IFC raises borrowing limit for Lien Viet Post Bank

The International Finance Corporation (IFC) has raised the trade finance limit for the Lien Viet Post Commercial Bank from US$5 million to $20 million.

Under the Global Trade Finance Programme, the IFC is supporting the development of Vietnamese SMEs. Lien Viet PostBank is one of 200 banks in 90 developing countries taking part in the GTFP.  

Vietnam strives to access New Zealand market

Vietnamese businesses should take advantage of the ASEAN- Australia -New Zealand Free Trade Agreement (AANZFTA) to better exploit the New Zealand market, economists have said.

The economists also suggested the Vietnam Trade Promotion Agency build trade promotion programmes and help businesses to access the market effectively.

According to the Export-Import Department under the Ministry of Industry and Trade, although New Zealand is a small market, the country has provided many consumer products of good quality for Vietnam while importing many goods from the country.

New Zealand also proves itself a market of high taste and stable price, the department added, noting that in 2011, Vietnam ’s export to the market surged by about 30 percent while imports rose just 8 percent.

With such speed, the trade balance between the two countries is expected to equalise.

The department described New Zealand as a provider of material milk and wood for Vietnamese producers and processors.

Each year, New Zealand ’s imports of minerals, machinery and consumer goods from Vietnam increase by about 25-30 percent.

The New Zealand Ministry of Agriculture and Forestry allowed Vietnamese mango fruit to enter the market from Nov. 11, 2011.

Notably, apart from goods, next year Vietnamese businesses will conduct a number of new cooperative programmes with their New Zealand partners in kiwi fruit planting, husbandry, afforestation, timber exploitation and labour export.

However, the department warned Vietnamese businesses to pay attention to the quality of agricultural, forestry and aquatic products in accordance with the country’s biosecurity regulations.

Refinery grants contracts for maintenance services

PetroVietnam Energy Technology Corporation (PV EIC) and Binh Son Refinery Ltd. (BSR) have signed a contract for maintenance of the Dung Quat Refinery in the central province of Quang Ngai.

Under the 5-year contract, PV EIC will take care of maintenance at the factory, including periodical and general maintenance and breakdown repairs of machines, pipes and technology systems.-

MOF requests oil price stability

The Ministry of Finance (MOF) requested enterprises to maintain fuel prices as they were in an announcement issued yesterday.

In lieu of increasing prices, enterprises will be permitted to use the price stabilisation fund as follows: gasoline must be kept stable at VND1,400 (US$0.07) per litre; diesel may increase to VND1,240 from VND690 per litre; kerosene can rise to VND780 ($0.04) from VND440 per litre; and mazut oil may increase to VND1,610 ($0.08) from VND740 per kg.

Asians seek more VN shrimp
 
Domestic shrimp exporters will boost their shipments to Asian markets this year as seafood consumption demand was forecast to surge in the region, said general secretary of the Viet Nam Seafood Exporters and Producers, Truong Dinh Hoe.

Hoe said that China, Japan and South Korea would be potential markets for Vietnamese shrimp exports this year, with an anticipated declining demand in the EU and US markets.

Having exported to 91 markets worldwide, shrimp is the biggest earner among exported seafood, earning the country US$2.4 billion last year, up 13.7 per cent over the previous year.

The Ministry of Agriculture and Rural Development targeted $6.5 billion of earnings from seafood exports this year, $2.5 billion of which will be from shrimp exports.

However, industry insiders were concerned about the fishery industry's shortage of materials, especially for shrimp production, this year.

Hoe said that fisheries would face a shortage of materials due to difficulties in capital and breeding, though it was expected farmers would resume investments in aquaculture in the wake of feed price decline.

High input costs for aquaculture and fishing hinder farmer investment in the field.

"Seafood exports are also forecast to face more challenges this year due to stricter hygienic regulations imposed by importing countries", said general director of the Minh Phu seafood export group Le Minh Quang.

Besides urging relevant authorities to take bolder measures in supervising aquaculture processes, Quang also recommended to build up dedicated areas for aquaculture.

‘Time to reform finance firms'

Financial leasing companies need to be comprehensively restructuredto provides no colateral, non-bank financing for enterprises, particularly small and medium-sized enterprises unable to access bank credit, said Viet Nam Financial Leasing Association general secretary Dam Duc Long.

He said that after 10 years of development, the legal framework governing financial leasing companies remained inadequate, and their operations continued to stagnate.

