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 HCM City’s foreign-currency credits tumble; Vietnam eyes labour cooperation with Middle East, North Africa; BIDV receives Asia Risk award; Mekong Delta looks towards green economy

HCM City’s foreign-currency credits tumble

Banks based in HCMC were estimated to offer foreign-currency credits with the total value equivalent to VND152 trillion as of the end of October, a 19.3% contraction compared to the end of 2012.

Meanwhile, foreign-currency mobilization of local banks dropped just a slight 0.39% to over VND176 trillion, according to a report of the central bank’s HCMC branch.

Due to the strong decline of foreign-currency credits, the city reported low credit growth rate during the period. Total outstanding loan was expected at VND902.5 trillion, rising 5.5% against late December, while the nation’s credit growth rate stood at 6.82% as of the end of September.

Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, predicted the city’s credit growth rate at only 10% this year versus the target of 12% established by the central bank.

Under Circular 37/2012/TT-NHNN that began effective early this year, credit institutions only provide short-term forex loans to companies having foreign currency incomes, except for importers in the oil and gas sector. The borrowers must have sufficient foreign currency from export to repay loans.

Meanwhile, importers, who have strong demands for forex loans, have to take out credits in dong and then buy foreign currencies to repay loans.

Local banks are offering U.S. dollar lending rates from 5-7% per annum. However, some banks have launched preferential programs to offer short-term dollar lending rates under 5% per annum.

HDBank has made US$30 million worth of loans available with terms from one to six months. The bank applies the lending rate of 3% per annum for terms from one to two months, 3.5% per annum for three months and 4.25% per annum for six months.

VietinBank is also giving short-term dollar lending rates from 3.5-5% per annum while lending rates at Eximbank, ACB and Sacombank are some 4-5.5% annually. However, to enjoy these rates, enterprises must use banking services of the lenders.

Meanwhile, foreign banks have offered enterprises dollar loans at the rates from 3-4% per annum without the need to use their services. These lenders have cheap foreign-currency supplies from their parent banks.

Enterprises now can take out short-term loans in dong at lending rates from 5-6% per annum but have to use the banks’ services.

In addition, as the Prime Minister during his trip to the U.S. in September announced the possible dong devaluation by 2% against the greenback in the rest of this year, many enterprises have been hesitant in taking out dollar loans for fear of forex risks.

Vietnam eyes labour cooperation with Middle East, North Africa

Vietnam’s export of labourers to the Middle East and North African countries has yet to meet the abundant potential of cooperation between the two sides.

The assessment was given during talks on labour cooperation between Vietnam and businesses from the Middle East and North Africa in Hanoi on November 5.

According to the Department of Overseas Labour Management under the Ministry of Labour, Invalids and Social Affairs, Vietnam and the Middle East and North Africa have enjoyed a decade of cooperation in the field.

About 30,000 Vietnamese employees are working in countries in the regions, especially in Saudi Arabia and the United Arab Emirates, Qatar, Libya and Algeria.

With the economic recovery, some countries are resuming their demands for imported labour, the department added.

The major difficulties facing Vietnamese labourers in the host countries are cultural shock and a language barrier, as well as competition from other markets such as India, Pakistan, Bangladesh, Sri Lanka , the Philippines and Thailand.

Palestine Ambassador to Vietnam Saadi Salama said although Vietnamese workers are hardworking and skilled, a contingent workforce has yet to meet the increasing requirements of the potential markets in the Middle East and North Africa.

He suggested that Vietnam should establish training centres that introduce culture and traditional practices of the host countries for labourers.

Sharing Salama’s opinion, Vietnamese Ambassador to Saudi Arabia Tran Nguyen Tuyen said it is crucial to outline a long-term cooperation strategy with the Middle East and North African markets with specific targets and steps.

The event was organised alongside the first economic cooperation forum between Vietnam and Middle East and North African partners.-

BIDV receives Asia Risk award

The Joint Stock Commercial Bank for Investment and Development of Vietnam ( BIDV) has recently been hounoured with the House of the Year award presented by the Hong Kong-based Asia Risk Magazine.

The bank won the prize in two straight years for its provision of derivative products and risk administration in Vietnam.

Launching a package of derivative products in 2006, the BIDV holds a big share in the domestic derivative product market and has become the first Vietnamese bank supplying them to help customers prevent risks due to changes in foreign exchange rates, interest rates and commodity prices that may affect their business activities.

House of the Year is an annual Asia Risk award hounouring the most prominent financial institutions in the Asia-Pacific region for their successful operations in the fields of risk management and trading in derivative products.-

First tea area meets VietGAP standard in Lao Cai

The northern province of Lao Cai saw the first tea area of about 1,000 ha reach VietGAP standards after a safe tea project was carried out in the locality in the 2011-2015 period.

