Merger, acquisition deals tipped to increase

Merger and acquisition activity is expected to further increase this year, following high-profile deals last year such as food products company Masan Consumer's acquisition of coffee processor Vinacafe Bien Hoa (VCF) and the merger of real estate developer Vincom (VIC) with resort operator Vinpearl.

Aureos Capital director Dang Doan Kien and Viasa Investment Fund chairman Alan Phan predicted mergers and acquisitions (M&A) will be most prevalent in the banking, securities and real estate sectors in the coming year.

Low stock prices in these sectors have made takeover efforts more likely, Phan said.

Around 80 percent of shares on both of the nation's stock exchanges have market values below book value, and 59 percent of all stocks are being traded below par, said State Securities Commission chairman Vu Bang.

Low valuations have generated difficulties for these companies in raising capital, stated a report on M&A conducted by financial media firm StoxPlus. "While it's hard to get loans from banks, businesses are more willing to merge," the report said.

In the banking sector, with the central bank determined not to let any banks go bankrupt, smaller and weaker banks would probably be merged, Phan said. Although listed banks have been involved in such deals yet, rumours have emerged involving possible tie-ups between Eximbank (EIB) and Sacombank (STB), and Habubank (HBB) and Sai Gon-Hanoi Bank (SHB).

Consolidation is another M&A trend likely to be on the rise and companies struggle to remain competitive in a tough economy. Two subsidiaries of Binh Duong-based Truong Thanh Furniture (TTF) will be merged into the mother company, targeting to make the most efficient use of capital and human resources.

"At the shareholders' meeting this month, we will come up with a final decision on a stock swap ratio," said TTF deputy director Ngo Thi Hong Thu.

At its shareholders meeting slated for Mar. 22, construction firm Song Da 6 (SD6) will also consult its shareholders about a merger with Song Da 6.04 (S64).

SD6 leaders said that the merger will help the mother company focus on funding for key projects as well as achieve cost savings through the closure of ineffective offices, staff reductions and lowered procurement costs.

Acquisitions will also be able to wield greater financial leverage. Viet Nam–Italy Steel Co (VIS) general director Tran Van Thanh told the newspaper Dau tu Chung khoan (Securities Investment) that its plan to acquire the Song Da steel mill, worth over 469.2 billion VND (22.3 million USD), "will assist our company in improving financial capacity and increasing competitiveness." VIS currently holds a 42.5 percent stake in the Song Da mill.

Province asks to stop setting up EZs

In a recent conference about 20 years of operation of industrial parks and export processing zones, Quang Nam Province asked the Government to stop establishing new economic zones, but it remains doubtful whether the Government and other provinces would agree.

At another conference in Quang Nam a few years ago, the Ministry of Planning and Investment agreed to focus on developing 3 among the 15 licensed economic zones to avoid haphazard investments in provinces nationwide. “Everyone agreed,” said Former Politburo member and standing member of the Party Central Committee’s Secretariat Phan Dien.

But later the ministry continued to submit to the Government a plan of opening 3 more economic zones, raising the total number to 18 currently. Dien said as an advisory agency, the ministry should have taken another approach.

The 3 new economic zones as mentioned by Dien are Ninh Co Economic Zone in Nam Dinh Province, Thai Binh Coastal Economic Zone in Thai Binh Province and Dong Nam Economic Zone in Quang Tri Province.

Vu Dai Thang, director general of the Department for Economic Zones Management under the ministry, said at the conference that it was the ministry who evaluated and presented to the Prime Minister a proposal of adding those 3 projects to the planning scheme for coastal economic zones toward 2020.

There have thus been 18 coastal economic zones projects approved with a total area of nearly 731,000 hectares, or 2.2 percent of the country’s total area. However, investments in economic zones are insignificant.

The total State budget capital allocated to develop infrastructure of these zones until 2011 amounted to VND11,361 billion while the budget allocation plan for last year was only VND1,885 billion.

“It is obvious that scattered and haphazard investments distribute resources unequally and create tough competitions between provinces,” said Tran Dinh Thien, director of the Vietnam Economics Institute.

