Spanish railway firms seek opportunities in VN

A delegation from 12 Spanish businesses will visit Vietnam from Mar. 23-28 to inquire into possibilities of becoming key providers of transport technology solutions for Vietnam.

Vietnam and Thailand are two stopovers on their trip to survey the Asian market, said the Spanish Association of Manufacturers and Exporters of Equipment and Services for the Railway Industry (MAFEX) – the organizer of the trip.

In each country, the delegation plans to meet representatives of transport management agencies, to express their keen interest in projects to modernize railway infrastructure and improve the quality of urban transport. In addition, the delegation will meet local businesses to establish cooperative relations.

According to MAFEX, Vietnam attracts Spain’s railway businesses as it has a plan on railway development, including a possibility to link railway routes to Cambodia and China in future.

In April 2010, Vietnam and Spain signed a memorandum of understanding (MoU) in transport infrastructure cooperation during a visit to Spain by Transport Minister Ho Nghia Dung.

In another development, a delegation of 15 Spanish businesses will visit Vietnam on Mar. 26-27 as part of its tour to study the Asian market, including Indonesia and Thailand. The tour is arranged by the Chamber of Commerce and Industry of Tarragona city in Catalunya.

Polish airline to suspend Warsaw-Hanoi service

Poland-based LOT Polish Airlines will stop offering flights connecting Warsaw and Hanoi as of March 25, after less than two years in service, according to the Civil Aviation Administration of Vietnam (CAAV).

LOT Polish Airlines said the suspension was made following market difficulties, adding that the air route will be reopened once conditions permit, newswire Saigon Times Online quoted CAAV as announcing.

The direct service connecting the Eastern European capital and Vietnam’s capital city was launched in November 2010, with three weekly flights on a 243-seat Boeing 767-300 aircraft.

LOT Polish Airlines’ ceased service will not affect the number of international flights to the country this summer, since most other carriers have maintained their flight frequency, while CAAV has also licensed new airliners to offer services to Vietnam, it said.

Specifically, CAAV has licensed Emirates Airline to offer seven weekly flights between Dubai and Ho Chi Minh City, starting this June.

Emirates announced in January that it will use its Airbus 330-200 with 27 business seats and 251 economic ones for flights from Dubai to HCMC – the carrier’s 124th destination worldwide.

The new service is expected to connect the Middle East, Europe, and Africa and Vietnam.

Meanwhile, CAAV also licensed Saudi Airlines Cargo to offer two weekly flights by Boeing 747 to HCMC as of the end of this month.

‘Buy local' campaign in a bind
 
The steering committee for the "Vietnamese People Buy Made-in-Viet Nam Products First" campaign has advocated policies encouraging domestic producers to improve the quality of their goods, said an official from the Viet Nam Fatherland Front.

Vu Trong Kim, deputy chairman and general secretary of the Front, spoke at the conference on the theme held earlier this week.

He said that the steering committee would focus on reviewing and adding policies to encourage local producers to invest further in production, improve the quality of their products and build up their brands.

The steering committee would urge enterprises to invest in technology and management systems to improve quality, reduce production costs and establish distribution networks, Kim said.

The committee would support the enterprises in stabilising the price of goods, especially ones distributing to rural, remote and mountainous regions, he said.

At the conference, experts said there were many initiatives, mechanisms and policies involved in the campaign, but thus far they had not been implemented effectively.

To Hoai Nam, general secretary of the Viet Nam Small – and Medium-Sized Enterprise Association, said the factor that had the strongest effect on the campaign was sale networks so enterprises should focus on that aspect.

Additionally, the State should eliminate smuggled goods in the domestic market, Nam said. If smuggling did not stop, enterprises would not dare to invest in production because they could not compete, he stressed.

"Though domestic customers love their country, they would not buy made-in-Viet Nam products if the products do not meet their demands", he said.

Deputy minister of industry and trade Ho Thi Kim Thoa said existing distribution systems for made-in-Viet Nam products had developed in the past three years.

Enterprises have produced goods of higher quality for diverse needs with cheaper price, she said. But distribution of made-in-Viet Nam goods to rural areas has been not simple because the areas lacked infrastructure for trading activities.

According to the report of the steering committee, the campaign contributed greatly to the increase in total retail value of goods and services last year, which rose year-on-year by 24 per cent to US$95 billion.

The Nielsen Company's recent survey reported 90 per cent of customers in HCM City chose made-in-Viet Nam products, while the figure was 83 per cent in Ha Noi.

