Vietnam’s inflation to drop: Standard Chartered

Vietnam’s inflation is expected to drop to 11.3 percent next year, according to Standard Chartered Bank’s latest report on the 2-year outlook for Vietnamese economic growth.

The bank said inflation in Vietnam had begun slowing down and was expected to fall to 19.7 percent next month while the average full-year figure for 2012 was 11.3 percent.

The bank said that the recently cooled global food prices plus the tightened monetary of the central bank would help combat the country’s inflation in the months to come.

“We expect that inflation rate will retreat to the single-digit rate at the end of the first quarter of next year,” the bank said.

But it said the tamed inflation was not enough for the government to loosen credit policies since there were other pressures facing the devaluation of the dong.

[The devaluation] and the restriction of credit growth would continue to challenge the country next year, the bank said, adding the situation would also be worsened by the global economic crisis and the volatile export markets.

Standard Chartered experts predicted that the dollar exchange rate next year would be VND20,600 a dollar, and 2012, VND22,000 a dollar.

The country’s GDP was foreseen to grow by 6.3 percent next year and 6.5 percent a year later, the bank said.

Vietnam seeks to revive stock markets, allows ETFs

Vietnam's government will allow exchange-traded funds and open-end funds to operate and seek to monitor indirect investment inflows in an attempt to support the sliding stock market, the Finance Ministry said.

The Vietnam Index has lost nearly a fifth of its value so far this year in the face of macroeconomic instability as the country battles one of the highest inflation rates in Asia, a slumping property market and a troublesome banking sector.

The ministry will issue guidelines on the operation of open-end funds by year-end and publish rules on property investment funds and voluntary retirement funds in early 2012 to attract more institutional investors and boost demand, it said in a statement.

The package of measures aism to "continue to stimulate the stock market for a stable development," it said.

The ministry will launch a programme to restructure the stock market next year and in 2013 and seek to manage the inflow of indirect investment with policies expected to take effect by the end of this year.

The statement did not elaborate on the measures for monitoring the inflows.

Exchange-traded funds for commodities could be available on the stock exchanges next year and corporate global depository receipts will be traded pending the government's consent, the statement said.

Other measures to boost Vietnam's stock markets are under way.

The Ho Chi Minh Stock Exchange, the country's main bourse, will extend trading hours into the afternoon from next February, a move than has been delayed for three years, the Vietnam Economic Times newspaper said on Wednesday.

In August the National Assembly approved a government proposal to reduce income tax on stock investors by 2012.

The Finance Ministry's statement said it plans to suggest the assembly continue the tax reduction and exemption to ease difficulties facing investors and businesses. It gave no new timeframe.

"In general, the package of measures by the State Securities Commission will likely have a positive impact on the stock market, which may help attract new foreign cash inflows given the country's macro fundamentals are stable," said Deputy Director Quach Manh Hao of Thang Long Securities Co.

The commission, the market watchdog, is run by the Finance Ministry.

"If different types of funds and derivative products are to be allowed next year, plus extending the trading time, it is good news because investors will have more tools to manage risks and of course it will help boost market liquidity," Hao said.

He said market regulators should cut the payment time to two days from three days now, and allow investors to buy and sell stocks in the same trading session.

If the government's policymaking is effective, investor's trust in the Vietnamese dong will improve and the stock market could see a boom, he added.

FDI firms face dilemma of unskilled local workforce

Faced with the inadequate skills of the local workforce, many FDI companies have hesitated to expand their operation and upgrade their facilities in Vietnam, Dau Tu newspaper reported.

According to a recent survey conducted by the Ministry of Labor, Invalids and Social Affairs on the skills of Vietnamese workforce, 25 percent of the participating businesses said the local workforce was not trustworthy, failed to pay adequate attention to the work quality, and lacked communication skills.

Half of the responding businesses said 23 percent of Vietnamese laborers did not have the skills they required, and 35 percent failed to meet their requirements.

The survey also demonstrated that training for the local workforce had lagged behind the rapid growth of the economy.

