Trade deficit declines to $100m in January

The trade deficit continues to shrink, falling from US$270 million in December to just $100 million last month.

According to the Ministry of Industry and Trade, exports were worth $6.5 billion in January, a year-on-year decline of 11.1 per cent and 28.5 per cent down from December.

But imports fell to $6.6 billion, respectively down 29.5 per cent and 18.7 per cent.

The ministry explained that there was a slump in trade during Tet every year.

The items that saw a major dip in export were textile and garments (26.9 per cent down); electronics and computers and computer components (34.5 per cent); wood and wood products (27.5 per cent); and rubber (31.3 per cent).

As for imports, the biggest falls were in transport vehicles and components (94 per cent); animal fat and vegetable oil (52 per cent); and metals (58 per cent).

In January alone agro-forestry and fisheries exports were worth $1.8 billion, a year-on-year drop of 16.3 per cent, according to figures from the Ministry of Agriculture and Rural Development.

The ministry said export staples faced barriers in many markets while their global prices were falling.

Around 400,000 tonnes of rice worth $240 million were exported in January, a year-on-year decrease of 25.4 per cent in volume and 14.2 per cent in value.

Coffee and rubber too saw export slumps.

Pepper and cashew prices remained stable.

The country also shipped $370 million worth of seafood products in January.

Outbound tourists increase during Tet

Around 80,000 tourists in Ho Chi Minh City and neighboring provinces went abroad through Tan Son Nhat International Airport Minh City to enjoy their lunar New Year holiday, representing a year-on-year increase of 20 percent.

According to the municipal Department of Culture, Sports and Tourism, the number of people traveled by road to Cambodia via the Moc Bai border gate in the southern province of Tay Ninh reached 40,000.

Meanwhile, about 90,000 others chose Phu Quoc, Phan Thiet, Nha Trang, Da Lat and Hue as their destinations during the Lunar New Year holiday.

In January 2012, HCM City welcomed around 310,000 foreign visitors, including 60,000 overseas Vietnamese, equivalent to the figures of the same period last year.

VN unlikely to achieve GDP, inflation targets: Ernst&Young

Inflation in Vietnam could cool down this year, yet by a lower rate than expected, while GDP growth may also lag behind target, foresees a recent report by Ernst & Young.

In its report, Ernst & Young said Vietnam would not be likely to achieve the GDP growth target of 6 – 6.5 percent in 2012, given the low figure of 5.89 percent recorded last year.

The report concerns the economic outlook of the countries with fast economic growth in Asia – Pacific including China, India, Indonesia, Korea, Malaysia, Thailand, and Vietnam.

The accountancy firm said that although the country will focus its policies on boosting economic growth and taming inflation, the target could not be achieved since the government has to handle possible risks during its process of restructuring state-owned enterprises and the banking system.

The Ernst & Young forecast also stated that Vietnam’s inflation would remain higher than expected.

However, the report said the country’s economic outlook would get brighter next year, when inflation is expected to drop below 10 percent, and strong export growth would help reduce trade deficit.

President of US Ex-Im Bank to visit Vietnam

Fred Hochberg, President of the Export-Import Bank (Ex-Im Bank) of the United States and other high-ranking leaders of the bank will pay a visit to Vietnam from February 5-8.

The three-day visit aims to seek opportunities for financial support for US high-quality goods and services in Vietnam.

Accordingly, the delegation of the US finance organization will meet with Vietnam’s trade partners and Government officials to introduce financial support programmes from Ex-Im Bank.

In its strategy, Ex-Im Bank is seeking new markets apart from Vietnam such as Mexico, Brazil, India, Indonesia and South Africa.

The bank is focused on regenerated energy, construction, agricultural machinery, medical technology, and aviation.

In 2011, Ex-Im Bank provided over US$40 billion in financial support for US exports to other countries over the world.

Japanese company launches goods delivery services

Japan’s leading transportation company Sagawa Holdings has announced that it will launch delivery services in Vietnam in February on a trial basis, and then officially from March.

Sagawa announced on February 1 that this year the firm will invest 100 million yen (US$1.2 million) to buy more than 30 lorries and motorbikes for goods transportation and to hire about 100 employees for delivery services.

