Vietnam reduces travelers’ foreign currency limit

The State Bank of Vietnam has reduced the amount of foreign exchange that can be taken out of the country without customs declaration from US$7,000 to $5,000 with effect from September 1.

In case of dong, the limit remains unchanged at VND15 million.
 
Vietnam’s foreign debt tops $32 billion: ministry 

The Vietnamese government’s foreign debt reached US$32.5 billion in 2010, up 16.5 percent year on year, according to a recent report from the Ministry of Finance.

The debt accounted for 42.2 percent of Vietnam’s GDP, which was a 3.2 percent increase year on year, said the report which was released 2 months later than scheduled.

The government had expected the amount to be only 38.8 percent of GDP.

In its report, the ministry also warned that Vietnam’s foreign exchange reserves in 2010 were equal to only 187 percent of short-term outstanding loans, compared to 290 percent in 2009 and 2,808 percent in 2008.

The ministry also warned that Vietnam’s borrowing interest rates tended to increase after the country joined the group of middle-income countries last year.

Borrowing interest rates also increased because of macroeconomic instability factors and the credit downgrade caused by the debt-stricken shipbuilder Vinashin, the report said.

Currently, though Vietnamese are still enjoying low interest rates of 1 percent to 2.99 percent a year for 65.5 percent of total loans, loans with high interest rates of 6 percent to 10 percent a year rose in 2010 to $1.89 billion, doubling the figure of 2009.

Vietnam's main creditors are Japan, France, ADB, and WB.
 
VN to produce 41 mln tons of rice in 2011

This year’s rice output is likely to reach 41.017 million tons, a year-on-year rise of 2.6 percent, said a senior agricultural official.

Nguyen Tri Ngoc, Head of the Crop Production Department under the Ministry of Agriculture and Rural Development, said that this would help ensure domestic food security and realize the goal of exporting over 7 million tons of rice this year.

Thanks to the application of scientific technology advances, the selection of high-yield varieties and favorable weather conditions, the nation’s winter-spring crop yield reached 63.47 quintal per hectare, an increase of 1.2 quintal per hectare over the same period of last year, he added.

According to the Vietnam Food Association, rice export prices will continue rising due to impacts of Thailand’s rice prices, a happy signal for Vietnam’s rice production sector.

Nation attracts additional 651 FDI projects

Vietnam attracted additional 651 foreign invested projects in the first seven months of this year.

Among 43 cities and provinces nationwide, the northern province of Hai Duong took the lead in attracting foreign investment with a total capital of $2.472 billion, accounting for 32.4 percent of the country’s total registered foreign capital.

It was followed by Ho Chi Minh City with $1.588 billion, making up 20.8 percent, and the southern provinces of Ba Ria – Vung Tau and Tay Ninh with $478 million and $436 million USD, respectively.

Experts say at a time when investors are pursing strategies to shift their investment locations, restructure investment capital and adjust their business activities, foreign investment activities in the country are likely to revive in the near future.

HCMC exports 5 million ornamental fish  
 
Ho Chi Minh City has exported more than 5 million ornamental fish to 32 countries in the first seven months of the year, as per the Department of Agriculture and Rural Development.

The department said the city exported ornamental fish to the three main markets of Europe, North America and Asia-Pacific region. Last year the city exported 7.56 million fish.

Around 60 varieties of fresh ornamental fish such as neon, moly, angel fish and black arowana were exported.  

Chinese traders hunt for Vietnam’s rubber sap

Chinese traders have been flocking to the southern province of Binh Phuoc to purchase rubber sap from local enterprises regardless of quality or brand.

As one of Binh Phuoc’s major rubber producing & processing company, private enterprise Linh Huong in Long Hung Commune, Bu Gia Map District, regularly receives traders from China who come to buy rubber sap.

“Chinese traders come every month to order a large volume of rubber sap,” said Nguyen Van Truong, Linh Huong’s owner.

Several local enterprises said Chinese dealers first came to Binh Phuoc to buy rubber sap 4 or 5 years ago, but they have started to intensify their purchase recently.

According to Vo Van Thuan, owner of Thuan Loi Enterprise in Thuan Loi Commune, Dong Phu District, latex or processed sap has attracted much attention from Chinese vendors.

