Waste treatment plants await investors

HCMC is calling for financially-capable investors to develop a waste-to-power plant capable of processing 2,000 tons of garbage daily and a toxic waste treatment plant of the same capacity.

These are two out of 41 priority programs and projects in 2013-2015 as part of the climate change response scheme that the city’s government approved late last week.

The waste-to-power plant requires an estimated cost of some US$280 million while the toxic waste treatment plant needs about US$100 million.

HCMC discharges 7,500 tons of waste a day but there have been no waste-to-power plants for the city up to now, said Nguyen Trung Viet, chief officer of the municipal Climate Change Adaptation Department. Many investors have sought permission to invest in such projects in the city but no schemes have been deployed due to capital shortage or unsuitable technology, Viet said.

The city now has only a few waste treatment facilities that are fitted with gas recovery equipment for power generation like Da Phuoc, Go Cat, Dong Thanh and Phuoc Hiep.

Besides the aforesaid facilities, the local government has approved a plan and an action program on climate change response in the city by 2015. Under the program, several much-needed projects have been designed, including piloting biogas power generation from waste at wholesale markets, inspecting greenhouse gas emissions, and building a regulation reservoir in Go Dua in Thu Duc District among others.

Vietnam’s inflation beats all regional nations

Inflation in Vietnam has always been higher than in any other nation in the region since the country carried out renovation, says a research project published on Tuesday.

The research shows that in all five-year periods between 1991 and 2012, Vietnam outpaced all other regional nations in only one aspect: inflation.

The research conducted by Dao Van Hung, Nguyen Thac Hoat and their colleagues at the Academy of Policy and Development (APD) was unveiled at a workshop on Tuesday. The workshop themed inflation and economic growth in Vietnam was held by APD, the Ministry of Planning and Investment and USAID.

Inflation in Vietnam was over 18% in 2011 and 6.8% in 2012, far higher than the average 3% of China, Indonesia, the Philippines and Thailand. Indonesia had the highest inflation among these nations, 3.8-5% in the last two years, still lower than the rate in Vietnam.

From 1986 to 2012, there were 13 years and four five-year periods in which inflation in Vietnam stayed at a double-digit level or above. Notably, the average inflation rate in Vietnam was 225% in the 1986-1992 period, 16.3% in 2007-2008 and 15% in 2010-2011.

Even when compared with China, Vietnam has higher inflation, while economic growth is lower, said Luu Bich Ho, former head of the Development Strategy Institute.

In the period from 2008 to 2012, Vietnam recorded an average economic growth of 5.9% per year and inflation of 12.6%, while the respective figures in China were 9.3% and 3.3%.

From 1991 to 2010, the annual economic growth in Vietnam was 7.4% on average and inflation stood at nearly 11%, while China registered 10.5% and 4.8% respectively.

Ho wondered: “How come their growth is twice as much as ours and inflation only a half?”

Pointing at the chart of inflation in 1992-2012 shown at the workshop, Nguyen Thac Hoat said: “The inflation line fluctuates widely, the peak is sharp and the amplitude is large. All of these reveal that inflation in Vietnam hasn’t been restrained in a sustainable way, and monetary and macroeconomic uncertainties remain considerable.”

Deputy Minister of Planning and Investment Cao Viet Sinh said rampant inflation in Vietnam was making lending rates and the costs of investment and doing business in Vietnam higher than other nations.

Other nations can offer low lending rates because the macroeconomic risks are small. Vietnam is in the opposite situation, he said.

After the policies aimed at curbing inflation have been adopted for quite a long time, enterprises now no longer want to do business and consumers no longer want to spend, he remarked.

“Given current high lending rates and poor consumption, enterprises deposit their money in banks to enjoy interest sums rather than making investment and doing business. Such a trend is very dangerous,” he stressed.

As one of the main authors of the Government’s economic development plans, Sinh wondered how to find financial resources to prop up the economy, especially when the credit growth target of 12%, equivalent to VND360 trillion, for this year is unattainable.

Economists said the most ideal inflation for the period from now to 2015 should be 7-7.5%. They suggested there should be an independent agency to carry out the fiscal and monetary policies in coordination with the central bank and the Ministry of Finance.

SOEs reform is too slow

It would be hard to accelerate the reform of State-owned enterprises (SOEs) in Vietnam even with the assistance of legal documents and political resolution by the Government, said local economic experts and policymakers.

