Petrol prices rise VND1,100 per litre

The National Petroleum Corp (Petrolimex) and Military Petrochemical Joint Stock Co (MIPEC) raised their retail oil and petrol prices by VND500 – 1,100 per litre as of 17.00 pm August 13.  

A92 and A95 petrol prices rose VND1,100 to VND23,000 and VND23,500 per litre respectively.

The price of diesel oil, kerosene and heavy oil also increased by VND750 per litre, VND800 per litre and VND500 per kilogram, respectively.

Last week, petrol businesses sent a request to the Ministry of Finance, saying they were suffering a great loss, and asked for a price rise.

Early this month, they raised retail prices for their petroleum products by VND400-900 per litre.

HCM City stocks gain ground

The benchmark VN-Index on the HCM City Stock Exchange added value by the end of yesterday's session after closing lower in the morning, with the afternoon's gains driven by blue chip rises.

The VN-Index recouped 0.14 per cent, closing yesterday at 426.17 points, with the value of trades totalling nearly VND451 billion (US$21.5 million), down 37 per cent from Friday's level.

Blue chips gained ground although decliners doubled advancers overall. Shares tracked by the VN30 climbed 0.47 per cent to nearly 509 points, led by dairy giant Vinamilk (VNM), Eximbank (EIB) and the Military Bank (EIB) with an average increase of 2 per cent for each code.

With over 2 million shares traded, Tay Bac Minerals Investment (KTB) was still the most active share, sinking 4.3 per cent to VND8,900 ($0.42) a share.

Meanwhile, shares on the Ha Noi Stock Exchange remained in the red by the end of the afternoon's session, with losers overwhelming gainers by 127-69. The HNX-Index fell 0.54 per cent to 69.96 points on a total turnover of VND308.4 billion ($14.7 million).

Habubank (HBB) was still the most active code on the Ha Noi bourse yesterday but demand for the shares decreased substantially from nearly 12 million shares traded on Friday to just 3.5 million shares traded yesterday. HBB closed flat at VND5,100 ($0.24) a share yesterday.

HBB will be delisted from the Ha Noi's exchange on August 17 and the shares will be swapped for shares of Sai Gon-Ha Noi Bank (SHB) by August 28. Investors holding HBB shares now will have to wait until September 29 to be able to trade these shares.

"Lacklustre trading persisted as investors found no catalyst for new buying," FPT Securities Co's analysts wrote on the company's website, noting the market sentiment had dampened as local media reported that petroleum retailers were asking for another hike in fuel prices.

Late in the afternoon, Petrolimex announced that it will increase the retail petrol price by VND1,100 per litre to VND23,300 ($1.10). This news is forecast to have a negative impact on investor psychology during today's trading.

Foreign investors concluded yesterday as net buyers on both exchanges, picking up combined shares worth over VND21 billion ($1 million).

Simple trick disguises Chinese grapes as US fruit

Chinese grapes are being rampantly sold in Ho Chi Minh City and neighboring localities behind “US grapes” banners, under a trick that could not be simpler.

Some 30 tons of grapes, along with apples, pears, and oranges, are imported to the city every night, and all traders have to do to sell them as grown-in-USA fruit is “just tell buyers that they are from the US,” said Lien, the owner of a fruit booth in the Thu Duc wholesale market, in revealing the as easy as ABC trick to dupe consumers.

And yet her revelation is totally true, and serious, as many customers seemingly do not care where the fruit they buy actually comes from.

“The seller told me that they are US grapes, and that’s so I know. I have no idea of their actual origins,” said Ngo Quoc Tuan, a grape buyer hailing from HCMC’s District 1.

Lien, another fruit wholesaler, said Chinese grapes will be transported across the country, even to the Central Highlands and the central region, but HCMC and the Mekong Delta provinces still post the largest consumption.  

Authorities in Hau Giang Province have recently warned local consumers against the street stands that sell “US grapes” in the locality, as they are all actually from China.

The disguised US grapes are on sale at the quite reasonable price of VND40,000 a kg, while authentic American fruit is available in supermarkets at high prices from between VND160, 000 and VND200,000 a kg. (US$1 = VND20,800)

The cheapies thus attract a large number of local consumers, despite the fruits’ dubious origins and safety and hygiene standards.

Meanwhile, in HCMC, the inauthentic fruits are on sale at exorbitant prices.

Chinese grapes are imported to the city at only VND25,000 – 37,000 a kg, according to Tai, a wholesaler in Thu Duc market.

But vendors who frequent streets across the city and even small traders in markets citywide are selling them at VND90,000 – VND100,000 a kg.

Genetically modified crops to be planted in 2015

Official permission for the growing of genetically modified (GM) crops on a large scale in Vietnam may not be realized until 2015, said a recent conference.

The first GM plant to be grown may be corn, according to a biotechnology conference co-hosted in Ho Chi Minh City by the Ministry of Agriculture and Rural Development (MARD) and the US Embassy in Vietnam.

Vietnam has imported GM corn and soybeans from the US and Argentina for animal feeding purposes for about a decade, said the conference.

