New container port helps shorten way to Europe, Americas

PM Nguyen Xuan Phuc on Sunday attended the grand opening of Hai Phong International Container Terminal, which allows direct shipments to Europe and the Americas.

Present at the ceremony included Japanese Ambassador to Viet Nam Umeda Kunio and representatives of the city local authorities.

The Terminal means exports from North Viet Nam will not have to be transited through other ports before reaching the above markets, thus helping reduce business costs and increase competitiveness of Vietnamese exports.

The Terminal is jointly invested by Sai Gon Newport Corporation (Viet Nam), MITSUI O.S.K Lines and Itochu (Japan) and Wan Hai Lines (Chinese Taipei), in which the Vietnamese corporation holds 51% stake.

Located in Cat Hai district, it is the first deep-water seaport in the Northern region, capable of receiving vessels up to 160,000 DWT.

Construction of the terminal began on May 12, 2016.

Vietjet Air to open Hai Phong-Busan (RoK) direct air route

The low-cost carrier Vietjet Air is finalizing procedures to launch a direct air route between Vietnam’s northern port city of Hai Phong to Busan in the Republic of Korea (RoK), reported the Vietnam Investment Review.

Busan port city is one of the biggest economic centres of the RoK with many tourist destinations.

A market survey of Vietjet Air showed that the Hai Phong-Busan route potential is high, thus the opening of an air route between the two localities is necessary to meet the demand in goods transport, trade and travel of people between the two sides.

The air route is also expected to help facilitate socio-economic development of Hai Phong and the whole northeastern coastal region in general.

As one of the important commercial and industrial hub in northern Vietnam, Hai Phong is striving to make tourism a spearhead economic sector and turn itself into one of the nation’s key tourism destinations.

 According to the municipal People’s Committee’s action programme on tourism development from 2017–2020 with a vision through 2030, the city hopes to receive 8 million tourists and earn 3.5 trillion VND (154 million USD) with expected annual average growth rates of between 8.2 percent and 8.9 percent.

With a fleet of 56 aircraft, including A320s and A321s, Vietjet Air operates 385 flights each day. The airline has already transported more than 55 million passengers on a network featuring 82 routes in Vietnam and across the region to international destinations such as Thailand, Singapore, the Republic of Korea, Taiwan, Hong Kong, China, Malaysia, Indonesia, Myanmar and Cambodia.

The airline plans to operate more than 120,000 flights and serve over 24.1 million passengers by the end of 2018. Additionally, it will provide services on a total of 100 air routes, including 39 domestic and 61 international airways.

Vietjet to offer promotional tickets from zero Vietnamese dong

The low-cost carrier Vietjet will launch the biggest promotion of the year “Free up your summer with Vietjet” from May 9 to July 31, with millions of super promotional tickets priced only from VND0, during the golden hours from 12:00 to 14:00, on their website www.vietjetair.com.

During the first week of the promotional campaign, Vietjet will present 3 golden days from May 9 to 11 with 2,000,000 promotional tickets.

The promotional fares, excluding VAT, airport fees and other surcharges, will be applied on all domestic and international routes from Vietnam to Seoul, Busan, Daegu (the Republic of Korea)/ Hong Kong/ Kaohsiung, Taipei, Taichung, Tainan (Taiwan - China)/ Singapore/ Bangkok, Phuket, Chiang Mai (Thailand)/ Kuala Lumpur (Malaysia)/ Yangon (Myanmar)/ Phnom Penh, Siem Reap (Cambodia).

The tickets are valid for passengers travelling between August 20 and December 31 this year, excluding public holidays.

The promotional tickets are available during the golden hours from 12:00 to 14:00 at www.vietjetair.com (also compatible with smartphones at https://m.vietjetair.com) or at www.facebook.com/vietjetvietnam (just click the “Booking” tab).

Payment can easily be made with Visa/ MasterCard/ AMEX/ JCB/ KCP/ or any ATM card issued by 34 Vietnamese banks that have registered with internet banking.

Aiming to be a “Consumer Airline”, Vietjet is continuously opening new routes, adding more aircraft, investing in modern technology and offering more added-on products and services to serve all of the demands of customers.

Vietnam, UK seek stronger partnership in customs

Director of the General Department of Vietnam Customs Nguyen Van Can and UK Ambassador to Vietnam Giles Lever have agreed to strengthen the Vietnam-UK customs partnership through the signing of a letter of intent on possibilities of cooperation, heading to a governmental-level deal in the field.