The project, implemented in several local communes of Muong Khuong district such as Lung Vai, Ban Lau, Ban Xen and Thanh Binh, will be the basis for expanding the project across the province.

Presently, Lao Cai has over 4,000 ha of tea bushes, including 1,400 ha and 2,000 ha in Muong Khuong and Bao Thang districts, respectively.

The tea project has involved nearly 2,000 local households that have been trained to look after the tea according to VietGAP standards, as well as increasing farmer’s awareness of environmental protection and public health.

According to the tea growers, production under the VietGAP standard will increase productivity by 5-10 percent, equivalent to 2-2.5 tonnes of tea leaves a hectare per year, as well as increasing the price of tea leaves and raising growers’ incomes.

Furthermore, the VietGAP process also reduces the use of chemical pesticides as all local growers registered to use biological pesticides.

Quy Nhon port’s new wharf put into use

The Quy Nhon New Port Joint Stock Company has put into operation a 220-metre wharf, which can handle 37,500-tonne container ships.

The new facility, which was built next to the main wharf with a cost of 200 billion VND ($9.4 million), aims to ease the overloaded Quy Nhon port, said General Director of the Quy Nhon port Nguyen Huu Phuc on November 5.

The Quy Nhon port has received over 1,000 ships so far this year, including 529 from abroad with customs clearance for more than 5.7 million tonnes of goods, a year-on-year increase of 16.6 percent. It is expected to pass 6.3 million tonnes of cargo through customs at the end of this year .

Thanks to its geographical advantages, the Quy Nhon port complex is home to three seaports, including two trade ports, namely Quy Nhon Port and Quy Nhon New Port, and a military port.

These ports serve as a gateway connecting the East Sea to the Central Highlands, Laos, northern Cambodia and north-eastern Thailand.

As a result, the demand for goods via the port complex is expected to surge in the coming years, and Quy Nhon will be a key entrepôt in the region in the foreseeable future.-

Southern companies suggest tax, customs overhaul

Over 500 firms in the southern region gathered at a dialogue in Ho Chi Minh City on November 5 to recommend solutions to removing red tape in administrative procedures, taxation and customs.

A majority of them shared the view that tax refunds remain slow while guiding documents still contain misleading details.

They also dug into how property developers pay for land use and corporate income tax is cut at appropriate rates.

Chairman of the HCM City Real Estate Association Le Hoang Chau called on the Ministry of Finance (MoF) to make the 30 trillion VND (1.4 billion USD) support package available to more home buyers as scheduled because numerous property developers are on the brink of bankruptcy.

According to him, the property market is closely linked to other economic sectors and its recovery will be helpful for them.

Referring to customs, representatives from over 1,000 enterprises in industry lauded the launch of e-customs that have helped facilitate exports-imports. However, they noted that it is necessary to upgrade the system so that more data will be processed.

Deputy Finance Minister Do Hoang Anh Tuan and tax and customs officials cleared up a number of queries. They also vowed to consider feasible suggestions for supplements to taxation policies in the future.

The event was a joint collaboration between the MoF and the Vietnam Chamber of Commerce and Industry

Seafood exports create big profits for Bac Lieu

The southern province of Bac Lieu earned 294 million USD from seafood exports in the first 10 months of this year, a year-on-year rise of eight percent, and equivalent to 83 percent of its planned figure.

Over 38,200 tonnes of seafood were processed for the province’s exports in the reviewed period, a year-on-year increase of 33 percent.

Shrimp is still a key export product in the list, fetching more than 286 million USD from the export of 37,000 tonnes, up 17 percent from the same period last year.

In the January-November period, the province’s shrimp production achieved 65,100 tonnes, up 29 percent from last year’s figure.

The hike results from Bac Lieu’s flexible management and farmers’ efforts to overcome difficulties.

The provincial authorities worked out technical measures to help shrimp breeders treat polluted water in shrimp hatching areas and cope with aquatic diseases.

Information related to changes in the market was also regularly conveyed to 33 seafood processing facilities in the province, helping them take the initiative in their production.

Mekong Delta looks towards green economy

The Mekong Delta will hold an economic cooperation forum from November 25-28, which will focus on green economy.

The information was released during a November 5 meeting between leaders of the steering committee and the organisation board of the event.

The Mekong Delta Economic Cooperation Forum (MDEC-Vinh Long 2013), the seventh of its kind, is a joint effort between the Steering Committee for the Southwestern Region, ministries, localities and sectors.

A series of activities will be organised during the event, including a trade fair and an investment promotion conference chaired by Deputy Prime Minister Vu Van Ninh. Investment licences will be granted to a number of investors on the occasion of the forum.

The highlight of the event is an exhibition themed “Green environment week – Green technology – Sustainable economic development of green economy” with over 500 booths.

According to Nguyen Phong Quang, deputy head of the MDEC-Vinh Long 2013’s steering committee, the Mekong Delta is a promising region with many advantages in socio-economic development and strengths in food, fruit and seafood production.

