Businesses seek opportunities at Int’l Boston Seafood Show

Nearly 30 Vietnamese businesses are attending the International Boston Seafood Show in Massachusetts, the US, from March 11-13.

The three-day event, the largest in the North American region introducing frozen and canned seafood products, have attracted representatives from over 900 import-export companies, distributors and supermarkets from the US and other nations in the world.

Shrimps are traditional goods of Vietnamese businesses at this year’s fair. In addition, high quality Tra fillets also attracted the American and international customers.

Nguyen Huu Dung, Vice President of the Vietnam Association of Seafood Exporters and Producers (VASEP) said that this is the 14th consecutive year Vietnamese businesses have participated in the event.

However, apart from maintaining the US market, Vietnam seafood businesses have also sought new markets. At this show, Dung said many South American countries like Columbia, Brazil, and Ecuador have a great demand for importing Tra fish and want to establish contact with Vietnamese enterprises to buy the fish.

Mai Dang Hoa, director general of Samefico - one of the Vietnamese businesses at the event, said that his company has earned great revenues thanks to exporting Tra and Basa fish to the US market.

“Every year, we export our products to this market because we enjoy a zero-tax rate,” said Hoa. “By participating in this show, we hope to seek new customers, besides maintaining regular ones.” He added that his company is expected to work with more than 20 new partners and 10 old clients at this event.

Vietnamese businesses’ participation in the show is part of the national trade promotion programmes this year. This is a good opportunity for the businesses to update information and penetrate the American and international markets in order to boost seafood exports.

Stocks sustain rise in HCM City, down in Ha Noi

Stocks sustained their rise on the HCM City Stock Exchange when this morning's session closed, but sank on the Ha Noi bourse.

In HCM City, the benchmark VN-Index added 0.68 per cent to stand at 432.32 points even though decliners outnumbered advancers by 127-96.

The VN30 Index, which tracks the performance of the 30 leading shares by market value and liquidity, was up 0.12 per cent at over 487 points, thanks to some major shares that hit the ceiling of a 5 per cent rise. They included insurer Bao Viet Holdings (BVH), PetroVietnam Finance (PVF), Sacombank (STB) and Sacombank Securities (SBS).

Blue chips tumbled overall as just eight of the 30 leading shares declined.

Investors were wary of a possible "bulltrap", causing the total market volume to stand at just 46.6 million shares, worth VND728.6 billion (US$34.7 million).

Ninh Van Bay Travel Real Estate (NVT) finished this morning as the most active stock on the HCM City bourse on a trade of over 4.3 million shares, closing unchanged at VND3,500.

On the Ha Noi Stock Exchange, the HNX-Index lost 1.18 per cent to conclude this morning at 69.71 points. Value of trades totalled VND421.1 billion ($20 million) with almost 50 million shares changing hands.

Losers narrowly edged out gainers by a margin of 128-110.

Habubank (HBB) continued to be the most active trade nationwide with 17.3 million shares exchanged, traded at the floor price of VND6,100 a pop. The central bank late yesterday rejected the rumour that it has allowed Sai Gon-Ha Noi Bank (SHB) to acquire it.

Rebounding blue chips boost Index

Stocks rebounded across the two national electronic boards yesterday with more than 50 per cent of codes rising steadily.

On the HCM City Stock Exchange, the VN-Index regained 0.32 per cent from Monday's loss, ending yesterday's session at 429.39 points.

Total market value decreased slightly over the previous session, reaching VND917.5 billion (US$43.73 million), as nearly 63 million shares changed hands.

Many blue chips gained value, pushing the VN30 Index, which tracks the performance of the 30 shares with the highest market value and liquidity, up 0.56 per cent, standing at 485.36 points.

Insurer Bao Viet Holdings (BVH), Sacombank (STB) and Sacombank Securities (SBS) hit ceiling prices capped at 5 per cent a day on the HCM City bourse. However, property developer Vincom (VIC) bottomed out.

With over 5 million shares changing hands, accounting for 8.63 per cent of total market volume, Military Bank (MBB) was the most active code on the southern bourse, adding 4.17 per cent to close yesterday at VND15,000 ($0.71).

On the Ha Noi Stock Exchange, the HNX-Index jumped 1.85 per cent to conclude at 70.54 points. Market volume soared 36 per cent over Monday, totalling 80 million shares, while value of trades increased 20 per cent to over VND663.7 billion ($31.6 million).