This has been necessary thanks to the lack of domestic raw materials for processing animal feed, said Nguyen Tri Ngoc, director of the Cultivation Department under the MARD.

“These GM materials don’t affect human health as they are mostly used to process animal feed,” he said.

Imported GM corn has many outstanding features over normal crops, including high productivity and better anti-insect capacity.

However, the planting of such GM crops needs to follow the general planning for such plants in Vietnam, along with sound state management and brave scientists pioneering in the field.

Genetically modified plants will play an important part in triggering the second green revolution in Vietnam so that the country’s agricultural sector can thrive in the face of climate change and shrinking agricultural land, said Bui Chi Buu, professor at the Institute of Southern Agriculture Engineering of Vietnam.

Regarding risks and other harmful effects created by GM crops, Buu added that the risks are primarily a part of to people’s imagination, adding that there is no scientific evidence proving that such problems exist.

In 2008, Vietnam planned to test GM agricultural crops until 2010 and then grow them on a large scale, but that has not happened.

Under the government plan, Vietnam would from 2011 plant GM species of maize, cotton and soybean.

GM technology has become highly controversial in many countries, praised by some for increasing yields and improving varieties, and condemned by others for creating "frankenfoods" that pose dangers to the environment and people's health, according to AFP.

Environmental group Greenpeace has called for a worldwide recall of GM foods, with a spokesman saying this week that distributing them was "like playing Russian roulette with consumers and public health", AFP reported.

Bianfishco pledges to pay farmers’ debts in August

Binh An Seafood Co (Bianfishco) will hand over its fish processing plant to the farmers to whom it owes hundreds billions of dong if it misses the payment deadline on August 29, promised its acting general director.

The pledge was released after a brief meeting between the acting general director Nguyen Van Tri and representatives from dozens of farmers who pitched camps in front of Tri’s villa in the Mekong Delta city of Can Tho on Sunday, according to newswire Vnexpress.

The two sides also reached an agreement on the repayment so that the farmers will not gather at the villa to shout out via loudspeaker to demand the debts back.

Tri said the many of Bianfishco’s shareholders owe the debts, not just his family alone.

The company will take priority in repaying the debts to the farmers, Vnexpress quoted Tri as saying. The farmers sold their catfish to Bianfishco many months ago without being paid any money until now.

Bianfishco had sent paper notices to local banks that hold stocks mortgaged by the former general director, Pham Thi Dieu Hien – Tri’s wife, so that they can contact the company for final settlement procedures, Tri said.

The firm will hold a press conference upon receiving the new certificate of business registration. The new license will see the Saigon – Hanoi Commercial Bank Joint Stock Bank (SHB) emerge as the largest shareholder with 50 percent of shares.

Soon the company will have cash to repay the farmers, and join hands with Debts and Assets Trading Corp and other banks to streamline the debt clearance procedures and bring the firm back on track, Tri added.

Earlier, after it was rumored that Bianfisco could not obtain the new certificate of business registration, the farmers started to ramp up their movement with banners and loudspeakers demanding for debt repayment in front of the villa of Tri and Hien.

The stagnancy in issuing the new certificate of business registration is due to the deadlock in debt settlement between the firm and three banks relating to the 25 million shares Dieu Hien had mortgaged to two banks for loans.

The meeting between three parties, Bianfishco, SHB and Vietnam Development Bank (VDB), early this month ended without reaching any deals as the 25 million remaining Bianfishco shares had been mortgaged to a branch of the Bank for Investment and Development of Vietnam (BIDV) for loans before being brought to the Can Tho branch of VDB as the mortgage for another loan.

The shares had finally been sold to Ho May Co.

The Can Tho City branch of Asia Commercial Joint Stock Bank (ACB) late last week heated up the situation when it announced that Hien had also mortgaged 8 million shares for a VND80 billion loans without repayment.

Regarding the new development, Tri said the firm had already repaid all the debts it owed to ACB, but Hien had not finalized necessary procedures to reclaim the shares as all were printed in the old format.

As a result, Hien had only sent one written document to ACB to ask the bank to get rid of all the invalid shares (with the old format).

The debt-stricken fishery firm officially restarted operations at its catfish processing and exporting plant in Can Tho-based Tra Noc Industrial Park on May 9, 2012.

The company then still owed VND200 billion to farmers on fish purchase.

The beleaguered seafood company has managed to reduce its bank debts to VND900 billion from VND1.54 trillion ($73.9 million).

The Ca Mau gas-power-fertiliser project

Mekong Delta provinces are working closely together to develop a feasible strategy to raise their industrial production value to VND302 trillion by 2015, which would account for about 40 percent of the country's total GDP.

To achieve this target, they aim to boost progress of the Ca Mau gas-power-fertiliser project and the O Mon electric power plant to supply sufficient energy for production.

The Long An-Tien Giang-Can Tho and Can Tho-An Giang-Kien Giang industrial triangles and the Can Tho-Soc Trang-Bac Lieu-Ca Mau quadrangle are currently taking shape.

The provinces will strengthen cooperation with Ho Chi Minh City and the southeastern region to develop industries based on their own advantages, with a focus on refining and processing seafood, foodstuffs, sugar cane, coconuts, pineapples and condensed fruit juice using advanced technology.

