Petroleum wholesalers seek approval for price hike

Four local petroleum wholesalers are seeking approval from the Ministry of Finance to increase retail prices, according to the Price Management Department under the ministry.

Accordingly, Vietnam National Petroleum Group (Petrolimex), PetroVietnam Oil Corp (PV Oil), Saigon Petro, and Dong Thap Petroleum Trading Import Export Co (Petimex), have submitted requesting documents to the ministry.

Among them, Petrolimex accounts for 55 percent of the local market share.

The representative of the four enterprises said the retail fuel prices should be increased since the base price is higher than the retail price, forcing them to take losses.

The firm also said in documents sent to the Ministry of Finance that it is not proposing any specific price increase range, it only suggested that the ministry consider the issue.

According to Nguyen Tien Thoa, head of the department, the average price of petroleum products in the last 30 days was still as high as around $134 a barrel.

As current import tax rates of petroleum products are at zero percent, the Ministry of Finance is considering the matter to ensure harmonization between the interests of consumers and businesses.

The Government Office has issued a written document giving the green light to a price increase of coal for electricity generation, according to Document No.421/VPCP-KTTH sent to the Ministry of Finance.

The specific roadmap for the future price increase has been assigned to the Ministry of Finance for calculations.

With the approved guidelines for coal prices, an electricity price increase has also been cleared.

The new coal prices will make up just 51- 55 percent of the current production cost, said the Coal and Mineral Industries Group (Vinacomin).

Currently, the electricity sector is the largest customer of the coal industry, with about 10 million tons of coal bought per a year.

The latest price hike of 5 percent for coal dust occurred last April, and met 51- 55 percent of coal production costs in 2011 and 57- 63 percent of the audited coal production cost in 2010.

The fact that the price of coal for electricity production is always lower than the cost of excavating coal has caused a loss of thousands of billions of dong in profits for Vinacomin.

As a result Vinacomin has repeatedly proposed price increases to ensure the health of the sector development plan, which requires some VND42 trillion of annual investment for coal production.

Recently, Vinacomin proposed a 30 percent price surge of coal for electricity generation in 2012, after which they will proceed at the market price.

According to the General Department of Energy under the Ministry of Industry and Trade, if the price of coal for the power sector rises 70- 80 percent compared to the cost of production in 2010, electricity prices will increase by VND18 per kWh.

If the coal price increase meets the market mechanism in 2012, electricity prices will rise by VND200 per KWh.

The Ministry of Finance's calculations show that power prices will affect the consumer price index (CPI) twice.

A 1-percent electricity price increase will push CPI up by 0.0246 percent in the immediate impact, while later price hike will hit related goods and services, raising CPI 0.153 percent.

"If coal prices increase, electricity prices will certainly increase because this is one of the three inputs of electricity prices", economist Vu Dinh Anh said.

According to Decision No.24/2011 of the Government, with an input power increase of 5 percent, the corresponding price increase will occur once every 3 months.

So, along with the approval for the increased price of coal, the electricity price increase was a given.

"At this time, many agencies and economists think that the ability to restrict inflation under a single-digit rate is quite optimistic. However, I think the price of electricity is one of the most important factors in determining the inflation rate by year-end", Anh told Nguoi Lao Dong newspaper.

Economic malaise depresses shares

Shares tumbled during yesterday's trades on both of the nation's stock exchanges as uncertainties grew over whether the market could maintain sustainable growth.

"The market has yet to develop substantially," said independent analyst Ho Ba Tinh in an interview with the newspaper Dau tu Chung khoan (Securities Investment).

Recent stock market movements were quite similar to what occurred in mid-2009, when the market had just passed through the financial crisis and rallied from a severe low point, Tinh said. As the economy had stabilised, the market had rebounded.

"However, current economic factors still suggest high risk, including high levels of bad debt at banks and rising corporate bankruptcies," he said.

On the HCM City Stock Exchange yesterday, the VN-Index retreated by 1 per cent to close at 467.08 points. The value of trades reached VND2.3 trillion (US$109.5 million), a decline of 8 per cent from the previous day's level, while volume totalled 144.5 million shares.

Among blue chips, only insurer Bao Viet Holdings (BVH), Sacombank (STB) and food processor Masan Group (MSN) posted gains. Real estate shares bottomed out, including shares of developers Hoang Anh Gia Lai (HAG), Quoc Cuong Gia Lai (QCG), and Sudico (SJS) and investment group Tan Tao (ITA). Losses among the leading shares by capitalisation and liquidity tracked by the VN30 Index drove the index down by nearly 1.5 per cent to 533.68 points.

Notably, some penny stocks saw surging trading volumes of 3.3-6.3 million shares, with steelmaker Huu Lien Asia (HLA) and miner Nari Hamico Minerals Co (KSS) hitting their ceiling prices and Viet Nam Mechanisation Electrification and Construction Co (MCG) adding 1.6 per cent on the day.

On the Ha Noi Stock Exchange, the HNX-Index declined by 2.3 per cent to conclude yesterday's session at 77.50 points. Around 100.4 million shares changed hands, worth a total of about VND1 trillion (US$47.6 million), a 21.3-per-cent loss compared to Wednesday's level.

Decliners overwhelmed advancers on the northern bourse by 212-81. Habubank (HBB) was the most-active share in Ha Noi with some 9.7 million exchanged.