The survey, polling 1,000 businesses in six major cities and provinces countrywide, was co-conducted by workforce solution provider Manpower Group.

Manpower Chairman David Arkless said Vietnam was seeing a much more serious lack of necessary skills in its workforce than do China and India -- the regional biggest economies.

“Vietnam does not have many well-trained employees for both simple jobs and sophisticated professions that require higher levels of skills such as managers and engineers,” he said.

Laborers in the food processing, public health, construction, logistics and chemical sectors had poor professional and technical knowledge, he said.

In terms of its managerial capability, he added, Vietnamese workforce also lacked management and interpersonal skills as well as legal and financial knowledge.

“Most Vietnamese workers have also neglected certain skills such as foreign languages, creativity, and informatics.”

According to a survey by the Institute of Labor Science and Social Affairs, the low-cost workforce of Vietnam still remains the most appealing factor to foreign investors.

Herb Kochan, executive director of the American Chamber of Commerce in Vietnam, said many US enterprises operating in the services and manufacturing sectors had relocated their plants from China to Vietnam because of the latter’s better business environment and lower labor costs.

However, as the survey by Manpower shows, despite the labor cost advantage, the poor skills of the workforce can seriously slow down the country’s growth rate and discourage foreign investment.

One fifth of the respondent businesses in the survey said Vietnamese laborers lacked basic knowledge about work safety and the ability to adopt new technology.

Arkless of Manpower said the inadequate skills would prove to be the main obstacle for Vietnam to increase its competitiveness in the global economy.

“Vietnam has an abundant labor force who can handle basic work in the agricultural sector or in the production line,” he said.

“But the country lacks a force of well-trained laborers.”

Sharing this viewpoint, Lee Chon-kin, Chairman of the Korean Chamber of Commerce and Industry in Ho Chi Minh City, said the shortage of a qualified workforce was one of the main causes that had prevented many Korean businesses from upgrading their plants and expanding their operation in Vietnam.

“We wanted to transfer some modern machinery to Vietnam but failed to find skilled workers to operate them,” Lee said.

Mobile phones reap record export turnover

Mobile phones and components export turnover in October soared by 20.2 percent against September and 205.8 percent year-on-year, reaping more than US$1 billion in earnings, according to the General Customs Department

With this impressive rise, mobile phones and parts have surpassed many of Vietnam’s traditional export staples to rank second in the top earner list, only standing behind textiles and garments, which brought home $1.2 billion last month.

In other export news, seafood exports earned $604 million, while the respective October export turnovers of footwear, crude oil, and rice were $545 million, $532 million, and $257 million, the customs department said.

Over the last ten months, mobile phones and parts topped $5.12 billion in turnover, ranking fourth in the list of commodities with highest export turnover.

Textiles and garments topped the list with $11.6 billion, followed by crude oil, at $6 billion, and footwear, at $5.19 billion.

According to the Saigon Times daily, Korea’s Samsung Electronics Vietnam (SEV) accounted for most of the export value of mobile phones and parts since it was the only mobile phone producer to put most of its focus on exports in Vietnam so far.

SEV was quoted by the Saigon Times as saying that more than 96 percent of its products were for exports.

The company said its Q1 export turnover reached $780 million, while they earned $944 billion in Q2.

“SEV expects to earn $1.2 billion and $1.3 billion in turnover in the last two quarters of the year,” it said, adding that the expected full-year figure was $4.3 billion.

Designing enterprise architecture for sustainable development

Deputy Minister of Industry and Trade Hoang Tuan Anh has affirmed the need to build enterprise architecture with the aim of establishing a platform for promoting corporate profitability and growth.

The statement was made at the E-Commerce Forum 2011 entitled ‘Restructuring through building enterprise architecture’ held by the Ministry of Industry and Trade in Hanoi on November 17.

Enterprise architecture features the ties between information technology structures and service systems, according to Deputy Minister Tuan Anh.

The Director of the Vietnam E-Commerce and Information Technology Agency, Tran Huu Linh, said enterprise architecture serves as a tool for decision making, and building it helps economize on investment costs.

