Fleeing investors depress exchange trade

Viet Nam's stock market witnessed the worst trading week since the beginning of this year with shares falling due to the "fleeing" sentiment of investors on both national exchanges.

On the HCM City Stock Exchange, the VN-Index lost 7.4 per cent over the course of last week, finishing Friday's session at 434.95 points.

Cautious psychology drove trading volume down 24.7 per cent, averaging over 90.4 million shares, worth VND1.45 trillion (US$69.2 million) per session.

In a week of steep decline, all 24/24 sectors gave up value, led by accommodation-entertainment group shares with an average loss of 12.5 per cent and those of the construction material and insurance sectors with a decrease of over 11 per cent each.

Sharp decreases of heavyweight stocks like Vietcombank (VCB) and insurer Bao Viet Holdings (BVH) further depressed the market. VCB, after listing over 1.78 billion additional shares on Monday and becoming the largest share in HCM City, fell during four out of a total five sessions, while BVH bottomed out four of its fifth declining session.

The VN30 Index which measures the top 30 shares by market capitalisation and liquidity also slid 1.79 per cent to stand at 504.61 points.

Heavy selling extended to foreign investors who unloaded a net VND404 billion ($19.2 million) worth of shares last week. Sacombank (STB) and Bao Viet Holdings (BVH) were the two codes sold the most heavily with a net sell of over VND64 billion ($3 million) for each code.

According to analysts of Sai Gon-Ha Noi Securities, there are two reasons why foreigners were net sells. First, they want to restructure their portfolios and put money in new shares such as PV Gas or BIDV, which are about to list later this year. Second, instability in the eurozone made them more cautious in investing in emerging markets, particularly when Viet Nam's stock market has continuously climbed since the beginning of this year.

"With the advantage of a stable economy, we still see Viet Nam as an attractive destination for foreign investors. But in the short term, heavy selling by this sector will have negative impacts on the market," they wrote in a research note.

Foreigners also were net sellers on the Ha Noi Stock Exchange last week, responsible for a net sell of VND2 billion ($96,000) worth of shares.

The benchmark HNX-Index was also down 6.4 per cent over the course of the week, closing Friday at 73.81 points. Daily trading volume also decreased 25.4 per cent to an average of over 72 million shares, worth VND737.8 billion ($35.1 million) a day.

After seven consecutive sessions of decline, most stocks were falling to reasonable prices that will likely stimulate speculative money in the short term, said an analyst of FPT Securities, Le Thi Bich Hang.

"However, to back the market uptrend, there should be stronger supporting economic news," Hang said, mentioning that the release of the CPI (Consumer Price Index) information in May was due this week.

She said the CPI could increase slightly in May, not a positive sign in the context of negative credit growth, which decreased 0.66 per cent by the end of April, also causing low GDP growth of just 4 per cent in the first quarter of this year.

Shares rebound on both exchanges, led by blue chips

Stocks rallied strongly this morning on both national exchanges, led by blue chips.

Twenty-five of the top 30 shares by market value and liquidity advanced on the HCM City Stock Exchange, of which insurer Bao Viet Holdings (BVH), PetroVietnam Finance (PVF), Ocean Group (OGC) and Tan Tao Investment Industry (ITA) hit their ceiling prices.

There were five times more gainers than losers and the benchmark VN-Index increased 1.95 per cent over Friday, closing this morning's session at 443.41 on a turnover of more than VND815 billion (US$38.8 million).

The VN30 Index also rose 1.79 per cent to stand at 513.65 points.

Today, PV Gas debuted nearly 1.9 billion shares under the code of GAS at the reference price of VND36,000 ($1.71), becoming the second largest share on the southern bourse with a 9-per-cent market share on a total capitalisation of VND68.22 trillion ($3.25 billion). GAS climbed 7.2 per cent over its reference price to finish this morning at VND38,600 ($1.84).

Property developer Hoang Quan Corp (HQC) temporarily led trades in HCM City with 2.3 million shares changing hands this morning. HQC increased 1.8 per cent to VND5,800.

On the Ha Noi Stock Exchange, the HNX-Index jumped 2.75 per cent to conclude this morning's session at 75.84 points with nearly 31 million shares, worth VND294 billion ($14 million) traded.

Vinalines wastes money on ineffective ports

Besides the huge los Vinalines has made on a myriad of old, deteriorated vessels as recently reported by Tuoi Tre, the state-run shipping line has also thrown money out of the window with a series of unprofitable ports.

All of the loss-stricken port projects worth thousands of billions dong were made under the regime of Duong Chi Dung, its former chairman, who is wanted for ‘intentionally violating state regulations on economic management that causes severe consequences.’ (VND1 trillion = US$48 million)

Between 2007 and 2010, Vinalines, or the Vietnam National Shipping Lines, implemented 14 port projects, including 12 seaports, 1 river and 1 dry port, most of which have violated regulations in administrative management, finance allocation, design approval, and construction, according to the State Inspectorate of Vietnam.

Vinalines has earmarked more than VND1.8 trillion to join in the ventures to build four major international ports including the SP-SSA, Saigon, Cai Mep, and Cai Lan.

Three of the above ports are located in the Thi Vai – Cai Mep in the southern province of Ba Ria – Vung Tau, which fails to attract international container ships, and thus pushes the ports to steep losses.

