EU footwear project bears fruit
 
Leather and footwear enterprises had improved their competitiveness over the last two years, thanks to a Multilateral Trade Assistance project between the EU and Viet Nam, according to the secretary of the Viet Nam Leather and Footwear Association (Lefaso), Nguyen Thi Tong.

Speaking at a workshop on the In Trade project, which aims to enhance the competitiveness of leather and footwear enterprises, on Tuesday, she said this was most important, as shoes and leathergoods were one of the key export products of Viet Nam.

In two years of operation, the project had run training courses on commercial policies for senior management. These included approaching the markets, technical support for development - and study courses for overseas staff of leather and footwear enterprises, Tong said.

The project had also helped renovate designs and to develop collections of footwear to build a trade name for Viet Nam's export footwear on the domestic and world markets, she said.

Enrico Perego, from Octagona, an international business consulting organisation, said all enterprises needed to build trade marks, especially small-sized enterprises. He said trade marks were an effective way for customers to identify something they like.

Tong said the ongoing target of the project was to establish sustainable development for the industry by developing business and co-operation opportunities with foreign partners.

Viet Nam is the fourth largest exporter of footwear in the world, but 90 per cent of this is for foreign companies who supply most of the materials, much of it from China, Taiwan and South Korea. Exports hit US$2 billion every year, but the volume of it bearing Vietnamese brands accounted for only 10-15 per cent.

VN rice contributes to world food security

The exponential growth recorded by Viet Nam in rice exports over the last two decades augurs well for nation's food security as well as that of the world, experts said at a conference yesterday.

However, the shrinking area for rice farming even as food demand increased worldwide was a matter of concern and would need to be addressed by more efficient farming models, they said.

Experts attending the conference that focused on rice production in the Mekong Delta, known as the nation's rice granary, said Viet Nam's rice exports could reach about 10 million tonnes of rice a year by 2015 or 2016.

The Viet Nam Food Association (VFA) reported that this year's rice export was expected to set a record in surpassing 7 million tonnes, accounting for more than 20 per cent of rice traded in the world.

Vo Hung Dung, director of the Viet Nam Chamber of Commerce and Industry (VCCI)'s Can Tho City Chapter, said that the country's total productivity could rise to 44 to 45 million tonnes of rice in 2015 with export rising to more than 9 million tonnes.

"Viet Nam's food security is one of the factors that contribute to the global food security. It will provide more rice to the world's market using its capacity optimally," Dung said.

He recalled that in 1989, Viet Nam exported 1.4 millions tonnes of rice worth over US$320 million.
 
There was a major spurt in rice exports between 2005 and 2010 in terms of both volume and price. The total volume exported during this period was 31.8 million tonnes.

Dung also said that Viet Nam faced the challenge of reducing area for rice cultivation even as local and international food demand kept increasing.

Rice productivity should be increased further, he said, adding that the model of large-scale farms should be applied. If this was done, Dung was confident that Viet Nam could produce 46 million tonnes of paddy and export 9.5 tonnes of rice annually by 2015.

He also noted that recent improvements in rice exports did not originate from production but harvesting and post-harvesting processes.

"Farmers currently know how to harvest rice effectively and minimise losses. The post-harvest potential is really great and it is the most vital issue that needs to be addressed to increase the volume of exported rice."

Agriculture experts have estimated that the total volume of rice that can be lost after harvest can be as high as 10-15 per cent of total production. At this rate, with annual production exceeding 40 million tonnes, the volume of rice that can be lost is a whopping 2.5 million tonnes.

VFA General Secretary Huynh Minh Hue said that between 2006 and 2010, the country's rice exports have grown sharply, from 4.69 to 6.75 million tonnes. The growth has gained pace this year and final export figure is expected to top 7 million tonnes.

But, he said, rice exports were not likely to increase next year.

Discussing the future outlook for Vietnamese rice exports, Bui Chi Buu, director general of the Institute of Agricultural Sciences for Southern Viet Nam, said that nation's rice revolution would be able to contribute to rising food demand as the world's population grows from the current 7 to 9 billion in 2020.

The Cuu Long (Mekong) Delta province of Soc Trang needs to ensure the development of agriculture and aquaculture in a sustainable manner, Deputy Prime Minister Vu Van Ninh said at a meeting yesterday with local authorities.

Ninh, who was visiting Soc Trang on the occasion of the Viet Nam Rice Festival, told the province's leaders to have a clear overview of all the factors needed to develop rural areas in the context of new challenges that lie ahead and ensure that development would not take place in a haphazard manner.