Last month, in a move intended to increase the competitiveness of the sector, the State Bank of Viet Nam approved requests by two major finance companies to increase their charter capital. Vietinbank Financial Leasing Ltd Co will increase its charter capital from VND500 billion ($23.8 million) to VND800 billion ($38 million), while Vietcombank Financial Leasing Ltd Co will hike its charter capital from VND300 billion ($14.3 million) to VND500 billion.

But most of these companies still lacked capital, skilled human resources and the capacity to adequately assess the credit worthiness of their clients, Long said.

As a consequence, the bad debts of finance companies skyrocketed to 40-50 per cent in 2011, according to the National Financial Supervision Committee.

The committee's chairman, Vu Viet Ngoan, said finance companies operate in a difficult environment compared with commercial banks and have yet to find a suitable market segment. They also lacked a comprehensive legal structure.

Long said the State Bank needed to create a favourable mechanism for finance companies to access capital. At the same time, the companies needed to increase their management, internal control and audit capacity, as well as their systems for evaluating clients, he said.

The companies also needed a better system of protecting their interests in leased assets, particularly at the end of the lease, when many clients think they have a right simply sell the asset, Long said.

Meanwhile, the Government was expected to issue a new decree on non-bank credit institutions, including finance companies.

HCM City price stabilisation scheme controls CPI increase

The Price Stabilisation programme implemented by HCM City has helped reduce the CPI (consumer price index) growth rate in HCM City and had a partial impact on national figures as well, a senior Government official in HCM City has said.

Beginning 10 years ago as a call for enterprises to have sufficient supply for goods for the Tet (Lunar New Year) festival, it has since developed into a general programme to stabilise prices of essential goods and ensure consumers get quality goods and reasonable prices, according to Nguyen Thi Hong, Deputy Chairwoman of HCM City People's Committee.

From the initial target of controling prices of essential goods, the programme has also affected prices of other commodities in the domestic market and thus helped reduce CPI growth rates across the country.

Hong said that for the three months before Tet this year, enterprises participating in the programme reserved goods valued at VND5,560 billion (US$265 million), accounting for 30 – 40 per cent of the demand of the local market in this period.

The development of the networks of stalls and shops selling goods under the programme lasting from April 2011 to 31 March 2012 had had an impact on the living standards of the low-income labourers and people in remote areas, she said.

Le Ngoc Dao, Deputy Director of HCM City Department of Industry and Trade, said so far the programme had opened 2,550 stalls, an increase of 230 compared with the beginning of this year's programme in April 2011.

The new stalls are located in surburban areas, industrial parks and export processing zones as well as in traditional markets so that goods under the programme can reach low-income workers.

The department has also co-operated with the HCM City Export Processing Zones and Industrial Parks Authority to build nine stalls at the Tan Thuan EPZ and some IPs.

New stalls are expected to be built at all 13 EPZs and IPs in the city by the end of April 2012, and goods under the programme will be delivered to the workers' canteens at these EPZs and IPs, according to Dao.

So far, the municipal authority has provided loans of VND412 billion ($19.7 million) to enterprises under the Price Stabilisation Programme. Essential goods under the programme are rice, sugar, cooking oil, processed foods, vegetable and fruits, livestock and poultry meat, eggs, and seafood and aqua-products.

At present, prices of some goods sold by the programme have decreased compared with those in April 2011. Sugar prices are down 4.65 per cent; cooking oil by 4.39 per cent and eggs by 4.44 per cent.

Vietinbank agrees mining loan
 
Viet Nam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) will provide a VND2.1 trillion (US$100 million) loan to the Nhan Co bauxite-alumina production project in the Central Highlands province of Dak Nong.

The bank inked a credit contract with the Viet Nam Coal and Minerals Industries Group, the project's investor, yesterday in the capital.

The signing of a credit agreement with Vinacomin would open up a new page for bilateral relations between the two sides, said Vietinbank chairman Pham Huy Hung.

It would also prove our commitment to accelerate co-ordination in accordance with a comprehensive co-operation agreement signed in 2007, Hung said.

Vinacomin general director Le Minh Chuan spoke highly of Vietinbank's credit resources for the project, saying that the group would effectively utilise the loan to implement the project as scheduled.

The Nhan Co bauxite-alumina project is comprised of two components. The first, a bauxite refining plant, is expected to supply 1.65 million tonnes of bauxite each year. The second part is an alumina plant which is designed to produce 650,000 tonnes annually.