Unlike Vietnamese counterparts, Chinese traders are willing to purchase rubber sap of all types regardless of quality or brand.

“Chinese traders offer more and show less concern about quality,” Thuan said.

In order to have enough rubber sap to meet Chinese vendors’ demand, some local businesses have offered high prices for sap from small rubber plantations. But as supply is still falling short, some are now diluting their sap just to have enough to sell to Chinese traders.

In response, those who are trying to build high-quality rubber sap said Binh Phuoc rubber’s reputation was being damaged by such dishonesty.

Le Van Uy, Director of Binh Phuoc’s Department of Industry and Commerce, said his department would try to stop this situation but admitted it would take a great deal of time to inspect and identify impure sap.

As for selling to Chinese traders, Linh Huong’s owner Truong warned against the possibility of being tricked. Truong said he himself had been a victim. Some Chinese traders he had dealt with failed to send him payments after receiving the sap and Truong had to go to China to look for them.

“I’ve never agreed to ‘deliver first, pay later,’ ever since,” he said.

US bilateral trade rises by 21% in first half

Two-way trade between Viet Nam and the US topped over US$10 billion in the first half of this year, surging 21 per cent against the same period last year, according the US International Trade Commission.

During the period, Viet Nam exported goods worth $7.94 billion to the US, a yearly rise of 21.4 per cent, while imports hit $2.07 billion, up 25 per cent year on year.

Textiles and garments remained Viet Nam's leading export item, bringing home $3.04 billion, up 18.5 per cent. Garment exports were followed by footwear with $967.7 million, up 27 per cent, and wood products with $837 million, up 4.5 per cent.

Electric and audio equipment maintained its fourth place with export revenues reaching $403 million while seafood exports earned $332.6 million.

Among the US exports to Viet Nam, cotton, including fibre and fabric, recorded the highest value with $262.2 million, a year-on-year rise of 155 per cent. Second was steel with $132.6 million and next was machinery and mechanical appliances with $186 million.

Earlier, the Viet Nam Trade Office in the US predicted that bilateral trade turnover would increase by 20 per cent, reaching $20 billion by year's end.

Last year, two-way trade hit over $18.3 billion, the record since the two countries set up their diplomatic ties in 1995.

The US market held potential for Vietnamese manufacturers and exporters, but it was also challenging, said Nguyen The Hung, deputy director of the Viet Nam Chamber of Commerce and Industry in HCM City.

Domestic businesses therefore would have to continue to improve production and raise the quality of their products to make them more competitive. They should also keep a close eye on changes in the US market's requirements, Hung said.

Local gas suppliers offer discount for distributors

 Some local cooking gas suppliers such as Saigon Petro, Gia Dinh Gas and Vinagas have cut the price of a 12-kg cylinder of cooking gas by VND5,000 for their distributors as the price of gas worldwide has dropped by US$50 to $80 a ton.

Le Van Cuong, the owner of gas distributor Quoc Phong in Hiep Binh Chanh Ward, Thu Duc District, Ho Chi Minh City, said that he had been offered the discount by some suppliers.

Cuong said the discount would help him to offer certain types of consumers lower and more competitive prices.

Do Trung Thanh, Deputy Head of the Sales Department at Saigon Petro Ltd. Company, told Tuoi Tre that though his company has yet to offer the discount to customers because the domestic gas price now is depending on the contract price, which is announced at the end of every month, and changing retail prices must be first approved by the Ministry of Finance’s Price Administration Bureau.

Earlier on August 1, the domestic retail price increased by VND8,000 per 12-kg cylinder when the cooking gas contract price (CP) increased by $25 a ton to $860 a ton.

Slow construction industry weighs on materials sales
 
The building materials market has had a tough time lately due to a downturn in the building industry and increased production.

The Viet Nam Building Material Association said production at factories making cement and ceramic tiles had increased against the same period last year while consumption had reduced.

Nguyen Thi Thuy, owner of Tien Thuy building material shop in Hoang Quoc Viet Street, said sales always fell in the wet season but this year they were down from the beginning of the year and hadn't recovered.

Pham Thanh Trung, owner of Son Tung shop in Tay Ho Street, Ha Noi, said the shop had a year-on-year reduction of 70 per cent in revenue to VND300 million (US$14,527) in June.