According to the Ministry of Planning and Investment, only 27 State-owned companies had been restructured nationwide from last year to March with 16 entities going public.

Besides, many State conglomerates will delay their equitization plans until after 2015, says a report of the planning ministry at the seminar “Sharing experiences on improving criteria and list of classifying State enterprises” in Hanoi on Tuesday.

As much as 76 companies will delay equitization plans until after 2015, including 61 provincial firms and 15 subsidiaries of groups and corporations, the ministry reports.

The Prime Minister has already approved 99 out of 101 projects which are designed to arrange and renovate State-run entities in the 2012-2015 period so far, said Le Manh Hung, deputy head of the Agency for Business Development under the ministry. As of the end of last month, the Prime Minister ratified restructuring schemes of six out of nine economic giants and ten of 12 members of 91 corporations.

However, the fact shows that the plans are being deployed in a slow manner.

Ho Sy Hung, head of the business development agency, posed the question of why State-owned giants in the paper, textile and aviation industries have still failed to carry out their equitization plans. He wondered if related policies are unsuitable for the activities.

An executive of the Vietnam Oil and Gas Group (PVN) with up to 206 corporate members, raised concerns that the execution of the restructuring plan of his entity that was given approval from the Prime Minister would be really tough to achieve.

“Recently, it has been very difficult to deploy equitization or withdraw capital from non-core business sectors. Plenty of PVN affiliates have been unable to divest or recover their capital,” the executive said. In fact, executives of these entities are afraid of losing State capital but they find it impossible to secure the sum by either maintaining or transferring the stakes they hold at non-core business areas, he added.

Restructuring SOEs now is only moving at a snail’s pace, according to a recent report of the National Assembly.

Farmers shy away from shrimp farming despite good price

Rising demand from foreign markets and local undersupply are said to have fueled up prices of unprocessed shrimp in the Mekong Delta recently but farmers have still been indifferent to resuming shrimp farming in the region.

Prices of shrimp materials have rebounded markedly in recent days thanks to the global market’s recovery while harvest volume has fallen and failed to achieve the targets, said Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP).

VASEP has yet to obtain the latest information on shrimp exports of local enterprises from customs agencies but Hoe affirmed the price hikes indicate the improving demand in foreign markets as well as a decline in material supply at home.

“The mortality rate at shrimp farming areas in Thailand has amounted to nearly 50%; shrimp death still remains a headache in Vietnam while supply in India is minimal and supply in China can only meet its domestic demand… These factors have led to a global undersupply and price hikes,” observed Nguyen Van Kich, general director of Cafatex Corporation in Hau Giang Province.

As Thailand and Vietnam are the two major shrimp suppliers of Japan, the Northeast Asian nation has shifted to purchasing Vietnamese shrimp given the current widespread shrimp death in Thailand, he remarked.

Speaking with the Daily, Kich noted that now is not the peak consumption season in importing countries, but the number of export contracts that Cafatex has sealed since last month has risen strongly over the same period last year.

Prices of shrimp materials, including tiger shrimp and white-legged shrimp, have soared by over 20% against last year, he informed.

Vo Hong Ngoan, a veteran shrimp farmer in Bac Lieu, said frozen tiger shrimp now is priced at around VND250,000 a kilo for the 20-shrimp type and VND200,000-220,000 a kilo for the 30-shrimp category.

“Some traders even buy live shrimp at up to VND300,000 a kilo for the category of 30 shrimp at certain times,” he added.

Though shrimp material prices have picked up strongly over the year-ago period which is expected to bring in lucrative profits, farmers are still indifferent and have yet to resume farming.

Nguyen Van Nhiem, chairman of the My Thanh Shrimp Association in Soc Trang, said shrimp prices in the province have stayed high but local farmers are hesitant to do the job owing to financial constraints and epidemic outbreak concerns. Member farmers have resumed farming in only 450 hectares out of 2,600 hectares under shrimp cultivation of the association.

Firm hand on asset tiller buoys market

The market was given a boost after the Prime Minister approved the establishment of a national asset management corporation (VAMC), which helped maintain the uptrend on both stock exchanges during yesterday's session.

The State-owned corporation, with an initial charter capital of VND500 billion (US$23.8 million), will be responsible for handling bad debts held by credit institutions and is set to begin operations from July 9 this year.

