Circular to hasten equitisation

 

The Ministry of Finance has issued a circular based on the purchase of outstanding State-enterprise debt and assets by the Debt and Assets Trading Company in order to help accelerate equitisation.

 

Circular 79/2011/TT-BTC will replace an older one issued in March 2010. Under the new decree, the single-member Debt and Assets Trading Company (DATC) will be considered a special State-owned enterprise (SoEs) with charter capital of around VND2.48 trillion (US$119 million).

 

The DATC has to use at least 70 per cent of its total investment capital to buy outstanding debt and assets from State-owned companies undergoing restructuring and ownership transition.

 

The remaining 30 per cent of investment capital will be used to handle outstanding debt and assets excluded from enterprise values.

 

During debt collection, the DATC will restructure repayment periods, freezing and rescheduling debts or adjusting interest rates to adapt to debtor ability.

 

Under Circular 79/2011/TT-BTC, the DATC is entitled to provide consultancy and brokerage services to organisations and individuals involved in buying, selling, debt collection or mergers and acquisitions, auctions and valuations.

 

DATC council members will be allowed to decide how to purchase outstanding debt with values of less than 50 per cent of registered capital and buy, sell, lease, mortgage, liquidate or transfer assets and finance investment.

 

Chairman of the DATC Pham Phan Quang said that his company had helped many companies restructure their finances in order to ensure enough capital for business performance. By doing so, enterprises were made eligible to transfer ownership or seek strategic investors to participate in capital investment and technical assistance.

 

According to the DATC, within three years of debt collection, it will have successfully restructured 34 companies.

 

From 2004 to 2010, the DATC received nearly VND3.037 trillion ($114.6 million) in bad debt and assets from 2,332 SoEs and 106 enterprises.

 

Thai Nguyen textile mill begins production

 

TNG Investment and Trade Company has opened a new garment factory, worth VND180 billion (US$8.7 million), in the northern province of Thai Nguyen.

The 9ha TNG Phu Binh garment factory has a designed capacity of 3.5 million products a year, all of which will be exported to the EU, Japan and the US.

 

The factory provides 4,000 jobs for local workers.

 

Ammonia import tax to be reduced to zero

 

From July 22, the Ministry of Finance will remove the 3 per cent import tax on ammonia, the main raw material to produce diammonium phosphate (DAP) fertiliser.

 

The move is expected to improve competition among the local fertiliser producers.

 

New building to go up in Cau Giay District

 

Work on a VND1.35 trillion (US$66 million) building will begin in September in the capital's Cau Giay District.

 

Financed by Licogi 16 Joint Stock Co, the 9,260sq.m building is slated for completion in the second quarter of 2014.

 

Swede investors seek eco-sensitive partners

 

Swedish businessmen seeking environmental opportunities held a working session with HCM City's business circle on Monday.

 

They are keen to work in partnerships with Vietnamese companies to find "green" solutions that will encourage sustainable economic development.

 

The entrepreneurs also visited Da Nang, Quy Nhon and Ba Ria-Vung Tau during a two-day visit to Viet Nam.

 

Ocean Bank branch opens in south

 

OceanBank opened a new branch in the southern province of Binh Duong on Monday. This brings the total number of its branches to 17.

 

The new bank will provide banking guarantees and warranties, offer financing, and arrange capital, operational support payments and credit.

 

CMC named among most famous brands

 

CMC Corporation has been named as one of the top 50 famous national brand names this year.

 

The award, made by the National Office of Intellectual Property, is judged on criteria for market competitiveness, investment strategies, quality management, product prestige and services to customers.

 

CMC products include internet broadband service Giganet and Bluefone mobilephone. The corporation now has 10 subsidiaries operating in software services, telecommunication, internet and electronic products.

 

Food exports drive up local prices

 

The increasing unofficial export of many kinds of food items including poultry eggs, pigs, sugar and coconuts to China has pushed their prices up in the domestic market.

The price of poultry eggs in HCM City markets has risen significantly, with salted duck eggs now costing VND5,000 (US$0.24) each, compared to VND3,500 earlier.

 

Furthermore, traders are finding it difficult to purchase enough eggs despite offering higher prices, reports the Sai Gon Tiep Thi newspaper.

 

According to the two biggest egg suppliers for the HCM City market, Ba Huan and Vinh Thanh Dat companies, the quantity of eggs they have been able to buy from the Cuu Long (Mekong) Delta market has decreased by 30-40 per cent recently.

