State bank ponders rate cut
 
The central bank plans to lower interest rates this year, but is unsure about the best time to do it.

The Government recently issued a resolution requiring the central bank to lower interest rates at a proper time in order to meet society's needs.

The Governor of the State Bank of Viet Nam, Nguyen Van Binh, said bank deposit interest rates would likely drop to about 10 per cent per year if the Government achieves its set target of controlling the rate of inflation at 9 per cent or 9.5 per cent by year-end, while at the same time settling banks' liquidity problems.

Such a decrease is possible because since August the monthly consumer price index (CPI) has slowed to a rate of less than one per cent.

Moreover, the central bank is bent on solving the liquidity of some credit institutions.

A director of a State-run bank, who declined to be named, said that although the CPI had showed signs of lowering deposit interest rates to less than 10 per cent this year, as expected, it had proven to be difficult because the liquidity of many banks was uncertain.

After Tet (Lunar New Year), many banks continued to launch promotions and even illegally offered deposit interest rates beyond the central bank's 14 per cent cap in order to raise more capital.

If they do not impose penalties on these banks, deposit interest rates will remain too high.

The director of the State-run bank said that banks should receive specific plans to cut their interest rates.

To help banks lower interest rates, Dr. Can Van Luc, a high-ranking advisor for the Bank for Investment and Development of Viet Nam (BIDV), said the Government needed to seek more ways to reduce inflation and settle the banking sector's liquidity situation.

The SBV should continue refinancing on the open market operation (OMO) and should merge banks that are weak, according to Luc.

Dr. Nguyen Duc Kien, vice chairman of the National Assembly's Economic Commission, told Dau Tu newspaper (Vietnam Investment Review) that interest rates would be cut in the near future.

Interest rates might be forced to drop, Kien said, adding that the main duties of the central bank in 2012 were to ensure the liquidity of the banking sector and keep the value of Vietnamese dong, and lower lending interest rates.

Meanwhile, Dau Tu revealed that many foreign banks, including ANZ and HSBC, warned that Viet Nam should not be premature in cutting interest rates or implementing loose monetary policies because it could distort the market, thus enabling inflation to return.

Sumit Dutta, CEO of HSBC Viet Nam, also suggested that the SBV continue pursuing tight monetary policy to constrain inflation in 2012.

Stocks rebound on both exchanges, values decrease

Stocks posting gains were four times higher than losers on the HCM City bourse this morning, pushing the benchmark VN-Index up 1.71 per cent to close today's session at 403.30 points.

Market volume increased 17 per cent over yesterday to 40.8 million shares but value of trades dropped 17 per cent, totalling VND547.7 billion (US$26.1 million).

Blue chips surged with many shares included in the VN30 hitting ceiling prices, including that of insurer Bao Viet (BVH), PetroVietnam Finance (PVF), seafood processor Hung Vuong (HVG), Ocean Group (OGC), Becamex Infrastructure Development (IJC) and Tan Tao Investment and Industry (ITA).

Only property developer Vincom (VIC) and Phu Nhuan Jewelry (PNJ) closed down slightly, below 1 per cent each.

On the HCM Stock Exchange, the VN30 Index edged up 1.73 per cent to 451.22 points overall.

ITA was also the most active code with over 3 million shares changing hands.

On the Ha Noi Stock Exchange, the HNX-Index gained another 2 per cent to finish today at 61.79 points as advancers overwhelmed decliners by 205-55.

Both trading volume and value grew 14 per cent over yesterday, totalling nearly 37 million shares worth VND303.3 billion ($14.4 million).

VNDirect Securities (VND) shares saw the heaviest trades today with 4.6 million exchanged, soaring to the ceiling price of VND7,800.

State Bank allocates credit growth rates to banks

The State Bank of Viet Nam (SBV) officially announced on Monday the rates of credit growth allocated for commercial banks this year.

Under the Direction No 01 issued by the Governor of SBV Nguyen Van Binh, four credit institutions and bank groups are allocated credit growth rates from zero to 17 per cent this year.

