Banks to increase ATM cash withdrawal fee

 

As of June, members of the Card Society under the Vietnam Banking Association will increase the fee they charge for every cash withdrawal at other banks’ ATMs from VND3.300 to 5.500.

 

The Card Society said it would also ask the State Bank of Vietnam (SBV) to allow a member bank to charge a fee for cash withdrawal at its own ATMs.

 

SBV has three times rejected this proposal.

 

Nguyen Thu Ha, chairwoman of the Card Society, said banks had to increase the cash withdrawal fee at other banks’ ATMs to help pay for the very expensive cost of operating all ATMs.

 

This cost has been increasing since ATMs have been repeatedly attacked and banks have thus had to invest more on security, Ha said.

 

She said in fact, several banks increased the fee to VND5.500 as early as at the end of last year and customers didn’t seem to object.

 

As for allowing a bank to charge a fee for cash withdrawal at its own ATMs, Ha said this was necessary since banks now don’t have any source of revenues to pay for the cost of operating ATMs.

 

The money in customers’ accounts is simply put back into ATMs so it doesn’t generate any profit.

 

The director of a joint stock bank’s card center agreed. He said Vietnamese customers are yet to have the habit to use their debit cards for transactions and often withdraw cash as soon as it is available in their accounts.

 

In addition, saving interest rates are now high as 12 percent per year so most are putting their idle money in savings, not debit accounts.

 

As a result, banks with an average ATM network often have to keep at least VND400 million in ATMs without generating any profit, and the figure for those operating thousands of ATMs is as much as VND600 billion.

 

Banks said increasing the cash withdrawal fee at other banks’ ATMs would also encourage smaller banks to operate their own ATMs, rather than rely on big banks’, if they don’t want to lose customers.

 

According to figures released at the recent annual 2011 Card Society conference by Dang Cong Hoan, director of Techcombank’s card center, 6 major banks (Agribank, Vietinbank, Vietcombank, Dong A, BIDV, and Techcombank) are now operating 8.200 ATMs or 70 percent of all ATMs on the market.

 

Many banks issue cards but don’t have their own ATMs, putting an incredible burden on big banks’ ATMs, each of which has to serve up to 2.700 account holders, Hoan said.

 

That means the more ATMs a major bank operates, the bigger it loses, especially because 95 percent of debit card users use their cards to withdraw cash.

 

Hoan also suggested the number of debit card issued by a bank should be proportionate to the number of its ATMs to reduce the burden on major banks.

 

Lifeless property market gets lift from M&A deals

 

The moribund Vietnamese property market may see a glimmer of light through an increasing number of mergers and acquisitions (M&A).

 

According to Savills Vietnam real estate agency expert Troy Griffiths, there is a rapid need for cash among investors that boast large land reserves but lack capital to invest, resulting in a rising number of M&A deals.

 

AVM Vietnam M&A research and consultancy director Dang Xuan Minh said that the rise in M&A deals in the real estate sector is due to rising property prices, and the considerable amounts of hot money that have flowed into the market.

 

M&A offers an effective tool to promote revenue growth and restructuring, meaning only the most competent investors would carry out projects, Minh said.

 

He said that with large amounts of capital, foreign investment funds and enterprises and strong domestic private conglomerates will benefit from M&A deals.

 

Since the beginning of the year, the property market has witnessed a series of major M&A deals, as evidenced by Thien Minh Tourism Company's acquisition of a chain of six hotels and resorts from Hong Kong's EEM Victoria valued at US$45 million and Vinaland Company's transfer of all shares in a housing development project to a Vietnamese partner, worth up to $10.9 million.

 

To explore M&A options further, the Vietnam Investment Review newspaper and AVM Vietnam will host an M&A Vietnam forum in HCM City on June 9.

 

A seminar on M&A strategy and an exhibition to promote businesses and investment opportunities will also be held at the event.

 

HCMC eyes private investment in traffic infrastructure

 

A photo captured from the video clipThe Ho Chi Minh City Department of Transport has called on the private sector to invest in roads and bridges to ease the terrible congestion on the roads.

 

It has mobilised investments in road and bridge projects under BOT (Build-Operate-Transfer) and BT (Build-Transfer) models. They include the Phu My Bridge, Binh Trieu 2 Bridge, Hanoi Highway , Tan Son Nhat – Binh Loi – Outer Ring Road.

 

Right now the city has seven BOT and BT projects involving a total investment of VND15.9 trillion  ($757 million) and is seeking investment of VND167.58 trillion (US$7.97 billion) in 31 others.