Sagawa Holdings has set the target of earning one billion yen (US$12 million) per year in revenues within the next three years.

The company will initially deliver goods for businesses in Hanoi and Ho Chi Minh City, and then expand its services to other regions and other groups of customers.

Upon receiving orders by phone from customers, Sagawa will pick up and deliver goods to their destination, within one day for inner city businesses, at the price of about US$4.20 per parcel and within 3 or 4 days for goods delivered between Hanoi and HCM City at the price of $7.60 per parcel.

In the future, Sagawa will reduce the time for goods delivery between the two cities to just one day, using aviation.

Vietnam is the second foreign market where Sagawa is opening operations.

Sagawa said it has chosen Vietnam because this market has cheap labour and high economic growth, while many Japanese companies are operating here.

Blue chips help lift indices

Closing at 401.61 points this morning, the VN-Index on the HCM Stock Exchange rose by 2.8 per cent over yesterday's session.

Gainers were four times higher than losers.

Six of the 10 leading shares by capitalisation hit their ceiling prices, including insurer Bao Viet Holdings (BVH), Vietinbank (CTG), Eximbank (EIB), property developer Hoang Anh Gia Lai (HAG), food processor Masan (MSN) and Vietcombank (VCB).

Other stocks in the future benchmark index VN30 also rose sharply, many hitting their daily increase limit. Meanwhile, blue chip Sacombank (STB) lost 0.5 per cent to VND18,900 (US$0.9) per share.

Trading value on the southern bourse reached VND715.3 billion ($34 million), an increase of 8 per cent compared to yesterday's level. Meanwhile, the volume of trades added 12 per cent to 44 million shares.

On the Ha Noi Stock Exchange, the HNX-Index edged up nearly 3.5 per cent to 62.57 points with 253 out of 393 codes posting gains.

Market value climbed 13.4 per cent over yesterday's session, totalling VND270.4 billion ($12.87 million) on a volume of 32.7 million shares.

Kim Long Securities Co (KLS) was the most active stock with around 4.3 million shares changing hands. It also fetched its ceiling price of VND9,600 per share.

Shares rise on VN-30 Index launch

Transactions focused on shares announced on Monday to be included in the basket used to calculate the new VN-30 Index.

Led by blue chips, shares on the HCM City Stock Exchange continued to rise yesterday, but profit-taking had a negative impact on the Ha Noi bourse.

In HCM City, the VN-Index concluded the session at 390.67 points, up 0.7 per cent over Tuesday's close. Trading volume remained unchanged compared to the previous session with 39.2 million shares changing hands, but the value of trades rose 22 per cent to VND622.5 billion (US$29.6 million).

Transactions focused on shares announced on Monday to be included in the basket used to calculate the new VN-30 Index, which will be rolled out next Monday. These included real estate developer Hoang Anh Gia Lai (HAG), PetroVietnam Finance (PVF), Becamex Infrastructure Development (IJC), Tan Tao Investment Industry (ITA), Kinh Bac City Development (KBC) and Ocean Group (OGC).

Eight of the 10 leading shares by capitalisation also posted gains, with only food processor Masan Group (MSN) closing off. Decliners pipped advancers by 110-109 overall.

Lacking support from blue chips, shares eased on the Ha Noi Stock Exchange, with the HNX-Index closing down by 0.2 per cent to 60.47. Both value and volume slumped by over 20 per cent, with trades totalling VND238.2 billion ($11.3 million) on a volume of 30.6 million shares. Losers outnumbered gainers by 147-95.

Bao Viet Securities Co analyst Pham Tien Dung also said some stocks had experienced gains of 15-20 per cent and current prices were advantageous for institutional investors to cash out their investments.

"Their potential sales are a huge barrier to this short-term rally," Dung wrote in a report. "Short-term money is also not interested in the market at this time so prices will hardly be able to travel far."

Foreign investors remained net buyers on both exchanges yesterday, responsible for a combined net buy of VND54.6 billion ($2.6 million) worth of shares.

Tourists to Hanoi increase during Tet

Around 183,000 foreign tourists visited Hanoi during the lunar New Year (Tet) holiday, a year-on-year increase of 16 percent.  

The city’s Culture, Sports and Tourism Department said that thanks to visa exemptions, the number of Overseas Vietnamese increased sharply to almost 700,000.

