Viet Nam supermarket opens in Cambodia

The Z38 company, a member of the Viet Nam Enterprises Association, opened the Viet Nam Supermarket yesterday in Phnom Penh, Cambodia.

The 3-storey supermarket covers a total area of 7,550 square metres on the Monivong Boulevard, one of the capital city's main thoroughfares.

The company invested US$3 million to build supermarket which is the largest Vietnamese goods retailer in Cambodia, said Le Minh, the store manager.

He said he hoped the supermarket would help to introduce high quality Vietnamese products to Cambodian consumers and the Vietnamese people living in that country, and further increase the reputation of Vietnamese goods.

More than 20 Vietnamese businesses have their products on sale in the supermarket, including garments, footwear, cosmetics, instant noodles, canned food, coffee and dairy products.

There are also mobile phone shops and designer watches on sale along with self-service shops, restaurants, beauty salons and an entertainment area for children.

Many Vietnamese products had caught the attention of Cambodians due to their quality and reasonable price including Acecook instant noodles, Bibica and Kinh Do confectionery products, Vissan processed foods, Trung Nguyen coffee products and Phu Quoc sauces, said a Cambodian trader from the Orussey Market in Phnom Penh.

Vietnamese producers should concentrate more on improving the quality and design of their products to further penetrate the 14 million strong Cambodian market. More Vietnamese supermarkets were expected to open in four other provinces across the country, Minh added.

A Vietnamese trader in Phnom Penh said it was important for Vietnamese enterprises to have a good distribution system and customer care services to promote the consumption of Vietnamese goods in Cambodia.

Viet Nam invested $900 million in 63 projects in Cambodia in the first six moths of this year, according to the Cambodian Development Council, making it the country's third largest investor, after China and South Korea.

Investors included Viettel Telecom Group, Bank for Investment and Development of Viet Nam, PetroVietnam, Viet Nam National Coal and Mineral Group and Vietnam Airlines.

Trade between the two countries is expected to reach $2 billion this year.

Interest rates on dollars still high, but dong falls

The maximum interest rate offered on dong deposits has fallen to 14 per cent from a record high of 17.5 per cent recently, but interest on dollar deposits remains high at above 5 per cent.

Some banks pay even higher — Phuong Dong (Oriental) Commercial Bank offers retail depositors 5.1 per cent for seven to 13 months while An Binh Bank pays 5.6 per cent for 60 months.

Even large banks face the risk of losing customers if they cut the rate: Eximbank Vietnam, for instance, pays 5.2 per cent for three-month terms.

With businesses usually paying off debts to foreign and local partners during the year end, there is a high demand for foreign currency loans now. Many businesses also require dollars for importing items for the long holiday season between Christmas and Tet (the Lunar New Year).

But there has been a spurt in lending through the year. The State Bank of Viet Nam said commercial banks operating in HCM City lent almost VND185 trillion (US$949 million) in US dollars, a year-on-year increase of 35.4 per cent.

The central bank also said foreign currency lending in the country was up almost 37.8 per cent this year compared to a 25.34- per- cent rise in dong loans.

Businesses accepted dollar loans despite the volatility in foreign exchange to enjoy the much lower interest rates compared to the dong.

Le Xuan Nghia, deputy chairman of the National Committee for Financial Supervision, said the Government had assigned top priority to cooling inflation (at 11.75 per cent this year). Once inflation was lowered, the interest rate problem would cease, he assured.

Processed food tops list of products hit by inflation

The prices of most consumer goods, especially dried and processed foods, have risen sharply in HCM City.

Analysts said though there had been no rise in purchasing power among consumers, the prices of many goods in demand during Tet (the Lunar New Year) had gone up by 7 to 10 per cent.

At some wholesales markets like Binh Tay in District 6 and An Dong and Hoa Binh in District 5, the prices of dried and processed foods have been rising since mid-December.

Medium-quality dried shrimp has soared from VND300,000 (US$15.4) per kilogramme to VND350,000 while high-quality ones cost VND600,000.

Lap xuong (Chinese sausage) has risen from about VND50,000 to VND170,000.

Sugar and vegetable oils are up by at least VND3,000 since last month.

Farms are selling chicken at VND5,000 per kilogramme more than a fortnight ago.

Many businesses have already adjusted prices by at least 10 per cent and plan to increase them by another 5 to 10 per cent ahead of the Tet shopping season.

The analysts warned that food prices would continue to go up until Tet since suppliers would continue to hike their prices.

Suppliers blamed their higher prices on the rise in the cost of raw materials.

Nguyen Kim Ngan, director of the Viet Huong Food Company, said the price of raw pork had jumped by VND4,000 per kilo-gramme and many other foodstuffs by by 5 to 10 per cent.

