Foreign banks asked to limit 2011 credit growth

The State Bank of Vietnam has issued a dispatch asking foreign banks to obey the cap on 2011 credit growth which has been applied to local institutions.

Foreign-owned banks and foreign bank branches must make plans to confine their 2011 credit growth to less than 20% compared with late last year, with the exchange rate factor taken into account.

Credit operations under the law comprises of lending, discounting, finance leasing, factoring, underwriting, and other forms of granting credit.

Those institutions must send reports on the credit growth plan to the Monetary Policy Department of the central bank before this Friday.

Given this year’s credit growth, foreign lenders will need to give a credit line to their branches and those figures must be submitted to the provincial branches of the central bank.

Like domestic banks, foreign banks have been asked to reduce the proportion of loans for the non-manufacturing sector to 22% by late June and 16% by the end of this year.

Lending to non-manufacturing sectors comprises of loans for stock investment, real estate transactions and investment, and consumption purposes.

The central bank said if a bank cannot ensure the ratios above on time, it would double the required reserve ratio for the bank and take some measures to limit operations of the bank in the second half of this year and next.

The central bank has shown a steely determination to keep the credit growth this year below 20% as mentioned in Resolution 11 of the Government to curb inflation and stabilize the macro economy.

According to the central bank’s report, by March 16, money supply is expected to increase by 2.07% from late last year, mobilization grew 1.56% while the credit growth is estimated at 3.67%.

Once-promising IT industry languishes

Despite its huge potential, the software industry has failed to develop as rapidly as it could have.

The decade-old industry has some impressive achievements, including an increase in revenue every year. Its turnover last year was 20 times the 2001 figure while its workforce had grown 10 times.

Viet Nam has also become an important global provider of software services.

But growth in the last few years has remained far short of potential.

There is huge demand for software products and services, particularly in public administration and industry.

But with the local industry unable to meet the needs, the main beneficiaries are foreign companies who get contracts worth millions of US dollars.

For instance, the IT infrastructure needed to set up a personal income tax management system is now being provided by two foreign firms with FPT only acting as a contractor.

Many Vietnamese firms like Petrolimex, Cement Corporation, and Thu Duc House Company are ready to pay foreign IT companies for overall management solutions.

Domestic banks spent dozens of millions of dollars each to create core banking – the services provided by a group of networked branches – to develop personal banking and even larger amounts for carrying out administration measures and operate the core banking system.

Many State enterprises are also potentially large customers for the software industry.

Vietnamese IT companies only had the capability to undertake minor projects under sub-contracts with foreign partners, experts said.

The Corporation for Financing and Promoting Technology, or FPT, for example, is one of the country's largest IT companies but has only 6,000 workers involved in software and IT-enabled services. Of them, half are deployed in sub-contracted projects.

The number of IT companies with even 500 software engineers remains modest.

The limited numbers preclude Vietnamese IT companies from landing major deals, experts pointed out.

Prof Dang Huu, former Minister of Technology and Natural Resources, said there was a fairly good policy framework in place to develop IT, especially software services.

However the polices were not proving very effective because administrative officials and managers ignored them, he said.

Le Manh Ha, director of the HCM City Department of Information and Communication, also underlined the role of these people in fostering the IT industry's growth.

Agencies and enterprises using public funds must give priority to sourcing IT products and services from domestic firms, with failure to do so entailing severe penalties.

But Ha said this regulation was not being implemented because officials at such agencies and enterprises demanded bribes.

He also blamed IT firms for lacking systematic development strategies, especially for marketing and advertising their products and building brands, saying this has made it difficult for them to get a firm foothold in the market.

Nguyen Quang, an IT advisor, said the biggest problem the Vietnamese software industry faced was the workforce.

In the past the focus was merely on developing programmers and not managers and researchers, including system architects and project directors.

This imbalance had come back to haunt the industry, he said, pointing out that IT companies were unable to win contracts for entire projects and had to be happy with sub-contracts from the main vendors, he said.

To succeed, the sector needs to have a long-term personnel development strategy that enables workers to effectively use advanced technologies, he stressed.

Chu Tien Dung, chairman of the HCM City Computing Association, said the country still lacked policies to foster the IT sector, particularly software.

Dung Quat to refine 10 million tonnes of petroleum per year

The Government has agreed to raise the capacity at Dung Quat Oil Refinery from the current 6.5 million tonnes to 10 million tonnes per year in the next five years.