Spreading the money around

Banks are restructuring lending activities and it’s expected that this will make it possible for the state to reach its 2012 credit growth targets.

Small and medium-sized firms and individual customers are now in the sights of many banks.

DaiA Bank would like to accelerate its credit growth in this second quarter and at the same time mobilise more capital from the community.

One of the bank’s executives said that this year bank loans will be provided mainly to small and medium-sized firms, individuals and trading households. While the bank strives to expand credit growth it will also attempt to keep its bad debt rate to less than 1.5 per cent of total its total outstanding loans.

NamA Bank’s target customers this year are, for the most part, small and medium-sized firms, individuals and trading households and they will be offered loans not to exceed VND10 billion ($476,000) in order to keep the bank’s bad debts at a minimum, said bank chairwoman Nguyen Thi Xuan Loan.

In addition NamA Bank presented a 12 per cent average credit growth plan in non-manufacturing areas while the central bank has regulated that it must not exceed 16 per cent for this year.

VietinBank Chairman Pham Huu Hung said that this year the giant state bank would focus on promoting short-term credit while keeping medium and long-term loans to a minimum, particularly regarding foreign credit. In the meantime, the bank has made credit quality control a top priority this year as it attempts to avoid risk in this time of continuing economic difficulty.

With 17 per cent credit growth this year, VCB will strive to maintain a balance between its credit growth and the amount it holds in deposits. The bank executive said that this year its capital sources will be channeled into agricultural and rural areas, export production and support industries and it will provide supplementary working capital to labour intensive small and medium-sized firms. Loans for businesses that import non-priority commodities will be restricted.

VCB envisages making it possible for small and medium-sized firms and individual customers to obtain loans quicker and it will also strive to ensure credit quality.

For its part, an ACB representative said the bank will promote lending to retailers with priority given to individuals and small and medium-sized corporations.

According to State Bank Governor Nguyen Van Binh, the country’s credit growth contracted over 1 per cent as of March 31, 2012 compared to the 5 per cent credit growth of the first quarter of 2011.

Lower cost loans for businesses

Getting their hands on one of these lower-cost loans is hard for firms following the central bank’s recent move to lower the rate that banks would charge for the loans.

On April 12, 2012, one day after central bank issued Circular 08/TT-NHNN of April 10, 2012, which pulled the loan ceiling rate down from 13 to 12 per cent per year, Techcombank announced its plan to offer VND4 trillion ($190.4 million) supportive credit packages to its corporate customers that would carry an interest rate of 15 per cent per year.

This preferential credit, however, would be available only to businesses involved in import/export or essential goods production or those operating in agricultural and rural areas.

On the same day, ABBank rolled out a VND2 trillion ($95.2 million) supportive package that is only for import/export firms and has an interest rate that is 2 per cent per year lower than those that are regulated.

Similarly, Eximbank unveiled a preferential VND6 trillion ($285.7 million) package with a 16.5 per cent per year interest rate that is being offered to export, small and medium-sized firms.

Also on April 12, Sacombank set aside a VND1 trillion ($47.6 million) concessionary credit package that would target agricultural, forestry and fishery/trading households. The interest rate for the first month is 12 per cent per year. However, in later months the interest rate is to be revised rooted on the bank’s regulated interest rates. Sacombank’s floor interest rate currently is 16 per cent per year.

For its part, ACB intends to slash its lending rates by 1-1.5 per cent sometime this week.

“With copious available capital sources, ACB will step up its capital support for firms operating in export, production and trading fields,” said ABC deputy general director Do Minh Toan.

Current negotiable lending rates at the bank range between 17.5-18 per cent per year.

“Loans will be made available to those firms which have annual revenue of VND300 billion ($14.2 million) or more,” said Toan.

Toan did, however, admit that there is a low rate of disbursement of the supportive credit package capital. For instance, nearly one month after the VND1 trillion ($47.6 million) preferential credit package was launched to allow small and medium-sized firms to carry out financial restructuring, only VND300 billion ($14.2 million) has been disbursed.

Orient Commercial Joint Stock Bank (OCB) came up with a concessionary credit package backed with VND2 trillion ($95.2 million) in mid-March 2012 with interest rates 2-2.5 per cent lower than regulated ones. While its current lending rates are fairly high at around 19 per cent per year, OCB only rendered lower cost loans to firms that deal in food, seafood, rubber, textile-garments, chemicals and plastics.

While most banks have lowered their lending rates in the recent past, the current average borrowing cost of 17-18 per cent per year is not low enough to entice most firms to apply for a loan.

Economic restructuring should start first with SOEs

State-owned firms should undergo restructuring first if the national economy is to be effectively restructured, said a prominent economist at a seminar in Danang City on Monday.

Le Dang Doanh told the seminar that many problems of the economy have been exposed given the increasing international economic integration and the current global economic crisis.

It is urgent that the nation stick to restructuring for a stable and sustainable economy, thus raising its competitiveness and closing the development gap with other regional countries, Doanh told the seminar ‘Vietnam Economy and Restructuring Issues’ which was organized as part of the EU-Vietnam MUTRAP III project. The seminar was attended by executives from related State-run enterprises operating in the central coast city.

The seminar is to provide the local business community an insight into the present economic situation, thus helping administrators come up with appropriate management policies to restructure organizations.