The VN-Index on the HCM City Stock Exchange gained 0.41 per cent to finish the session at 502.23 points.

The market volume was down 25 per cent from the previous session, however, totalling nearly 67 million shares, while the value of trades decreasing 30 per cent to VND1.086 trillion (US$51.7 million).

Blue chips were mixed. Among the top 30 shares by market capitalisation and liquidity, 13 advanced while 12 declined, lifting the VN30 up just 0.23 per cent on 566.79 points.

Vinh Son-Song Hinh Hydro-power (VSH) surprised the market to become the most active code on the southern bourse with 3.53 million shares changing hands. VSH climbed over 2 per cent at VND14,700 ($0.70) a share.

On the Ha Noi Stock Exchange, the HNX-Index grew 1.56 per cent to a close on 62.59 points. Trading value also increased 20 per cent over the previous session, totalling over VND511.3 billion ($24.3 million).

A sudden rise on both markets on Tuesday made many investors cautious over the sustainability of an uptrend, but according to stock analysts at Viet Nam Investment Securities Co, as liquidity remained high yesterday, investors felt more confident in the market.

"Cash flow shifted to the Ha Noi Stock Exchange yesterday as investors sought profits from speculative stocks which have not increased much over the past time," analysts wrote in a note.

Sai Gon-Ha Noi Bank (SHB) was the most active code on the northern bourse on huge trades of 18.9 million shares, edging up nearly 3 per cent to settle at VND7,200 a share.

Other speculative stocks such as Sacomreal (SCR) and PetroVietnam Construction (PVX) also saw active trades with each having from 5.4-6.8 million shares exchanged. SCR rose 1.3 per cent to VND7,900 while PVX climbed 5.8 per cent to VND5,500.

Foreign investors were also net buyers yesterday on both exchanges, picking up shares worth a combined VND47.5 billion ($2.3 million).

State Audit reports on SBV performance in 2011

The State Bank of Viet Nam has adhered to the Government's instructions in 2011 to implementing a tight monetary policy, adjusting interest rates in line with market signals and keeping exchange rates stable.

This was according to the online newspaper VnEconomy which quoted the State Audit's report on the State Bank's performance in 2011.

However, the State Audit said the central bank management must be held responsible for lending growth failing to reach its target and bad debts continuing to rise since 2007.

The State Bank's inspection and supervision on refinance loans was also referred to as "untimely" or "incomplete".

The State Audit said that some commercial banks borrowing refinancing loans had violated regulations on capital adequacy but the central bank did not warn, prevent and handle the matter quickly enough. For example, the Northern Asia Bank, Trust Bank violated the ratio in the first nine months of 2011, but the State Bank only started supervising their activities in late November.

The State Bank's management on the interbank market also was "limited", and it could not control unusually high interbank rates. The State Audit commented on an incident in February 2011 when the interbank rate surged to 30 per cent a year, and up to 37.5 per cent in November against deposit rate cap of only 14 per cent at that time.

As for commercial banks, the State Audit said most had followed legal regulations on lending and credit growth. However, some banks had gathered and finished legal and economic documents before lending was incomplete. Control before, during and after lending was not strict.

In cases where banks classified loans inappropriately, the State Audit asked the Bank for Investment and Development of Viet Nam (BIDV) and the Mekong Housing Bank (MHB) to make the necessary adjustments.

Some lenders had high overdue debts on the interbank market. For example, MHB's outstanding deposits at the end of 2011 at other credit institutions was VND11.73 trillion (US$558.94 million), of which overdue deposits that must be renewed reached VND1.15 trillion ($55.1 million) and more than $4 million in total.

The State Audit said trading in the forex market of some commercial banks had not followed the rules while some had violated interest rate cap regulations.

Viet Nam improves seafood quality

The US Department of Commerce (DoC) has decided to increase anti-dumping duties on tra fish imported from Viet Nam by an additional US$0.52 to $1.29 per kilo, said the Viet Nam Association of Seafood Exporters and Producers (VASEP).

Association secretary Truong Dinh Hoe said the tax hike was made after the US checked errors in the calculation of the previous tax, saying that the increase was consistent with the calculated data.

