especially students.-

New internet charges proposed

The Ministry of Information and Communications has collected ideas on a draft outlining charges for internet access services.

Accordingly, internet users at home would have to pay VND24,000 per month for download speeds of more than 256kb/s, and 45 dong per megabyte as an output charge.

Under the draft, internet charges in cafes and other public places would be defined by the businesses.

It also stipulated that the charge for fixed telephone services inside a region would be VND200 per minute with a monthly subscriber charge of VND20,000.

Viettel introduces roaming service

Viettel Corporation has introduced an international roaming service for its prepaid subscribers, enabling both 50 million prepaid and post paid users to use the service.

Its subscribers will be able to use services provided by 198 networks in 96 countries and territories. The group has also launched a preferential package for subscribers that travel in countries with networks that are partnered with Viettel, including Metfone in Cambodia, Unitel in Laos, Natcom in Haiti and Movitel in Mozambique. Viettel has the largest coverage in Viet Nam and is also the sole provider of roaming services to pre-paid subscribers.

Coast radio seeks more channels

The Viet Nam Coast Radio Station Company Ltd has asked the Government for more channels because the frequency it was using to provide maritime information to fishermen was overloaded.

It said the additional channels would improve the effectiveness of its work in responding to disasters and search and rescue activities at sea by updating information from the Viet Nam Coastal Information Station.

The company added that Viet Nam had more than 10,000 cargo ships and 100,000 fishing vessels at sea, that could jam the frequency at any time.-

Intel teaches computer skills

Intel Viet Nam yesterday launched a campaign entitled "Be Amazing Everyday" in collaboration with the Viet Nam Television Corporation (VTC).

The programme aims to encourage people to explore the world through computers and other new technology, said Mai Sean Cang, general manager of Intel Viet Nam.

Intel signed a memorandum of understanding with the corporation for a TV programme teaching basic computing skills and applications on channel VTC using the Intel Easy Steps module, Cang said.

The first phase of the campaign, which targets Amazing Youth, began on Thursday and will run till June 30. Other activities include a motorbike caravan of Intel partners and volunteers that will stop at 100 rural villages nationwide to teach residents how to take advantage of computers and their applications, Cang said.-

Banks delay listing due to market doldrums

A number of banks are reluctant to list shares on the stock exchange due to the market's poor performance over an extended period.

"Bank share prices have fallen below par, so it's just not the right time to list," said HDBank vice chairwoman Nguyen Thi Phuong Thao at a meeting with shareholders .

With plans to increase its charter capital from VND3 trillion ($142.8 million) to VND5 trillion (US$238 million) this year, HDBank has targeted acquiring or merging with another bank, Thao said.

Southern Bank shareholders recently approved a plan to list on the HCM City Stock Exchange, but the plan did not establish a detailed time frame. Southern Bank chairman Mac Thieu Duc said that ongoing market difficulties made listing a challenge.

Dong A Bank has delayed its planned listing for an extended period of time frame, with the bank's CEO, Tran Phuong Binh, saying that listing was "unneccessary" and that it would raise capital by selling a stake to a foreign strategic partner before it would list shares.

"The hefty decline of the market would have a severe impact on our share prices," Binh said.

Construction firm targets low profit after loss

PetroVietnam – Nghe An Construction Co (PVA) has set modest targets this year, with net profit expected to reach VND42.1 billion (US$2 million), higher than last year's level but accounting for only 37 per cent of 2010. Revenue is expected to total VND848 billion ($40.3 million) and dividends will be paid at 10 per cent.

Last year, the company recorded a loss of VND17.5 billion.

Cavico Minerals sees six-fold profit rise

Cavico Minerals Co (CMI) reported its net profit in the first quarter of this year increased six times compared to the same period last year to VND6.6 billion (US$314,200).

Although revenue decreased 19 per cent, the cost of goods sold increased by 55 per cent, so the company's gross profit reached VND11 billion, up 248 per cent.

It is estimated that from this month, the Chan Hung iron mine will bring an average monthly revenue of VND10 billion and an average profit of VND4 billion.