As of December 31, 2010, Vinalines incurred a total loss of VND252 billion from its joint-venture ports in Cai Mep – Thi Vai, the state inspectorate said.

Meanwhile, the respective losses for the SP-PSA and the Cai Mep international ports in the first half of last year were VND365 billion, and VND97 billion.

According to the Vietnam Seaport Association, the losses could even expand in the years to come, and Vinalines could be forced into selling the ports to foreign operators due to its inability to afford them.

Another typical example of ineffective investment of Vinalines in constructing ports is the Van Phong International Transshipment Port in the central province of Khanh Hoa.

Though the Prime Minister only allowed it to hold the groundbreaking ceremony for the project forVND50 million, Vinalines sunk more than VND4.1 billion into the show.

The shipping line also committed a number of other wrongdoings in design approval and construction management.

Specifically, in August 2011, Nguyen Truong Son, former director of the Maritime Project Management Board 1, a subsidiary of Vinalines, approved the pricing list for the project at prices 1.5 times higher than market price.

Meanwhile, the bidder package to build the wharf was nominated for a contractor at VND973 billion, while the market rate was only VND650 billion.

Despite the massive losses incurred even from its core-business of shipping lines and ports, Vinalines has been ‘enthusiastic’ to sink money in other non-core investments, and gained nothing other than another myriad of losses.

According to the State Inspectorate of Vietnam, in the period between 2007 and 2010, Vinalines invested in and contributed capital to 158 businesses, but held a loose management on its capital.

Moreover, its investment in the Capital Securities Company even exceeded the allowed rate of 2.18 percent.

A shipping company, however, Vinalines board of directors has contributed capital to establish some businesses operating in the securities and real-estate sectors.

Most of the investments were haphazard and had poor economic effectiveness, the inspectorate said.

The Hai Phong Maritime Investment and Commerce Co, and two realty companies had used the capital contributions of the shareholders to put in bank deposits, and did not share the interests with the shareholders for three consecutive years.

In 2012 the Vinalines Real Estate JSC contributed VND58 billion to the Ninh Thuan Sea Route Exploitation, whose director has recently been indicted for “taking advantage of others' trust to misappropriate property.”

This means Vinalines is likely to lose all of its VND36.7 billion contribution to the company.

New Mekong highway celebrates Uncle Ho

Prime Minister Nguyen Tan Dung inaugurated National Highway No61B in the Mekong Delta on Saturday morning as part of the celebrations of the 122nd anniversary of the birthday of President Ho Chi Minh.

The highway, which links the city of Can Tho to Vi Thanh City in Hau Giang Province, is a 11.5-metre-wide road that has two lanes for automobiles and two for motorcycles.

The new road, which improves connections between the provinces of Kien Giang and Hau Giang with HCM City, aims to pave the way for socio-economic development of the Mekong Delta.

Addressing the inauguration ceremony, the Prime Minister said the road would play an important role in the development of trade among provinces in the Mekong Delta, especially in Can Tho and Hau Giang Province.

The 47.5km highway, which had a total investment of VND3,390 billion (US$163 million) from Government bonds, was completed over a period of four years.

Local residents said Hau Giang would benefit the most from the new highway.

A 37km section, or over three-quarters of the road, runs through the province's districts of Chau Thanh A and Vi Thuy as well as Vi Thanh City, while a 10.5km section runs through Can Tho's Cai Rang District.

Dung told the authorities of Can Tho and Hau Giang to remove obstacles for manufacturing, business and service enterprises in the industrial and agricultural sectors.

To raise product value, he asked provincial authorities in the Delta to apply scientific and technological achievements to agricultural and aqua-cultural production.

The Mekong Delta, the country's biggest granary and fish-production area, contributes 20 per cent to Viet Nam's gross domestic product every year.

"In addition to infrastructure development, we need to further develop our education system, which builds a foundation for the development of our country," said Dung.

Later, the Prime Minister visited southern Tien Giang Province.

Speaking with provincial leaders, Dung stressed that Tien Giang needed to promote and exploit its potential in food production, fruits, aquaculture and poultry in a sustainable way.

He asked the province to focus on the application of science and technology in food production, fruit and vegetable production and to produce 1 million tonnes of rice per year.

He also asked provincial leaders to build modern agricultural processing facilities and to take advantage of the Cho Gao Canal for the transport of raw materials such as rice and other agricultural products in the region.

Dung reminded provincial leaders of the need to train human resources, build a specific plan to improve locals' lives and mobilise resources for infrastructure development.

Reports for the first four months of this year show that rice production in Tien Giang Province had increased 3.6 per cent, while livestock and fish farm output had risen by 3.8 per cent. Meanwhile, the industrial production development index had increased 15.7 per cent, export turnover 1.9 per cent and the number of visitors by 5.4 per cent against the same period last year.

However, shortcomings included the outbreak of animals and plant diseases, the unstable price of pork and rice and difficulties attracting investment at industrial and economic zones.

At the meeting, officials asked for funds to restore damaged parts of the Cho Gao Canal and capital to implement urgent projects such as the My Loi Bridge connecting between Long An and Tien Giang provinces, Xuan Hoa-Cau Ngang Canal and the development of Long Giao Industrial Zone.

In response, Dung urged the Ministry of Planning and Investment to give priority to allocating capital for the repair of the Cho Gao Canal as the waterway was vital to shipping routes in the region, which is used by about 1,000 vessels everyday.