Nguyen Tien Nghi, deputy chairman of the Viet Nam Steel Association, said consumption of steel had fallen to 298,000 tonnes in June and recovered to 359,000 tonnes in July, still much lower than the average consumption of 400,000 tonnes a month.

Sales were not expected to improve before the end of this year due to reduced public investment and expenditure on construction in a period of high inflation, Nghi said.

Consumption of cement in July had also reduced by 360,000 tonnes against June to 3.59 million tonnes, said Le Van Diep, head of the administrative office at the Viet Nam Cement Association.

To promote sales of building materials, producers and retailers had offered large discounts.

Viglacera Ha Long, a building ceramics producer, usually discounted at the end of the year but this year 10-15 per cent was applied since mid-year, Thuy said.

Meanwhile, large steel and cement producers had sought to export their products.

This was a temporary solution because the export value was not high, Diep said.

Exports of clinker and cement reached 2.5 million tonnes in the first half and 133,000 tonnes of steel in the first seven months.

Thai firms on the lookout for investment

More than 60 small and medium-sized businesses from Thailand 's central and north-eastern areas gathered in HCM City yesterday to discuss the possibility of co-operation in the logistics sector.

The conference was jointly organised by Thailand 's Consulate General in HCM City and the Investment and Trade Promotion Centre (ITPC) of the city.

Thai businesses, which are operating in the fields of import-export, consumer goods, foodstuff processing, construction materials, transportation and service, arrived in Viet Nam with the aim of surveying co-operative opportunities in logistics services.

The event provided the businesses with a chance to research markets and seek business partners and investment opportunities in Viet Nam.

At the conference, Nguyen Tan Phat from Sunrise Logistics Company in HCM City, expressed hope that both countries' businesses would strengthen trade ties through support from State organs and trade promotion agencies.

A representative from the ITPC also affirmed that the centre made consistent efforts to create links between domestic and foreign businesses, offering support and providing free consultancy on the socio-economic situation and investment environment to foreign enterprises and Thai businesses in particular.

Firms bemoan inflation, monetary policies
 
Economic groups, corporations and big companies voiced their concerns over severely tightened monetary policies at a forum in Ha Noi last week.

The forum evaluated inflation's impact and Government Resolution 11, which aimed to curb inflation. The Bank for Investment and Development of Viet Nam (BIDV) organised and conducted the meeting.

Contributors revealed that in the first half of this year, about 39,500 new enterprises were established with a total registered capital of VND230.2 trillion (US$11 billion). These figures show a decline of 4.7 per cent and 12.8 per cent in number and registered capital value respectively.

In the same period, around 30 per cent of businesses were forced to halt, go bankrupt, dissolve or close down their operations.

A BIDV-conducted survey on 70 enterprises, including economic groups, corporations, large State-owned enterprises and private companies which are the bank's traditional customers, showed that most enterprises were hit hard by the central bank's "too tightened monetary policies," while 16.6 per cent were severely influenced. In reality, BIDV had to extend principals and interests for those businesses.

Only 13.3 per cent of the total businesses are unlikely to be affected, according to the survey.

Due to unclassified criteria relating to essential and nonessential real estate loans, most commercial banks have restricted their lending to non-production and real estate sectors. As a result, many essential real estate projects, such as housing for low-income families or infrastructure development for industrial parks are unable to access loans.

A reduction of VND80.55 trillion ($3.87 billion) in public investment projects this year, increased production costs and tighter monetary policies were to blame for the harsh situation.

In the past few months, banks posted their lending interest rates up to 22 per cent per year.

Most participants bemoaned the continued increase in production costs due to high interest rates. The total expenses per total revenue ratio increased significantly from the same period last year. Specifically, expenses on loan interest payment soared to 30 per cent from 20 per cent.

Consequently, the financial condition of enterprises' operations in electricity, cement, steel, real estate and transportation fields are getting worse.

Representatives said that relevant bodies should review and report on the impact of Government Resolution 11, with a focus on how tightened monetary policies influence business operations.

Do Hong Khanh, chairman of the board of directors of Bach Dang Joint Stock Company, said that enterprises should cut costs by switching to night shifts to take advantages of cheaper electricity prices while minimising stockpiles of products to avoid warehouse expenses.