Nhon Hoi Economic Zone covering 12,000 hectares in Binh Dinh Province is an example. According to Man Ngoc Ly, head of the zone authority, a transport network in this economic zone has been completed, and the province has also built an 80-meter-wide road stretching 15 kilometers across the zone.

However, just over VND2 trillion out of some VND33.4 trillion of 35 licensed projects has been disbursed so far.

Meanwhile, the situation of Chu Lai Open Economic Zone, the first to be licensed, isn’t better. According to a report released by the Quang Nam Province People’s Committee, the industrial production value of enterprises in the zone was VND1,850 billion last year, or 15 percent of the province’s economic value, and the zone created jobs for 8,500 people.

But the business efficiency of Chu Lai Open Economic Zone is nothing compared to industrial parks in the province. The total production value of 3 industrial parks in the province amounted to VND5 trillion, accounting for 40 percent of the province’s economic value and 23,000 jobs were generated.

Chu Lai Open Economic Zone which was expected to play the role of a model project for economic policies a decade ago thus fails to meet expectations.

Nguyen Duc Hai, Party Secretary of Quang Nam Province, said that the development of economic zones contained high risks because of lack of experience.

In a petition sent to the Government from the conference, Quang Nam Province has officially proposed to stop establishing new economic zones in order to shift investments to existing ones.

Besides, the province has also asked for incentives for investments in Chu Lai Open Economic Zone. Specifically, the Government should consider a corporate income tax of below 10 percent for enterprises.

But it’s unlikely that relevant ministries will agree to this proposal and some other provinces still want to develop economic zones in their localities.

In the current situation, the Government no longer has enough resources to develop these projects.

The Ministry of Finance, in its recent move, has requested the Ministry of Planning and Investment to ensure that economic zones focus investments on major projects.

The request, again, puts more responsibilities on Minister of Planning and Investment Bui Quang Vinh.

Minister Vinh and his predecessor told the conference that the planning adjustment of developing economic zones only brought short-term benefits to localities.

The Ministry of Planning and Investment thus again requested provincial and central agencies to stop developing new economic zones. But this request may be simply ignored as it was 2 years ago.

Foreign capital pours into VN share market

An additional US$500 million in foreign capital has flowed into Viet Nam's stock market since the beginning of this year.

While most foreign indirect investment has focused on listed shares, stocks and unlisted companies have also attracted investors, said the director of the customer development department at Saigon Securities Inc, Pham Ngoc Bich.

"In the eyes of foreign investors, Viet Nam's stock market is more attractive than those of many other emerging markets, including Indonesia, India, Sri Lanka, Bangladesh and Thailand," Bich said.

"The trend of foreign net buys from early this year indicates the more optimistic view of foreign investors towards Viet Nam's market compared to the same period last year," VinaCapital chief economist Alan T Pham told the newspaper Dau Tu Chung Khoan (Securities Investment).

Recent evaluations showed that Viet Nam's stock market enjoyed the strongest growth among emerging markets, helping increase foreign interest, Pham said. In addition to disbursed capital, there was also a pool of capital from major funds awaiting opportunities to participate in the market.

"This suggests that the increase in foreign disbursement will continue in both the short and medium term," he said.

In a recent report, HSBC attributed the increase in foreign capital inflows to the country's improved growth and inflation prospects, while Vietnamese assets were viewed as attractively undervalued. HCM City Securities Co deputy director Trinh Hoai Giang agreed that the brighter economic outlook this year, with prospects for lower inflation and interest rates, was a primary factor driving foreign investment in the domestic market.

Savings deemed safer as gold price fluctuates

Saving is the best investment amid the current fluctuating gold prices, says HCM City Banking University business administration department head Le Tham Duong.

Duong told Kinh te and Do thi newspaper (Economy and Urban Areas) domestic gold prices remained significantly higher than world gold prices, although the difference narrowed to VND2.2-2.4 million (US$105.77-115.38) per tael yesterday from several previous days of gaps up to VND3 million ($144.23) per tael.