Yesterday was the eleventh successive session that CMI hit its ceiling price, nearly doubling to VND9,300.-

Mercedes-Benz VN slashes prices

Mercedes-Benz Viet Nam, only in May, offers jaw-dropping affordable prices for all customers buying sports cars at Mercedes-Benz dealers nationwide.

For all other car models, the company also announces its new attractive price tags which is some 1.85 per cent – 3.96 per cent lower than previous accordingly. The new price list is officially valid from May 11, 2012.

Mercedes-Benz Viet Nam in conjunction with its authorised dealer Viet Nam Star, is organising a complimentary service clinic giving special treatment to its customers.-

Quang Ngai attracts $9.66m investment

The Quang Ngai Industrial Zone Management Board gave investment licences to two projects of production and construction in Tinh Phong Industrial Zone (IZ) with a total investment of VND203 billion (US$9.66 million), Doan Tan Han, head of management board said yesterday.

The first licence was given to the Foster Da Nang Electronic Company Ltd of Japan to produce electronic parts with a capital of VND174 billion.

The second investment company is Kizuna Quang Ngai Joint Stock Company that would build workshop, offices and support construction to serve investors who rent land in the industrial zone for production with a capital of VND29 billion.-

Malaysia helps develop VN wind energy sector

Timar Wind Solar Energy Malaysia and Ninh Thuan provincial People’s Committee signed a memorandum of understanding (MoU) on investment cooperation in the central province on May 14.

Under the MoU, Timar will invest in development of new technology in the renewable energy sector in Ninh Thuan, with a total capital of 800 million USD. It is expected to finish all procedures and start work in 2012.

The Malaysian business will build factories to manufacture spare parts for the wind energy sector, supporting the province in providing lighting on major streets as well as building other works in the province.

The business also pledged to provide capital and technology if other wind energy projects in Ninh Thuan can be run on a cooperative basis with Timar.

Chairman of the provincial People’s Committee Nguyen Duc Thanh said the province will support the plans of Timar, creating favourable conditions for Timar to complete all legal procedures relating to investment, to promptly implement the project.

Standard Chartered predicts 10.9 percent inflation this quarter

The nation's inflation rate in the second quarter will ease to 10.9 percent, before dipping back into single-digit territory in the third and fourth quarters, Standard Chartered Bank has forecast.

Inflation in March fell to 14.1 percent from a peak of 23 percent last August, the bank noted.

Moderated inflationary pressures, coupled with an improved balance of trade and foreign reserves, should provide the State Bank of Vietnam (SBV) with ammunition for further interest rate cuts during the rest of the year, Standard Chartered said, predicting that the refinance rate would be cut to 12 percent this second quarter and to 11 percent by the end of the year.

With inflation down to 14.1 percent in March from its peak of 23 percent seven months earlier, along with a stable currency, the State Bank had room to shift its attention to reinforcing economic growth, Standard Chartered said.

"Although growth is at its slowest since 2009, there are reasons to remain optimistic," the bank said.

During the 2009 downturn, the economy grew at a respectable 5.3 percent even though the first-quarter growth was a meagre 3.1 percent.

The bank therefore maintained its forecast of 5.8 percent growth this year, with a pace in the second quarter of 5.4 percent to gradually accelerate to 6.4 percent and 6.6 percent in third and fourth quarters, respectively.

Standard Chartered has also forecast that two-year Government bond yields would ease to 10.6 percent this year, down from the current 10.8 percent.

VietJetAir opens two new routes from Hanoi

New budget airline VietJetAir will open two new routes from Hanoi with direct daily flights to the central cities of Nha Trang and Da Nang starting May 19 and May 24, respectively.

To celebrate the launch, the airline is offering all-in-fares between Hanoi – Danang from VND 299,000 (US$15). Bookings must be made on www.vietjetair.com from 21:00 to 24:00 on May 16 for travel between May 24 and December 20, excluding periods between June 10-August 15 and August 31- September 3.

There are up to 1,000 promotional seats available on a first-come-first-served basis with applied terms and conditions.