They also should look for financial sources from other channels, he said, adding that if capital was unavailable, businesses should temporarily halt their production expansion.

Vietnam’s exports to Mexico increase sharply

Vietnam’s exports to Mexico in June hit more than VND80 million, up nearly 15 percent from a year earlier, according to the trade office of the Vietnamese embassy in Mexico.  

In the first six months of the year, Vietnam’s exports to Mexico reached more than US$453 million, up nearly 30 percent against the same period last year.

Hoang Anh Dung, trade counselor of the Vietnamese embassy in Mexico affirmed that Vietnam’s exports to the second biggest economy in the Latin America has maintained high growth thanks to bulk orders for traditional goods such as footwear, garment and textile, seafood, printers, electrical machines, rubber, coffee and wood products.

Mexico’s central bank announced that the Mexican economy will continue to recover rapidly from its increasing import-export growth.

Hanoi Int’l Fair due in October

About 350 domestic and foreign enterprises will take part in the 2011 Hanoi International Fair from October 7-11, which will coincide with activities to celebrate the libation of the capital city (October 10).

The fair will be held at the Giang Vo Exhibition Centre in Hanoi with some 600 stands displaying software, industrial staples, high-tech products, construction material, real estate, handicrafts and many other things.

On the sidelines of the fair, held by the Hanoi Department of Industry and Trade, there will be symposiums on trade aimed at boosting the development of domestic businesses.

Taxes on car imports increased

The customs at national border gates will impose new tariffs on imported used motor vehicles for 15 seaters or more under the Prime Minister’s Decision 36/2001/QD-TTg.

Accordingly, a tax rate of US$3,500 per item will apply to automobiles for 9 passengers or more with a capacity lower than 1,000cc, and US$7,000-8,000 per item on automobiles with a capacity ranging from 1,000cc to 1,500cc.

10-15 seater motor vehicles with a capacity below 2,000cc will have a tax rate of US$9,500 per item (as compared to previously US$7,200). The tax rates range between US$10,800-13,000 for automobiles with a capacity of 2,000cc-3,000cc.

The Prime Minister has asked the Ministry of Finance to adjust the above tax rates within 20 percent depending on concrete situations. When the adjustment exceeds 20 percent, it must be reported to the Prime Minister for approval.

Vietsovpetro plans to invest US$7 billion

The Russian-Vietnamese oil and gas joint venture Vietsovpetro plans to invest US$7 billion in the business between 2011 and 2015.

During the same period, the joint venture aims to produce 33 million tones of gas, worth US$21 billion US$22 billion.

Of the investment, US$1 billion will be spent on off-shore oil exploration off Russia and nearby countries. The remainder will be spent on buying new equipment.

Vietnam attends CLMV Economic Ministers’ Meeting

A Vietnamese delegation headed by Deputy Minister of Industry and Trade Nguyen Cam Tu attended the 3rd Meeting of Economic Ministers of Cambodia, Laos, Myanmar and Vietnam (CLMV) held in Manado, Indonesia, on August 14.

The Vietnamese delegates joined others in discussing measures to boost trade exchanges in the group, the region and the world, and exploit their potential to narrow the development gap between countries in the group with other members in ASEAN.

Participants also agreed to accelerate the implementation of agreements reached at the CLMV Summit, and appraised the implementation of the Plan of Action in 2011 and proposal to reach the targets of this year.

They discussed the content of the 2012 Plan of Action in the fields of the economy, human resource development and coordination mechanisms among the four countries.

They praised and encouraged their partners and international donors to actively take part in the implementation of the Plan of Action 2011 and 2012.

Trade Minister Cham Prasidh headed the Cambodian delegation to the meeting, while General Director of Foreign Trade, Industry and Commerce Bounsom Phommavihance led the Lao delegation and Minister for Economic Development and National Planning U Tin Naing Thein, the Myanmar delegation.

Bauxite route not ready for transport

Transport officials at a meeting in Dong Nai Province on Saturday concluded that road conditions are not suitable for transporting alumina from the mining site in the Central Highlands to a port on the Thi Vai River for export, and suggested that upgrade be made quickly.

