Shares track declining global markets

Shares declined on sluggish trades yesterday, tracking tumbling global markets overnight. The combined volume of trades on both of the nation's stock exchanges dropped to less than 29 per cent of Monday's level.

"Since last year, the level of correlation between the Vietnamese market and global markets has clearly increased," Kim Eng Securities Co analysts wrote in note yesterday.

The VN-Index has posted three consecutive declining sessions, typically not a good sign, they added.

"Technically, there are no signals coming from prices as the two indices are still trading below their resistance levels," they said.

On the HCM City Stock Exchange yesterday, the VN-Index closed down by about 1 per cent to 428.16 points and the value of trades reached only VND838.4 billion (US$39.9 million) on a volume of just over 57 million shares.

Over 70 per cent of codes closed unchanged, while 41 advanced and 45 declined, including most blue chips. However, Vietinbank (CTG) and property developer Hoang Anh Gia Lai (HAG) were able to buck the trend, gaining 0.5 and 0.4 per cent, respectively.

The VN30 Index, tracking the city's 30 leading stocks in terms of capitalisation and liquidity, reached 506.49 points, a decline of 0.7 per cent from the prior session.

On the Ha Noi Stock Exchange, the HNX-Index shed 1.6 per cent to close at 74.60. Over half of listed codes dropped points, while value shrank to a mere VND458.2 billion ($39.5 million) on a volume of only 43.45 million shares, respectively.

Bao Viet Securities Co analysts predicted that the European debt crisis could have significant adverse impacts on Vietnamese exports and flows of foreign investment.

Notable is that overall market capitalisation has increased recently with the listing of a number of new shares, but liquidity and indices have fallen.

"The increasing number of new and additional listings this year has actually been a barrier to the growth of the market," they commented. Nevertheless, they predicted that strong domestic investment would enable markets to rally this month.

EPC deal struck for US$181-million port project

Vietnam Electricity (EVN) has signed an engineering, procurement and construction (EPC) contract with China Communication Construction to develop a port project in the Duyen Hai Thermo-power Center with total investment capital of US$180.96 million.

The port will be used to transport coal and oil to the thermo-power stations in the electricity generation center. The amount of coal which will be loaded is projected to reach 12 million tons a year.

The port is part of the Duyen Hai Thermo-power Center project in the Mekong Delta province of Tra Vinh. It will have two terminals for handling coal which can accommodate 30,000 DWT vessels and another for oil transport which can receive 1,000 DWT ships.

Related infrastructure facilities such as a 3.9 km seawall, a navigational passage, a U-turn area, a coal handling system and an oil pumping system will also be developed.

Under the deal, the port is scheduled for completion within 27 months. When it is put into use by the third quarter of 2014, the port will clear the way for smooth operation of thermo power plants Duyen Hai 1 and Duyen Hai 3.

Capital cost differential boosts M&A transactions

The high capital cost differential is a reason for the increasing number of merger and acquisition (M&A) deals recorded last year and this, according to experts at the M&A Forum Vietnam 2012 held in HCMC on Thursday.

Andy Ho, managing director of VinaCapital, said the total value of M&A deals last year amounted to over US$4 billion with foreign entities accounting for 65%, but the increased M&A deals mainly resulted from the differential of capital cost between sellers and buyers.

“Japanese investors have flocked to Vietnam due to the low capital cost in their country and the strong Japanese yen, plus the Vietnamese Government’s incentives for foreign investment activity. Meanwhile, the capital cost in Vietnam is high, so it is the capital cost differential that has led to a rise in the value of M&A deals and pushed up the total value last year to a record high,” he said.

The most vibrant M&A deals are seen in the sectors of fast moving consumer goods, finance and property. Besides, foreign investors regard M&A as the fastest way to penetrate the domestic market instead of establishing a new company.

According to John Ditty, KGMP chairman for Vietnam and Cambodia, Vietnamese enterprises have actively sought cheap capital through investment funds, strategic partners and overseas bond sales.

Good enterprises will continue to attract more capital inflows in the coming time to expand their operations, said Ditty.

Besides, according to experts, the equitization of State-owned enterprises is attractive to foreign investors through M&A as well as private enterprises and those operating in the infrastructure sector.

For example, among 160 enterprises and projects VinaCapital is investing in, there are many equitized firms such as Vinamilk, Phu My Fertilizer and Phuoc Hoa Rubber.

According to Ho from VinaCapital, Vietnam will continue facing challenges such as capital costs and mounting inventories in the second half of the year, M&A activity will grow strongly in Vietnam in both value and number with a rise of 20-40% from the previous year.