The event, which will see the participation of nine regional cities and provinces, is a chance for the region to introduce its potential and strengths, increasing connectivity among regional localities and between them and Ho Chi Minh City and other regions.

It will create an opportunity for them to speak on policies and initiatives for the making full use of the region’s advantages, he added.

Preparations for the event have been chiefly completed. Investors have registered to fund 159 projects in the region with a total capital of 4 trillion VND (188 million USD), while capital raised for social welfare activities in the Mekong Delta region has hit nearly 600 billion VND (28.2 million USD).

Mekong economic hub set to contribute 13.3 percent to GDP

The Mekong Delta key economic zone will focus on industrial, trade and agricultural development with priority given to the industrial sector in a bid to fulfil the set target of contributing 13.3 percent to the country’s gross domestic product (GDP) by 2020.

To realise its industrial development programme, the zone - including An Giang, Kien Giang and Ca Mau provinces and Can Tho city - has rearranged State-owned businesses operating in the field of aquatic product processing towards equitisation.

The businesses have also received support to upgrade their equipment and technologies, raise processing capacity and expand operations.

The zone’s fishery exports have expanded further to such markets as Asia, Europe and North America, helping obtain an export turn-over growth rate of 13.5 percent to over 20 trillion VND (940 million USD).

Apart from building canned food factories, the zone has also upgraded and built more rice processing facilities and warehouses in An Giang, Kien Giang and Can Tho.

On the plane of commercial development, the zone has extracted its advantages and joined hands with other regions across the country to raise its annual trade growth by 17.1 percent.

Thanks to investment in infrastructure, the zone now boasts 23 wholesale markets, 21 border markets, 37 commercial centres, 52 supermarkets, four exhibition centres and four logistics centres.

Phu Quoc Island in Kien Giang province is set to become an international tourism and trade centre while Can Tho city is expected to serve as a commercial and service hub for the entire region.

Rice and aquatic products have been identified as strategic with annual outputs reaching eight million tonnes and four million tonnes respectively.

Accordingly, high-tech application areas have been built in Can Tho city in a bid to raise the zone’s annual agricultural growth rate to 5.2 percent.

The zone has also set up large-scale paddy fields in Kien Giang and An Giang provinces and developed the fishery sector as a spearhead industry.

Under a project ratified by the Government in 2009, the Mekong Delta key economic zone’s annual GDP growth rate is set to increase 1.25 times in comparison with the national figure during the 2011-2020 period.

Piaggio’s new model hoped to stun Vietnamese bikers

A new model of the Italian Piaggio motorbike, launched in Milan on November 4, is expected to become a phenomenon in Vietnam.

Vespa Primavera (Spring)’s vintage design is loved by Vespa fans around the world for its moderate size and suitability for couples.

Piaggio General Director in Vietnam Costantino Sambuy said that Vietnam is among the firm’s best markets with high growth every year.

Vespa motorbikes are not only revered for their fashionable style but have long been a ‘cultural ambassador’ linking Italy with the rest of the world, he added.

In the first nine months of 2013, Piaggio sold 146,000 vehicles across the world, up 21.3 percent over the same period last year.

The company penetrated Southeast Asia by setting up its first factory in the northern province of Vinh Phuc in 2009. It then built another one manufacturing motor engines three years later.

The move demonstrates the growing demand of Vietnamese customers for the high and medium level motorbikes.

Sales from the Asian market are expected to account for half of Piaggio’s global turnover of 2 billion USD.

Foreign-funded projects carried out in Thua Thien-Hue

The Nordic Assistance to Vietnam has provided over 572 million VND (26,884 USD) to help central Thua Thien-Hue province implement a project on climate change adaption.

The project is carried out until the end of 2013 in Nam Dong and Phong Dien districts and Hue city. It is to help needy people who are vulnerable to climate change access renewable energy and sustainable livelihood strategies.

The project includes training courses on mitigating climate change risks and raising public awareness of renewable energy and building 20 biogas systems to local people in coastal communes and providing solar water heating systems for five kindergartens.

Additionally, the project also helps them develop a model on organic fertilizer production, while providing training to improve community capacity on dealing with livelihood-related risks caused by climate change and assisting them in building climate change resilience models which are based on the beneficiaries’ proposals.

Besides, the locality has also received 550 million VND (25,850 USD) from the Bridge Asia Japan (BAJ) to carry out a project on community-based development in Thuy Xuan ward, Hue city.

The project aims to improve income of local people by developing available tourism products in the locality, thus contributing to restoring and preserving traditional cultural values in Hue city.

Pursuing financial arrangements for power grid projects

According to the electricity master plan for the 2011-2020 period, 130 500kV power grid projects and 551 220kV ones will be upgraded and built with a total investment capital of more than 210 trillion VND (10 billion USD). Report by the Vietnam Economic News.