In March, the US imposed a high tax rate of $0.77 per kilo on Vietnamese tra fish. It chose Indonesia as the sole benchmark country to calculate the anti-dumping rate, VASEP said.

On a brighter note, Japan, one of the leading importers of Vietnamese seafood, has lifted a regulation that imported Vietnamese shrimps must be tested for trifluralin, a type of antibiotic, it said.

The regulation has been applied to all kinds of shrimps imported from Viet Nam since October 2010.

The ban led to a close watch on the industry – from shrimp breeding to final processing – by Viet Nam's Ministry of Agriculture and Rural Development.

However, experts believe Viet Nam is heading in the right direction in controlling seafood quality.

To push up the export turnover of seafood to the Japanese market, deputy director of the Department of Fisheries Nguyen Huy Dien said localities needed to further focus on preventing shrimp diseases.

In addition, Dien said it was also necessary to pass on shrimp raising methods that ensured low Ethoxyquin content, an anti-oxidant substance popularly used in preserving aquatic feed.

In the first four months of this year, Japan imported shrimp worth more than US$168 million from Viet Nam, an increase of 2.4 per cent compared with the same period last year.

Low inflation keystone for growth

Single-digit inflation should be maintained for three coming years to achieve the economic growth target, experts said at a Tuesday conference held by the Academy of Policy and Development.

Nguyen Thac Hoat from the academy said in the economic downturn, the inflation rate in the 2013-15 period should be controlled at about 7-7.5 per cent.

This is to allow gross domestic product (GDP) to grow at an average of 6.5-7 per cent per year as targeted by the National Assembly.

A report at the conference said that economic growth and inflation in Viet Nam were somehow inversely related.

Statistics showed that in 2004-06, inflation was within 7-9.5 per cent and GDP growth at 8-8.5 per cent. However, in 2010-11, when inflation rocketed to double-digits, GDP grew at only 6-6.8 per cent.

Experts said that the country's economic growth relied too much on an increase in investment during 2007-11. Together with the inefficient use of capital, it put pressure on inflation to rise.

Hoat calculated that when inflation exceeded the optimal threshold, an increase by 1 per cent of inflation could lower economic growth by 0.0138 per cent.

Economist Luu Bich Ho forecast economic growth at 5-6 per cent per year. He said that the optimal inflation rate was between 7-8 per cent, but could be lowered to 5-6 per cent when the economy experienced higher growth.

According to academy director Dao Van Hung, declining credit growth from 2011, despite a slight increase in the the past two months (by 1.4 per cent by the end of April) put impacts on the economic growth.

Inflation control required co-ordination and consistency of financial and monetary policies, Hung said. Tighter policies could help prevent inflation in the short term, he stressed, but added that the risk of inflation return remained high.

Nguyen Thi Kim Thanh, director of the Banking Strategy Institute, said the management of investment capital should be enhanced to ensure efficiency.

VHG to delist if restructuring fails

Beleaguered Viet Han Investment and Production (VHG) would delist if its restructuring plan failed, according to the company's recent annual meeting.

The board of directors would assess the possibility of success of the restructure and, at the same time, choose a reasonable time to delist, if necessary, so the maximum benefits to shareholders would be assured.

The company has 25 million shares listed on the HCM City Stock Exchange.

Under the restructuring plan, VHG will probably be split, merged or establish new subsidiaries. It will have to transfer assets and shares in subsidiaries and associates to other entities.

The company will also settle and liquidate its projects, such as D'Evelyn Tower Da Nang, D'Evelyn Beach Quang Nam, Dong Giang Rubber Quang Nam, some mineral, recycled plastics and fertilisers projects.

Last year, it planned to established a VND100 billion (US$4.7 million) limited liability company to manage the rubber project. Previously in 2011, the company invested 65 per cent in a VND100 billion partnership in the D'Evelyn Beach Quang Nam.

Of the above projects, the most expensive was D'evelyn Tower Da Nang, which was expected to cost the company VND850 billion ($40.4 million). It was kicked off in 2010 and VHG has poured in VND108 billion ($5.1 million) so far.

Prior to the annual shareholder meeting, the company had said it hoped the transfer of its projects and assets would account for 50 per cent of this year's revenue.

VHG has targeted a revenue of just VND200 billion ($9.5 million) for 2013. It also expects losses would narrow to VND20 billion ($952,300) compared to VND36 billion ($1.7 million) last year. VHG shares closed yesterday at the ceiling price of VND4,000 ($0.19).