 

However, it has not proved enough to cope with the congestion on the roads.

 

Therefore, the Department said, it seeks to create newer investment models that benefit both society and investors.

 

To do this, the city needs to reform investment policies to attract private funds, it said.

 

It pledged to work with relevant departments and sectors to tweak investment policies so that investors can save time and problems can be resolved easily and quickly.

 

It will also continue to work to acquire and clear lands for the projects and spell out compensation norms to safeguard the benefits of all parties.

 

By 2020 the Department plans to build and upgrade three belt roads, 11 roads running to the city centre, seven highways, four elevated roads, 25 bridges and tunnels through the Sai Gon, Dong Nai, Nha Be, and Long Tau Rivers.

 

It will also build and upgrade many car parks in the city.

 

It will move existing ports on the Sai Gon River away from the city centre and build ports at Hiep Phuoc and Cat Lai that can receive large passenger and cargo vessels.

 

Also by 2020 it hopes to transport 200 million tonnes of cargo per year through international ports in HCMC and 62 million tonnes through domestic ports.

 

The Department will also focus on developing public transport, starting six metro and three tramway and monorail routes, and upgrading the bus system.

 

To improve the pubic transport system, it will try to improve the quality of the bus service, attract investment in car parks and bus stations, and encourage people to use public instead of private transport.

 

It will upgrade Mien Dong (Eastern) Bus Station, Mien Tay (Western) Bus Station, and Cho Lon (Lon Market) Bus Station in the inner city and build inter-provincial bus stations in the suburbs.

Jetstar Pacific to launch new route

 

Low-cost carrier Jetstar Pacific Airlines (JPA) will offer direct flights between Nha Trang and Hanoi as of May 24, the airliner announced Sunday.

 

Ta Huu Thanh, deputy CEO of JPA, said there would be one flight everyday on this route from now until June 1, and afterwards, two flights per day.

 

One-way tickets cost VND1.025 million (US$51) (excluding taxes and surcharges).

 

Fertiliser, steel prices rise

 

A multi-layered distribution system, high production and transport costs, and an artificial supply shortage have fuelled domestic fertiliser and steel prices despite the State's price stabilisation measures, industry insiders have said.

 

Fertiliser prices continue to rise amid strong demand for the ongoing summer-autumn crop. The price started increasing by VND1,000-3,000 a kilo since late last year.

 

For example, in the Cuu Long (Mekong) Delta region, urea fertiliser rose by VND1,300 to VND9,800 a kilo while diammonium phosphate (DAP) went up by VND2,000 to VND15,000 a kilo, potassium by VND2,200 to VND12,200 a kilo, and NPK by VND2,000 to VND11,000 a kilo.

 

Nguyen Anh Tuan, deputy director of the Finance Ministry's Pricing Management Department, said the State had offered support policies to stabilise fertiliser prices, including the zero per cent import tax and incentive input prices for locally made fertilisers.

 

However, problems still exist in the management and implementation of price stabilisation measures. In addition, there is a weak supply-demand regulation system because of poor and inconsistent information.

 

Tuan said the fertiliser association has not paid enough attention to having an adequate level of fertiliser storage, which has pushed prices up as demand ran high.

 

Soaring fertiliser prices have also occurred because of speculation, the overlapping distribution network, and monopolies existing in the market, he added.

 

Nguyen Loc An, deputy head of the Industry and Trade Ministry's Domestic Market Department, said the increase in fertiliser prices resulted from heavy reliance on the import market.

 

He said the country would need 8.5 million tonnes of fertiliser this year, but the local market could only produce 5.9 million tonnes.

 

He said the local market has had to import 100 per cent or 1.3 million tonnes of potassium and South Africa (SA) fertiliser, 50 per cent or 990,000 tonnes of urea, 40 per cent or 260,000 tonnes of DAP.

 

He added that volatile fertiliser prices were also due to the supply-demand imbalance and an uncertain supply.

 

While global steel prices are undergoing a lull and currently falling, domestic steel prices are much higher than imported ones, which has helped the latter to penetrate the local market.

 

Deformed steel prices in North America declined by US$50 over last month to $680-700 a tonne while steel prices in Turkey are currently $30 lower than last month's price.

 

Transactions have also slowed down on the Asian steel market, with steel ingot prices sometimes selling for $640 a tonne.