Other areas for concentration include cement manufacturing, stone and sand exploitation for construction, heavy and high-tech industries and consumer products for export to Cambodia.

The localities will build an additional 36 industrial zones and complete their seaports to handle 10,000 tonne ships, begin construction of the Ho Chi Minh City-Can Tho highway, and upgrade national roads linking Can Tho to Ca Mau and Kien Giang.

They will also establish an industrial zones association to attract more investment and cooperate with research institutes and universities to transfer technology, apply scientific advances in training, and improve skills required for labourers.

Businesses in the region will be supported in mobilizing capital and improving their competitiveness by cutting production costs, protecting the environment, ensuring food safety and creating brand names for their products. They are advised to establish comprehensive delivery networks and managing the quality of their products in line with international standards.

 Japan ups investment in Vietnam

Vietnam has attracted more Japanese capital despite a considerable fall in foreign direct investment (FDI) in recent months.    

The Ministry of Planning and Investment (MoPI) reported that the country lured 548 FDI projects with a total capitalisation of US$8 billion in the past seven months.

Japan alone injected US$4.29 billion into 55 projects, accounting for 53.4 percent of the total capital and 10 percent of the total project number, making it the largest foreign investor in Vietnam.

Hideo Okubo, President of the Tokyo-based Forval Corporation, says Vietnam remains an attractive destination for Japanese businesses, as stated in a survey conducted by the Japan External Trade Organisation (JETRO).

Another survey conducted by a Japanese newspaper shows that Vietnam has outdone India and Thailand to become an ideal place for opening production bases.

The northern port city of Haiphong has emerged as an attractive destination for Japanese businesses. It has so far drawn US$926 million from FDI projects, ranking second after Binh Duong province that has lured more than US$1.7 billion.

The city has developed specialised industrial parks and support industries targeting Japan’s small and medium-sized businesses.   

Alongside mammoth Bridgestone and Nipro Pharma Vietnam projects, other Japanese-invested projects valued less than US$30 million each are focused on metal products, medical equipment, telecommunication accessories, electronics, hydraulic equipment for the construction sector, and industrial vehicles.

The MoPI forecast that Japanese businesses will continue to select Vietnam as a safe and attractive investment destination.

Viettel’s investment reaches out to East Timor

Vietnam’s military-run telecommunications group Viettel has decided to set up a branch in Timor Leste in an effort to expand its operation.  

The branch will carry out a US$15 million project on telecommunications infrastructure in the country.

To date, Timor Leste will be Viettel’s sixth overseas market following Laos, Cambodia, Haiti, Mozambique and Peru.

The giant aims to reap overseas revenue of US$791 million and profits of US$94 million in 2012.

Chile-Vietnam trade up 38 percent

Two-way trade between Chile and Vietnam increased 38 percent in the first six months of this year, reaching US$321 million, according to the Export Promotion Bureau (ProChile).    

The South American nation enjoyed a trade surplus with Vietnam as its exports rose 41 percent, generating US$239 million.

It mainly exports copper, scrap iron, pine timber, salmon, and crabs, to Vietnam, and imports footwear, cement, clothing, Tra fish, modems and coffee from the Southeast Asian nation.

The sharp increase in bilateral trade value was encouraging, given the fact that Chile’s foreign trade only rose 2 percent in the reviewed period due to the global financial turmoil.

ProChile director Félix de Vicente has forecast that with the enforcement of the Chile-Vietnam free trade agreement, bilateral trade will probably fetch US$3 billion in the next three years.

Last year, two-way trade hit a record high of US$486.8 million, up 50 percent over 2010.

Vietnam allows banks higher lending targets to spur growth

Vietnam's central bank has allowed lenders to raise their credit growth targets to up to 27 percent from a cap of 17 percent in a bid to boost lending and spur economic expansion, a senior central banker said on Friday.

Credit growth has been slow this year, as businesses are reluctant to take loans due to their high inventory and difficulties settling existing loans while banks tighten lending activities for fear of bad debt.

"The permission for several credit institutions to have a credit growth of 25-27 percent is appropriate, in line with the current extremely low credit expansion of the whole (banking) system," said Nguyen Thi Hong, head of the State Bank of Vietnam's monetary policy department.

The central bank stands ready to pump cash to help boost banks' funds, Hong said in an online discussion held by the official Vietnam Economic Times newspaper.

Vietnam's banking system is aiming for a credit growth this year of 8-10 percent, she said, revised from an initial projection of 15 percent, after an annual expansion of 14.4 percent in 2011.

Tien Phong Bank, a partly private lender, has received the central bank's permission to expand lending by 27 percent this year, including investment in corporate bonds, an online report of the Vietnam Economic Times quoted the lender as saying.

It said the Military Bank may be allowed to raise its credit growth quota to 25 percent from an initial target of 17 percent.

The central bank had earlier set credit growth targets for individual domestic banks from between zero to 17 percent, trying to balance growth while keeping inflationary pressures in check.