The agreement was reached at a meeting of Can and the UK diplomat as well as UK customs representatives in Asia in Hanoi in early May, according to the General Department of Vietnam Customs.

The deal is expected to focus on affiliation in facilitating trade, preventing smuggling and illegally transportation of drugs, wine, cigarette, banned goods, wild animals, as well as in developing human resources, providing technical support, and sharing information and experience.

The two sides concurred to implement a project to assist Vietnam Customs.

Steve Wood, UK customs official for Asia region, said that the project will provide Vietnam with information, experience, human resources training, as well as evaluation on world criminal trends related to land and sea borders, aviation and in Southeast Asia and Asia-Pacific region that relate to Vietnam, while introducing new measures and equipment serving the detection and fight of customs-related crimes.

At the meeting, the two sides also discussed preparations for a UK visit of the General Department of Vietnam Customs’ Director in August, during which both sides will officially exchange ideas on the possibility of signing a cooperation deal.

The UK ambassador also suggested cooperation with Vietnam in implementing a UK’s programme to facilitate global trade.

Licogi 16 aims for 110 million USD in consolidated revenue in 2018

Licogi 16 Joint Stock Company (Licogi 16) aims to earn 2.5 trillion VND (110 million USD) in consolidated revenue and roughly 1.96 trillion VND (86.2 million USD) in stand-alone revenue in 2018, up 65 percent and 69 percent year on year, respectively.

This year, it expects to achieve 123 billion VND (5.4 million USD) in consolidated after-tax profit and 73 billion VND (3.2 million USD) in stand-alone after-tax profit, year-on-year increases of 58 percent and 90 percent, respectively.

The company’s earnings will come from construction activities in a number of projects across the country, including Bac Giang – Lang Son and Ha Long – Van Don expressways, BOO Phu Ninh water treatment plant, Can Tho water treatment plant, Binh Tien Bridge and Road project, Da Nang - Quang Ngai expressway, Hiep Thanh and Nam Anh residential buildings and several electricity projects.

In addition, it will also collect incomes from 50-hectare and 27-hectare urban area projects in Long Tan commune, Nhon Trach district of southern Dong Nai province alongside the 3.4-hectare Nam Phuong City shopping centre.

The firm will offer a cash dividend of 10 percent, up about 3 percent from 2017.

FDI firms prefer commercial dispute arbitration

As many as 40 percent of foreign direct investment (FDI) enterprises choose to use commercial arbitration in cases of disputes, rather than going to court, said Phan Trong Dat, Deputy Secretary General of the Vietnam International Arbitration Centre (VIAC).

Speaking at a seminar, entitled, “Commercial Arbitration – Increasing Confidence in Foreign Direct Investment,” held in Hanoi late last week, Dat said the FDI firms chose commercial arbitration for resolving disputes because of its effectiveness, and due to its helping them save time and costs. Meanwhile, court proceedings to settle disputes failed to meet FDI requirements when many of the judgments were unfair, causing lengthy disputes and considerable expenses for enterprises.

Statistics showed that some 24 percent of disputes were resolved at VIAC and involved FDI as one of the parties. Of these, 32 percent were in the purchasing of goods, 24 percent in construction and 20 percent in leasing.

“More than a half of commercial arbitration cases at VIAC are resolved in foreign languages (mainly English),” he said, adding that the rate of disputes in the country has been on the rise in the last three years.

Vu Anh Duong, VIAC’s secretary general, said Vietnam has been considered one of the countries with high and stable economic growth in the region and the world. One of the reasons for the significant momentum for this growth was FDI activities in Vietnam.

Pham Manh Dung, VIAC’s arbitrator and a lawyer from Rajah and Tann LCT Lawyers Company Limited, said that by the end of 2017, Vietnam had 24,700 FDI projects with total registered capital of 318.7 billion USD, accounting for 25 percent of the total investment in the country and more than half of the nation’s total industrial production value.

Dung noted that FDI has had a large impact on Vietnam’s integration into the world economy.

“This has been an important factor for the country’s infrastructure development and in completing legal systems to develop market mechanisms that are suitable with international norms,” he said.

VIAC has striven to become a trusted address to resolve disputes, thus helping ensure the rights and benefits of investors seeking to invest in Vietnam.

Commercial arbitration in Vietnam has been increasingly developed to become a useful tool for foreign investors in the country.