 

Steel prices at domestic mills, however, sit at VND18 million (US$900) a tonne inclusive of taxes, VND4 million ($200) a tonne more expensive than global steel prices and in some countries in the region.

 

The sharp difference in steel prices has lowered the market share of the domestic rolled steel segment to 14 per cent from 30 per cent earlier. Imported rolled steel is VND400,000 ($20) a tonne cheaper than the local counterpart.

 

A senior official of a large steel mill in HCM City said that exceedingly high production and service expenses were attributable to high steel prices on the domestic market.

 

He said the porterage fee on the domestic market was two to three times higher than other countries and discount costs remained high at domestic factories.

 

Nguyen Tien Nghi, deputy chairman of the Viet Nam Steel Association, said the demand for construction steel was plunging, with March steel consumption falling to 327,000 tonnes from 475,000 tonnes in February.

 

An estimated 300,000 tonnes of steel were consumed in April.

 

But local steel factories were planning price hikes to offset higher expenses and bank loans, he said.

 

Do Duy Thai, general director of Thep Viet Steel Co, said steel prices would most likely go up in the near future because of rising electricity prices.

Levi Strauss finds Vietnam a good fit for jeans production

 

The global leader in jeanswear Levi Strauss is looking to make Vietnam its production hub for exporting jeans to Asia.

 

Levi Strauss CEO John Anderson last week visited Vietnam and said the nation was an important part of the ongoing development of the company’s business in Asia.

 

“We looked at other countries but picked Vietnam because of its young, highly literate, talented and available workforce and its close proximity to our Asia-Pacific markets. Also, Vietnam is one of the fastest growing economies coupled with a young population,” Anderson told VIR.

 

“Vietnam is very important to Levi Strauss and it is one of our most important sourcing countries and is also a growing market for the retail sale of our products through our distributor, Thanh Bac,” he said.

 

Last year, Levi Strauss started operating its first new jeans finishing facility in northern Ninh Binh province, two hours drive from Hanoi, where Levi Strauss adds a “look” to jeans.

 

With the estimated investment of $8 million in equipment and machinery, the facility’s current capacity is six million units per day, and all of the facility’s jeanswear are exported to Asian markets, which contributed about 17 per cent of Levi Strauss’ annual global sales in fiscal year 2010.

 

Anderson said that Levi Strauss had already planned to raise its capacity at the Ninh Binh facility to 10,000 units per day so as to satisfy both regional and domestic demand.

 

“We will continue to invest in the brand in Vietnam especially in terms of brand presentation.  We want the brand to be represented in each and every key city in Vietnam,” he said.

 

Levi Strauss’ products are now sold in more than 110 countries worldwide through a combination of chain retailers, department stores, online sites, and franchised and company-owned stores.

 

As of February 27, 2011, the company operated 482 stores within 31 countries and its reported fiscal 2010 net revenues were $4.4 billion.

HSBC opens 16th outlet in Vietnam

 

HSBC Bank (Vietnam) Ltd, (HSBC Vietnam) has opened another new outlet in Hanoi, its 16th outlet in Vietnam.

 

Located at 185 Giang Vo, Cat Linh Ward, Dong Da District, in the capital with the population of around 6.5 million e, the Hanoi Branch Giang Vo Deposit Office will be a sub unit of HSBC's Hanoi branch.

 

"The opening of Giang Vo Deposit Office clearly reflects HSBC's plan to enhance its presence in Vietnam. We want to ensure customers can access our banking services with greater convenience, and leverage HSBC's global connectivity, local knowledge and strong national reach to unlock Vietnam's potential,” said Thomas Tobin, CEO of HSBC Vietnam.

 

“Customers in Hanoi will benefit from our extensive network with an enhanced banking experience, including the latest banking technology conducted a more convenient location tailored to their needs," he added.

 

“With the opening of our 16th branch in the country, we continue to build our ability to serve our customers in Vietnam, and give them access to internationally proven, Asian-built solutions for their personal and professional needs," said Peter Wong, Chief Executive of The Hongkong and Shanghai Banking Corp.

 

In April, HSBC inaugurated Le Dai Hanh branch in Ho Chi Minh City, which is located at the Flemington Building, 182 Le Dai Hanh, District 11. It is the 15th outlet in Vietnam and the seventh outlet in Ho Chi Minh City.

 

HSBC in Vietnam has just been named Best Bank in Vietnam by The Asset and awarded a certificate of merit from the State Bank of Vietnam (SBV) for 15 years of service.