14 banks requested to accelerate debt settlement

The State Bank of Vietnam (SBV) has asked 14 commercial banks to accelerate debt settlement processes.

The banks included in the request are Agribank, BIDV, Vietinbank, Vietcombank, ACB, Eximbank, Sacombank, Techcombank, MB, Maritime Bank, VP Bank, VIB, SHB, and Seabank.

Accordingly, banks should actively implement solutions for debt settlement in accordance with current regulations, boosting debt trading on schedule.

Any banks facing difficulties in finding debt sellers/buyer should make synthesis reports to the central bank for solutions.

The SBV branch in HCMC has sought for the government’s approval for the establishment of a debt trading company for credit institutions, according to newswire Vnexpress.

In a report for a meeting with a National Assembly delegation, the agency said that the move would help remove bad debts which were increasing in the banks. It would also help businesses to access banks’ loans.

The report said that the total outstanding loans in the city was nearly VND760 trillion as of April 30, 2012, up 0.74 percent compared to March, up 2.27 percent over the same period last year.

But the rate dropped 0.64 percent if compared to the end of 2011.

Total deposits reached VND898 trillion, up 0.52 percent year on year.

The SBV branch said that the reduction in outstanding credit growth may due to difficulties in production, associated with low GDP growth and high inventory rates.

All these factors create certain hurdles for enterprises in the process of accessing credit.

The agency said that another cause is difficulties from the real estate market continuing to impact directly to the relationships between the lenders and the borrowers, thus the outstanding credit growth rate.

In addition, the general effects of tightening policies, aimed at stabilizing macro-economy and restraining inflation over the past time, have affected the economy, banking and business operations in the early months of 2012.

These difficulties have not only affected the credit growth but also added more bad debts.

Accordingly, as of April 30, bad debts in HCMC were at 5.3 percent of total loans, up 1 percent from the end of 2011.

In particular, bad debts related to real estate is very difficult to handle, because this market is in a state of frozenness, said the report.

“This not only makes it difficult for the banking system but also affect the flow of capital throughout the economy, affecting business growth and development.”

The HCMC Tax Department said the number of enterprises having stopped operations or dissolved since the beginning of the year have surged to 38,284 units, including 8,293 private enterprises and 29,898 individual households.

The rate was higher than the past rate, said the department, adding that the tax payments from profitable businesses were also declining.

The number dropped from 40.43 percent of companies making profits 2009 to 38.37 percent in 2010 and 35.04 percent in 2011. The rate continued to0 slumped to 25.42 percent in Q1/2012.

Petroleum price cut under consideration: ministry

The Ministry of Finance has assigned its Price Management Department to closely monitor changes in world oil prices for timely adjustment of the local retail prices, said a state official.

“The ministry’s viewpoint in price management is to ensure the harmonization of interests between the state, consumers and petroleum businesses.”

“It is a favorable time for a reduction in the retail prices as the prices of imported petroleum products have fallen sharply.”

“However, actual oil import duties have recently been recovered since May 9, from 0 percent to 2 percent, still a low level.”

“Therefore, the Ministry of Finance will consider very carefully for early decision, including price cut plan and import tax restoration.”

Representative of a petroleum importer said they are awaiting the decision of the Ministry of Finance on the price adjustment of petroleum products.

He told Tuoi Tre that the firm was enjoying a profit of about VND1,000 per liter of fuel as the prices of imported petroleum products have decreased strongly, about 5-7 percent, over the past 15-day period.

Earlier, the general director of SaigonPetro said its profit rate was about VND700 per liter of petroleum products sold. For smaller businesses which are not importers or import small volumes, their profit rates were at VND1300-1500 per liter on average for the last 10 days.

When world prices decrease, wholesalers have increased the discount rate for their dealers from VND600 to 800 VND per liter, some even raised the rate higher.

Under the provisions of Decree 84 on petrol and oil trading, businesses have to register for any price adjustment plans to the Ministry of Finance.

However, they are currently waiting for the Ministry of Finance’s decision for the coming price cut, while always actively suggesting for the price hike, bemoaning on losses.

Petroleum wholesalers have enjoyed a profit rates amounting to some tens of billions of dong per day as imported petroleum prices continue to fall, while the domestic retail prices remain unchanged.

On Thursday, the A92 gasoline price in Singapore was only $ 117.01 a barrel. It was $ 117.33 a barrel in the previous day.

As a result, per every liter of A92 gasoline sold, local firms have recently enjoyed a VND100 more in tiered profits every day.

Specifically, with the current average base price for the last 30 days starting May 16, the profit rate is VND800 per liter. The rate inched up VND100 per liter to VND900 per liter after the Thursday session.

Major businesses are also enjoying big profits in trading other petroleum products including diesel and kerosene.

Preliminary calculations show that with the sales of over 24 million liters a day at those wholesalers, their recent daily profit rates have surged to VND18-19 billion.

As for smaller enterprises with daily sales of about 7-8 million liters, their profit rates have been at VND5-6 billion per day.

Vietnam’s fisheries sector sets target for 2012

Vietnam ’s fisheries sector will increase its fish farms to 1.2 million hectares, producing as much as 4.5 million tons a year and reaching an annual average growth rate of 5.2 percent by 2020.