 

"Prices have increased strongly, but we don't have enough eggs to buy," said Truong Chi Thien, director of Vinh Thanh Dat Co Ltd.

 

Industry insiders say some businesses in Vinh Long Province and Can Tho City have collected large quantities of fresh eggs to make salted duck eggs for export to China.

 

The Animal Health Centre in the region, which issues quarantine certificates, also affirmed that the export of salted duck eggs to China by enterprises in Vinh Long and Can Tho provinces had increased remarkably in recent time.

 

Ba Huan, director of Ba Huan Company, said with the Autumn Festival approaching both in China and Viet Nam, there was a huge demand for salted duck eggs – an important ingredient in the moon cake that is a festival specialty.

 

She also said a lot of Chinese businesses had come to Viet Nam and begun competing with local companies in buying eggs.

 

Dinh Van The, an animal health department official in Long An Province, said Chinese businesses were even buying old ducks that have stopped laying eggs.

 

Therefore, some slaught-erhouses in the province were buying these birds for slaughtering, freezing and delivering them to Chinese buyers at the border gate.

 

Huan said a slaughter-house in Cai Be District of Tien Giang Province was also collecting the old ducks to sell to Chinese businesses.

 

The price of an old duck was about VND50,000 early this year, but it has risen to VND110,000-VND120,000 at present.

 

With price of ducks increasing suddenly amidst economic difficulties, some duck breeders sold part of their flock, leading to a dip in egg supply, Huan said.

 

After a brief lull lasting several months, Chinese traders have in recent weeks resumed buying pigs from Viet Nam, especially those weighing between 80-120 kilos each, pushing pork prices up in the domestic market.

 

Two other commodities whose prices have risen as a result of increased export to China are coconuts and sugar.

 

Coconut prices went up from VND110,000 per dozen earlier this year to VND165,000.

 

Some traders who specialise in collecting coconuts to supply to confectioneries said volumes brought into HCM City had reduced sharply because of exports to China.

 

Hoang Thi Tam Ai, owner of the Tri Duc Food Processing Company, said coconut prices had increased strongly and it had become hard to purchase them, so many companies had reduced the amount of coconut milk in their products and replaced by oil or fat.

 

Similarly, with a big difference in sugar prices between Viet Nam and China, many businesses are buying sugar and transporting them to the border gate for export to China.

 

Nguyen Thanh Long, chairman of the Viet Nam Sugar Cane and Sugar Association, said a kilo of sugar was sold at about VND30,000 in China, VND10,000-12,000 higher than in Viet Nam.

 

Some sugar factories in the northern and central region were selling a large volume of sugar to traders who then exported it to China via border trade, he said.

 

He also said the association would petition the Ministry of Industry and Trade to allow sugar imports in case local prices touched VND20,000 a kilo.

 

Vietnam attends Asia-Pacific trade meeting

 

Vietnamese Deputy Minister of Trade and Industry Nguyen Cam Tu has attended the third regional meeting on Aid for Trade for Asia and the Pacific in Jakarta, Indonesia.

 

Addressing the conference on June 14, Deputy Minister Tu said the meeting provides a good opportunity for countries to assess the efficiency of trade assistance in the Asia-Pacific region and share experiences in accessing and distributing aid for trade.

 

Vietnam highly values the role of trade assistance in its development process, said the deputy minister, adding that the nation has become a developing nation with average income levels since this year.

 

Deputy minister Tu attributed this achievement to the important role of the international community’s trade assistance programmes for Vietnam.

 

Many important trade assistance programmes have been launched in the country, such as the Mekong-sub region economic cooperation programmes sponsored by the Asian Development Bank (ADB) and the EU-Vietnam Multilateral Trade Assistance Project.

 

The conference focused on discussing successful experiences in trade liberalisation and economic growth, as well as present and future aid for trade initiatives.

 

Export policy lacks sustainability

 

Deputy Minister of Industry and Trade Le Danh Vinh has called on policymakers to gear up for an import-export balance and focus more on export quality rather than quantity.

 

Vinh told a workshop in Hanoi on June 14 that export policies should ensure environment protection and social welfare, and encourage sustainable development, which are not featured strongly in the current policy.

 

He said value-added goods accounts for a small part of exports which are largely based on natural resources and low labour costs and export policy is in favour of quantity rather than quality and efficiency.

