CBU imports hit US$1.57 billion

Vietnam has spent US$227 million importing completely built-up (CBU) automobiles in December, bringing the total value of CBU imports this year to US$1.57 billion.

Data of the General Statistics Office (GSO) showed that Vietnam has imported 72,000 CBU units worth a combined US$1.57 billion this year, up a staggering 103.8% in volume and 117.3% in value against last year.

The volume of CBU autos imported into the country in December alone has reached 10,000, the highest level in five years. December is also the second consecutive month with CBU imports standing at 10,000 units.

Although the General Department of Customs has yet to report on CBU imports this month, its figures unveiled higher CBU imports in the January-November period than those announced by the GSO.

According to the GSO, Vietnam imported 60,000 CBUs worth a total of US$1.29 billion in the 11-month period, while the customs department estimated that the country had spent US$1.34 billion purchasing nearly 61,600 foreign units in the period.

The 72,000 autos imported into Vietnam this year as calculated by the GSO accounts for half of this year’s auto sales projected earlier by the Vietnam Automobile Manufacturers Association (VAMA). This reflects rising CBU imports by auto distributors and assemblers in Vietnam.

Currently, almost all automobile joint ventures with foreign investments in the country sell at least one imported CBU model. For instance, Toyota Vietnam, which holds the biggest passenger car market share in Vietnam, sells three imported CBU models including Yaris, Hilux, and FT86.

Although Yaris is a competitive product on the local market, Toyota Vietnam has not decided to assemble the car in Vietnam.

Vinastar, an automobile joint venture with Japanese automaker Mitsubishi, is one of the auto firms which have increased CBU imports. Vinastar used to be one of the auto joint ventures dominating the locally-assembled auto segment but has recently announced its plan to import CBU autos because the tariffs imposed on these products will gradually fall until 2018.

The company showcased a number of imported CBU autos including Attrage, Outlander, Sport and Pajero at the Vietnam Motorshow 2014 exhibition in HCMC last month. The enterprise now only manufactures and assembles two of the six models that it distributes in Vietnam and imports the rest from Thailand and Japan.

Vinastar general director Kazuhiro Yamana said the enterprise has decided to focus on importing CBUs rather than buying auto parts for local assembly because it is not sure how Vietnam’s policy for the auto sector could change between now and 2018.

A leader of a Japanese auto manufacturer said the localization rate of Vietnam’s automobile industry is just higher than 10% and contains simple and low-value components. When ASEAN countries exempt duties on CBU imports in 2018, his company will still have to import components from other countries at high prices to assemble vehicles in Vietnam and therefore will not be able to compete with CBU units.

Foreign auto manufacturers and assemblers in Vietnam have to propose new regulations and policies to develop the domestic auto sector and at the same time, they have invested in large-scale auto factories in Thailand and Indonesia to cash in on the opportunity from CBU imports.

Vietcombank mulls merger with other bank

The Bank for Foreign Trade of Vietnam (Vietcombank), one of the five biggest commercial joint stock banks in the country, held an extraordinary general meeting last week to discuss a plan to merge with another local institution.

Stock market experts said Vietnam Construction Bank (VNCB) has emerged as the strongest candidate because when the former chairman, general director and some other senior executives of VNCB were detained in August this year by police over alleged wrongdoing, Vietcombank said it would support this troubled bank.

But a source close to the situation told the Daily that Vietcombank is eyeing a small bank in HCMC and that Vietcombank has sent its executives to help improve VNCB’s operations only.

Deputy Governor of the State Bank of Vietnam (SBV) Nguyen Phuoc Thanh told reporters earlier this year that he was uncertain whether VNCB would be merged with Vietcombank or not. However, as the two banks are shareholder-owned, their merger, if any, would be conducted in accordance with the current regulations.

The source also told the Daily that Vietcombank also plans to ink a merger deal with Saigon Bank for Industry and Trade (SaigonBank). An official of the SBV has confirmed the plan, saying the central bank has given approval in principle of the plan.

The official said the two banks will submit their merger plan to the SBV for approval after their shareholders have agreed on this. The two can only proceed with the plan when they get approval from the central bank. Share pricing is one of the key issues of negotiations between the two banks.

The news about SaigonBank’s merger with Vietcombank is surprising as the former is not in the SBV’s list of weak institutions that should be restructured. So the official said this merger scheme is just a matter between Vietcombank and SaigonBank.

SaigonBank has total chartered capital of VND3.08 trillion (US$144 million), which is very low compared to other banks in the system. Nonetheless, it has not incurred losses despite falling profits in the first months of this year.