The bauxite route – as a traffic corridor comprised of National Highways 20 and 51 and Provincial Road 769 is often referred to – can accommodate trucks of a maximum 30 tons, while Vietnam Coal and Minerals Industries Group (Vinacomin) plans to use heavy trucks of 40 tons for the purpose.

At the meeting on Saturday, Dong Nai Province vice chairman Tran Van Vinh stressed that National Highway 20 is only seven meters wide with many curves.

The highway, with many sections having been deteriorated, is already overburdened with some 15,000 vehicles passing through each day. So if bauxite trucks are allowed on this highway, the risk of accidents will be high, Vinh said.

Meanwhile, Provincial Road 769 linking National Highway 20 to National Highway 51 is also a narrow road, with five small bridges with maximum load of 30 tons each, and therefore cannot stand the 40-ton bauxite trucks.

Even National Highway 51 is not convenient for alumina transport now, as its upgrade has not yet completed.

Vice chairman Vinh said that National Highway 51 is under construction, where traffic jams occur often due to the daily 25,000 turns of vehicles.

Vinh urged the Ministry of Transport to quickly upgrade the roads and bridges if Vinacomin’s heavy trucks are to be allowed on the route.

The Vietnam Road Administration agreed at the meeting, saying two bridges on National Highway 20 and five on Provincial Road 769 must be upgraded to allow for 40-ton trucks to cross.

The big problem is that Vinacomin has already imported such big trucks to transport bauxite, and the transport should start some time next month.

Minister of Transport Dinh La Thang said at the meeting that the ministry always facilitate businesses but cannot accept the way Vinacomin runs business by importing heavy-duty trucks for use before upgrading the roads.

Thang said the Government has approved the upgrade for National Highway 20 under Build – Transfer (BT) project. Therefore, the ministry will soon consider financial schemes to mobilize capital for the project.

The upgrade projects for the bauxite route will be submitted to the government for approval on Monday, the minister said.

* Earlier on August 12, the Ministry of Transport had a working session with Dong Nai and Ba Ria–Vung Tau provinces about construction progress on National Highway 51.

At the session, Pham Van Hien, general director of the Bien Hoa-Vung Tau Expressway Development Joint Stock Co. (BVEC), said his firm has completed 14 construction packages.

Hien said the construction project faces many difficulties in site clearance and compensation for affected people at some bridges and flyovers. Besides, rising material costs may push up the total investment capital and rainfall may slow down the progress.

However, BVEC committed to timely complete the remaining items of the project within this year provided that the two provinces Dong Nai and Ba Ria–Vung Tau sufficiently hand over the required land.

National Highway 51 expansion project kicked off on August 2009 and was planned for completion in August 2012. The project’s total investment capital is some VND3.2 trillion and is carried out under the Build-Operate-Transfer (BOT) format.
 
Bosch to double capital in auto component plant

Germany’s Bosch on Friday announced that it will double investment in its auto components plant known as the gasoline systems factory in the southern province of Dong Nai from $73 million to $132.6 million by 2015.

At the gala dinner in HCMC to mark the 125th birthday of the Bosch Group, Vo Quang Hue, managing director of Robert Bosch Vietnam Co., Ltd, said that the group decided to spur investment to capitalise on the rising demand.

“We are very excited about this additional investment in Vietnam. With the rapid rise in demand for push belt production by the automotive industry, we are confident that the increased investment will enhance our share in the Continuously Variable Transmissions (CVT) market,” he said.

The gasoline systems manufacturing plant produces push belts used for CVT products in automobiles. Situated at Long Thanh Industrial Zone in the province and spanning over a land area of 160,000 square meters, the plant officially opened in the middle of April this year.

The plant will produce up to 1.6 million push belts this year, which can be fitted into vehicles ranging from sub-compact cars to sports utility vehicles with gasoline or hybrid engines.

With the increased investment, production volume of the plant will be double from 1.6 million to 3.2 million push belts per year, Hue said.

“We expect our production volume to double to about 3.2 million units by 2015 to support the growth of the automobile industry. That’s why we decided to increase our investment to expand the current facility.”

“We will also be investing in new state-of-the-art equipment to further enhance the quality of the push belts produced and we will be able to build our own components for push belt assembly,” said Ryosuke Masumitsu, who succeeded Reinhard Kink as the new plant manager of the Gasoline Systems plant on 1 July 2011.