US steel producers make dumping claim

After welded steel pipes and steel wire garment hangers, now welded stainless pressure pipe from Viet Nam continue to face charges of dumping in the US.

The Viet Nam Competition Authority under the Ministry of Industry and Trade on Monday said three US stainless pipe producers - Bristol Metals LP, Felker Brothers Corp and Outokumpu Stainless Pipe Inc- have filed a trade petition with the US International Trade Commission (USITC) and the US Commerce Department (DOC) seeking to impose anti-dumping duties against welded stainless pressure pipe from Malaysia, Thailand and Viet Nam.

Last year, imports of steel pipe from Viet Nam amounted to 4,627 net tonnes, worth US$16.3 million, and took 6.61 per cent of US import market share, the filing said.

The petition alleges dumping margins of 15 to 17 per cent for Malaysia, 13 to 15 per cent for Thailand, and 70 to 71 per cent for Viet Nam, according to Bristol Metals.

The ITC will hold a hearing on June 6 and make a preliminary determination by July 1, Bristol Metals said.

The action marks the third steel-related trade case against Vietnamese steel products filed in the US since 2011.

In the past two years, the domestic steel industry faced five anti-dumping lawsuits and two anti-subsidy ones from the US, Brazil, Thailand and Indonesia.

However, US ITC announced late last year that after investigation, it found welded carbon-quality steel pipes imported from Viet Nam caused neither injury nor losses to the US steel pipe industry. Therefore, it said the US would not impose anti-dumping duties on them.

According to Tran Tuan Nghiep, director of Huu Lien Asia Corporation, a defendant in last year's lawsuit against Viet Nam welded carbon-quality steel pipes, price competition in the steel market is fierce and if Vietnamese steel is subject to more and more anti-dumping and anti-subsidy tariffs, it could lose an important market.

Taxi operations run riot in Hanoi

Hanoi’s authorities are struggling to deal with the city’s anarchic taxi companies, as complaints of theft and rip-offs of foreign tourists and other users spiral.

"This problem is a type terrorism on our services." Khuat Viet Hung, head of the Transportation Department said.

According to Hung, it's easy to acquire a business permit and open a taxi companies. Many have taken advantages of the situation to lie about their businesses and establish a taxi company with only a few of cars, no offices or managers.

Some even have set an income quota so their employees must find ways to meet the goal, leading to bad services such overpricing or deliberately extending journey lengths.

There are about 1,000 such kind of taxis operating in Hanoi and according to the state managers, they are struggling to deal with the situation.

"The authorities must be more responsible by conducting inspections and quickly dealing with substandard companies." Hung said.

Nguyen Hoang Linh, deputy head of Hanoi Department of Transport said they have developed regulations for taxi services in Hanoi and taxi companies must install taxi fare meters in the near future.

To deal with these problems, the Hanoi Taxi Association plans to raise the fine from VND20 million (USD960) to VND50 million if their members are found out to have cheated customers.

"We are managing over 100 taxi companies in Hanoi with over 17,000 taxis. Taxis are often also accused of causing traffic problems. We'll tighten management to prevent any future issues within our association." Hanoi Taxi Association chairman Do Quoc Binh said.

Authorities tighten control over state-owned enterprises

The newly issued decree concerning Vietnam Electricity Group (EVN) issued by the Ministry of Industry and Trade stated that the group's CEO will be dismissed if he lets the company suffer losses for two consecutive years.

EVN's chartered capital as of December 31, 2012 reached USD7 billion, and the group has been given the goal of earning a profit.

The Ministry of Industry and Trade will be responsible for assigning EVN's CEO position and will cancel the contract if the CEO fails to maintain the expected return on equity or if he or she incurs losses for two consecutive years.

Both the CEO and chairman will also be dismissed if EVN incurs "inexplicable losses", and they will be required to pay compensation in accordance with the law.

In return, EVN will be given the authorisation to adjust the electricity prices within the regulated price limits.

Previously, a new decree was drafted to replace the decree 101 issued in 2009 addressing state-owned enterprises, also stated that CEO of the corporation must go if the mother company face losses for two consecutive years or was unable to achieve expected return on equity.