In January-September, SaigonBank obtained pre-tax profit of VND203 billion (US$9.5 million), a drop of 47.8% against the same period last year.

Vietcombank currently holds a stake of less than 5% at SaigonBank whose bad debt accounted for 2.69% of total outstanding loans as of September 30, up from the 2.24% at the beginning of this year.

Cashew sector still relies on material imports

Vietnam will continue depending heavily on crude cashew imports to maintain its position as the world’s largest exporter of cashew nuts, as local supply remains unchanged as envisioned in a new master development plan for the sector.

According to the plan on development of the cashew industry until 2020 approved by the Ministry of Agriculture and Rural Development, the country will have 300,000 hectares under cashew farming with an annual unprocessed cashew output of 400,000 tons. This figure is not higher than the current output, suggesting that local enterprises will still have to depend on imports in the coming years.

According to the agriculture ministry, domestic enterprises need almost one million tons of crude cashew for processing a year, but local suppliers meet 30-40% of that volume. So, they have to buy crude cashew from Cambodia, Indonesia and African countries, among others.

The crude cashew shipments have increased strongly over the past years, from 328,000 tons in 2012 to 600,000 tons this year. The year-on-year rise is attributable to the fact that the national acreage under cashew farming is in decline while yields do not improve.

The respective average yield and prices of raw cashew are around one ton per hectare and VND25,000 (over US$1) per kilo at the moment.

Statistics from the Cultivation Department under the ministry indicated that the earnings by cashew farmers are equivalent to only 20% of coffee growers and a mere 7% of pepper. This has led cashew farmers to turn to other high-yield plants and the area under cashew farming to shrink by 15,000 hectares a year.

According to the master plan, Binh Phuoc, Dong Nai, Ba Ria-Vung Tau and Binh Thuan are chosen as the country’s major cashew producing provinces with a combined area of 200,000 hectares. The remaining 100,000 hectares will be developed in other localities such as Dak Nong, Daklak, Lam Dong, Gia Lai and Ninh Thuan.

In addition, the agriculture ministry encourages provinces to plant cacao in cashew farms and find new seedlings to improve cashew output and value.

HCMC, localities join hands to develop hi-tech agriculture

The HCMC Agricultural High-Tech Park (AHTP) on December 29 signed cooperation agreements with Phu Yen, An Giang and Vinh Long provinces to develop hi-tech agriculture there.

The signatories of the deals are AHTP, the Phu Yen Agricultural Zone of High Technology Application, the An Giang Biotechnology Center and the Vinh Long Department of Agricultural and Rural Development.

These agencies will together carry out promotional programs to attract local and foreign investors to hi-tech agricultural projects in the localities as well as develop supply chains for certain agro-fishery products.

Tu Minh Thien, deputy head of AHTP, said many foreign investors are exploring opportunities in Vietnam’s agriculture sector to capitalize on the opportunities from the free trade agreements (FTA) which the country has signed or will sign, including the Trans-Pacific Partnership (TPP).

Thien said some foreign firms have asked AHTP to help look for local suppliers of farm produce in large quantity. However, AHTP will not be able to meet their request if it cannot cooperate with partners in other localities.

Dinh Minh Hiep, head of AHTP, said not only foreign investors but also local enterprises in HCMC want to execute large-scale projects but the park cannot meet their demand for large areas to deploy such projects but the provinces can.

Hiep added AHTP and provinces will join forces to develop quality and high value-added products for sale in HCMC and export in order to help increase incomes for farmers.

AHTP will aid the provinces in implementing projects applying hi-tech to cultivation, breeding and seafood production as well as establishing hi-tech agriculture enterprises.

AHTP was established in 2004 on an area of 88 hectares but officially came into operation in 2010. The first agricultural high-tech park in Vietnam has mainly supplied high quality seeds and help farmers, co-operatives and agriculture firms produce organic vegetables.

So far, AHTP has carried out 14 projects with a total investment of VND190 billion. It has provided nearly 60 tons of F1 seedlings, over 8,000 tons of farm produce and more than 11,000 liters of bioproducts, among others for farmers and enterprises.

NFSC: Banking system fares better

Many indicators have showed the financial and banking sector is changing for the better, according to the National Financial Supervisory Commission (NFSC).

In a report sent to a Government meeting on December 29, the commission said the financial market has gone through a lot of positive changes and that risks in the banking system have eased.