175 businesses join Int’l Livestock and Dairy Expo

The International Livestock and Dairy Expo (ILDEX Vietnam 2012) opened at the Saigon Exhibition and Convention Centre in HCM City on March 22.

The three-day event has attracted 175 businesses from 26 countries over the world. On display are advanced cattle-breeding, diary production, meat processing and aquaculture technologies.

Besides, a seminar will be held to discuss technological solutions to hot issues concerning aquaculture and breeding livestock presented by domestic and foreign experts, and new technology used by Nam Hoa, De Heus, CJ and Anh Minh companies.  

ILDEX 2013 will be held in Hanoi on June 6-7 and ILDEX Vietnam 2014 in HCM City from March 19-21.  

Prospect of Vietnam-Japan economic cooperation

Japanese Ambassador to Vietnam Yasuaki Tanizaki has spoken highly of Vietnam-Japan economic cooperation.
 
In his lecture at Foreign Trade University in Hanoi on March 22, he recalled that Vietnam and Japan committed themselves to becoming strategic partners in October, 2006 during Vietnamese Prime Minister Nguyen Tan Dung’s visit to Japan.

In the first three months of 2012, the total amount of investment capital poured by Japanese businesses to 208 projects reached US$1.8 billion. Vietnam now ranks second in Japan’s list of official development assistance (ODA) recipients.

Ambassador Tanizaki said the Japanese Government has highly appreciated Vietnam’s economic growth and its efforts to reduce hunger and poverty. With its rate of poverty dropping from 58 percent in 1993 to 14 percent in 2008, and its GDP per capita rising from US$144 in 1992 to US$1,000 in 2008. Vietnam has joined the group of middle-income countries.

However, he said, there remain some issues that require Vietnam to address property. If not, its economic growth will slow down, he warned.

The Japanese diplomat added that the Japanese Government is working with Vietnamese agencies such as the Government Office, the Ministry of Planning and Investment, the Ministry of Industry and Trade, and the Ministry of Finance to help build a strategy for national industrialization.

Asked about cooperation between Vietnam and Japan and other countries in the region, Mr Tanizaki said there is a plan afoot to develop links in the Mekong region for the benefit of the ASEAN community in future.

Vietnam and Japan are carrying out infrastructure projects in the east-west corridor stretching from Danang through Laos and Thailand to Myanmar, and southern economic corridor from HCM City to Cambodia and Thailand, he said.  

Dutch group, Vietnamese university boost training links

The Netherlands’ STC-Group (Shipping and Transport College) and Ba Ria-Vung Tau University signed a Memorandum of Understanding (MoU) on training cooperation in the southern province of Ba Ria-Vung Tau on March 22.

Under the MoU, the two sides will establish a joint venture company which will provide training in shipping services and logistics. STC-Group will provide educational infrastructure based on the international standards of the shipping and logistics sector, and share experiences in international education and human resource training.

The group will also support Ba Ria-Vung Tau University in running the company for five years, establish new research methods to receive important orders from other partners in this industry as well as providing consultancy for design and construction.

Ba Ria-Vung Tau University will be responsible for administrative formalities, and ensuring material facilities of classes are in conformity with international standards. STC-Group is a global leader in education for operations and management positions in the fields of shipping, transport and logistics.

Philippine airline flies to Hanoi

Cebu Pacific has become the first Philippine airline to operate a flight between capitals Manila and Hanoi. Its flights to HCM City began in April 2008.

The flights, which began on March 18, were conducted to strengthen relations between major cities in Southeast Asia, according to a Cebu Pacific spokesperson.

The deputy director of the HCM City Department of Culture, Sports and Tourism, La Quoc Khanh, said the Manila-Hanoi route and the upgrading of Manila-HCM City flights have helped increase trade as well as business and investment opportunities between Vietnam and the Philippines.

Together with aviation and tourism cooperation, Manila is also increasing the number of cultural and artistic exchanges with Vietnamese cities, with friendship concerts in Hanoi on March 19 and in HCM City on March 21.

High-quality human resources needed to attract Japanese SMEs

Vietnam should develop high-quality human resources and upgrade the infrastructure, especially for industrial, export processing and economic zones (IPEZs) to attract Japanese small- and medium-sized businesses (SMEs).

Japanese Ambassador to Vietnam Tanizaki Yashuki emphasized this at a seminar in Hanoi on March 22.

He affirmed the Japanese Government’s policy of supporting SMEs in promoting investment in foreign countries to restore production and disperse risks.

Japan now has as many as 2,200 SMEs operating in support industry but only 2.7 percent of them have invested in foreign countries, the diplomat said.