The plan was announced at a conference on development plans for aquaculture for 2020, with a vision to 2030”, held by the General Department of Fisheries, in Hanoi on May 18.

The sector also set a target of earning an annual export revenue of between US$7 to $7.5 billion, a rise of almost 7.5 percent annually, and will employ about 3.5 million workers.

Nguyen Thanh Tung, Head of Vietnam’s Institute of Fisheries Economics and Planning, said that besides the approved projects, another additional 12 projects with a total investment of VND54 trillion will be put in place to reach the set targets.

He said that it is necessary to look at other ways of using land and water, and examine policies on tax, credit and investment for the sector, while stepping up training programmes and improving the sectors infrastructure and technology. He added that applying Vietnam ’s Good Agricultural Practices Standard was also necessary.

Although Vietnam’s fisheries sector has a high growth rate, the sector is not efficient enough and there remains a lot of shortcomings and risks, as sits infrastructure and technology lacks investment.

European businesses in VN ‘still wary'

Business confidence and outlook among European businesses in Vietnam has remained consistently near "neutral" for the third straight quarter, a quarterly survey by EuroCham shows.

The EuroCham Business Climate Index for April/May 2012 released on May 19 fell by three points to 53.

European businesses that took part in the survey continued to be cautious about their business outlook and in assessing their current situation as well as the overall economic outlook in Vietnam .

Of them, 44 percent are in the services industry, 28 percent in manufacturing, 20 percent in trading, and the rest in others.

There was a 10 percentage point increase to 29 percent in respondents assessing their current business situation as "not good". It had been only 12 percent a year ago.

The percentage of companies describing their current business situation as "good" was 34 percent, unchanged from the last survey but down from 50 percent a year ago.

No respondents described the current situation as "excellent".

Asked about their expected number of orders and revenues in the medium term, the answers were mixed – 58 percent expected an increase in revenues, a solid increase from last quarter when it was 47 percent.

The number of businesses expecting revenues to fall remained unchanged at 22 percent. Only 18 percent expected revenues to remain constant, down from 27 percent.

Overall, this represents an upward trend in the outlook on orders and revenues.

But it has yet to have an effect on recruitment plans with 46 percent of companies wanting to maintain their current level of staff.

Only a third wanted to increase their staff, a 7 percent fall from last quarter, while 19 percent were planning to lay off employees, up from 14 percent last quarter.

The signs of optimism in business outlook seen in the last survey remained largely unchanged, with 38 percent saying "good" and 36 percent remaining "neutral".

This was almost unchanged from the last quarter, but is put into perspective by the 51 percent of respondents who had a positive outlook this time last year.

Twenty-six percent had a pessimistic outlook.

The results are still not decidedly positive and little is seen in the form of recovery of business outlook. It is worrying that 62 percent assessed their outlook as either "neutral" or negative.

When asked about their investment plans for 2012, many respondents continued to be cautious: 34 percent wanted to maintain their level of investments and 38 percent were looking to increase them.

In the last survey only 36 percent had wanted to increase their investments, but the number had been 59 percent last year.

This shows a continuation of the trend that businesses are getting more cautious about investing.

From 24 percent last quarter, the proportion of businesses looking to reduce their overall investment in the country rose to 28 percent.

Though majority of companies are looking to maintain or increase their investments in the country, it is worrying that nearly a third of companies are considering a reduction.

The estimate for the expected depreciation in the dong was 5.63 percent, down from 8.33 percent last quarter, hinting at confidence in the Government's measures to curb inflation.

But 57 percent still saw inflation as a major concern or even threat to their business operations in Vietnam , slightly less than the 61 percent last time.

When asked about the difficult economic situation in Vietnam, 45 percent expected "stabilisation and improvement" of the current situation (up 10 percent from last quarter).

Though it points towards an increase in confidence, 55 percent of respondents still expected the overall economic situation to deteriorate further.

Following the recent completion of the scoping exercise and impending start of formal negotiations for a EU-Vietnam free trade agreement, respondents were asked what this will mean for their business.

A majority (51 percent) expected a positive impact on their business, 29 percent saw no impact, and 16 percent were unsure what an FTA will mean for them.

Though pointing towards a positive sentiment, it also underlined the need to clarify what exactly a free trade agreement will include and how it will impact European businesses in Vietnam .

When asked what parts of a free trade agreement will be most important for their business, the two most common answers were "elimination of import tariffs" (56 percent) and "enhancing trade in services" (51 percent).

This was followed by "tackling non-tariff barriers (34 percent) " and reaching "agreement on intellectual-property rights" (27 percent).

EuroCham chairman Preben Hjortlund said: "The continuing low level of the EuroCham Business Climate Index at 53 points shows ongoing concerns and uncertainty in the business community and amongst investors.

"While there are some encouraging signs, the overall business sentiment is stagnating at a relatively low level."

His business grouping's executive director Paul Jewell said: "The continuing low level of EuroCham's [index] can be explained by slow progress on many of the issues that were addressed in our Whitebook, coupled with some new issues that are eroding confidence in the business environment in Vietnam: Macroeconomic uncertainties, high rates of inflation, corruption and administrative burdens continue.

"European investors are increasingly looking for alternative investment destinations in ASEAN. Therefore Vietnam has to increase its efforts to remain competitive in the region.