Sai Gon Jewelry Co chairman Le Hung Dung said the difference was because a connection hadn't been established between domestic and global prices, with many local firms refering to price levels of other buyers and sellers before posting their own prices.

Meanwhile, the monetary market has seen new peaks in interest rates for gold deposits over the last few weeks.

At the NamABank, gold deposit rates reached a peak of 4 per cent. At the Saigon Commercial Bank interest rates for short-term deposits registered in gold reached 3.5 per cent and gold deposit rates even reportedly reached 4.5 per cent at some SCB branches.

Duong said banks raising gold deposit rates could be doing so for several reasons.

"Some banks, due to their liquidity situation, find it hard to deposit money in dong and shift to depositing gold. Some others were perhaps waiting for an uptrend in gold prices based on [current] forecasts and analyses," he said.

Some banks were buying gold in order to be active in managing their liquidity in case of interest fluctuation, he said, noting that doing this would be highly risky in circumstances of gold price fluctuations.

Duong said that in order to narrow the gap between the world and domestic gold prices, there was no other way but to wait for the Government to issue a decree on gold management.

"With a regulation stipulating State monopoly in producing gold bars, it'd be simple for the State Bank to interfere in price differences," he said.

Related to last week's situation in which gold trading was busy while gold prices fell strongly, Duong said the developments were mainly due to the market rather than management policies.

"While world investors are interested in market analyses and different information sources, people in Viet Nam follow their psychology, they flock into shops to buy gold when prices edge up slightly and stop buying when prices decline," he said.

"Many people are still awaiting forecasts for gold price increases over the next few months," he said.

Seminar promotes agricultural development

The Vietnam Development Information Centre (VDIC) on March 21 hosted a video-conferencing seminar on the green revolution and agriculture productivity enhancement.

Experts from of six countries: Vietnam, Japan, the Republic of Korea (RoK), Indonesia, the Philippines and India debated modernising technological equipment used in agriculture, designing policies on the environment, studying new rice varieties that can resist effects of climate change, as well as the shortage of farmland.

Delegates agreed that a major challenge for scientists is to ensure food security while preserving natural resources. In this context, the development of environmentally friendly cultivation technology and high-yield rice varieties adaptable to climate change is of great importance.

They also studied the experience of Prof. Kim Je-Kyu from the RoK, who introduced his research on rice varieties that can grow well in adverse climate situations such as floods.

An Indonesian delegate said the green revolution has encouraged scientists to become closer to farmers and stand by farmers through sharing experience and information in agricultural production.

Since 2009, thanks to scientific research, up to 56 rice varieties that can resist insect attack and diseases have been transferred to many countries. As many as 106 drought resistant varieties have been sent to the International Network for Genetic Evaluation of Rice.

Vietnam, US cooperate in combating money laundering

Deputy Minister of Finance Tran Xuan Ha and US Under Secretary of State Robert Hormats have discussed issues related to anti-money laundering and restructuring of Vietnam’s economy.

At a meeting in Hanoi on March 20, Deputy Minister Ha highlighted the development of bilateral relations and expressed hope for stronger investment and trade cooperation between the two countries in the future.

Ha said Vietnam has basically restructured state-owned businesses in the 2012-2015 period and will continue to perfect this in the 2016-2020 period.

Vietnam is committed to implementing initiatives on anti-money laundering at multilateral forums, and it has signed 20 bilateral treaties on anti-crime, as well as regulations on anti-money laundering.

The State Bank of Vietnam is building a law on anti-money laundering and will submit it to the National Assembly for approval in the next session, Ha said.

The Ministry of Finance has also issued a circular on anti-money laundering in the fields of insurance, lottery and securities and is expected to get more technical assistance from the US in the fight against money laundering, he added.    

Leather, footwear set to earn $2b in exports

The leather and footwear industry earned an export revenue of about US$2 billion in the first quarter this year as part of a $7.3 billion annual target, up 21.7 per cent against 2011.