Ambassador Yashuki described Vietnam’s political and social stability, young workforce and investment policy as important factors behind its strategic partnership with Japan.

Vietnam has potential for developing support industry to reduce its dependence on imported input materials, producing high added-value goods and facilitating the development of industry, he stressed.

Meanwhile, Prof. Kenichi Ohno, Director of the Vietnam Development Forum, said Vietnam is facing tough competition from other countries such as Myanmar, Thailand, Laos, Cambodia, and China.

Therefore, he said, Vietnam should focus on specific areas to meet the demand of different businesses.

He proposed that Vietnam not only offer favourable conditions but also improve infrastructure facilities such as workshops and services for Japanese SMEs to invest effectively in industrial zones.

Vu Dai Thang, Director General of the Department for Economic Zones Management under the Ministry of Planning and Investment (MPI), said Vietnam has introduced the Law on Investment which shortens the time for license approval process.

Investors in support industry will not only enjoy the exemption of land rental and preferential tax and credit policies but also simplified administrative procedures, offered by management board of IPEZs under the “one-stop” mechanism, he said.

Prime Minister Nguyen Tan Dung has instructed the MPI to work closely with Haiphong city and Ba Ria – Vung Tau province to set up special industrial zones for Japanese SMEs.

The MPI and related agencies are drafting policies and mechanisms for support industry businesses to promote their production.

Cargill opens animal feed plant

Cargill Vietnam, a wholly owned subsidiary of Cargill Incorporated, inaugurated its 9th animal feed plant, worth US$18 million, in the Dong Van II Industrial Zone of Ha Nam Province on March 22.

With a production capacity of 240,000 tonnes per annum, the 4-ha plant will apply international standard technology to manufacture poultry and livestock feed.

The plant is expected to be operational in the 3rd quarter of this year, contributing to the country’s total capacity of 1 million tonnes per year, making up 10 percent of the market share nationwide.

Standard Chartered Bank to help Vietnam with credit rating

Standard Chartered Bank (SCB) has signed an agreement with the Vietnamese Ministry of Finance to help the latter with national credit rating consultancy.

The deal includes promoting information exchanges between the Vietnamese government and the three foreign firms - Moody’s, S&P, and Fitch - and helping them better understand Vietnam’s socio-economic situation.

Accordingly, SCB will assist the Ministry of Finance during its working with these credit rating companies.

The signing took place in Hanoi on March 22.

Vietnam to host Asia-Pacific maritime meeting

The 13th Asia Pacific Heads of Maritime Safety Agencies Forum (APHoMSA 13) will take place in Nha Trang city in the central province of Khanh Hoa from July 9-13.

This plan was agreed by representatives of the Vietnam Maritime Administration and the People’s Committee of Khanh Hoa province at a March 21 meeting, which aims to discuss preparations for this year’s forum.

The event is scheduled to see the participation of over 100 delegates from maritime agencies in the Asia Pacific Region and representatives from international maritime organizations.

This year’s forum will focus on issues related to APHoMSA’s strategic plans and the organizational structure of APHoMSA member countries, seafarer training in the region and in member nations, search and rescue work, maritime equipment and the implementation of Maritime Labour Convention.

APHoMSA 12 was organized in Jeju Island of the Republic of Korea last year.

Vietnam among top 50 Best Countries for Business Ranking

Vietnam has entered the top 50 Best Countries for Business Ranking, announced Bloomberg on March 21.

In Southeast Asia, Singapore ranks 9th, Malaysia 32nd, and Vietnam 46th.

Bloomberg Rankings measured 160 markets on a scale of zero to 100 percent based on six factors. These included the costs of setting up business, hiring and moving goods; the degree of economic integration; less tangible costs such as inflation and corruption; and the readiness of the local consumer base, a category comprising the size of the middle class, household consumption and gross domestic product per person.

Vietnam’s economic integration got a high score of 64.5 percent, followed by labour cost (45.7 percent) and the cost of setting up business (28.6 percent).  

Vietnam’s investment environment introduced in China

Two seminars were held in Hong Kong on March 21 to introduce Vietnam’s investment environment.

The event was co-organised by Vietnam’s trade office in Hong Kong, the Hong Kong Special Administrative Region and the Hong Kong Business Association Vietnam.

The President of the Hong Kong Business Association Vietnam, Winnie Lam, affirmed that Vietnam has great advantages in attracting foreign investment such as its political stability, low labour cost, social security and large population of nearly 90 million.