Nguyen Huu Thien, deputy director of the An Giang Fisheries Export-Import Company, said they also increased the prices of catfish products — twice, by 5 to 12 per cent the first time and by 5 and 15 per cent the second — after fish prices skyrocketed by 40 per cent since last month.

Many city retailers also said that the prices of many goods in demand during Tet had risen.

Huynh Huu Tuan, manager of Citimart's Binh Thanh District outlet, said almost all producers and distributors, including those supplying processed foods, hiked prices by 7 to 10 per cent in December.

Amid the price hikes, the People's Committee has told businesses participating in a city price stabilisation programme to keep their prices at committed levels, Le Ngoc Dao, deputy director of the Department of Industry and Trade, said.

Insurance premium grows 20% to $1.5b year-on-year

Total insurance premiums are estimated to have reached VND30.69 trillion (US$1.57 billion) this year, a rise of 20.3 per cent on last year, according to the Ministry of Finance's Insurance Management and Supervision Department.

The department reported non-life insurance premiums contributed roughly VND17 trillion ($871.8 million), up 24 per cent on last year.

Life insurance premiums rose 16 per cent to VND13.69 trillion ($702 million).

This year also saw insurers pay out more than VND12 trillion ($615.4 million) in claims to institutions and individuals.

Director of the Department Trinh Thanh Hoan said next year they would streamline the existing regulations to further develop the insurance market and encourage institutions and individuals to take out insurance.

Insurers would be encouraged to provide insurance to the agriculture, forestry and fishery sectors and in remote areas, Hoan added.

He said the department also planned to submit proposals to the Ministry of Finance for licensing the establishment of 3-4 insurers and insurance brokers next year.

According to the department's statistics, the country has 53 insurers, including 29 non-life insurers. There are also 12 life insurance and 11 insurance brokers. The country has only one re-insurance firm.

The department forecast the total insurance premium would reach VND35.29 trillion ($1.8 billion) next year, up 18.8 per cent year-on-year. Non-life insurance would see big rises of roughly 22-25 per cent to VND20 trillion ($1.03 billion) while life insurance rise would be 12-15 per cent.

General secretary of the Viet Nam Insurance Association Phung Dac Loc also believed the insurance market would experience strong growth next year as the Government had targeted a GDP growth rate of 7 per cent.

"Strong economic growth, which helps lift worker incomes, will lead to further development of the insurance market," he said.

Loc anticipated the life insurance market would grow roughly 18 per cent next year with mixed insurance as the key product.

He said there were still plenty of domestic opportunities for insurance companies to expand, with just 5 per cent of the total population holding life insurance. Loc estimated that roughly 30 per cent of the country's population could afford to take out insurance policies.

The Business Monitor International also reported this year that Viet Nam's insurance market was likely to see strong growth with total premiums of up to VND58.45 trillion ($2.99 billion) by 2014. This would include non-life premiums of VND27 trillion ($1.38 billion).

Ha Noi builders ordered to stop quoting in dollars

The State Bank of Viet Nam here has ordered Ba Dinh Joint Stock company, a company of construction consultants, to stop insisting that payments for its apartments be made in US dollars.

The company has been offering apartments in the Hattoco project located in Mo Lao, Ha Noi's Ha Dong district. However, all sales prices are quoted in greenbacks.

The State Bank said that the company's contracts did not conform with Foreign Exchange regulations.

The company has been told to cease the practice – or face stiff fines.

The bank took action after receiving many letters of complaint earlier this month.

Ba Dinh company director Luong Van Phu was quoted by local online newspaper Vnexpress.net as saying that the company had not received any advice from the bank.

"We will comment when we receive the document," Phu said.

However, Phu said that while apartment prices were quoted in dollars, the company converted prices into Vietnamese dong – but he did not say at what rate.

He also claimed that the technique was used "just to save equity and overcome variations in construction material prices".

The Foreign Exchange Ordinance forbids listing or selling goods in foreign currencies.

Bank issues convertible bonds to partners

An Binh Bank (AB Bank) will issue VND600 billion (US$28.6 million) worth of convertible bonds to strategic shareholders today.

The International Finance Corporation (IFC) will buy VND480 billion ($5.7 million) worth of bonds, convertible into a 10-per-cent stake in the bank after two years. Strategic shareholder May Bank will buy the remaining VND120 billion ($6.15 million) worth of bonds, aiming to maintain its current 20-per-cent stake in An Binh Bank.

"Funds raised through this issue will be allocated to the bank's medium- and long-term capital and to upgrade infrastructure," said bank chairman Vu Van Tien.