Kink added that “Vietnam will be our key manufacturing site in Asia for the production of CVT belts for the thriving Asian automotive market.”

With more than 300 associates, the plant is currently the first hi-tech CVT push-belt production site for Bosch in Southeast Asia, and the second of its kind for Bosch worldwide after Tilburg in the Netherlands. The increased investment sees Bosch deepening its commitment to further strengthen its operations in Vietnam, Hue added.

Over the past few years, Vietnam has rapidly emerged as a manufacturing and R&D hub for Bosch in Southeast Asia. Besides the Gasoline Systems plant, in May this year the company also inaugurated its Robert Bosch Engineering and Business Solutions, its first software and engineering center in Southeast Asia. Located in E-town 2 building, HCMC, the new center currently employs some 70 engineers and targets to hire some 500 engineers by 2015.

The Robert Bosch Engineering and Business Solutions Vietnam Company Limited (RBVH) offers hi-tech software and engineering solutions such as embedded software and mechanical design, as well as IT and IT enabled services.

Property project transfer tends to enhance

The office building Centre Point on Nguyen Van Troi Street in HCMC’s , Phu Nhuan District is one among many property projects changing hands of late - Photo: Dinh Dung  
Merger and acquisition (M&A) activities have been busy since the year’s beginning and are estimated to advance further into next year as several property projects are under negotiations for transfer.

Project buying or transferring is a popular economic activity among real estate enterprises. Such activities have occurred more often since 2008 as many local investors are facing capital problems and struggling to find an outlet for their products.  

While local firms are troubled with market slowdown, financially-capable foreign investors find it a good opportunity. Many investors, through foreign brokerage firms located in Vietnam, are exploring and seeking chances to enter the local market.

Marc Townsend, managing director of CB Richard Ellis Vietnam (CBRE), said many foreign investors are eyeing Asia, of which Vietnam is a new investment destination.

He said Korean investors are making their way back to Vietnam while several Chinese and Russian firms are looking for chances to invest in local office building or serviced apartment projects.

Sai Gon Thuong Tin Real Estate Joint Stock Company, or Sacomreal, said it received many foreign investment funds seeking ways to invest in its projects this June. For example, Mapletree Investments under the Singapore-based Temasek Holdings showed keen interest in office building and apartment projects, while Sung Chang of South Korea was interested in retail projects. EngelInvest of Israel was also named.

Townsend of CBRE described high population density and profitability of property projects as main factors to attract foreign investment despite the current economic challenges.

Tightened real estate loans and cash flow issue are pressuring local investors, forcing several companies to transfer some of their projects, withdraw capital from others and accepting break-even or losses to maintain their businesses.

To overcome the credit squeeze, many firms are looking for cooperation with local and foreign investors to access capital sources.

Su Ngoc Khuong, associate director of investment at Savills Vietnam Co., said many Vietnamese investors are seeking advice to approach foreign partners. The company witnessed 20% increase in their consultation enquiries this year compared to 2010.

Most investors in the local property market are Asian, such as Japanese, Korean or Singapore, thanks to similar cultures. Besides apartment and office, villa projects are appealing to many foreign investors.

Khuong said few companies publicize their project transfer, except for the listed ones. Moreover, a transfer deal takes between six months and two years to be accomplished.

Jones Lang LaSalle Vietnam Co, for instance, took one year to settle the transfer of Centre Point office building project on Nguyen Van Troi Street, Phu Nhuan District of HCMC. The transfer value remains unknown.

Savills Vietnam has served as a medium to help transfer a complex project of US$120 million, including shopping center, office building and residences in HCMC, Khuong said. The transfer is to be completed in the year’s end but identities of both local and foreign investors have yet to be revealed.

Khuong’s company has previously succeeded in brokering the transfer of an office building project of US$100 million in Hanoi. Khuong said that many project transfers are underway and more mergers and acquisitions would be announced in the coming time.

While new investors are cautiously entering local market, those who have comprehended the market are expanding their investments through project acquisition.

In May, CapitalLand Group announced 70% stake acquisition of an apartment project in Binh Tri Dong Ward, District 2 from Khang Dien Sai Gon Real Estate Co. The project comprises of 974 units covering 2.9 hectares with total capital of US$70 million.