Habubank (HBB) led market trades with more than 25 million shares exchanged, declining nearly 3 per cent to VND6,500. Yesterday morning, a rumour circulated around the market that Sai Gon-Ha Noi Bank (SHB) was seeking to acquire HBB and that the deal received the central bank's approval. However, in a press release late yesterday, Habubank denied the rumour, arguing the information was inaccurate and groundless.

Bianfishco to sell factory to Netherlands company

Can Tho-based Binh An Seafood JSC (Bianfishco) plans to sell its fish processing plant to a finance investment corporation from the Netherlands to pay off debts to its fish providers in March, the company's CEO Tran Van Tri confirmed yesterday.

Tri, who replaced his wife as company CEO on February 23, said the company owes 45 local farmers VND261 billion (US$12.4 million) for tra fish they supplied.

Yesterday morning the company paid its 1,200 workers their February salaries, worth VND3 billion ($143,000), he added. Many company employees remain out of work because of materials shortages.

According to the CEO, the company's total properties were audited and said to be worth more than VND2,700 billion (US$128million), adding that the company would be able to balance its current debts.

Tri said his business had taken steps to pay off debts and bank loans and would not go bankrupt, since the interest on its bank loans and taxes would be paid fully and on time.

The company will work with banks to discuss its loans and propose its restructuring plan by Thursday. Bianfishco will also urge its counterparts to pay back their debts to the company in order to help rectify the situation.

Talking with a Viet Nam Fatherland Front representative yesterday, farmers were hopeful that they would be paid within the month as promised. They also expressed their wish that the company would resume its operations and develop.

Former CEO Pham Thi Dieu Hien is a member of the Front and went abroad for medical reasons in late February.

Site clearance issue becalms Ke Ga port’s construction

Compensation issues are causing headaches for the developers of Binh Thuan province’s Ke Ga port, the planned gateway to the Vietnam’s first bauxite and alumina plants.

Disagreement on compensation levels between Binh Thuan People’s Committee and tourism property developers is stalling the construction of the key harbour. Nguyen Ngoc, vice chairman of Binh Thuan People’s Committee, said the provincial authority had failed to handover the cleared site to Vinacomin, the port investor. This had taken the winds out of the project’s sails.

Ke Ga port is designed to serve the import and export operation of Vietnam’s two first bauxite and alumina plants, Tan Rai and Nhan Co, both of which are located in Lam Dong province.

Vinacomin’s initial plans had the group completing construction of Ke Ga this year, in time for the start of operations at the country’s first bauxite plant in Tan Rai.

“The greatest difficulty is site clearance. We are still in negotiations with the coastal resort developers about compensation rates,” said Ngoc. He added the developers were asking more money than the provincial people’s committee could afford.

To build Ke Ga port, Binh Thuan People’s Committee has to give Vinacomin 296 hectares of sea surface and 70ha of land. The land is home to 13 resort projects developed by private companies.

Talks between the local authority and resort developers have been going on since 2008. Ngoc said the local authority was now in the final stages of negotiations with the developers of the Son Lam, Thanh Dat, Thanh Loi and Thai Duong projects. Those projects cover 8ha.

“We are expecting to end the negotiations with these four projects’ developers to allow Vinacomin to break ground for Ke Ga port in April,” Ngoc said. Ke Ga port, once operational, will significantly shorten the timeframes and costs for transporting processed alumina and bauxite from Tan Rai and Nhan Co plants to upload into vessels.

While waiting for Ke Ga port to commence operations, all products from those plants will be transported to Dong Nai province for export. This means a trip of about 300 kilometres. “We understand that the slow pace of [the development] of Ke Ga port will seriously impact on the effective operation of Tan Rai and Nhan Co plants,” said Ngoc.

Vietnam has some of the largest bauxite reserves in the world. These are predicted to total about 11 billion tonnes with the majority found in the Central Highlands region.

VSIP vows to step up industrial park development plans despite PM’s move

Vietnam’s leading industrial park and township developer VSIP claims a recent government halt on the construction of new industrial parks and economic zones will not affect its plans to develop a fifth industrial park and township project in Quang Ngai.

A senior officer at VSIP, short for Vietnam-Singapore Industrial Parks and Township Development Joint Stock Company, last week said the developer would this year continue developing its industrial parks and township project in the Dung Quat Economic Zone.