The increase in inventories of enterprises, plus the capital shortage and cheap stock prices this year, is appealing to Japanese and European investors, said Ho.

Customs to reverse fall in tax collection

The Customs Department has reported a plunge in tax collection, despite the country's increase in import and export, leading to a push to reverse the trend.

In the first five months the year, Customs collected VND77.8 trillion (US$3.7 billion) in tax or 34.7 per cent of its forecast, a fall of 10 per cent over the same period last year.

Customs said the country's total import and export turnover in the first five months was $86.3 billion, up 14.6 per cent on the period last year.

The fall in tax collection was attributed to less key products such as crude oil, coal, motorbikes and automobiles, which have a high-import tax, Customs said.

The global economic downturn also had an effect, plus tighter monetary policies to curb inflation had reduced access to loans and thus reduced business activity and taxes.

Besides, import taxes had been cut to assist failing businesses meaning that, for instance, Hai Phong Customs had collected VND10.3 trillion ($494 million), 30.96 per cent down on the previous first five months.

Customs has outlined measures to increase the tax take. Customs agencies were urged to put pressure on businesses to collect overdue taxes and limit bad debts, though the latter were expected to remain high.

Also the department said it would clamp down on re-export goods, bonded warehouses, databases and goods which were suspected to be involved in trade frauds.

Meanwhile, Customs has continued to improve its operation to create incentives for businesses and to outline proposals for revised tax management.

SSC blasted for tardy penalty in Sacombank acquisition

The State Securities Commission of Vietnam (SSC) last Friday slapped penalties on three individuals and organizations for breaching regulations while buying en mass the shares of Sacombank under a power transferring plan, something they did as early as March, while the transfer was completed a fortnight ago.

Saigon-Asia Financial Investment JSC, Saigon Exim Investment JSC, and Tran Phat Minh were amongst the alliance formed to acquire power at Sacombank, or the Saigon Thuong Tin Commercial Joint Stock Bank.

According to SSC, the three investors were fined for not submitting reports on their becoming Sacombank’s major shareholders after only one transaction.

Specifically, Exim Investment JSC on January 1 purchased 42 million Sacombank shares, bringing its total stake in the bank to 50 million shares, or 5.17 percent, which declared the company a major shareholder.

Similarly, in February Minh bought more than 1.544 million shares, and also become a major shareholder with a 5.01 percent stake.

Saigon-Asia Financial Investment JSC made the same move on March 1, and now holds a 5.01 percent stake after purchasing 22 million Sacombank shares.

Last February Eximbank, which holds a 9.73 percent stake in Sacombank, initiated the move by saying it was authorized to represent the group of major shareholders (holding more than a 51 percent stake) to call for an irregular shareholder meeting and reelect the board of directors of Sacombank.

The indicated three organizations and individual have bought a number of Sacombank shares to boost the acquisition, which was materialized with the introduction of a new board on May 27.

The year-long acquisition ended with almost all the power in Sacombank being transferred to the new shareholders group, including eight additional newly elected members from other banks, and former Sacombank chairman Dang Van Thanh and his son, Dang Hong Anh.

While many insiders have called for SCC to intervene in the acquisition of the 70,000-shareholder Sacombank, the watchdog had remained silent until last week, when it suddenly announced the mere fine of VND60 million for each of the violators, angering both the public and insiders.

“It seems like SSC’s management role has been abnormally neutralized,” the director of a securities firm told Tuoi Tre.

He said SSC must not have been uninfomred of the participation of Saigon Exim, a subsidiary of Eximbank, and a major shareholder of Sacombank, in the acquisition, but the watchdog simply kept silent.

Analysts said SSC should not have neglected opinions from insiders regarding such a large deal as a Sacombank power transfer. But SSC failed to announce any checkups on the transactions related to Sacombank shares, they claimed.

SSC also did nothing when the three investors bought shares en mass to become Sacombank’s major shareholders, which insiders said is an abnormal stance.

The neutralization of the authorities’ management role is worrying listed company as they may fall into the same situation, when other investors defy regulations to buy shares with impunity to acquire them.

In an interview with Tuoi Tre, SSC chairman Vu Bang said there is nothing dubious in the issue.

“It’s normal for the implementation of an administrative penalty to last for several months, as it’s stipulated that violators sign to the reports,” he said.

However, Bang admitted that he did ask Eximbank to report on its announcement to acquire Sacombank, but did not receive any response.

“I asked the SSC inspectorate to report the handling of the three investors related to the acquisition, but I believe there are no irregularities here,” he asserted.

Freight, catering service companies hesitate to cut prices

Though fuel prices, including gasoline and cooking gas prices, have fallen many times, freight businesses, catering service providers, and simple restaurants still hesitate to reduce their prices.