Two weeks later, the Singapore-based property group announced another acquisition of 65% stake, worth some VND121 billion, in Quoc Cuong Sai Gon Co. With these two projects in hands, CapitalLand holds a total seven property projects with 6,400 units, excluding the Somerset Central TD Hai Phong City project acquired by its subsidiary, Ascott Group Limited.

Yip Hoong Mun, chief representative of CapitalLand Vietnam, said the current difficulties are opportunities to investors and underlined that his firm would keep seeking investment cooperation in viable real estate projects.

Regarding this issue, Chairman Le Hoang Chau of the HCMC Real Estate Association (Horea), stated project merger and acquisition tendency would continue and investors are obliged to join hands to enhance financial power so as to implement their projects.

Market observers are optimistic about the mutual support in brand name, experience, project management and even customers offered by foreign partners. They also see that not all project transfers result in loss-making.

Sacomreal is an example. The property firm gained hundreds of billions of dongs from the transfer of Celadon City residence project in HCMC’s Tan Phu District, while it still retains a 40% stake in the project.

Experts predicted if project transfer deals are made successfully, some dozens of property projects might change hands in upcoming time.

Experts doubt central bank’s ability to pull down rate

Several experts have doubted the central bank’s ability to bring down the lending interest rate to benefit the business community, saying the recent warning by the credit rating agency Fitch must be taken seriously.

Nguyen Van Binh, Governor of the State Bank of Vietnam, has just pledged efforts to lower the lending rate to some 17%-19% a year, compared to the current range of 22%-25%.

A financial expert said the central bank would be unlikely to reduce the current interest rates although Fitch was maintaining Vietnam’s long-term foreign and local currency at B+. Once the credit rating was downgraded, the country would have difficulty mobilizing foreign capital, and must pay higher borrowing interest rates. Therefore, the Government needed to take prudence to avoid a downgrade, he said.

Vo Tri Thanh, deputy director of the Central Institute for Economic Management, said Fitch’s warning of downgrading was a reminder to the Government to control inflation. “The Government should be consistent in every of its policies,” he said.

Marc Djandji, director of research at Viet Capital Securities Co., said in a report that it was hard for the central bank to lower the interest rates of Vietnam dong as stated by the central bank’s Governor Nguyen Van Binh due to concerns about inflation rate and current risks on the forex market.

The deposit rate differential between the dollar and Vietnam dong encourages the people to keep more dong recently. If this differential was narrowed, it could affect the exchange rate.

Fitch said a credit downgrade is imminent if Vietnam’s tightening policies were not adhered to, resulting in higher inflation and eroded confidence in the local currency, which would lead to other macro instabilities.

Fitch appreciated the Government’s Resolution 11, saying it helped improve confidence in Vietnam dong, stabilize the economy and promote Vietnam’s credit rating.  

Between February and June, Vietnam had raised key rates – including discount rate and recapitalization rate – to 15% from the initial 7% before easing the rates to 14%.

Fitch also warned Vietnam of its big but weak banking system. According to the rating agency, Vietnam’s credit to GDP ratio was 125% in 2010.

According to Fitch, Vietnam’s high inflation was caused by strong credit growth and high public spending. The annualized inflation rate as of end-July was 22.2% compared to 11.8% in 2010.

Imported meat to continue strong rise

Meat import surged strongly last month, and the tempo will remain high if pork prices on the domestic market still stay high, according to the Animal Health Center for Zone VI in HCMC.

The amount of imported frozen pork in July was 1,300 tons, quadrupling that in June, said Nguyen Xuan Binh, director of the center.

However, given the large amount of imported pork, traders would sell it out gradually in line with the demand, Binh added.

“The imported amount in the year’s second half might rise,” Binh predicted.

A local importer said the company received many offerings of frozen meat imported from the U.S. with prices VND25,000-30,000 lower than the domestic price.

According to the company, July’s record high live-pig price of VND64,000 in the domestic market prompted the huge import of pork. At present, the local price has eased to under VND59,000 due to the low meat consumption in the seventh lunar month, also known as the vegetarian month.

The imported amount of frozen meat of all types in the first six months reached 39,180 tons, up 25% from the same period last year, half of which was imported in July alone, according to the center.

PV