 

Now, just over two years later, the bank operates a total of 16 outlets in Vietnam: one transaction centre, six full-service branches in Hanoi, HCM City, Binh Duong, Can Tho, Da Nang and Dong Nai, transaction offices and deposit office across key urban centers of Hanoi and HCMC.

 

HSBC has been in Vietnam for 140 years - the Bank first opened an office in Saigon, now HCMC, in 1870. It was the first wholly foreign-owned bank to operate both branches and transaction offices in Vietnam following its local incorporation in January 2009.

 

The Hongkong and Shanghai Banking Corp Limited is the founding and a principal member of the HSBC Group which, with around 7,500 properties in 87 countries and territories and assets of $2,455 billion as of 31 December 2010, is one of the world's largest banking and financial services organizations.

 

Seafood products export likely to touch $5.3b target

 

During the first four months of this year, Vietnam's export turnover for seafood products reached $1.6 billion, rising 29 percent against the same period last year, Ministry of Agriculture and Rural Development (MARD) reported.

 

Despite of highly increasing export turnover, most of enterprises have no profit due to too high input costs together with a series of other difficulties such as shortage of materials and selling price for seafood products lower than costs.

 

However, the country's seafood product exporters still expect to touch $5.3 billion target of export turnover in 2011 basing on key export items such as shrimp and tra catfish.

 

Facing many barriers, but Vietnam's seafood exports in first four months is still in growth momentum. Seafood export posted growth in most major markets, notably the US. increased 39 percent, Germany 32 percent and the Canadian market also saw a two-fold growth year-on-year.

 

Together with tra catfish, shrimp also maintained the export volume in traditional markets like US, Japan and Europe.

 

Along with traditional markets like the US, Japan, and EU, Vietnam should expand the market to huge potential countries such as Korea and China.

 

VN announces $19.8 mln project of bauxite study

 

The Vietnam’s Department of Geology and Minerals Friday announced a five-year-long VND408 billion (US$19.8 million) project to study bauxite and laterite deposits in seven provinces from October 2011 to September 2015.

 

Titled “Overall survey & examination of bauxite, laterite deposits potential in southern Vietnam”, the project will cover a total area of 14,000 square kilometers in Kon Tum, Gia Lai, Binh Dinh, Dak lak, Dak Nong, Binh Phuoc, Binh Thuan, Lam Dong, and Dong Nai.

 

Accordingly, the project not only focuses on discovering and zoning areas having bauxite and laterite deposits but also estimates on their reserves.

 

Vietnam will use land survey, mineral examination, and analysis to best implement the comprehensive study.

 

According to the geology department, bauxite and laterite in northern Vietnam have been well-studied and are set to produce alumina, which is a key component of the aluminum industry.

 

Laterite is used in iron and steel industries.

 

Prime Minister Nguyen Tan Dung told a National Assembly meeting last November that the country’s bauxite reserves could reach 11 billion tons, enough to supply for its alumina industry in the long term.

 

Vietnam is currently constructing two bauxite mining and processing complexes in the central highlands provinces of Lam Dong and Dak Nong.

 

Saudi Airlines Cargo to fly to Vietnam

 

The Civil Aviation Administration of Vietnam has approved Saudi Arabia’s cargo carrier Saudi Airlines Cargo to launch flights to Ho Chi Minh City starting May 16.

 

Saudi Airlines Cargo will operate three flights per week. It will use Cargo MD11 aircraft with a capacity of 80 tons for the route, reported TBKTSG Online.

 

It will be the second Middle East carrier flying to Vietnam. Qatar Airways is now running 11 flights per week between Vietnam and Doha.

 

Vietnam’s aviation market has experienced double-digit growth for the past few years. Air freight cargo in the country rose 30 percent last year to 460,000 tons, according to Thanh Nien.

 

Cargo carriers to and from Vietnam handled 113,000 tons of goods in the first quarter, up 11 percent from the same period last year.

 

The International Air Transport Association said in February that Vietnam will be one of the top three fastest growing international freight markets by 2014, together with Hong Kong and China.

 

Saudi Airlines Cargo operates 9 freighters and utilizes the belly-capacity on 125 passenger aircraft of Saudi Arabian Airlines spanning a rapidly expanding global network of 85 online destinations.

 

Possible new law on deposit insurance

 

A new law on deposit insurance might be set in place during the 2011-12 period in an effort to build an effective governing system, the General Director of the Deposit Insurance of Viet Nam said yesterday.