Nguyen Thi Tong, deputy chairwoman and general secretary of the Viet Nam Leather and Footwear Association (Lefaso), made the statement at a seminar jointly held by it and the Viet Nam Leather and Shoe Research Institute in the capital yesterday.

The event was aimed at launching a campaign to encourage Vietnamese creative designers to take part in the 4th International Footwear Design Competition 2012 in the Asia region. The competition will take place in Guang Zhou, China, from May 30 to June 1 and will be organised by the Asia Footwear Association and regional industrial associations.

"The initiative targets improving design capacity and production in Asian countries as well as discovering creative and professional designers," she said.

It will be a playing ground for enterprises and designers to assert their positions and styles.

"The industry has been promoting enterprises and designers, especially the youth, to create unique designs in an effort for shoe makers to implement direct orders rather than sub-contracts," she noted.

Most local producers utilise sub-contracts or outsource deals to international partners in Hong Kong, South Korea among others, with great dependence on imported raw materials and accessories, designs as well as equipment.

Tran Tuyet Mai, a representative of the Viet Nam Leather and Shoe Research Institute, said that active participation of Vietnamese designers would make a great contribution to the country's shoe industry as it still lacked qualified and professional players.

VN retailers forced to compete for space
 
Domestic retailers are facing increasing difficulties in securing retail space in favourable locations due to rising leasing costs and growing demand for space from foreign rivals.

The Ha Noi-based Nhat Nam Joint Stock Co, owner of the Fivimart supermarket chain, recently shut down its store in HCM City's District 7 after being unable to renew the leasing contract for the site.

Nhat Nam Joint Stock Co Deputy General Director Vu Thi Hau said the company was considering new locations for the store.

However, finding quality retail space at reasonable prices was a huge headache, said Hau, blaming fierce competition from not only foreign companies but also larger domestic firms who are also willing to spend big on retail space.

Previously, the company had opened five supermarkets in HCM City and southern Binh Duong Province, and all of the stores have had to close due to failure to extend leasing contracts.

Hau said her company could secure leasing contracts for terms of only 5 or 10 years.

Finding suitable retail space was the biggest challenge domestic retailers had to face, said Nguyen Thi Tranh, general director of Sai Gon Co.op Investment and Development (SCID), the main investor in the Co.opMart supermarket chain.

Tranh said SCID planned to open more stores in HCM City's District 4 and in the capital city but failed to find suitable space.

"We had to pay above US$20 for each square metre and with such a rate we would not ensure our profits."

Head of the Ministry of Industry and Trade's Domestic Market Department Vu Van Quyen said the majority of Vietnamese retailers, especially private ones, had to lease land for supermarkets and convenience stores as they had failed to benefit from the Government's land resources.

That has resulted in difficulties in negotiating extensions of leasing contracts mainly due to rising leasing costs or owners taking land back for other purposes, Quyen said.

In addition to skyrocketing rental fees, domestic retailers also say administrative barriers and unofficial costs make it even more difficult to secure retail space.

The Government has not provided enough support to local retailers to help them access land and deal with cumbersome administrative procedures, said the Ha Noi Supermarket Association chairman Vu Vinh Phu.

The Ministry of Industry and Trade was closely working with the Ministry of Planning and Investment to revise Decree 108/2006/ND-CP on investment incentives and bringing trade infrastructure into the list of sectors receiving investment incentives is a possibility.

The revised decree would create more favourable conditions for firms to better approach land sources to further develop their distribution and retail chains, Quyen said.
 
Handbag exports to rise 15% in value during 2012

Viet Nam expects a year-on-year export value increase of 15 per cent (US$1.5 billion) in 2012 for handbags, according to the Viet Nam Leather and Footwear Association (Lefaso).

The association said, with domestic handbag producers capable of producing 200 million units each, the sector would have little trouble in reaching such a target.

Export value of handbags is expected to reach a growth rate of 30 per cent during the next few years, it added.

