JP Morgan lends $108 mln to Masan

 

Masan Group, listed MSN on the Ho Chi Minh Stock Exchange, has borrowed US$108 million for 3 years from JP Morgan for its arm, Masan Industrial.

 

Masan Group, which focuses on the consumption and resources sector in Vietnam, is planning to use the money to invest in its existing businesses and continue to carry out strategic M&A in these sectors.

 

Since it was first listed on the Ho Chi Minh Stock Exchange in 2009 with MSN-coded stocks, Masan has consolidated its holdings in existing subsidiaries and acquired the Nui Phao Project, a world-class tungsten and base-metal mining project in order to build a resources platform.

 

Masan Group is one of Vietnam's largest private sector companies and has a track record of actively building, acquiring and managing market-leading businesses in several of the fastest growing areas of Vietnam's economy.

 

Masan's businesses include Masan Consumer, Techcombank and Masan Resources, which are leading operating platforms in consumer products, financial services and resources, respectively.

 

Vietnam’s livestock industry loses to foreign firms

 

Vietnamese businesses in the livestock industry are losing their home market to foreign competitors, with the latter holding most of the animal feed and livestock breeding market share -- the two most important sectors of the industry.

 

According to many analysts, although numbering only around 20, foreign animal feed manufacturers are holding up to 70 percent of the country’s market share.

 

The poultry breed sector, for example, are being dominated by three foreign companies, CP Vietnam Livestock Corporation, Japfa and Emivest, supplying around 6 million poultry to the domestic market monthly, leaving hundreds of domestic firms to compete for the remaining market share.

 

The fierce competition has driven 30 percent of domestic firms out of business, experts said.

 

Holding manipulating power over the domestic market, the foreign firms freely conspire with each other to hike their prices, causing great difficulty to livestock farmers.

 

According to the Vietnam Animal Husbandry Department, the animal feed manufacturers have already increased their prices a dozen times since early this year, making the current prices 40 percent higher over the same period last year.

 

Early this month, the price of a day-old breeder chick shot to VND27,000, 3.6 times higher than early this year, according to the Ministry of Agriculture and Rural Development.

 

Although their domestic market is dominated by the foreign competitors, Vietnamese businesses are still at a loss on how to find a solution to the problem.

 

Many companies said while 70 percent of the materials needed to produce animal feed for the domestic market are imported from abroad, the government has yet to develop an alternative supply source to support them.

 

In addition, while domestic businesses are only allowed to borrow in local currency and at high lending rates, their foreign counterparts can borrow in foreign currency at low interest rates and, supported by their parent companies, purchase raw materials at low cost.

 

Pham Duc Binh, deputy head of the Vietnam Animal Husbandry Department, urged the government to develop a policy to help the domestic livestock industry have access to a reliable and sustainable supply source of animal feed.

 

“We should put up technical barriers to keep domestic materials from flowing abroad,” he said. “With the current zero percent export tariff on corn and manioc, we will soon run out of these materials to produce animal feed for the domestic industry.”

 

Nguyen Thi Le Hong, CEO of Dong Nai Food Industrial Corporation (Dofico), also suggested the government devise an appropriate policy to curb the materials being exported en mass.

 

“If we do not have a solution soon, the livestock farmers will have to depend on, and thus remain at the mercy of, the foreign firms forever,” she worried.

 

Quang Tri moves to woo foreign investment

 

The central province of Quang Tri has embarked on a plan to improve information for foreign services in a bid to call for more foreign investment in key economic areas.

 

Through various information channels, Quang Tri has informed foreign businesses about its advantages and potentials on the East-West economic corridor. The province focuses on several large-scale projects such as the economic channel Road 9, the construction of the deep-sea port of My Thuy and the economic center of Dong Nam.

 

In addition, Quang Tri also possesses significant cultural and tourism values, such as traditional trade villages, national and international cultural festivals, tourism products and spiritual and memorial tourism.

 

The province has sought to contact and improve communication with overseas Vietnamese to appeal for their investment in its socio-economic development.

 

The Agency for Foreign Information Service under the Ministry of Information and Communications is working with the Border Guard High Command to construct a center for foreign information service at the Lao Bao international border gate to provide information for residents and foreign visitors passing through the border.

 

Dong Nai IP to become urban-service complex

 

The southern province of Dong Nai has completed a plan to convert an Industrial Park (IP) into an urban-service complex by the next decade as the IP has been polluting the Dong Nai River for years.

 

Under the plan, the 320-hectare area of what is now the Bien Hoa Industrial Zone 1 will see a complex of apartments, villas and other buildings for services and trade.

 

More than 100 businesses based within the industrial park will be relocated, the provincial authorities informed.

 

The US$633-million plan will be carried out in three phases, and the businesses are expected to finish their relocation in 2022, according to its main investor, the Corporation for the Development of Bien Hoa Industrial Zone.

 

Dinh Quoc Thai, head of the provincial People’s Committee, said it is necessary to convert the function of the Industrial Park since it has been severely contaminating the Dong Nai River with old, degraded infrastructure and wastewater treatment system that have been in use since its establishment in 1963.

 

“The Industrial Park has done its time,” he said. “We have to ‘rescue’ the river since it is the water supply for locals and also Ho Chi Minh City residents.”

 

He said Dong Nai would apply preferential policies for businesses which are to be relocated to others IPs in the province including Giang Dien, Ong Keo and Nhon Trach I,II,III and IV.

 

“Some businesses will have to move in the last quarter of this year for the investor to start infrastructure construction,” he added.

 

Local property market heating up with M&A

 

Merger and acquisition (M&A) activities are heating up the local property market as several property projects are under negotiations for transfer.

 

Since 2008, many investors, through foreign brokerage firms located in Vietnam, have been exploring and seeking chances to enter the local property market where local investors have been facing financial problems and struggling to find an outlet for their products.

 

Marc Townsend, managing director of CB Richard Ellis Vietnam (CBRE), said many foreign investors are eyeing Asia, of which Vietnam is a new investment destination.

 

He said Korean investors are making their way back to Vietnam while several Chinese and Russian firms are looking for chances to invest in office buildings or serviced apartments.

 

Sai Gon Thuong Tin Real Estate Joint Stock Company, or Sacomreal, said it received many foreign investment funds seeking ways to invest in its projects this June.

 

For example, Mapletree Investments under Singapore-based Temasek Holdings showed keen interest in office building and apartment projects, while Sung Chang of South Korea was interested in retail projects. EngelInvest of Israel was also named.

 

Townsend said high population density and profitability of property projects were the main factors attracing foreign investments despite current economic challenges.

 

Tightened real estate loans and cash flow problems are putting great pressuring on local investors, forcing several companies to transfer their projects, reduce investments or accept break-even or even losses to maintain their businesses.

 

To overcome the credit squeeze, many firms are looking for cooperation with local and foreign investors to access capital sources.

 

Su Ngoc Khuong, associate director of investment at Savills Vietnam Co., said many Vietnamese investors are seeking advice to approach foreign partners. The company witnessed a 20 percent increase in consultation enquiries this year compared to 2010.

 

Most investors in the local property market are Asian, such as Japanese, Korean or Singaporean, thanks to similar cultures.

 

Besides apartments and offices, villas are also appealing to many foreign investors.

 

Khuong said few companies publicize their project transfer, except for the listed ones. Moreover, a transfer deal takes between six months and two years to be completed.

 

Jones Lang LaSalle Vietnam Co, for instance, took one year to settle the transfer of the Centre Point office building project on Nguyen Van Troi Street in Ho Chi Minh City’s Phu Nhuan District and the transfer value remains unknown.

 

Savills Vietnam has helped transfer a complex project of US$120 million, including a shopping center, a office building and residences in HCMC, Khuong said.

The transfer is to be completed at the year’s end but identities of both local and foreign investors have yet to be revealed.

 

Khuong’s company has previously succeeded in brokering the transfer of an office building project worth $100 million in Hanoi. Khuong said that many project transfers are underway and more M&A would be announced in the coming time.

 

While new investors are cautiously entering local market, those who have entered the market are expanding their investments through project acquisition.

 

In May, CapitalLand Group announced a 70 percent stake acquisition of an apartment project in Binh Tri Dong Ward in HCMC’s District 2 from Khang Dien Sai Gon Real Estate Co.

 

The project comprises of 974 units covering 2.9 ha with a total capital of $70 million.

 

Two weeks later, the Singapore-based property group announced another acquisition of a 65 percent stake worth VND121 billion of Quoc Cuong Sai Gon Co.

 

With these two projects, CapitalLand holds a total 7 property projects with 6,400 units, excluding the Somerset Central TD Hai Phong City project acquired by its subsidiary, Ascott Group Limited.

 

Yip Hoong Mun, chief representative of CapitalLand Vietnam, said the current difficulties are opportunities to investors and emphasized that his firm would keep seeking investment cooperation in viable real estate projects.

 

Regarding this issue, Chairman Le Hoang Chau of the HCMC Real Estate Association (Horea), said project M&A tendency would continue and investors are obliged to join hands to enhance financial power so as to implement their projects.

 

Market observers are optimistic about mutual support in brand names, experience, project management and even customers offered by foreign partners. They also say that not all project transfers result in losses.

 

Sacomreal is an example. The property firm gained hundreds of billions of dongs from the transfer of the Celadon City residence project in HCMC’s Tan Phu District, while it still retains a 40 percent stake in the project.

 

Experts predicted if project transfer deals are successfull, dozens of property projects might change hands in the near future.

 

Car imports drop 46%

 

The number of imported cars dropped nearly 46% in July compared to the previous month, at 3,958 vehicles with a total value of US$72 million, according to data from the General Department of Customs.

 

According to Sai Gon Giai Phong, industry insiders attribute this decline to a circular dated May 12 this year issued by the Ministry of Industry on additional formalities in the import of passenger cars with nine seats or less.

 

Under the circular that took effect June 26, importers of passenger vehicles of nine seats or less must submit documents to competent state agencies to complete paperwork related to imports.

 

But taking into account this year, car imports are on the rise.

 

In the first seven months of 2011, 38,116 cars worth $703 million have been imported, representing an increase of 38.8% and 40.3% in terms of number and value compared to the same period last year.

 

In other news, as of August 15, Vietnam has begun to impose new tax rates on second-hand cars imported into Vietnam.

 

Accordingly, vehicles of less than 9 seats with size between 1,500 cc and 2,500 cc will be imposed a tariff of 82% plus a fixed tax of US$5,000.

 

Meanwhile, cars with more than 2,500 cc will be levied a tariff of 77% plus an absolute tax of $15,000.

 

Earlier, fixed tax rates were applied to all used cars irrespective of size.

 

But vehicles of less than 9 seats and less than 1,000 cc will be taxed a fixed amount of US$3,500 per car under the new regulations. Tax will rise to $8,000 for vehicles of 1,000 cc to 1,500 cc.

 

Now that the new rates depend on the value of the imported vehicles, the tax for luxury cars could be twice higher than previous rates.

 

According to TBKTVN, analysts have pointed out that with such calculation method, the import tax on second hand luxury cars with the capacity of 5.0L will be much higher than the tax imposed on brand new cars of the same type.

 

Global gas price fall: Vietnamese get no benefit

 

Most cooking gas consumers are not benefiting from the recent decline in global prices since companies have not passed on the cuts to them despite cutting wholesale prices.

 

They have cut the prices for retailers by VND5,000 to VND15,000 for a 12-kg cylinder, saying it is meant to compete with private suppliers.

 

Distributors now enjoy profits of up to VND45,000 ($2.25) per cylinder, but only a few of them have reduced their retail prices, and most consumers continue to pay up to VND380,000 ($19) for a cylinder.

 

Huynh Ngoc Tue, head of the sales at the state-owned Petrolimex Saigon, said his company had to cut prices for distributors to compete with private suppliers.

 

“[The private suppliers] have reduced prices three times this month, and we must do the same to ensure sales,” he said, adding the cooking-gas market was taking a hit from this kind of competition.

 

“Since they are new to the market, the private suppliers always try to cut prices to attract more distributors and expand market share.”

 

A spokesperson for a gas company with a large market share in Ho Chi Minh City said the small suppliers could easily offer discounts now to distributors since they imported gas at spot prices quoted at the time of import. Prices have fallen recently by US$60 a ton.

 

“But we cannot do so since we have to depend on the contract price, which is fixed at the end of every month,” he said.

 

Many gas companies said the contract prices were likely to soar at the end of this month.

 

Earlier this month they hiked retail prices by VND8,000 after the contract price rose by $25 a ton.

 

German Talanx subsidiary to buy 25 pct of Vietnam insurer

 

A subsidiary of Germany's third-biggest insurer, Talanx, has agreed to buy a 25 percent stake in the enlarged share capital of Vietnam's PVI Holdings for VND1.92 trillion (US$92 million), PVI said on Wednesday.

 

The transaction with HDI-Gerling Industrie Versicherung AG is expected to take place before the end of the year, pending local regulatory approval, and another Talanx firm, Hannover Re, will provide support, PVI said in a statement.

 

The agreed purchase price was VND36,000 per share, it said.

 

PVI stock rose 5.13 percent on Wednesday to VND16,400 in trading that ended before the announcement of the agreement.

 

PVI Holdings, a Hanoi-listed subsidiary of state oil and gas group Petrovietnam, is the leading non-life and industrial sector insurer in Vietnam, with a 24 percent market share and gross written premiums in 2010 of $183 million, the statement said.

 

Da Nang property pulls investors

 

Da Nang has remained an attractive real estate market to both local and foreign investors amidst the global economic crisis.

 

"While real estate market development has been sluggish, investors have continued paying special attention to Da Nang," Lam Quang Minh, director of the Da Nang Investment Promotion Centre, told a seminar in Ha Noi yesterday.

 

"Da Nang property prices are much lower than those in Ha Noi and HCM City due to more investment incentives, which the coastal city has endeavoured to promote via its seminar in the capital," Minh said.

 

"While the economic crisis has affected the property market, construction has managed to continue according to plan," said Phung Tan Viet, deputy chairman of the People's Committee of Da Nang.

 

Current advantages imbedded in the Da Nang property market include low land prices, the development of its economic and tourism sectors, as well as its upgraded infrastructure and excellent geographical position, according to a representative from Savill Viet Nam, a property-consulting firm.

 

At present, Da Nang had 56 ongoing property projects with a total investment of US$3.5 billion, 30 per cent of which came from foreign investments, Viet said.

 

"Although the property market in Da Nang also froze, it was only temporarily," said Dam Quang Tuan, chairman of the Da Nang Real Estate Association.

 

"The association expects the property market in the city to warm up in the near future because of macro economic policies having good effects across economic sectors," Tuan said.

 

To warm up the property market, enterprises expected banks to provide loans toward property projects, he explained, adding that customers and enterprises should closely co-operate in ensuring on schedule repayments.

 

Cooler weather dampens air-conditioning market

 

With cooler weather this summer compared to last year, local consumers are purchasing less cooling and refrigerating electronic appliances, Newswire VnExpress reported.

 

The owner of an electronic store on Hai Ba Trung Street in Hanoi said last summer, when the weather was as high as 40 Celsius degrees, consumers had to line up to be able to buy an air-conditioner from his store.

 

“The electronic stores were always in demand and some families were willing to pay more to have their devices delivered faster,” he said.

 

But air-conditioners this summer aren’t selling that well even though prices have fallen by up to 5 percent compared to last year.

 

Nguyen Thi Van, who runs a fan store on Nguyen Luong Bang Street, said her sales were 30 percent lower compared to last summer.

 

“There’re days when I sell nothing,” Van said.

 

For their parts, electronic shopping centers aren’t enjoying better sales despite a series of promotion programs.

 

An employee of Tran Anh Computer said air-conditioner sales had gone down as the weather this summer is not as hot as last year.

 

He said customers had less demand for cooling devices because the heat waves only lasted a few days before the rain set in.

 

The director of a cooling device distributor said many retailers had expected increased sales for power-saving cooling devices when the power sector early this year forecast a power shortage this summer.

 

“But as there is no power shortage, many families have delayed their purchase,” he said, adding that customers tend to cut down spending on shopping given the current economic downturn.

 

Bank reserves increase on cards

 

In efforts to reduce interest rates, Viet Nam's State Bank may adjust capital regulation, increase compulsory reserves and alter State Bank note issuance.

 

Newly-named State Bank governor Nguyen Van Binh told the Sai Gon Economics Times the target to slash commercial lending rates to 17-19 per cent per year was feasible.

 

He said the banking system had sufficient capital on hand which indicated rather low lending rates on the inter-bank market, which ranged from 12-15 per cent per year and under 10 per cent annually for overnight interest rates.

 

However, capital is not balanced within the banking system and some banks hold more than others, which discourages them to cut interest rates.

 

Binh said the central bank could raise banks' compulsory reserves or issue a State Bank note to absorb excess capital and refinance high-capital demand within the banking sector, which would not add more to interest rates at commercial banks.

 

When all banks have sufficient capital, they do not have to price capital at a high cost, and can cut lending rates.

 

Deputy general director of Asia Commercial Bank Nguyen Thanh Toai said assuming banks having large amounts of capital was wrong.

 

"It's not really right to say many banks have abundant capital. If it were true, banks have no reason to offer costly deposit interest rates. High inflationary pressure hoops attempt to cut interest rates," Toai said.

 

The State Bank of Viet Nam has applied a deposit ceiling for interest rates of 14 per cent per year, while lending interest rates are negotiable.

 

Governor Binh said banks were concerned about the profit margin between deposits and lending rates, not common interest rates, and profit margins of 2.5-3 per cent were reasonable if deposit interest rates stood at 14 per cent and borrowing interest rates were 17-19 per cent.

 

Current borrowing costs at state-run commercial banks are 17-21 per cent per year, 21-24 per cent at private banks, and 20-22 per cent at finance companies.

 

To lower interest rates in the coming months, Binh suggested amending current capital regulations, including provisions issued last year to address problems with risk-management and to ensure market stability and well-managed capital circulation in 2010 and 2011.

 

"Shortcomings of these regulations have annulled the capital supply function of the inter-bank market - a series of existing capital regulations must be reconsidered in order to make capital flow run smoothly and effectively," Binh said.

 

Circulars 13 and 19 allow banks to calculate 25 per cent of non-term capital deposited by companies as mobilised funds which can be used as loans and capital borrowed from other institutions with a three month or longer term and capital borrowed from foreign banks will also be added to funds for lending.

 

The circulars allow the loans-to-deposit ratio of 80 per cent for commercial banks, and 85 per cent for non-banking credit institutions. The central bank has also left the risk coefficient at 2.5 for stock and real estate loans, restricting cash flow for these two sectors, while the capital adequacy ratio is set at 9 per cent.

 

When released in October last year, the two circulars generated controversy amid fears that deposit and lending rates would remain high and enterprises would find it harder to access loans.

 

Ho Chi Minh City hosts VietAd 2011

 

Around 80 domestic and foreign businesses are attending the second Vietnam International Advertising Equipment and Technology Exhibition (VietAd 2011) in Ho Chi Minh City from August 18-21.

 

The event is jointly held by the Vietnam Advertising Association (VAA), the Ho Chi Minh Advertising Association and the Dong Nam Advertising and Commercial Promotion Joint Stock Company.

 

On display at the exhibition will be modern printers, wood and laser engraving machines, light-emitting diode (LED) technologies and advertising equipment.

 

The event aims to provide an opportunity for advertising companies to connect with their customers, while also promoting the advertising industry in Vietnam.

 

Economic cooperation in the Gulf of Tonkin makes progress

 

Economic cooperation in the Gulf of Tonkin has made significant progress, playing an important role in the process of comprehensive cooperation between China and ASEAN.

 

Many projects have been implemented in the fields of investment, transport and distribution and become a new bright spot of cooperation between China and ASEAN. The “Nanning-Singapore economic corridor” has been basically completed to link roads from Nanning to Singapore through seven countries.

 

Guangxi province (China) has recently opened an international railway route from Nanning to Vietnam and upgraded the Nanning-Huu Nghi Quan-Pingxiang highway and ten of 24 roads to Vietnam.

 

In addition, cross-border cooperation is now in full swing after Guangxi and Quang Ninh agreed in September 2010 to build the Dongxing -Mong Cai border economic zone.

 

Financial cooperation in the Gulf is also increasing with the Development Bank of Singapore (DBS) establishing its branch in Nanning and Chinese financial agencies setting up 8 offices in ASEAN countries. By the end of 2010, Chinese banks in Guangxi had coordinated with ASEAN to establish 94 subsidiary banks.

 

Guangxi province has signed economic cooperation agreements with Vietnam, Indonesia, the Philippines, Malaysia, and Singapore and opened new sea routes for container ships.

 

Asian cocoa association helps local farmers

 

The Cocoa Association of Asia (CAA) will transfer techniques for growing cocoa trees to Vietnamese farmers.

 

A memorandum of understanding to this effect was signed between CAA and the Vietnam Coordination Committee for Cocoa Development, in Ho Chi Minh City on Aug. 18.

 

Under the MoU, a project worth US$100,000 will be carried out in the three southern provinces with the largest cocoa areas in Vietnam – Ba Ria-Vung Tau, Ben Tre and Dong Nai – from September 2011 to August 2014.

 

The CAA will build models and training courses nearly 2,150 farm households in the project areas.

 

Speaking at the signing ceremony, CAA General Secretary Lucas Van Maarschalkerweerd expressed his hope that the project will help raise the productivity of cocoa trees in Vietnam to 1.5 tonnes of cocoa per hectare.

 

At present, the country has nearly 20,600 hectares of cocoa with an average capacity of 0.7 tonne per hectare.

 

The total area of cocoa trees in Vietnam is expected to reach 26,732 hectares by the end of 2011 and 53,580 hectares by 2015.

 

Vietnam’s tra fish exports drop

 

Vietnam has earned just US$17.8 million from exporting 8,500 tonnes of tra fish this year, down 26 percent in output and 6.8 percent in export value over the same period last year.

 

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the number of exporters to the market has dropped from 43 last year to just 35 this year.

 

Businesses have attributed the sharp fall in tra fish exports to political instability in Egypt and Egyptian importers’ decision to reduce import volumes amid soaring export prices.

 

900,000 tonnes of coffee already exported

 

By early August, Vietnam has exported 900,000 tonnes of coffee, earning around US$2 billion.

 

According to the Vietnam Coffee and Cocoa Association, total coffee export volume is estimated to reach 1.3 million tonnes this year, representing a value of nearly US$3 billion.

 

The coffee supply on the global market is currently limited, causing the price to rise. In addition, Vietnam’s key cultivation areas are likely to achieve high productivity with at least 3 tonnes of coffee beans per hectare.

 

Discovering new factors to develop economy in the northwestern region

 

The Northwestern Steering Committee should discover new factors to develop the economy in the northwestern region, said Head of the CPVCC’s Commission for Organisation To Huy Rua.

 

During his visit to the northern province of Yen Bai on August 17, To Huy Rua, Politburo member and Head of the Communist Party of Vietnam Central Committee’s Commission for Organisation planted a tree at the Monument to patriotic scholar Nguyen Thai Hoc and worked with the Yen Bai City Party Committee and the Northwest Steering Committee.

 

Mr Rua highlighted achievements made by the local authorities in socio-economic developments to help reduce poverty, generate jobs and upgrade transport infrastructure.

 

Over the past six years, the northwestern region has achieved an annual economic growth rate of 11.21 percent. People’s living standards have greatly improved with average income per capita reaching VND11.75 million, three times higher than 2004’s figure.

 

Mr Rua expressed hope that Yen Bai City will soon become a keen urban centre in the northwestern region.

 

He emphasized the significance of proper urban planning and the need to protect the city’s surrounding scenery and environment.

 

PVI Holdings finds strategic partner

 

HDI-Gerling Industrie Versicherung AG, a member of German insurer Talanx Group, signed a deal on August 17 to buy a 25 percent stake in Vietnamese insurer PVI Holdings (PVI).

 

At a value of US$93 million, the stake equates to VND36,000 ($1.7) per share while PVI closed the August 17 session at its ceiling price of only VND16,400. When the deal is completed, PVI will increase its charter capital to VND2 trillion ($97.1 million) from VND1.6 trillion ($77.7 million).

 

“Talanx is now our second largest shareholder after PetroVietnam and the only shareholder in the insurance field,” said PVI’s Chairman Nguyen Anh Tuan.

 

“We will be represented on the supervisory board as well as the management board. We will share our knowledge of the insurance business for the benefit of both sides,” said the German group’s chairman Christian Hinsch.

 

On explaining why Talanx Group chose to be a strategic shareholder of the PVI in the context of a declining stock market, Hinsch said: “We have been investing outside of Germany for more than 30 years, and investing in Vietnam is part of gaining a foothold in the Southeast Asian market.”

 

Vietnam is a dynamic and promising economy, while there is a low penetration rate in the insurance industry, he commented. “We don’t look at the moment, but we look at the long-term benefits. That is why we invest,” he said, adding that rising and falling is in the nature of a stock market.

 

New regulations on cross-border cash carrying

 

The State Bank of Vietnam has issued a circular stipulating the bringing of foreign currency in cash and Vietnam dong in cash by individuals when leaving or entering the country.

 

Under Circular No. 15/2011/TT-NHNN, individuals who carry over US$5,000 or other foreign currencies that have equal value and more than VND15 million must make customs declarations at border gates.

 

For individuals who carry into Vietnam foreign currency equal to or less than US$5,000, or other kinds of foreign currency have equal value and wish to send this amount of foreign currency to account of payments in foreign currency of individuals opened at credit institutions or branches of foreign banks licensed to conduct foreign exchange transactions must also declare to the border gate customs.

 

The border customs-certified entry-exit declaration of the foreign currency in cash brought into Vietnam is the basis for licensed credit institutions to send foreign currency in cash to the account of payments.

 

Genetically modified maize successfully tested

 

The experimental growing of genetically modified (GM) maize in the Central Highland province of Dak Lak has showed good results with higher yield, quality and anti-pest capacity than normal maize grown in the same conditions.

 

The information was released at a seminar on improving public awareness of GM maize jointly held by the Ministry of Agriculture and Rural Development, the Central Highland Agro-Forestry Science & Technology Institute (CASTI) and the Dekalb Vietnam Co., Ltd in Buon Ma Thuot City on August 16.

 

Maize was the first GM crop experimentally grown in Vietnam which may produce up to 10 tonnes per ha, doubling the yield of other maize varieties, with low input costs, according to CASTI Director Le Ngoc Bau.

 

At present, maize is the second most popular crop in Dak Lak province, after coffee, with a total area of 140,000 ha. However, maize productivity only reaches 4-5 tonnes per ha due to natural disasters and diseases.

 

Bau said that the growing of GM maize will help farmers reduce production costs and gradually improve their living standards.

 

Vietnam, China boost cooperation in energy

 

Vietnamese and Chinese businesses operating in mechanic engineering and energy had a chance to exchange information and seek cooperation opportunities at a seminar in Hanoi on August 17.

 

The event was jointly held by the Vietnam Chamber of Commerce and Industry (VCCI) and the Beijing research institute of state enterprise information technology.

 

Vietnam has a huge demand for machinery and facilities to serve the exploitation of natural resources, minerals and clean energies during its integration and development process, said Pham Quang Thinh, Deputy Director of the VCCI’s International Relations Department.

 

The demand is expected to increase in the coming years, he said.

 

Since the establishment of the ASEAN-China Free Trade Area in 2010, a large volume of goods, including agricultural and industrial products, has enjoyed low import taxes of between 0-5 percent.

 

Thinh underlined the need for the two countries’ businesses to take advantage of that low tax rate to cooperate in trade, investment and joint venture production, contributing to the development of the two economies. 

 

Over VND1.4 trillion for agricultural promotion programme

 

Over VND1.4 trillion will be allocated for the national agricultural promotion programme in the 2011-2015 period, according to the National Agricultural Promotion Centre.