Disputes in investment activities have many mechanisms for resolving conflicts, such as courts, commercial arbitration and foreign affairs. However, the courts have not been an attractive solution, while resolving disputes through foreign affair mechanisms have been used in certain cases.

Commercial arbitration and investment arbitration have been mostly preferred.

The dispute resolving mechanisms of commercial arbitration also faced challenges, said Fan Mingchao, Regional Director of Arbitration and ADR for North Asia at the International Chamber of Commerce.

He said the majority of challenges were concerning competitiveness, as the scale of disputes become larger and more complicated, resulting in prolonged time, which reduces its effectiveness.

The issues relating to security and transparency of arbitration procedures have also been a problem.

Security is a core feature of international arbitration, but transparency requirements are also increasingly high. In order to address this issue, agencies have approved and joined the transparency framework of the United Nations, he said.

The benefit has also been seen in commercial arbitration. He said that governments should build a transparent arbitration procedure to control the quality of arbitration decisions.

The seminar focused on discussing the necessity and efficiency of commercial arbitration methods as one of the most effective ways of resolving disputes related to FDI enterprises.

The seminar is divided into three sessions, with discussions on topics, such as: An update on the situation of commercial arbitration in Vietnam and around the world; Commercial Arbitration - A new element worth noting to attract foreign direct investment; Commercial arbitrage as a useful tool for controlling business risks.

The event is considered to be an important forum for lawyers and leading experts to share knowledge with enterprises and help Vietnamese enterprises to better understand and more effectively use commercial arbitration methods. Commercial arbitration is an effective tool in preserving capital inflows from legal risks in business investments.

More than 100 delegates from FDI enterprises, counterpart enterprises, potential partners with FDI enterprises, many prestigious lawyers, and representatives from State management agencies attended the seminar.

Reference exchange rate down at week’s beginning

The State Bank of Vietnam set the daily reference exchange rate on May 14 at 22,550 VND/USD, down 10 VND from the last working day of previous week (May 11). 

With the current trading band of +/-3 percent, the ceiling rate applied to commercial banks during the day is 23,226 VND/USD and the floor rate 21,874 VND/USD.

The opening hour rates at many commercial banks stayed unchanged from the end of last week. 

Vietcombank and BIDV listed their buying rate at 22,735 VND/USD and the selling rate at 22,805 VND/USD, the same as on May 11. 

Techcombank also maintained the same rates as on May 11 at 22,715 VND/USD (buying) and 22,815 VND/USD (selling).

During the week from May 7-11, the daily reference exchange rate followed a rising trend from Monday to Thursday, gaining accumulated 24 VND/USD before dropping 18 VND/USD on Friday.  

However, the rates at major commercial banks remained stable with only slight fluctuations throughout the week.

Vietcombank and BIDV kept both rates unchanged at 22,735 VND/USD (buying) and 22,805 VND/USD (selling) since the beginning of the week (May 7).

Firms buy goods from distressed farmers     

Korean supermarket chain Lotte Mart has bought more than 10 tonnes of pumpkins and five tonnes of watermelons from distressed farmers facing declining prices because of a bumper crop in Dak Lak and Quang Nam provinces.

Lotte Mart plans to increase the purchase volume to 50 tonnes of pumpkins.

To help farmers, the supermarket has paid them more than the price offered by traders.

Big C supermarkets have also bought pumpkins from farmers in Dak Lak District’s Cu Yang Commune.

Last Friday, the supermarket began selling pumpkins bought from farmers in Cu Yang Commune at VND4,900 per kg at its stores in the south.

The supermarket is expected to buy 60 tonnes of pumpkins within a week.

Nguyen Manh Hung, chairman of the Cu Yang People’s Committee, said Cu Yang commune in Eakar District was struggling the most.

Ethnic minority groups account for 42 per cent of the commune’s population. Agriculture is the main source of farmers’ incomes.

The commune has 3,200ha of farmland, with rice, maize, soybean and pumpkin the main crops.

This year, the farmers in the commune grew pumpkin on about 110ha, with productivity estimated at 20 tonnes per hectare.

The price fell to VND800 to VND1,500 per kg, but farmers were still unable to sell their product.

Hung attributed the situation to the shortage of companies specialising in purchasing farm produce in the area.

In Quang Nam Province, watermelon prices fell from VND8,000 per kg earlier this year to VND1,000-VND1,500 per kg, but demand plunged, leaving farmers with huge unsold stocks.