Many businesses owners were startled to receive many notices about a looming price hike for freight charges, set to take effect in July.

Every time gasoline prices rise, transport enterprises are also poised to launch price increases as soon as possible.

But after three recent fuel price cuts, freight businesses have refused to slash their prices, reasoning that lower gasoline prices cannot make up for shrinking shipping volumes, while other input costs are still higher.

The Ho Chi Minh City-based Dai Huong Viet Co said that after gasoline prices are increased, freight businesses immediately announce rate increases of 5 percent for short routes and 10-15 percent for longer routes.

“But now, with the price of gasoline being cut three times, freight charges remain unchanged. We are negotiating with multiple partners, but they all have said the price cut is still under consideration”, said Nguyen Van The, the business’s owner.

Nguyen Quoc Thang, director of food importer Kim Hieu, said: "We have negotiated with transport partners to lower the transportation cost, but their only response is that a cut is ‘under consideration’."

“It seems that the charges will never be reduced once they have been increased."

According to Duong Ngoc Minh, general director of Hung Vuong Seafood Joint Stock Co, freight charges have doubled from early this year.

The average monthly domestic and international transport costs of the Tien Giang Province-based company are around $1.6 million for $22 million in export earnings.

"While the company is preparing to negotiate with partners to reduce transportation rates due to lowered oil prices, international freight operators have informed us that they plan to add fees of 10 percent in July.”

“They are demanding higher rates to offset the expenses accumulated due to fewer goods being sold."

Many companies running north - south trucking routes claim that there cannot be reduced freight rates at this time.

A spokesperson for HL Trade Co Ltd said the firm has raised the price for its 9-ton trucking services by VND1 million against what it cost in early May. Accordingly, a one-way trip will cost VND25 million and VND23.5-24 million for full-load and partial-load trucks running the HCMC - Hanoi route.

When asked why diesel prices have decreased while freight transport costs still remain high, the company representative said that it is currently the low- season for the transport sector.

The volumes of goods are fewer, especially on long-haul routes. Most trucks running from HCMC to the Northern provinces are usually fully-loaded, but the return trip is the opposite, while the cost of drivers, car accessories, and lubricant remains unchanged.

Meanwhile, as calculated by local firms, oil costs typically account for 40-45 percent of total expenditure. So, with a VND1,400 per liter reduction of diesel oil, the transport rates would fall by about 2.8 percent.

In the case of HL Co, then, instead of increasing its price by VND1 million per trip, the transport fees ought to be reduced by VND700,000 per trip.

Sanh, the owner of a private enterprise specializing in renting 2-ton trucks for businesses in HCMC, said he will not reduce rates if other businesses in the transport industry do not.

For more than a month prices for food, cooking gas, and domestic retail gasoline have been on a downward trend, but many restaurants and food shops have yet to announce any price cuts for diners.

Some, including fast-food restaurants, are instead raising their prices.

"All the shops I often eat at had their prices increase by around 50 percent from last year, but serve less food. Just a week after the petrol price increase, prices at those shops went up. But now, when cooking gas and gasoline prices have declined, there are still no price decreases,” Phuc Long, a diner at a shop on Tran Nhat Duat Street, told Tuoi Tre.

Office worker Thai Ha, who often has a daily bowl of pho for breakfastat a shop on Le Van Sy Street in Tan Binh Dsitrict for breakfast, told Tuoi Tre that she had recently become because she has to pay VND10,000 more for the same pho bowl.

As a patron of Kieu Huong food shop in District 12, Minh Hung, a worker at Viet Hung Garment Co, was surprised at a recent VND5,000 price hike at the shop, brining the cost of a set lunch to VND22,000.

"The price increased, while less vegetables and rice are included, and thinner slices of meat are provided," Hung said.

A price increase of around VND5,000-10,000 has also been seen at a series of shops nearby. Nguyen Van Hoang, a garment worker, said the former price range at these businesses was VND15,000-17,000, but recently the shop owners said they had to raise the prices as the input costs, namely cooking gas and gasoline, have risen.

The same thing is taking place in the university area in Thu Duc District, HCMC.

The recent meal price hike there is about VND2,000-3,000 per set, Linh, a sophomore at the University of Natural Sciences, told Tuoi Tre.

At the My Son noodle shop on Phan Xich Long Street, a group of diners holding menus in their hands exclaims, "Why did the prices rise again?" The patrons said that not long ago, the minimum price was around VND30,000, but it has increased to VND45,000 per set.