Liquidity is growing strong and deposits by both individuals and corporations are still surging despite lower interest rates. The loan-to-deposit ratio (LDR) of the banking system stayed at 83.43% on October 31, the lowest level in recent years.

The borrowing, lending and inter-bank rates have fallen to the 2006 levels. The lending rates have dropped by 0.5-1.5 percentage point from early this year, thus fueling credit growth.

The assets quality of credit institutions has also improved.

The net interest margin (NIM) is now quite stable after declining strongly in the 2011-2013 period. NIM slid from 3.5% in 2011 to 3.2% in 2012, 2.8% last year and has stabilized this year.

Regarding the stock market, according to NFSC, market capitalization has climbed to 31.5% of GDP this year. Capital mobilized via share sales and equitization has amounted to VND25.1 trillion, up 22% against last year.

Total assets of securities firms and fund management firms have risen for the first time since 2011 to approximately VND75.5 trillion, with a growth rate of 20%. The capital adequacy ratio is 350%, much higher than the safety level of 180%.

The assets quality of these firms has significantly increased as they have restructured investments and the stock index has improved.

In addition, the woes suffered by enterprises and households have become less intense.

NFSC quoted statistics of the Ministry of Planning and Investment as saying that though the number of newly established enterprises has gone down by 2.7% this year, average registered capital has picked up 11.5% from last year.

Over 15,400 enterprises have resumed operations this year, up 7.1% compared to last year.

Meanwhile, enterprises have seen an improvement in profitability. After a long period of decline, the return on assets (ROA) and the return on equity (ROE) of firms listed in the year’s first three quarters are 3.8% and 9.4% respectively, rising 0.5 and 1.1 percentage points from a year earlier.

The current and quick ratios have edged up slightly to 1.5 and 0.9 respectively. The interest coverage ratio of non-finance firms has improved compared to last year, at 5.4 in September.

Total retail sales of goods and services, with the price hike factor excluded, have inched up 6.3% compared to 5.6% of last year.

According to NFSC’s survey conducted in the 2012-2014 period, households tend to increase investments in production to seize investment opportunities when the economy is on the way to recovery.

In August this year, around 24% of respondents said they intend to invest in production while the figures in February of the same year and in July last year are 17% and 6% respectively.

Exports to Russia seen declining as ruble falls

The plunge of the ruble is becoming a challenge to Vietnamese exporters dealing with the Russian market.

Key export products of Vietnam to the Russian market, including seafood, telephones and their spare parts, rice and coffee, are at risk of declining in export turnover.

The plunge of the ruble against the dollar and euro will raise the price of Vietnamese products imported to the Russian market.

The Russians will likely reduce imports from foreign countries to decrease their spending.

Trade Counsellor to Russia Pham Quang Niem said that the slide of the ruble would limit the imports of the country.

A representative of the An Dinh Technology Investment and Development Co Ltd told Dau Tu (Vietnam Investment Review) that its Russian partner had stopped signing new contracts for 2015. Next year will be a tough year for Vietnamese exporters to the Russian market.

The company, located in My Hao District in the northern province of Hung Yen, had an average agricultural export turnover to the Russian market of nearly 1 million USD per year. This accounts for 20 percent of the company's total export turnover.

Statistics from the General Department of Customs showed that the rice export of Vietnam to Russia in the first 11 months of 2014 fell by 74 percent compared with that recorded in the same period last year.

Than Duc Viet, management director of Garment 10, remarked that Russians will have to pay more for products when the ruble weakens. Therefore, customers will have to adjust their spending and may choose to buy lower-quality products. These are factors that Vietnamese exporters should take into consideration.

* Slow payments

Apart from worrying about the decline in export turnover, enterprises are also anxious about the increasing risks associated with payment. Russian partners may have difficulty buying dollars to pay for import contracts from Vietnam, which could result in slow payments, shared Dinh Hong Ky, chairman of the Secoin joint-stock company management board.

However, a number of enterprises expressed optimism that the market will still need to import products with lower prices. This would create opportunities for Vietnamese products with reasonable prices since Russian customers are expected to limit their purchases of high-quality products as the ruble weakens.

The Russian market will still be a potential consumption market for Vietnamese exporters, especially for seafood and garments and textiles, said the Vietnam Enterprises Association in Russia.-

Business development policies to be prioritised in 2015

The Party Central Committee’s Economic Commission will focus on researching institutions and polices for the development of all types of businesses in 2015, said commission head Vuong Dinh Hue.