“The prime minister’s direction doesn’t affect our investment plan in Quang Ngai because this project is located in Dung Quat Economic Zone and has been already planned previously,” he said.

On March 2, Prime Minister Nguyen Tan Dung issued a direction asking local authorities and ministerial bodies to temporarily stop establishing new industrial parks and economic zones, while the Ministry of Planning and Investment (MPI) reviewed the current sites’ effectiveness.

The direction came after National Assembly deputies late last year raised questions about the need for more industrial parks, citing low ratios of land reservation at many existing facilities.

The MPI will review the sites before a decision on when to allow resumption of the establishment of new industrial parks and economic zones is made.

“We support the direction of Prime Minister Nguyen Tan Dung to review the effectiveness of industrial parks, but I think the government should give priority to establishing new industrial parks in locations which are attractive to foreign manufacturers,” said the VSIP source.

In September 2011, VSIP signed a memorandum of understanding with the province to conduct a comprehensive feasibility study for a 1,020 hectare integrated township and industrial park in Dung Quat, its fifth industrial park and township integrated project in Vietnam. It follows two projects in southern Binh Duong province, one in northern Bac Ninh province and one in Haiphong city.

The proposed development comprises a 500ha industrial park located within this zone where government-supported special economic zone incentives are made available to manufacturers. Also under consideration is 520ha zoned for commercial and residential purposes near downtown Quang Ngai city.

VSIP was expected to begin the construction of this project in the third quarter of this year and would offer land for food, consumer goods and manufacturing manufacturers, the officer said.

He added several manufacturers had expressed interest in setting up manufacturing facilities in this industrial park.

Le Van Dung, deputy director of Dung Quat Economic Zone Management Authority, said the authority expected there would be a plenty of manufacturing projects flocking into the zone, following VSIP’s investments.

The VISIP’s four existing integrated townships and industrial parks total 4,845ha and have attracted 440 customers with a total of $4 billion in investment. More than 100,000 jobs have been created by operational tenants.

Hiway takes the high road to the retail market

Hiway Vietnam Company has the Vietnamese market in its crosshairs.

Last week, locally invested-Hiway Vietnam Company officially declared it would jump into the retail market with an aim to have 20 stores in Hanoi and northern provinces during 2012-2016. Hiway Vietnam Company, a joint venture between Son Ha Group and its strategic shareholders, will see Son Ha Group hold a 75 per cent share and pour $45 million into the mix.

Le Vinh Son, chairman of Hiway Vietnam Company, said three stores would be opened in Hanoi in 2012 - the Ha Dong Hiway, Hoang Quoc Viet Hiway and Dien Hiway supercentres. The 12,000 square metre Ha Dong Hiway branch and 3,000sqm Hoang Quoc Viet store would come online in the third quarter, while the others would come online in the fourth quarter.

Son said the firm was confident it could compete as there was room for new investors to prosper in the market. “We cannot deny that the current demand from consumers as well as the supply of supermarkets and modern facilities may not meet the market’s demand. The shopping habits of local residents have moved from traditional to modern facilities,” Son said.

Besides, its biggest competitive advantage was that Hiway owned nearly 10 locations for its facilities. Pham Hong Thai, deputy director of Hiway Vietnam Company, said the Hiway system was built on main traffic routes that brought benefits for customers with 3,000-12,000sqm retail areas with food courts, fashion, game and cinema areas.

Over the last several years, specialised supermarkets have been mushrooming and many of have become familiar to domestic consumers, such as home appliance centres Nguyen Kim, Tran Anh, Pico or Best Caring and garment supermarkets Vinatex Mart.

Meanwhile, foreign retailers such as Big C, Metro Cash & Carry, Lotte, E-Mart also have big plans.

Aeon Corporation, well known for its Jusco supermarket chain, saw Vietnam as its key market. It was expected become one of the three leading retailers in Asia during the next 10 years, in which Vietnam would become Aeon’s fourth foreign market after China, Thailand and Malaysia.

The largest retailer in South Korea, E-mart also expected to see 52 stores before 2020 after it signed a joint venture contract with the Binh Duong province-based U&I Investment Corporation to make it first step into Vietnam in July 2011.

Doosan Vina exports equipment to Turkmenistan

The Chemical Processing Equipment Plant (CPE), a unit of Doosan Vina, has completed a project to export 18 hi-tech pressure tanks and 20 heat exchangers to Turkmenistan.