A restaurant employee said: "Since early this year the shop has raised prices three times, ranging from VND13,000-15,000 per set, depending on food prices. Despite lower gas prices, prices for food and foodstuffs in the market are still increasing consistently, so we have to raise the prices."

At fast food outlets like KFC and Pizza Hut, the combo savings meals have had their prices increased by almost 40 percent.

Most restaurants pointed to the increase in cooking gas and gasoline prices and raw materials such as beef, pork and vegetables for their price hikes. However, in reality, the prices of most commodities have fallen recently, some sharply.

Specifically, the price of cooking gas, which reached VND477,000 per 12kg cylinder in the first three months of the year, has fallen to VND340,000 per 12kg cylinder recently.

Similarly, the gasoline price has been reduced three times by a total of VND1,900 per liter of A92 over the past month.

In terms of food items, the prices of fresh foods and raw materials for rice shops like vegetables, meats, and fish, are decreasing. According to Luong Hong Thanh, representative of Thu Duc market management board, said the current prices of many kinds of food are even lower than the same period last year.

Similarly, Thai Tran Thi Thanh, deputy director of the Pham Van Hai market management board in Tan Binh District, said weak purchasing power has prevented food prices from rising.

Dang Van Duc, director of City Market Management Department, said the organization would step up inspections and sanctions at shops that don’t list prices, or sell at a higher price than the listed ones.

Such occurrences still happen often, especially in the field of food service businesses, he said. In May alone, the agency examined and recorded 70 violations.

Indonesia keen to work closer with Vietnam

The first ever Vietnamese-Indonesian Trade, Investment and Tourism Forum was held in Hanoi on June 11, to enhance bilateral cooperation between the two countries in these sectors.

The forum, themed “Vietnam-Indonesia: a Partnership for Prosperity,” was jointly organised by the Indonesian Embassy in Vietnam and the Vietnam Chamber of Commerce and Industry (VCCI), was also an excellent chance for the business communities of both countries to seek out cooperation opportunities.

During his opening speech, Indonesia’s Ambassador Mayerfas stated that Vietnam is very important to Indonesia and the region, especially for trade and investment.

He also expressed his pleasure at the remarkable increase in cooperation in a number of areas between Indonesia and Vietnam over recent years, especially trade.

“We are very pleased to see the remarkable development of the relations and cooperation between Indonesia and Vietnam in multifaceted areas over the recent years, especially in terms of trade. Even though Indonesia-Vietnam economic relationship was set up and developed not long ago, the pace of development is remarkably high,” he said.

In 2011, two-way trade between the two countries reached US$4.6 billion, the highest ever during 67 years of diplomatic relations between the two countries, and a ten fold increase within only 10 years.

However, trade cooperation between the two countries is still far from its full potential, especially when taking into account the huge domestic markets in both countries and the public’s increasingly growing purchasing power, said the ambassador.

Both countries, therefore, must work harder in the coming years to double bilateral trade to $10 billion by 2015, instead of the $5 billion as previously agreed to by both governments during Prime Minister Nguyen Tan Dung’s visit to Indonesia last September, he added.

At the forum, Chairman of VCCI Vu Tien Loc also said that Vietnam and Indonesia are important partners for each other in Southeast Asia .

The forum will promote trade, investment and tourism cooperation between the two countries and meet the desires of both business communities as well as leaders and officials in both countries, said Loc.

Indonesia currently ranks 29th out of the 91 countries and territories that invest in Vietnam , with 31 projects and a capital investment of almost $233.3 million.

Change of strategy benefits Dung Quat EZ

Four new projects have been licensed to operate in Dung Quat Economic Zone, increasing the investment capital by VND46 trillion.

They include a $2 billion thermoelectric plant to be built by the Sembcorp Utilities Company from Singapore; a VND3.8 trillion Industry – Service - Urban Zone project by the Vietnam - Singapore Industrial Zone Company and two projects to build harbours with a combined investment of VND1.4 trillion.

The Vice Chairman of Quang Ngai Provincial People’s Committee and Head of Dung Quat Economic Zone’s Management Committee Pham Nhu So, said that the initial success in drawing investment into Dung Quat had been due to the province changing its strategy and focusing on businesses from ASEAN and East Asia as well as drawing up suitable policies to support them.

The new projects included, Dung Quat Economic Zone now houses 115 projects with a total capital of VND174 trillion, approximately $8.3 billion, including 15 foreign direct investment projects worth $5.74 billion.

IFC helps improve Vietnam’s coffee processing

The International Finance Corporation (IFC) will provide US$18 million for an instant coffee processing factory in Vietnam to help improve its coffee-processing capacity.     

The factory, which is owned by the Ngon Coffee Company, exports instant coffee products to more than 58 countries.