At the forum, information technology experts also focused their discussions on the role of enterprise architecture in devising business strategies in the 2011-2015 period. They believed that groups, corporations, commercial banks and businesses should take the lead in this work.

Swiss businesses keen on developing HCMC infrastructure

Swiss businesses have expressed their wish to help Ho Chi Minh City promote its economic development, especially infrastructure development.

During a meeting with the Municipal People’s Committee Chairman Le Hoang Quan on November 17, Swiss Economic Minister Marie Gabrielle Ineichen Fleish said Vietnam is of great importance to Switzerland, in a list of priorities for development cooperation.

The President of the Swiss Chamber of Commerce in Asia, Urs Lustenberger, said Swiss businesses are quite optimistic about Vietnam as a fast growing economy with inviting prospects.

Representatives of the Swiss company ABB said it can provide experts, solutions and equipment for HCMC to address its difficulties in the fields of traffic, power, and environment.

Meanwhile, Zurich international airport wants to cooperate with HCMC in modernizing the latter’s airport system to ease traffic overload and develop the local economy.

The Philippines to import Vietnamese rice

The Philippines is likely to buy about 800,000 tonnes of husked rice, mostly from Vietnam to support its stocks ahead of lean months next year.

Agriculture Secretary Proceso J. Alcala said on November 17 that the government may invite bidders next month after the National Food Authority (NFA) Council meets in late November to identify the volume and process of importing rice.

The bidding will start in December, said the Secretary.  

Every year the Philippines is faced with powerful typhoons which destroy its farmlands, resulting in lean months starting in July.

The Philippines is the largest rice importer in the world. This year, it has imported 860,000 tonnes of rice, mostly from Vietnam.

Bringing Vietnam-Sri Lanka trade turnover to US$1 billion by 2015

Vietnamese and Sri Lankan businesses gathered in Hanoi on November 17 to discuss ways to further boost economic ties between the two countries.

The event also aims to create favourable conditions for Vietnamese businesses to export goods and technologies to Sri Lanka.

At the meeting, the Vice Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), Hoang Van Dung, emphasized that two-way trade between Vietnam and Sri Lanka remains modest, and it is necessary to lift trade relations to a new height in the coming time.

He called on the two business communities to expand operation to raise bilateral trade to US$1 billion by 2015.

The President of the Sri Lankan Chamber of Industry and Commerce (SCIC), Asoka Hettigoda, expressed his wish to seek opportunities to import goods from Vietnam and cooperate with Vietnamese businesses in such fields as medical equipment manufacturing, construction of hospitals and hotels, pharmacy, garment making, coconut, tea and rubber processing and jewelry making. Mr Asoka Hettigoda also emphasized that Sri Lanka has great advantages in exporting tea, pepper and spices.

SCIC is the leading trade promotion agency in Sri Lanka, and is committed to supporting businesses of both nations in increasing two-way trade turnover.

The event included a signing ceremony for a cooperative agreement between VCCI and SCIC which will open more opportunities for cooperation and investment between the two countries in the future.  

Numerous new cars debut at motor show in city

With the presence of just one-third of the Vietnam Automobile Manufacturers Association (VAMA) members, the Vietnam Motor Show 2011 still features multiple locally assembled vehicles and new models.

Half of the six participating VAMA represent Japanese automakers Toyota Vietnam, Honda Vietnam and Suzuki Vietnam. Toyota Vietnam is displaying the FT-86G Sport concept, along with the familiar models available on the market such as Fortuner, Corolla Altis, Yaris and Land Cruiser Prado.

Similarly, Honda Vietnam is introducing two popular urban models – Honda City and Honda Jazz, apart from the three models assembled and distributed in Vietnam – Civic, CR-V and Accord.

This is considered the firm’s step to explore the market.

Meanwhile, Suzuki Vietnam reveals the new Suzuki Grand Vitara that replaces the previous model.

Still, the event is not attended by other famous auto firms from Japan like Mitsubishi, Isuzu and Hino.