Apart from the current eight return daily flights between HCMC - Hanoi and a newly-launched route between HCMC – Da Nang, VietJetAir’s coming flights connecting Nha Trang and Da Nang with Hanoi will be a milestone for its plan of connecting the whole country, which now includes Hanoi, Da Nang, Nha Trang and HCMC.

Vietinbank issues international bonds

Vietinbank (CTG) has successfully raised $250 million worth of international bonds on a five-year term, with a yield of 8 percent.

The bonds were issued in the European, Asian and the US markets.

Vietinbank plans to issue US$2 billion worth of bonds, and in February, the Government agreed to allow the bank to issue international bonds.

The bank's outstanding foreign currency loans as of last year reached nearly VND54.14 trillion, accounting for 18.5 percent of the total outstanding loans; while customer deposits in foreign currency hit VND34.17 trillion, 13.3 percent of the total.

First-ever private firm receives ODA from Japan

Ho Chi Minh City-based Esuhai Co Ltd has become the first privately-owned firm to receive ODA (Official Development Assistance) loans, which have long been granted only to government-related projects.

Esuhai yesterday broke ground on the construction of its Japan – Vietnam Center for Technological Workforce Training and Development, a project funded by the Japanese International Cooperation Agency (JICA) via ODA loans.

The assistance is made under a plan that JICA will transfer capital to the Asia Commercial Bank (ACB), which will later offer a loan worth 200 million yen, or VND52 billion (US$2.5 million) to Esuhai to invest in the center.

“Though most of JICA assistance has been put in government-related projects so far, infrastructure project in the private sector will now also come into JICA’s consideration,” said Yasui Takehiro, head of JICA’s foreign investment.

“Most of the ODA-funded projects are in the fields of infrastructure, education, and personnel training.

“We are evaluating some projects, including one to build a school in the north and one to set up a wastewater treatment plant in Long An,” he continued.

Takehiro said a project should meet three requirements to be eligible for an ODA from JICA.

First, the project should contribute to social development. Second, it should boost the economic and cultural cooperation between Japan and Vietnam.

“And finally, the project should have high feasibility,” he said.

Fitch affirms Vietnam rating at B+

Fitch Ratings announced Friday an affirmation of Vietnam rating at ‘B+’, and evaluated the country’s economic outlook as being stable.

Vietnam's foreign- and local-currency issuer default ratings are affirmed at 'B+', while the outlook for both ratings is stable, the report said.

The country ceiling is also affirmed at 'B+', and the short-term foreign currency IDR at 'B'.

"The ratings and stable outlook reflect the success so far of efforts by Vietnam's authorities to tackle the macro-financial imbalances that arose in 2010 and 2011," the report quoted Art Woo, Director in Fitch's Asia-Pacific Sovereign Ratings group in a statement as saying.

"However, despite recent signs of greater macroeconomic stability including lower inflation, a stronger current account position and a more stable dong exchange rate, further evidence that these improvements have become entrenched and reform of the banking and state-owned enterprise sector is needed to put upward pressure on Vietnam's sovereign ratings."

Since implementing fiscal and monetary tightening measures to restore macroeconomic stability under Resolution 11 in February 2011, Vietnam has made vital progress in taming inflation, Fitch stated.

Headline CPI inflation grew 10.5 percent y-o-y in April, down from a recent peak of 23 percent y-o-y in August 2011.

CPI inflation is forecasted to average 10 percent in 2012, compared with 18.7 percent in 2011.

Resolution 11 also lent support to the current account position, which recorded a surplus to 0.2 percent of GDP in 2011 versus a deficit of 4 percent in 2010.

It should be noted that foreign-direct investments (FDI) have remained robust, totaling USD7.4bn in 2011 (6 percent of GDP).

These factors supported the improvement in the balance of payments and in turn foreign exchange reserves position, which has recently proven vulnerable to capital flight, particularly when economic stability has been under strain.

The success Vietnam has enjoyed in attracting FDI and the dynamism of its economy are significant sovereign rating strengths.

Vietnam's last reported official reserves, excluding gold, increased to US$14.1 billion at end-November 2011, from $12 billion at end-2010.