The World Bank reported Vietnam had dropped six places in terms of competitive capacity.

“Most serious issues including public debts or bad business results caused by State-owned companies have not been accurately reported,” noted Doanh, adding such lenient reports have distorted the picture.

To ensure that the restructuring of State-run firms bring about benefits, Doanh proposed loss-making ones be identified. He urged State-owned enterprises to completely divest capital from non-core business areas by 2015, especially in securities, realty, banking and insurance sectors among others.

Relevant authorities need to speed up equitization, or dissolution of State-owned enterprises, or let loss-making ones to go bankrupt besides strongly supervising and managing other groups, corporations or companies of the same sector, Doanh added.

The nation has suffered a slowdown in the economic growth rate and imbalanced development in different aspects. The domestic savings have tumbled, investments have been ineffective, foreign loans have rapidly grown and the banking system has been mired in instability.

On the other hand, budget deficit of the nation remains high, while trade deficit, foreign exchange rate and gold price volatility are still going on and stock and property markets are still spiraling into stagnation.

“The economy will face stagnation and inflation risks unless the Government drastically undergoes restructuring and reforms so as to utilize economic potentials of the country for sustainable development,” Doanh asserted.

Bleak outlook forecast for seafood firms

Some 20% of the seafood enterprises are forecast to go bust or face stagnant production this year for several reasons, said Nguyen Huu Dung, vice chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP).

Speaking at the seminar on application of enterprise resource planning in the seafood industry held in Can Tho on Monday, Dung said the number of bankrupted seafood companies had increased strongly since the year’s beginning, and would surge further in the coming time. Such a situation, described as unusual by the VASEP vice chairman, is caused by the objective factors such as policies and the market, not the enterprises themselves.

Material tra fish prices in the Mekong Delta have constantly dropped. High-quality fish is now sold at VND20,000-21,000 per kilo, and prices of the lower-quality ones fluctuate around VND19,000-19,500 a kilo.

Dung suggested the Government should adjust the way they drive the economy, seeking low-interest funds for enterprises and offering tax reduction and exemption. Above all, seafood enterprises must save themselves through restructuring.

Hard to seek funds for new expressway project

Given the global economic slump, the construction of the Trung Luong-My Thuan expressway project set to start next year is facing challenges in seeking funds, said the project owner.

The Ministry of Transport is calling for loans from the Asian Development Bank (ADB), the Japan International Cooperation Agency (JICA) and the Korea Development Bank (KDB), said Duong Tuan Minh, general director of the project owner Cuu Long Corporation for Investment, Development and Project Management of Infrastructure (Cuu Long CIPM).

Among the three lenders, KDB is considered the most potential as it has agreed to set aside an amount of up to US$400 million for the project. In this case, the ministry has to be given the guarantee from the Government and accept the participation of Korean contractors in the project construction.

Meanwhile, it is not until 2014 ADB and JICA will consider loans to the expressway scheme. To ensure the construction progress on schedule, Cuu Long CIPM has drafted a financial plan, including US$10 million funded by the South Korean government via Economic Development Cooperation Fund (EDCF), US$950 million sourced from KDB and US$186 million as the local company’s counter capital.

To have counter capital, Cuu Long CIPM has proposed mobilizing capital from toll collections on the HCMC-Trung Luong expressway, Can Tho and My Thuan bridges from now to 2015 with total value of about VND2.295 trillion.

In fact, the new expressway project had been earlier assigned to Bank for Investment and Development of Vietnam (BIDV) as the developer. However, the bank and its partners finally withdrew from the scheme after failing to lure investment capitals estimated at VND22 trillion as of April last year.

Lending rate will not fall until Q3

Despite the central bank’s move to reduce the deposit rate to 12% last week, most experts forecast the lending rate will only fall from the third quarter, with the average rate expected at some 15.5%.

Several banks have announced credit lines amounting to trillions of Vietnam dong each at softer rates, but experts said few enterprises could access such sources of cheap capital.

An executive of a large commercial bank predicted lending rates would be all slashed to 15.5% a year between July and August this year.

Soft loans with reduced interest rates offered by local banks during the past time target certain customers only, he said. In fact, just some lenders with strong financial capacity have lowered their rates in line with the central bank’s order, he added.

“Interest rates will strongly go down if bad debts of the banking system are dealt with basically,” the executive told the Daily.

Now Asia Commercial Bank (ACB) charges its borrowers with a yearly rate of 17.5% on average. Lowering interest rates is an obvious trend which will continue more evidently in the future, according to general director Ly Xuan Hai of ACB.

Banks are currently trying to secure margin profits with lending rates set based on real capital demand from enterprises. This is not the right time for them to revise down the rates as much as expected, Hai explained.

Economist Tran Du Lich deemed the central bank’s latest deposit rate cut just a slow move. “It would be too late to rescue cash-strapped firms if the move came later,” Lich reckoned.

Lich believed it would be difficult for local lenders to gain the credit growth rate of 15-17% annually this year as set by the central bank. It is due to cautiousness for bank loans among corporate borrowers who are afraid of failing to service the loans later.

Speaking to the Daily, Pham Hong Hai of HSBC Vietnam said the central bank’s move had responded to the market’s expectation when reducing borrowing costs paid by individual and corporate borrowers. This will motivate the country’s economic growth rate in the context of its gross domestic product (GDP) staying at a meager increase of 4.1% in the first quarter.