In the first two months of the year, the sector experienced an export value increase, based on handbags, suitcases, hats and umbrellas, of $71.6 million to the US, $30.6 million to Japan, $18.2 million to Germany, $11 million to South Korea and $7.4 million to France, according to the General Department of Taxation.

Lefaso Chairman Nguyen Duc Thuan said the handbag sector had great prospects for development now that many large global companies had shifted production from China to Viet Nam. Local demand had also increased as domestic consumers moved away from cheap and poor quality Chinese products.

However, Thuan said that not all opportunities could be capitalised upon because firms need to satisfy essential requirements related to management capacity, financial resources, equipment, facilities and skilled labour in order to secure contracts with big brands.

The greatest weakness in the handbag sector is the significant dependence on raw material and accessory imports. The domestic market can only meet about 20 per cent of the demand for leather along with some basic accessories such as labels, laces, buttons and zips. Sophisticated accessories must be imported, he said.

At present, many producers still have to outsource orders from foreign firms so they can only use existing designs. In the long-term however, producers should manage the design process themselves in an aim to better serve the domestic market as well as build up strong brands for Made-in-Viet Nam handbags, he said.

Last year, the country earned more than $1.3 billion by exporting various kinds of bags, up 33 per cent against 2010, according to Lefaso.

Key export markets included the US ($461 million in export value), the EU ($422 million), Japan ($140 million) and Southeast Asian countries ($66 million).

Leading cities see rise in FDI

The cities of Ha Noi and HCM City licensed nearly 100 foreign-invested projects in the first quarter of the year, with a combined registered capital of US$160 million.

According to the Ha Noi Statistics Department, the capital city licensed 39 foreign-invested projects during the period, worth a total of nearly $120 million – about a 590 per cent increase over the previous year.

The department's director, Dinh Cong Mui, said that the increase in foreign direct investment (FDI) in Ha Noi was a positive sign in the context of the current economic downturn, reflecting the city's success in supporting the business community, streamlining administrative procedures, providing market information, and accelerating land clearance.

However, the capital's Department of Planning and Investment was still concerned that it would be difficult to meet the target of attracting $1.5 billion in FDI this year.

HCM City, meanwhile, licensed 59 foreign-invested projects in the first three months of the year, although the total value of FDI declined by 96.5 per cent from the same period last year as many of the licensed projects were small in scope, with investment capital of less than $100,000 each.

Among the city's projects, seven were in the industrial sector, worth a total of $15.5 million. Another 20 projects, worth a combined $12 million, were in the commercial sector.

Japan was the leading source of foreign investment in HCM City, with 15 projects worth $12 million. Singapore and South Korea followed, responsible for FDI of $4 million and $3 million, respectively.

LPG traders doing very well

Local LPG (liquid petroleum gas or cooking gas) trading companies are actually making handsome profits despite their repeated complaints about suffering losses every time international prices go up.

A Tuoi Tre (Youth) report yesterday noted that the companies typically increase selling prices soon after international prices go up, but when these go down, a corresponding decrease in retail prices takes a long time coming.

The report cited market observers as saying this makes dubious the oft-repeated claims of losses made by the firms.

Since the beginning of this year, local gas prices have been increasing alongside international prices. However, most of gas sold under new, increased prices, had been imported before.

It is fact that when the international prices increase sharply, the quantity gas imported decreases sharply, the report says.

It cited the General Department of Customs as saying that in February, gas companies only imported 19,000 tonnes at US$1,078 per tonne, a decrease of 73 per cent in comparison with January, when the price stood at $927 per tonne.

Therefore, companies were able to earn a huge profit of VND42,000 per 12kg cylinder.

One expert said that gas companies can earn huge profits because fluctuation of international price happens on the basis of "some fixed rules."

"If companies know well these rules and own a big warehouse, they will get huge benefits," he said.

This was seen early this year as companies imported a lot of gas in January and strongly reduced the amount in February.

In addition, gas produced in Viet Nam, from Dinh Co and Dung Quat plants, is also sold at international prices.

It means that the $100 per tonne in insurance and transportation fees that local manufacturers have not paid goes straight into their pockets.