Nguyen Hoai Giang, general director of Binh Son Petro-Chemical Co Ltd, the operator of the country's first oil refinery, said Dung Quat would meet 40 to 50 per cent of the fuel demand in the country when the expansion plan is finished by the end of 2015 or early 2016.

Currently the refinery turns out 6 million tonnes of oil products per year, meeting 30 per cent of the local market's fuel demand.

With total investment of US$3 billion, Dung Quat has produced a range of refined products including liquefied petroleum gas (LPG), kerosene, diesel, fuel oil, A95 and A92-grade petrol, and JetA1 fuel.

To accommodate the increased production capacity, Quang Ngai provincial authority has asked the Government to expand the Dung Quat Economic Zone where the refinery is located to 45,332 ha, four times the current area.

The zone will also be transformed into an industrialised city complete with urban areas and ports.

The feasibility study for the expansion plan will be completed by the Japanese contractor JPC by April of this year.

Preparations for equitisation of the refinery were going on, aiming to seek funds for the expansion plan, estimated at $1.2 billion, said Giang.

He said the staff would be comprised of Vietnamese only, who would operate and conduct maintenance service at the refinery by the end of 2011.

In addition to the expansion plan, Dung Quat staff would be responsible for human resource development for the future petro-chemical projects in the country, said Giang.

Crude oil from the Middle East would be added to the refinery's source of raw materials, which would come from Bach Ho Oilfield off the southern coast of Viet Nam, he added.

Retailer trademarks seen popular, says expert

The local market will see more products under retailers’ trademarks and they will soon become essential commodities to consumers, said BigC Vietnam general director Pascal Billaud.

For every four products in supermarkets, we will see one become a product of retailers within the next three years. The figures will be one from two within the next six or seven years, Billaud said at a seminar on new product competitiveness in HCMC last week.

The products will play an important role in retailers’ future growth due to having distinctions and meeting demands of consumers. Retailers should set up plans for developing the products to catch up with increasing consumer needs, he added.

Many retailers such as Metro, Saigon Co.op and BigC in recent years have developed their own trademarks, mainly for food and cosmetics products. The products are 5% to 30% cheaper than other similar goods.

Saigon Co.op has 500 out of 20,000 products under its brands while BigC has 250. Lotte has also launched its own brands for customers.

Seven provinces to expand e-customs

The Government has approved the expansion of e-customs procedures at seven provinces this year.

Long An, Thanh Hoa, Nghe An, Dak Lak, Thua Thien – Hue, Tay Ninh and Binh Dinh provinces have been judged to have sufficient conditions, including IT infrastructure and other needed facilities, for the expansion, according to the Customs General Department's Reform and Modernisation Division.

The Ministry of Finance will oversee the expansion in cooperation with relevant agencies and provincial Customs departments.

The General Department of Customs (GDC) is preparing detailed plans to provide training for staff in provincial Customs Departments so they will have the skills to carry out the expansion next month.

The provincial Customs Departments are working with relevant departments and agencies to select firms in their localities that will make e-customs declarations this year onwards.

The expansion of e-customs procedures had been carried out in 13 provincial and municipal Customs Departments as of the end of last year.

Of these 13, seven have been able to expand e-customs procedures to all their sub-departments, according to the GDC.

With the addition of seven provinces, the GDC's target of having 18-20 provincial and municipal Customs Departments implementing the expansion of e-customs procedures by the end of this year will be met.

Binh Dinh revokes funeral park project license

Authorities of Binh Dinh Province have revoked the investment certificate of Singapore’s Optivest Investment Pte Ltd. for a modern crematorium and memorial park.

The reason behind the decision is Optivest Binh Dinh Ltd., a subsidiary of the Singapore company, received the investment certificate in 2008 but it has delayed construction work since then, according to the province’s Investment Promotion Center.

The company was expected to invest US$5 million in the park on 12 hectares in the province’s Quy Nhon City, which was originally scheduled for opening in 2009.

This was the first foreign-direct investment project in the sector in Vietnam.

Meanwhile, Ba Ria-Vung Tau Province’s Department of Planning and Investment has proposed the Government revoke the investment certificate of an Australia-invested project worth US$20 million to produce sailboats.

Investor Corsair Marine Park, according to the department, is not financially capable and has had difficulty with site clearance and compensation, according to Tuoi Tre newspaper.