"Tangible progress towards an EU-Vietnam free trade agreement will be a step in the right direction and help restore investor confidence."

Vietnam hands newly-built ship to Mexico

The Song Thu Co under the General Department of National Defense Industry and the Netherlands’s Damen Group yesterday held a launching ceremony to officially hand over its newly-built ship to a Mexican partner.

The FCS 5009 vessel will be renamed into M.V Dona Lourdes after being transferred to the Mexico’s Naviera Integral Co, Song Thu Co said.

The ship is 50m long, 9m wide, and 4.7m high, and is equipped with four engines with the total capacity of 6,000 CV. The fastest possible speed is 31 nautical miles per hour, the company said.

The ship is specialized in transporting crewmen, experts, and technicians to serve offshore oil exploitation tasks.

Policies aim to boost rental housing

Residential developers will likely be required to set aside at least 10 per cent of their projects to build apartments for rent if a draft decree from the Ministry of Construction is approved by the Government.

The Law on Housing enacted in 2005 encourages organisations and individuals of all economic sectors to participate in investment of houses for sale, lease, rent or purchase.

This would satisfy the housing demands of low-income earners and people of different socio-economic strata.

In recent years, most enterprises have invested in building houses for sale, not for rent, in order to quickly collect capital.

As a result, according to the Ministry of Construction's data, the number of houses for lease is equal to only 6.3 per cent of that of house owners.

In HCM City, the ratio is 19 per cent and in Ha Noi, 14 per cent, while between 4 and 6 per cent are in towns classified by the Government as first-grade.

To increase the house-for-lease ratio, the ministry recently submitted a draft decree to the Government for consideration.

Under the draft, owners of projects covering over 10 ha will have to set aside at least 20 per cent of the land to build social housing and a certain area to build houses for rent.

For projects covering an area of less than 10 ha, projects owners are required to set aside 10 per cent of land for building houses for lease.

For major cities including Ha Noi, HCM City and Da Nang, the requirement will be 15 per cent.

Ministry experts said that more rental housing was needed for residents who need a stable place for living. This would have the added benefit of contributing to social welfare policies.

The new decree is expected to help realise the targets set in the national housing development strategy for 2020, with a vision for 2030, approved by the Prime Minister.

Targets include increasing the ratio of rental houses to 20 per cent by 2020 and 30 per cent by 2030.

To encourage enterprises to participate in building rental houses, the ministry has proposed to the Government to allow developers to enjoy preferential treatment such as exemption of land-use fees, exemption and reduction of income tax from rental activities, and access to soft loans from the Viet Nam Development Bank, Housing Development Funds and Housing Saving Fund.

In addition, the ministry has proposed that developers of rental housing have their land-use coefficiency raised by 1.3 per cent, compared with the current regulation.

Owners of rental housing would be permitted to sell their houses after 10 years of use.

According to the draft decrees, capital to be used for development of rental housing will be raised from the State budget or from enterprises that will participate in rental housing projects in the free market and without the government's preferential treatment.

The decree also states that apartments for rent invested in by the State must have a floor area of at least 30sq.m and a maximum of 60sq.m.

Rental houses built by private companies with State preferential treatment must have a floor area of at least 25sq.m to 70sq.m.

Rental houses built under the market and without State preferences are required to have a floor area of 25sq.m each.

The ministry will establish rental prices and adjust them if necessary, according to the decree.

Minister Trinh Dinh Dung said that Government policies had previously focused on rental housing projects for workers at industrial parks and students, but that it was now necessary to build more rentals to meet the high demand from the public.

Techcombank to offer Visa card

High credit limits and more international privileges on aviation, tourism, health and beauty products and services are some of the advantages of the Techcombank Visa Platinum card, which was officially launched in HCM City on Tuesday.

With 30 million transaction sites around the world, the Platinum card owner can spend up to VND1 billion (US$48,000) without bank interest during a 45-day period. Cash withdrawals of up to $2,000 can be made at 2 million ATMs worldwide.

The card is the only international credit card in Viet Nam that has Vietnamese and English versions for Concierge and Lifestyle services. These provide information about destinations, hotels, restaurants, shopping, visa/passport/customs procedures, exchange rates, and the weather.

IBM expo offers glimpse into future

IBM has taken a major step towards a new, simpler era of computing with the introduction of "expert integrated systems", which it showcased at the IBM Technology Exhibition and Workshop in HCM City on Tuesday.

The US giant said PureSystems offered clients an alternative to today's enterprise computing model, which uses multiple systems that require significant resources to set up and maintain.

PureSystems cost US$2 billion in terms of research and acquisitions over the four years as IBM moved to integrate physical and virtual elements like cloud computing.

With the PureSystems family, IBM has unveiled three major advances that allow businesses to reduce the costs and complexity associated with managing information technology.

Da Nang calls for more investment

Australia will encourage businesses to invest in the central city of Da Nang, the Australian Consul General in HCM City said during a visit here yesterday.

He said Da Nang had potential, especially in tourism development.

The city currently has 13 investment projects from Australia worth US$9 million – 0.3 per cent of the city's total foreign investment capital of $3 billion.

Da Nang has called for more foreign investment in tourism and hi-tech sectors.-

Largest plywood mill begins operations

The country's biggest plywood manufacturing plant opened its doors in the southern province of Long An on Thursday, according to provincial Department of Planning and Investment Director Nguyen Minh Ha.