The province needs to come up with long-term plans to effectively exploit its social-economic development potential, aiming to improve local living standards, he said.

Local authorities informed the Deputy PM that the province has piloted programmes to develop rural areas in 22 communes in the new context.

The province has almost completed the restructuring of State-owned agricultural and forestry farms, they said.

Vietcombank explains uncollected Q3 debts

Vietcombank's bad debts were estimated at 3.9 per cent as of the end of September, the highest rate amongst those of domestic joint stock commercial banks, according to the bank's Q3 financial statement.

Explaining the issue, the bank said that Vietcombank had been applying international rules for computing its bad debts, aiming at helping provide transparency and accountability to its shareholders and customers.

Another reason was that in the past years, the bank had poured about VND8 trillion (US$382.77 million) into doubtful debt provision.

The bank also said that the rate of bad debts would be calculated more precisely at the end of its 2011 fiscal year, adding that Vietcombank may use part of the doubtful debt provision to reduce its bad debts.

Ministry poised to increase coal prices when time is ripe
 
The Ministry of Industry and Trade (MoIT) is looking for the most suitable time for a coal price increase after the country's largest coal producer asked the Government to raise the product's price for next year.

Earlier this week, the Viet Nam Coal and Mineral Industries Holding Corporation (Vinacomin) asked the Government to approve its proposed price increase for coal sold to the power industry next year.

Vinacomin deputy general director, Nguyen Van Bien, said his group faced financial difficulties as it currently had to sell coal to power producers at prices much lower than production costs.

He said that coal prices for power producers currently equalled only half of production costs. The current rate for coal price increase was only roughly 30 per cent per year.

"With this increasing rate, it will take three years to have the coal price equal production costs of this year," said Bien.

Meanwhile, he said, the coal industry would have to pay an additional environmental protection fee of VND20,000 per tonne as of next year. In addition, it would have to pay more taxes due to the Government's approval to raise the export tax and mineral resource tax on coal.

However, deputy director of MoIT's Heavy Industry Department, Nguyen Khac Tho said that his ministry would closely examine Vinacomin's proposal to choose the most suitable time for the coal price hike.

MoIT would also consult the Ministry of Finance about the time for a coal price hike before submitting it to the Prime Minister, Tho said, adding that relevant authorities must closely watch the state of the economy given the present context of high inflation.

Tho said that the Prime Minister also instructed to have the coal price rise gradually and in accordance with the market trend, reaffirming that coal price hikes were necessary to help the coal industry reinvest in production.

To reduce difficulties at this moment, Vinacomin also recommended the Government to cut its export tax of alumina from bauxite projects from the current 20 per cent to zero per cent.

Viet Nam, Singapore biz forum to open

The Viet Nam-Singapore Business Forum, one of the biggest bilateral trade and investment promotion events, will take place in Ha Noi on November 30, the Viet Nam Chamber of Commerce and Industry has announced.

The three-day forum is expected to attract 300 Vietnamese and Singaporean companies, the chamber said.

The event, which aims to bring business representatives from the two countries together, would also update Singaporean and Vietnamese firms about investment opportunities in Viet Nam and Singapore, said Vu Tien Loc, the chamber's chairman.

"Viet Nam is a rapidly growing economy that has created greater opportunities for Singapore businesses. Believing in the long-term economic prospects of Viet Nam, many Singapore companies have invested in the three regions of Viet Nam and in many different fields, " said Bobby Liu, chairman of Singapore Business Association in Viet Nam.

"This forum once again confirms the interest of the leaders, researchers, and business communities in co-operation and concrete investment between the two countries, particularly in the areas of financial services and banking, education, real estate and property management services, as well as manufacturing and supply chain management," he said.

In the first 10 months of 2011, with Singapore's 81 new investment projects in Viet Nam totalling US$1.419 billion, Singapore became the second largest investor in Viet Nam.

Singapore investors are now present in most economic sectors in Viet Nam, from oil and gas exploration and industrial production, to agro-forestry-fisheries, but their main interest is infrastructure, services and real estate.

Two-way trade volume reached $10 billion last year, more than four times that of 2000.

Forum looks at solutions to economic challenges

Exporters should diversify their products, markets, partners and channels to cope with the global economic downturn.

Head of the Department for Economic Development Studies and the Ha Noi Institute for Socio-Economic Development Studies, Nguyen Minh Phong, made the statement at a conference, organised to forecast economic opportunities and challenges for 2012 as well as financial solutions for exporters, held in Ha Noi yesterday.