Soaring credit growth in Vietnam recent years has stoked inflation, which rose to 23 percent year-on-year l ast A ugust b efore abating, ending the year at more than 18 percent. Hanoi aims to keep annual inflation this year at 9 percent.

Major lenders have said they will fail to fulfill the quotas, with Vietcombank estimating its credit growth at below 12 percent and Sacombank at 10 percent, state-run Saigon Giai Phong newspaper has reported.

VietinBank, Vietnam's second-largest partly private lender by assets, will post annual credit growth of between 10-12 percent this year, following a slowdown in the first seven months, a senior executive said on Friday.

Fuel price hike not the only choice: experts

Import tax cut and the suspension of stabilization fund feeding will help preventing local retail prices of fuel from rising too much, said experts.

Economist Le Dang Doanh said that the fuel price increase plan proposed by local enterprises can be fully justified by force majeure reasons.

“As world oil prices have risen sharply in the past ten days, plus the abrupt halt of Dung Quat - the sole refinery of Vietnam, Vietnam has to increase fuel import to meet up with local demand.”

“However, in the current context, the price hike should be considered carefully at a reasonable rate.”

"I think an increase up to VND1,400 (0.67 US cent) per liter as proposed by the local wholesalers is too much, which will certainly cause a widespread shock over local business communities and the people.”

“If such a price hike is realized, there will be a new round of price increases of consumer goods as a direct consequence," Doanh said.

Local enterprises now are suffering from too much pressure from the recent electricity price increase, so a fresh petroleum price increase will certainly cause a negative impact on their business operations.

For local consumers whose purchasing power is depleting, such a fuel price increase as proposed by the petroleum wholesalers will make a majority of fixed-income earners to apply a stricter austerity plan in their daily spending.

Doanh told Tuoi Tre that the Ministry of Finance should consider sharing a part of budget revenues with the people and local business communities by reducing import tariffs on petroleum products.

The import tax rates for petroleum products are about 10-12 percent.

In many previous gasoline price adjustments, the ministry has adopted plans to raise taxes and cut the retail prices at the same time.

So, what should be materialized now is a tax cut combined with a slight price increase, Doanh added.

Economist Ngo Tri Long, while sharing Doanh’s opinions, said that there are many kind of taxes imposed on every liter of petroleum products.

Specifically, it includes 12 percent import tax, 10 percent value-added tax, 10 percent special consumption tax and a VND1,000 environmental tax. They are translated to around VND6,000 worth of tax and fee in total.

In addition, Long said that the suspension of feeding the oil stabilization fund can be a solution that should be applied.

"The stabilization fund should only be deducted when world oil prices are low and petroleum enterprises are operating with a profit," Long said.

Petroleum wholesalers should reduce the profit margins to share the burden with people. “They must know how to allocate profits to cover losses, and should not always concentrate on profits even if the customers are in a stage of difficulty.”

"Despite any world price fluctuation, the wholesalers always enjoy a profit of VND300 per liter of petroleum product sold. With the daily supply of tens of millions of liters for the local market, the profits could be up to tens of billions," Long said.

As a rule, fuel prices will be adjusted 3 days after local petroleum wholesalers submitted their price hike plans to the Ministry of Finance.

However, experts said such price regulatory mechanism cannot be decided by the wholesalers. Moreover, the state should have another solution to share the burden with the people and businesses, instead of continuously increasing oil prices in the context of the economic slowdown.

Economist Ngo Tri Long suggested the Ministry of Finance should review the mechanism.

"It go against the local price law since the law states that for any products offered by state monopolies, like petroleum products, they should exclusively price by relevant state agencies," Long said.

The petroleum market of Vietnam is still dominated by state monopolies, led by the National Petroleum Corp (Petrolimex) with about 60 percent of the market shares, so any rules applied for a competitive market will be useless.

Farmers get back land as inactive projects canceled

Authorities in the southern province of Tay Ninh have recently pulled the plug on 10 industrial cluster projects that failed to make any progress in the last ten years and have given back land plots previously zoned for the project to their original owners/farmers.

The sluggish projects, spanning a total of 1,149 hectares in seven districts and towns of the province, have been canceled due to their unattractiveness to investors, according to Huynh Van Quang, deputy chairman of the provincial People’s Committee.

“It is difficult for the projects to be implemented given the poorly-developed traffic infrastructure in their locations,” said Quang.

“Hence, they should be revoked as soon as possible to ease the difficulties of local residents who have to give their land to serve the project investment.”

For local farmers, having their agricultural land zoned for industrial development means they have to lose the land and sometimes have to relocate, with investors only paying them inadequate compensation for site clearance.

Even worse is the fact that the investors would usually receive the right to exploit the land taken from farmers, but fail to start any construction on the area.

As they did not know when the investors would actually start working, farmers had to live on their own land with constant concern.

They would not grow new crops or build new houses as the investors could suddenly begin their site clearance tasks.

Ho Minh Hai, whose 1.5 hectare of paddy field had been zoned to give way to the Bau Don Industrial Cluster in Go Dau District, said he is happy that the project has been canceled.