Of this, commercial banks and credit institutions will be allocated growth based on the health of the organisation and their performance last year. Institutions will be classified into four groups based on SBV criteria, with well-performing lenders classed in group A and weaker lenders in group D.

Specifically, group A will be allocated the highest credit growth of 17 per cent for the year; group B, 15 per cent; group C, 8 per cent and group D, zero per cent.

After six months, the central bank will review such allocations and may adjust the growth rates to meet monetary policy goals.

The list of the four groups of banks and credit institutions has not been revealed yet.

Last year, the SBV issued a general rate of under 20 per cent for all banks.

Coffee exports to hit $3b in 2012
 
Coffee exports this year are likely to reach 1.2 million tonnes, earning the country a turnover of US$3 billion, the Ministry of Agriculture and Rural Development forecasts.

The exports would be equal to last year's quantity but increase by 10 per cent in quality, the ministry said.

The prediction was made amid the International Coffee Organisation's pessimistic information about the global coffee production in the 2011-12 crop, which was estimated at over 132.4 million bags, down by 1.3 per cent against the previous crop.

Meanwhile, slumps in international coffee prices have also influenced domestic prices. As of late January this year, coffee prices in the central highland province of Dak Lak decreased by 3.4 per cent compared to that of the beginning of this year, reaching only VND36,800 ($1.7) per kilo .

The country generated $350 million from exporting 170,000 tonnes of coffee in the first month of this year, marking a year-on-year decrease of 21 per cent in volume and 15 per cent in turnover.

Vietnamese coffee is exported to nearly 80 countries and territories, with the US, Germany and Belgium the largest importers.

In order to ensure the sustainable development of the coffee sector, the Viet Nam Coffee and Cocoa Association chairman Luong Van Tu said coffee growers and businesses should further unite in farming, processing and price setting.

Market forecasting and analysing of market information must be improved, he said.

Nguyen Van Hoa, deputy head of the agriculture ministry's Cultivation Department, said the coffee industry should reorganise production with a focus on improving quality, and investing more in processing to add more value to the bean.

The coffee sector in the coming years must replace old trees to avoid a sharp decrease in yield, he said.

In addition, coffee production companies should try to obtain global coffee certificates such as UTZ and Common Code for the Coffee Community to increase the value of Vietnamese coffee.

Hoa said Vicofa would hold more trade promotion activities to boost exports to China, ASEAN member countries and the Middle East.

Surplus sours mood for sugar producers
 
Viet Nam will have a sugar surplus for the first ever time this year, and is looking at ways to export the commodity.

Sugar output is expected to reach a record 1.43 million tonnes in the 2011-12 crop, 280,000 tonnes higher than last year, Do Thanh Liem, deputy chairman of the Viet Nam Sugar and Sugarcane Association, told a recent conference.

This amount, in addition to more than 100,000 tonnes stockpiled at sugar mills and 70,000 tonnes imported under Viet Nam's World Trade Organisation commitments, would lead to excess supply of 300,000 tonnes, he said.

It does not include sugar that is smuggled in, the association said, adding the volume of contraband is forecast to rise this year, putting even more pressure on the industry.

Liem said sugar producers face difficulties such as lack of funds to pay off their debts to sugarcane farmers and the high interest rates on bank loans.

Nguyen Thanh Long, the association's chairman, said though the producers have cut prices, sales remain poor.
 
To reduce stocks, the association has submitted a proposal to the Ministries of Agriculture and Rural Development and Industry and Trade to allow members to export 30,000 tonnes of sugar to Indonesia and Singapore and to sell overland to China, and adopt flexible import-export policies, he said.

It has also petitioned the Government to order banks to lend more to the sugar industry, he said.

Deputy Minister of Agriculture and Rural Development Diep Kinh Tan said his ministry would discuss solutions for the sugar industry's problems with the Ministry of Industry and Trade next month.

He suggested Government support in terms of funds and lending interest rates so that sugar mills can maintain stocks to stabilise the market.

His ministry would seek approval for export of 250,000 tonnes of sugar as petitioned by the association, Tan said, adding relevant agencies should prevent sugar smuggling into the country.