"Exporters should develop their brand names and take action in preventing forex risks," Phong said, adding that overseas Vietnamese needed to be utilised in terms of assisting exports.

He said it was time for businesses to restructure production chains through mergers and acquisitions.

"Vietnamese export enterprises should develop human resources and risk management to improve effectiveness and take advantage of new agreements between the country and large partners such as Japan, the US and Germany," he said.

Domestic exports have brought in US$1 billion in terms of turnover.

Deputy Minister of Industry and Trade Tran Quoc Khanh said that Vietnamese exporters had faced high interest rates and public debts alongside the global economic meltdown.

He said the country had earned US$78 billion in exports during the first 10 months of the year, an increase of 35 per cent over the same period last year.

"Viet Nam is set to reach an export turnover of $98 billion, a 31 per cent increase against last year," he added, saying that the world economy next year was expected to remain unstable, exposing domestic exporters to risk despite positive results.

In agreement, Vice Chairman of the National Financial Supervisory Committee Ha Huy Tuan said that inflation would be the main concern, limiting the effectiveness of political tools.

He said that world commercial growth had been reduced in parallel with decreasing investment flow into developing countries.

Exporters had been suffering from capital and foreign currency shortages, high lending interest rates and forex fluctuations, Tuan said.

"The current situation requires joint efforts in monetary management and bank response," he added.

General Director of the DHA Garment Export Company Nguyen Van Lo said that the business had taken out limited loans due to high interest rates.

"Our largest concern is that importers could suddenly cancel contracts because of the difficult economic situation," Lo said, adding that they had refrained from increasing prices due to general financial conditions.

He added that it had been a tough task meeting certain criteria for loan purposes.

"Volatile conditions in import countries as well as tightened spending within the domestic market have put pressure on exporters. We planned to expand our market, but were forced to delay due to capital and human resource problems," said Pham Hong Viet, director of the Ha Noi Rubber Company.

He explained that turnover in the first 10 months of the year saw a 20 per cent decrease over the same period last year while profits only reached 15 per cent of last year's figure.

Viet said that exports this year would reach 60 to 70 per cent of last years total, mainly dependent on European countries, while exporters had to borrow and pay loans with foreign currency, making forex balance tough.

"We suggest a yearly foreign currency lending interest rate of six per cent instead of the current 7.5 per cent," he stressed, adding that exporters should apply suitable payment methods for different markets.

"Exporters should co-operate with Vietnamese counsellors in foreign countries as useful information channels by which to reduce export," he said.

Vu Tuan Giang, general director of the Sunny Ocean Viet Nam Company, said exporters should diversify their products to meet global market demand.

Deputy General Director of the Southeast Asian Bank (Seabank), Nguyen Thi Huong Giang, confirmed that exporters had been faced with severe capital shortages.

Regulators halt commissions on bank deposits
 
The State Bank of Viet Nam has showed a more determined attitude to enforce the deposit interest rate cap by banning payments of commission for deposit-related brokerage activities.

Late October, the central bank issued Document No8376 which bans credit institutions and branches of foreign banks from paying commissions to individuals or firms that facilitate the placement of investor deposits.

To ensure transparency, credit organisations and branches of foreign banks in the country are also required by the central bank to establish interest rates on Vietnamese dong and US dollar deposits that do not exceed the regulated interest-rate caps, even including bonuses from promotions.

Banks that want to launch promotion prog-rammes will have to calculate their maximum deposit interest rates based on quoted rates, plus the percentage between their total value of bonuses and total deposits attracted during promotions.

The credit organisations will also be required to report their promotional programmes to the central bank so that the latter can monitor these activities. This will ensure that the programmes are carried out in line with current regulations.

The bank's move is aimed to miminise negative practices in the payment of brokerage commissions.

These kinds of payments harm the banking sector's prestige and adversely affect the stability of the domestic monetary market.

After the central bank began closely watching deposit interest rate caps, many credit institutions have begun competing with each other to mobilise more capital by launching attractive promotional programmes.

The Viet Nam Thinh Vuong Joint-Stock Commercial Bank (VPBank) is launching a promotion, with attractive gifts worth a total of VND9 billion (US$428,570) for deposits of VND30 million ($1,428), $1,500 or 1,000 euros upwards. It is offering a special gift worth up to 20 SJC (Sai Gon Jewelry Company) gold taels. The promotion lasts from November 3 to January 16.