Over the past time, interest rates on the inter-bank market have been easing as well. The market has seen those loans with terms of less than three months traded at below 12% per annum.

Therefore, the central bank is totally rational to pull down deposit rate cap to 12% yearly to match deposit rates with real market levels.

Meanwhile, Vu Thanh Tu Anh, director of research at the Fulbright Economic Teaching Program, insisted on a credit market without any ceiling rates set. The so-called rate cap just leaves bad impacts on related sides, Anh pointed out.

Lending rate cap will eliminate the base to categorize customers and credit risk assessments by credit institutions as it is the only tool banks wield to treat various kinds of customers, Anh cited.

Similarly, the deposit rate cap imposed on depositors causes those with small deposit amounts to suffer unfair treatment consequently, he said.

“The present ceiling deposit rate proves the banking sector restructuring have yet to bring about good results as expected” he asserted.

Ho Guom Plaza put up for sale

Together with the opening of model apartments for public viewing, Ho Guom Garment Joint Stock Co. has launched a sale of its Ho Guom Plaza homes at VND26 million per square meter, exclusive of VAT.  

Covering some 11,000 square meters and costing VND1.5 trillion, Ho Guom Plaza is a mixed-use complex that comprises apartments, grade-A offices and a retail podium. Featuring three 29-storey towers and a three-level basement, the project got off the ground in October 2009.

The project will have 20,000 square meters for parking, 23,000 square meters for retail, 36,000 square meters for offices, 460 high-end apartments and eight penthouses.

The first nine floors have been completed. The structure of the complex is expected to be completed in November and the apartments will be handed over to buyers by the fourth quarter next year.

Sudico Chairman dismissed    

The extraordinary general meeting was denounced by wife of sacked board member Phan Ngoc Diep as being illegal as she claimed that the company had not gone through the necessary legal procedures prior to hold it. Her calls were ignored.

Newly-elected chairman of Sudico, Ho Sy Hung, dismissed Diep's complaint, claiming, “This extraordinary meeting which was called by Sudico’s management board is legal and lawful,” on the morning of April 16.

“Sudico’s management board submitted the relevant documents to Ho Chi Minh City Stock Exchange’s Central Securities Depository for permission. We have proposed this meeting. Sudico in general and the management board in particular will be responsible for this extraordinary meeting’s legality”, Hung said.

After the secretariat had checked the ballots, 74.8%  of shareholders were entitled to vote.

The main aim of this extraordinary meeting was “to stabilise management measures, to improve the operations and productivity of the company and to ensure Sudico’s common interests and those of its shareholders.”

After four hours of discussing, three board members were dismissed.

Chairman Phan Ngoc Diep, Vi Viet Dung, CEO, and Dang Hoang Quang, commission of direction board were dismissed with over 90% in favour of the removal of these board members. The meeting agreed to find suitable replacements, with Do Van Binh was nominated by shareholders, and Ho Sy Hung and Pham Van Viet recommended by Song Da Corporation’s steering committee.

On April 12, Ho Chi Minh City Stock Exchange issued a warning over Sudico's shares due to the fact that its parent company had recorded losses in 2011 of VND82.5 billion (USD3,953,042.6)

The three men were dismissed for misconduct, but the details of their actions remains unclear until Subdico make a public announcement. However, according to rumours, Phan Ngoc Diep was responsible for a variety of  serious management blunders, including losing tens of billions of VND in the My Dinh-Me Tri project, and thousands of billions of VND due to inaccurate accounting during Subdico’s privatisation process. Vi Viet Dung and Dang Hong Quang were accused of being remiss in their duties, which unintentionally created the ideal conditions for Diep to breach management regulations.

At the close of  yesterday’s stock exchange, Sudico shares rose 5%, closing at VND40,000 (USD1.9) per share.

Festival long gone but flower farmers still unpaid

A dozen of flower farmers have not been paid for the flowers they supplied for the Dalat Flower Festival that was organized four months ago.

Da Ha Ra Co. Ltd. ordered Hiep Luc Cooperative to supply 20,000 baskets of chrysanthemum worth VND200 million in October last year to serve the flower festival in the hilly resort town of Dalat.

Considering the event a chance to promote their image, dozens of cooperative members intensified their farming then, said Ho Ngoc Dinh, a farmer flower. However, the flower cultivation was vastly destroyed by flooding, forcing farmers to move to a new location with higher cultivation cost.

Since the fourth Dalat Flower Festival ended, farmers have repeatedly asked Da Ha Ra to pay as contracted. This company has attributed its payment delay to the festival organizing committee that has not paid it.

But Nguyen Vu Hoang, director of the 2012 Dalat Flower Festival, said VND100 million had been transferred to Da Ha Ra and that the committee now owes a mere VND30 million, which the organizer will settle this week.

At Da Ha Ra Co., there is nothing left but a banner and no one answers phone calls.

Consumers show increasing concern over health issues

Health is the top concern of Vietnamese consumers despite current inflation, as more people now attend more to food safety and related issues, say results of a survey conducted by market researcher Kantar Worldpanel Vietnam.

Specifically, there are up to 88% of housewives living in urban areas caring more for health of their own and families than before while 81% said that they were willing to spend more on nutritional and healthy products.