The CEOs of state-owned enterprises are to be sacked immediately if they fail to meet the members' council's tasks, violate the council's decisions or let the company fall into bankruptcy or refuse to file for bankruptcy if needed.

However, many CEOs have been able to dodge the regulation by justifying their losses, saying that they are a result of expansion or technology upgrades.

The Ministry of Industry and Trade said the corporate regulations must indicate in detail the requirements of CEO and that CEO terms must be no longer than five years

HCM City targets 4.1 million foreign visitors

Ho Chi Minh City is expected to welcome 4.1 million foreign guests in 2013 to achieve a year-on-year increase of 8 percent.

The city hopes to earn over VND81 trillion (US$40 billion) in revenue, up 15 percent from last year’s figure.

The local tourism industry is gearing up for the upcoming 9th International Travel Expo Ho Chi Minh City - ITE HCMC 2013 in September.

Sales promotion months will be held from September to December, along with other activities to improve the quality of tourism products and to lure more foreign visitors.

VietJetAir launches HCMC-Buon Me Thuot route

Vietnam’s leading low-cost carrier VietJetAir is offering a week-long special promotion for its newly-launched Ho Chi Minh City-Buon Me Thuot flight from now until May 26.

During the promotion a one-way ticket on one of the route’s seven flights each week will cost just VND390,000.

The flight takes off from Ho Chi Minh City at 18.20 and arrives in Buon Me Thuot at 19.15. Flights leaving Buon Me Thuot for HCMC depart at 19.50.

VietJetAir plans to continue expanding its markets and will offer more domestic and international flights in the future.

Japan ends Trifluralin tests on Vietnamese shrimp

Japan has announced to end tests for Trifluralin, a commonly used pre-emergence herbicide, on Vietnamese shrimp exported to the country, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

Following the start of Japan’s tests on October 21, 2010, Vietnam’s Ministry of Agriculture and Rural Development (MARD) banned the use of 44 Trifluralin-contained products in aquatic farming as part of efforts to win back Japan’s confidence in Vietnamese shrimp.

Besides, Vietnam’s shrimp export business community has endeavoured to control Trifluralin in all exported shrimp, which had a significant impact on Japan’s decision.

Japan remains the largest market for Vietnamese shrimp. In the first four months of 2013 Vietnam exported U$$168 million of shrimp to the country, up 2.4 percent from the same period last year.

IMF positive about Vietnam’s macro-economy

The International Monetary Fund (IMF) has made positive assessments on Vietnam’s macroeconomic situation as well as the policy management of the State Bank of Vietnam (SBV) over the past time.

A press release, posted after IMF concluded the annual consultation mission to Vietnam in late April, said that the country’s macro-economy has shown signs of recovery mainly thanks to strong exports.

It pointed out that the country’s headline inflation reduced from double digits to about 7 percent year-on-year in March, while calm has return to the financial market with the SBV’s efforts to provide liquidity and the merger of several small, weak banks.

The achievements gained during the macroeconomic and financial market stabilization in 2012 helped improve the credibility of the SBV with market participants, IMF affirmed, noting that while headline inflation has come down, core inflation (excluding basic food and energy) still remains high, limiting the room for interest rate cut.

The fund suggested the Vietnamese Government accelerate reforms in the banking and State-owned enterprises sectors to reduce vulnerabilities and restore Vietnam to a higher, sound and sustainable growth path.

The recent stabilization gains need to be consolidated through appropriate macroeconomic policies to further bolster international reserves and fiscal buffers, it said.

At a recent interview granted to the Vietnam Television, the IMF Mission Chief Alfred Schipke also affirmed that Vietnam’s economic policy has rather succeeded in restoring macroeconomic stability over the past more than one year, which is reflected in the strong decline of headline inflation and the increasing trust in domestic currency.

Regarding the gold market, the IMF mission said that the SBV’s recent moves to manage the gold market, including the rejection of the monetary intermediary role of gold, help reduce fluctuations in the financial sector caused by gold speculation.

It also agreed with the central bank’s measures to ban other banks from receiving deposits in gold, saying that it is for the benefit of financial stabilization.

Vietnamese, French businesses promote cooperation in national defence

French businesses are interested in Vietnam’s national defence cooperation, said Major-General Tran Trung Tin, director of the Finance Department under the Defence Ministry.