The project is expected to foster sustainable socio-economic development, security and political stability in the Central Highlands and accelerate the regional economic restructuring from agro-forestry to a multi-sector economy with industry and service as its basic components.

Under an approved plan for the 2007-15 period, Viet Nam will build a number of alumina plants with a combined output of 6.4 million tonnes per annum and the capacity will be raised in the following years. Product exports will begin in the first phase.

S&P revises Vietcombank long-term outlook

International credit rating agency Standard & Poor's has revised Vietcombank's long-term outlook from negative to stable, but lowered its stand-alone credit profile (SACP) from B+ to B. The bank's counterparty credit rating remained at B+/B.

The revised outlook reflected Vietcombank's improved capital position after Japan-based Mizuho Corporate Bank Ltd completed its acquisition of a 15-per-cent stake in Vietcombank.

The strategic partnership with Mizuho would provide Vietcombank with enhanced products and service offerings, encouraging alignment of its risk management processes and systems with international standards. According to S&P, this could improve Vietcombank's earning profile and mitigate potentially higher credit costs.

S&P also stated that Vietcombank's moderate loan growth following the Government's credit tightening measures would increase the bank's capital sustainability. As a result, the bank was expected to continue to strengthen its balance sheet through higher retained earnings and reasonable dividend payouts.

They opined that Vietcombank would maintain its strong market position in Viet Nam and maintain its financial profile despite challenging market conditions.

Last month, S&P downgraded the long-term credit rating of three domestic banks – the Bank for Investment and Development of Viet Nam (BIDV), Vietcombank and Techcombank from BB – to B+. The short-term rating of the three banks was maintained at B.

VND firms against US dollar

The exchange rate between the Vietnamese dong and the US dollar have fallen sharply on the days before Tet (Lunar New Year) because of increased supplies of the greenback.

On Wednesday, commercial banks quoted buying and selling prices of US dollars at VND20,850 and VND20,930, respectively, down by VND106 compared with the ceiling rate on Monday.

Although the Government has banned US dollar trading activities on the free market, some places still operate.

The buying price of US dollars at these markets have fallen by VND50 to VND20,970 per dollar, while the selling rate stood at 21,000. If compared with the rate recorded 10 days ago, the dollar price on the free market fell by VND300 per dollar, VND70 higher than the rate quoted at commercial banks.

Meanwhile, the forex rate at the inter-bank market was VND20,963 per dollar, VND100 lower than the ceiling rate of VND21,036.

Independent market observers attributed the cut in US dollar prices to two reasons, one of which was a significant increase in supply of dollars, and the other a decrease in the market's purchasing power.

Several commercial bank directors said that shortages of dong caused many enterprises to sell US dollars to have dong to pay salaries and bonuses for their employees.

The general director of one major bank that is heavily involved exports and imports said that his bank had bought a large volume of dollars over the last three days.

The Viet Nam Export and Import Commercial Joint-Stock Bank (Eximbank) also revealed that it had purchased US$300 million over the last month.

Many individuals have had to sell US dollars to prepare for Tet. The increasing number of overseas Vietnamese who returned home for Tet had also significantly enriched the country's dollar sources at this time, according to experts.

Nguyen Thanh Son, deputy minister of Foreign Affairs, said that last year the country's inward remittances reached over $9 billion, a record level, making Viet Nam one of the top 10 countries receiving the highest amount in remittances.

HCM City alone received $5 billion in 2011.

While dollar sources look to be plentiful, enterprises' and individuals'demand for the greenback has fallen.

Hoang Anh Tuan, owner of a gold shop in HCM City's District 1, said that individuals were not buying US dollars.

Also, commercial banks in recent months have launched policies of limiting dollar loans to companies, thus restricting their ability to make payments to banks.

Climate-smart farming to improve practices

The Food and Agriculture Organisation (FAO) and the European Commission Monday announced a new 5.3 million-euro (US$7.95 million) project that helps promote climate-smart farming in Viet Nam, Malawi and Zambia.

The project hopes to make changes in farming systems, including improving their contribution to the fight against hunger and poverty, rendering them more resilient to climate change and reducing emissions, according to Rome-based FAO.

"The project will look closely at three countries and identify challenges and opportunities for climate-smart agriculture and produce strategic plans tailored to each country's own reality," said FAO Assistant Director-General for the Economic and Social Development Department, Hafez Ghanem.