Besides, nutritional food products and drinks like functional milk, fresh milk, soybean milk and energy drinks are products having strong growths in the group of fast moving consumer goods (FMCG).

Consumers’ care for health is reflected in the choice of not only food products and drinks but also basic products of their daily use. They are willing to pay more for products of brands giving quality pledges, according to the survey.

In addition, the survey also reveals income differences between social classes in spending on FMCG products. Low-income earners have tended to cut their spending or bought cheap products while medium- and high-income ones have not been affected much and less cared about prices despite inflation.

According to the survey, producers of consumer goods should be flexible to meet the demand of consumers and soon have strategies when the market recovers.

Vietnam could soon join ISAF

Vietnam could soon be a member of the International Sailing Federation (ISAF) making it possible to hold international sailing events along its amazing coastline.

Head of ISAF Administration, Helen Fry, said via a recent email that Vietnam’s application would be put before the ISAF council at the mid-year meetings in May.

The SE Asian country’s National Sailing Coach, Julia Shaw, based in Mui Ne, has been the force behind the move since it was first discussed in November 2009.

Shaw said she was confident that the membership would go through because the national authority for sailing, Vietnam Canoeing, Rowing and Sailing Federation (VCRSF) that was set up last November submitted the papers to ISAF last December.

Shaw said the Vietnamese authorities carefully considered the move for two years before they agreed to apply.

“The Vietnamese authorities have had a chance to meet ISAF to talk directly and understand international requirements and benefits – particularly ISAF paperwork and the set up of the Sailing Federation,” Shaw said.

The ISAF Vice Chair of the Racing Rules Committee, Bernard Bonneau, said he was keen to for Vietnam to become a member.

“I really wish the process to be shortly completed and for Vietnam to become ISAF MNA with full rights. I believe that this will allow sailors to take part in official ISAF events and certainly encourage some exchange and cooperation programs with ISAF and other National Authorities.

“This will allow as well Vietnam to bid for some official sailing events, which are good to promote the country, to improve local level in event organization, and certainly encourage more people to join sailing.”

Shaw said more Vietnamese people are realizing everyday that it’s possible to sail from Vietnam’s Sail Training Centre in Mui Ne.

She said the Ministry of Culture, Sports and Tourism has asked her to train students from the National Sports Universities and the provincial professional sports school. Vietnamese sailors including overseas Vietnamese are already making waves competitively around the world, she added.

“The intention is promotion of human and environmental health including adaptation to climate change with sea levels rising and an alternative to overfishing.”

An UK expert on the environmental impacts of watersports, Professor Barbara Humberstone, from University of Brighton, said there was little or no research into whether introducing watersports into a developing country would increase environmental awareness, but said she would expect a positive outcome.

“It would need the people introducing the sports/activities to be environmentally aware and active. This would mean perhaps balancing the financial costs with ‘profit’,” Humberstone said. She said there have been marina developments that have not taken care of the environment in developing countries.

Foreign investment projects ‘require careful evaluation'

Viet Nam needs to develop a set of standards to evaluate the effectiveness of foreign direct investment (FDI) to help policymakers improve the activities, a seminar held in the capital heard yesterday.

Ngo Doan Vinh, former head of the Ministry of Planning and Investment's Development Strategy Institute, said the project would meet requirements of marco-economic analysis.

Vinh said evaluation should include labour productivity, capital utilisation and contribution to the economy.

Statistics from the ministry showed that by the end of last year, Viet Nam attracted 13,500 FDI projects with registered capital of US$195.9 billion since the Foreign Investment Law was adopted in 1988. Of the total, disbursement capital made up $88.2 billion, accounting for 43 per cent.

The FDI sector has created jobs for around 2.3 million labourers, contributing to one-third of GDP, 40 per cent of industrial production value and more than 30 per cent of export turnover.

However, the sector has also exposed shortcomings as some had not been suitable with industry development planning, importing backward machines and causing environmental concerns.

The Provincial Competiveness Index (PCI) 2011, launched by the US Agency for International Development (USAID) and the Viet Nam Competitiveness Initiative (VNCI), covering more than 1,100 businesses from 47 countries and accounting for 21 per cent of total foreign-invested firms in Viet Nam, showed that foreign-invested enterprises in the country were mostly small in scale and operated at low profits.

The majority of foreign-invested firms included subcontractors for multinational companies, thus ranked at the lowest level of product value.

Of the total, only 5 per cent operated in the modern technology sector, 5 per cent in science and technology and 3.5 per cent in financial services.

Chairman of the Viet Nam Association of Foreign Invested Enterprises Nguyen Mai said the country has been slow in changing orientation in attracting FDI.

"We have not attracted investors despite a better investment environment," Mai said, adding that it was time to utilise scientific criteria to evaluate the affects of FDI on the country's development as well as improve quality of FDI inflow.

He said some foreign-invested businesses have taken advantage of price transfer mechanisms to report losses and invade corporate income tax to shift revenues and profits to markets where taxes are lower than in Viet Nam.

"It needs to be confirmed that FDI is the most important international capital to Viet Nam. The Government should have a clear message on FDI orientation in terms of quality and socio-economic effectiveness," he said.

Phan Huu Thang, former director of the Foreign Investment Agency, said a effective evaluation would help improve State management.