Like Hai, many other farmers in the locality were worried when the land was revoked from them as these elders did not know what to do other than agricultural production.

The Bau Don Industrial Cluster was planned for development in 2008, but 170 farmer households have never seen any investors coming to the area since then.

“As their land was zoned for the industrial cluster, farmers were not allowed to build houses, transfer, or covert the land use purposes,” said Tran Van Minh, chairman of Bau Don Commune People’s Committee.

Meanwhile, local authorities are eying other cancelation and land-returning plans.

Out of the 13 industrial clusters planned in the locality, only two are operating, with four having infrastructure investors, said Quang, the province’s chairman, adding that the remaining seven projects still remain inactive.

“The province will continue inspection and pull the plug on any ineffective projects,” he promised.

Agricultural biotechnology lecture launched in Vietnam

A lecture entitled “Vietnam Biotech: Growing the Future”, which is the fifth annual series concerning the topic since 2008, was organized on August 9 in Ho Chi Minh City to discuss the benefits of agricultural biotechnology in Vietnam.

Co-hosted by the Ministry of Agriculture and Rural Development of Vietnam and the US Embassy, the event aims at introducing the role and prospective of biotechnology in ensuring food safety, economic growth, and climate change adaptation in Vietnam.

Despite worries about risks of consuming genetically modified (GM) crops, agriculture biotech has actually grown steadily since it was first introduced commercially in 1996.

In 2011, 15 years after the commercial start, 160 million hectares of GM crops across the world were cultivated by 16 million farmers, mainly in developing countries.

Biotechnology helped gain a net economic benefit of US$9.2 billion in 2008, thanks to increasing production capacity and reduction in production costs.

It is estimated that in the ten next years, qualified GM seeds cross-bred by the agriculture biotechnology will help reduce an amount of 2.9 million tons of carbon dioxide from discarding into the air; and save 1.1 billion liters of fuel, 120,000 tons of ingredients for pesticides, and 130 billion liters of water.

Dr. Paulo Paes de Andrade, associate professor at the Department of Genetics of the Brazil’s Federal University of Pernambuco, is the key lecturer at the event.

ADB plans nearly $4 bln for Vietnam economic development

The Asian Development Bank (ADB) on Thursday said it has planned nearly US$4 billion in regular and concessional loans and grants to Vietnam in the next three years to support projects aimed at easing bottlenecks to economic growth.

Six sectors - farming, education, energy, finance, transport and municipal infrastructure - would be covered by the funding aimed at reforming state-owned companies, helping poorer regions develop and dealing with climate change, the Manila-based multilateral lender said in a statement.

While Vietnam has had grown rapidly in the past two decades, "structural constraints continue to be a concern" in the longer term, ADB Vice-President for Operations in East Asia, Southeast Asia and the Pacific, Stephen P. Groff, said in the statement.

The Country Partnership Strategy through 2015 includes $2.6 billion in ordinary loans and $1.2 billion in lending from the Asian Development Fund, plus technical assistance worth $8 million a year, the ADB said.

Raw meat sold in 8 hrs rule comes under scrutiny

Meat traders are concerned over the new regulation set to take effect next month which stipulates that raw meat must be sold within eight hours of slaughtering, while consumers and experts have expressed skepticism about its applicability.

Raw meat usually remains on sale in markets across Ho Chi Minh City until late in the afternoon, and traders said lawmakers may not understand anything about the business at all.

“I am wondering if they know that meat traders are facing hard business times,” said Nguyen Thi Yen, who sells pork in Go Vap market.

Yen sources the meat from the Hoc Mon wholesale market on a daily basis, and it takes two to three hours to transport the product.

“I then spend nearly an hour cleaning and putting the meat in my booth, which means there are only five hours left to sell the product within the required time,” she said.

Similarly Dung, who runs a meat stand in Ban Co market in District 3, said it is impossible to sell all of the meat within just eight hours.

Most other traders in the market can only manage to clear their booths by late midday or even into the afternoon, she said.

The trader herself sources some 100 – 120kg of pork every day, and only manages to sell half that amount by 2pm.

“Once the rule takes effect, I will have to cut down supply,” she lamented.

The regulation has been developed by the Ministry of Agriculture and Rural Development, in a bid to increase food safety and hygiene for raw meat.

But even consumers have said its application is doubtful.

The problem, consumers say, is that no one knows how long the meat has been on sale, or what they can do to detect raw meat that was slaughtered more than eight hours before the time of their purchase.

Even if there are inspectorates to handle the checkups, this may result in under-the-table payments as traders may bribe officials to obtain certification stating that their meat is still eligible for sale.

Bui Quang Anh, former head of the Animal Health Agency, also said he is concerned over how the regulation will be applied.

“How will authorities implement the rule? How will they monitor the “overdue” meat, and how will they sanction the violators?” he said, adding that all these issues remain unanswered.

“Millions of consumers are waiting for a clear answer as they all hope to consume safe and hygienic food,” he pressed.

HSBC says it may sell Vietnam insurance business

HSBC Holdings said on Thursday it is considering a sale of its Vietnam insurance business in a deal which could fetch about US$400 million for Europe's biggest bank as it pushes to exit non-core operations globally.