According to Hang Ha Ryu, General Director of Doosan Heavy Industries Vietnam (Doosan Vina) in Dung Quat economic zone, the second and also final shipment of the project includes three pressure tanks and nine heat exchangers with a total weight of 560 tonnes.

Right after the order contract was signed in July 2011, Dossan Vina designed and manufactured the equipment for the South Yoloten project in Mary Welayaty province.

CPE is one of the five factories equipped with advanced machines and professional Vietnamese engineers. It also produces heavy equipment for Doosan Vina and Doosan Group of the Republic of Korea.

Turkmenistan is the world’s fifth largest gas provider which supplies nearly 30 billion cubic metres of natural gas for industry, commerce and retail consumption customers throughout the world.

Lao PM pledges assistance to Vietnam businesses

Lao Prime Minister Thoongsinh Thammavong has affirmed the intention of his government to facilitate Vietnamese businesses and localities’ effective investment in Laos.

The Lao PM made the commitment at a reception given to visiting Secretary of the Party Committee of southeastern Dong Nai province, Tran Dinh Thanh, in Vientiane on March 9.

Thoongsinh Thammavong highlighted the effective investment and mineral exploitation of Dong Nai’s major companies in Vientiane and Attapeu province, welcoming the provincial policy to expand investment cooperation in Laos.

Thanh, who is on a working visit to Laos from March 7-12, informed the host of the results of his working session with Champasak provincial authorities to carry out cooperative activities in 2011-2015.

He said the two localities will organise delegations to promote investment, trade, tourism, service and sports and culture exchange and swap experiences in socio-economic management.

ADB to provide US$180 million in loans for Vietnam

The Asian Development Bank (ADB) will grant Vietnam two credit loans worth a total of US$180 million to support the development of irrigation systems and urban infrastructure.  

The loan agreements were signed by the State Bank of Vietnam Governor Nguyen Van Binh and ADB Country Director in Vietnam Tomoyuki Kimura in Hanoi on March 9.

Accordingly, ADB will provide US$110 million for a project to improve the irrigation system in the central province of Thanh Hoa between the Chu River in the north of the province and the Ma River in the south. An additional US$33.14 million for the project will be sourced from the State budget.

The project aims to increase agricultural production in the region to help ensure national food security, reduce poverty and enhance people’s living conditions and incomes.

Another project to develop the socio-economic situation in Viet Tri, Hung Yen and Dong Dang cities will receive loans worth US$70 million from ADB, US$13.52 million from the Export-Import Bank of Korea (Keximbank), and US$31.81 million from provincial budgets.

These cities will be developed as satellite cities of Hanoi and become major economic centres in northern Vietnam, contributing to transforming the North-South economic corridor from merely a transport route to a fully functional economic artery.

Both ADB credit loans will have 32-year terms with a grace period of eight years. A one percent interest rate will be applied during the grace period and 1.5 percent in the following years until the end of the loan's term.

Remarkable progress in five years of Vietnam's WTO membership

Five years after joining the WTO, Vietnam’s GDP per capita reached US$1,300, and its export market have been expanded to 149 WTO economies.

Vietnam’s export turnover last year, over US$96 billion, was double 2007’s figure.

The information was unveiled at a seminar on March 9 to discuss the competitiveness of Vietnamese businesses after five years in the WTO.

The event was co-organized by the Communist Review and the Ministry of Industry and Trade.

According to economists, after five years of WTO membership, the number of enterprises has increased 2.3 times and 7.3 times in registered capital compared to 2007. Many local businesses have affirmed their foothold in regional and international markets by penetrating demanding markets. As of 2010, Vietnam has had 19 traditional markets with export turnover reaching more than US$1 billion.

Export turnover grew by more than 19 percent on average from 2007 to 2011 compared to 18 percent before Vietnam's entry to the largest trade organization.

Economists also agreed that after WTO admis;sion, Vietnamese businesses’ competitiveness has improved remarkably. However, they still reveal weaknesses such as small- scale operation, low capacity of applying science and technology, and limited market share. Many businesses have failed to work out a competitive strategy to affirm their prestige and quality in the region and the world.  

Cao Sy Kiem, President of the Vietnam Association of Small and Medium-sized Enterprises (SMEs), said that although SMEs have developed rapidly, they have not been fully equipped with capital sources, advanced technology, highly-skilled human resources and business administration experience, putting them in a fix to ensure the quality of product design and competitive prices, even in the domestic market.