In 2013 alone, 50 new projects will be launched with a total investment capital of more than 12 trillion VND. This is considered a necessary solution to ensure sufficient electricity supplies for Vietnam’s socioeconomic development, especially in the southern region in the coming years.

Chairman of Vietnam National Power Transmission Corporation (EVN NPT) Dang Phan Tuong said among power grid projects to be carried out in 2013, many projects have special importance in ensuring the sufficient electricity supplies for the southern region such as the 220kV Dak Nong - Phuoc Long - Binh Long; 500kV Pleiku - My Phuoc - Cau Bong; Song May - Tan Dinh, Vinh Tan - Song May and Phu My - Song May transmission lines.

By the end of 2013, EVN NPT will start the construction of the 500kV Duyen Hai - Tra Vinh project and the 500kV transformer station of Long Phu Thermal Power Plant and Thien Luong Thermal Complex approved in the master plan.

More than half of the planned projects are funded by international organisations like Asian Development Bank (ADB), the KfW Banking Group, NEXI and domestic commercial banks.

However, accessing capital has faced difficulties due to the too high capital demands and the too low power transmission costs (accounting for only 6-7 percent of the electricity prices). For this reason, revenue could only offset production costs.

In addition, EVN NPT’s debt-equity capital ratio has increased by 4.4 times, resulting in more difficulties in financial arrangements. This is also a big problem mentioned by Deputy Prime Minister Hoang Trung Hai when he instructed solutions to remove difficulties and accelerate power projects in the coming time. He assigned the domestic commercial banks make financial arrangements guaranteed by the government.

In Announcement 344/TB-VPCP, Deputy PM Hai also assigned the Ministry of Industry and Trade to review and adjust the 2013 electricity transmission costs and work out a roadmap to increase these costs by 2015 and in the 2016-2020 period.

The rise in electricity transmission costs must suit the roadmap to increase electricity retail prices which could ensure the corporation’s finances so that it could arrange capital resources to accelerate the construction of power transmission networks, meeting the n-1 standard.

Tuong of the EVN NPT also said the corporation has also been simultaneously implementing many power projects in 2013 worth over VND12 trillion and in 2014, 2015 of 17 trillion VND per year.

At present, EVN NPT has signed credit contracts to make financial arrangements for 42 out of the 50 projects launched in 2013 and eight remaining projects are expected to be arranged by the end of this year. It has also planned to raise long-term capital resources for those projects approved in the master plan and strive to diversify sources of capital.

“To ensure sufficient financial arrangements for investment in power projects, EVN NPT is intending to speed up progress of the projects, seek for solutions to reduce costs, and diversify and take full advantage of the preferential sources of capital,” Tuong said.

How tax policies help attract more investment to Vietnam

Up to now, there have been 15,100 FDI projects in Vietnam, with a total registered capital of 220 billion USD, of which 50 percent (107 billion USD) has been disbursed. This success is significantly attributed to tax incentives. The Vietnam Business Forum reports.

At the annual meeting of the Asia-Oceania Tax Consultants' Association taking place on October 17-18, 2013 in Hanoi, the speakers agreed with the view that the tax policies for attracting more investment has become one of the priorities of the policy makers.

"The favourable tax regime applied in recent years has turned Vietnam into an attractive investment destination. In the context of the declining world economic growth from 2008, Vietnam remains its position as an attractive investment destination, promoting the economic growth.

"In recent years, Japan, Republic of Korea, and Singapore are the top countries with largest investment in Vietnam," said Nguyen Van Nam, Representative from the Vietnam Tax Consultants’ Association (VTCA) said.

Specifically, Vietnam's National Assembly has passed a law amending and supplementing a number of articles of the Law on Corporate Tax (in effect from January 1, 2014), of which more regulations are proposed to attract and encourage investment.

Accordingly, the corporate tax will be reduced; the ordinary tax rate will be 22 percent from January 1, 2014 and 20 percent from January 1, 2016.

Besides, there is extension of tax incentives and adjustment of the level of tax reduction and tax incentives, especially for agriculture, farming, rural development, socialisation, non-profit purposes, the areas with tough socio-economy and the areas with priorities for investment. The new regulations also provide tax incentives for investment expansion and industrial zones. The amendment of the tax policies will target different groups to meet the actual demands and be consistent with the Investment Law.

Besides, the Government approved a strategy to reform the tax system in the 2011-2020 with the aims of simplifying the tax administrative procedures, facilitating the taxpayer, standardising the tax administration on the basis of the application of information technology to ensure the consistency, making punishment against the acts of transfer pricing, tax fraud and encouraging the use of the tax services through tax agents.

One of the conference topics raising a lot of concerns is the transfer pricing and the mechanism for the advance pricing agreement (APA).