Fitch estimates that reserves may have reached $16 billion – 17 billion at end-March 2012, which roughly equates to 1.8 months of current external payments receipts.

The increase illustrates the stabilization of the macro economy and balance of payments, though import coverage of less than two months is low relative to rated peers.

Vietnam's banking sector remains a source of weakness and a constraint on the sovereign rating.

Some smaller banks are still facing liquidity pressures as they expanded credit more rapidly than their deposit base. However, the authorities have recently stepped up efforts to pressure weaker banks to clear up bad debt and encourage consolidation.

The ability to persist with Resolution 11 measures and in turn create a more balanced macroeconomic environment of lower inflation, stable GDP growth and a more stable balance of payments would be a positive development for Vietnam's sovereign ratings. Acceleration of broader structural economic reforms, particularly with respect to SOEs and public investment, would be positive for the sovereign credit profile.

However, were recent macro-stabilization gains to be reversed with a resumption of excessive credit growth and double-digit inflation, downward pressure on Vietnam's sovereign ratings would emerge. In addition, large-scale losses in the banking sector, which require sovereign support, could trigger negative rating action.

Interbank overnight rate dips to 2.5pct, 5-year low

The interbank overnight interest rate has tumbled to 2.5 percent a year, the lowest rate since the figure was set for the first time 5 years ago.

The rate was first set on July 23, 2007, falling 0.5 percent from the previous rate of 3 percent, according to the State Bank of Vietnam (SBV).

The new rate, dropping from the previous rate of 3-3.6 percent, is the lowest since 2005, according to Reuters data.

On the interbank market, the interbank interest rate for a one-week term has also fallen to 3.5-4 percent a year, down sharply from 4-4.5 percent a year.

The interest rate for a 1-month term has also dropped from 6-7 percent to 6-6.5 percent a year.

On the open market operations (OMO), interest rates of treasury bills (T-bills) have also declined to 5.8-10.23 percent a year. However, many commercial banks continue to buy T-bills at a daily volume of some VND3 trillion.

The total amount of money commercial banks have spent on T-bills since March 15 is more than VND80 trillion.

This means banks are in a surplus of money, or the amount of serviceable capital of banks is plentiful, though the ceiling depositing rate has been lowered to 12 percent a year, according to local newswire VnEconomy.

This unusual circumstance has set the stage for interest rates to continue to decline in the near future.

The SBV last month continued to withdraw capital via repo operations and the T-bills channel, said a recent report of the Foreign Exchange Department of Vietnam Commercial Joint Stock Bank for Industry and Trade (VietinBank).

Specifically, according to the central bank’s data and as calculated in the “Evolutions and trends of monetary market in April 2012″ report, the central bank pumped VND9.055 trillion for 7-day terms on OMO at an interest rate of 12-13 percent per year and withdrew VND10.962 trillion.

At the same time, the central bank issued T-bills to draw out VND51.431 trillion (for tenures of 28-days, 91-days and 182-days) at the yield of 6.2-12.5 percent per year.

“Notably, by late April, the yield of T-bills continued to fall daily.

The constant fall of interbank interest rates has led to the decline of the T-bill yield. However, commercial banks with too much money is not a good sign” VietinBank’s report stated.

In total for April, the amount of money withdrawn by the central bank via repo operation and T-bills reached VND53.338 trillion.

Interbank transactions also showed that the capital sources of banks have recently been quite favorable, and the interest rates have fallen constantly and remained low.

In particular, in the last week of April, the central bank’s data showed that the interbank average interest rate in dong decreased in all terms.

Of which, the 1-week, 2-weeks, 1-month, 6-months and more than 12-months saw a fall of 1 percent-1.49 percent, while overnight term and 3-months were down 0.88 percent and 0.81 percent, and 3-weeks and 2-months slipped slightly.

The 12-month term saw a strong 5.22 percent decline over the previous week.

The overnight average interest rate thereby stood at only 6.69 percent per year and the average interest rate for 1 and 2-week terms even dropped to 5.79 percent per year and 5.93 percent per year.

The rates for longer terms were at 10 percent per year, and the highest was 12.04 percent per year for a 6-month term.