Simon Andrews, IFC regional director for Vietnam, Thailand, Cambodia and Laos, said Vietnam’s coffee industry has great potential for development. The IFC investment will help the country promote exports of high quality coffee and improve the industry’s competitiveness, as well as incomes for local farmers and workers.

The IFC has provided significant assistance to Vietnam’s coffee industry since 2010 by setting up a training centre for farmers to help them obtain certification for sustainable production and increase product prices to raise their incomes.

The CEO of Ngon Coffee Company, Pajendra Prasad Challa, said the company will spend this investment capital on new processing techniques and equipment to produce high quality, environmentally friendly products.

Vietnam is the world’s second largest coffee producer and exporter but 97 percent of its exported coffee is unprocessed so it sells for a low price, Challa added.

The IFC is a member of the World Bank that focuses on mobilizing capital from international financial markets to help developing countries promote sustainable growth.

Interest rates to be kept relatively stable
 
The State Bank of Viet Nam will hold interest rates "relatively stable" during the remainder of the year, says the director of the central bank's monetary policy department, Nguyen Thi Hong, calling significant recent cuts in interest rates a positive sign even though the overall economic picture remained troubling.

Yesterday, the ceiling rate that commercial banks can pay in deposit interest was lowered from 11 per cent to 9 per cent per year, pursuant to a State Bank decision issued last week. The move represents the fourth time the rate cap was tightened within the last three months, with a total cumulative adjustment level of 5 percentage points.

The central bank also cut key lending rates, with the refinancing rate falling from 12 per cent to 11 per cent, and the discount rate from 10 per cent to 9 per cent. It has also targeted allowing exchange rates to fluctuate by no more than 3 per cent this year, SBV Deputy Governor Le Minh Hung said. (The average interbank exchange rate listed on the central bank's website yesterday at 20,828 dong per US dollar.)

Lien Viet Post Bank vice chairman Nguyen Duc Huong said that lower deposit rates had already created improved conditions for banks to free up stagnant credit flows to help stimulate production on a national scale.

Hung said at a meeting late last week that recent deposit rates have been reasonable enough to balance the interests of depositors and borrowers in a context of easing inflation. Maintaining stable interest rates would ensure economic conditions were predictable for enterprises and help them avoid financial shocks.

Companies have continued to complain that lending interest rates remained high, with some sectors seeing rates of over 20 per cent per year. However, Hong said this was normal for non-prioritised sectors in the current economic context, for example, real estate and securities investment.

VN-Latin America chase trade

Businesses in southern provinces were urged to attend a ministerial level forum on trade and investment between Viet Nam and Latin America to be held in Ha Noi early next month.

Addressing a press conference held yesterday on the first such forum to be held in the country, Nguyen Hoanh Nam, Deputy Director of the Americas Department under the Ministry of Foreign Affairs, said it was an important foreign affairs initiative aimed at boosting bilateral and multilateral trade and investment co-operation between Viet Nam and Latin America.

The forum will be a good opportunity for businesses on both sides to exchange information, seek invest-ment opportunities and sign co-operation agreements, he said.

Delegates from 27 Latin American countries including ministers and deputy ministers in charge of international trade and investment, represent-atives from Latin American embassies in Viet Nam and representatives of businesses from the continent operating in Viet Nam or interested in doing business here are expected to participate in the forum.

The prospects for trade and investment ties between Viet Nam and Latin American countries are huge, Nam said.

With a GDP of more than US$5.5 trillion and a population of 580 million, Latin America represents great investment opportunities for Vietnamese companies.

Viet Nam's main exports to Latin American countries are rice, textiles, seafood, rubber and coffee. It imports animal feed, raw materials for textiles and garments, steel, chemicals and medicine.

To date, Vietnamese firms have pledged to invest $7 billion in the region while Latin American countries plan to invest $3 billion in Viet Nam.

The forum will look into the background of Viet Nam – Latin America relations; potentials and oppor-tunities; advantages and obstacles to trade, economic and investment relations between the two sides; and co-operation orientations.

Indonesian envoy predicts enhanced economic ties

The time was right for Indonesia and Viet Nam to strengthen relations and boost bilateral trade, according to Indonesian ambassador H.E. Mayerfas.

Speaking at the Indonesian Trade, Tourism and Investment Forum in Ha Noi yesterday, Mayerfas said the two countries shared several conditions that can lead to enhanced economic ties, as both countries had huge populations, growing economies and rising purchasing power parity. Viet Nam and Indonesia were also both members of ASEAN, he said.

"There are areas such as agriculture, fisheries, mining, pharmaceuticals, halal food and tourism that have huge potential for more bilateral co-operation," the ambassador said.