The department predicted that the number of tourists from traditional markets including China, Japan, France, Australia, the Republic of Korea and other Southeast Asian nations will increase in the first quarter of the year.

Hanoi also welcomed more than 1.8 million domestic visitors, a year-on-year rise of 40 percent. The Huong (Perfume) Pagoda festival and Thang Long Imperial Citadel relic site attracted the largest number of tourists.

Around 28,500 Vietnamese people went abroad to spent their long Tet holiday that lasted from January 21 to 29. Malaysia, Singapore, Thailand, Laos, Cambodia and China remained their favourite destinations.

Milk, cooking gas announce shocking price hikes

As of Wednesday, local cooking gas suppliers announced enormous price increases, while earlier, milk producers also shocked consumers with their new pricing scheme.

Cooking gas prices rose by VND42,000-45,000 (US$2.16) a 12-kilogram cylinder to VND425,000-464,280 a cylinder, with suppliers claiming the soaring import prices, which shot up by $145 a ton month on month, as the main cause for the hike.

Prices have been hiked as many as three times within the very first month of this year, with the total increase of VND74,000.

Cuong, a gas distributor in Ho Chi Minh City’s Thu Duc District, said that although he had been informed of the price hike beforehand, he was still shocked to learn of the new price list provided by the suppliers.

“I only managed to sell four 12-kg cylinders today, instead of the usual ten,” Cuong lamented.

Meanwhile, distributors of Saigon Petro operating in HCMC and the southern province of Long An said they no longer receive commissions worth VND7,000 per cylinder as before the Lunar New Year.

Le Thi Anh Man, deputy chairwoman of the Vietnam Gas Association, said that increasing import prices are not the main culprit for the skyrocketing domestic cooking gas prices.

“The second cause is that cooking gas imports are subject to the new 5 percent tariff as of the beginning of this year, instead of 2 percent,” Man elaborated.

“The association will petition for a tax cut to support gas suppliers and consumers.”

Milk dealers around HCMC said prices have risen by 7 to 19 percent, or VND10,000 – VND100,000, a can since earlier this week, as the producers have adjusted the product design, enhanced product quality, and cut commissions.

Vinamilk said one of its new products will be sold at a 9 percent higher price than the old product line, but are still 40 percent lower than imported products with similar quality.

Enda Ryan, CEO of Mead Johnson Vietnam, said all of the new products are 10 percent costlier than the old ones, thanks to their nutritious additions.

“Buying power has slumped due to the skyrocketing milk prices,” said Tung, a milk dealer in Phu Nhuan District.

“Consumers are extremely hesitant in choosing the formula milk since an imported product can now cost up to VND1 million.”

EuroCham slightly increases confidence in local economy

Business confidence and outlook among European businesses in Vietnam has stabilized and shown a modest increase after a steep 11-point drop in the last quarter of 2011, a recent report by the European Chamber of Commerce in Vietnam (EuroCham) has shown.

EuroCham’s sixth quarterly report, released Wednesday, shows that the Business Climate Index increased by 4 points to 56, with 38 percent of respondents assessing their current business situation as ’neutral,’ slightly down from 45 percent in the last survey.

Meanwhile, a ‘good’ or ‘excellent’ view of their current business situation was held by 36 percent of respondents, up slightly from 32 percent last quarter, but still much lower than the 64 percent who were content with their current business situation this time last year, the report said.

“The number of businesses having a negative view on their current situation has remained nearly unchanged since last quarter, but at 26 percent, it is 14 percentage points higher than a year ago,” it stated.

The survey, titled EuroCham Business Climate Index survey, was conducted in January 2012, with 40 percent of the respondents active in the services industry, about a quarter in each manufacturing and trading and the rest in other activities.

“The slight increase of the EuroCham Business Climate Index at 56 points shows a halt in the downward trend in business confidence we have seen in 2011,” commented EuroCham Chairman Alain Cany on the survey.

“However, the business confidence is still far below last year’s level. This shows that uncertainty amongst investors remains. Key structural issues have not been resolved such as privatization of state owned enterprises and stabilizing the macroeconomic environment to name two examples.”

Respondents to the survey also showed slight optimism in their business outlook for 2012, or the Year of Dragon according to the Lunar calendar.