 

“The import-export sector in recent years has not made a strong contribution to socio-economic development in a sustainable way,” said Vinh.

 

Despite these shortfalls, he recognised exports as one of the major engines for economic growth, contributing to employment promotion, income increase and poverty alleviation.

 

Export business enables the nation to enhance managerial experience and increase capital, have broader access to advanced technology and overcome the shortages of material, fuel and equipment.

 

Lao Bao economic trade zone planning announced

 

The Quang Tri provincial People’s Committee on June 14 announced the overall plan for the Lao Bao special economic trade zone until 2025, under the Prime Minister’s decision.

 

Accordingly, the planned area will cover 15,804 ha including Lao Bao and Khe Sanh towns and the five communes of Tan Thanh, Tan Long, Tan Lap, Tan Lien, and Tan Hop in Huong Hoa district. It will be divided into four main parts: the 1,700 ha Lao Bao town will focus on developing trade and export-import services and producing construction materials; the 1,340 ha Khe Sanh town will focus on trade and tourism services, agricultural and mechanical production; an area along Highway 9; and an ecological area for forestry development and eco-tourism.

 

The Lao Bao special economic trade zone is an important international gateway which plays a key role in promoting trade between countries in the East-West economic corridor. It is one of Quang Tri’s key economic centres and includes two economically significant towns, Lao Bao and Khe Sanh.

 

It is also within a strategic area for national defence and security.

 

Da Nang says it sells cheap land to improve city

 

The Da Nang People’s Committee and its relevant agencies Monday held a meeting with Tuoi Tre’s representatives after the newspaper reported the committee had sold many prime pieces of real estate to certain companies at dirt cheap prices, defying land management regulations.

 

Tran Van Minh, head of the municipal people’s committee, said Da Nang has been using the policy of auctioning off land to mobilize social investment in order to develop the economy and increase the city’s budget.

 

Thanks to this policy, the city has mobilized thousands of billions of dong for its infrastructural and eco-social development.

 

Speaking of 5.5 hectares of land in the city center, which Tuoi Tre reported had been given to the Thien Thanh Corporation for VND25.3 million (US$1,265) per square meter, or a third of the market price, Minh said they had auctioned off the land by posting announcements in Da Nang Police and Nguoi Lao Dong newspapers beginning on September 22 last year.

 

But Thien Thanh was the only investor that agreed to the project, so the city had to give the land to them, he said.

 

When asked why the committee gave a term of only 14 days, from September 22 to October 6, instead of 30 days as required by the government auction regulation, Minh said they had followed the law, but refused to elaborate.

 

When Tuoi Tre mentioned the 23,000-square-meter plot at 209 Truong Chinh Street, which was also given to Thien Thanh for a cheap price without passing an auction, Minh said the plot was not “prime land.”

 

Earlier, Da Nang had directly transferred the land to Thien Thanh and only charged them VND40 billion ($2 million) for the right to use it.

 

Tuoi Tre’s representative said this move was against land management regulations because the actual value of the plot, according to the price required by Da Nang, could be as much as VND140 billion ($7 million).

 

In response, Minh said the city had transferred the land to Thien Thanh as required by an order from the Ministry of Defence.

 

Minh also said the transaction in which the 15,421-square-meter plot on Truong Sa Street was sold to Bac Nam 79 Corporation for VND3.7 million ($185) per square meter, which is lower than the required price of VND4.5 million ($225), is also “a response to the Ministry of Public Security’s request.”

 

As for the 71,000-square-meter land near the Dong Nam Dai Tuong Niem Park, which was sold to Nam Viet A Corporation for VND7 million ($350) per square meter, VND900,000 lower than required, Minh said they had also called for investment here and Nam Viet A was the only firm to respond.

 

Minh said there was nothing wrong with Da Nang charging Nam Viet A VND7 million ($350) for the area of 44,428 square meters.

 

But when Tuoi Tre asked why the city charged Nam Viet A for only 62 percent of the required selling price, Minh said it was because the land had no infrastructure.

 

He said the remaining 38 percent of the plot would be used to build roads and parks so they could not grant land use rights for it.

 

However, Tuoi Tre’s investigation found that the whole area of 71,463 square meters was sold for VND7 million ($350) per square meter.

 

Foreign bank loans grow at twice the industry rate

 

Outstanding loan growth at foreign banks was 2.2 times that of the overall banking system in the first four months, newswire VnEconomy has reported.