In early May, the interbank average interest rate in dong maintained its downward tendency and remained low.

Lao Cai strives to earn US$162 million from tourism

The northern border province of Lao Cai aims to receive 1.5 million visitors and earn more than VND3,400 billion (US$162 million) from tourism services by 2015.

To obtain the target, the province has developed 12 tourism sites and identified Sapa, Bac Ha and Lao Cai City as key destinations for tourism development. It also built three key tourism zones: Lao Cai City-Sapa-Bat Xat; Bac Ha-Muong Khuong-Si Ma Cai; and Cao Thang-Bao Yen-Van Ban.

From now until 2015, the province will focus on investing in infrastructure, diversifying tourism products, training human resources, and advertising tourism to attract both domestic and foreign visitors.

In the first three months of this year, Lao Cai received nearly 299,000 visitors, including 149,000 foreigners, up nearly 23 percent compared to the same period last year, and raising earnings 52.8 percent to more than VND558 billion (US$27 million).

The expected surge of visitors in the upcoming time, especially during holidays and festivals in 2012, will be an important factor to help the provincial tourism sector fulfil its target for 980,000 arrivals this year.

Vinacomin exports coal while imports are needed

While the Vietnam National Coal and Mineral Industries Corporation, or Vinacomin, has confirmed that it only exports coal types that are rarely used domestically, the Ministry of Industry and Trade’s figures show that this is not entirely true.

Vinacomin has exported nearly 10 million tons of coal to be used in thermo-power generation, and is likely to import this type of coal in the future, the ministry said in its report on the coal exporting plan in 2011 – 2015 that was recently submitted to the government.

Responding to the issue, Vinacomin chairman Tran Xuan Hoa said that using the coal which it has exported at US$300 a ton only to fuel the thermo-power plants is “too wasteful.”

Coal dust No 4 and 5, which Vietnam is expected to begin importing in 2015 due to the domestic supply shortage for fueling thermo-power plants, accounted for as much as 14 percent of the total coal exports of Vinacomin last year.

The figures were even higher in 2009 and 2010, at 22.3 percent and 21 percent, respectively.

In 2010 alone, Vinacomin exported more than 18 million tons of coal, pocketing $1.4 billion.

Meanwhile, the Ministry of Industry and Trade said that out of the 17 million tons of coal exported last year, coal dust No 6 and poor-quality coal accounted for 12 million tons, although Vinacomin said it only exported “good coal.”

To Quoc Tru, director of the Vietnam Energy Consultancy Center under the General Department of Energy, said most thermo-power plants in the country are using coal dust No 5 and 6 for production.

“We will have to import these types of coal in 2015 as Vinacomin will fail to maintain supply,” said Tru.

“In June 2011, Vinacomin imported the first batch of this coal to prepare for a 5 million ton plan five years later.”

Although Vincomin claims an export price of $300 a ton, figures obtained by Tuoi Tre show that the actual rates are not that high.

The average export price for coal in the first quarter of this year is only $85.6 a ton, down by $6.5 a ton compared to the full-figure last year, according to the General Department of Energy.

However, when global coal prices slumped, and while experts demanded that Vinacomin cut its exports to save natural resources, the coal giant instead called on the government to reduce the exporting tariff from the current 20 percent to zero as it is in a tough spot with 7.5 million tons of coal in stock.

In explaining the plan of high exports, Vinacomin has repeatedly said that it is to make up for the loss it incurs when it has to sell coal under cost prices to the power sector, as ordered by the government.

However, the General Department of Energy said Vincomin only incurred a VND5 trillion loss for selling at subsidized prices, while it reaped a huge VND6.8 trillion profit from exporting coal in 2011.

From its foundation in 1995 to the end of 2009, Vinacomin has exploited a total of 361.5 million tons of coal.

The company has repeatedly lamented of capital shortages to seek permission to increase exports.

While Vinacomin is expected to need around $2 billion a year for its operation and investment between 2011 and 2015, the public has wondered how much coal will have to be exported before this complaining can stop.

Vietnam-Brazil trade turnover keeps rising sharply

The two-way trade turnover between Vietnam and Brazil in the first quarter of the year reached US$366.8 million, up 32 percent over the same period last year.
    