Reuters reported last month that HSBC was looking for buyers for its 18 percent stake in government-controlled Bao Viet Holdings, the country's top insurer, and is in talks with Japan's Sumitomo Life over a potential deal.

"HSBC confirms that it is reviewing its strategic options with respect to its shareholding in Bao Viet Holdings. No decision has been made as yet and HSBC will make a further statement if or when appropriate," it said in a statement.

The stake has a market value of $250 million, but HSBC is expecting a hefty premium due to Bao Viet's market position and the potential to raise the ownership level at a later stage, a source told Reuters in July.

Unlisted Sumito Life is among Japan's four biggest life insurance companies. Sources have told Reuters that more bidders could emerge.

HSBC has been pulling back from unprofitable markets and businesses as part of a three-year recovery plan. It has already sold 28 businesses, taken 15,000 staff of its payroll and released about $55 billion in risk-weighted assets under the plan.

The planned exit from Vietnam comes four months after it sold its global general insurance business to AXA SA and Australia's QBE Insurance Group Ltd for $914 million.

Less capital means more Chinese-sourced power

Capital shortages for electricity infrastructure could also be one of the reasons why the Electricity of Vietnam Group (EVN) has had to increase power purchase from other sources, including China, in the first seven months of this year.

The Ministry of Construction has said that work on many electricity projects of EVN and the Vietnam National Oil and Gas Group (PetroVietnam) cannot continue due to a capital shortage from investors, newswire Vnexpress reported.

In the first seven months of this year, EVN bought 36.78 billion kWh of electricity from outside providers, accounting for 56.1 percent of the total output, said EVN.

It bought 1.571 billion kWh from neighboring China, EVN said in its report on business and production performance in January-July.

In July alone, EVN’s electricity supply for households and production was sufficiently maintained at a total 10.38 billion kWh, of which, power production was 5.551 billion kWh, accounting for 53.5 percent.

Cumulatively, in the first seven months of this year, EVN’s electricity production and purchases were 69.097 billion kWh, rising 11.2 percent over the same period last year.

Specifically, electricity production was 30.315 billion kWh, making up 43.9 percent of its total output.

According to EVN, as expected, this month the load of the power system is able to reach up to 348 million kWh per day, and the largest capacity would range around 19,000-19,300 MW.

Also this month, the group’s electrical system operation target is to exploit hydropower plants such as Son La and Hoa Binh to ensure safe operation of the grid.

Vietnam is currently buying electricity from China at the price of 1,300 dong/kWh (6.08 US cents), while the electricity price from local small hydropower plants is about VND800-900 dong/kWh; coal-fired thermo power plants at VND1,280-1,300 /kWh; and oil-fuelled power plants at VND5,500-6,000/kWh, said the Ministry of Industry and Trade in early June.

In 2011, Vietnam bought electricity from China at the price of 5.8 US cents/kWh.

With the new pricing mechanism, electricity prices from China are higher than the electricity prices from local small hydropower plants by VND400-500 /kWh.

Vietnam started buying electricity from China in 2004, and the annual electricity import volume from China has reached about five billion kWh.

In the first five months of this year, Vietnam’s electricity purchase from China was over 1.16 billion kWh, according to the ministry’s data.

An electricity purchase contract with China is signed once per five years, and the electricity price is calculated by Chinese partners.

Earlier, many local small and medium hydropower companies said that EVN is buying electricity from local plants at extremely low prices, causing losses and even bankruptcy for local businesses.

Therefore, in the ministry’s press conference in May, the ministry’s leader allowed EVN to increase the electricity buying price by an additional 5 percent from 2011 for 10 small hydropower plants with capacity of less than 30 MW.

“Ongoing power projects account for 40 percent in planning and 75 percent of the capacity of the whole sector”, said the ministry.
Vietnam aims to follow a competitive power market model by the end of 2022, said Minister of Industry and Trade Vu Huy Hoang.

EVN currently holds a monopoly in electricity transmission and distribution. Other groups such as PetroVietnam, Vinacomin and Song Da Corporation have joined EVN to generate electricity.

This monopoly affects the competitiveness of power plants and the motivation for development of the power sector and the interests of consumers, Hoang said, adding that the government has introduced a roadmap to abolish the monopoly in the electricity industry.

Vietnam is scheduled to begin operating a competitive model in electricity generation from July 1 of next year, after pilot programs are carried out.

Then, the nation seeks to carry out competitive wholesale and retail electric energy markets by 2014 and 2022, respectively.

Previously, EVN said that in 2010-2011, it had to buy electricity at high prices and use oil for electricity production due to increasing demand and unfavorable weather conditions. This brought a total loss VND11 trillion ($529 million) to EVN.

As of December 31, 2011, EVN’s total audited loss due to forex rate fluctuations was VND26 trillion ($1.25 billion).

Dung Quat suspension causes huge fuel shortage

With the Dung Quat Oil Refinery undergoing a temporary shutdown over a technical fault, local fuel wholesalers are concerned over the 120,000 ton fuel product shortage that has arisen as a result of the suspension.