They showed interest at a meeting co-organized by the Vietnamese trade office in France and the City Hall of Neuilly Sur Seine on May 22.

Mayor of Neuilly Sur Seine and Vietnamese ambassador to France Duong Chi Dung affirmed that there are huge opportunities for French and Vietnamese businesses to promote cooperation in economics and national defense in the context of growing bilateral relations.

Major-General Tran Trung Tin said this is the first time Vietnamese defense businesses have come to France to seek cooperation partners. They are involved in the fields of construction, mechanics, chemicals, garments and textiles and vocational training.

Rubber exports fall sharply

Due to a sharp fall in both volume and price in the first quarter of 2013, rubber exports earned 24.2 percent less than in the same period last year.

Tyre manufacturers spent US$243 million on the import of raw materials, pushing the sector’s trade surplus to US$370 million.

According to the Ministry of Agriculture and Rural Development (MARD), rubber exports in April alone were estimated at 44,000 tonnes, worth US$610 million, down 12.9 percent in volume and 24.2 percent in turnover. The average rubber export price was US$2,683 per tonne, down 8.7 percent from last year. The price of SMR3L rubber in the first week of April was just US$2.780 per tonne, down 1.8 percent. As Vietnam’s biggest rubber market, China reduced its imports by 20.3 percent in volume and 22.4 percent in value compared to 2012.

Meanwhile, rubber exports to Malaysia increased by 15.8 percent in volume, not much in revenue.

The world rubber market’s outlook is grim, with reserves estimated at just 2.17 million tonnes by 2014. Those at Thanh Dao - China’s largest rubber centre already hit a record high level of 366,900 tonnes in mid- April while rubber prices in Thailand, the world’s largest manufacturer, rubber prices dropped by 1.5 percent to US$2.84 per kilo by the end of April.

Vietnam is the world’s third largest rubber exporter. However, its tyre manufacturing businesses are on the verge of bankruptcy due to material shortages. Its 220 rubber processing businesses consume hundreds thousands of tonnes of raw material a year.

A rubber latex export business owner says his company exports as much as 90 percent of total output. If its products were sold in the country, they would have to pay 5 percent VAT.

Professor Nguyen Viet Bac from the Institute of Material Chemistry says rubber businesses are mostly state-owned and limited in forest cultivation and rubber latex production.

The Vietnam Rubber Association reports that raw rubber exports account for 87 percent of the country’s total rubber output, often at low value-added prices.

The Central Highland Steering Committee has a plan afoot to promote the intensive processing and diversification of rubber products. Total rubber plantations cover 242.810 hectares with an annual output reaching 165 - 170,000 tonnes, lower than in the southeastern region.

The reason is the Central Highlands has only invested in rubber latex factories. In Dak Lak province, a newly-built rubber processing factory has a design capacity of 15,000 tonnes of latex while six existing factories produce only 40,000 tonnes of latex per year.

Many experts argue that for the sustainable growth of the rubber sector, it is imperative to draw up long-term contracts between processing businesses and retail companies with fresh impetus given by the government under its incentives policies.

Banks still hold power over VND30-tril. package

While the HCMC Department of Construction is making a list of budget and small-sized housing projects to be offered to beneficiaries of the VND30-trillion subsidy package next month, it is commercial banks that decide who can access these soft loans.

A banker in the group of five commercial banks selected to undertake the loans on Tuesday told the Daily that lenders have the right to give loans to customers or not.

Customers’ solvency will be the top priority during credit application assessment because banks will have to set up reserve funds for future bad debts.

In this home loan subsidy package, the central bank has forced commercial banks to deduct for reserve funds at 0.75% of the total outstanding loans. Because the difference between the central bank’s refinancing rate and the lending rate banks will offer to customers is just 0.75%, banks are unable to compensate for costs.

If risks occur, banks must have solutions to deal with the problems and deduct more for reserve funds. Therefore, lenders will be very cautious in assessing credit applications.

In other words, the lower the income of a customers, the less possibility they will be offered bank loans. Lenders will not take risks in giving loans to customers that may not pay debts, the banker said.

Tran Trong Tuan, director of the HCMC Department of Construction, said that investors have registered to convert three commercial projects into budget home projects to benefit from this package. The department expects to supply around 3,000 condos for the market this year.