Brazil’s exports to Vietnam were estimated at US$172.247 million and its imports at US$194.601 million, up 34 and 30 percent, respectively.

Brazil exported mainly soybeans, cigarette, cotton, wood, iron and steel to Vietnam and it imported footwear, printing machines, rubber, and hand-made fibres from the country.

The trade turnover between the two countries in 2011 exceeded US$1 billion for the first time, up 53.8 percent against 2010.

Vinalines spends $23.5 mln on 43-year-old dock

Besides wasting money on a number of old, downgraded vessels, Vinalines has also thrown good money after a floating dock which was produced in 1965, only to have it under constant maintenance since the purchase.

Floating dock No83M was amongst the equipment included in the plan to construct the Vinalines southern ship repair factory of Vinalines Shipyard Co (VNLS), a subsidiary of Vinalines, or the Vietnam National Shipping Line.

Ironically, the floating dock that was intended to handle the repairs for Vinalines’ shipping fleet has in fact yet to receive any ships in the last four years, and has itself been under constant maintenance.

VNLS was initially approved to buy the equipment for $13.1 million in September 2007, but the figure rose to $14.1 million a month later.

On March 15, 2008, Vinalines inked a deal to buy the No83M floating dock, which was produced in Japan in 1963, from a Singaporean company.

As the dock was too old to meet technical requirements for registry clearance, Vinalines had to hire Hyundai Vinashin Nha Trang to repair it under the standards of Russia.

Expenses for the equipment thus overran to $19.5 million.

Not long after it was put into use, the floating dock experienced breakdowns and was transported to Dong Nai-based Go Dau port for repairing, which then sent investment in the dock to $26.3 million.

Moreover, the floating dock also has to bear regular expenses including a docking fee worth VND420 million ($20,160) a month, a daily fee of $700 to hire two ships to tow the dock, and labor wages.

According to the Vietnam State Inspectorate (VSI), the purchase of No83M floating dock is suspected of violating laws on investment.

The floating dock was 43 year olds when it was bought, while the limit is only 15 years. Moreover, it consumed a total of $26.3 million, which is 70 percent of the expense of building a completely new dock, the VSI said.

VSI said it has transferred the case to the Ministry of Public Security for further investigation.

The No83M floating dock now sits abandoned like a huge iron block in decrepit condition at Go Dau port, as observed by Tuoi Tre reporters in early May.

The dock’s coat of paint has peeled off, while several parts have rusted.

“It’s not easy to fix these problems,” said a worker on the dock.

While there were as many as 100 workers deployed to remove the rust and repaint the floating dock when it first arrived in the port, work just seems desperate now, workers said.

“It has been 47 years since it was built, so deterioration is inevitable,” they said.
 
On May 10, Vinalines submitted a report to the Ministry of Transport regarding the plan to modernize its shipping fleet by 2020 under a VND100-trillion proposal which has recently ignited an uproar among insiders.

In the report, Vinalines said it will cut the total investment needed to only VND68 trillion.

The investment will be sourced from loans, stocks, and Vinalines’ own capital source, and the company will not use any money from the state budget to invest in its vessels, Vinalines confirmed.

Can Tho attracts more US$76 million into IZs

Since early this year, Can Tho has granted licences to 10 projects in industrial zones (IZs) with a total capitalization of US$76 million.

Currently, the Mekong Delta city has 198 projects valued at nearly US$1.6 billion.

These projects operate in the fields of processing food, agriculture, forestry, seafood, footwear, fertilizers, chemicals, iron and steel and automobile assembly.

The city’s IZs have created jobs for 34,000 local labourers and earned US$380.7 million in revenue over the past four months, up 72.4 percent against the same period last year, export turnover rose by 63 percent to US$133.4 million.    

There is a plan afoot to expand four IZs near the Hau river to over 1,000 hectares to build two 320-hectare resettlement areas in O Mon district.

Media role in question as pig farmers lose big

While only 3 percent of the total pig-raising farmers are found using the forbidden lean-meat agents, the local media have created a panic mentality in consumers with their front page news about the issue, driving away consumers and hurting farmers.