Nearly 40 percent of businesses stated a ‘good’ or ‘excellent’ outlook, which is a 12 percent increase from last quarter. However, the rate is far lower than the 72 percent recorded during the same period last year, the report said.

Meanwhile, 25 percent respondents had a pessimistic outlook for business in the second half of this year.

Asked for an expected percent of VND depreciation in 2012, most of the respondents replied with the rate of 8.33 percent, while 53 percent of companies expect inflation to have a significant impact on their business. Only 8 percent stated that inflation was “actually threatening their business in the country.”

Regarding the macroeconomic uncertainties in Vietnam, a significant 65 percent of respondents expect the difficult macroeconomic situation in Vietnam to worsen further, while 35 percent expect the situation to stabilize and gradually improve.

“This shows an underlying uncertainty by investors about the fate of the Vietnamese economy,” the report stated.

Asked whether the current economic crisis in Europe is affecting their company's decision to invest in Vietnam, 55 percent stated that the crisis affected them, although most of them stated a ‘slight’ effect.

On the contrary, the survey showed that 44 percent said the crisis in Europe does not affect their decision to invest in Vietnam at all.

Meanwhile, when asked whether corruption had ultimately reduced or delayed their investment in Vietnam, 34 percent of respondent said that corruption had ‘significantly’ reduced or delayed their investment in Vietnam, a 6 percent increase from the last quarter, while 25 percent said corruption had not affected them at all.

This indicates that corruption is still a serious problem and features prominently in investors’ consideration the country, EuroCham stated in its report.

Vietnamese goods to be sold in foreign supermarkets

The purchasing division of LotteMart Vietnam, the owner of a chain of supermarkets, is preparing to offer Vietnamese goods for sale at 122 foreign overseas supermarkets, including 94 in China and 28 others in Indonesia.

A LotteMart Vietnam representative said the parent group in the Republic of Korea is working with Vietnamese embassies in Indonesia and China to introduce Vietnamese goods in these countries via promotion programmes.

According to the representative, by early 2012, LotteMart have brought Vietnamese goods, including cooking utensils, sauces, spices, milk, coffee, tea, instant porridge and noodles, confectionery and seafood for sale at 97 supermarkets in the RoK.

Meanwhile, Big C Vietnam exported 1,000 containers of Vietnamese goods worth over US$17 million in 2011, according to Duong Thi Quynh Trang, Director of Big C External Affairs and Public Relations Department.  

Since it entered the Vietnamese market, Big C set up an export-import division, a member of Casino Global Sourcing, which is a goods supplier for France’s Casino group. The division has boosted the export of garments, interior and exterior decorations and food produced by 70 Vietnamese businesses. Thanks to its efforts, Vietnamese products have been put on sale at Casino’s supermarket and shop chains, such as Casino, Geant, Go Sport and Monoprix in France, Pao de Acucar in Brazil, Vindemia in India, Exito in Colombia and Libertad in Argentina.

Vietnamese goods, with their own characteristics and varieties, attract a lot of foreign customers, said Trang. However, she said, domestic producers should modernize production process to create higher quality products in order to meet the demands of overseas markets.

The LotteMart Vietnam representative said Vietnamese goods are cheaper than locally-made goods, and qualified to enter the RoK market.

Apart from this, RoK-based LotteMart as well as relevant agencies in the country have created favourable conditions for the import of Vietnamese products so they can reach customers quickly.

From the success in the RoK, LotteMart group has decided to accelerate the progress of sending Vietnamese commodities to China and Indonesia and also plans to send them to other countries.

Tien Giang Province welcomes 150,000 tourists

The southern Tien Giang Province welcomed around 140,000-150,000 tourist arrivals which were mainly international visitors for tours during the Tet Holiday, said Nguyen Ngoc Minh, director of the province's Culture, Sport and Tourism Department.

Thoi Son island and other islands in the Tien River have been the most attractive destinations in the tours. The province has explored new tours in Cai Be, Cai Lay, Tan Thanh and Den Do areas in Go Cong District.

Minh said the province aimed to receive more than 1.14 million tourists this year, which would be a 9 per cent increase over last year.