As 2015 is considered a business year, the commission plans to conduct in-depth studies on the organisation model of management agencies representing the State ownership of enterprises as well as institutions and policies supporting small- and medium-sized enterprises, he said in an interview granted to the Vietnam News Agency on the threshold of the New Year 2015.

It will also focus on building policies for social businesses, mechanisms for the operation of non-productive public units, as well as policies to develop and improve the efficiency of the collective and cooperative economic sectors, especially in the field of agriculture.

Orientations and policies for the attraction, management and use of official development assistance (ODA) in the time ahead will be scrutinised along with those on developing industry and industrial trademark, he said.

In addition, the agency will research economic development strategies and border trade policies as well as those to develop tourism as a key economic sector, he added.

The Party official emphasized the importance of 2015 as the last year in the Party’s five-year tenure with the entire political system striving to fulfil the set targets.

He noted that the year is expected to see the signing of several free trade agreements, creating an important momentum for the country’s trade and investment growth.

At the same time, the enforcement of many laws related to the business and investment environment and the market economy institution, including the revised Enterprise Law, the revised Investment Law, the Real Estate Business Law and the Housing Law, is expected to bring new vitality to the economy.

Looking back at the country’s 2014 socio-economic situation, the commission head highlighted the more stable macro economy, lower-than-target inflation rate, better-than-expected GDP growth rate, more stable monetary and financial market, and remarkable progress in economic restructuring as the bright spots in the national economic picture.

However, he noted that the economy will still face a lot of difficulties next year as its growth rate is yet to match potential, business and production activities still meet obstacles, and public and bad debts remain high.-

Lao Cai’s DAP fertilizer plant starts operating

The 234 million USD Lao Cai diammonium phosphate (DAP) plant started operating on December 28 in northern Lao Cai province, providing high quality fertilizer particularly for the northern mountainous areas.

The plant covers an area of 72ha in Tang Loong Industrial Park, designed to produce 330,000 tonnes of DAP from Apatite ores a year, using technologies of the EU, the US, Belgium, and Spain.

Speaking at the opening ceremony, Minister of Industry and Trade Vu Huy Hoang praised the effort of local authority and constructors to keep the construction progress on schedule and ensure its safety and quality at the same time.

He asked the plant’s managers to rigorously guarantee environmental protection and output quality.

Chairman of the provincial People’s Committee Doan Van Huong regarded the plant as a key project marking the province’s XIV Party Congress (2015 – 2020).

He pledged that the authority continues creating all possible conditions for the constructors to finish remaining works.

Ministry works on new regulations for supporting industry

The Ministry of Industry and Trade (MoIT) is drafting a new decree on developing the supporting industry with more attractive incentives and transparent stipulations with the aim of creating a breakthrough for the sector, according to a senior official.

Truong Thanh Hoai, Head of the MoIT’s Heavy Industry Department disclosed this during a recent interview granted to the Vietnam News Agency.

He said the new decree will focus on policies for industrial parks and clusters, technical and technological research, application and transfer, human resource training, development funds and foreign investment attraction in the field of supporting industry.

The official added that there will be a national programme designed specifically to help domestic supporting enterprises connect with potential customers.

He noted that as most domestic supporting enterprises have a low starting point, the State will continue to furnish the sector with assistance in terms of capital, infrastructure, production technology, workforce training and market development, so as to help them to make a breakthrough in the time ahead.

Hoai underlined that at present, only a small number of local makers are able to meet multi-national corporations’ requirements of stable quality, on-schedule delivery and reasonable price.

He stressed that beside the State’s support, the business community should make stronger efforts to enhance their capacity.

Vietnam currently has 1,400 enterprises operating in supporting industries that manufacture electrical, electronic, metal and rubber components and accessories. However, their limited production capacity has forced manufacturers to look for foreign suppliers, leading to the country's prolonged trade deficit in industrial production in previous years.

Vietnam had to import a wide range of components and accessories worth 53.1 billion USD last year, and that number is expected to jump to 67.6 billion USD this year.-

Restructuring on right track, securities commission says

The State Securities Commission (SSC) said the restructuring of securities companies is keeping in the right direction, taking in cautious steps with respect for market rules.

The move reduced the rate of loss-suffering companies from 60 percent to 20 percent with loss slashed remarkably from 4,200 billion VND to 200 billion VND.

Meanwhile, the profitability rate increased 1.5 times and the average index of the financial safety expanded by 15 percent, the SSC said.

As of the end of the third quarter, 43 fund management companies were in operation, of which 23 companies ran profitably with a joint sum of 132 billion VND while 20 others suffered a combined loss of 64 billion VND.