Vietnam’s Commercial Counselor to Hong Kong, Pham Van Cong, said that Hong Kong led other nations and territories in pouring capital into Vietnam last year.

Hong Kong had 49 investment projects in Vietnam capitalized at nearly US$3 billion in 2011, making up nearly 26 percent of total foreign investment in Vietnam.

The Vietnamese trade office in Hong Kong has regularly helped organize seminars to introduce Vietnam’s investment environment and arranged for delegations of Hong Kong businesses to visit Vietnam.  

Vietnam’s external debts hit US$50 billion

Vietnam’s debt levels are still under control, not yet in the Debt Initiative for the Heavily Indebted Poor Countries (HIPCs) group, according to the World Bank (WB) and International Monetary Fund (IMF).

As of December 31, 2011, the country’s foreign debt was estimated at US$50 billion, or 41.5 percent of GDP last year and within safety limit.

According to the recent National Assembly resolution, Vietnam’s outstanding pubic debt will be kept at below 65 percent of its GDP by 2015 while its government and national debts will be reduced to below 50 percent.

Regarding the country’s debt structure, long-term loans and preferential rates of interest come mostly from official development assistance (ODA) which account for 75 percent of total debt.

The WB’s 40-year loans have a 10-year grace period with an interest rate of 0.75 percent while the Asian Development Bank (ADB) provides 30-year loans with a 10-year grade period and an interest rate of 1 percent. Thirty-year loans from the Japanese Government have a ten-year grace period with an interest rate of 1-2 percent per year.

Currently, both domestic and overseas debts have been paid back with no bad debts left. The structure of domestic and foreign mobilized loans has been changed to reduce dependence on external loans.

Compared with other developing countries with the same BB credit rating, Vietnam’s debt index is at average level.

Foreign loans have been important resources to stimulate the country’s socio-economic development, especially to help upgrade and build national transport infrastructure facilities.

The Ministry of Finance is implementing measures to ensure the safety debt level as approved by the National Assembly.

Cruise ship Columbus brings 550 foreign tourists to Vietnam

Saigontourist Travel Services (Saigontourist) have welcomed 550 foreign passengers, mainly from Germany, on board the Columbus, which docked at Tien Sa Port in central Danang city on March 20.

They are on a Danang-Nha Trang-Ho Chi Minh City tour until March 23.

This is the second time the luxury cruise ship Columbus has visited Vietnam since early this year.

So far, Saigontourist has received more than 140,300 international tourists coming on board the Costa Classica, SuperStar Aquarius, Columbus, Spirit Of Adventure, and Europa.

The same day, cruise ship Diamond Princess of Bermuda brought nearly 2,700 foreign visitors to Nha Trang city in central Vietnam.

The tourists, coming from 40 countries and territories, took part in shopping activities, tasted local special dishes and visited popular sites in the city before heading to Hong Kong in the afternoon.

Japan helps boost VN support industries

Japan would continue to help develop support industries in Viet Nam's industrial, economic and export processing zones, said Tsuno Motonori from the Japan International Co-operation Agency (JICA).

Making the comments at a meeting in Ha Noi yesterday, Motonori said the support would take the form of assistance provided to Vietnamese small and medium-sized enterprises (SMEs) and Japanese companies considering investment in Viet Nam.

The development of support industries was extremely important for Viet Nam to boost foreign investment at a time when the country was likely to see much stiffer competition within regional trade liberalisation frameworks, he said.

"Our goal today is trying to attract more Japanese enterprises to Viet Nam in the coming time, and we want to assist them when they invest here," he said, adding that JICA would tighten co-operation with other agencies to work out proper policies related to regulations, finance and human resources.

Motonori said the agency had consulted with the Ministry of Planning and Investment about policies and appointed experts to the ministry to help Japanese firms approach the domestic investment environment.

The agency expected to expand entrepreneur training courses at the Ha Noi-based Viet Name-Japan Human Resources Co-operation Centre (VJCC) and the agency's education programmes at universities in Ha Noi, HCM City and central Nghe An and Thanh Hoa provinces.

It also expected to provide local SMEs with more official development assistance (ODA) capital sources and technical support. Motonori said that in the coming months, Japanese experts would discuss development plans with four localities that were "key industrial development areas", including Hai Phong, Nghe An, Da Nang and Ba Ria-Vung Tau.

"A six-month survey is expected to begin in April and based on that, we will give suggestions as to lure more SMEs to these areas," he said.

An important factor, he said, was that industrial zones needed to offer a more complete range of facilities and services.