The Asia Commercial Bank (ACB) also has a promotion for customers who buy certificates of deposit in Vietnamese dong, the US dollar or the euro, with valuable gifts worth a total of VND3 billion ($142,857).

Many other banks including Viet Nam Tin Nghia, Phuong Dong, Nam A and Agribank are also launching promotion programmes with thousands of attractive gifts.

However, industry insiders suspect that many of the banks carrying out these promotions set their maximum deposit interest rates higher than the SBV caps.

State Bank to probe gold derivatives

The State Bank of Viet Nam will investigate the use of gold-based derivatives at commercial banks in order to reduce systemic risks and control speculation in gold, the central bank announced yesterday.

It made the decision to investigate following reports that several commercial banks were offering short-term futures contracts on gold, a practice banned by the State Bank, which instructed banks earlier last month to reduce gold holdings and wrap up this type of business by May of next year, including lending to finance gold purchases.

Exceptions to the ban include loans approved by the State Bank Governor for purchases of gold to make jewelry and gold bars as well as to import gold as a raw material under import licences.

Banks are also required to report to the central bank every Friday on gold trading operations.

Gold prices yesterday rose by 3 per cent to VND46.6 million (US$2,230) per tael, marking the highest level over the past six weeks. (One tael is equivalent to 1.2 ounces). Sai Gon Jewelry Co, Bao Tin Minh Chau, Agribank Gold and Jewelry Co, Sacombank Jewelry Co, Phu Nhuan Jewelry Co and Doji all quoted buy/sell prices at the end of the day yesterday at VND46.35/46.6 million per tael.

Global prices have been hovering in recent weeks at over $1,790 per ounce. Based on the prevailing exchange rates, the domestic gold price continued to exceed the global price by about VND300,000 per tael.

Hai Duong attracts foreign investors
 
The northern province of Hai Duong has so far this year attracted US$2.56 billion in foreign investment, representing 23 per cent of the entire nation's total FDI capital, according to the provincial Department of Planning and Investment.

Malaysia's Hai Duong Thermoelectricity plant was the largest FDI project in the region, operated via the Build-Operate-Transfer model at a total investment of $2.26 billion.

Located in the Ha Noi-Hai Phong-Quang Ninh Development Triangle, the province has various potentials to develop many industrial and coastal service sectors including shipbuilding, iron production, power, port and logistics.

The province has so far attracted 221 FDI projects from 23 countries and territories with a total registered capital of nearly $5.2 billion, $1.9 billion of which have already been disbursed.

The department revealed that most major investors came from Malaysia, Japan, Taiwan, mainland China, Hong Kong, Samoa, South Korea and the US.

Priorities have been given to FDI projects that are large size, high tech, competitive or use the provincial materials. Projects whose products are used for supporting industries or for exports have also received the provincial priorities.

The department said that foreign invested enterprises (FIEs) had contributed to a provincial face-lift in modernising local infrastructure and ensuring jobs with stable incomes.

Statistics have shown that FIEs last year generated revenues of $1.77 billion, up 18.7 per cent against the previous year. Of the total, more than $1 billion came from exports, representing 96 per cent of total provincial export value.

FDI projects helped create around 85,000 jobs, contributing $97 million to the State budget, and 42.4 per cent of the province's total budget collection.

The province expects to attract additionally foreign investment on the back of industrial zone development over 4,000ha from 2015-2020. Planning for 10 industrial zones, covering 2,086ha, has already received approval.

Stricter conditions set for bond issues  

The value of the nation's bond market is meagre relative to those in other countries in the region, representing just 17 per cent of the GDP in Viet Nam compared to 74 per cent in Singapore, 53 per cent in China, and 82 per cent in Malaysia.

To boost the bond market, the Government issued Decree No 90/2011/ND-CP on October 14. The new decree supersedes Decree No 52/2006//ND-CP of May 2006 governing corporate bond issues, and Decree No 53/2009/ND-CP of June 2009 on the issuance of international bonds.

To control risks inherent in bond issues, Decree No 90 provides two additional principles governing bond issues: (i) if bonds are issued to finance programmes or projects, the issuer must maintain a minimum equity ratio of 20 per cent of the total investment capital of the programme or project; and (ii) for international bond issues, the issuer must comply with the law on foreign loans and their repayment. These conditions help ensure that enterprises have sufficient financial resources and credit-worthiness before issuing bonds.

In addition, audited financial statements of the issuing enterprises must contain an unqualified auditor opinion, a strict requirement that effectively bars up to a quarter of all Vietnamese enterprises – the proportion currently unable to satisfy such a condition.