Work begins on Thi Cau bridge

Construction of new Thi Cau Bridge linking northern Bac Ninh and Bac Giang provinces began yesterday.

It is one of the three new bridges to be built as part of a project following Prime Minister Nguyen Tan Dung's urgent directive. The other two are the Dong Nai Bridge in southern Dong Nai Province and Tam Bac Bridge in northern Hai Phong City.

The new bridges will be built to separate traffic on existing Dong Nai, Tam Bac and Thi Cau bridges which are currently used by trains and motor vehicles.

Thi Cau was one of 10 bridges that were used by both trains and other vehicles, which caused traffic jams and posed high traffic risks.

Construction of the new Thi Cau Bridge, 30m away from the existing one of the same name, was aimed at separating road and railway traffic to ensure traffic safety and prevent congestion, Director of the Railway Management Board for Region 1 Doan Kim Khen said.

The new Thi Cau Bridge, which is 572.1m long and 16m wide, is designed for traffic speeds of 60km per hour.

Total investment in building the new Thi Cau Bridge and upgrading the existing one for temporary use will be VND466 billion (US$22.3 million).

Project construction is expected to be completed by the end of the first quarter of 2013.

Building site inspections fall well short of what's needed
 
Experts are calling for quality inspections at construction sites to be enhanced, saying that only around 10 per cent of such projects throughout the country are inspected every year.

According to State Authority for Construction Quality Inspection deputy director Pham Tien Van, quality inspections failed to cover about 45,000 construction projects last year.

He added that of those which were inspected, only 0.3 per cent were found with quality-related problems, which raised the question of whether the figure would rise if all projects were inspected.

Deputy director of the Consultant and Inspection Joint Stock Company of Construction Technology and Equipment (CONINCO) Le Huu Truong said the limitations and weakness in the construction quality management of State agencies resulted in the construction of many low-quality buildings.

Quality-related problems were mainly revealed in resettlement housing projects or traffic projects, which must adhere to strict quality supervision.

"Another key factor is the low capacity of evaluating contractors, which can lead to poor designation of contractors who may lack the experience to properly implement the projects," Truong said.

According to Van, legal documents on construction quality inspection must be completed to improve the situation as well as raising the capacity of the State agencies in carrying out inspections on projects to ensure compliance with regulations and safety standards.

In addition, clarification was needed to clarify the role and responsibility of contractors and State agencies, and violations of construction quality regulations must also be strictly dealt with.

Fire safety fines to help boost services
 
Money collected from fire violation fines is expected to enhance the country's firefighting capacity, which is now far below demand, according to major general Do Van Son, director of the Department for Firefighting and Rescues under the Ministry of Public Security.

According to a new draft decree expected to be approved this year, 70 per cent of money collected from fire violation fines will be invested in firefighting facilities.

"Examples in some other sectors have proved the efficiency of using the money collected from fines to invest back in those sectors," said Son.

As a pilot locality, the central province of Nghe An used all of the money collected from fire fines in 2010 and two-thirds last year to invest in the provincial firefighting facilities.

Fines in fire violations in Viet Nam now range from VND50,000-20 million (US$2.3-950).

The money is expected to help set up new firefighter teams and upgrade facilities.

The whole country has now only 169 professional firefighter teams, "which is far below the real demand", according to Son.

"As regulated, a firefighter team only covers an area of 5km in radius but in fact, some teams have to manage areas 30 times bigger than that," he said.

The number of amateur firefighter teams only meets four-fifths of the demand, while the whole sector also faces a severe shortage of facilities, according to a report from the Department for Firefighting and Rescues.

Only 30 per cent of appliances in Viet Nam are in good condition, the report reveals.

Last year saw a 16 per cent decrease in the number of fires across the country from 2010, but "the risks of serious fires are still there," said Son.

Nearly 1,550 fires were reported last year, claiming 75 lives and injuring 215 others. The total losses were nearly VND572 billion ($27.2 million).

They included some 220 forest fires, which destroyed more than 2,000ha of trees.

Key projects inaugurated in southern Ca Mau

Prime Minister Nguyen Tan Dung on January 30 witnessed the inauguration of key projects in the southernmost province of Ca Mau.

The newly completed projects are the Ca Mau fertiliser plant, Dam Cung Bridge and a memorial complex to President Ho Chi Minh.