The two-day forum, themed ‘Indonesia-Viet Nam: Partnership for Prosperity', was one of Indonesia's initiatives aimed at bringing Indonesian and Vietnamese private sectors closer together, said Mayerfas.

Recent years have seen remarkable development in co-operation between Viet Nam and Indonesia, with bilateral trade seeing strong growth.

Two-way trade reached US$4.6 billion in 2011, the highest figure ever during the 67 years of diplomatic relation between the two countries, and a ten-fold increase within only 10 years.

Viet Nam Chamber of Commerce and Industry chairman Vu Tien Loc said that in addition to trade, there was great scope to further develop co-operation in investment.

Indonesia now ranks 29th among 91 countries and territories that have investments in Viet Nam, with 31 projects worth over $233 million.

Loc encouraged enterprises to take full advantage of the forum to boost co-operation, saying that new contracts inked between the firms would make an effective contribution to strengthening the bilateral relationship.

Private report says business looks more positive

Results from the seventh bi-annual Private Equity report conducted by Grant Thornton Viet Nam in the second quarter showed that 34 per cent of respondents reported positive business sentiment, double the figure compared to six months earlier.

The report's findings on sentiment toward the private equity sector in the last 12 months were analysed from opinions of a number of decision-makers based in Viet Nam or those having a significant focus on the country.

The figure, however, was still lower compared to 81 per cent in the second quarter in 2010, 65 per cent in the fourth quarter in 2010 and 53 per cent in the second quarter last year. The neutral response rate of 39 per cent and negative response rate of 27 per cent reflect that much of private equity remains apprehensive.

Investment attractiveness, as a result of an increase in the positive outlook for the economy, improved to 56 per cent in this quarter, from 39 per cent in the fourth quarter of 2011. Of that 56 per cent, 3 per cent consider Viet Nam as extremely attractive compared to other investment destinations, and 53 per cent see it as more attractive than others, compared to 1 and 38 per cent, respectively, in the fourth quarter last year.

For those considering an additional market for investment, Myanmar was seen by 62 per cent of respondents the most attractive investment destination in the region neighbouring Viet Nam.

The report states that many local small- and medium-sized enterprises have been struggling with the tough economic environment for some time and many will not be able to survive without additional capital being introduced.

As a result, 58 per cent expect distressed assets to be investment opportunities in Viet Nam. The figure was 61 per cent in the fourth quarter and 28 per cent in the second quarter of 2011.

Secondary buyout deals (46 per cent) overtook private or family businesses as the biggest source of deals, increasing from 31 per cent in the previous survey, probably reflecting the fact that several funds are approaching their exit phase.

In terms of investment obstacles in Viet Nam, corruption was considered by 83 per cent of respondents as a concern when investing in the country.

Seafood exporters drop by almost half

There were only 473 companies involved in seafood exports during the first five months of this year, down significantly from 800 companies in the same period last year, according to the Viet Nam Association of Seafood Exporters and Producers (VASEP).

However, the falling number of exporters has not influenced the country's total export value, as those who departed had low turnovers.

The country's five month seafood exports still experienced a 9.8 per cent year-on-year increase, reaching US$2.3 billion, VASEP general secretary Truong Dinh Hoe has said, attributing this encouraging performance to increasing export turnover of large exporters.

Despite positive increase in terms of value, seafood exporters were now facing with numerous difficulties for their business, including shortage of raw materials for processing and insufficient capital for production and increasing input cost, VASEP said. Slumping demand for Vietnamese seafood in the EU, the country's largest seafood importer due to eurozone debt crisis were also problematic, it said, adding that Viet Nam's seafood exports to the market slipped by 7.9 per cent year-on-year with shrimp and tra fish witnessing the strongest decreases.

In order to better facilitate seafood exporters in the coming months, the Ministry of Agriculture and Rural Development has recently proposed two stimulus packages of credits worth VND4.4 trillion ($209.5 million).

The proposal, which would submit to the Prime Minister for approval, included VND2 trillion ($95.2 million) package for raw materials purchasers and VND2.4 trillion ($114.3 million) ones for tra fish breeders.

Furikura Fibre Optics inaugurates

Fujikura Fibre Optics Viet Nam Co last week inaugurated its second factory in the Viet Nam-Singapore Industrial Park in southern Binh Duong Province.

Covering an area of 1ha, the project will turn out fiber optic components for use in telecommunication and data communication systems with the high technology transferred from the Fujikura Group in Japan. The company's first plant came into operation in 2001. The total yearly revenue of the two plants was expected to reach over US$158 million.