To improve the competitive edge of SOEs in the future, it is necessary to restructure state owned enterprises (SOEs) by eradicating weak enterprises, strengthening inspection and training qualified business administration managers.

Vietnam joins Thai-ASEAN trade fair

Vietnamese businesses have shown their products at the 2012 Thai-ASEAN Trade Fair, taking place in Ubon Ratchathani province, Thailand, from March 5-11.

The event has attracted businesses from Vietnam, Thailand, China, Laos and Cambodia, aimed at boosting trade ties among members of the East-West Economic Corridor, particularly as Southeast Asian countries are looking forward to establishing an ASEAN Economic Community (AEC) by 2015.

Representatives from all three regions of Vietnam are displaying traditional products at the fair, including confectioneries and handicrafts.

On the occasion, the trade counselor of Vietnamese Embassy in Thailand, Nguyen Thanh Hung, held a working session with Vietnamese firms at the fair. He also asked local trade officials to help Vietnamese goods enter the Thai market.

Binh Dinh to get $8m residential area, $11m supermarket

Tay Son District saw groundbreaking ceremonies last month for a new VND180 billion ($8.6 million) residential area on a 20-ha site along Highway 19, as well as for the VND240 billion (US$11.4 million) Vinatex Tay Son supermarket on a site of 6,720sq.m, the local People's Committee announced.

Long Duc Investment Co to begin work on Long Duc Industrial Zone

The Long Duc Investment Co Ltd will begin construction on Monday of the 281-ha Long Duc Industrial Zone at the estimated cost of US$100 million in Long Thanh district of the southeastern province of Dong Nai. The project was slated for completion at the middle of next year, said the company's managing director, Pham Nhat Hanh.

Viet Nam's Donafoods Co established Long Duc Investment Co Ltd with three Japanese partners, including Sojitz Corporation, Daiwa House Industry Co Ltd and Kobelco Eco-Solutions Co Ltd, which holds 88 per cent of the shares. This new industrial zone will bring the total number of industrial zones in the province to 30, covering a combined area of over 9,500ha.

Viglacera, Viet Nam institute to develop energy-saving materials

The Viglacera Corporation and the Viet Nam Institute for Building Science and Technology under the Ministry of Construction signed a co-operation agreement on research, training and technology transfer last Thursday.

Under the agreement, both sides would apply technology solutions to decrease the construction costs of five- to 12-storey low-cost housing projects by 10-20 per cent. The partners would also develop energy-saving products and standards for building materials, including glass, cement and mortar.

With projects including the Dang Xa new urban area, Xuan Phuong urban area and Tay Mo residential area, Viglacera was building about 2,000 low-income housing units in Ha Noi, said Viglacera managing director Nguyen Anh Tuan.

Techcombank profit last year jumps by 53% to $200 million

Techcombank posted a profit last year of VND4.2 trillion (US$200 million), an increase of over 53 per cent over 2010. The bank's total assets as of December 31, 2011, totalled VND180.8 trillion ($8.6 billion), an increase of 20.35 per cent over the previous year.

Techcombank's capital adequacy ratio (CAR) remained at 11.43 per cent, much higher than the standard of 9 per cent set by the State Bank of Viet Nam. Techcombank has 307 branches and 1,250 ATMs nationwide.

HCM City trade delegation to explore Italian business market

The HCM City Trade Promotion Office is organising a trade delegation with the Italian Business Association in Viet Nam and Umbria Export. Members of the delegation, planned to visit Umbria in December, would specialise in machinery and equipment. The organisers will provide support for the delegation's travel costs.

8th international auto accessories show to open in HCM City

The 8th International Sai Gon Autotech & Accessories Show will take place in HCM City from May 31 to June 3. The show is being organised by the Asia Trade Fair and Business Promotion (ATFA) in co-ordination with Taiwan's Chanchao International Co Ltd.

With nearly 150 stalls, the show will display automobiles, motorbikes and accessaries from such popular brands as Subaru, Vinamotor, Samco, and Harley Davidson. Importers Luxgen Viet Nam and Kylin-GX668 will be joining in the annual event for the first time, said ATFA president Tao Linh.

Site clearance still dogging key projects

Land clearance continues to be a major stumbling block in implementing infrastructure construction projects in HCM City, says the city People's Committee deputy chairman Nguyen Huu Tin.