The companies took responsibility for a total asset of 109 trillion VND.

According to the commission, the open-end funds, which replaced the closed-end funds, are operating in a more flexible and transparent manner with mechanisms to better protect investors.

As of December, 2014, the market saw the presence of 25 mutual funds with two of them being Exchange-Traded Fund (ETF), 15 open-end funds and eight member funds. Their total mobilisation value is over 7 trillion VND.

The SSC said that it has to date issued all mechanisms and policies related to the organisation and operation of securities businesses in line with international practices, especially using BASEL II financial safety criteria, CAMEL early warning criteria and international-standard risk management system.

In 2015, the SSC said it would work with other relevant agencies to develop standard accountancy criteria applied to organisations which trade securities, and an accountancy system used by securities companies.

The SSC will also amend circular 210 on organising the operation of securities companies and take measures to keep the securities market operating stably, safely, and effectively.

Central bank's flexible monetary policy brings in positive results

The State Bank of Vietnam (SBV) has seen positive outcomes while implementing monetary policy in a flexible and synchronous manner in 2014, in line with the targets set by the National Assembly and Government, making significant contributions to national economic achievements.

The SBV has carried out an active interest rate policy in an effort to reduce interest rates and ease difficulties for the domestic economy. The average interest rate on deposits is currently 1.5%-2% per year lower than 2013 while the lending interest rate is about 2% lower than 2013. The move helped enterprises have easier access to banking loans and create a more efficient allocation of capital in the economy.

In addition, commercial banks have proactively lowered the interest rates of old loans. Loans with annual interest rates higher than 15% account for only 3.9% of the total loans in Vietnamese dong, compared with 6.3% in 2013, while loans with annual rates of over 13% account for 10.65% of the total loans in Vietnamese dong, much lower than 19.72% in 2013.

Along with lowered interest rates, the SBV also implemented many other measures to support enterprises including focusing loans on prioritised sectors, restructuring debts, reassessing the repayment capacity of customers among others. Credit lent to small-and medium-sized enterprises grew 13.5% in 2014 while credit to high-tech enterprises and rural agriculture rose 14.8% and 12.8% respectively.

In the meantime, the national credit growth in 2014 met the whole year target of 12%-14% with improved credit quality, creating positive changes for the macroeconomy.

The year 2014 also witnessed a stable exchange rate and foreign exchange market. There were times the exchange rate increased, but quickly calmed down thanks to measures from the central bank.

In 2014, the system of credit institutions could meet demands for foreign currencies serving investment and international trade transaction. The country's foreign exchange reserves surged sharply and reached a record high, contributing to boosting the confidence of foreign investors in the macroeconomic stability in Vietnam.

Despite gaining positive results in 2014, the monetary policy regulation in 2015 is forecast to deal with challenges.

The fluctuations of the world economy, the sharp decrease in prices of crude oil, the fall of the Russian rouble and the possibility of rising interest rates from the Federal Reserve System (Fed), may create adverse impacts and pressure on the management of foreign exchange and the exchange rate. The upcoming signing of bilateral and multilateral trade agreements, such as the Trans-Pacific Partnership Agreement, will also lead to changes in regulating economic policies.

Non-performing loans, cross-ownership and others are also big challenges to the SBV in regulating monetary policy in 2015 which requires the SBV to be consistent with its targets and increase co-ordination with other ministries and agencies.

Monetary policy in 2015 should come in line with the target of maintaining an inflation rate under 5%, stabilising the macroeconomy and contributing to an economic growth rate of around 6.2%, as set by the NA at the recently concluded session in November.

The monetary policy must be implemented proactively and flexibly in parallel with fiscal policy in order to control inflation as set targets, ensure macroeconomic stability as well as ensure the liquidity of credit institutions.

The SBV needs to regulate instruments of monetary policy, such as interest rates and exchange rates, in a synchronous manner to stabilise the monetary market, ensure the stable value of Vietnamese dong and increase the nation's foreign currency reserves. It is also necessary for the SBV to focus its policies on settling non-performing loans, restructuring credit institutions and improving the quality of credit.

Vietnam sets national strategy for pharmaceutical sector

Vietnamese pharmaceutical sector has produced more than 12,000 various medicines; however, local drugs just take up half of market share and most are simple kind, not bringing much profit.

A Vietnamese resident has an average spent of US$31 a year on medications and half of them are foreign-made drugs. Accordingly, the home pharmaceutical sector must work out a national development strategy with the vision to 2020.