The bonds will have a face value of VND1 million $47.6 and pay a yield of 6.9 per cent per year. One bond will be convertible into 100 shares.

AB Bank has also closed registration for bonus shares to be issued at a 1:10 ratio. The bank is attempting to raise funds in order to increase charter capital from VND3.4 trillion to VND3.8 trillion ($182.4 million), with a further increase to VND4.8 trillion ($228.6 million) within two years.

Securities shares depress indices

A plunge in the value of shares of Saigon Securities Inc (SSI) weighed down stock indices yesterday and stoked investor concerns over year-end trends.

"SSI shares was among the major stocks heavily impacted by market moves," said Ha Noi broker Nguyen Van Quy. "It is also among the group of securities stocks which achieved some of the most impressive gains the day before."

A sell-off of SSI began as soon as the shares hit a five-month high of VND33,000. A wave of profit-taking spread to other stocks, driving down 145 out of 230 listed shares on the HCM City Stock Exchange. SSI closed off 1.2 per cent on a heavy volume of 3.6 million shares.

The VN-Index ended the session down 0.12 per cent to 478.75 points. The volume of trades fell 30.4 per cent from Tuesday to 61.9 million shares, worth VND1.4 trillion (US$66.7 million).

On the Ha Noi Stock Exchange, the HNX-Index declined by 1.64 per cent to 112.93 points, with losers outperforming advancers by 199-106. Volume remained high at 50.7 million shares, worth VND1.1 trillion ($52.8 million).

Securities stocks fell by 1.4 per cent overall on both exchanges, Quy said, with only VNDirect Securities (VND) and Kim Long Securities (KLS) – the most active stock of Ha Noi market, with 7.3 million shares traded – closing flat.

"The brisk at trading volume, especially in Ha Noi, meant an existance of hot money inflows, which could create a turnaround in the final days of the year," Quy said.

Le Cong, an analyst with the financial services provider Stoxplus Corporation, said that market correction could drive sentiment in the next two sessions, but, with all major economic data released, the market was unlikely to see any big changes.

Foreign investors increased their sales on both exchanges, unloading nearly 8 million shares, while buys remained strong at 7.1 million.

PetroVietnam inks deal for new power plant

The PetroVietnam Group inked a contract worth US$1.2 billion with Petro-Vietnam Technical Services Corporation (PTSC) in Ha Noi yesterday to build the Long Phu 1 coal-fired thermal power plant.

Under the contract, PTSC would provide engineering, procurement and construction for PetroVietnam's 1,200-megawatt plant in the Cuu Long (Mekong) Delta province of Soc Trang.

The contract marked an important step for the two sides to begin progress on the project, slated for January next year, said PetroVietnam deputy general director Nguyen Quoc Khanh.

It would be the first of three coal-fired power plants located in the provincial Long Phu Power Centre to begin construction.

To date, land clearance and the overall design for the 115-ha plant has been completed, he said, adding that it would use hi-quality coal imported from Indonesia and Australia.

During the signing ceremony, Deputy Minister of Industry and Trade Le Duong Quang spoke highly of PetroVietnam's efforts in ensuring the efficient funding and adequate coal supplies for the project.

He called on further efforts from the two sides to implement the project on schedule, ensuring that the plant's first turbine would be put into commercial operation in 2014, with the second section operational in 2015.

The two turbines set to provide an annual output of 7.8 billion kWh would help to better ensure power for the region and the country as a whole.

The ministry would also ask the Government and the Ministry of Transport to facilitate the plant's construction and operation, he said.

Late last week, the first turbine of Nhon Trach 2 thermal power plant, in the southern province of Dong Nai began generating electricity for the national grid, three months ahead of schedule.

The plant was invested in by PetroVietnam and contractors, the Viet Nam Machinery Erection Corporation (Lilama) and PetroVietnam Construction Joint Stock Corporation.

Viet Nam's power industry would have a total capacity of 20,900MW by the year-end. Of which, 10,400MW was provided by EVN from 2006-10. This marks a 1.98 increase on 2005's figure.

The average growth rate of residential electricity purchases from 2006-10 was 13.7 per cent, double the GDP growth rate.

Tea products need more added value

Although the fifth largest tea exporter in the world, Viet Nam has sold mostly raw tea and is advised to invest in both varieties and technology to bring added value for the product.

This was emphasised at a seminar to seek ways for the tea sector's development in the Tay Nguyen (Central Highlands) province of Lam Dong on December 26-27. The seminar was part of the third Tea Festival.

The Vice President of the Viet Nam Tea Technology and Science Association Pham S said the tea sector should make the best use of science and technology to make breakthroughs in its development.

He noted that local tea producers have not yet paid due attention and investment in packaging and promoting their trademarks, warning them of a harsh competition that comes from small and medium-sized foreign businesses with high-quality tea strains and modern processing know-how.