"Last week when I followed a delegation to Osaka and talked to the chamber of commerce and industry there about how to attract enterprises from Osaka to Viet Nam, many suggestions related to power supplies and human resources were raised, and enterprises there said they wanted better quality industrial zones," Motonori said.

Tokyo-based National Graduate Institute for Policy Studies professor Kenichi Ohno said Viet Nam was not the only country which was trying to lure foreign investment in manufac-turing and industrial-isation.

"Japanese enterprises were also eyeing different destin-ations," he said.

He warned that Viet Nam faced significant challenges in ensuring the quality of economic growth, especially in areas such as investment efficiency, economic stability, income disparity, wages and technology.

Noting that Viet Nam's policy capability and business competitiveness were weaker than those of Thailand and Malaysia, he said, "a radical policy reform is required for internal value creation and strong competitiveness."

He also stressed the importance of securing reliable power supplies, saying, "in the long run, development of fire, hydraulic, nuclear and new-energy power generation based on a master plan supported by international co-operation is indispensable."

According to a survey of manufacturing SMEs in Osaka, which was conducted by the Osaka Chamber of Commerce and Industry in January and involved 55 firms, 75 per cent expected to choose Viet Nam as a production site, 55 per cent aimed at domestic sales, and 27.8 per cent eyed the country for input procurement.

CAAV licenses more foreign airlines in Vietnam

The Civil Aviation Administration of Vietnam (CAAV) has approved Emirates Airline and Saudi Airlines Cargo to operate flights between the Middle East and HCMC in summer schedule, which will begin late this month.

Vo Huy Cuong, director of CAAV’s Air Transport Department, told the Daily on Wednesday that Emirates would operate daily services linking Dubai International Airport and Tan Son Nhat International Airport from the beginning of June.

Cuong said the fast growing international airline intended to fly on the route with the Airbus 330 aircraft in summer schedule and the Boeing 777 plane in winter schedule.

Another Middle East airline Qatar Airways currently services flights between Doha and both HCMC and Hanoi via Thailand’s city of Bangkok.

As for the cargo segment, CAAV has granted Saudi Airlines Cargo a ticket to connect its flights from the Middle East to HCMC from next week.

Cuong of CAAV said Saudi Airlines Cargo would offer two weekly flights to HCMC, using the planned Boeing B747 for the route.

* LOT Polish Airlines will call off its flights between Warsaw and Hanoi later this week, less than two years of having flown between the capital cities of Poland and Vietnam, the aviation authority CAAV confirmed.

CAAV told the Daily that LOT Polish Airlines had reported suspension for the Warsaw-Hanoi service from March 25 due to market difficulties and that it would resume this route when favorable conditions came.
 
Central bank slashes forex position at banks to 20%

The central bank has just issued a circular on foreign currency position supervision targeting local and foreign credit institutions, slashing the position to 20% from the current 30%.

With the new circular, the figure of either total long position or total short position at the closing session of lenders shall not exceed 20% of their equity capital.

The newly-issued rule requires each foreign bank’s branch in Vietnam with equity capital of no more than US$25 million to comply with the amount of US$5 million or below in its total long position. The same limit is also imposed on total short position at the end of the day at these institutions.

The limit of total foreign currency position of industry players is based on the ratio of total long position or total short position divided by their equity capital. Equity capital amounts in this case are counted as of the month before such institutions submit reports to authorities.

According to the circular effective from May 2 this year, local banks have to report their foreign currency positions of the day before to the central bank by 2p.m. on normal weekdays.

Economist Le Xuan Nghia said narrowing total foreign currency positions was meant is to restrict lenders from speculating foreign currencies, thus helping stabilize foreign exchange rates at home.

He noted the central bank had also released another circular on foreign currency lending activities at the same time.

The second regulation only allows banks to give out credits in U.S. dollars to those companies being able to service bank loans by their own revenues. This means those firms without foreign currency revenues, or importers, need the permission from the central bank to borrow money from banks.

The moves by the central bank are aimed at protecting the market from being dollarized and improving Vietnam dong value against the U.S. currency.

The inter-bank exchange rate has remained unchanged for three consecutive months, at VND21,828 to the dollar. Vietcombank on Wednesday set the rate at VND20,830 for buying and VND20,890 for selling a dollar, just slightly higher than the level on the inter-bank market.

Over the last three months, ample supplies of foreign currencies at local commercial banks have pulled down considerably the gap between the exchange rates they quoted and the inter-bank figure. On the unofficial markets, one dollar is bought at VND20,850 and sold at VND20,950.
 