According to the Ministry of Health’s Vietnam Administration of Drug, as of December, 2014, there are around 130 GMP-standard pharmaceutical factories including 104 producing modern drugs, 25 manufacturing herbal drugs and four making vaccine.

Domestic enterprises have made 12,000 drugs and 520 active ingredients while there are 1,000 abroad-made active ingredients and specific drugs with high value.

In addition, though there have been more Vietnamese-made drugs which are available in market but it has just satisfied half of local demand.  

Moreover, to produce some drugs, most materials are imported leading to a higher price. Therefore, local enterprises just produce simple drugs with low value rather than specific ones.

Head of the Drug Administration of Vietnam Truong Quoc Cuong said that to achieve the target to help Vietnamese –made medications replace gradually their foreign counterparts, the sector should invest more to produce cheaper generic versions. Furthermore, the sector should pay more attention to herbal drugs.

As per the government, the health sector is focusing on building the national brand name which the sector must implement 62 good drugs and 30 excellent manufacturers to select the best ones, the ministry will have measures to support them in a bid to spread information of local drugs to consumers to help increase turnover.

Medical workers should use Vietnamese-made medications in their prescription, Mr. Cuong noted.

The Ministry of Health ordered all hospitals nationwide must name Vietnamese drugs into drug index.

The national strategy with the vision to 2030 points out that Vietnam strives to produce 20 materials for manufacturing drugs and local medications must account for 80 percent spending.

US$15 million collected from stake transfers

The HCMC Department of Taxation said it had collected VND322 billion (US$15 million) in tax arrears and fines from 632 stake transfers of which individuals and firms had not make sufficient tax declarations and payments as of November.

The tax and fine collections were credited to the department’s close coordination with the HCMC Department of Planning and Investment since the end of 2013 to inspect stake transfers and changes to business certificates of enterprises in the city.

The department said the inspected firms usually delayed submitting documents and explaining their stake transfer deals. However, inspection teams took measures to deal with these cases.

According to the department, the amount of tax arrears and fines in HCMC is higher than other localities despite the smaller number of companies inspected here in the city.

Figures of the General Department of Taxation showed that local tax agencies have probed over 2,800 loss-making enterprises and those with signs of transfer pricing this year.

Local tax agencies have reduced tax deductions by over VND5.8 trillion (US$272.3 million), including VND1.6 trillion from foreign-invested enterprises (FIEs). They have collected tax arrears and fines worth over VND1.7 trillion with VND600 billion (US$28 million) from FIEs.

The General Department of Taxation said it will monitor and inspect companies likely to commit tax violations and those enterprises which incur losses but still expand operations.

Hanoi, HCMC have highest tax arrears

* Tax arrears in Hanoi and HCMC account for 60% of the country’s total tax debts this year, resulting in the two cities having the highest tax debt ratio, according to the General Department of Taxation.

By the end of this year, the tax arrears have exceeded VND21.5 trillion (around US$1 billion) in Hanoi and totaled VND20.3 trillion in HCMC, up around 30% against last year.

Notably, the irrecoverable tax debts are VND1.8 trillion in the capital city and VND2.8 trillion in HCMC.

To recover tax debts, the Ministry of Finance has told local tax agencies to inspect FIEs which import materials to produce items for export, companies with large amounts of unpaid tax, and firms which change offices frequently.

Saigontourist begins work on Cam Ranh tourism complex

Saigontourist Holding Company and Saigon-Cam Ranh JSC broke ground for a luxury tourism complex on Cam Ranh Peninsula in the central province of Khanh Hoa over the weekend.

The 20-hectare Saigon-Cam Ranh complex in the north of Cam Ranh Peninsula will comprise of a five-star hotel with 216 guest rooms, luxury villas, restaurants, health and meeting facilities and a mini golf course.

Tran Hung Viet, general director of Saigontourist, told the Daily that the first phase of the tourism project will require some VND100 billion (around US$4.7 million). Hotel rooms, villas and restaurants of the first phase could be put into service in 2016.

The project site is around six kilometers from Cam Ranh airport and 30 kilometers from the beach city of Nha Trang.

Saigontourist has developed many tourism projects in some 30 of the country’s 63 provinces and cities. The company is also one of the shareholders of Saigon-Cam Ranh JSC, Thanh Phong Investment Consulting Co. Ltd., HCMC Housing Trading and Development JSC, and Thoi Dai Housing Development and Investment Co.