Financed by Vina Eco Board, the US$110 million plant has an annual capacity of 250,000 cubic meters and covers a total area of 20ha in the province's Phu An Thach Industrial Zone.

Nation aims for higher exports to EU

Measures to accelerate Viet Nam's wood and seafood exports to the European market were highlighted at a seminar held in the central province of Binh Dinh on Thursday.

During the event, experts from these sectors in the province and Germany reviewed exports to the EU. A number of challenges and potentials for exports were also put on the table for discussion.

Delegates called for sufficient investment in design and technology innovation to improve product quality.

Binh Dinh generated only US$88 million from wood exports during the first four months of this year, a year-on-year decrease of 14.5 per cent due to a limited number of orders, exporters' concern about increasing prices of materials and local firms' inadequate financial capacities.

TVS says error in transaction wasn't costly

Thien Viet Securities Co (TVS) did not incur any financial losses resulting from the purchase of over 6.4 million shares in HCM City Infrastructure and Investment (CII), TVS General Director Tran Quoc Tuan has said.

In a letter sent to its shareholders on Thursday, Tuan said in the first half of this year, TVS successfully consulted a major shareholder of CII to transfer a large amount of CII shares to a foreign investor.

However, on May 10, due to an error in executing a transaction, over 6.4 million CII shares, which should have been transferred to the foreign investor's account, mistakenly arrived in TVS's account.

"In compliance with the regulation on information disclosure, TVS had to disclose becoming a major shareholder in CII. But on Wednesday, TVS transferred these shares to AIT Pte Ltd," Tuan wrote.

The Singapore-based technology company AIT became a foreign shareholder of CII, holding 8.56 per cent its charter capital. AIT registered to buy another 1.1 million CII shares to increase its holdings to 7.53 million.

TVS's leader said besides consulting fees from investors, the company did not incur any financial losses caused by this transaction, except fees charged by regulation.

On May 10, TVS bought over 6.4 million shares of CII at a price of VND44,000 (US$2.1) a share. However after that, CII dropped to the floor price for five consecutive sessions to VND33,000 ($1.57) which raised the rumour that the "mistake" cost TVS a loss of over VND70 billion ($3.3 million).

CII, after a brief rise of 3 per cent on Thursday, closed yesterday down another 4.4 per cent, settling at VND32,500 ($1.55) a share.

Brokerages set for tighter debt ratios

Capital inflows into the stock market are likely to decline substantially if a draft circular being prepared to replace Ministry of Finance Decision No 27/2007/QD-BTC is approved.

The draft regulation on the organisation and operation of securities companies will limit these companies from carrying a debt load in excess of three times their equity capital. Current regulations allow them to borrow up to six times their equity.

Revising the debt-to-equity ratio down to three times might not have a serious impact, said analysts from the publication Dau tu Chung khoan (Securities Investment), since the top 10 securities companies operating on the HCM City Stock Exchange all already maintained low debt ratios.

First-quarter financial statements from Vietcombank Securities Co and VNDirect Securities Co even showed that neither firm needed to borrow to lend to clients for margin trading or other purposes.

Analysts therefore said that problems could arise instead from the proposed regulation that securities firms must borrow from credit institutions or by issuing bonds. Currently, bank loans represent a very small proportion of the debt structure of many securities firms.

Thang Long Securities Co (TLS), for instance, reported no outstanding loans from banks. Of the company's total debt last year of VND1.8 trillion (US$86 million), about VND992 billion ($47.2 million) was borrowed from other enterprises and VND219.6 billion ($10.5 million), from individuals.

The draft circular aims to tighten the operations of securities companies who have recently shifted their strategies from making their own investments on the stock market to developing brokerage services and financial support for investors.

In the past, the securities affiliate of the Viet Nam Prosperity Bank (VP Bank) was fined for violating the debt ratio, with a debt ratio in excess of 7.5 times its equity.

Call to adjust rules on agricultural insurance

Agricultural insurance regulations need to be revised to encourage more farmers to buy agricultural insurance, said the provincial authority of Dong Nai.

The request was made after implementing the pilot programme for animal husbandry insurance in the province. The authority said some insurance regulations on animal husbandry were not relevant and needed to be adjusted.

Dong Nai currently has 1.2 million pigs (the largest number in the country) and 9 million chickens.

The local authority has asked the ministry of finance to adjust the insurance premium rates for different types of pigs and chickens, which it said were too high.

It also said the preventive injection compulsory taking out of agricultural insurance added to farmers' costs.

The authority also said there needed to be clearer regulations on the announcement of epidemics.

Officials said that farmers should be compensated if livestock died from disease before an official announcement had been made.

Nguyen Tri Cong, chairman of Dong Nai livestock breeding association, said many farmers were unsure about the regulations governing agricultural insurance.

According to Dong Nai People's Committee, about 1.4 million of cows, buffalos, pigs, chickens and ducks in the province had been bought insurance by last April. A survey conducted by the province also showed that livestock farms were not interested in buying agricultural insurance due to the cost.

The pilot programme covers rice, animal husbandry and aquaculture which are worst affected by natural disasters and disease.

Paddy fields are covered by insurance in An Giang, Dong Thap, Binh Thuan, Ha Tinh, Nghe An, Nam Dinh and Thai Binh provinces.