Big C Claunches anniversary promotion

French supermarket chain Big C has launched a promotion campaign offering discounts of up to 50 per cent on 4,000 products that will last through August to mark the 14th anniversary of its presence in Viet Nam.

The promotion is divided into three phases of 20 days each. The first, to last until June 17, discounts of 5-50 per cent will be offered on 1,500 products, including food, frozen food, beverages, household appliances, cosmetics, electrical and fashion items.-

Business group receives 100ha

Central Da Nang City People's Committee has granted 100ha land in the city's Hoa Vang District to its small- and medium-sized enterprises association to build an industrial park. The move was to help businesses develop during the economic downturn.

Association vice chairman-cum-general secretary Van Huu Thiet said the city had over 2,000 businesses which needed land to build workshops.-

Viglacera eyes energy-saving glass

Viglacera Group's Research and Development Institute has signed a memorandum of understanding with Germany Innovent eV Technology Development Institute to develop energy-saving glass in Viet Nam.

Under the MoU, the German institute would transfer the secrets of making the glass to Viglacera, plus technology, copyright contracts, research contracts, staff exchanges and supporting techniques.

SOE reforms chalk-up several wins

The process of restructuring State-owned enterprises has revved up in the past six years and seen some notable initial successes, said the deputy CEO of the State Capital Investment Corporation (SCIC), Le Song Lai, addressing the closing day of the Viet Nam Investment and Banking Conference in Da Nang on Saturday.

"The SCIC was assigned by the Government six years ago to aid in the effort of restructuring State-owned enterprises," said Lai. "We have acquired shares in 936 equitised enterprises worth a total of VND7.5 trillion (US$355 million) since 2006, and we have sold our interests in 541 businesses at cost at a value of over VND3 trillion ($143 million)."

He also said the Government would diversify its holdings in State-owned enterprises (SOEs) and build up a supervisory regime to manage businesses more effectively.

"We will strengthen the transparency of SOEs, which has been a weak point," Lai said, noting that equitised firms would be required to list shares and comply with stricter disclosure requirements applicable to listed firms within six months. "The Government will also stop the establishment of new groups as well as speed up the equitisation process in order to stabilise the country's economic growth."

The number of SOEs nationwide has fallen from 12,000 in 1991 to about 1,300 enterprises in 2011, representing a total State investment of VND659 trillion ($31 billion). While 573 more have been targeted for equitisation by 2015, only six have been equitised so far this year.

Railway plan gets PM's tick of approval

The Viet Nam Railway Corporation's development plan for the next three year has been given the thumbs-up by the Prime Minister for its focus on upgrading and new infrastructure.

The corporation tips a budget of VND200 trillion (US$9.5 billion) of which VND195 trillion ($9.28 billion) will be spent on upgrading and building new ones and linking them to major ports, industrial zones and tourist attractions.

Among railways to be upgraded is the north-south Thong Nhat railway, which aims to enable passenger trains reach 120kph and freight trains, 80kph.

Preparations will be finalised for the construction of the railway routes linking Ha Noi-HCM City, Lao Cai-Ha Noi-Hai Phong; and Ha Noi-Dong Dang.

By 2015, Ha Noi Railway Station is expected to become the heart of the country's system, connecting with other means of transport and having a multi-functional service centre.

The improved facilities and services are expected to transport 13.7 million tonnes of freight and 17.7 million passengers a year. Last year, 7.2 million tonnes of goods and 11.9 million passengers were transported by rail.

In a National Assembly session last week, several deputies voiced their concerns about the inadequate railway system and called for more investment in the sector.

Fund proposed to prop up SMEs

The Government should set up a fund to help small- and medium-sized enterprises (SME) at a time of economic hardship, said Pham Thi Thu Hang, general secretary of the Vietnam Chamber of Commerce and Industry (VCCI).

Hang said this fund had already been mentioned in the Government’s Decree 56/2009 but it has yet to exist. “Such a fund is now necessary for backing SMEs, especially those cash-strapped, as they have found it hard to gain access to bank loans without collateral,” Hang told a seminar held in Hanoi last Friday to discuss capital management and investment opportunities in the rest of the year.

Statistics of VCCI show a large number of enterprises were still reliant on bank loans at an interest rate of 18% per year in April.

Senior economist Le Dang Doanh threw support behind the proposed fund, saying HCMC and Bac Ninh Province were having such funds that have proved to be efficient.

Hang’s proposal came as VCCI member enterprises are championing this kind of fund given commercial banks shunning corporate clients in difficulty.

However, in explaining the difficult access to bank loans, Pham Thien Long, deputy general director of HCMC Housing Development Bank (HDBank), said getting access to loans was different from borrowing to pay overdue debts.