VN firms urged to tap Arab market     

The affluent Middle East is a promising market for Vietnamese companies, the Viet Nam Chamber of Commerce and Industry has said.

Speaking at the Viet Nam-Middle East Business Forum held in HCM City yesterday, Nguyen The Hung, deputy director of the VCCI’s HCM City office, said: “The Middle East has high demand for farm produce, seafood, garment and textile products, footwear, and wood products from Viet Nam.”

Trade between Viet Nam and the Middle East had gone up sharply in recent years, doubling from 2011 to US$12.8 billion last year, he said.

According to Le Thai Hoa, deputy head of the Ministry of Industry and Trade’s Asia-Africa Market Department, Viet Nam enjoys a trade surplus with the Middle East, which consists of 16 countries and has more than 300 million people.

The United Arab Emirates is Viet Nam’s largest partner in the region, with their trade increasing from $4.46 billion in 2013 to $5.6 billion last year.

With a per capita GDP of over $60,000 and a large number of immigrants and tourists, the UAE has large demand for various products.

“Vietnamese goods such as seafood, garment and textile, footwear, farm produce, foodstuff and household appliances have established a firm foothold in the market,” he said.

But despite the increase in trade, Viet Nam’s exports to the Middle East still account for a very small portion of the region’s total imports.

The forum was held to further promote economic, trade and investment ties between the two sides, Hung said.

“Viet Nam hopes to attract more investment from the Middle East in the fields of renewable energy, hospitality, infrastructure, ports, aviation, property, and agriculture.”

Obaid al Dhaheri, the UAE ambassador to Viet Nam, said as the hub of the Middle East and gateway to Europe and Africa, his country could serve as an entry point to the global market for Vietnamese companies.

In turn, "Viet Nam is the gateway to Southeast Asia for UAE firms," he said.

“Thus, more opportunities to enhance co-operation between Viet Nam and UAE are available.”

When doing business with the region, enterprises must always keep a close eye on its unstable political situation, Hoa warned.

They must also understand the regulations of each market and Muslim cultural factors such as not consuming alcohol and requiring food and foodstuffs to have Halal certification, he said.

“Exporters of agro-forestry and fisheries products should focus on improving hygiene and food safety because the market is increasingly adopting trade barriers.”

Sharing his experience in doing business with the Middle East, Do Ha Nam, deputy chairman of the Viet Nam Coffee and Cocoa Association and chairman of Intimex Group, which has exported to Dubai for nearly 20 years, said the market had huge demand for Vietnamese pepper, cashew, coffee, and seafood.

“To penetrate the market, enterprises should participate in trade fairs in Dubai, where they will meet potential customers. Finding a right business partner is very important," he said.

Also at the forum, Relam Investment L.L.C, a partnership between Dubai-based Vault Investment L.L.C and Viet Nam’s MIG Holdings, announced the establishment of Trade-Hub (T-Hub), a full-fledged trading and logistics platform, in Viet Nam to help Vietnamese firms promote their exports in Middle East and other markets.

The forum was organised by the VCCI in collaboration with MIG Holdings and Relam Investment.

Pepper output increases sharply but prices fall     

Viet Nam’s output and export of pepper increased sharply last year, but their prices and thus turnover from exports fell, according to the industry association

The Viet Nam Pepper Association (VPA) and industry-related authorities attended a meeting on Friday in HCM City to review last year’s performance.

According to the Ministry of Agriculture and Rural Development and the General Statistic Office, Viet Nam has around 150,000 hectares under pepper and output last year was 240,000 tonnes, or 48 per cent of global production.

According to the VPA there was a decrease in the use of pesticides last year since farmers are more aware these days of better farming techniques.

Prices have been highly volatile: the price of black pepper for instance declined from VND133,000 per kilogramme in January to VND73,000 in December.

The General Department of Vietnam Customs said 215,000 tonnes of the spice were exported for US$1.1 billion, respectively up 20 per cent and down 22 per cent.

The reasons for the falling prices include climate change, a massive spike in the area under pepper, farmers’ inexperience, which have contributed to rising outputs but with poor quality.

In the first quarter of this year prices were around 30 per cent lower than a year ago, the VPA said.

Viet Nam’s exports this year are expected to be comparable to that of last year since the industry will continue to face all the current challenges such as climate change and diseases.