Meanwhile, tiger and white leg shrimp producers are insured in Tra Vinh, Ben Tre, Bac Lieu, Ca Mau and Soc Trang provinces.

The breeding of cows, buffalos, pigs, chickens and ducks are insured in Dong Nai, Binh Duong, Binh Dinh, Nghe An, Thanh Hoa, Bac Ninh, Hai Phong, Vinh Phuc provinces and Ha Noi.

Each province selects three districts and each district selects three communes or villages to run the pilot programme.

The State funds 100 per cent of the insurance premium for those living below the poverty line, 80 per cent for poor households and 60 per cent for households with an average income. Production units buying agricultural insurance are reimbursed 20 per cent of the amount by the insurance company, under the plan.

The pilot programme on agricultural insurance for the 2011-2013 period aims to help farmers cope with the consequences of natural disasters and epidemics.

Vietnam commits to public private partnership

The Vietnamese Government has committed to implement the Public Private Partnership (PPP) models to resolve capital difficulties in infrastructure projects.

This statement was made by Deputy Minister of Finance Tran Xuan Ha on May 18 at a workshop in Hanoi organised jointly by the Ministry of Finance and the British embassy in Vietnam.

Those attending the workshop learned about international experiences in developing PPP models and directions for designing financing regulations in Vietnam.

According to Mr. Dang Xuan Quang from the Ministry of Planning and Investment (MPI), a big gap still remains between the annual requirement for infrastructure investment capital, which is estimated at about US$15 billion, and the annual mobilised fund of US$7-8 billion, which has created obstacles to socio-economic development, the environment for foreign direct investment and economic growth. While the State budget is limited, the PPP model presents a sound solution to the issue.

Last year, Prime Minister Nguyen Tan Dung’s Decision 71/2010/QD-TTg, dated November 9, 2010, on piloting the PPP model came into effect and a full-time office has been established under the MPI to handle issues related to implementing PPPs.

At the workshop, Mr. David Wright, an international consultant on PPPs, shared useful international experiences in developing PPP models and suggested avenues for developing PPP financing regulations for such projects in Vietnam.

If PPPs are to be successful, Vietnam needs to continue its political support for the model at all levels, improve public and media communication about PPPs, develop appropriate legal documents in accordance with good international practices, and enhance collaboration among relevant ministries, Mr. Wright said.

VND3 trillion to help troubled firms in HCM City

The central bank’s HCMC branch and Vietnam Bank for Industry and Trade (Vietinbank) are asked to allocate VND2-3 trillion for troubled companies in the city to restore their production.

This is the request of HCMC Chairman Le Hoang Quan made at the municipal government’s meeting on Thursday over the central Government’s Resolution 13 on easing the hardship in production and business activities.

Chairman Quan assigned the Department of Finance, the Department of Industry and Trade and the HCMC Union of Business Associations to collect the specific figures of how many enterprises in each sector are having capital access problems.

Removing the difficulties of producers and exporters will be the top priority of the city from now to the year-end, said Quan. Still, the city will not support the constantly loss-making businesses.

Nguyen Ngoc Thang, deputy director of the central bank’s HCMC branch, told the Daily that exporters, agribusinesses and small and medium-sized enterprises can approach the capital source at the lending rate of 15%.

The biggest problem of enterprises with bad debts is they lack assets for mortgage, Thang noted. Recently, some commercial lenders even accept inventories as collateral for loans provided that the unsold products are of warranted quality, he said.

In the first four months of the year, the mobilized capital of the city-based credit institutions recorded poor growth of 0.52%. The total outstanding loans in four months amounted to some VND898 trillion, in which bad debts made up 5.3%.

Nguyen Thi Hong, vice chairwoman of HCMC, said the city and the Ministry of Finance would provide guidelines on the issues related to the preferential tax polices in Resolution 13 late next week.

She proposed the central bank should have clear instructions on beneficiaries of Resolution 13 and the procedures and schedule for implementing the debt restructuring measures on a transparent basis.

The Government’s Resolution 13 was released on May 10, offering solutions such as a 30% corporate income tax cut in 2012 and a six-month extension for value-added tax payments for April, May and June for small and medium enterprises and those using a large amount of labor.

A senior official of the HCMC Department of Taxation said with the 30% corporate tax reduction, the city’s tax revenue would drop by VND1.85 trillion this year.

Leading gas firm set to debut on bourse next week

PetroVietnam Gas Corporation (PV Gas) will begin trading nearly 1.9 billion shares on the Hochiminh Stock Exchange (HOSE) next Monday under the code of GAS, making it the second largest firm on this bourse after Vietcombank.

According to a statement released on Thursday, the firm’s listing on HOSE will help it raise funds from local and international investors, improve financial capability and renovate oil and gas technologies.

GAS is a common stock with the face value of VND10,000 per share. Its starting price on the first trading day will be VND36,000 per share.

The company supplies gas for power stations which account for 40% of the country’s total electricity output, and for urea fertilizer plants that are responsible for 30% of the nation’s urea production. It is also the supplier of liquefied petroleum gas for 70% of national needs.

Deflation not a problem yet: expert

Deflation is not a problem in Vietnam at the moment and the country will not face it in the near future, said Trinh Nguyen, an economist at HSBC.