According to Nguyen Thi Minh, Deputy Minister of Finance, the application of the APA is beneficial for businesses, tax authorities and the country. Vietnam always encourages and creates favorable conditions for foreign investors to negotiate and sign an agreement based on the principles of determining APA. Currently, Vietnam has signed agreements with 65 countries and territories, of which 58 agreements are in effect to avoid the double taxation and prevent the tax evasion.

In regards to the application of the APA, at the meeting, international and domestic speakers also shared that because of the differences on the conditions of each country and territory, investment policies, different tax policies, the application of the APA needs the consensus.

According to Marcellus Wong, Senior Adviser of PricewaterhouseCoopers in Hong Kong, China, the application of the APA is very complicated and controversial, which requires a large team of consultants and takes 1-3 years or even 5 years to help the countries to reach the agreement of implementing the APA. Some basic forms of the APA agreements have been undertaken among the taxpayers, the local tax collection offices (the unilateral APA) and the tax authorities in other countries (bilateral agreements and multilateral APA). To apply the APA, each country should build their own system based on its legal system, geography, politics and economics. However, the system should comply with the principles of Organization for Economic Co-operation and Development (OECD) and the recommendations of other countries.

Mie Seyama, on behalf of the Japan International Cooperation Agency (JICA), shared that Japan has adopted the APA since as early as 1986 based on the handbook of the market valuation for the multinational companies and tax authorities (1985). However, the application of the APA always faces challenges in determining the market price. The number of cases relating to examination of the taxation on market pricing and implementation of the APA in Japan remain very high. It is estimated there are over 100 cases per year. The forming of the APA and the agreements of the APA among the countries should focus onthe general rules of the Treaty on the tax of the OECD, issued in 2007.

According to Huong Vu, representative from the Vietnam Tax Consultants’ Association, Vietnam is strengthening the legal ability and learning the international experiences in forming the APA consistent with the characteristics of the economy and the current business operations of Vietnamese businesses.

The APA is expectedly applied on 3 levels. The simplified APA includes least procedures, which is least time consuming and expensive to the taxpayers. Second, the standard APA is aimed at the entities with least complicated transactions. Third, the APA is offered for more complex transactions, linking to the international transactions.

Manufacturing maintains growth momentum

HSBC Vietnam said om Monday the country’s Purchasing Managers’ Index (PMI) in October remained at 51.5, which is unchanged compared to September and a signal showing that manufacturing is maintaining its growth momentum.

“The continued expansion signaled by the PMI shows that activity is indeed stabilizing in the country. We expect economic activity to continue to be bolstered by strong performance of exports, supported by steady FDI inflows,” said Trinh Nguyen, Asia Economist at HSBC.

She added that this would help Vietnam get through a tough deleveraging phase, with foreign inflows counterbalancing sluggish domestic demand.

According to HSBC, the manufacturing industry’s production growth bounced back in October with a high number of new orders resulting from an increasing demand. The number of laborers of surveyed manufacturing enterprises continued to rise but at a slower rate.

Overall operating conditions in October were improved after four months of deterioration. Although growth was modest, this is still the first growth recorded since April.

Production inched up following an increase in the number of new orders. Latest data showed that the volume of new orders rose for the second month in a row with the fastest growth rate in the survey history.

Besides, faced with a continuous increase in input costs, Vietnamese manufacturers have raised their own charges for the first time since March.

HSBC expects low inflation at year-end

SBC, in its Vietnam macro economics report released om Monday, predicted that weak domestic demand and benign oil prices would keep inflation low until year-end, staying at around 6.6%.

The bank said that one of the risks to inflation in the coming months will likely come from rising food prices, which saw a sharp uptick in October to 4.1% year-on-year versus 3.5% in September. “We expect a gradual rise in food inflation, especially towards year-end and the Tet festival,” it said.

“However, inflationary pressures will likely be contained, thanks to low global commodity prices. Our base line scenario is for crude prices to stay flat and only accelerate towards the end of the first quarter of 2014,” the bank predicted.

According to the report, the sluggish domestic demand also keeps inflationary pressures in check. While the export sector is feeling a boost from external demand, the domestic sector is still affected by a frozen banking system, which dampens appetite for consumption.

Since the start of the year, credit growth has expanded at a mere 6.6% year-on-year, which suggests that Vietnam’s non-performing loan problem remains largely unresolved despite efforts by the Vietnam Asset Management Company to purchase bad debts from banks. This in turn has kept lending weak and dampened private sector sentiment.

Despite the large drag from the deleveraging process, the economy is performing relatively well. The macroeconomic situation is largely more stable, with the currency, inflation and external balances more sustainable. Vietnam is spending within its means and accumulating foreign exchange reserves in the process.

The country’s strong foreign direct investment inflows provide a sticky capital base, giving the Government time to press forward with strategies to resolve the build-up of bad debts.