Global sugar prices continued to fall last week following an increase in supply and a fall in demand due to the European debt crisis.

The Gia Lai Sugarcane and Thermo Electricity Joint Stock Company this month will develop a new sugarcane raw material area of 1,500 ha with total investment capital of VND150 billion ($7.2 million), increasing the company's total area to 7,000 ha, despite of the current sugar surplus.

The company will grow the new variety K88-92 and Ku 00-158 instead of the current K84-200 and R579. The new seed may have other anti-disease properties. It has a high productivity of 100-140 tonnes per ha.

Vinachem proposes tax break

Viet Nam Chemicals Corp (Vinachem) has submitted a proposal to cut the import tax of nylon fibre from five to zero per cent.

Supplies of industrial cord fabric from local producers hasn't met demand, especially for automobile tyre production.

Vinachem has imported 5,000 tonnes of cord fabric, worth US$20 million per year.

Payless ShoeSource to open in VN

US footwear franchise Collective Brands has signed a franchising contract with the Central Marketing Group to open five Payless ShoeSource stores in Viet Nam

Under the agreement, Payless would provide products, marketing strategies and use of trademarks while the Central Marketing Group will be responsible for finding locations, building stores, training, recruiting and expanding markets.

Vinapaco uses cost reduction plan

The Viet Nam Paper Corp (Vinapaco) will apply a range of new methods to reduce production costs and increase business efficiency this year.

The corporation aims to control input prices, use more domestic materials, enhance supervision of wood production and expand its share in the domestic market.

Vinapaco has targeted revenue of VND7.772 trillion (US$370 million) for 2012, and profit of VND125 billion ($5.95 million).

Gov't urged to raise price of coal

The Viet Nam Coal and Mineral Industries Holding Corp Ltd (Vinacomin) plans to urge the Government to increase the price coal-fired power plants pay for coal, said Le Minh Chuan, Vinacomin's managing director.

Coal production costs were at about VND1 million (US$47.6) per tonne while selling prices to power plants are only VND600,000 per tonne ($28.5).

Chuan said it was difficult for Vinacomin to balance its capital for reinvestment with the current prices. Vinacomin has planned to export around 13.5 million tonnes of coal this year at an average price of $100 per tonne.

Tra fish exports reach 65,000 tonnes

Farms in the Cuu Long (Mekong) Delta region have exported an additional 15,000 tonnes of tra fish so far this year, bringing the total export volume to 65,000 tonnes worth US$195 million, according to the regional trade sector.

Provincial authorities in the Cuu Long Delta region plan to expand tra fish farms by 6,000ha, along with upgrading farm infrastructure to help producers meet international standards such as the Safe Quality Food (SQF) 1000 and (Global Good Agricultural Practices) GAP criteria. The moves aim to help the region reach an export target of 600,000 tonnes of tra fish this year.

Firms urged to use safe preservatives
 
The Plant Protection Department, under the Ministry of Agriculture and Rural Development, encouraged enterprises to import safe preservatives which can help improve the value of domestic farming products, said the department director, Nguyen Xuan Hong.

Plant hormones, organic acid and growth regulating substances were among eligible groups of preservatives, Hong said.

Viet Nam has yet to specify the use of any chemicals, safe or unsafe, for preserving farming products, especially for fruits and vegetables.

Meanwhile, the use of safe preservatives is popular in other countries, including mainland China, Taiwan, Thailand, the US, Australia and EU countries.

In Viet Nam, people usually dissolved vitamin B1 in water to keep flowers fresh for longer, which was harmless, Hong gave an example.

Similarly, salicylix acid not only functions as a plant hormone but also has the ability to ease aches and pains and reduce fevers. The medicinal properties, particularly fever relief, have been known since ancient times when they were used as anti-inflammatory drugs. The use of the acid is therefore good for fruit preservation and people's health.

Though Vietnamese enterprises still hesitate with importing preservatives for agricultural products, the move could help avoid the intrusion of substandard preservatives that harm people's health.

Lack of information and people's prejudices regarding preservatives were two major reasons for the enterprises' hesitation, Hong said, adding that people usually thought preserved fruits were not healthy.