Article 23.1(dd) of Decree No 90 sets conditions for a bond issue on the international market, providing that "the enterprise must satisfy international market requirements on credit ratings in order to conduct the issue, and a State enterprise must have a credit rating at least equal to the national credit rating."

There is not yet any professional credit rating companies for the Vietnamese market, however, making this another potentially limiting condition. In Viet Nam, credit ratings for enterprises are conducted by the Credit Information Centre attached to the State Bank of Viet Nam, and the result of such rating is temporary and does not meet international standards.

Notably, Decree No 90 introduces a note of confusion by changing or eliminating terminology from Decrees 52 and 53. The legal terms "types of enterprise bonds" and "bond issuance modes" in Decree No 52, as well as "enterprise bonds with government guarantee" in Decree No 53 are not included in Decree No 90. Implementing Decree No 90 will therefore require an additional guiding circular from the Ministry of Finance, an additional step that is contrary to the current general spirit of administrative reform.

Binh Duong okays 70 projects this year

Southern Binh Duong Province has approved 70 foreign direct investment (FDI) projects with a total capital of nearly US$400 million since the beginning of the year, according to provincial deputy chairman Tran Thanh Liem.

He confirmed that, together with the new projects, total provincial FDI capital in 2011 amounted to $830 million.

To date, total FDI investments had reached $14 billion with around 65-70 per cent already disbursed, Liem added.

Binh Duong had attracted a large volume of FDI capital alongside high levels of disbursement, thanks to which the province had been allowed to increase the capital of 103 projects to widen production.

Most projects have implemented disbursements on time despite facing many challenges such as those involved in developing garment and tyre plants.

Thanks to increased levels of investment, industrial production value during the first 10 months of the year reached nearly VND100 trillion ($145 million), a year-on-year increase of 17.5 per cent. FDI contribution accounted for VND65 trillion ($94 million), up by 17 per cent against the same period last year.

Survey looks at youth spending

Approximately 40 per cent of Vietnamese youth are careful spenders while 15 per cent spend money carelessly and 20 per cent save up with big-ticket items in mind, according to a recent G2/Grey Group study.

The results, based on interaction with over 400 youths, revealed that on average Vietnamese youth spent around US$75 per month on goods including mobile recharges, beverages, snacks and movies.

Around 25 per cent of monthly incomes are saved for future spending on mobiles, apparel and trips.

"Twenty-something year olds make up an important consumer segment as big spenders, forking out approximately $5 billion annually".

"The youth are more novelty-seeking and form the majority of ‘early adopters' based on new technology. They are also the most vocal about brand experiences via blogs, forums and social networks," it said, adding that in Viet Nam, the 12-24 segment accounted for roughly 24 per cent of the population.

Coal miners' losses surprise investors

Three out of eight listed coal companies reported losses in the first nine months of the year, surprising many investors who consider "black gold" incapable of suffering slumps.

Eight companies have posted third-quarter business results so far, five of which reported profits including Nui Beo (NBC), Mong Duong (MDC), Ha Lam (HLC), Coc Sau (TC6) and Vang Danh (TVD). NBC's nine-month pre-tax profit surpassed its yearly goal by 7 per cent, while MDC hit its annual target.

Others also reported high profits and will soon reach their yearly targets.

By contrast, three companies, including Cao Son (TCS), Deo Nai (TDN) and Ha Tu (THT), announced losses.

TCS reported the heaviest loss of VND84.4 billion (US$4 million) in the first nine months, of which third-quarter loss alone amounted to VND310 billion ($14.8 million).

Cao Son Coal Co Director Nguyen Xuan Lap blamed high lending interest rates for pushing up financial costs, as well as increasing material input worth VND114 billion ($5.4 million) which its parent company Vinacomin had not paid for.

"Because oil price hikes were unexpected, the Vinacomin group has yet to pay," Lap explained, saying the group would make a full payment this quarter, and along with favourable weather conditions, the company could ensure its profit target this year.

It expects to earn a total profit of VND78 billion ($3.7 million) and pay a dividend rate of 15 per cent.

Deo Nai (TDN) also posted a loss of over VND34.8 billion ($1.7 million) during July-September while Ha Tu (THT) incurred a loss of nearly VND10 billion ($476,200). Both companies, however, managed to post profits for the first nine months, with TDN gaining over VND14 billion ($671,400) in net profit and THT nearly VND31.8 billion ($1.5 million).