However, HSBC said that the Government will also need to work on key issues such as the role of State-owned enterprises in the economy, as well as soft and hard infrastructure. Promoting linkages of domestic firms to foreign enterprises is also important, as labor competitiveness does not last forever and wanes as wages rise.

Presenting the Government’s socioeconomic report at the National Assembly session on October 21, Prime Minister Nguyen Tan Dung said that consumer price index (CPI) dropped from 18.13% in 2011 to 6.81% in 2012 and 4.63% between January and September this year. The nation’s CPI is expected at around 7% this year.

Enterprises reserved about business prospects

Around half of 122 enterprises surveyed by the credit rating firm World Vest Base Vietnam (WVB) are still reserved about the business prospects, although business conditions have improved compared to one year ago.

The survey conducted between late September and mid-October is meant to build the Business Confidence Index for the third quarter, and findings were released in Hanoi om Monday. The respondents were from 11 different business sectors, and half of them represented small- and medium-sized enterprises.

Half of the respondents said the overall business environment improved compared to one year ago, while 35% said it was unchanged, and 15% said conditions worsened.

Some 63% of the respondents predicted the business outlook would be better, while only 2% were concerned about the future. Some 57% of polled enterprises said they would maintain their current workforce, while 36% said they would recruit more, and 7% said they would lay off workers in the next 12 months.

Meanwhile, regarding fixed assets, 56% said they would stay put, while 38% planned to acquire more assets, and 6% they would cut costs in the next one year.

The WVB report indicates that enterprises still find access to bank loans restricted due to the lack of assets for collateral though interest rates have been slashed. In addition, difficulties in finding outlet for products coupled with concern over the return of high inflation have deterred enterprises from expanding operations.

That is the reason why up to 50% of surveyed enterprises do not want to recruit more laborers or expand production, while 7% planned to lay off workers and 6% would scale down production to cut costs.

Despite concerns about uncertainties, 54% of the enterprises estimated higher revenues, while 39% expected revenues to be unchanged, and only 7% worried that revenues would fall in the next 12 months.

Similarly, some 55% of the respondents were confident that profits would increase in the next 12 months, some 38% expected profits to stay unchanged, and only 7% worried about falling profits.

Explaining on the high ratio of nearly half of the respondents lacking confidence in higher revenues and profits in the next one year, WVB pointed to weak domestic demand, low credit absorption in the economy, and the slow efficiency of macroeconomic policies.

On account of data collected from the survey, WVB gives the Business Confidence Index for the third quarter at 116 points, a mild decrease from the second quarter’s index of 118 points.

Wood exporters to face stricter requirements in EU, U.S.

Firms exporting woodwork products to the European Union (EU) and the U.S. will have to follow a system of strict measures and processes required by importing countries to reduce the risk of illegal wood purchase.

Tim Dawson, the European Forest Institute’s FLEGT Facilitator in Vietnam, said at a seminar on legality of wood held last week in HCMC that exporters had to provide their partners with information including origin, type, volume, details about suppliers and compliance of laws.

Based on such information, authorities of importing countries will analyze and evaluate risks to ensure imported wood has legal origins.

According to Chen Hin Keong, Global Forest Trade Program Leader at TRAFFIC, if enterprises have forest certifications but fail to clarify origins of exported wood, the legality of wood is not ensured.

It is highly likely that cheap wood materials are illegal. If committing violations, enterprises may receive maximum fines of US$250,000 or US$500,000, he noted.

Nguyen Ton Quyen, general secretary of the Vietnam Timber and Forest Product Association, said that enterprises should keep in mind regulations of the U.S. and EU markets to avoid risks. Vietnam’s woodwork products have now been exported to over 120 countries.

The U.S., EU and Japan currently account for over 80% of Vietnam’s wood exports with bedroom and kitchen furniture the major products. The U.S. is the biggest market and almost three times bigger than Japan in second place.

According to the Ministry of Agriculture and Rural Development, the total export turnover of wood and wood products amounted to over US$4.35 billion in the January-October period, up 14.8% year-on-year. Meanwhile, the import turnover increased by 4.8% to US$1.21 billion, with the volumes imported from Laos, the U.S. and China accounting for 22.8%, 14.7% and 12.9% respectively.

Condo division not a wise solution: experts

Some experts have cast doubt on the success of real estate enterprises’ reduction of condo sizes to clear stockpiles, saying that the solution may only help reduce financial burden of homebuyers while it still fails to drag down house prices.

The current Housing Law requires commercial apartments to be at least 45 square meters each. However, given the amended Housing Law the Ministry of Construction is fielding suggestions for, housing developers in Vietnam will get the green light to divide large apartments into smaller units for which they expect greater demand.

Some have raised concerns over huge supply of small-sized condos in the future given large apartment stockpiles in the country. According to the ministry, the nation saw a condo stockpile of around 27,800 units as of June, including nearly 6,200 units in Hanoi City and 12,600 units in HCMC.