Meanwhile, Hong said, poor post-harvest techniques, including preservation, reduced the value of Viet Nam's potential fruits for export, such as green dragon fruit, litchi and sweet mango.

For example, Viet Nam's litchi exported to China was likely to spoil five days later, but proper use of preservatives could keep it fresh for 10 days without damaging its quality or harming health.

Agriculture official Hong said that at present, there were over 1,200 chemical substances and compounds on the list of allowed plant protection substances dated 10 years ago, revealing its outdatedness.

"The department is compiling a draft for managing plant protection chemicals to replace the current one," Hong said.

"The new circular is expected to create a better legal framework for facilitating enterprises importing quality plant protection chemicals, as well as curb the intrusion of the substandard ones into domestic market," he said.

New approach needed to address flooding: WB

Urban flooding has become an increasingly serious development challenge for fast growing low-and-middle-income countries in East Asia, including Viet Nam, according to a new World Bank guidebook released yesterday.

As developing countries transformed into largely urban societies, the concentration of people and assets has made urban flooding even more costly and difficult to manage, it said.

This is why there is an urgent need for integrated flood risk management related to urban planning and governance.

The guidebook, entitled "Cities and Flooding: A Guide to Integrated Urban Flood Risk Management for the 21st Century", provides forward-looking operational guidance on how to manage the risk of floods in a transforming urban environment and changeable climate.

"Urban expansion often creates poorer neighbourhoods which lack adequate infrastructure and services, making them more vulnerable to floods. The poor are hit hardest, especially women and children,".said World Bank Vice President for East Asia and the Pacific Region Pamela Cox, who led the launch of the book via cross-country videoconference from Tokyo yesterday.

"But rapid urbanisation also means we have the opportunity to do things right the first time, so cities and towns can support sustainable development, saving lives and money," she said.

Abhas Jha, lead author of the guidebook and urban specialist for Disaster Risk Management, said that recent large-scale disasters such as the earthquake and tsunami in Japan and the floods in Thailand and Australia emphasised the need for a new approach to disaster risk management and resilience.

"We need to design systems that recognise the complex and uncertain nature of flood risk management and its impacts. Design should be comprehensive, flexible and iterative to avoid an over-reliance on any one given solution which may not be enough to counter the dynamic nature of risk," he said.

According to the guidebook, the most effective way to manage flood risk is to take an integrated approach that combines both structural and non-structural measures.

This includes building drainage channels and flood-ways, incorporating "urban greening" such as wetlands and environmental buffers, creating flood warning systems as well as land use planning for flood avoidance.

Speaking of mapping risk and vulnerability, the Washington-based lender has already worked with partners to support meteorological services in the Lower Mekong Basin. This will assist cities in Viet Nam and Indonesia to develop a medium term resilience plan that takes into account the uncertainties and risks from natural hazards.

While floods are the most frequent among all natural disasters, causing widespread devastation, economic damage and casualties, the East Asia and Pacific region is particularly vulnerable.

The number of floods in Asia amounted to around 40 per cent of the total worldwide over the past 30 years.

Forest closed to public due to high risk of fire

The U Minh Ha forest in southernmost Ca Mau Province has been temporarily closed to visitors and forestry workers as hot weather has increased the risk of forest fires, Nguyen Van Dau, deputy director of the U Minh Ha National Park said.

Only visitors with licences issued by the local forest management board are allowed to visit the forest, which is scheduled to re-open in the rainy season.

The provincial People's Committee requires local rangers to maintain 24-hour duty shifts to detect and prevent any forest fires.

Vinatexmart opens new market, fashion store

Vinatex Fashion, the owner of the Vinatexmart retail chain under Vietnam National Garment and Textile Group (Vinatex), on Saturday opened its first market in Binh Duong Province and a new fashion store in HCMC.

The new market is located at My Phuoc Town in the southern province’s Ben Cat District. The My Phuoc 2 market covering 2,000 square meters sells seafood, meats, flowers, fruits, consumers’ goods, electrical goods, clothes, and miscellaneous goods. The company has plans to open a supermarket at the market.