Experts: Local currency fall of 2% next year realistic

Banking and securities experts have said that the central bank could realize its target of keeping the fall of Vietnam dong currency against the U.S. dollar at a slight 2% next year thanks to positive signs of the economy.

Ngo Dang Khoa, head of trading at HSBC Vietnam, said the target is achievable because of more supporting factors for stabilizing the exchange rate.

Khoa said this year Vietnam has posted a balance of payments surplus of US$11-12 billion owing to strong foreign direct and indirect investment inflows, a trade surplus of over US$2.5 billon (as of November) and incoming remittances of around US$10 billion.

Next year, the country’s balance of payments is expected to run a surplus of US$8-9 billion next year, so supply and demand for the U.S. dollar is not a major concern. If strong volatility occurs, the State Bank of Vietnam (SBV) will adopt timely and effective measures to stabilize the local market.

Sharing Khoa’s view, deputy general director of Hochiminh City Securities Company (HSC) Trinh Hoai Giang said in addition to the balance of payment surplus, inflation next year is estimated to stay low and the local currency stable.

Asked whether Vietnam’s exports would be less competitive if Vietnam dong is pegged to the firmer greenback, Khoa said there are different views on how to control the exchange rate to back the export sector.

Khoa noted that as Vietnam has to import materials and machines to turn out export goods, a devaluation of dong against the dollar would result in the country’s import bill rising, which will in turn affect goods prices and inflation.

It is certain that Vietnam’s foreign debt would snowball if Vietnam dong is devaluated. Therefore, instead of adjusting the foreign exchange rate to support exports, the SBV has plans to keep it stable and flexible within a reasonable range so as to minimize negative impacts, Khoa said.

Khoa projected the exchange rate would be stable in the short term. The dollar appreciation in the last months of 2014 is normal as exporters have to pay loans, FDI firms repatriate their profits to their home countries, and importers buy the greenback to pay their bills. Increasing demand for the dollar will pile pressure on the exchange rate.

Khoa predicted the foreign exchange rate and the market will return to a stable status after the Lunar New Year holiday (Tet), which falls on February 19 next year.

Giang of HSC noted that as the dollar is firmer against other currencies, especially euro, foreign investors tend to sell assets, including stocks and bonds in emerging countries to get the U.S. dollar for repatriation to their countries, and this could affect capital markets and the exchange rate in Vietnam.  

However, the possibility of offloading large volumes of shares and bonds by foreign investors to withdraw capital is not high as local bonds have turned attractive since Vietnam has been upgraded by international rating agencies and has offered higher coupons than many other countries. On top of that, the local economy has performed better.

Foreign investors net sold around VND4 trillion (US$187 million) in the fourth quarter of this year, which is equivalent to the amount of money they net bought in the first three quarters of the year. This has impacted the exchange rate between the U.S. dollar and Vietnam dong.

Last month, the SBV issued Circular 36/2014/TT-NHNN limiting the percentages of bond holding by foreign bank branches and banks from February next year, which has led them to sell bonds. However, the local bond market is seen stable, Giang said.

Prosecutors insist VietinBank return lost deposits

The Supreme People’s Procuracy in HCMC reiterated that the Vietnam Bank for Industry and Trade (VietinBank) should take responsibility for over VND1 trillion (US$46.9 million) deposited at the bank by five firms but expropriated by its former executive Huynh Thi Huyen Nhu.

The prosecution said it did not agree with the arguments of five lawyers defending VietinBank that the expropriation of cash from the five companies by Nhu, former deputy chief of the risk management department at VietinBank, happened outside the bank.

At the appeals hearing on December 29, the prosecution said VietinBank had caused losses of VND1 trillion deposited by Hung Yen Trading and Investment Joint Stock Company, Saigon Bank Berjaya Securities Joint Stock Company, An Loc Investment and Trading Joint Stock Company, Global Insurance Corporation and Orient Securitites Corporation.

“The deposits in the payment accounts of the five firms were mobilized capital of VietinBank as the bank had paid the interest for those corporate depositors. Therefore, if VietinBank had conducted its banking operations correctly, no one could take away the deposits but the depositors,” he said.

The prosecution also objected to the arguments of VietinBank’s defense attorneys who said the agreements which Nhu and the five companies reached before they opened payment accounts at VietinBank were against law, and that the procedures to open their accounts at the bank were not correct.

They placed their deposits at VietinBank and the bank accepted their deposits, the prosecution noted.

Defense attorneys for the five companies shared the same view with the prosecution, blaming VietinBank for irresponsibility.