Leading shareholders to divest from Sacombank

Four leading shareholders of Sacombank (STB) have registered to sell a combined 80 million shares, or 8.3 per cent of the bank's charter capital, worth a total market value of VND2 trillion (US$95.2 million).

Thanh Thanh Cong Trading Production Co will sell over 22 million shares, while Sacombank's real estate unit, Sacomreal (SCR), will sell its entire holdings of 17.3 million STB shares. Sugar maker Societe De Bourbon Tay Ninh has registered to sell 7.5 million shares. And Chang Hen Jui, husband of STB vice chairwoman Huynh Que Ha, plans to unload over 33 million shares which he acquired from Dragon Capital last year. 

Real estate developer to pay dividend in bonus shares

Real estate developer Hoang Anh Gia Lai (HAG), one of the 10 leading shares by capitalisation on the HCM City Stock Exchange, will pay a 15-per-cent dividend on last year's profits in the form of shares. April 24 has been set as the ex-date (the date on or after which a stock is traded without a previously declared dividend or distribution), while April 26 will be the deadline for shareholders to register for the payout.-

Steelmaker Tien Len to acquire rival Phuc Tien

Steelmakers Phuc Tien Trade Manufacture (PHT) and Tien Len Steel Corp (TLH) will merge, with TLH to issue additional shares to swap for PHT shares, PHT has announced.

The share swap ratio has not yet been decided, but PHT would select the underwriter for the merger deal by tomorrow. After the share swap, PHT would become a wholly-owned subsidiary of TLH.

TLH currently holds a 24.8-per-cent stake in PHT, and the two companies share the same chairman, Nguyen Manh Ha, who holds a 17.3-per-cent stake in PHT and a 16.2-per-cent stake in TLH.

May 3 has been set as the deadline to close the list of PHT shareholders. PHT will then hold an extraordinary shareholders meeting on May 26 to discuss and potentially approve the deal.-

Phu Quoc Island okays six projects

The Investment Management Board of Phu Quoc Island revealed it has allowed two projects to raise investment capital and granted certificates to six new initiatives with investments totalling VND1.497 trillion (US$71.3 million).

The six projects, operating in tourism as well as wind and solar power, have brought the total number of projects on the island to 87, worth more than VND59 trillion ($2.8 billion) in registered capital.

The district has called on relevant authorities to grant over VND2 trillion ($95.2 million) to invest in routes including Cua Can – Ganh Dau, Cua Lap-An Thoi and Nguyen Trung Truc Bridge.'

Da Nang airport taxi fares announced

The Transport Department of central Da Nang City on Tuesday officially issued a list of taxi fares from the Da Nang International Airport to tourist destinations in the area.

Drawn up by the municipal Taxi Association and taxi companies to better service passengers, the list is publicised in Vietnamese and English at the airport and in all taxis.

All prices include airport and transport charges.

Provinces FDI firms hit $144m turnover

Foreign direct investment (FDI) enterprises operating in 11 industrial zones (IZs) of Quang Ninh province reached a turnover of US$143.9 million in the first quarter of this year, 18 per cent of the annual plan.

Domestic companies saw turnovers of VND383 billion ($18.2 million), according to the Quang Ninh Economic Zone Authority.

In the first three months of this year, provincial IZs have attracted VND100 billion ($4.8 million) in domestic investment capital and $70.8 million in FDI.

Food processors to study US laws
 
Viet Nam food processors and exporters must study changes in the FDA Food Safety Modernisation Act conducted by the US Food and Drug Administration and measures to avoid common mistakes.

The issue was breached at a seminar on exports to the US and requirements of food and pharmaceutical safety management agencies held by the Viet Nam Trade Promotion Agency and the US Registral Corp in the capital yesterday.

David Lennarz, former technical expert at the US Food and Drug Administration (FDA) and vice president of the US Registral Corp, said since early this year, every food companies must re-register with the FDA every two years. Re-registration would be required in the fourth Q4 of every year. Any companies located outside the US would continue to be required to designate a representative in the US so the FDA could communicate with them under the anti-terrorism law of 2002.

With the FDA Food Safety Modernisation Act, the FDA has the right to inspect any food processors and food packaging companies who are found involved in causing bad health or death amongst humans and animals.

Under the act, the FDA will have the right to order companies to recall contaminated food.

Experts noted that any local food processors and exporters to the US will be required by the FDA to outline hazard analysis, prevention and control of risks and changes in operation every three years.

Small businesses may be exempt or face less strict requirements and will be defined as those with revenues of less than $500,000 per year.

To make Vietnamese commodities, pharmaceuticals and beverages eligible for export to the US, importers are required to confirm the safety of all shipments while the FDA issues safety certificates for each.

Ta Hoang Linh, deputy director of the Trade Promotion Agency, said after the US and Viet Nam normalised relations and signed bilateral agreements, trade ties have rapidly developed. In 2011, Viet Nam's exports to the US brought revenue of US$16.9 billion or a year-on-year increase of 16.8 per cent and accounting for 17.5 per cent of the country's total export turnover

However, Viet Nam's enterprises are still coming to terms with US regulations on export goods.

UK helps Vietnam improve the quality of auditors

The Vietnamese Ministry of Finance and the Association of Chartered Certified Accountants (ACCA) have agreed to organize professional auditors contests in Vietnam.