 

Deposit insurance is defined as a measure implemented in many countries in order to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due. Deposit insurance systems form one component of a financial system's safety net and promote financial stability.

 

"We feel that a new deposit insurance law, which could help clarify functions on service implementation in order to protect customers while ensuring the effectiveness of the banking system, is a crucial necessity," said General Director Bui Khac Son.

 

Functions governed by a proper law will lead to more efficient protection, he added.

 

The Deputy Director of the Deposit Insurance of Viet Nam (DIV), Nguyen Manh Dung said that deposit insurers had to take responsibility for supervising deposit receivers.

 

"Supervision could help protect deposit receivers from unexpected calamities while ensuring the safety of depositors."

 

Son added that the DIV has developed two monitoring systems whereby remote monitoring depended on data and reports from participants (banks, financial companies, credit funds etc.) in order to make early alerts possible.

 

Insurers could send messages to alert organisations and other related organs, such as the State Bank, to ask for assistance, he said, while in-place control allowed deposit insurers to visit alerted organisations in order to check for risks.

 

"In-place controls are currently rare. The new law will have detailed regulations regarding the establishment of such controls," Dung said.

 

EU firms positive on VN regardless of inflation

 

Confidence among European businesses in Viet Nam has fallen due to increasing concerns about inflation and the weakness of the Vietnamese dong, but the overall response as well as the current business outlook remained largely positive, according to a Eurocham Business Climate Index survey released yesterday in HCM City.

 

Results of the survey conducted in mid-April showed that the mood had shifted downward with a fall to 70 from 79 index points.

 

The index ranges from 0 to 100 index points, representing the lowest and highest confidence levels. The survey questions companies' predictions about each business quarter.

 

Alain Cany, chairman of Eurocham, said the survey on the second quarter of this year had the lowest figure among three conducted surveys.

 

Matthias Duhn, executive director of Eurocham, said the proportion of respondents who assessed their current business situation as "good" or "excellent" fell from 64 to 56 per cent.

 

As for investment plans this year, 51 per cent of businesses want to increase their investment, but those that want to "significantly increase" their investment sank from 32 per cent to 18 per cent.

 

Businesses were also optimistic about their sector growth in the second quarter as 47 per cent of them expected growth to exceed 8 per cent, showing overall confidence in economic development in Viet Nam.

 

Significant salary increases are foreseeable this year. According to the survey, 59 per cent said salaries would rise by more than 10 per cent this year for skilled employees compared to 54 per cent of the respondents in the previous survey.

 

High inflation was still a major concern for European companies in Viet Nam this year. At least 72 per cent of the respondents predicted inflation would reach more than 10 per cent.

 

As for the VND/USD exchange rate, 52 per cent expected the VND to depreciate by 6-8 per cent or remain unchanged by mid-2011, while 57 per cent expected the currency to depreciate 8 per cent or more against the USD by the end of this year.

 

In the survey, 74 per cent of respondents have been affected by recent power cuts.

 

Eurocham members would welcome a Viet Nam-EU Free Trade Agreement (FTA) as 60 per cent of European businesses surveyed stated that they would see a positive impact on their business from the Viet Nam-EU FTA.

 

Duhn said Eurocham members were increasingly concerned about the volatile macroeconomic environment in Viet Nam.

 

Eurocham believes the key challenges for Viet Nam's leadership this year will be maintaining investors' confidence in macroeconomic stability, in particular, by carefully balancing growth and inflation, and emphasising growth in value-added industries.

 

Alain Cany said: "Viet Nam is in the minds of European businesses. However, a lot of question marks about time, inflation, cost of production and stability of the dong have confused investors and made them more hesitant to come to Viet Nam."

 

As a result, many investment projects had been left behind and were not moving as fast as they could, he added.

 

"Viet Nam will see a big impact in FDI if there is not any improvement in the coming time. It will cause negative results for Viet Nam's business prospects since European companies frequently bring quality and long-term investment, which Viet Nam really needs for sustainable development," he noted.

 

EuroCham executive board member Peter Born pointed to the impressive changes in Government policy and economic improvement in Indonesia, noting that the Vietnamese Government should focus on macroeconomic stability, monetary policy and inflation, as Indonesia has done.

 

The Eurocham Business Climate Index is an internet-based survey. All Eurocham member companies are sent a link to the online questionnaire every quarter.

 

The survey poses 18 questions about current business issues, business outlook, investment plans, expected inflation and growth of the company's business sector in Viet Nam.