“Pig price now dropped to under VND40,000 a kg,” Dang Thi Ha, a pig farmer in southern Dong Nai Province’s Vinh Cuu District, angrily shouted at a Tuoi Tre reporter when asked about the price development of pig meat.

Like Ha, other farmers expressed the same reaction whenever receiving phone calls or questions from the media.

“This is sympathetic as they are those who suffer the most from the news articles on lean-meat agents, though things are cooling,” said Nguyen Tri Cong, chairman of the provincial husbandry association.

The harmful lean meat agents are banned by the World Health Organization (WHO) and the Food and Agriculture Organization of the United Nations (FAO).

The agents, once consumed, affect various organs such as the brain and liver, and are especially dangerous for pregnant women.

What the media failed to emphasize is that “only a very small proportion -- around 3 percent -- of pig farmers used this substance,” said Cong, citing figures from the animal health authorities.

“And yet this has resulted in a huge damage for the animal husbandry industry as customers refuse to buy pig meat.

“With a 1.2-million herd of pigs in Dong Nai, total damage caused by the slumping prices following the news has amounted to thousands of billions of dong,” he added. (VND1 trillion = US$48 million)

According to Nguyen Van Thanh, a farmer in Trang Bom District, the cost to raise a 100-kg pig is as high as VND4.8 million, while selling price has dropped to VND40,000 a kg.

“Thus, a VND800,000 loss is incurred on every pig sold, and my family will soon fall into further losses should the price fails to increase,” he said.

What annoys pig farmers the most is the negligence of authorities in announcing information regarding the lean-meat agents, especially when test results on its dangers are still unclear and unreliable, said Cong.

When the final test results are different from what they earlier announced, no one will ever step out to take responsibility, or at least to clarify the issue for consumers, he added.

“What’s dangerous is that it’s not easy to regain consumers’ trust once they have worries”.

“Pig meat prices are much cheaper now but consumption is still low.”

“The troubled economy plus the bad news of lean-meat agents have driven consumers totally away from pig meats,” said Son, a pig trader in Ho Chi Minh City-based Hoc Mon wholesale market.

Last year when pig meat prices skyrocketed to VND65,000 a kg, it was the Ministry of Agriculture and Rural Development who called on businesses and farmers to “cut prices to stabilize the market,” the director of a food company said.

“And now no sign of the ministry can be spotted when prices slump and farmers are in hardship,” he complained.

Vietnam display flight cancelled after Indo crash

Russian Sukhoi aircraft holding company has announced the cancelation of the display flight of its new passenger plane, the Sukhoi Superjet 100 (SSJ100), in Vietnam, according to Lai Xuan Thanh, deputy head of the Civil Aviation Administration of Vietnam.

The demonstration flight, expected to kick off on May 14 at Noi Bai airport to show off the capacity of the new aircraft, was canceled as the only SSJ-100 plane Sukhoi intended for use at the show slammed into a mountain in Indonesia on Thursday, killing all people aboard.

The ill-fated new civilian plane crashed in during Sukhoi’s Asian tour to promote the aircraft, which is a joint venture between Sukhoi and Italy's Alenia Aeronautica, according to AFP.

According to the tour’s plan, the SSJ-100 was scheduled to make similar demonstration flights in Laos, and Vietnam -- its last destination.

Manufacturing civilian planes for Vietnam is included in the priorities under the strategic cooperation between Russia and Vietnam in 2012.

Sukhoi has said it is negotiating with Vietnamese air carriers to sell the SSJ-100 for domestic air routes.

However, Vietnam Airlines, Jetstar Pacific, and VietJet Air told Tuoi Tre that they have yet to receive any contact from Sukhoi.

Vietnam targets over 1.3 mln tonnes of sugar

Vietnam’s sugar output is expected to reach 1.31 million tonnes in the 2011-12 crop, according to the Ministry of Agriculture and Rural Development.

By the end of April this year, sugar mills across the country produced 1.12 million tonnes, an increase of 78,700 tonnes from the same period last year.