At the signing of a cooperative agreement in Hanoi on April 18, Minister of Finance Vuong Dinh Hue highlighted ACCA’s assistance in developing auditing work in Vietnam.

Under the agreement, ACCA will help the MoF’s staff improve their ethical and professional standards. ACCA is also committed to granting full scholarships to Vietnamese financial officials.

The cooperative agreement will take effects in five years (from April 18, 2012 to April 17, 2014).

Seminar discusses prospects for major Vietnamese exports

Export businesses should be fully aware of laws, make the best of legal aid and receive support from craft associations if they want to maintain export growth in the context of shrinking markets overseas.

The view was shared by experts at seminar in Hanoi on April 18 to examine the prospects for major Vietnamese exports.

The seminar also aimed to discuss ways to support businesses to promote import-export activities and strengthening competitive edge of these products.

Delegates looked at advantages and disadvantages of Vietnam’s key exports such as garments and textiles, wooden products, farm produce and seafood.

They assessed the impact of the opening of the market within the WTO and Free Trade Agreements (FTAs) on Vietnam’s production and trade activities in order to complete the import-export mechanism by the Ministry of Industry and Trade in the future.

By 2020, Vietnam aims to triple its import-export value against 2010, raise GDP per capita income to over US$2,000 and balance trade deficit.

Apart from the State’s solutions for market development, and policies on finance, credit and production development, each import-export business should make greater efforts to fulfill the goal, said delegates.

New barriers against food exports to US

Food and beverage businesses are facing new challenges to their exports to the US when new US regulations on food hygiene and safety are effective in 2012.

At a workshop in Hanoi on April 18, US experts introduced the Food Safety Modernization Act by the US Food and Drug Administration (FDA), its amendments and impact on exports to the US.

According to David Lennarz, former FDA expert, imported items under strict control include food for pets containing melamine and aquaculture products containing antibiotic residue.

He said that mandatory preventive controls for food companies will be effective in July 2012, and mandatory production safety standards will take effect in 2013.

Lennarz said that major difficulties facing Vietnamese export businesses relate to the quality of products, certificates of origin, packaging methods and delivery time.

Businesses should strictly implement these regulations, especially seafood and soft drink businesses, to avoid having their products seized, he said.

Currently, the US is Vietnam’s leading import market. Last year, Vietnam fetched US$16.9 billion in export turnover from the US market, up nearly 20 percent compared to 2010. It is forecast that Vietnam’s exports of food and soft drinks will continue to increase in the coming years.

However, Vietnamese businesses are advised to meet new regulations on food and pharmaceutical safety to promote export growth to this potential market.

HCM City, Japanese locality cooperate in automobile manufacturing

Ho Chi Minh City wants to cooperate in automobile manufacturing with Aichi Prefecture, a leading auto manufacturing centre in Japan.    

Vice Chairman of the City People’s Committee Le Manh Ha made the statement at a meeting on April 18 with Hideaki Ohmura, chief of Aichi Prefecture and his business delegation, on a visit to Vietnam.

Ha revealed that HCM City is building an industrial zone and will create the best conditions for Aichi investors to operate there.

He said around 500 Japanese businesses are investing in the city, with combined capital of US$2 billion. Trade value between the city and Japan hit nearly US$4 billion per year. In addition, it receives more than 300,000 Japanese visitors each year.

Ha thanked Japan and Aichi for their assistance to the city’s construction and development. The East-West Boulevard project, including Thu Thiem Tunnel, built with Japanese official development assistance (ODA), is considered a successful cooperation model between Vietnam and Japan.

He expressed his hope that more Aichi businesses will invest in HCM City.

For his part, Hideaki said in recent times Aichi has paid more attention to investment activities in Vietnam and encouraged small and medium enterprises to seek opportunities in HCM City.

He added that they held talks with Vietnam Airlines to increase flights between Vietnam and Nagoya from the current three to four or five per week.

In the future, Aichi will boost cooperation with HCM City in industry, tourism and education, said Hideaki.

On the same day, the Aichi delegation visited Rinnai Vietnam Company at Dong An industrial zone in Binh Duong and met with Japanese students in the city.

Thai investors to seek opportunities in Hanoi

Thailand Reed Tradex Co, one of the leading exhibition organisers in Southeast Asia, has announced it will organise a business trip to Hanoi starting on May 23.

"The two-day mission programme will enable Thai investors to explore and survey investment or trade opportunities in Vietnam, while learning about the requirements of Vietnamese industrialists through a series of networking activities," said managing director Chainarong Limpkittisin.

Vietnam is still a big promising market for foreign investors as it has a high ratio of industrial expansion. To further the potential, Vietnamese manufacturers need to learn what technology trends are coming so they can catch up with the advances, he said.

Japanese businesses eye Vietnamese market

Japan’s Aichi Perfecture businesses are keen to invest in Vietnam as they have been impressed by its stable economic growth and young population.  

The statement was made by Hideaki Ohmura, chief of Aichi Perfecture while leading a delegation of Aichi leaders and 50 businesses to visit Vietnam from April 16-20.

He said that the number of Aichi businesses and representative offices in Vietnam has grown from 18 and 21 to 60 and 74, respectively. Vietnam now ranks third place only after China and Thailand in attracting Aichi investors, with trade turnover rising from 99.2 billion JPY in 2005 to 191.5 billion JPY in 2010, he added.