The Ca Mau fertiliser plant officially turned out its first products on the same day, after 40 months of construction.

The plant, built at a cost of $780 million, is a part of the complex of Ca Mau Gas-Electricity-Fertiliser. It is a key national project and is expected to ensure a stable supply of fertiliser for the country by 2025.

The plant has a capacity of 800,000 tons of urea fertiliser a year, meeting about 40 per cent of the country’s demand.

The plant is the final component of the Ca Mau Gas-Electricity-Fertiliser complex, contributing to generating a combined industrial value of over VND34 trillion and nearly 1.200 jobs.

Prime Minister Dung stressed the significance of the plant to the country’s agricultural sector. He asked Ca Mau province, Vietnam Oil and Gas Group and the Management Board of the industrial complex to continue to care for local people’s lives, especially the more than 1.400 households which had to relocate to make way for the fertiliser plant.

Speaking at the inauguration ceremony of Dam Cung Bridge, PM Dung said the bridge is very important to the province and the southwestern region as it links the south and the north of the province and is the last point to access Ho Chi Minh Highway from the southernmost parts of the country.

The bridge has a length of 668 metres and a width of 12m. It was built at a cost of over VND350 billion ($16.6 million).

Meanwhile, a memorial complex to President Ho Chi Minh was inaugurated as a place for local people, especially young people, to learn about revolutionary tradition.

The complex includes a worship room, a movie house, and a showroom of documents, photos and objects relating to President Ho Chi Minh.

EVN wants lid on power supply for Cambodia

Electricity of Vietnam (EVN) has submitted a petition to the Ministry of Industry and Trade against raising the power output sold to Cambodia since the country’s southern region is facing difficulties in power supply.

At present the power capacity sold to Cambodia is some 135 megawatts and the monthly output fluctuates between 90 and 100 kilowatts.

Experts said the southern region was currently short of electricity and required the additional supply from the north during the dry season to meet the regional consumption demand.

Speaking to the Daily on Sunday, Le Van Quang, deputy general director of Da Nhim-Ham Thuan-Da Mi Hydropower Company, warned about the low water levels at some hydropower reservoirs such as Dong Nai 3, Dong Nai 4, and Dai Ninh.

Da Nhim, Ham Thuan, Da Mi, Tri An and Dai Ninh lakes are boosting water storage for power generation in the coming dry season. At the same time, larger reservoirs like Tri An, Dai Ninh and Ham Thuan are supplying water for winter-spring crop in the south.

According to EVN, although the water storage at hydropower reservoirs in 2011 are better than in 2010, there are signals about a severe drought in this year’s dry season, leaving a huge impact on hydropower generation.

The total power output of EVN in 2012 is estimated at 105 billion kilowatt-hours, or a year-on-year increase of 11.9%, some 4.6 billion kilowatts of which will be imported from China.

To enhance power supply, EVN will kick off four projects this year with the total capacity of 2,390 megawatts, including the thermal power plants Duyen Hai 3, O Mon 1, and Thai Binh, together with Trung Son hydropower plant.
 
Uptrend expected to continue after Tet

Securities enterprises expected the local market to continue moving up after the week-long traditional Lunar New Year holiday as investor sentiment improved thanks to many rising sessions in a row earlier.

In the last trading session before Tet, the VN-Index ended its nine-day winning streak as the gauge lost 0.43 point, or 0.12%, to close at 373 points, just below the resistance line of 375 points. Meanwhile, the HNX-Index closed up 0.03 point, or 0.05%, to 58.44.

“Nevertheless, the rally so far was quite impressive as the VN-Index gained 12.25% since the low set on January 9, which, as we understand, came rather unexpected for most market participants,” Viet Capital Securities said in its report. The HNX-Index gained 6.9% during the same period and was lagging versus the southern bourse. Heavyweights like MSN and BVH were contributing a lot to the VN-Index’s rise.

“We expect the Vietnamese market to trade higher after Tet as investors in general might chase the rally. We keep all our open positions for now as we forecast a move to 425 points for the VN-Index and 65 points for the HNX-Index in the first quarter of this year,” the broker said.

HCMC Securities Co. (HSC), meanwhile, said that the last session before Tet was an unexciting day, although the previous weeks had at least reminded investors that perhaps there was a small faint light at the end of the tunnel.