According to the Ministry of Trade and Industry, around 640,000 tonnes of gas from the Dinh Co and Dung Quat plants can meet 50 per cent of local demand.

The Tuoi Tre report said that given the production at home, the Government should control and adjust gas prices when there are big fluctuations in international gas prices in order to benefit consumers.

Awards to honour corporate disclosures

Over 700 companies are expected to participate in this year's Annual Report Award competition, the organising committee announced on Tuesday.

The competition, sponsored by the newspaper Dau Tu Chung Khoan (Securities Investment) and the fund management company Dragon Capital, is in its fifth year and is aimed at improving the professionalism and transparency of annual reports from listed enterprises.

Timely reports of 2011 earnings submitted to the HCM City Stock Exchange and Ha Noi Stock Exchange prior to April 20 will be selected to participate, with results to be announced on July 10.

"Judging criteria will be based on how companies present information rather than their business performance," said Dau Tu Chung Khoan editor-in-chief Nguyen Anh Tuan, who heads the organising committee. Judging would focus on how well companies evaluate their operations and explain their financial situation, as well as their abilities to analyse and forecast risks and share information in risk management.

"In the past four years, the best annual reports tended to belong to large enterprises with positive performances," Tuan said. "This was understandable because these companies had advantages of strong financial capacity, good preparation and especially strong awareness of information disclosure requirements."

Transparency in disclosure was necessary for firms to gain investor confidence, he added, yet many companies still consider the regulation as a mandatory task and comply with it only superficially.

HCM City Stock Exchange general director Phan Thi Tuong Tam said companies should pay particular attention to international standards of good governance and insightful analyses of their operations.

Risk prediction and analysis would also be taken into account, she said.

"The contest aims to encourage transparency and effective communication of financial and business information."

Alternative Investment Capital Group chairman Hoang D. Quan said investors lost faith in companies because many were dishonest in providing information.

But Dragon Capital CEO Dominic Scriven said the corporate culture had changed over the past five years, with companies making good financial reports usually having higher business value, reflected in a stronger ability to raise capital.

Taiwanese companies update Viet Nam's software ownership regulations

Hundreds of Taiwanese companies doing business in Viet Nam received the latest legal and regulatory updates pertaining to software ownership in a workshop held recently in Ha Noi.

The workshop, entitled "Better Competitiveness through Compliance with Viet Nam IP laws and related legislation", was also attended by the Copyright Office of Viet Nam (COV), Business Software Alliance (BSA) and the Taiwan Chamber of Commerce in Viet Nam.

The information is expected to help Taiwanese companies avoid any legal or regulatory conflicts that could arise due to lack of awareness.

Addressing the workshop, Director General of the Viet Nam Copyright Office Vu Manh Chu provided an update of the current regulatory framework and walked the participants through existing laws and regulations on copyrights and related rights in Viet Nam to provide Taiwanese companies active in the country detailed information on the topic.

"Use of illegal software by businesses may result in criminal charges and severe legal punishments," said Chu.

In addition, copyright owners are also entitled to pursue other means to address infringements of their intellectual property rights, including filing complaints at the relevant court of law in line with Article 198.1d of the Intellectual Property Law and/or requesting the court to order the offenders to stop their misconduct, formally apologise and initiate remedial measures. They may also seek to demand the offenders to compensate for any damages caused, including material losses, and pay court fees in line with Articles 202, 204 and 205 of the Intellectual Property Law.

"The degree of damage is determined based on the actual losses to the intellectual property rights owner that were directly caused by the intellectual property right encroachment," stressed Chu.

At the workshop, BSA and its members including Lac Viet Computing Co, Bkis, PCT, Microsoft, Open Computing Alliance and Lac Viet also advised on effective software ownership solutions.

BSA representative Dao Anh Tuan informed participants that the Asia-Pacific region recorded a software piracy rate of 60 per cent in 2010 as reported in the International Data Corporation's Global Software Piracy Study. This translates into a commercial value of US$18.7 billion in pirated software.