VPA plans to work more closely with farmers and businesses to help them comply with regulations and standards for pepper production and export and provide market information to help them make informed decisions.

The Western Highlands Agriculture and Forestry Science Institute said they were researching into better pepper strains capable of withstanding diseases.

Willem Scato van Walt Meijer, general director of Nedspice Processing Viet Nam Ltd., which has been operating in Binh Phuoc Province for the last five years, said quality control for exports and working closely with farmers were the keys to resolving the problems.

“We have a network of 1,600 farmers and trained them very carefully, and … do 100 per cent tracking and tracing of all our farms, which allows us to help certain farmers improve, monitor the effectiveness of each farmer, and reward outstanding farmers.”

Minister of Agriculture and Rural Development Nguyen Xuan Cuong had said at a meeting in January that the rapid increase in land under pepper should be addressed quickly and the pepper farming land should be reduced.

Ben Tre seeks more investors in agriculture     

Ben Tre Province plans to carry out more public information initiatives and other activities to encourage investment in agriculture, according to Nguyen Huu Lap, the deputy chairman of the province’s People’s Committee.

The province plans to streamline administrative procedures and provide more assistance to projects after they have received approval. Departments have also been urged to provide help with construction procedures and the purchase of certificates.

In addition, more market information will be provided to businesses to help them make decisions about entering new markets and investing in modern technologies.

Ben Tre has provided VND32.6 billion (US$1.4 million) of funds to six agricultural businesses.

Every year, around 300 provincial businesses take part in trade promotion events.

Of the 3,940 businesses in Ben Tre Province; 253 are in the agricultural sector. The province aims to have 1,500 more new companies by 2020.

Thai firms eye business opportunities     

More than 210 Thai enterprises are showcasing their products and services at the Top Thai Brands expo which opened on May 10 in HCM City.

The four-day exhibition offers exceptional opportunities to explore the extensive range of internationally-recognised Thai products and services and discover the business potential in various sectors such as automobile and motorcycle parts and accessories, beauty and healthcare products, food and beverages, and fashion.

The fair also features services like education, tourism, franchise businesses, and food services.

Viet Nam has seen strong business expansion and investment by Thai firms in the last few years, Nguyen Van Nga, deputy director of the Ministry of Industry and Trade’s Agency for Southern Affairs, said.

Last year Thailand was its largest trade partner among ASEAN members, she said.

Last year bilateral trade topped US$15.11 billion, accounting for 30.5 per cent of Viet Nam’s trade within ASEAN.

The expo has attracted many major Thai brands and firms looking for opportunities to expand their business and franchise, she said.

Ureerat Ratanaprukse, the Thai consul general in HCM City, said Thai investment in just the last 10 months was $9.3 billion.

“This reflects the confidence of the Thai private sector in Viet Nam’s vibrant economy.”

According to her, the event not only creates business opportunities for the Thai private sector but also market access for Vietnamese to top quality products and services, thus benefiting both Thai and Vietnamese entrepreneurs.

Top Thai Brands 2018 is expected to contribute greatly to achieving the bilateral trade target of $20 billion by 2020 as agreed by the two countries, she added.

The fair, on at the Saigon Exhibition and Convention Centre in District 7, is being organised by the Thai Trade Centre in HCM City in collaboration with the Viet Nam National Trade Fair & Advertising Company.

SHB profit up 64 per cent in Q1     

Sai Gon-Ha Noi Joint Stock Commercial Bank (SHB) reported post-tax profit of VND402 billion (US$17.6 million) in the first quarter of this year, up 64 per cent year-on-year.

However, profit margin remained modest with a return-on-equity (ROE) of 2.6 per cent. Earnings per share was approximately VND332.

The main reason for this quarter’s profit growth came from a drop in provisioning expenses and a 16.1 per cent increase in net profit, which touched over VND1 trillion.

Revenue from the service activities of the bank decreased 24.6 per cent, reaching approximately VND58.4 billion, the lowest level in the past two years.

Revenue from payment activities accounted for the largest portion of total revenue, touching nearly VND42 billion.

Derivatives market records surge in transaction value     

The derivatives market proved its attractiveness when the value of its transactions rose threefold in April as the stock market posted a downward trend, reported Saigon Securities Inc (SSI).

An SSI financial and monetary report this week showed that since the beginning of 2018, the stock market experienced two downward periods in February and April when the liquidity of derivatives grew strongly.