In 2008, Aichi Perfecture signed a cooperation agreement on investment promotion with the Ministry of Planning and Investment and in 2009 set up its Support Desk to support Japanese businesses investing in Vietnam.

Mr Ohmura expressed his wish to cooperate more closely with Vietnam in training human resources, improving healthcare services and increasing direct flights between Aichi and Vietnam.

Deputy Minister of Planning and Investment Dang Huy Dong told the guest at a reception in Hanoi on April 16 that in 2012 and following years, Vietnam will give priority to environmentally friendly projects using modern technologies, land, minerals and other natural resources effectively to develop support industry, agriculture, services, information technology, education and training and infrastructure.

PM approves national strategy for sustainable development

Prime Minister Nguyen Tan Dung has approved Viet Nam's sustainable development strategy for the period 2011-20.

The strategy focuses on maintaining economic stability, especially with regard to food security, energy security and financial security. It also sets out the roadmap for Viet Nam's green growth in order to develop a low-carbon economy.

Progress in sustainable development during this period would be measured using the following criteria: Human Development Index, Environment Sustainability Index, efficiency of investment (IOCR) and poverty rate, among others.

The strategy supports small and medium-sized cities, in an attempt to reduce the development gap between regions, urban and rural areas, and different population groups.

Viet Nam's education system would be transformed to reach international standards and diversity and training would be emphasised.

Tra fish industry faces capital crisis
 
Tra fish producers and exporters are calling for loosened credit from commercial banks as they lack capital to maintain and expand their business and exports.

The tra fish industry, which has never faced such a crisis, has seen the closure of many seafood-production companies, especially in the Mekong River Delta, according to the Viet Nam Association of Seafood Exporters and Producers (VASEP).

More than 90 per cent of businesses in the field are facing a serious capital shortage and have been running 50-70 per cent under capacity, VASEP vice president Nguyen Huu Dung told participants at a conference held in HCM City on Tuesday to review the first quarter's tra fish export activities.

"Around 50 per cent of enterprises that produce feed for tra fish have closed down because of lack of capital," said Duong Ngoc Minh, chairman of the VASEP Freshwater Fish Committee (VFFA).

The association said the tra fish industry would face a year of difficulties, including a reduction in its export capacity from the next quarter and thousands of workers facing layoffs.

Export tra fish volume for the first quarter reached 161,000 tonnes, with total revenue of US$421 million, an increase of 12 per cent and 15 per cent, respectively, compared to the corresponding period last year, according to a report released by the association at the meeting.

However, the increase was due to the amount of tra fish in stock from last year, according to VASEP.

The sector aims to gain an export revenue of $1.2 billion this year.

Since the beginning of the year, productivity has fallen as most companies in the field could not get access to bank loans to invest in input materials and production.

At least 150 businesses in Ca Mau, one of the provinces that lead in tra fish exports in the Mekong region, closed or switched business in the first three months of the year, according to the provincial Department of Planning and Investment. The number is 3.5 times that of the same period last year.

The remaining companies have been running under capacity due to lack of capital. The rapid increase of input material costs, and tightened credit were the main causes behind the capital shortage.

In An Giang Province, another leader in tra fish production, nearly 900 workers in seafood production companies have either quit their jobs or have been laid off this year, according to the provincial People's Committee.

According to the committee, a large number of seafood producers and exporters in the province have lacked materials, capital and contracts from overseas markets, especially in Europe.

Can Tho is facing a similar problem, with its year-on-year seafood productivity decreasing by 20-50 per cent.

More than 90 per cent of enterprises in Can Tho have asked for an increase in their loan limit, which is VND10 billion (US$476,000) minimum and VND1.4 trillion ($66.6 million) maximum, according to VASEP. As many as 92.3 per cent of companies are in urgent need of capital in the second quarter.

The decline of export markets because of the financial crisis in Europe and the recent bankruptcy of the Can Tho-based Binh An Seafood Company, known as Bianfishco, has caused banks to place the tra fish industry on a high-risk list and to tighten credit.
Ngo Quang Truong, the director of Can Tho-based Bien Dong Seafood Joint-Stock Company, said although the company was still running well with its first-quarter revenue reaching $9 million, Asia Commercial Bank (ACB) had still cut loans and limited credit.

The ACB's move has been made, according to Truong, following the bad debts of a small number of companies such as Binh An and An Khang.

Bien Dong is one of the 70 per cent of tra fish companies in Can Tho that have been investing in high-quality production and are facing bankruptcy because of tightened credit.

Minh, the VFFA chairman, said," the banks should not stay out of the situation when tra fish producers and exporters face such difficulties."

He called on the banks to work with enterprises and analyse their situation to help them deal with problems, as the banks would also be affected by the enterprises' losses.

"The banks play a very important role in helping enterprises deal with capital shortage, which is the key reason behind the sector's crisis," said Minh, adding that the enterprises would also need Government support.

The deputy head of VASEP, Nguyen Huu Dung, said the association would have a meeting with the Prime Minister to discuss measures to help enterprises gain access to loans in the next quarter.

He also asked the enterprises to speak frankly about their difficulties, and urged VASEP to co-ordinate with local banks to obtain low-interest rate loans from foreign funds.