Addressing a meeting held last Friday to discuss measures to resolve difficulties in carrying out major transportation projects, Tin said site clearance problems including compensation for relocated residents posed the most serious challenge.

The Transport Department has reported that many key projects have fallen behind their deadlines, negatively impacting traffic quality and safety.

Administrative procedures, the amount of compensation and a lack of resettlement facilities and other options were delaying ground clearance. For instance, a project to expand a key 14km road that links HCM City and Long An Province began in early 2009 and was expected to be completed by March 2010. But part of the construction has not even started due to site clearance delays.

Another key project is the 13.6km long road linking Tan Son Nhat Airport and the ring road. The project, which is expected to open to public early in 2014, has been slowed down by ground clearance problems in the districts of Go Vap, Tan Binh and Thu Duc.

The tardy pace of other important projects including the Ha Noi Highway, the eastern ring road which links Phu My and Rach Chiec bridges, and the city metro system (which is two years behind schedule) is also the result of site clearance delays.

Tin said the city planned to speed up the above-mentioned projects this year after taking drastic measures to clear ground for construction. He did not specify what the drastic measures would entail.

Key projects expected to be completed this year would be prioritised, he said.

The city would closely supervise disbursement of projects that are receiving official development assistance funds, he added.

Risks remain in bank restructuring

A Government plan to restructure the Vietnamese banking system is positive for the sector, but a lack of clarity about the proposals and uncertainty regarding the authorities' commitment and ability to go through with them means significant risks remained in the short to medium term, according to the latest statement released by global credit agency Fitch Ratings.

On the agency's website, it said that the Government planned to include the potential acquisition of bad loans from commercial banks, measures to boost capital levels and potentially the merging of weaker banks.

Weak capital levels, tight liquidity, and deteriorating asset quality were among the main concerns in the relatively low-rated Vietnamese banking sector.

The Government's efforts to address these problems were therefore welcomed.

In particular, the rating agency believed that the broader financial system would benefit from banking sector consolidation, as it could reduce the risk of insolvency among smaller banks.

These smaller banks were fairly dependent on short-term interbank borrowing and could therefore cause wider disruption to the sector in an insolvency scenario.

Liquidity in the domestic banking system remained susceptible to high inflation and confidence in the local currency, the Vietnamese dong.

The statement also stated that asset quality was likely to deteriorate further. Non-performing loans were also significantly understated under the country's accounting standards and could be three or four times higher under international standards.

For example, there was a lack of transparency about how banks were recognising, and the adequacy of, provisions relating to loss-making State-owned enterprises.

Nevertheless, there was little detail available on when the Government might initiate mergers, how big the bad-debt acquisitions would be or what price the Government might pay. Without these details it was impossible to gauge how significant a benefit the measures would be for the sector.

The Government's commitment to push through the reforms and its capacity to absorb these bad debts was also unclear, the statement said, adding that Viet Nam's ‘B+' Long-Term IDR reflected the risk from very high inflation relative to GDP growth and high contingent liabilities from State-owned enterprises and banks.

Although the financial-sector reforms would be viewed as a positive step by the Government, they would have an impact on the country's balance sheet.

Vinalines asked to speed up repair work

Deputy Prime Minister Hoang Trung Hai has asked the Ministry of Transport to oversee work on the ship-repair complex being built by Viet Nam National Shipping Lines (Vinalines) in the south, the Government Office said.

The project is part of the Government's master plan on developing the country's ailing ship-repair sector.

The Government hopes the ship-repair complex will help to meet increasing demand for freight transport, particularly among Vinalines fleet.

Meanwhile, the Government Office stated the complex would not be allowed to operate as fuel and chemical terminal.

Vinalines last year shipped 36.8 million tonnes of cargo, up 1 per cent against the previous year, backed by increasing export volumes of coffee, cocoa, garments, seafood and steel.

The carrier this year plans to reach a turnover of VND27.2 trillion ($1.3 billion), a 10 per cent year-on-year increase, of which, profit would account for $5.7 million.

Petrovietnam in talks on stake sale

State-run PetroVietnam is in talks to sell a 49 per cent stake in its Dung Quat oil refinery to three foreign companies, the refinery's director general said.

"We are trying to sell the stake as soon as possible, so that we will have funds for expanding the refinery," Nguyen Hoai Giang told Dow Jones Newswires Friday.

Mr. Giang said the parties involved haven't reached agreement on the issue he said is dominating negotiations: the refinery's value.