Ford Vietnam is not present at the largest automobile industry exhibition either but General Motors (GM) Vietnam, the predecessor of Vidamco, is taking part.

The event offers an opportunity for GM Vietnam to officially present its Chevrolet models replacing the Korean brand Daewoo in Vietnam. The auto firm displays the sport car Chevrolet Camaro and the seven-seat family car Chevrolet Orlando together with other well-known Chevrolet models on the market.

As for the luxury car segment, Mercedes-Benz Vietnam is the only representative at the motor show. Famous brands like BMW, Audi, Porsche and Land Rover can be found at the show but they are all imported.

Therefore, to emphasize its leading position in the high-class car segment, Mercedes-Benz Vietnam has brought to the event the new generation of two renowned sport car models, the convertible SLK350 BE AMG and the four-door coupe CLS350 BE AMG. Moreover, the upgrade versions of other luxury cars are also included.

Overall, the exhibition showcases 60 new models and features over 100 enterprises in various sectors like accessories, spare parts, interior decoration, banks, and insurers.

The Vietnam Motor Show 2011 is organized by VAMA in coordination with Asia Trade Fair and Business Promotion (ATFA) until November 20 at the Saigon Exhibition and Convention Center.

The organizers expect to attract 120,000 visitors.
 
PVI Holdings picks Talanx as strategic partner

PetroVietnam Insurance Joint Stock Corporation, or PVI Holdings, has selected Germany’s Talanx as a strategic foreign partner.

Talanx’s member HDI-Gerling Industrie Vericherung AG has bought a 25% stake in PVI Holdings for around US$93 million.

PVI Insurance Corporation wholly owned by PVI Holdings on Tuesday signed a strategic cooperation agreement with HDI-Gerling.

“Through this agreement, PVI Insurance has become an important link in Talanx’s global chain,” said Nguyen Anh Tuan, president of PVI Holdings.

HDI-Gerling will transfer technology and know-how to PVI to operate in sectors such as reinsurance, non-life insurance, and to expand business outside Vietnam, said Jens Wohlthat of HDI-Gerling.

Talanx, the third and eleventh largest insurance groups in Germany and Europe respectively, got total premiums of around 23 billion euro last year.
 
Jesco joins hands with HBC to develop IP

Japan’s Jesco Holding Inc. specialized in engineering and infrastructure construction has decided to join hands with Hoa Binh Construction & Real Estate Corporation (HBC) to develop infrastructure for Long Hau 4 Industrial Park in the southern province of Long An.

Another partner, Long Hau Company, is also involved in the infrastructure development project at Long Hau 4 Industrial Park that covers 125 hectares in Long An Province’s Thu Thua District.

Jesco will provide advice on the design of the IP and market Long Hau 4 Industrial Park penetrate in Japan, Than Duc Trong, sales and marketing manager of Long Hau 4 Industrial Park, said.

Site clearance and compensation are 96% complete.

Long Hau 4 Industrial Park has recently attracted three local enterprises to set up shop in the sectors of warehousing, bio-technology and power generation, Duc said, and the IP could be fully occupied within the next five years.
 
Air Mekong to offer more flights to tourist destinations

Air Mekong will operate an extra 50 flights on the routes mostly connected to tourist destinations from December 23 to January 3 to cater to surging air travel demand during the upcoming Christmas and New Year holidays.

Truong Thanh Vu of Air Mekong told the Daily on the phone on Wednesday that almost all the additional flights would be conducted on the routes from Hanoi and HCMC to Phu Quoc, Dalat and Con Dao, with average frequency increases by 1.5 to two folds compared to normal days.

The airline plans to operate up to 14 weekly flights to Con Dao off Ba Ria-Vung Tau Province from the current five weekly times on Mondays, Wednesdays, Fridays, Saturdays and Sundays, Vu said.

The private carrier will raise from one to two daily flights to Phu Quoc off the Mekong Delta province of Kien Giang during the period.

From November 20, Air Mekong will add at least one daily flight to the Hanoi-HCMC route, which the airline currently has around three daily services. The carrier will sell some 40 seats on each flight for the same price of VND1.35 million, including a hot food portion.