 

It grew at 14.7 percent compared to the overall 6.42 percent.

 

By April end outstanding loans at foreign banks were estimated at VND190 trillion, or 8.2 percent of total outstanding bank loans, up 2 percent from March.

 

Dong loans accounted for VND53 trillion, or 3 percent of overall dong loans, after growing at 11.6 percent compared to only 3.2 percent overall.

 

Dollar loans accounted for $6.6 billion, or 24 percent of total dollar loans in the system.

 

Earlier, many foreign banks petitioned the State Bank of Vietnam (SBV) for permission to expand credit by more than the 20 percent it has allowed all banks, pointing out their higher credit growth would hardly affect the market given their small size.

 

However, the central bank shot down their demand, explaining that the policy should be fair to all.

 

SBV governor Nguyen Van Giau, reiterating the 20 percent cap at a recent meeting with bank representatives, warned that the central bank would require commercial banks violating the cap to double reserve ratios and place other restrictions on them.

 

By the end of May credit growth had reached 6.92 per cent, the SBV said.

 

However, among banks based in the south and represented at the meeting, at least 10 have already reached the 20-per-cent cap while two have actually surpassed it.

 

Giau is meeting this week with representatives of northern banks.

 

Diamond rig to leave US to work for BP in Vietnam

 

HOUSTON – A rig owned by Diamond Offshore will leave the Gulf of Mexico to work for BP Plc in Vietnam, marking another exit after BP's spill last year led to a moratorium on deepwater drilling.

 

The Ocean Monarch, a deepwater rig now working for Marathon Oil Corp on a daily rate of about $290,000, will earn US$340,000 per day on a three-month contract in Vietnam with the British oil company starting in November, according to Diamond Offshore Drilling Inc's fleet status report on Tuesday.

 

Seven of the more than 30 rigs working in the U.S. Gulf in April 2010 have departed, although one has returned and two more could come back later this year.

 

Also, Exxon Mobil Corp is expected to move a newly built Transocean Ltd deepwater rig to the Gulf late next year after working in the Black Sea.

 

The rig is the third owned by Diamond to leave the Gulf. Diamond also said in its fleet report that the first rig to depart, the Ocean Endeavor, signed an eight-month extension of the one-year contract it had with Egypt's Burullus Gas Co. Once the Monarch leaves, the Houston-based company will have just one deepwater rig left in the nearby waters.

 

The U.S. deepwater drilling moratorium followed BP's well blow-out in April 2010, which killed 11 people and destroyed a Transocean rig. However, regulators resumed issuing permits in the past four months, including for eight new wells.

 

Marvin Odum, president of Shell Oil Co, told the Reuters Global Energy and Climate Summit on Monday that it was good to see the process moving again, but added: "We really need to see that machine pick up speed again."

 

Textile group suspends $225 mln worth projects

 

Vietnam's biggest state-owned corporation in textiles and fabrics Vinatex (Viet Nam Textile Group) has suspended many projects worth over VND4.5 trillion ($225 million) but no reason has yet to be announced.

 

Le Tien Truong, deputy general director of the Hanoi-based group, told Tuoi Tre that the suspended projects are related to raw materials for textiles, dyeing and fibers.

 

Truong added that “the suspension will basically slow down the company’s goal of increasing added values on our products in the coming time”.

 

Truong earlier admitted to dwindling profits although garment exports in May saw a 35 per cent increase in value year-on-year.

 

Cotton and fabric prices had skyrocketed by 260 and 44 per cent respectively, he told the press.

 

"Garment exporters need large loans to buy materials for production, and so they can only afford to stock inputs for one month because of the high interest rates," he was quoted by VietnamNet.

 

Expert calls for policies to boost offshore fishing

 

Vietnam’s offshore fishing industry needs policy support to secure more funding and technologies and ensure fishermen’s safety, a former aquaculture official told Tuoi Tre in an interview Tuesday.

 

Nguyen Thi Hong Minh, deputy head of the erstwhile Ministry of Aquaculture and currently head of the consultative group for the Seafood Export Strategy, said offshore fishing only accounted for 20 percent of annual seafood exports.

 

The industry was far less developed than in neighboring countries and Vietnam also had serious limitations in vessels, fishing ports, and markets.

 

While other countries had switched to vessels made of steel and composites to sail further into the oceans, its fishermen mostly continued to use wooden boats and employ outdated technologies.

 

Though the number of offshore vessels had increased, the industry remained undeveloped.

 

Fishing offshore required proper management and high technology, but in Vietnam it continued to depend mainly on the experience and tradition of fishermen.

 

Though the government had some strategies to boost fisheries, fishermen needed more targeted policies.

 

Vietnam should solicit foreign investment to have greater access to capital and technology.

 

Some Russian and Spanish firms were interested in investing in Vietnam, but proper policies were required to ensure mutual benefit and secure their long-term cooperation.

 

More policies were also needed to ensure the safety of fishermen working in the high seas.

 

The government should set up professional associations for fishermen to help them to build a brand name and set common standards for their products to increase their value.

 

Cambodia seeks tie-up with Vietnam rubber firm

 

Cambodian Deputy Prime Minister Yim Chhayly and other senior officials from the Ministry of Trade, Agriculture and Environment visited the offices of the Vietnam Rubber Group in Southern Vietnam from June 9 to 13 to discuss cooperation in rubber cultivation.

 

Chhayly appreciated the group’s investment in rubber in Cambodia and promised incentives like tax reduction and simplification of procedures.

 

The Vietnam Rubber Group has begun to plant 100,000 hectares of rubber in five Cambodian provinces following an agreement between the two governments earlier this year.

 

The task is expected to finish next year at a cost of more than US$200 million.

 

The group will also help develop physical and social infrastructure in those five provinces through the construction of roads, schools, hospitals, and power and water plants.

 

Workers’ medical allowance becomes tax-free

 

Workers’ medical expenses paid by their employers will no longer be taxable, a circular issued by the Ministry of Finance has said.

 

It will apply only for the diagnosis and treatment of serious illnesses, but will cover workers’ close relatives like parents, spouse, and children.

 

The regulation takes effect July 23.

 

$243.4 mln G-bonds to be tendered on HNX

 

Additional VND5 trillion ($243.4 million) G-bonds, issued by the State Treasury, will be tendered on Thursday (June 16) in Hanoi Stock Exchange (HNX), said the northern bourse website.

 

The proportion of 2-year, 3-year and 5-year term G-bonds issued this time will be 2:2:1.

 

They will be sold at face value, with the coupon will be paid periodically every year, on the same date of issue from 2012 to maturity year. The principal will be paid once at due date.

 

The applied bidding method will be the combination between competitive and non-competitive bidding method.

 

Vietnam Bank for Social Policies (VBSP) and Vietnam Development Bank (VDB) have announced to be succeeded in jointly raising VND4.145 trillion of government-guaranteed bonds issued by the two parties via the auction held on HNX early this month.

 

VBSP has mobilized VND1.5 trillion dong of 2-year bond with the coupon rate of 13.2 percent per annum and VND500 billion worth of 3-year bond with the coupon rate of 13.1 percent per annum.

 

VDB has raised VND1.82 trillion (of the total VND2 trillion of offering volume) for 5-year bond with the coupon rate of 12.7 percent per annum and VND325 billion (of VND1.5 trillion of offering volume) for 10-year bond with the yield of 12 percent per annum.

 

Vietnam's June CPI likely to rise 1pct: NDHMoney

 

Vietnam's consumer price index (CPI) in June is expected to inch up by 1 percent , according to newswire NDHMoney using the Leontief and ARIMA models with data from 2007.

 

NDHMoney ‘s analysts said the CPI in June will slow down to increase at a lower level than that in May thanks to the stock market’s recovery, stability of the monetary market and the forex rate that has significant impacts on the CPI.

 

If the forecast comes true, the CPI will have increased by 13 percent from December 2010 and come closer to approaching the adjustment target of 15 percent for the year, a 20 percent increase from the same period last year.

 

Compared with the same period in recent years, the June 2011 CPI may only be lower than the rise in June 2008, showing the evolution of the price index still remains stable compared with previous years.

 

The high June CPI will lead to the increase in the CPI in the coming months, although the growth may be lower.

 

Asian Development Bank (ADB) has forecasts Vietnam's inflation may start to cool down from June, while the double-digit inflation rise over the same period last year will begin to decline in August.

 

However, ADB said that Vietnam is still able to raise interest rates, said Ayumi Konishi, representative of ADB in Vietnam.

 

Since monthly inflation rate from April to August last year was very low, even with the lightest monthly CPI increase in coming months, the annual increases will only continue to escalate from August, he added.