Many enterprises have provided insecure mortgages, such as wood that turns out to be rotten. “If enterprises cannot do good business, they will go bust while banks will have to bear the direct responsibility for the loans they provided,” Long said.

Long proposed banks and enterprises would need to build trust in their cooperation.

Doanh said total deposits at banks had risen while total outstanding loans have declined. Banks are sitting on large piles of cash while enterprises are unable to borrow loans and pay debts, he noted.

This situation, according to Doanh, is the consequence of the unstable macro economy.

To tackle the capital shortage for enterprises, the State Bank of Vietnam has lowered the interest rates three times and asked credit institutions to shift capital to the sectors as instructed by the Government, said Nguyen Thi Hong, head of the Monetary Policy Department of the central bank.

According to Hong, Vietnam’s macro economy is improving as seen through the stable foreign exchange rate, increasing foreign reserve and declining inventories.

VN goods on show at S.Korean stores

Many Vietnamese consumer products such as dried fruit, instant noodle, coffee and tiger shrimp are on display at 59 Lotte Mart supermarkets in South Korea until Wednesday.

This is part of the “Vietnam-Indonesia goods fair” organized by Lotte Group starting from June 5. The South Korean retailer is holding the event to mark the fact that it now has 30 outlets overseas with 28 of them in Indonesia and the remainder in Vietnam.

Local products will be on the shelves of 59 Lotte outlets, up from last year’s 11. There are 60 consumer goods made in Vietnam and Indonesia put on show so that South Korean consumers can directly inspect those goods.

The quality of the chosen products is high as producers are big exporters, said Lee Eun Seung, global purchasing manager of Lotte Mart. Especially, their prices are competitive thanks to tax exemptions stipulated in the free trade agreement signed between ASEAN and South Korea.

International retailers have promoted Vietnamese products in recent times. For instance, Metro Cash & Carry has recently launched a promotion program for Vietnamese products in Germany.

Thanks to these activities, retailers have seen their revenue from these products rising strongly.

Highway needs capital to move

The La Son- Tuy Loan highway project needs a $96 million capital injection.

The project covers a new 81.7 kilometres stretch of the highway from La Son town in central Thua Thien-Hue province to Danang city's Tuy Loan township.

Last week, Ho Chi Minh Road Project director Pham Hong Son said: "Building prices have been updated, but increasing its investment capital makes finding an investor for the project more difficult. We hope to find an investor after June," said Son.

Previously, the Ministry of Transport (MoT) planned to sink close to $1 billion into the project. The main 77km stretch will connect La Son road and Tuy Loan, while a further 4.68km will connect the roadway to National Highway 1.

The La Son–Tuy Loan road is part of the Ho Chi Minh City road project and will be constructed using the build–transfer model.

The project will be kicked-off in 2012's third quarter and is expected to be operational in 2015. The cost for compensation and clearance is around $19 million.

So far, a Vietnam and Korea joint venture including Korea's Shinhan E& C Group, Truong Son Building, Transport Company No8, Van Tuong Company, Truong Thinh Joint Stock Company and Son Hai is the only investor submitting an application to invest in this project.

30% of tra fish companies on brink of bankruptcy    

Between 20-30% of tra fish processing and exporting companies are on verge of bankruptcy this year due to a serious shortage of capital and materials.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the Vietnam Development Bank (VDB) has advocated the association’s proposal of offering urgent financial support to tra fish companies. The bank is seeking the Prime Minister’s approval for three proposals.

The VDB requested the PM to sign off on extensions of loans for seafood exporters in general and tra fish exporters in particular, who are coping with financial difficulties while waiting for the Government to issue regulations on dealing with export and investment credit risks. The maximum proposed extension time is two years. The VDB will co-operate with VASEP to consider companies on a case by case basis for the extension and financial assistance programmes.

The VDB has also sought the Prime Minister’s permission to offer capital to companies which have seafood processing factories and aquatic raising areas in addition to those who specialise in buying fish from producers.

The VDB has urged VASEP and concerned agencies to give support to large seafood exporters who have halted operations. According to the VDB, banks should be permitted to give debt extensions and continue providing new loans so they can resume operations.

VASEP has estimated that companies will need around VND5 trillion (USD238 million) to buy 200,000 tonnes of tra fish. The association recommended that the VDB give preferential loans to tra fish businesses who already have export contracts so that they can purchase the materials to fulfill those contracts.

More than 90% of tra fish businesses in the country are in dire need of capital and have been running at 50-70% below capacity, the vice president of VASEP, Nguyen Huu Dung, was cited by Vietnam News Agency as saying.