Many experts have expressed concern that Vietnam is facing the risk of deflation, especially after many businesses have gone bust. However, Nguyen noted that prices, while they have decelerated, still rose by 10.5% year-on-year in April.

Dampened domestic demand in the first four months put a downward pressure on prices. Nguyen expected May’s inflation to slow down to below 10%, which is still relatively high in comparison to Vietnam’s regional counterparts.

Deflation occurs when inflation falls below zero. Given that inflation is still elevated, it is too early to declare deflation, she told the Daily on Thursday.

In response to the weaker-than-expected GDP growth in the first quarter, the Government reduced policy rates by 2% in March and April, and would likely continue to do so in the near future, together with administrative measures to stimulate spending, said the economist.

She added the Government’s attempt to expand credit would boost growth, and thus boost aggregate demand. As such, inflation is expected to rise towards the end of 2012.

Recently, the Government has unveiled a VND29-trillion bailout package in a bid to ease operating conditions for businesses. Nguyen said the best way for the Government to support enterprises is to improve the operating environment in Vietnam.

“While Vietnam has made significant progress in improving its infrastructure in the past decade, much is still needed to increase its competitiveness. For example, according to the World Banks’ Doing Business Survey, it takes 24 days to export in Vietnam while it only takes 14 days in Thailand,” she said.

Vietnam is an attractive destination for many foreign investors, but the tough business conditions here have put some investors off, she said. Improving the business environment would attract even more FDI than the country already does at the moment, said Nguyen.

In addition, the Government can stimulate growth in the long run by promoting the efficiency of investment. With the current roadmap to restructure the banking system, the capital allocation must be improved to allow capital to go to more efficient enterprises, and thus boost the productivity in Vietnam.

Seafood exports to Europe plunge sharply

Given the persistent debt woes in Europe, many local seafood exporters have seen their exports to this key aquatic product market of the country spiraling into slump.

Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said now he considers the European market the “black point” of the local seafood industry.

Tran Van Hau, managing director of Hung Ca Company in Dong Thap Province, noted multiple exporters have had no choice but to cut the volume of shipments to Europe.

“The European negative economic outlooks have resulted in the stagnant export activities of the local seafood sector over the past few months,” Hau noted, adding he believed the market would probably bounce back after June only.

There are about 300 seafood processing plants for export in the Mekong Delta as reported by VASEP. Many of them are small enterprises struggling with capital shortages and thus are heavily vulnerable to dropping demands from the traditional importer.

According to the General Department of Customs, as of the middle of last month the country’s total seafood export to Europe declined by 12.5% year-on-year in revenue, with tra fish exports falling by 15% and shrimp exports slipping by up to 27.6% against the year-ago period.

Ngo Thanh Hau, deputy general director of Trung Son Seafood Company in HCMC, said his enterprise has shifted to shipping special products to Japan to cope with Europe’s import slowdown.

Poor demands from the European market have pulled down input material demands from a number of local companies over the past time, Hoe of VASEP pointed out. Therefore, tra fish prices in the Mekong Delta shrank to VND22,000-23,000 a kilo from the initial VND26,000 despite limited input materials among local farmers, he added.

According to VASEP, Europe is one of the three major seafood importers and accounts for 20% of total seafood export revenues of the country annually.

Substandard petrol moratorium could prevent vehicle fires   

Dr. Huynh Quyen, from the Refinery and Petrochemical Technology Research Centre, said, “As A83 is low-octane, it should not be used for modern vehicles. It can foster explosions, heat engines and increase the risk of fires. The circulation of such gasoline may facilitate illegal adulteration with methanol to create even more substandard fuel on the market.”

Dr. Phan Minh Tan, Director of the HCM City municipal Department of Science and Technology, told DTiNews that they agreed with scientific warnings and had proposed a ban to the Ministry of Science and Technology. If approved, A83 will be only circulated until the end of this year and be totally banned from 2013.

According to Tan, the continued circulation of such gasoline will only benefit illegal fuel traders at the expense of consumers.

The research group also proposed Vietnamese authorities heighten oversight over the quality of fuel in the market. They should consider adding some criteria for current 92 and 95 octane petrol to ensure standard quality and improved consumer safety.

“Tighter controls should be applied to the importation of petroleum products as well as the use of methanol. It’s vital to carry out inspections involving the adulteration of petrol to further strengthen our belief that poor quality fuel was the major cause of recent spate of vehicle fires,” Tan emphasised.

Tan admitted state agencies should take responsibility for the circulation of substandard petrol.

“We were requested to pay more attention to inspecting the quality of petrol used this year. However, petroleum importers, trading firms and their agencies should be the first to ensure quality of the fuel.”

He noted that it would be unfair to put all the responsibility on the shoulders of state agencies.

He took HCM City as an example. The inspection force consists of just six people despite the metropolis having up to 700 petroleum stations.

“We’ve requested petroleum wholesalers in HCM City to co-ordinate with local authorities in inspections over petroleum quality. They must make public a list of their agents to facilitate the inspection. If any firm is found acting as agent for two wholesalers they will be suspended,” he added.

Earlier, the ministries of Science and Technology, and Industry and Trade agreed in principle that they would remove A83 from circulation.

Tran Van Vinh, Deputy Director of the Ministry of Science and Technology’s Directorate for Standards, Metrology and Quality (STAMEQ), said that the ministries would send an official proposal on the issue to the Prime Minister soon.