 

The fund will be used to implement seven key agricultural programmes nationwide, with a focus on promoting agricultural cultivation, breeding activities, fisheries, forestry, as well as organizing training courses on management, inspection and examination skills.

 

Accordingly, agro-forestry and fishery promotion projects will receive about VND500 billion, while technical transfer projects in the forestry sector will be granted nearly VND80 billion. The fisheries promotion project will be provided with more than VND100 billion to help local fishermen improve their technical skills and manage aquaculture activities in a more effective and sustainable manner.

 

Banks to give priority to agriculture

 

The State Bank of Vietnam's Governor Nguyen Van Binh on August 16 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 percent, restaurant and dining services by 2.12 percent, after 1.79 percent in June.

 

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

 

The newly named governor has vowed to force commercial banks to slash lending interest rates to 17-19 percent 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 percent annually for individuals and households.

 

Vinacomin bargains over funds for bauxite transport route

 

Vietnam Coal and Mineral Industry Group, or Vinacomin, said it would petition the Government to reconsider the investment capital for the bauxite route upgrade because the group cannot afford the VND1-trillion contribution as tentatively suggested.

 

The alumina transport route comprises Provincial Road 725 in Lam Dong Province along with National Highway 20 and Provincial Road 769 in Dong Nai Province. Earlier, the Directorate for Roads of Vietnam under the Minister of Transport has submitted to the Government the upgrade project for these roads with total investment capital of VND1.6 trillion.

 

Vinacomin, as bauxite exploiter, is requested to contribute between VND482 billion and VND1 trillion to the capital. The remaining will be mobilized from the State budget.

 

In response to this decision, Duong Van Hoa, deputy general director of Vinacomin, told the Daily that the group cannot spend VND1 trillion for this project because its transport trucks would account for only 2% of all the vehicles circulating on such roads.

 

Hoa underscored Vinacomin approves this upgrade project but demanded revision on its financial obligations. He said the group would submit a petition on this subject to the Government in the coming days.

 

Hoa said it was unreasonable to impose the upgrade mission on Vinacomin alone, stating these roads have already been deteriorating and the upgrade is to facilitate the community and all industries as well as economic development of the region.

 

Real estate inflation may hurt economy

 

The real estate sector may overheat Viet Nam's economy if left to inflate, experts warned in a conference in Ha Noi yesterday.

 

Ambassador for Ireland Maeve Collins urged caution in regards to Viet Nam's growing real estate, citing Ireland's financial problems of 2008.

 

"When housing bubbles burst, they can cause substantial damage to the affected economies - on some occasions when housing bubbles have burst, they have also been associated with significant disruption to the domestic financial system," Ambassador Collins said.

 

"There is a risk of overheating in the property market - Viet Nam has a big population with high density and growth in urban areas exceed 35 per cent, while the Government has not yet developed a strategy for housing," Ambassador Collins said.

 

Ireland's 2008 property burst devastated the banking system when 35 billion euros were injected into two insolvent banks, and the total cost of the banking crisis may amount to 50 per cent of Ireland's GDP.

 

National Financial Supervisory Committee (NFSC) Chairman Vu Viet Ngoan warned that while the Vietnamese banking sector was not large, there were a number of small banks with poor management capacity.

 

"The State Bank should classify banks, giving them ratings so small banks need time to re-organise themselves," Ngoan said.

 

If banks were unable to restructure, the central bank could acquire or manage them, to avoid disruption to the banking system, Ngoan added.

 

NFSC vice chairman Le Xuan Nghia reiterated Ngoan's concerns, stating that 70-80 per cent of capital for property projects were raised from bank loans, adding that bad debts in the real estate market represented 3 per cent of debt in the sector.

 

"The outstanding balance in the real estate sector as of June reached VND245 trillion (US$11.9 billion), accounting for 10 per cent of the total outstanding balance of the economy," Nghia said.

 

"In addition, real estate shares have plunged 70 per cent in recent times, resulting in poor business results," Nghia said.

 

He said the real estate industry had to accept the difficulties, as stabilising the economy and controlling inflation required the State to focus on manufacturers.

 

"It is the most effective option for the benefit of the economy as a whole," Ngoan stated.

 

PV