On the same day, the company also opened its new fashion store at 440 No Trang Long Street in HCMC’s Binh Thanh District. The company has invested over VND5 billion in the Vinatex Binh Minh store, which stocks more than 10,000 items with 99 per cent supplied by local companies.

The market and new store is part of Vinatex Fashion’s strategy to develop its supermarket chain. The company recently announced a VND370 billion plan to set up over 30 new stores this year.

Deputy director Tran Thanh Nhan said that among these outlets, there would be 20 large-scale supermarkets while the rest would be small shops and stores selling fashion products.

In addition to big cities such as Hanoi and HCMC, Vinatexmart will shift investments to populated provinces, Nhan said. The firm aims to expand its business network nationwide, targeting 200 stores by 2015 compared to the current number of 65 in 26 provinces.

Vinatexmart last year saw its revenue rise by nearly 30 per cent and targets an even faster growth rate of 35 per cent this year, with the garment sector accounting for 45 per cent of total revenue.

As a subsidiary of Vinatex, the core business of the Vinatexmart chain is fashion products. The chain sells products of over 300 garment firms among a total of 1,050 suppliers of Vinatexmart.

First petrochemical complex to be built in Vietnam  

SCG Chemicals of the Siam Cement Group from Thailand, Qatar Petroleum International, Vietnam Oil and Gas Group and Vietnam National Chemical Group have signed a joint venture agreement to build a petrochemical complex in Vietnam at a cost of US$4.5 billion.
 
According to the agreement, SCG Chemicals will pick up 28 per cent stake in the project and Thailand’s Plastic and Chemicals Group will hold 18 per cent.

Qatar Petroleum International will supply feedstock for the complex, which will be located on Long Son Island in southern Vietnam in Ba Ria-Vung Tau Province.

The joint venture will also develop supporting infrastructure such as a port, storage facilities and a power station.

The complex will be Vietnam's first fully integrated petrochemical project and is expected to begin operations within the next four years.

Thailand’s Plastic and Chemicals Group is a leading manufacturer and distributor of polyvinyl chloride polymer in Southeast Asia. The firm plans to raise its annual production capacity of PVC in Vietnam to 200,000 tonnes from its current 110,000 tonnes, within the next five years.
 
SCG Chemicals, the third largest industrial group in Thailand, started operations in Vietnam in 1990 and has currently four representative offices and seven subsidiaries operating in petrochemical, paper and building materials.

Vietnam borrows US$730 million to upgrade national power grid  

Asian Development Bank has signed an agreement to provide the first loan installment of nearly US$121 million, of a total loan of $730 million to Vietnam, for upgrading its national power grid.

The project aims to upgrade the national power grid to improve power supply for daily domestic consumption and for manufacturing units.

The first loan installment will be disbursed over a period of three years, starting in 2012. The Ministry of Industry and Trade will be the governing body, Vietnam Electricity will be in charge of coordinating and supervising, and the National Power Transmission Corporation will be the investor.

The loan amount will be spent on upgrading nearly 648 kilometres of the main 500KV power line, and more than 100 kilometres of 220KV power line linked to sub-projects.

Vietnam Coffee Export Council to charge export fee  
 
The Vietnam Coffee Export Insurance Fund Management Council under the Vietnam Coffee and Cocoa Association has announced that it will charge export coffee fees of US$2 per tonne effective from October 1.

The fee amount will be invested back into the industry to be distributed proportionally to the different sectors, with 50 per cent going for replanting, 30 per cent for temporary reserve, 10 per cent for quality improvement, and 10 per cent for brand and trade promotion.

The coffee insurance fund was established with the purpose of boosting and improving production, processing and coffee quality; besides mitigating risk in coffee exports, supporting trade promotion activities and market information. In particular, most of the money from the fees fund will be used to increase more varieties of coffee and for better processing methods.

Project takes off to expand Phu Yen airport

A project to expand Tuy Hoa Airport in the central province of Phu Yen was officially launched during a ceremony held by the Ministry of Transport on February 12.