It will take around a week to repair the carbon monoxide exhaust pipe system at the catalysis cracking sector, which caused the shutdown, according to Nguyen Hoai Giang, CEO of the refinery’s operator, Binh Son Refining and Petrochemical Co (BSR).

Fuel wholesalers have looked to foreign imports to make up for the domestic shortage from Dung Quat, said Giang.

Petrolimex, the country’s largest fuel wholesaler, tops the list of three businesses that source the most products from Dung Quat, with 6,000 tons on a daily basis. Petrolimex will import some 42,000 tons within the next seven days to make up for the loss.

Petec and PVOil, both subsidiaries of PetroVietnam, source some 5 million tons of fuel from Dung Quat annually.

Other wholesalers include the Military Petrochemical Joint Stock Co, 140,000 tons, Vinapco, 300,000 tons, and Saigon Petro and Dong Thap Co, 560,000 tons.

The shutdown will cost BSR an enormous US$1 million daily in losses thanks to unsold products.

The $2.2-billion refinery still has 150,000 tons of crude oil in stock, and has considered exporting them to preserve their quality.

More travelers pick affordable local tours

Some 3,000 local tourists chose inexpensive local tours offered by eight local tour operators in July, a 250 percent month-on-month increase, said the vice head of a domestic tourism stimulus program.

Those who picked the program automatically booked discounted air tickets sold by local carriers, said Tran The Dung, who is also the deputy director of the Young Generation Tourism Co.

Among the tourists, 963 booked round-trip airfares through Vietnam Airlines from Ho Chi Minh City to Hanoi, Da Nang, and Phu Quoc, and the remaining booked tickets of budget carrier VietJet Air for HCMC-Hanoi flights.

Local firms participating in the program are expecting that the number of tourists will increase again this month as VNA will offer a 10 percent airfare discount during the period.

The discount will make inbound tour prices 30-36 percent lower than normal, instead of 22-28 percent as earlier.

The travel stimulus program, initiated by the Ho Chi Minh City Tourism Association (HTA), will last until the end of the year and aims to boost demand for domestic travel in Vietnam.

The Vietnam Society of Travel Agents (VISTA) and HTA have also been cooperating with localities to help slash service prices for travel agencies.

According to Vietnam Travel News, 2011 witnessed a boom in summer tourism demand, when the number of travelers increased by 30 percent.

However, the situation is currently changing due to low demand caused by the international and domestic economic slowdown, which has forced people to cut down expenses on tourism and other luxury needs.

Instead of booking tours, travelers nowadays tend to organize tours themselves, while they only order transport and hotel services.

Furthermore, due to unreasonable provisions of the tourism law and the unhealthy competition, travel firms have been facing big barriers when trying to develop domestic tours.

This has also resulted in travelers turning their backs on low cost tours, because they believe that low cost means low quality.

Five-year WTO membership review – not as good as expected

Vietnam’s GDP average growth in 2007-2011 was at 6.5 percent, much lower than the recorded figure of 7.8 percent in the previous five-year period.
   
According to recent reports on the assessment of the socio-economic situation five years after joining the World Trade Organisation (WTO) by the Central Institute for Economic Management (CIEM), WTO membership has been a major factor in driving up inflation in Vietnam. This is largely due to price fluctuations in the global markets, complicated balance of international payments and supply-demand imbalances caused by import surplus.

In addition, Vietnam’s maintenance of economic stability and management of fiscal policy are still dependent too much on economic analysis and predictions.

As a result, the financial crunch in three years (2007-2009) led to an economic slowdown in the next two years (2010-2011).

In the face of tough competition from foreign-made products on sale, it seems domestic distribution chains are increasingly at the risk of losing ground.

Once reason, cited by Dr Pham Lan Huong from the CIEM, is Vietnam’s slow progress in opening the market for some services needed by foreign investors in a number of industries.

So, foreign investment remains limited even in potential areas of Vietnam.

Dr Huong says agro-forestry-fishery was the only sector that grew by 3.4 percent annually in the 2007-2011 period.

In the same period, annual domestic industrial growth was 7 percent, much lower than in the 2002-2006 period at 10.2 percent.

Huong puts this down to the failure of domestic businesses to use locally-sourced input materials in production and the underdevelopment of support industries.

Dr Huong proposes improving the business environment and speeding up the restructuring of the national economy into a new pattern.

For the industrial sector, she says, it is crucial to encourage businesses to apply advanced technologies, increase the added values of their products, and take advantage of free trade agreements (FTA) to penetrate foreign markets.

Dr Huong emphasizes the need to cooperate with foreign-invested businesses and encouraged small- and medium-sized enterprises to integrate into regional supply chains.

Commenting on the investment sector, Dr Nguyen Dang Binh from the Ministry of Planning and Investment says that total social investments grew by 8.3 percent on average from 2007-2011, much lower than the 13.4 percent figure recorded in the previous period.

In the same period, only foreign investments showed an increase of 150 percent with total registered capital in projects rising 510 percent and additional capital 330 percent, Binh says.