A person familiar with the situation said Friday that one of the three companies is state-owned Petróleos de Venezuela SA, the other two are from Japan and South Korea, and that it's likely all three will buy the stake jointly.

PetroVietnam, formally Vietnam Oil and Gas Group, has said it will use the money raised from selling the stake to expand the refinery's annual capacity to 10 million metric tons, or 200,000 barrels a day, from 6.5 million tons.

Dung Quat, the only refinery operating in Vietnam, It meets around one-third of the country's demand for oil products.

A feasibility study on the expansion will be completed by the end of this month, and the sale may take place after that, the person familiar with the situation said.

State media cited Mr. Giang as saying last month that the expansion of the refinery may cost between $1.5 billion and $2 billion, and will likely take five to six years.

Foreign banks lower deposit rates

After the central bank announced its intention to lower the ceiling deposit rate to less than 13 percent, several foreign banks have reduced their rates while local banks have yet to make any move.

ANZ Vietnam has officially applied new deposit rates, with the highest being 13 percent a year. The annual interest of 12.7 percent is now applicable for deposits of over VND500 million.

A teller of this bank said the deposit rate cut was to comply with the central bank’s policy to reduce interest rates by one percentage point, adding that clients should early deposit their money as interest rates would likely drop further.

Shinhan Vietnam Bank last Tuesday lowered deposit rates to an average of 12.8 percent. Deposits of 1-3 months are given the highest interest rate of 13 percent per year.

HSBC Vietnam has also announced its intention to reduce deposit rates. Meanwhile, local banks still keep deposit rates at 13 percent – 14 percent depending on terms, waiting for an official announcement of the central bank.

A teller of a large bank said those depositing more than VND1 billion could enjoy the maximum interest rate of 16 percent upon negotiation, but only a branch director has the authority to negotiate a deposit rate.

Small banks still maintain the deposit rates they have negotiated with customers. A bank in District 1, HCMC offers an interest rate of 17 percent for deposits of over VND500 million.

Le Tham Duong, head of the Business Faculty of the HCMC Banking University, said lowering deposit rates should have been done earlier when the central bank had categorized local credit institutions.

Banks in group 1 and 2 have received capital from banks in group 3 and 4, as well as gained hefty mobilized capital from the 14 percent deposit rate ceiling applicable from September 7, 2011.

Abundant capital input, while few enterprises can borrow bank loans, enables banks to ease lending rates, leading to lower deposit rates.

Duong said lower inflation also helped bring down interest rates.

The inflation rate of the first quarter often accounts for a half of the year’s figure, but since inflation will likely pick up a mere 3 percent in the first 3 months, cutting interest rates is sensible.

As unhealthy banks have been identified, banks aren’t likely to push up interest rates either, Duong said.

But Duong said it remained doubtful whether capital flows into profitable sectors like export, agriculture and supporting industries, or inefficient State-owned businesses, and whether enterprises can access capital.

Nguyen Duc Thanh, director of the Vietnam Center for Economic and Policy Research (VEPR), said the deposit rate ceiling should be removed.

As inflation is declining and more capital is flowing into banks, interest rates should be decided by the market.

If the central bank insists on imposing a ceiling for deposit rates, strong sanctions must be given as several banks are still violating the ceiling, making it difficult for small lenders.

Government bonds fetch high yields at auction

All three-year government bonds issued by the State Treasury worth VND1 trillion (US$47.6 million) were sold in an auction held on the Ha Noi Stock Exchange on Thursday, with yields reaching 10.94 per cent per year.

Up to VND960 billion ($45.7 million) worth of two-year bonds were also sold at an interest rate of 11 per cent on a total call of VND1 trillion, while only VND1.16 trillion out of a total VND2 trillion worth of five-year bonds were purchased at an interest rate of 11.1 per cent per year.

Military Bank executives to sell stock options

Four Military Bank (MBB) executives have sold their rights to purchasing shares in the bank's upcoming issue, it announced.

They include Tran Thi Kim Thanh, member of the board of directors; Tran Thanh Binh, member of the board of control; Le Thi Loi, financial manager; and Cao Thi Thuy Nga, deputy director general. All retained their current holdings but sold their share purchase rights worth a total of over 480,000. Transactions were carried out on Monday and Tuesday.

The Military Bank plans to issue 170 million shares to raise its charter capital to VND9 trillion (US$428,6 million).