“The year of the Cat inflicted a 27% loss for the VN-Index and a 45% loss for the HNX-Index and most participants will be happy that we leave the year behind us,” it added.

The Vietnamese equity markets have experienced an Asian crisis ‘in slow motion’ over the past years with prices losing between 85% and 90% for the median stock and this has devastated investor psychology. Given difficulties it might see, these are the times when one has to reconsider this asset class, HSC said.

“In the meantime, it seems that the coming year is going to be another challenge as the consolidation in the banking sector will force banks to prioritize their balance sheet instead of credit growth and as a consequence, liquidity is likely to remain tight. And with a market that is highly dependent on liquidity and leverage, it is unlikely that we will see a sustainable rally in the short term although we might see a few trading rallies in the first half,” the broker added.
 
Japanese confectionery firm buys 10% stake of Kinh Do

Japan-based Ezaki Glico Co. Ltd. has signed an agreement with Kinh Do Corporation (KDC) to buy 14 million shares of KDC, or a 10% stake in the local enterprise, marking the penetration of Glico into the local market.

According to KDC, with this share purchase, KDC and Glico have cooperation plans to distribute luxury products of Glico in Vietnam through KDC’s distribution network and marketing team to develop the confectionery business in Vietnam.

Tran Le Nguyen, chief executive officer cum vice chairman of KDC, said that with experiences and products of Glico, his firm could take the confectionary business to a higher level. The partnership would create new products which would be distributed to KDC’s 120,000 retail points, Nguyen added.

Meanwhile, Katsuhisa Ezaki, chief executive officer cum president of Ezaki Glico, said that Glico was working on a plan to expand its business overseas, especially in Asian countries, and hoped to earn benefits from KDC’s leadership in the confectionery business in Vietnam with the strong distribution network.

Through this partnership, the firm expected to introduce and expand products in Vietnam, he said.

Ezaki Glico Co., Ltd. is a Japan-based confectionery and food company established in 1922. In addition to chocolate, biscuits, sweets and gums, Glico has expanded its business portfolio to ice cream, processed food, milk products and beverages.
 
Rice crop in north faces water shortage

The Central Meteorology and Hydrology Forecasting Center has warned a water shortage will likely hit the winter-spring rice crop 2011-2012 in northern Vietnam.

This is the second successive winter-spring rice crop in the country’s northern region that has had no enough water. The Cultivation Department under the Ministry of Agriculture and Rural Development said northern provinces this year would be planting about 670,000 hectares of rice, one-fifth of the country’s total winter-spring cultivation area.

The department’s head, Nguyen Tri Ngoc, said that before sowing the winter-spring crop, local farmers had been told about a possible water shortage. However, they have almost completed the sowing, Ngoc said, adding his department had worked with relevant agencies to map out plans to ensure irrigation.

According to the department, Hoa Binh, Thac Ba and Tuyen Quang hydropower reservoirs will release some 2.8 billion cubic meters of water in two phases until February 9 to help rice growers have enough water to begin the winter-spring crop in a timely manner.

State bank moves to accumulate privately-held gold

The State Bank of Vietnam (SBV) will submit a plan to the Government to mobilise gold from individual people who hold an estimated at 300-500 tonnes.    

This was revealed by Nguyen Van Binh, Governor of SBV, during an interview, which was posted on the SBV website on January 30.

According to the plan, credit institutions will act as agents to accumulate gold for the central bank. The Government will not directly intervene in the market, but through these institutions as intermediaries.

In order to help curb speculation, the Government issued Decree 95, which levies fines for illegal foreign currency and gold transactions. This, it is hoped, will help stabilise the gold market.

According to  Binh, the SBV is taking measures to improve liquidity in banks, with the goal of lowering interest rates this year.

Binh referred to the International Monetary Fund’s assessment, saying that if the country continues its monetary policies begun in 2011, inflation will be able to be brought down to 8-8.5% this year. He added that it will also help to reduce deposit interest rates to around 10%.

The SBV will also continue measures to stabilise exchange rates, Binh said, emphasising that without any unforeseen external shocks, the domestic currency should only lose a maximum 3% of its value against the dollar in 2012.