Japan helps to improve Vietnam transportation

Vietnam’s Transport Minister Dinh La Thang and Japanese Ambassador to Vietnam Yasuaki Tanizaki have signed an Exchange Note (EN) in Hanoi to help improve the transportation system in Vietnam.

According to the EN, the Japanese Government will provide non-refundable aid in the form of industrial products of Japanese businesses which suffered from the earthquake and tsunami disaster in March, 2011, worth a total 300 million JPY.

The Japanese Government decided on this activity to restore socio-economic activities of the regions affected by the disaster.

The products include equipment to help students in study and scientific research, and support for training activities in the sectors of shipping, shipbuilding and marine environments, as well as equipment to improve the railway system.

The Ministry of Transport said that it assigned this project to Vietnam Maritime University on Feb. 20 and the aid will be implemented as from early April with the consultancy of the Japan International Cooperation System (JICS).

The aid is scheduled to take effect in one year, and be completed at the end of the first quarter of 2013.

Vietnam cbank to shrink banks' FX positions

Vietnam's central bank said on Wednesday it will require lenders to reduce the amount of foreign currency they hold at the end of each day beginning in early May, in what bankers said was another attempt to prevent dollar hoarding and control the foreign exchange market.

Starting on May 2, banks will have to keep their long foreign exchange position at no more than 20 percent of their equity by the end of each working day, compared with 30 percent now, the State Bank of Vietnam said in a statement.

The 20 percent ratio will also be applied to the short position, the statement said.

Branches of foreign banks with equity below US$25 million will be required to keep their foreign exchange positions at no more than $5 million on a daily basis, the central bank said.

The Vietnamese dong has been stable so far this year, with the mid-point rate set daily by the central bank at 20,828 dong per dollar, unchanged since late December, following a lower-than-expected trade deficit in 2011 of $9.5 billion.

The central bank's move is another step to gain control of the foreign exchange market and reduce risks, said a currency trader at a Hanoi-based bank.

"The lenders will have less room to hold and speculate the dollars," he said.

The move will prompt lenders to sell dollars to the central bank, said another banker in Hanoi.

The dong will depreciate by no more than 2-3 percent against the dollar this year, central bank governor Nguyen Van Binh has said, after losing 5.2 percent in 2011.

The dong's depreciation has slowed this year as businesses reduce imports due to unfavourable economic conditions and after the central bank stepped up measures to control the gold market, which ultimately reduces the demand for dollars, analysts said.

Firms scramble to borrow loans in dollars

Many businesses have recently scrambled to borrow bank loans in US dollars as there are only around 40 days left until a new regulation on restricting lending in foreign currencies comes into effect.

Commercial banks are only allowed to offer loans in US dollars to borrowers who can prove that they have an adequate source of revenue in foreign currency from their business and manufacturing operations to clear the loans, according to the State Bank of Vietnam’s Circular No 3, set to take effect on May 2.

Businesses failing to meet the requirement can only access bank loans if they have the particular approval from the central bank, the rule stipulates.

The regulation has ignited a furor as businesses have rushed to borrow the greenback over the last few days, Phap Luat Thanh Pho reported.

Dang Quoc Tien, deputy CEO of the Military Bank, confirmed the phenomenon, but added that borrowers of this kind only account for 5 percent of the bank’s total offered loans.

“Since terms for US dollar loans are only around six to nine months, those with long-term business plans have to consider another solution,” he said.

An executive of a bank said another reason is that the interest lending rate for loans in US dollars is only 5 to 7 percent a year, while the figures are as high as 18 percent with the dong.

Meanwhile, Doctor Nguyen Duc Thanh of the Hanoi-based National University of Vietnam said the tightened policy on foreign currency loans can drive businesses without access to bank loans to borrow from those who have large sources of the greenback.

“Borrowing loans from lenders other than credit institutions is risky,” he warned.

“Moreover, it can create an unofficial lending market outside the banks.”

However, Tien of Military Bank stated that a business is unlikely to lend US dollars to others, since this is against the law, and subject to strict penalty.