From December, Air Mekong will service between Buon Ma Thuot and Vinh cities on Tuesdays, Wednesdays, Thursdays and Saturdays, or one more flight compared to its existing schedule. The airline credited this expansion to the route launched in October to connect the Central Highlands with the north of central Vietnam to a high occupancy rate of 80% and continuously rising demand.

Also in the plan is to launch the new Vinh-Pleiku route from December 1, the second of Air Mekong’s air link between the Central Highlands and the north of central Vietnam. As scheduled, flights will take off Pleiku in Gia Lai Province at 5 p.m. and Vinh at 6:45 p.m. on Mondays, Wednesdays and Fridays.

Air Mekong will apply promotional single fares from VND1 million to VND1.35 million exclusive of airport tax and surcharges to 50% of the 90-seat Bombardier CRJ 900 the carrier operates on the Vinh-Pleiku route. This promotion is valid for bookings until December 15.
 
HVK to develop condo project in city

HVK, a joint venture between Hung Viet Investment Construction Joint Stock Co. and Korea Real Estate Development Fund (KRDF03), has reached an agreement with South Korea’s Posco E&C Vietnam to develop a condo project in HCMC’s District 9.

The Eastern project costing US$40 million includes 648 flats covering 56-112 square meters each, a pool, tennis court, gym and children’s entertainment areas.

According to HVK, the project would be completed and handed over to homebuyers at the end of 2013.

Based on customer demand, the firm will launch condos onto the market in early March, revealed Park Jong Woo, deputy general director of HVK.

“It is really hard to release apartments into the market at this time given the gloomy realty market and steep lending rates,” Park said.

However, HVK still pursues its investment in the apartment segment, aimed at buyers in need of housing in District 9 and other neighboring regions in the long run, he added.

KRDF03 so far has injected US$1.2 billion in the stock and property market in Vietnam with US$130 million set aside for developing real estate schemes only.

The Eastern is the third realty project developed by the development fund besides Hanviet Tower in Hanoi and Luxel serviced apartment scheme under construction in Phu My Hung new urban area in District 7.
 
Hau Giang cane crop unaffected by flooding

The Mekong Delta province of Hau Giang may have harvested a total sugar cane area of nearly 13,750 hectares by the end of this month, thereby preventing the entire cane crop from being affected by the ongoing flooding in the delta.

Nguyen Van Dong, director of Hau Giang’s Department of Agriculture and Rural Development, said ten enterprises had been purchasing sugar cane in all flood-hit areas over the past two weeks.

Just about 1,800 hectares of cane is still under harvest and this job could be done by the month-end, Dong said.

He said that two weeks ago cane farmers complained about the slow pace of cane purchases by the sugar refineries, with one-third of the total cane area in the province sold out and the remainder affected by the flooding. However, the sugar producers’ cane buying has improved, he noted.

In previous years, floods often submerged 2,000 to 3,000 hectares of cane but things are different this year, with a large swath of cane farms inundated. Therefore, the provincial authority has proposed the agriculture ministry seek Government approval to build an embankment to protect 8,800 hectares of cane from floods, Dong said.

Accountants failing to meet int'l standards

Viet Nam's auditing and accounting industry was in need of more professional and qualified staff to conform to international accounting standards, said Rob Thomason, Executive General Manager, Business Development, CPA Australia.

"Within Viet Nam, a developing country, companies are looking for great levels for investment. They come looking for IPOs as a lot of State-owned enterprises are sold to commercialise," said the official of CPA Australia, one of the world's leading professional associations for accountants and auditors.

"Those investors utilise agencies to give them the opportunity to see what is really happening within the company. So, that really drives the demand for professional accounting," he said.

However, there were challenges facing companies, especially multinational ones, in seeking young professional people engaged in professional accountancy, he noted.

As one of the many increasing efforts to raise the quality of accountancy in Viet Nam, CPA Australia has recently appointed four leading auditing and consulting companies in the market as Recognised Employer Partners (REP), a programme designed to help employers attract, develop and retain top accounting and finance staff for their organisations.