Concerning affordable commercial condos, the department will review each project and negotiate with investors on a voluntary basis. If investors wish to join the program, the department will introduce their projects to homebuyers.

The department will announce the list of budget and affordable home projects next month but newly-completed or nearly-finished projects will be prioritized. The department will not eye projects that remain on paper or that only have the site clearance step finished to prevent further stockpiles, Tuan said.

To reach soft loans, customers will sign home leasing or buying contracts with investors and then contact any of the five banks to ask for credit. The bank will assess necessary documents before giving them loans.

PVFCCo receives operational excellence certificate

PetroVietnam Fertilizer and Chemicals Corporation (PVFCCo) was granted with the Certificate of Operational Excellence by Denmark-based Haldor Topsoe A/S in a visit trip to this country last week.

The certificate is given to recognize the safe and stable operation progress of Phu My fertilizer plant owned by PVFCCo and located in Phu My I Industrial Park, Ba Ria-Vung Tau Province’s Tan Thanh District.

The plant has a production capacity of 800,000 tons of urea fertilizer per year and uses the technologies of Haldor Topsoe A/S and Italy’s Snamprogetti to produce ammonia and urea fertilizer respectively. The plant’s main feedstock is natural gas while its products are ammonia and urea.

Greenback expensive at some banks

A number of banks lowered their U.S. dollar prices in the last 48 hours, but others are still quoting the greenback at high levels, hitting the ceiling of VND21,036 for a dollar.

At Techcombank, the ceiling price has remained unchanged since last Thursday. Some other banks, like Vietcombank, cut the dollar price to around VND20,020, down a mere VND16 over the preceding day.

Meanwhile, Sacombank, BIDV and Eximbank kept their prices at over VND21,025.

Nguyen Hoang Minh, deputy director of the central bank’s branch in HCMC, noted foreign currency supply and demand remained stable in the city. While foreign currency deposits in April fell 4.4% against end-2012, loans in foreign currency dropped 8.2%.

Banks have demand for foreign currencies, he stated, but they have to ensure their foreign currency status does not fluctuate wider than 2% per day. They keep buying foreign currency as the interest rates for dong have sharply declined.

In the free market, one U.S. dollar sold for VND21,400, up VND120 over last weekend.

In related news, the central bank spent some US$1 billion importing gold after selling nearly 19 tons of gold via auctions. In an auction on Tuesday, 26,000 taels were sold at roughly VND40.53 million per tael.

Foreign ownership cap in local banks to rise

Foreign investors can own stakes exceeding the prescribed limit in local banks, says a draft decree prepared by the State Bank of Vietnam (SBV).

The decree is drawn up to replace Decree 69/2007/ND-CP dated April 20, 2007. It has been submitted to the Government.

As per the draft decree, an individual foreigner can own a maximum stake of 20% in a credit institution with no need to get the nod from the Prime Minister. Currently, approval from the Prime Minister is required.

In some special cases, the Prime Minister will specify the combined stake that foreign investors and those persons related to them can hold in a weak bank, which may exceed the above cap, in order to restructure the banking system, according to SBV.

Currently, Decree 69 stipulates the combined stake that foreign investors and those related to them can hold in a Vietnamese bank is 30%, consistent with Vietnam’s WTO commitments to opening the market. A foreign strategic investor can own a maximum stake of 20% in a credit institution with regulatory approval from the Prime Minister.

SBV has compiled the new decree based on the ownership limit for a shareholder (15%) provided in the 2010 Law on Credit Institutions and the policy of encouraging foreign investors to join the restructuring of weak banks under Decision 254 of the Prime Minister.

Many State-owned enterprises have pulled out of credit institutions, says the central bank.

Import surplus hits US$1.2 billion in May

Vietnam’s exports were estimated at US$10.8 billion and its imports at US$12 billion in May.

The direct foreign investment (FDI) sector boasted US$7.12 billion, or 65.9% of Vietnam’s total export value and imported US$6.6 billion worth of goods, making up 55 percent of the country’s total import spending.

Key export items included crude oil, seafood, rice, electronics, computers and spare parts, and garment and textile products. Imports were mostly electronic components, machinery, steel, chemicals, and petrol.

Since the beginning of this year, Vietnam’s import turnover has reached nearly US$52 billion, a year-on-year increase of 16.8 percent, representing a trade deficit of over US$1.9 billion.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR