Textile giants eager to be supplier for domestic retailers

 

Textile exporters with large output and skilled employees opt for becoming suppliers for domestic fashion retailers as the global economy remains sour.

 

Textile producer Garmex Sai Gon, one of the country’s largest textile exporters, has inked an agreement worth VND100 billion ($5 million) to become a supplier for local fashion retailer Blue Exchange this year.

 

The move has startled analysts since the Ho Chi Minh City-based textile firm already established a chain of fashion shops with the brand named Saga in 2004.

 

“Saga seems to be booming, with positive sales, diversified designs and broad distribution network,” says Garmex Sai Gon chairman Le Quang Hung.

 

“However, the chain actually incurred losses due to a large inventory, low return-on-investment rate and profit margin, which were not announced officially.”

 

Garmex Sai Gon gradually reduced the chain’s operation before shutting it down in 2004.

 

Many big textile exporters have suffered heavy losses from making forays into the domestic market due to lack of experience in retail business, Hung notices.

 

The profit margin from export shipments drops to below 10 per cent due to the global economic turmoil, he discloses.

 

“If we set the margin [10 per cent] for the domestic market, we will have great advantages over other competitors,” Hung says.

 

“They comprise of low-prices and high-quality products and the capability of supplying up to hundreds of thousands of apparels in a short period of time.”

 

Blue Exchange, meanwhile, is among the city’s most popular fashion retailers, with a chain of 140 shops nationwide.

 

It is seeking suppliers that produce hi-quality apparels in large volumes without requiring either initial investments or materials. Therefore, Garment Sai Gon is one of its top picks.

 

“ASEAN is expected to become a free trade area by 2015. As a result, apparels from Singapore, Malyasia and Thailand will strongly enter Vietnam, while local retailers such as Blue Exchange will have chances to hit store shelves in neighboring countries,” Hung says.

 

“Garment Sai Gon will also consequently have opportunities to boost sales.”

 

The firm notices that it has to rely on the core business since it suffers heavy losses from trying to become a local retailer, which were caused by a huge inventory and unstable consumption, he says.

 

“We are skilled at textile. We are among the biggest suppliers for many European fashion groups. Thus we can easily become the biggest suppliers for local retailers,” Hung says.

 

Vietnam’s first half exports to Mexico rises 30 per cent

 

Vietnam earned $453.6 million from exports to Mexico in the first half of this year, a rise of 30 per cent over the same period last year, according to the Vietnamese Embassy in Mexico .

 

Meanwhile imports in the reviewed period were $41 million, a drop of 31.3 per cent, the source said.

 

In June alone, Vietnam ’s exports to the second largest economy in Latin America increased 15 percent to $80.3 million while imports were down 6 per cent to $5.55 million, it added.

 

Hoang Anh Dung, the Vietnamese Embassy’s commerce counsellor, attributed the surplus to the increase in the volume of traditional export items such as footwear, apparel, aquatic products, printers, electric equipment and machines, rubber, coffee and wood furniture.

 

The Central Bank of Mexico said Mexico ’s quick economic recovery and high growth in import-export are an advantage for commodities produced in Vietnam.

 

Denmark launched new programme to support green growth and clean tech

 

Denmarktoday launched a Business Partnership Programme (DBP), which aims to support sustainable development and contribute to poverty reduction.

 

The programme will be focused on creating economic growth and employment in Danida partner countries, including Vietnam, according to the Denmark’s embassy to Vietnam statement.

 

The Business Partnerships is part of the implementation of Danida’s new policy on “Growth and Employment”, which emphasises a streamlining of Danish development aid, and an increased focus on private sector support as a way to achieve development goals.

 

The DBP supports the establishment of commercial partnerships between Danish and Vietnamese companies in order to improve business competencies in Vietnam.

 

The objective of the programme is to improve the competitiveness of Vietnamese companies and thereby generate economic growth and reduce poverty. This is done through long-term, committed partnerships between Vietnamese and Danish companies realising a common commercial business idea.

 

In Vietnam, the focus of the new programme will be on Green Growth and Clean Tech, where new commitments will be considered for 2012 and 2013.

 

John Nielsen, the Danish ambassador to Vietnam, expressed that he was confident that the DBP together with other Danida’s business support instruments would continue to help poverty reduction.

 

“Denmark is one of the leading countries within solutions for climate change, renewable energy, and energy efficiency, which are areas that Vietnam has expressed a great interest in increasing cooperation within,” Nielsen said.

 

Vietnam, he added, needed to work towards focusing more on sustainability and green growth as part of its development model.

 

“This is crucial as renewable energy and in general a green growth focus has the potential to deliver millions of new jobs, introduce transfer high value-adding technology to Vietnam, and diversify economic development,” he added.

 

Since 1997 the DBP has granted DKK372 million ($67million) and has assisted in the establishment of approximately 255 small start-up projects and almost 150 long-term partnerships in Vietnam.

 

Effective from August 8, 2011, the DBP replaced the B2B/IPD programmes as part of the new strategy for Danida’s business instruments and the out-phasing of development cooperation to Vietnam.

 

PetroVietnam to ramp up production

 

PetroVietnam is to be one of the nation's leading groups, both inside and outside the country, with sharpened competitive edges and growth of up to 20 per cent a year, according to a five-year plan approved by the Prime Minister.

 

The group aims to increase oil and gas reserves and petroleum exploration output by 35-40 million tonnes and 23-34 million tonnes of oil equivalent per year respectively.

 

By 2015, PetroVietnam would be able to produce about 16-17 million tonnes of refined oil, meeting 50-60 per cent of domestic petrol demand and 60-70 per cent of nitrogenous fertiliser demand.

 

By 2015, around 50-60 per cent of materials demand for petrochemical and petrochemical products would be satisfied.

 

At the same time, the group would put three bio-fuel plants into operation while developing bio-fuel production and distribution systems nationwide.

 

Petroleum services would be encouraged to grow at an average rate of 20 per cent per year, the plan says.

 

PetroVietnam was eligible to use foreign currencies for its investment projects or those carried out by its subsidiaries via service contracts, according to a new circular issued by the Ministry of Finance.

 

The circular said the group was allowed to use foreign currencies to contribute capital to joint ventures.

 

PetroVietnam could use foreign currencies to pay principal, interest and fees on its borrowings for those investment projects and other maturity debts.

 

The group was expected to collect foreign currencies from petroleum contract revenues inside and outside the country.

 

The new circular would not apply for PetroVietnam subsidiaries.

 

Ministry to inspect resort and tourism projects

 

The Ministry of Planning and Investment last week announced its inspection plan for resort and tourism property projects in Danang City at a working session with the city’s government and project investors.

 

Nguyen Van Dung, deputy head inspector of the ministry, said the inspection team would focus on certain issues such as the State management over resort and tourism property projects in the 2001-2010 period.

 

Land recovery, site clearance, compensation, resettlement and project progress would also be taken into account, along with environment issues and investors’ liability to their laborers and the government, he said.

 

Among those, Dung stated “project progress is the most important with change of land use purpose as the second.” In case a project is discovered violating the laws, it would be halted and possibly revoked.

 

At the working session, Vice Chairman Phung Tan Viet of Danang City assigned the city’s Department of Planning and Investment to work with the inspection team. The department will choose and inspect some typical projects from the current 46 projects in the city within 30 days.

 

As of June 2010, there were 46 licensed investment projects on resort and tourism property in Danang with the total investment capital of VND72.5 trillion, or US$3.5 billion. Among those, 26 projects are of local investors, worth some VND28.4 trillion, and 20 others are of foreign investors, worth VND44.1 trillion and US$27 million in total. 

 

Six of these projects are under progress while 15 other projects have been delayed.

 

HCM City to have solar-powered motor competition

 

HCMC Energy Conservation Center (ECC) will coordinate with HCMC Television to launch a solar-powered motor competition with an aim to promote studies as well as applications of solar energy in schools, institutes, businesses, and community.

 

All individuals and organizations that are living and working in Vietnam can register participation in the competition at ECC from now to the end of September 30, 2011. The final round is planned to take place in HCMC on December 1, 2011.

 

This will be the first solar-powered motor competition to be organized in Vietnam to draw community’s attention to solar energy applications.

 

The main form of the competition is for every two vehicles to compete with each other each time. The vehicles are designed to have a driver and provided solely with energy for operation from solar cells with input capacity of 240W.

 

The race is to be held on a 3-km-long closed racing track with obstacles and the competition duration is no more than 20 minutes for each competition.

 

Size and weight of the vehicles, according to the organizing board, are not limited. Competition vehicles must be manned and must not use any other energy sources under any form in addition to the solar cells supplied by the organizing board.

 

All solar cells in the competition are sponsored by Redsun Energy Joint Stock Company.

 

Safety for tourists still a major concern

 

Travel agencies have voiced concerns over the security in tourist attractions in Vietnam like HCMC and Nha Trang, saying the situation is getting worse due to an increasing number of robberies and swindles.

 

Nguyen Viet Hung, director of Fiditourist, said he has seen robbers snatching foreign tourists’ belongings in downtown HCMC for three times. Sometimes, tourists not only lost their things but also got scratches due to being pushed by robbers.

 

“Guests at our company have not fallen victim to such crimes, but this is the common concern. Ensuring safety for tourists must be the top priority, otherwise all efforts to promote the country as a safe and friendly destination will be worthless,” he told the Daily.

 

Sharing the same opinion, Phan Xuan Anh, chairman of Viet Excursions, claimed that some of his company’s tourists were robbed and it made them worried when taking the tours. For their sake, more security policies must be carried out to protect them as well as not to spoil the Vietnam’s image.

 

Before departure, the tour guide carefully advised tourists how to protect their valuable items but as a matter of fact, some of them were robbed. Such robberies scare them, and warnings make them worry and lose interest in traveling, he continued.

 

Meanwhile, Bui Viet Thuy Tien, CEO of Asian Trails Co., said no tourists of her company had been robbed but one has been swindled a big sum of money. “One day after being swindled, the elderly German lady decided to cancel her trip to go back home due to being highly frightened,” Tien said.

 

The HCMC Department of Culture, Sports and Tourism believed one of the biggest drawbacks for the city’s travel industry is that security for foreign tourists is not highly regarded.

 

Voluntary Youth forces responsible for protecting foreigners have prevented many robbery cases but they cannot assure the safety for each of the tourists. The authority is considering a plan to establish the tourism police, said La Quoc Khanh, vice chairman of the department.

 

In the January-July period, international arrivals in HCMC are estimated to reach over 1.86 million.

 

July Ford’s best business month

 

While automobile firms were struggling with the tough economic conditions, Ford Vietnam’s July retail sales expanded 63% year-over-year to 871 units, marking its best performing month this year.

 

The good performance led the automaker to achieve an overall market share of 8.8% in July, the highest monthly share since January 2007.

 

Laurent Charpentier, managing director of Ford Vietnam, said in a statement, “Our exceptional July results were driven by strong sales across our full lineup, highlighting the wide appeal of our Ford vehicles to so many different lifestyles.”

 

Fueling the company’s July performance was the immediate success of the all-new Ford Fiesta, which led its segment with an extraordinary 25% share in just its second month of availability with sales of 269 vehicles.

 

“The all-new Ford Fiesta has gotten off to an incredible start, with Vietnamese customers clearly appreciating its class-leading combination of design, fuel efficiency, safety and smart technology,” Charpentier said.

 

Sales of Ford Focus rose 58% year-over-year to 161 units, accounting for its highest monthly share of the year of 11.5%.

 

The Ford Escape dominated the Small Utility segment in July with sales of 73 units, representing a 45% share, its highest monthly share since 2009.

 

Ford Vietnam’s strong July performance also benefited from Ford Transit sales that rose 24% year-over-year to 77 units, and Ford Everest sales that were up 14% to 192 units, said the statement.

 

Capitalizing on its strong sales momentum in July, Ford Vietnam has launched a promotion through August by offering discounts of 5 to 9% on the Mondeo 2.3 AT and Fiesta 1.4L MT.

 

The Mondeo 2.3 AT CKD will have a new price tag of VND939.75 million, down by VND53 million, and the Fiesta 1.4L MT VND489 million, down by VND53 million.

 

For the Everest, it is offering a discount of VND30 million and car loans at only 0.99% a month for the first six months. Buyers of the 16-seat Transit will get 2,100 liters of diesel or its equivalent in cash.

 

As for the other automakers, their July sales fell 11% year-on-year to more than 8,550 units but grew by more than 930 units from the previous month, the Vietnam Automobile Manufacturers’ Association (VAMA) reported.

 

Last month, sales of commercial vehicles were down 27% against July 2010 to just 3,600 units, while sales of sport utility vehicles (SUV) and multi-purpose vehicles (MPV) were down 13% to over 1,600 units. However VAMA reported sales of passenger cars last month increased 20% to over 3,330 units.

 

With January-July figures combined, however, sales of VAMA members grew 1% year-on-year to over 61,120 units thanks to better results at the start of the year. The passenger car segment was most impressive with sales expanding a hefty 24.9% to reach more than 21,100 units, while SUV and MPV sales increased 2% to reach 12,766 units. But commercial vehicle sales decreased 12%.

 

Banks to give priority to agriculture

 

The State Bank of Viet Nam's Governor Nguyen Van Binh yesterday instructed commercial banks to restructure capital and boost credit at reliable interest rates for agricultural production, in a bid to ensure sufficient food supply and stabilise market prices.

 

Banks were told to prioritise capital for effective agricultural producers, projects and high-capital-demand livestock units that produce and distribute food to cities and large residential areas.

 

Creditors have to strictly supervise capital distribution and investment in order to handle rising problems.

 

If agricultural production becomes badly affected by natural calamities or diseases, banks will have to restructure loans and create favourable conditions for farmers to borrow capital to remain in operation.

 

The central bank's move was made as food and foodstuff prices rose higher, putting Vietnamese officials in a bind as they tried to beat back soaring inflation.

 

Last month's CPI hike surged again after two months of decline, mostly due to a high increase in foodstuff prices by 3.02 per cent, restaurant and dining services by 2.12 per cent, after 1.79 per cent in June.

 

On the other hand, the State Bank's decision was released when popular borrowing costs remained high, around 22-24 per cent yearly, threatening many companies and households.

 

The newly named governor has vowed to force commercial banks to slash lending interest rates to 17-19 per cent per year.

 

Over the last two weeks, Asia Commercial Bank, HD Bank, Vietinbank, BIDV and Vietcombank have lowered lending interest by 1-2 percentage points to 20 per cent annually for individuals and households.

 

Denmark to increase partnerships

 

Denmark launched a Business Partnership Programme that focuses on creating economic growth and employment in partner countries, including Viet Nam.

 

The focus of the new programme in Viet Nam will be on green growth and clean technologies, where new commitments will be considered for 2012 and 2013.

 

John Nielsen, the Danish Ambassador to Viet Nam, said he was confident the programme would continue to help poverty reduction in Viet Nam.

 

"Viet Nam needs to work towards focusing more on sustainability and green growth as part of its development model," said Nielsen.

 

The objective of the programme is to improve the competitiveness of Vietnamese companies and thereby generate economic growth and reduce poverty.

 

Viettel introduces digital signature

 

Viettel Telecom has reached an agreement with MISA Corp to include a digital signature application in their MISA SME.NET accounting software. The software will provide a comprehensive full package from tax accounting to tools for electronic tax returns.

 

In June 2010, the Viet Nam Telecommunications Authority licensed Viettel to promote its digital signature services in the market.

 

Ha Noi to build nine industrial zones

 

Ha Noi will build nine industrial zones between now and 2015 and plans to build an additional 15 of the zones in the next 15 years.

 

At the moment, the city has only eight industrial zones that account for 10 per cent of the city's industrial production value, 45 per cent of its export revenues and 20 per cent of its GDP. These zones also employ about 110,000 workers.

 

According to the Management Board of Ha Noi Industrial and Export Processing Zones, up to June 2011, Ha Noi's industrial zones had attracted 537 projects, including 253 foreign direct investment projects with a total investment of US$3.63 billion.

 

Poll shows Asia retail mind-set

 

Two-thirds of final purchase choices are made in-store but almost half the promotions done in-store are wasted, according to a survey by the global marketing communications agency G2/Grey group Viet Nam.

 

The Eye on Asia – Retail study, carried out between the first quarter of 2010 and the first quarter of 2011, was based on conversations with over 2,100 shoppers from eight countries: Australia, mainland China, India, Indonesia, Japan, South Korea, Malaysia and Viet Nam.

 

The study found that Asian shoppers tended to visit stores not only for products but also for the experience, and they appreciated advice, as long as staff's approach was non-intrusive.

 

The analysis was drawn from shopping experiences in supermarkets, pharmacies and local shops, with a focus on categories including over-the-counter supplements, health and beauty products, and food and drink.

 

Sandip Rakhit, CEO of G2/Grey Group Viet Nam, said that "Vietnamese marketers and retailers can benefit from an understanding of the regional scenario and adopt the best practices."

 

He said in the next few months, G2/Grey group Viet Nam would share these insights in detail and discuss relevant trends based on their extensive interaction with the world of brands and consumers.

 

Feed maker sold to Hong Kong firm

 

Thai conglomerate Charoen Pokphand Group has sold 71 per cent of its stake in animal feed manufacturer CP Viet Nam to Hong Kong-based Charoen Pokphand subsidiary CPP in a deal worth US$609 million, CP Viet Nam confirmed on Monday.

 

However, the deal is attracting controversy for transferring the control of a major player in the feed industry outside the region.

 

Vissan Ltd General Director Van Duc Muoi told the Dau tu (Vietnam Investment Review) that Vissan was concerned about the deal, since CP Viet Nam already cornered most of the domestic market for agricultural materials used in producing animal feed.

 

"The infrastructure of Viet Nam's livestock industry is weak, and the domestic animal feed market in particular is under the control of foreign companies, including CP Viet Nam," Muoi said.

 

However, CP Viet Nam General Director Sooksunt Jiumjaiswang Lerg said that the deal simply represented the transfer of capital within the group's managment scope.

 

"Selling our stake to CPP Hong Kong is to easily mobilise capital for business expansion, as the Hong Kong-based company is listing shares on the Hong Kong stock market," Lerg said.

 

CP Viet Nam previously raised extra capital by borrowing from its Thai parent company. "However, as the demand for investment by CP Viet Nam has grown quickly, we need to be able to raise more capital through the stock market," Lerg said.

 

CP Viet Nam accounts for 20 per cent of the total domestic market share in the feed industry. It also provides 5 per cent of the nation's pork, 40 per cent of processed chicken and 50 per cent of chicken eggs. It has planned to expand its production to other products with the aim of establishing a new plant each year. The company is currently building a food processing factory in Ha Noi before completing one more in the south.

 

10 percent discount on train fares 

 

Vietnam Railways is offering a 10 percent discount on rail fares on its north-south route from September 6 to December 31 to individual passengers. 

 

Passengers booking tickets 60 days before departure on the Thong Nhat trains (TN 1, 2) can avail of a 10 percent discount on the fare. This promotional program is for individuals only and not for organizations. There will be a 30 percent charge on refund of tickets.

 

Those buying tickets on Thong Nhat trains SE5, 6, 7 and 8 will also receive a 10 percent discount. The discount is applicable for all hard seats and beds as well as for soft seats and beds without air conditioning.

 

Nguyen Dat Tuong, deputy director of Vietnam Railways, said yesterday that the Railways department will start selling Tet tickets from the beginning of October for the north-south route on the Thong Nhat trains.

 

Passengers can purchase tickets at railway stations, from agencies and from schools. They can also ask for home delivery of tickets, book via internet or via SMS messaging.

 

Vietnam faces setback in wood furniture export 

 

Nguyen Ton Quyen, Secretary General of the Vietnam Timber & Forest Products Association is concerned that wood furniture exports from Vietnam are now facing a setback due to policy changes in many countries. 

 

Vietnamese wood furniture is mainly exported to the United States and EU countries with a 45 and 30 percent mark up share respectively; however, now these two main markets are applying new policies such as the Lacey Act which will greatly hinder exports from Vietnam.

 

According to Hans Farhammer, first secretary and head of the EU Delegation to Vietnam, the thrust of the US Lacey Act is to make it a federal crime to knowingly export wood sourced illegally, either from illegal logging, stealing or originating from “suspicious” sources.

 

Similarly, Japan, Australia, New Zealand, Switzerland and Norway are also applying strict measures against illegal wood products.

 

Meanwhile, the Vietnamese government has ordered to shut the gates of forests in the country to protect the natural resources and banned the use of forest wood to make furniture for export. As a consequence, wood manufacturers are relying on wood imports from neighboring countries to make furniture products.

 

Vietnam has about 3,400 enterprises employing 300,000 people in the timber sector. Firms now are compelled to import wood from other countries, often without knowing its sources.

 

To facilitate Vietnamese wood products to enter the EU market, the Ministry of Agriculture and Rural Development and the European Union held a workshop on Forest Law Enforcement, Governance and Trade under the Voluntary Partnerships Agreement (FLEGT/VPA).

 

The FLEGT Action Plan, approved by the EU in 2003, will take effect in March 2013 taking into account EU concerns of illegal logging and trading. It will also set out a supply-and-demand method to combat the problem.

 

Last year, wood exports touched US$3.34 billion, 10 times higher than in 2000. In 2009 there was 16.24 million hectares under forest cover in Vietnam, 48 percent of which provided raw wood for the export industry. Still, Vietnam has to import wood from other countries like Malaysia and Laos.

 

Deputy Minister of Agriculture and Rural Development, Hua Duc Nhi said that Vietnam’s industry faced challenges like low efficiency and productivity, a disadvantaged financial environment and meeting new requirements on logging and sustainable timber resources.

 

Hans Farhammer believes that Vietnam needs to build up an effective system to trace back the source of timber to ensure its export market.

 

“HCMC Sales Promotion Month” in September 

 

The Department of Industry and Trade will be permitting more than 670 enterprises to participate in an annual “Sales promotion month” this September, in Ho Chi Minh City. 

 

Enterprises from diverse fields of consumer products, electronic appliances, garments, fashion wear, chemicals, cosmetics, pharmaceuticals, textiles, telecommunication and the tourism industry will offer to lower their prices by 4-49 percent during the event.

 

The program will be conducted at 2,500 shopping centers throughout the city.

 

The month will begin with a promotional fair from August 31 to September 4 at the Phu Tho Indoor Stadium on 1 Lu Gia Street, Ward 15, District 11.

 

Solution package for interest rate cut underway

 

The central bank will finish a solution package for interest rate cut by the end of this week so that there will be a meeting with 12 biggest commercial banks to discuss its feasibility next week, central bank governor told Tuoi Tre.

 

Agencies under the State Bank of Vietnam are working actively to timely draft new documents, or review and adjust the current ones to prepare for the implementation of a series of measures to reduce interest rates, stable forex rates, and manage domestic gold market under a recent directive from the government, State Bank Governor Nguyen Van Binh said.

 

These reviewed documents are mostly provisions relating to funding on the interbank market which is one of the knots to break to regulate capital between inter-bank market with the mobilization of capitals from the population and enterprises.

 

In early September, the central bank will hold a national conference with the banks to realize the aforementioned solution package.

 

The content of the solution package, which has high feasibility in the case of Vietnam, will be publicized so that it can be observed by the whole economy, Binh said.

 

Some big state-run banks have reduced lending rates to around 17-21 percent per annum, while the rate at other commercial banks and financial firms are 21-24 percent and 20-22 percent respectively, according to Dau Tu Chung Khoan newspaper.

 

Banks have begun to reduce interest rates in Vietnam dong to stimulate demand for household business and manufacturing enterprises, but still turn their backs to consumer loans, said a senior official at Maritime Bank.

 

Not only reducing interest rates for businesses in general, many banks have also offered preferential interest rates for a specific groups of borrowers, such as exporters and those operating in fertilizer, seafood, and animal feed industries.

 

Explaining the new trend, officials of some banks said that liquidity and capital of credit organizations are relatively good as for now.

 

Overnight inter-bank interest rate last week dropped to around 10 percent a year, down 2 percent a year compared to last week, while the term of 1 -2 weeks also saw slight decrease at 11 - 14 percent a year.

 

State Bank Governor Nguyen Van Binh said the interest rates on the interbank market were stabilizing, ranging from 12 to 15 percent a year, in the last 2 months.

 

When the banks borrow from each other with a maximum rate of about 15 percent a year, they are ready to pump it for the economy, Binh said.

 

An official of a joint stock bank said the deposit rate of banks has declined substantially.

 

Highest rate for individual and business depositors does not exceed 18 percent and 18.5 percent a year respectively. Corporate lending rates of the bank are ranging from 21 to 23.5 percent a year based on the rankings of businesses.

 

Thang Long Securities Joint Stock Co (TLS) in its latest weekly-updated news, from August 8 to 16, said that banks are now in surplus of dong liquidity.

 

Together with the stability of the interest rate in the interbank market, tender activities on open market operations (OMO) have been also narrowed clearly.

 

TLS's news for the week between August 8 and 16 reported the total number of commercial banks joining tenders on OMO declined strongly with only 5-6 banks each session. Notably, the central bank has narrowed the scale of tenders with fixed amount of capital injection of one trillion dong per day.

 

In addition, the central bank has also maintained a balance between withdrawal and injection of capital on OMO for recent three consecutive weeks.

 

"In the current good liquidity condition with an assumption that the average deposit interest rate hovers 16-17 percent per year, if the central bank has more flexible policies in credit growth target for each commercial bank, the lending interest rate can be believed to fall to 18-19 percent per year," said TLS.

 

Previously, soon after the inaugural the central bank's newly-appointed governor, Nguyen Van Binh, also sent his message to lower the lending rate to about 17-19 percent per year from September 2011.

 

Analysts said that the credit growth in the first seven months of this year was only 12.97 percent against this year's target of 20 percent and the total means of payments of the economy increased 3.57 percent compared to the year's plan of 16 percent.

 

These factors are creating favorable conditions for interest rates to go down.

 

However, leaders of many banks said that banks cannot make further reductions of interest rates if the State Bank of Vietnam (SBV) does not have loosening monetary policy.

 

The central bank should increase the money supply through the OMO, at the same time lower the central bank's lending interest rate from currently 14-15 percent to 12 percent per annum whereby pulling down the lending interest rate.

 

Le Tham Duong, dean of the Business Administration Faculty of Ho Chi Minh City Banking University, told Nguoi Lao Dong newspaper that the current monetary policy does not increase the inflation.

 

Duong said the credit growth room left is up to 12 percent, therefore the central bank can strongly pump more money for credit growth at 5 percent so that the actual deposit interest rate is stable at 14 percent per year, at the same time, the capital should be injected for right purposes whereby lowering the lending interest rate.

 

Vietinbank demands debt payment via SMS

 

The Vietnam Commercial Joint Stock Bank for Industry and Trade, or Vietinbank, Thursday began to demand debt payment via SMS messages.

 

This new method, which has been operational merely for individual customers since last year, will send SMS messages to registered customers of the bank to remind them of outstanding loans seven days before the due date.

 

This is voluntary as a message costs VND1,650 from customer’s phone account and will be sent during 7:00am to 11:00pm every day, the bank informed, adding its customers (debtors) can register for as many as five phone numbers to receive the debt-reminding messages.

 

VietinBank said this would help reduce its bad and late-paying debts as well as building the good habit of clearing debt on time.

 

A similar service was also launched by the Saigon – Hanoi Commercial Joint Stock Bank in early July, newswire VnExpress reported.

 

Traditionally, banks will send their reminding letters and documents to their individual customers’ houses or enterprise-borrowers’ offices before the loans are due.

 

“The task is time-consuming and customers may clear their debts late in case the reminding documents are lost on their way,” VnExpress quoted a bank official as saying.

 

Small traders still aren’t quoting prices

 

Despite a regulation that took effect four years ago, products at most street markets in Ho Chi Minh City are still being displayed without a price tag.

 

For instance, at some markets such as Tan Dinh in District 1, Ba Chieu in Binh Thanh District and Tan Huong in Tan Phu District, price tags can only be found only on certain goods such as rice, eggs and dry food.

 

Many shoppers thus say they still have to be worried about being overcharged on those commodities whose prices are not quoted.

 

Pham Duc Thanh, head of the management board of Phan Van Tri Market, said only traders selling essentials such as meat, fish and vegetables had to follow the common prices set down by the board.

 

Analysts say the reason small traders are still ignoring the regulation because they wouldn’t be fined too heavily if they were caught.

 

Many market management boards admitted that their “penalties” for violators were indeed light and small traders only quoted prices if they knew they would be inspected.

 

A utensil seller at Bau Nai Market in District 12 said the management board had told small traderss they would be fined if they were found selling without price tags. “But we’ve rarely been fined so we don’t bother quoting anymore,” she said, adding that even after being fined, a vendor would continue without quoting.

 

For her part, Ha Thi Phi Hung, deputy head of the management board of Tan Huong Market, said the current regulation on price quoting was unlikely to be obeyed. If they quote, small traders have to replace the tags whenever prices change, and it would be very inconvenient, she said.

 

She thus suggested an alternative: manufacturers would print prices directly on the labels and packaging so that all traders would follow the same prices without having to use price tags.

 

Advertising industry expects $1.2 bln in revenue

 

Vietnam’s advertising industry is expected to earn US$1-1.2 billion in revenue this year, a 10 percent to 15 percent increase year-on-year, said Do Kim Dung, Deputy Chairman of the Vietnam Advertising Association (VAA).

 

Dung said this growth would be much lower compared to previous years because of the current economic downturn.

 

The average revenue of the industry has grown steadily at the rate of 20 percent to 30 percent a year, he said.

 

According to VAA statistics, the industry earned $555 million in 2008, $736 million in 2009 and $840 million in 2010.

 

Advertisements on mass media accounted for 80 percent of the total revenue and the remaining went to advertisements via billboards and leaflets.

 

Last May, VAA announced its target to reach $3 billion in revenue by 2020.

 

PV