In his opinion, however, Nguyen Hoang Minh, deputy director of the central bank’s branch in HCMC, said things will not get complicated.

“Those failing to meet requirements for bank loans can still buy the greenback,” he said.

Bank buys back gold at lower than listed price

Many customers purchasing SBJ gold bullion from Sai Gon Thuong Tin Bank, or Sacombank, have complained that the bank has only agreed to buy the bars back at a lower price than the listed one.

Customers had to sell the SBJ gold bullion, produced by the bank’s subsidiary Sacombank Jewelry Co, at VND1 million (US$48) a tael lower that listed price, when the gap between the domestic and global gold price skyrocketed to VND2 – 3 million a tael, they said.

One such customer is N.L., who told Tuoi Tre that she had to resell the SBJ gold bars bought in Binh Thuan Province at VND1 million a tael lower than the price displayed on the board at a Sacombank branch in Ho Chi Minh City.

The bankers told N.L. that it was a directive from the bank’s chiefs, following doubts that  SBJ gold bars had been illegally brought to Vietnam from Cambodia to earn profits from the price difference, she said.

“I disagreed, since I had bought the gold in Vietnam only a few days earlier,” she complained.

SBJ representative told Tuoi Tre that the gold producer has a branch in Cambodia, which also produces SBJ gold bullion for the Cambodian market.

Recently, with the domestic gold price VND2 million a tael lower than its global counterpart, the bank has applied a restrictive policy on fears of smuggled SBJ gold bullion from Cambodia, he said.

He added that it is not easy to tell the Vietnam-made SBJ gold bars from the Cambodia-produced ones.

The representative said only a few hundred tons of SBJ gold bullion has been produced in Cambodia since June 2010.

“The SBJ branch in Cambodia has stopped producing gold bullion over the last month, but there are still many products circulated on the market,” he said.

Meanwhile, a representative of Sacombank said the case has been handled.

“SBJ gold bullion’s real bid and ask prices are now in line with the quoted prices,” the bank confirmed.

As Tuoi Tre observed on March 20, there was no difference between real purchase and quoted prices of SBJ gold bars.

The gold price on the global market on Tuesday dropped by $15 an ounce to $1,648 an ounce, while the price of the precious metal in Vietnam fell by VND440,000 a tael to VND43.7 million (US$ 2,097).

At the official foreign exchange rate, the gap between domestic and global gold prices was still as high as VND2.2 million a tael.

VN presents Ho Chi Minh prize to Russian experts

President Truong Tan Sang has awarded the Ho Chi Minh prize to 10 Russian oil and gas experts for their great contributions to Vietnam’s economic, science and technology development.

A ceremony to hand over the prize to the Russian experts was held at the Vietnamese Embassy in Moscow on Mar. 21.

The decoration was made in recognition of their contributions to the scientific and technological project to discover and effectively exploit oil from the Cuu Long basin in the Vietnamese continental shelf.

Two of the Russian experts were posthumously conferred with the prize.

Addressing the ceremony, Vietnamese Ambassador to Russia Pham Xuan Son and General Director of the Vietnam oil and gas group PetroVietnam praised contributions of the Russian experts to the cause of the development of the education, oil and gas sectors of Vietnam.

They expressed hope that the traditional and comprehensive cooperation and strategic partnership, including the oil and gas sector, will be further enhanced.

VN, Netherlands train seaport workforce

Tan Cang Human Resources Development Co (STC), which was put into operation in HCM City on Mar. 21, is expected to supply human resources for seaports, maritime transport and logistics in Vietnam.

A joint venture between Saigon Newport Corporation and STC Corporation of the Netherlands, STC is sponsored by the Dutch government.

It will offer short-term courses on shipping agents and intermediaries, forwarding, port management and development, safety checks and customs procedures to managers and workers.

Ton Van Essen, General Director of STC company said with advanced equipment and software training products exclusively designed for the Vietnamese market, STC will offer trainees a chance to practice professional skills and receive globally accredited certificates.