Work starts on new resort in Khanh Hoa

Golden Beach Co., Ltd on Wednesday held a groundbreaking ceremony for Manna Luxury Holidays Resort in Cam Ranh Peninsula in the central province of Khanh Hoa’s Cam Lam District.

The 12-hectare resort, which is invested by Golden Beach Co., Ltd. and the Rafaeli Group (Israel), includes bungalows and adjoining holiday cottages restaurants, high-rise hotels, services and central administrative area, sport complex, and shopping malls among others.

The total investment of the project is more than VND350 billion. The project is expected to be completed and put into operation in 2014. Golden Beach Co., Ltd. has also appointed Savills Vietnam to be exclusive sales and marketing agent for the holiday home products in this resort.

Manna as a five-star resort is invested and developed by Golden Beach. It will be one of the largest resorts in Vietnam under the Timeshare model, according to a statement of the company.

Manna will change the resort concept because it will have facilities and entertainment programs making visitors fell relaxing in the attractive programs after the whole busy week of working .

On the occasion of groundbreaking ceremony of Manna Luxury Holiday Resort, Golden Beach Co., Ltd. gave 10 scholarships, each of the amount of VND2 million, for 10 poor students with good grades in Khanh Hoa Province.
 
Installment payments catch homebuyers’ attention

Homebuyers show their keen interest in installment payments offered by developers in a property fair organized by Eden Real Co. in HCMC on Wednesday.

There are some 200 visitors coming to the event and 30 of them purchased apartment units in Tan Phu District’s Quang Thai and District 7’s Ngoc Lan projects on the opening day, Huynh Kim Doan, director of Eden Real said.

These are two realty projects on sale under the program in which customers make a down payment equivalent to 50% of the apartment’s value and the rest will be paid within two years, she added.

The property fair is putting up 20 apartment projects along with over 1,000 townhouses and land lots for sale in six days, from Wednesday through next Monday.
 
Experts pinpoint weaknesses behind economic instability

Multiple internal shortcomings causing macro-economic instability were once again mentioned at the policy dialogue seminar: towards a policy framework for Vietnam’s economy in mid- and long-term held in Hanoi on Wednesday.

Nguyen Duc Thanh of the Hanoi National University stressed the mistakes of the monetary policy in 2007 caused inflation to shoot up in 2008, and the spillover effects were still felt now.

“The worst concern is such mistakes are prolonged. Policymakers are confused and the economy has to suffer,” he said.

Thanh noted the instability of the banking system is getting worse with rising bad debts, low asset values, alarming liquidity, sky-high lending rates and lowered deposit rates. All of these issues show that the banking system has failed to fulfill its role as a financial intermediary.

Nguyen Thi Kim Thanh, director of the Banking Strategy Institute, said the central bank found itself stuck in a dilemma with many targets to achieve. The central State Bank of Vietnam has many difficulties operating the monetary policy, while having to curb inflation and stabilize the monetary market, said the director.

In the middle term, when the financial market and the bond market develop, the burden of the monetary policy will be relieved. However, the capital pressure will remain high until 2015, sparking a need to expand credit.

She proposed the central bank continue to tighten credit from now to 2014, because once the credit is loosened, people will invest in efficient sectors, making it hard to tame inflation.

Former trade minister Truong Dinh Tuyen said the establishment of an independent central bank is worth considering. Without this model, the nation will always be struggling with the impossible trinity of fixed exchange rates, free capital flows and monetary independence.

Thanh of the Hanoi National University said the gap of 10% between saving and investment is another cause of macro-economic instability in Vietnam.

The economic growth model focuses on promoting investment but investment quality is going downhill. The State-owned enterprises make dispersed and inefficient investment with huge resources in hands.

The model to develop the economy in width requires boosting investment, which has widened the gap between saving and investment, Thanh explained. The gap is often evened out by foreign capital sources, but as the foreign resources dwindle, domestic capital is used instead, causing inflation and instability.

Former minister Tuyen shared Thanh’s view, saying the fact that the majority of investment capital was allocated to inefficient State firms resulted in the vicious cycle of inflation.

He stressed these weaknesses had been pointed out before, but it was hard to overcome them.

Meanwhile, chief economic expert of the World Bank Deepak Mishra said though tax collection makes great contribution to the State budget revenue, Vietnam has to fulfill debt obligations in the coming time, which will likely lead to the State budget deficit.

If the State budget deficit continued to stay high, it would be difficult to stabilize the macro-economy, said the expert.
 
Record rubber exports forecast

Rubber export volume could hit a record of 882,000 tonnes this year against the annual target of 830,000, the Ministry of Agriculture and Rural Development has forecast.