Corsair Marine International planned to develop the trimaran manufacturing project on 27 hectares in Long Son Commune. The project was granted an investment certificate in July, 2007.

Provinces seek to lure tourists in high holiday season

Provinces and cities across the country are hoping to woo tourists for the upcoming national holidays and summer travel season.

With Liberation Day on April 30, International Labor Day on May 1 and then the big summer push, there is a lot of money to be made from domestic tourism.

Nguyen Duy Quang, deputy director of the Tourism Promotion Center of Danang City, said the city is ready for a big time with the highly-anticipated International Fireworks Competition 2011 underway.

The event on the Han River will run for two nights on April 29 and 30 with the theme of ‘Sparkling Han River’. The competition has five teams from England, South Korea, Italy, China and host Vietnam.

As well as the floating flower garlands and colored lanterns on the Han River, the Non Nuoc stone exhibitions, a photo display from the last year’s show, beach sports, music and fashion shows will also be part of the event.

“We expect to sell 16,000 tickets on each night. Up until on Tuesday, ticket agents in Danang have reported that the tickets allotted to them were sold out,” he said.

However, city residents can buy tickets at Viettravel Media at175 Nguyen Thai Binh, District 1, HCMC for the big event.

The northern province of Quang Ninh will organize the Halong-Quang Ninh Tourism Week from April 29 to May 2 with tourism and sports events, a photo exhibition, hip-hop and dance sport competitions. The big attraction will be the Carnaval Halong 2011 which will take place at 8.00 p.m. on May 1 at Bai Chay Park in the city.

According to the province’s Department of Culture, Sports and Tourism, the Central Government has just approved a 15-minute fireworks display during the Carnaval Halong.

In Thanh Hoa, the Sam Son Tourism Week, an event which officially opens the summer tourism season, will take place from April 28 to May 2.

The event will include sea sports activities such as dragon boat races, bicycle races, a ceremony to launch new tours and exhibitions.

Ocean Hospitality launches tourism property project in Nha Trang

Ocean Hospitality and Services Joint Stock Company, or Ocean Hospitality, has started marketing a multipurpose property project and introduced opportunities for investment in the project to prospective investors.

Ta Thanh Thuy, general director of Ocean Hospitality, said the company would spend VND400 billion to VND500 billion developing the Condotel StarCity Nha Trang project at a 2,500-square-meter site on Tran Phu Street in the central coast city of Nha Trang.

The project will have a total of 283 rooms, of which there will be 66 apartments of 33 to 99 square meters. Other serviced facilities will include conference room, swimming pool, restaurant, fitness center and shopping center.

The developer said it would launch 30 apartments in the first sale with prices starting from VND1.2 billion per unit.

Thuy said for this project the company would introduce a timeshare program in which apartment owners will sign trustee contracts with Ocean Hospitality to manage and lease their properties during non-use periods.

The Condotel Nha Trang StarCity project is expected to be up and running by the fourth quarter of 2013.

Ocean Hospitality also has the Saigon StarCity Hotel on Nguyen Van Troi Street in HCMC, the first project to be put into operation earlier this year.

Garment exports to hit $13 billion this year

Viet Nam should be able to export US$13 billion of garments and textiles this year, according to the Viet Nam Textile and Apparel Association (Vitas).

Vitas said the goal was achievable given that established partners had recently agreed to a price increase of between 15 and 20 per cent.

In the first quarter of this year, the industry earned $2.8 billion from exports, a year-on-year increase of 28 per cent.

According to Vitas, the prices of many imported raw materials have surged.

For example, the price of cotton imported from the US has increased by 74.1 per cent in comparison with the same period last year, while the costs of labour, transport and power have also gone up.

A representative from the Gia Dinh Garment Company admitted that his company faced many challenges because it had signed contracts last year when raw materials were a lot cheaper, and they were having to honour those contracts.

To solve the problem, the association has worked with provinces to construct industrial zones in which they can plant cotton and produce other raw materials.

The association said that if companies boosted their exports, they would be able to balance their foreign currency source and import more raw material. Using alternative raw material was also suggested.

As part of a garment and textile development plan for the 2010-15 period, the industry will meet about 45 per cent of the domestic fibre demand in 2011, and this figure will increase to 70 per cent in 2012.

In 2015, the localisation rate is expected to be 70-80 per cent.

Last year, the garment and textile industry invested more than VND1.1 trillion ($52 million) to develop technologies and productivity.