Phan Thanh Mai, general secretary of the Vietnam Real Estate Association, said that apartments around the world are usually measured at 30 to 50 square meters each while a commercial condo in Vietnam is around 70 square meters. With limited finances, most customers cannot afford large apartments.

“In my opinion, investors should be allowed to choose condo sizes following market demands,” Mai said.

Pham Trung Ha, general director of Hoa Phat Land, said that if investors can decide condo sizes, the real estate market will see positive impacts.

This solution will help enterprises speed up sales and improve market liquidity. Hoa Phat Land also has plans to convert some projects into small-sized condos to reduce investment expenses.

According to the Ministry of Construction, investors registered to convert over 50 commercial projects into budget home projects as of August 31. Enterprises also sought approval to revise sizes of 6,000 commercial condos of 22 projects to turn out over 8,300 apartments.

However, many experts said that division of condos into smaller units will not help reduce prices. In contrast, condo prices may increase given this solution.

Tran Minh Tri, deputy director of Thu Do Trade and Investment Joint Stock Company, said that this solution will only support homebuyers. Meanwhile, enterprises cannot cut investment costs and have to spend more on re-building condo projects. Only firms building new projects can save construction expenses.

Some even said that this solution actually cannot help reduce sales prices per square meter although the total value of a condo has been lowered.

Nguyen Quoc Hung, director of a real estate trading center in Hanoi City’s My Dinh District, said building smaller apartment units would lead prices per unit to slide but the cost of each square meter built is not lower, or even higher than medium-sized apartments.

For instance, a condo measured at 53 square meters in Xa La is offered at around VND20-22 million per square meter, much higher than the per square meter price of a 70-square-meter unit.

Time-consuming procedure for getting social housing status

It has taken HCMC-based real estate firm Hoang Quan around eight months to complete the procedure for converting a commercial apartment project into a low-cost one to enjoy policy incentives.

With a decision of approval issued by the city government, Hoang Quan can now redesign the 1,060 apartment units in CC1 project in Binh Chanh District into 1,735 smaller units. The name of the project has been changed into HQC Plaza.

Half of the apartments will be sold to staff of the Ministry of Public Security and the remainder to those city dwellers eligible for buying social housing, according to Hoang Quan.

Hoang Quan is one of the first real estate firms which the Bank for Investment and Development of Vietnam (BIDV) has provided loans for under the Government’s VND30-trillion credit program designed to prop up the lackluster real estate sector.

BIDV has approved a VND540-billion loan for Hoang Quan to implement this project, on which work will start this November. The apartments are expected to be ready in the fourth quarter of 2015.

Hoang Quan sent the Ministry of Construction an application for seeking a social housing status for HQC Plaza on February 27 and after the ministry approved of this, the HCMC government issued a license for the firm on October 26 to go ahead with the revised project.

Also having the social housing status are Company 584’s project to build 418 units and the Hung Dien commercial and residential project in District 8 with 1,056 units to be converted into 3,916 smaller units. The two projects are forecast to be finished in the next two or three years.

The city is concerned that if more apartments are developed in inner-city areas, the effort to move people to outlying areas will fail and social and technical infrastructure will become insufficient to meet a spike in local population density. This explains why the city government is careful about it.

Techcombank wins Best Retail Bank Award

Techcombank will be honored with the Best Retail Bank Award at the ASEAN Banker Forum 2013, which will take place in HCMC on November 19.

Other lenders such as VietinBank, HDBank, Ocean Bank, TienPhong Bank and Citibank will also receive various awards at the event organized by the Vietnam Banks Association and International Data Group (IDG).

These banks have been recognized to apply technologies in competitiveness improvement and customer service. They have also obtained high ratios of successful payments, ensure information security and reported positive safety ratios.

The ASEAN Banker Forum 2013 will discuss development of the retail banking sector in 2013 and 2014. The organizing board expects to lure 450 bankers and specialists from Vietnam and ASEAN countries to the event this year.

Overseas remittance to HCMC keeps rising

Overseas remittance via HCMC-based banks was expected at US$3.7 billion between January and October, or over 90% of that in the entire 2012, said Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch.

In the Jan-Sep period, the city’s remittance hit nearly US$3.5 billion, much higher than earlier estimation of US$2.9 billion or 84% of the entire 2012’s figure.

This year’s remittance inflow will be higher than last year’s as remittance usually surges in the fourth quarter, when overseas Vietnamese send money to their relatives in the homeland before the Lunar New Year holiday. This channel makes up a high ratio while remittance generated by the labor export sector accounts for only 20%, Minh said.

Trinh Hoai Nam, deputy director of Dong A Remittance Company, said that remittance via the enterprise remained positive despite economic woes of many countries in the 10 months. The enterprise’s remittance increased 15% year-on-year and met 95% of this year’s target.