According to custom office statistics, the country last month shipped abroad 88,825 tonnes of rubber worth US$252.7 million, up 27.7 per cent in volume and 32.2 per cent in value against the previous month. It raised rubber exports in the first two months to 158,394 tonnes, worth $443.8 million.

General Secretary of the Viet Nam Rubber Association Tran Thi Thuy Hoa said that rising demand on the world market, especially in China and India, contributed to the sharp increase in exports.

"The demand for natural rubber in China, which consumes more than 57 per cent of Viet Nam's produce, is rising as the country imports more to offset decreasing supply." Hoa added.

China's rubber reserve on the Shanghai Commodity Exchange reduced 6 per cent against mid January. Meanwhile, the market this year is expected to consume roughly 3.61 million tonnes of rubber, up 3 per cent over last year.

Rubber export prices to China hit a two-year high over the past few weeks. In March 13, a tonne of SVR 3L rubber reached 24,200 Yuan, up 200-500 Yuan against the previous week. Export volume in March also rose sharply, reaching about 900 tonnes daily compared to 500 in February.

The Indian Rubber Committee also reported the country's rubber output decreasing by 29,275 tonnes, causing a shortage of roughly 100,000 tonnes. Meanwhile, according to the Association of Natural Rubber Producing Countries, the world's three leading rubber exporters Thailand, Indonesia and Malaysia all experienced reductions in crop yield due to unfavourable weather conditions, resulting in declining supply.

The price hike on the global market also contributed to the surge in domestic prices. On the Sai Gon Thuong Tin Commodity Exchange, a tonne of SVR 3L and SVR CV rubber was traded at VND80-81 million and VND84 million, up VND15 million on January.

Despite an anticipated global rubber price hike and the country's optimistic export results in the first two months, experts still recommended local rubber exporters keep an eye on the market, where exports are dominated by the global prices of crude oil, gold and the US dollars.
 
HDBank changes name

The HCM City Housing Development Bank has become the HCM City Development Joint Stock Commercial Bank, effective from March 16.

It has also adopted a new logo and slogan but retained the acronym HDBank. The bank said the name change was aimed at facilitating its development strategy and enhancing its image. HDBank, incorporated in 1990, has a network of 65 branches, which is likely to increase to 90 this year.

VN, Israel developers build time-share

Construction began on Wednesday on the Mamna Luxury Holiday Resort in central Khanh Hoa Province, a time-share resort invested by the Golden Beach Co Ltd and the Rafaeli Group of Israel.

The project located in Cam Lam District has total investment capital of VND350 billion (US$16.7 million) and is expected to be put into operation in 2014. Covering 12hectares in the northern resort area of Cam Ranh peninsula, the five-star resort will include a spa, restaurants, high-rise hotels, services, sports complex, shopping malls, souvenir shops, health recovery center and swimming pool.

Ukraine group look to invest in VN

A delegation from Ukraine's AVEC Group, led by Parliament member Alexander Feldman, paid a three-day working visit to central Da Nang City to seek investment opportunities.

The group, operating within the commercial real estate market of Ukraine since 1994, is one of the most influential players in the country's field.

Feldman, also honorary president of AVEC and chairman of the Feldman Charity Fund, awarded 50 scholarships to underprivileged students from Da Nang College yesterday.

As scheduled, the group will have a working day with leaders of the city's administration and visit the SOS Village today.

A seminar on the Asia Trade Park project will be held in the city tomorrow. The central coastal city has attracted 215 projects from 30 countries and territories with investment capital of $3.18 billion, of which 76.86 per cent consist of real estate and service projects, in the first quarter.-

dong shrinks on new forex position rules

The Vietnamese dong weakened against the US dollar yesterday due to new rules on the foreign currency positions of banks issued by the State Bank of Viet Nam and a resulting increase in demand for the greenback. The change ended 30 days of stability in foreign exchange rates.

Although the interbank exchange rate remained unchanged yesterday at VND20,828 per US dollar, with a ceiling rate of VND21,036, rates posted by commercial banks and on black market rose by VND20-60 per dollar.

Vietcombank yesterday posted US dollar buy/sell rates of VND20,850/VND20,950, up from VND20,830/VND20,890 on Wednesday. Eximbank and Asia Commercial Bank listed rates at VND20,830/VND20,900, up from VND20,810/VND20,890 the previous day.

On the street, the US dollar was trading at VND20,860/VND20,880, VND20/VND30 higher than on Wednesday.