The project, worth VND353 billion (more than USD16.8 million), will include construction of a runway and landing area as well as a new passenger terminal.

Aiming to raise the airport’s capacity to be able to handle 300 passengers an hour during peak periods, the project is scheduled to be completed by September 2 next year.

Ongoing work is also expected to raised the airport’s capacity to be able to handle more than 850,000 passengers annually by 2020.

The airport’s terminal, parking lots, roads and other facilities were designed following the International Civil Aviation Organisation’s standards.

The project is implemented by the Airport Construction Company under the Ministry of Defence.

The 678-ha Tuy Hoa Airport was built by the US Army in the 1960s during the American War.

Local firm joins school to train German-speaking tour guides

Indochina Services Travel Group in coordination with the HCMC University of Social Sciences and Humanities (USSH) will launch an international tour guide course majoring in the German language in early April.

This is the first time a local tour operator has joined forces with a university to meet the rising need for German-speaking tour guides in the locality.

The travel agency’s director Ung Phuong Dung said that trainees will study and join internship for an eight-month long period. The course consists of German proficiency improvement, knowledge of tourism, geology and history among others, she stated.

The course is open to those wishing to become tour guides, including graduated students that can speak German or students majoring in the German language and being about to graduate. Every course will enroll only 25 students or below and the business will recruit ten trainees of the first course as official tour guides.

“Over years, we and other firms have faced the severe shortage of German-speaking tour guides, so we have decided to cooperate with USSH to organize this course,” Dung explained.

The travel agency specializing in the German market annually receives about 15,000 German visitors but finds it difficult to seek tour guides, like what the city’s tourism industry has confronted with so far.

Most German-speaking tour guides are those who have returned from Germany as guest workers. These workers already obtained language certificates but lack of university degrees, meaning they are unable to get the international tour guide card as required as per the law.
 
Plastics enterprises frustrated over environment taxes

The Vietnam Plastic Association (VPA) has sent petitions to relevant authorities, calling for halting or delaying the application of the environment tax on plastic bags owing to ambiguous regulations, said chairman Le Quang Doanh.

The chairman in a press briefing held last Friday cited feedbacks and outcries of industry players relating to the Environment Tax Law applied on plastic bags effective from January 1.

According to Doanh, enterprises, relevant authorities and consumers are still confused over unclear guidance documents though the law has taken effect for over one month.

Many companies still do not know whether their products are tax-exempt or not, although the law provides that environment-friendly plastic products are tax-exempt.

VPA’s vice chairman Pham Trung Cang, said from the beginning his association’s ideas contributing to the draft law had been ignored.

“The biggest problem is that manufacturers are all puzzled as the Ministry of Finance has yet to clarify which products will be levied with taxes and how they will be taxed,” pointed out Cang.

The new law, which slaps an absolute tax sum of either VND30,000 or VND40,000 on each kilo of plastic bags or plastic packaging products, has pushed local companies into extreme difficulties, or even to the verge of bankruptcy.

“Tax collection has pushed up input costs and prices and this has dampened local producers’ competitiveness compared to foreign ones,” Cang said.

Cang noted a large number of foreign buyers having imported products from Vietnam had shifted to other neighboring exporters for lower prices, meaning the local plastic sector has been losing its large customers.

“If the environment tax aims at the plastic industry without any appropriate road map, it will deliver a deadly blow to industry players mired in the troubles,” Cang warned. Local firms will suffer a huge loss which can eliminate the whole plastic industry’s development, he added.

Ho Duc Lam, vice chairman of VPA, stated that his association since early had reviewed how the new law affected corporate payers, especially small and medium-sized firms.

“VPA will continue sending petitions to the Government and related agencies and ministries to ask for a conversation with plastic producers to find out the best solution for the issue,” Lam asserted.

The local plastic sector has about 2,200 members creating 200,000 jobs for laborers. The whole sector last year earned US$7.9 billion in revenue, with export value recorded at some US$1.3 billion.

The nation’s top ten importers are Japan, the U.S., Germany, the Netherlands, Cambodia, Britain, Indonesia, the Philippines, Malaysia and Thailand.