The domestic market is now seeing an increase in demand from China, raising sugar prices by VND200-500 per kilograme in the central and southern regions.

However, in the North, the prices remain stable at VND16,500–16,700 per kilogramme.

First batch of eggs shipped to Hong Kong

Trai Viet Ltd Company (Vietfarm) shipped the first batch of 144,000 fresh eggs to Hong Kong on May 11.

This is the first batch of eggs exported to the market, as Vietnam has mainly exported only salted eggs to China and Hong Kong.

This is a trial export, said Dam Van Hoat, Vietfarm Director, adding that if the eggs meet the quality requirements of the Hong Kong partner, around 1 million eggs will be shipped to this market per month.

Hong Kong imports eggs from the mainland China.

Franchising – new development trend in Vietnam

Franchising will develop and become a potential business form in Vietnam when the country opens its retail market in 2014.   

This was emphasized at a seminar, “Franchising – new development trends, opportunities and potential”, which was held in HCM City on May 11 by the Trade Promotion Agency under the Ministry of Industry and Trade.

Experts said the trend will also offer chances for local and foreign entrepreneurs to develop their retail networks in Vietnam.

It is estimated that there are now 200 businesses systems in the country using the franchising practice. Franchising is now becoming a more and more popular form of business that helps franchisers develop business chains without increasing investment, thus expanding their operations and increasing the value of their brand names.

Meanwhile, franchise owners will gain experience from major companies, minimize risks they may incur when starting up their business, and benefit from the positive effect of the system.

Vietnam, Malaysia boost trade ties

Vietnam and Malaysia need to increase trade, investment and tourism cooperation to raise bilateral trade to US$10 billion in the coming years.

Vietnamese ambassador to Malaysia Nguyen Hoang Thao made the proposal at a joint forum in Kuala Lumpur on May 10.

Such cooperation relations have developed well in recent times, but do not yet match the two countries’ potential and meet their expectations, Thao told more than 100 businesses and travel representatives attending the forum.

He said the forum aims to kick-start tourism promotions and introduce opportunities and investment policies to increase the number of tourists to their countries’ destinations and meet the set US$10 billion trade target.

Thao expressed hope that Malaysian groups and companies will continue to pour more investment into projects in Vietnam to capitalize on this market.

Vietnamese trade counsellor Vu Van Canh reported that two-way trade between Vietnam and Malaysia has increased by 20 percent annually over the years.

In 2011, bilateral trade reached US$6.66 billion, with Vietnam’s exports fetching US$2.76 billion, he added.

With 404 projects valued at more than US$11.09 billion, Malaysia is Vietnam’s second biggest ASEAN investor and eight biggest world investor, Cuong emphasized.

The forum drew the participation of major Malaysian giants such as Pitaberry, Chin Huat, Polar Ice Cream Sdn. Bhd, HG Travel, I-travel Indochina.

Seminar promotes Hanoi-Moscow trade investment

Vice Chairman of the Hanoi People’s Committee Nguyen Van Suu introduced Hanoi’s investment potential to Russian companies at a seminar to promote trade and investment between Hanoi and Moscow on May 11.

Suu said Hanoi will develop into a high-quality service hub for the country and region, with the development of hi-tech industries, a modern infrastructure network, a highly skilled workforce and a potential science and technology centre for national development.

Deputy Minister of Industry and Trade Hoang Quoc Vuong highlighted the 20.22 percent year on year increase in two-way trade between Vietnam and Russia in the first three months of the year, reaching US$519.6 million.

However, he added, Vietnam’s export businesses have no stable partners in Russia and only a few of them have representative offices or branches in the country. In addition, tariff and non-tariff barriers remain popular, especially for farm and seafood products.

Therefore, Vietnamese exporters have proposed the Vietnamese and Russian Governments lift trade barriers and remove complicated customs procedures and import/export payment hindrances, to increase trade liberalisation between the two countries.

Participants were briefed on the Hanoi-Moscow Trade and Culture Centre complex in Moscow, a US$200 million cooperation project between the two cities. This will be an ideal location for Vietnamese companies and businesses to establish representative offices and showrooms.