They said it is contradictory when VietinBank said the procedures to open their accounts at the bank are against law but had still allowed them to deposit their money and paid them the interest.

Regarding ACB and Navibank, the prosecution rejected the appeals by Asia Commercial Joint Stock Bank (ACB) and Nam Viet Commercial Joint Stock Bank (Navibank), saying the two banks had violated regulations.

According to the prosecution, ACB and Navibank have to take responsibility for their lost deposits worth a combined VND900 billion (US$42 million).

However, lawyers defending the two banks said Navibank and ACB officers had opened accounts at VietinBank under the agreement of the bank, and their deposits are legal and put under management of VietinBank but had been stolen by Nhu.

The lawyers admitted ACB and Navibank officers committed wrongdoing when depositing money at VietinBank but said the cases of ACB and Navibank are similar to the above five companies. Therefore, the prosecution’s decision to turn down their appeals is unfair.

Catalogue Shopping to boost sales by mail

Catalogue Shopping Company is proceeding with plans to speed up sales by mail and its target customers include middle-aged buyers, especially those living in rural areas.

Pierre Faucher, general director of Blue Fox Group which operates Catalogue Shopping, told the Daily last week that shopping via the post office channel is popular in foreign nations but still new in Vietnam.

The channel allows customers to place orders with Catalogue Shopping by telephoning or mail, and they will receive the goods by mail.

“Customers in rural areas do not have many options for shopping due to the lack of big supermarkets and shopping malls and difficult access to the Internet,” Faucher said.

Faucher said 60% of Catalogue Shopping’s customers are in rural areas and the target for the coming years is 70%. Among the target customers are housewives.

The company will also increase from three catalogues consisting of 50 items, mostly home appliances, to four catalogues with 60 different products next year for customers to see and buy. Nearly 30% of the items in the catalogues are made in Vietnam while the rest are imported from China, Taiwan, Thailand and South Korea, Faucher said.

Faucher admitted that as Catalogue Shopping is a new brand in Vietnam, the company will have to invest heavily to gain the confidence of customers in the products it is selling.

Catalogue Shopping has plans to step up sales via telephone and e-commerce channels in the future.

Catalogue Shopping carried out a sales campaign between September 22 and December 22 this year by sending out 60,000 letters and catalogues. Of the 24,000 customers responding to the campaign, 2,000 ordered products from the company.

Cargo throughput at HCMC ports soars

Total cargo throughput at HCMC ports has been estimated at 109 million tons in the year to date, 28 million tons more than last year and nine million tons above the year’s target, heard a conference in the city on the weekend.

HCMC chairman Le Hoang Quan told a review conference on the city’s socio-economic performance in 2014 that the strong increase has resulted from the upgrade of transport and port infrastructure, investments innew roads, and the dredging  of Soai Rap River to allow ports along this waterway to handle larger vessels.

The rise in cargo throughput at ports has contributed to quarter-on-quarter gross domestic product (GDP) growth in the city, exports and development of key sectors, including services, manufacturing and agriculture.

The city’s GDP has expanded 9.6% to VND852.5 trillion (US$39.8 billion) this year against last year. Exports have increased by 8.8% year-on-year to US$32 billion while imports have edged down 2.24% to US$25.4 billion.

Thai Van Re, director of the HCMC Department of Planning and Investment, said the city’s GDP per capita this year is put at US$5,131, 1.6 times higher than the national average. Earlier, the city targeted the GDP per capita of US$4,800 for next year.

Development investments in the city this year total VND250 trillion (US$11.69 billion), accounting for 28.5% of the GDP.

Next year, the city targets GDP growth of 9.5% or higher, total development investments up to 30% of GDP, export growth of 8-10% and tax collections picking up 8.08% year-on-year to VND265.7 trillion (US$12.4 billion), according to Re.

Quan said many production enterprises have recovered and been back to strong growth this year.

Dao Thi Huong Lan, director of the HCMC Department of Finance, gave figures to support what Quan said that tax collections have grown 10.29% year-on-year to VND249.86 trillion (US$11.68 billion) this year, making up 30% of the nation’s budget revenues.

The city has collected more than VND16 trillion in tax arrears from last year and this.

Data from the finance department showed that around 50,000 out of 230,000 firms operating in the city have taken out bank loans. City banks have inked deals to provide combined loans of VND40 trillion (US$1.87 billion) for enterprises under the bank-business matching program for this year, doubling the initial estimate.

Lan said the city government will continue support policy for local enterprises and boosting investments in infrastructure and education next year.