On Tuesday, the State Bank of Viet Nam issued Circular No 07/2012/TT-NHNN governing the foreign currency positions of credit institutions licensed to engage in forex operations, including branches of foreign banks.

Under the circular, effective May 2, the foreign currency position of credit institutions may not exceed 20 per cent of their charter capital, down from the existing 30 per cent.

Banks seeking additional supplies of US dollars in order to meet the new requirements is being blamed for the strengthening of the US dollar this week.

In recent months, the existing limit on positions of 30 per cent of a bank's charter capital was blamed for encouraging banks to convert their foreign currencies to Vietnamese dong to receive higher interest rates when depositing in other banks. These operations dumped a significant supply of foreign currency on the market. The new quota will ensure a tighter supply of dollars on the market.

The foreign currency position limit will be calculated by the ratio of the total positive or negative foreign currency position over the credit institution's registered capital. For instance, if a bank has charter capital of US$25 million, the bank will be allowed to maintain a foreign currency position of up to $5 million, either positive or negative, at the end of the working day.Banks will be required to report their positions to the State Bank's foreign exchange department by 2pm the following day.

The circular replace State Bank Decision No 1081/2002/QD-NHNN and Decision No 1168/2003/QD-NHNN.

At the beginning of the year, State Bank Governor Nguyen Van Binh said that without any unexpected external shocks, the central bank would be able to maintain a stable foreign exchange rate, with currency devaluation during the year of no less than 3 per cent.

Building begins on link road in capital

Construction on a belt road linking Nhat Tan Bridge to Cau Giay junction began yesterday as part of an urban transportation project funded by preferential World Bank loans and charter capital worth US$300 million.

It is expected to be 58-64m in width and consist of two lanes for cars, one for buses and two for mixed vehicles. It would serve as one of the main urban routes and reduce travel times from the city centre to west and northwest Ha Noi.

Deputy Chairman of Ha Noi People's Committee Nguyen Van Khoi said the belt road was a critical component in completing the link between Noi Bai International Airport and the city, thus promoting socio-economic development.

He requested the city's Department of Transportation to monitor project progress and quality, aiming for completion before Lunar New Year 2013.

Decline in garment exports from Vietnam  

The Ministry of Industry and Trade has reported that 80 per cent of Vietnamese garment and textile companies have received export orders until the end of the first quarter, but quantities are small, showing a sharp decline in volumes.
 
Compared to the same period last year, export turnover to the EU market has dropped by 25 per cent; to the US market by 12 per cent; and to Japan by 7 per cent; presumably due to the present economic downturn.

Another reason that led to a drop in garment export turnover in Vietnam was due to most importers shifting to developing countries where import tariff is zero per cent, such as Cambodia and Laos, instead of Vietnam where it is 10 per cent.

In order to tackle such problems, the ministry has suggested that garment companies use natural materials; buy materials directly; and create innovative finished products. Garment companies should now also improve their designing sector, to achieve high growth in the future, instead of merely relying on processing orders.
 
Vietnam to harshly crack down on smuggling, counterfeit goods  

Vietnam will implement tough measures to combat smuggling, counterfeiting and illegal trade, said Deputy Prime Minister Hoang Trung Hai at an online coference in Hanoi on March 21.  

The online conference was held by the Central Steering Committee 127, to implement measures to combat smuggling, counterfeiting of   goods and illegal trade.

Vu Huy Hoang, Minister of Industry and Trade said that crime has become more complex, along with a new breed of criminals. Thus, preventing smuggling, counterfeiting of goods and combating illegal trade have become even more challenging.

However, the Central Steering Committee 127 will coordinate with relevant agencies, including police, market managers, border guards and custom agents to ensure more control and restrictions to combat such social evils.

Deputy PM Hai proposed stepping up communication and building a healthy social environment and underlined the need to come up with solutions for handling violators of fraud crimes.

Rice exports reach 2.6 million tonnes in March  

Domestic rice firms have so far signed contracts to export 2.6 million tonnes of rice and have purchased approximately 200,000 tonnes for stockpiling as per gov’t directive, said Truong Thanh Phong, chairman of the Vietnam Food Association on March 21.

By the beginning of March, businesses had signed contracts to export 555,000 tonnes of rice and are expected to sign for another 3 million tonnes by the end of this month.

China, Malaysia, Indonesia and Philippines are Vietnam’s traditional rice export markets.

From the beginning of this year, domestic rice firms have so far dispatched 800,000 tonnes of rice, and are expected to deliver a further 1.1 million tonnes in the first quarter of the year, worth an estimated US$553 million.