He proposes that Vietnam push through legal reforms and fully implement its WTO commitments to improve the effective mobilisation and use of capital, the quality of planning and forecasting, as well as cooperation in key projects.

CIEM economist Dinh Thu Hang says that Vietnam will enjoy less preferential official development assistance (ODA) in the near future.

As international integration cuts both ways, she insists on proposing completing a mechanism for import-export activities, increasing the added values of export goods, reducing the export volume of raw materials, strengthening links between producers and exporters, and cooperating with major exporting businesses.

Hang also recommends restructuring the domestic retail market, especially in sectors involving State-owned enterprises.

Another expert from the CIEM, Nguyen Anh Duong, says it is necessary to effectively coordinate monetary and fiscal policies and develop an information database for timely analysis and forecasting.

HCM City to build export support centre

A centre will soon be built in Ho Chi Minh City to showcase export products and connect local businesses with their foreign counterparts.

The two-to-five hectare centre will also include a conference hall and training rooms for domestic and foreign businesses.

Dien Quang Hiep, Director of the Mifaco Group, which exports furniture to the US and the EU, says the centre will become a convenient place for foreign companies to seek cooperative opportunities.

A showroom of this kind already exists at the city’s Investment and Trade Promotion Centre, however, it is small and products are displayed for a short time.

Tran Quoc Manh, Deputy Chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), says centres for permanent product displays are found in many places overseas, but they are usually used for a single industry sector, such as the Las Vegas Furniture Centre.

If the HCM City centre aims to show all the export items, it should have concrete links with other organisations, including national trade promotion agencies and trade consulates in different countries, he suggests.

Nguyen Duc Tuan, Chairman of the Vietnam Leather and Footwear Association, says it is important to determine a suitable location and contractor to build the centre. Normally, the centre should be built on a main street in the city suitable for a wide range of events to take place there.

The HCM City Union of Business Association (HUBA) is putting the finishing touch to the project, with funds to be sourced mainly from domestic investors. Foreign investors and expo organisers are also encouraged to take part in the project.

100 businesses awarded Vietnamese Trademark 2012 title

One hundred businesses were given sustainable Vietnamese brand title at an awards ceremony in Hanoi on August 12.

The event, co-organized by the Vietnam Union of Science and Technology Associations (VUSTA) and the Vietnam Trademark Application and Development Research Centre, honours outstanding businesses in building trademark.

The prize winners were selected from 200 nominated businesses.

The top ten awards went to well-known trademarks including Tien Phong Plastic JSC, Cai Lan Oils and Fats Industries Company, Transport Construction JSC No 1, Pyme Pharco JSC, Lavie Company, Power Engineering JSC, Petroleum Technical Service Corporation, and Khanh Hoa Salangine Nest Company.

The awards are presented every three years according to the Prime Minister's regulations.

 ICT-finance forum to be held in Hanoi

“Strengthening fiscal sustainability in Vietnam” is the major theme for the ninth Vietnam Finance Conference and Exposition, to be held in Hanoi from September 20-21.
   
The annual event, hosted by the Ministry of Finance and the International Data Group (IDG), has become the biggest and most prestigious event for information and communications technology (ICT) applications in Vietnam’s finance sector.

Recognised as a high-class ICT forum for the public finance sector since its inception, Vietnam Finance 2012 will continue to offer a helpful networking platform for sharing information solutions.

This year’s event is expected to attract leading experts, policy-makers and ICT companies to discuss measures to ensure fiscal sustainability through a medium-term budget framework and technology solutions.

Participants will focus on solutions for effective public financial management, budget spending plans, e-public services, business restructuring, and information security.

In an environment where the national economy is facing numerous difficulties due to high interest rates, trade deficits, and global economic fluctuations, Vietnam Finance 2012 is considered a timely opportunity for leading economists and businesses from Vietnam and abroad to exchange information and experience in stabilising domestic economies, controlling inflation and boosting development.

An exhibition will also take place as part of the conference to introduce a national ICT system development strategy as well as the latest technology solutions in the finance sector.

Cashewnut processors set sights on exports

The price of processed cashewnuts for export is predicted to increase considerably in the remaining months of this year thanks to high demands and limited supplies, according to Vietnam Cashew Association (Vinacas).  
    
Over the past 10 days the market price rose 15 cents and 10-20 cents per kilogram in China and Australia, respectively, Vinacas Vice President Nguyen Van Chieu told the media in Ho Chi Minh City on August 10.

He said cashewnut importers have high demands in the remaining months of the year due to the cold weather and the organisation of festivals, and domestic processors seize this opportunity to boost exports.  

However, small processing plants are running short of raw materials for production, and in the face of shrinking acreage of cashew plantation, domestic businesses should export finished products rather than materials to increase export value, said Chieu.

In the past seven months, Vietnam shipped 104,712 tonnes of processed cashewnuts abroad, up 18.2 percent from a year ago. Despite an 11.5 percent fall in export price, an increase in export volume drove export value up 2.32 percent to reach US$713.35 million.

Vietnam aims to earn US$1.022 billion from cashewnut exports in 2012.

 Mekong Delta targets VND302 trillion in industrial production by 2015