The value of transactions in the derivatives market increased three times from the average of over VND2 trillion (US$87.7 million) in the beginning of April to VND6 trillion at the end of the month. It peaked at VND7.1 trillion on May 3, approximating the total transaction value of VND7.3 trillion in the stock market.

The derivatives market attracted a considerable amount of capital from the stock market, mainly from domestic investors.

SSI said Viet Nam’s securities market witnessed a series of widespread nosedives when the number of codes with declines doubled those with increases. All groups of key shares fell sharply, causing a psychological pressure on the overall market.

The benchmark VN Index surged in the first quarter of 2018 to set a record of 1,204.33 points on April 9, up by 220 points or 22.4 per cent from the end of last year and 49 per cent in six months.

However, the market reported continuous plunge since then when the VN Index dropped to 1,050.26 points in late April, losing 154 points or 12.8 per cent of the new record. The total market capitalisation in HCM Stock Exchange, Ha Noi Stock Exchange and the Unlisted Public Company Market decreased by $20 billion to combined $173 billion.

Foreign investors were net buyers last month, which was attributable to a tumble in the global stock market in February, changes in global interest rates when the administration of US President Donald Trump took drastic actions to protect US businesses, possibility of an interest rate hike by FED sooner than expected and risk of a widespread trade war.

That more large-cap stocks carried out initial public offerings and were listed in the market might have also led to foreign funds’ restructuring of their investment items, according to SSI.

Southeast Asia’s e-commerce platform raises new funding round     

iPrice Group, Southeast Asia’s product discovery and price comparison platform, raised a new round of funding from messaging app Line’s venture capital arm, Line Ventures.

Its existing backers, including Cento Ventures and Venturra, also took part in this round, the company announced.

The e-commerce website refused to disclose the funding value when contacted by Việt Nam News, but it is estimated at some US$4 million, according to technology website Tech Crunch’s source.

iPrice raised $4 million Series A funding in late 2016. Since then, more than 50 million online shoppers have visited its website, which has expanded its product catalogue from few dozens of millions to over 500 million SKUs (stock keeping units) across seven markets, including Malaysia, Singapore, Indonesia, the Philippines, Thailand, Việt Nam and Hong Kong.

“iPrice, which is driving the explosive growth of e-commerce in Southeast Asia, has the most promising team with the right talents, technology and operational excellence. In turn, they [iPrice] will become the first destination in the online shopping journey in Southeast Asia,” said June Cha, general manager of Line Ventures.

iPrice has set up strategic B2B (business-to-business) partnerships with some large media groups and brands, such as Mediacorp, Thairath and Samsung, by offering them tailored affiliate solutions.

Last year, it introduced an insightful report on the development of e-commerce in Southeast Asia.

More than 1,000 co-operatives to join trade fair     

More than 1,000 co-operatives from 63 provinces and cities nationwide will take part in a trade promotion fair for co-operatives, slated to be held at Thong Nhat Park in Ha Noi from May 18-20.

They will showcase farm produce, seafood, fishery, industrial and service goods besides fine arts and handicrafts at nearly 400 booths, organisers said at a press conference to introduce the fair last week.

The forthcoming event will also attract the participation of 40 big businesses and about 100 delegates who are clients, partners and cooperatives from many countries and territories around the world such as South Korea, Singapore and Taiwan.

Nguyen Ngoc Bao, chairman of the Viet Nam Cooperative Alliance, described the fair as a good chance for Vietnamese cooperatives to advertise their products and services to domestic consumers and exchange business opportunities with foreign cooperatives and businesses.

Oil firms pile up losses, shares take beating

The first quarter of this year saw the Petroleum Equipment Assembly & Metal Structure Joint Stock Company (PXS)’s revenues plummet to a mere VNĐ18.5 billion (US$815,000), 94.4 per cent down year-on-year.

It had been VNĐ343.6 billion in the comparable period last year.

Gross profit was down 94 per cent to VNĐ2.85 billion, and the company ended VNĐ20.1 billion in the red.

Another oil company, Petrovietnam Drilling and Well Services Joint Stock Company (PV Drilling), reported a gross loss of VNĐ201 billion.

The Drilling Mud Joint Stock Company (DMC) reported a loss of VNĐ12.8 billion.

Market observers said the huge losses run up by the companies sent the prices of their shares plunging on the stock market.

PXS has fallen by 41.1 per cent to VNĐ6,190.