The country's first approved enterprises were Deloitte, Ernst & Young, PricewaterhouseCoopers and KPMG.

Methods used to train auditors and accountants needed fundamental change, said Viet Nam Association of Accountants and Auditors President Dang Van Thanh.

Viet Nam's accounting and auditing systems needed greater capability to analyse economic and financial information and make forecasts, Thanh said.

Dak Lak Province demands Chinese company cancel coffee patent rights  

Vu Khanh Toan, head of Pham and Associates Law Firm on Wednesday said they had sent a letter to Guangzhou Buon Ma Thuot Coffee Company in China asking them to cancel patent rights of Buon Ma Thuot coffee brand.

Lawyer Toan said he had asked their Chinese associate law office to forward the letter. Toan’s firm is being paid by the central highland province of Dak Lak to sue the Chinese company who has registered patent rights of the Buon Ma Thuot coffee brand of Vietnam.

Guangzhou Buon Ma Thuot Coffee Company in Guangdong Province of China has patented two Vietnamese brands. The “Buon Ma Thuot và chữ Hán” (Buon Ma Thuot in Han-Chinese script) coffee brand, for the period November 14, 2010 to November 13, 2020 and the “Buon Ma Thuot Coffee-1986” for the period June 14, 2011 to June 13, 2021.

Toan said that if the Guangzhou Buon Ma Thuot Coffee Company demands less than US$8,000 for cancellation of patent rights, he would agree to pay the amount. However, if the Chinese Company demands more than $8,000, then they will take legal action and file proceedings.

He said that he had consulted six law firms in China who said that his company had a 100 percent chance of winning the lawsuit.

Fertilizer prices drop while demand increases  

Although demand for fertilizers for the 2011-2012 Winter-Spring Crop is increasing in the Mekong Delta Provinces, fertilizer prices have dropped sharply by VND80,000-VND100,000 per 50 kilogram bag.

Phu My Urea fertilizer price is currently VND535,000-VND540,000 per bag, decreasing by VND75,000-80,000 per bag compared to September. DPA fertilizer from Philippines is VND890,000-985,000 per bag, decreasing by VND50,000-55,000 per bag.

NPK 20-20-15 and NPK 16-16-8 have decreased by VND100,000 per bag.

According to the Southern Regional Plant Protection Center, farmers in the Mekong Delta Provinces have transplanted rice saplings on approximately 170,000-180,000 hectares for the 2011-2012 Winter-Spring crops. While farmers in Tien Giang, Long An and Dong Thap Provinces will transplant by the end of November. Hence, fertilizer demand will increase substantially.

Cloud computing helps cuts costs

Cloud computing was an ideal solution to help enterprises drive down costs and overcome difficulties involving lack of budgets, the data boom and information safety, said experts from EMC, a leading provider of storage hardware solutions, during a seminar on Cloud Computing and Big Data held in Ha Noi yesterday.

Cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided to computers and other devices as a utility (like the electricity grid) over a network (typically the internet).

According to EMC experts, cloud computing was a new trend that would open the door to great opportunities in the near future and could be beneficial to the most crucial acknowledged business demands. In cloud computing, resources and information technology services were separated from the infrastructure and provided on demand, in accordance with the scale of a multi-user environment.

At the seminar, Ajit Nair, senior director of global services Southeast Asia EMC Corporation, said in 2010, 60 per cent of the companies listed on the Fortune 500 had their email addresses attacked by viruses and malwares and of the total 60 million variations of malware, one-third were developed last year.

To help enterprises better enhance their data protection, the EMC had introduced its technological continuous data protection (CDP). The CDP was a technology like a video camera, recording all changes in information technology systems around the clock. When having problems, this technology helped to restore the system at any certain time, said Nair.

Nguyen Minh Hong, deputy minister of Posts and Telecommunications, told participants that information technology had become a factor that had a great influence on every aspect of daily life and played a key role in developing the country's economy over the last year.