Therefore, Dong A may surpass this year’s target by 30% because remittance often jumps by 30-35% in final months of the year, Nam said.

Notably, this year’s overseas remittance has seen positive growth. Vietnamese communities in the U.S., Australia and Canada have obtained stable incomes, an important factor for remittance to flow strongly into Vietnam in final months of 2013 and early 2014, Nam added.

Sacombank Remittance Company said that remittance via the enterprise hit around US$1.2 billion between January and September, the biggest revenue among banks and firms providing remittance service.

According to an official of the Ministry of Labor, Invalids and Social Welfares, the ministry has no specific statistics on remittance sent from Vietnamese guest-workers overseas. However, reports from localities showed that the figure was around US$1.8-2 billion.

However, the official said that the real remittance inflow may be much higher as overseas Vietnamese still send money via unofficial channels or bring money home on their own.

This year, remittance sent from overseas workers may be equal to that in previous years.

Viet Capital Bank joins Visa

Vietnam’s Viet Capital Bank has become an official member of the Visa International Service Association, the local bank said in a statement.

To gain membership of Visa, Viet Capital Bank has to meet Visa’s requirements for legal and financial capacity, and the high standards for technology and security in providing modern banking services of international levels.

The Visa-Viet Capital Bank licensing ceremony was held at the local bank’s head office in HCMC last Friday.

Lorijon Bacchi, Visa country manager for Vietnam, Cambodia and Laos, said in the statement: “We are happy to welcome Viet Capital Bank join Visa. With Visa international payment network, fast transaction time processing and advanced security system, we want to cooperate with Viet Capital Bank to offer a real global service for the bank’s customers.”

With Visa membership, Viet Capital Bank can make use of Visa’s worldwide POS network to better service for its customers through international cards such as debit, prepaid and credit cards.

HCM City to listen to taxpayers

The HCMC Tax Department will organize a week of activities with the main aim to get feedback from taxpayers from November 11-17.

According to the HCMC Tax Department, tax offices of every district will have direct talks with taxpayers to listen to and respond to their tax-related problems. If questions are not answered during the week due to limited time, taxpayers will receive responses in document form one week after the event finishes.

In addition, opinions and questions of taxpayers can be sent to the HCMC Tax Department’s website with replies within 48 hours.

Taxpayers can also voice their opinions to newspapers like Sai Gon Giai Phong and Thanh Nien which will be dealt with by tax officers.

Besides, the HCMC Tax Department will have direct dialogue with readers of Tuoi Tre and Thanh Nien with detailed schedules to be announced soon. There will be at least three talks to popularize the ins and outs of personal income tax to students at HCMC’s universities of pedagogy, social sciences and humanities and economics.

In March, a similar event was held to handle taxpayers’ problems concerning personal income taxes.

Experts stress reasonable, not reckless, credit growth

Credit growth was low in the first ten months of the year and experts are warining that pushing it up only to accomplish the year end target is risky and imprudent.

According to a government press release, as of October 23, Vietnam’s credit growth stood at 6.48 per cent, far below the 12 per cent annual target set by the State Bank (SBV) under Direction 08 on July 18.

The entire banking sector would have to surge forward to gain the 5.5 per cent needed to meet the goal.

“Credit growth should not be a target, a number to be achieved at year end,” said Alan Pham, chief economist at VinaCapital.

Credit should grow according to the real capital needs of an economy. It is contingent on economic forces such as business conditions, consumer demand, and absorbtion capacity, he added.

Experts say low credit growth is resulting from lack of demand. Enterprises aren’t borrowing as they are producing less goods because consumers aren’t buying.

Economist Tran Du Lich said many enterprises were floundering because of weak purchasing power, surplus inventories, and mounting bad debts.

Also, the poor liquidity of the falling real estate market has made it difficult for banks to recoup bad debts.

Commercial banks need healthier enterprises to boost capital demand and help them meet their credit sales targets.

But Pham said that any attempt to bolster bank lending in the last two months to hit the annual target would do more damage than good due to policy lag time – it takes about 6 months to see the effects.

He said that economic growth and GDP performance was already pretty much determined for the year.

“Any attempt to increase credit now is already too late to affect growth this year and it may have inflationary consequences further down the road in 2-14,” Pham explained.

Economist Nguyen Tri Hieu also agreed it was not necessary to reach the 12 per cent credit growth target.

According to Pham, credit growth of 9-10 per cent this year is achievable and is on par with last year.Vietnam’s economy has entered a period of sub-par growth (5-5.5 per cent) due to inefficiencies such as slow banking, SOE and public investment reforms. The best solution to achive growth is pushing these reforms forward, he said.

HSBC economist Trinh Nguyen has forecast appropriate credit growth of 8 per cent for this year.



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