Tea tree is planted on about 130,000 hectares in Viet Nam and more than 6 million people are involved in growing and processing tea.

However, the Ministry of Agriculture and Rural Development's Plantation Department has found that varieties of high-quality tea are grown on just a small proportion of growing acreage, hence production is not effective.

It also referred to the unplanned development of small-scale private processing establishments that use sub-standard equipment and the lax monitoring of quality of both input tea and tea products as factors to make Vietnamese-made tea products less competitive in the world market. Viet Nam's tea products have been sold in 110 countries and territories with Pakistan being the largest importer, followed by Taiwan and Russia.

In 2009, the country raked in US$178 million from the export of 133,000 tonnes of tea and expects to ship 120,000 tonnes for $200 million this year.

Thai business delegation arrives

Twenty-six companies from the northeastern region of Thailand met with executives of 50 Vietnamese companies yesterday in HCM City to exchange information and explore business opportunities.

The visiting enterprises specialise in producing processed food, farm produce, handicrafts, cosmetics, functional food and food processing machines.

Nguyen The Hung, deputy director of the Viet Nam Chamber of Commerce and Industry (VCCI) in HCM City, said bilateral trade between Viet Nam and Thailand had grown rapidly in the past years, reaching nearly US$6 billion last year, the highest figure among ASEAN countries.

Trade between the two countries is expected to reach $7.5 billion this year, an increase of 21 per cent over last year.

More and more Thai companies have arrived in Viet Nam to seek business and investment opportunities, he said.

The event was co-organised by VCCI and the Office of Small and Medium Enterprises Promotion of Thailand.

Mekong Securities wins contest

Mekong Securities Co has been honoured by Bloomberg as having the "Best Equity Research Team in Viet Nam 2010". Winning the designation required an analyst to analysise at least three stocks, after which a Bloomberg judging panel evaluated the most meaningful, well-written and ultimately accurate analyses for the award.

Analysts from eight research teams, including Saigon Securities Inc, Vina Securities, ACB Securities, Horizon Securities, Kim Eng Viet Nam Securities, Vietcombank Securities, and FPT Securities, participated in the contest.

PetroVietnam affiliate to list

Petroleum Gas City Investment and Development Co, a member of the PetroVietnam Group, will list nearly 18.9 million shares on the Ha Noi Stock Exchange. The company has targeted earnings this year of VND338 billion ($16.1 million) and a net profit of VND7 billion ($333,333), on which it plans to pay a 3.87-per-cent dividend. It currently has charter capital of VND189 billion (US$9.5 million), of which 44 per cent is held by foreign investors.

EVN to transfer Pha Lai shares

HCM City-listed Pha Lai Thermal Power Co (VSE:PPC) has announced that its major shareholder, Electricity of Viet Nam (EVN), will sell 37.3 million shares to its affiliate EVN Finance. EVN will sell another 9.8 million shares to An Binh Commercial Bank. The sales, to be carried out between December 29 and February 24, will be conducted through negotiation trading and will reduce EVN's holdings in Pha Lai from 213.5 million shares to 166.4 million shares, representing a 51-per-cent stake.

Sacombank meets profit targets

Sacombank posted a profit of VND2.2 trillion (US$104.8 million) in the first 11 months of the year, representing over 91 per cent of its target for the year of VND2.4 trillion. Sacombank, with 360 offices nationwide, currently has charter capital of VND9.2 trillion ($438.1 million) and has targeted a profit of VND2.8 trillion ($133.3 million) in 2011.

Tonnes of farm fish found dead

More than 150 tonnes of red tilapias have died en masse in the past week in Cao Lanh District in the southern province of Dong Thap, resulting in losses of VND35 billion (US$1.7 million) for aquaculture farmers.

Red tilapias are the world's most popular farmed fish. They are fast growing and low in mercury.

The dead fish were being raised by 41 households along the Can Lo River. It was the first time such a disaster has occurred.

"Tests on the fish and water samples reveal the deaths were caused by frequent ebb tides and the high densities of fish kept caged in pens," said Vu Thi Nhung, head of the provincial Department of Natural Resources and Environment's Environmental Protection Division.

The tests were conducted by the department and Can Tho University. Nhung added that ebb tides created high amounts of organic substances in the water, which helped make oxygen levels below regulated levels.

The density of the fish in pens was 130-200 per square metre, much higher than the 90-150.

"The more organic substances deposited, the less oxygen in the water. This is what killed them," said Nhung.

She added that the department did not have any plan to support local farmers who lost their fish. But it will hold training courses to make sure farmers understand the proper technology for raising the fish.

PV