Along with the development of IT, cloud computing had been raised as a new trend making a great influence on traditional IT development. In Viet Nam, many organisations and businesses had quickly studied and enhanced the application of cloud computing in order to raise their competitiveness.

Hong said his ministry was conducting research to develop policies and measures to enhance the application of cloud computing in State-run companies and organisations.

Nguyen Duc Doanh, Head of the IT Network and Data Centre Administration Division of Dong A Bank, said to raise customer services, his bank invested in its data centre by applying this model of computing with a view to enhancing the efficiency and protecting the increased data growth.

Over the years, the bank had taken considerable chances on its virtualised IT environment. Just a few years ago, only 40 per cent of businesses applied virtualised IT environments, but it was now nearly 100 per cent, said Thai Hoa Nha, Manager of IT Division of Dong A Bank.

Data centres were using a wide range of storage architecture to support their server virtualisation efforts and clearly therefore a unified storage approach such as that which EMC was now offering would allow greater operational flexibility and lower consolidated total cost of ownership in combination with enhanced capabilities such as back up or recovery and remote replication, said Ajit Nair.
 
More companies make moves to de-list shares as market stalls

Sai Gon Beverages Co (TRI) and Descon Construction Corporation (DCC) are two of the latest companies seeking shareholder approval to cancel listing of the companies' shares.

They join Mekophar Chemical Pharmaceutical Co (MKP), Interfood Shareholding Co (IFS), Sai Gon Telecommunications and Technologies (SGT), Sai Gon-Quy Nhon Mining (SQC), Viet Nam Construction Co No 11 (V11), and Song Da No 27 (S27), among other companies cancelling plans to list.

As more listed companies consider or decide to exit the stock market, reversing the trend of just a few short years ago of companies racing to list, what are the reasons behind the shift?

SGT and SQC attributed their decision to difficulties in raising capital via the stock market with the steep decline in share prices negatively affecting their corporate images. MKP was unable to conduct retail operations in the field of pharmaceuticals due to foreign ownership, while V11 planned to restructure.

DCC, TRI and IFS have not publicised their reasons, but, according to market insiders, prolonged unprofitability has forced them to stay behind the scenes.

The director of the Research Institute of Informatics and Applied Economics director, Dinh The Hien, said these reasons were not really convincing.

"This doesn't depend on the general market trend, but on the investors," Hien said. "In a downturn, most shares decline, but that doesn't mean that investors can't properly evaluate the shares they are holding."

Hien said many investors would opt to hold onto their shares and await a recovery.

Some ostensibly profitable companies have also begged off from listing on the stock market, saying they did not have any demand to raise capital in the immediate future and that leaving the stock market would actually help them save some costs.

The director of a plastics company, which makes a yearly profit of VND80-100 billion (US$3.8-4.8 million) on total charter capital of just VND150 billion ($7.1 million) and pays a cash dividend from 20-40 per cent per year, told Dau Tu Chung Khoan (Securities Investment), "We are considering to exit the market because the number of our outstanding shares on the market is small while the daily trading volume is only a few thousand shares. A group of major shareholders proposed to re-calculate the efficiency of listing."

The fact that over half of all shares are currently being traded under their par value on both of the nation's stock exchanges has made many smaller firms easy targets for takeovers. In theory, a group of investors with only VND25-30 billion ($1.2-1.4 million) could own cotrolling stake of a company with charter capital of VND100 billion ($4.8 million). In face of this risk, some firms see cancelling their listings as a defensive move.

"Each company has its own difficulties, but it took them a lot of time, effort and financial cost to list shares on the stock market," said Nguyen Phuc Thinh, director of the Corporate Finance, Research and Planning Division of Hoa Binh Securities Co. "They will therefore consider carefully before making any move to de-list."

Independent analyst Pham Viet Hung agreed that a lot of shares were under valued now but said that such ups and downs were normal on a stock market. The best way to support stock prices, he suggested, would be to improve corporate transparency, not turn their backs on the market.

Those who opted to leave the market would lose credibility in the eyes of investors, particularly foreign investors, and this would cause them more difficulty later in raising capital when they need it, Hung said.