PV Drilling is down 36 per cent to VNĐ14,950.

Petrovietnam –Nghệ An Investment & Trading Joint Stock Company shares have fallen by 43 per cent to current VNĐ800 as compared with the price recorded in sessions in early year.

While several other oil companies like PXT, PSE, PCR, PPY, PBP and PSD did not report losses, their profits were sharply down.

Following their huge losses many of the oil companies have been placed under the Government’s special control, with some even being on the brink of having to delist their shares because their accumulated losses exceed their charter capital.

Petrovietnam –Nghệ An, for instance, saw its accumulated losses exceed its capital as of December 31 last year.

According to current legal provisions, the company would have to delist.                      

To improve the situation, many of the companies have outlined new plans with measures like restructuring, selling of stakes and recovery of debts.

But analysts said it would be not easy for them to improve their situation because they depend heavily on global oil prices, which show no signs of recovery.

Banks rejig deposit interest rate structure

Many banks have recently reduced deposit interest rates by 0.2-0.4 percentage points.

On March 30 VPBank cut its rates for deposits of less than six months and 12-36 months by 0.2 percentage points.

It also reduced the rates by 0.3 and 0.4 percentage points for 6-7 months and 8-11 months.  

VIB cut deposit interest rates twice in March and now its rates for 1-3 month deposits are down by 0.3-0.5 percentage points and for more than six months by 0.2-0.4 percentage points.

Military Bank has reduced the rates for short-term deposits by 0.1-0.2 percentage points.

The rate cutting has been attributed to a credit slowdown and lenders’ excellent liquidity.

But a closer look shows the reason lies elsewhere.

Some banks have reduced interest rates on short-term deposits but hiked the rates on long-term deposits to even up to 8.7 per cent.

This suggests that they have not cut interest rates because of plentiful liquidity but due to their rejigging of deposit terms.

The State Bank of Việt Nam had, last December, issued a circular reducing the ratio of short-term deposits used for funding medium- and long-term loans from 50 per cent to 45 per cent this year and 40 per cent next year.

Thus, to meet this requirement, banks need to increase mobilisation of long-term deposits.

Meanwhile, growth in short-term loans has been low while medium- and long-term loans are increasing quickly.

The National Financial Supervisory Committee reported that in the first quarter of this year long-term credit grew by 4.3 per cent compared to only 2.6 per cent in the case of short-terms loans.

The ratio of medium- and long-term loans to total outstanding loans increased from 52.8 per cent late last year to 53.2 per cent now.                    

While for obvious reasons banks desire a high ratio of long- and medium-term deposits, in reality 90 per cent of their deposits are short-term.

Meanwhile, 60-70 per cent of their loans are for long terms, especially real estate-related credit.

Analysts said though the banking sector has been making efforts to reduce the ratio of short-term deposits used for funding long- and medium-term loans following the SBV’s diktat, they are not making much headway. Long- and medium-term loans still make up 53 per cent of total outstanding loans as against the 15 per cent long- and medium-term deposits they have mobilised.

Vitas: Vietnam’s potential of exporting apparel to Australia is huge

Chairman of the Vietnam Textile & Apparel Association (Vitas) Vu Duc Giang has stated that Vietnam’s potential of exporting apparel to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) member states and Australia in particular is huge. 

During a seminar held in Ho Chi Minh City on May 11, Giang asked Vietnamese apparel exporters to devise a strategy to take advantage of incentives brought about by the deal and other free trade agreements signed by Vietnam. 

Amidst the fourth industrial revolution, firms need to invest in modern technology to meet stringent demand of customers, he said. 

Vitas Vice General Secretary Nguyen Thi Tuyet Mai said in order to tap tax incentives in FTAs, firms must meet demand for rules of origin and control supply chain in the region. 

In the near future, Vitas will hold more seminars on CPTPP terms and connect domestic fiber manufacturers, weaving and dying establishments with buyers. 

A representative from Australia’s IEC Group said though Australian population is only one-fourth of Vietnam’s but they are ready to spend more so that firms need to offer products with high quality and diverse designs. 

There are only five sport apparel firms in Australia with a 16 percent market share so that Vietnamese enterprises could enter the market in the future, he said, adding that apparel businesses could access Australia via trade fairs. 

IEC will hold a specialised exhibition for global suppliers in apparel, accessories, leather and footwear in Melbourne, Australia from November 20-22.