BUSINESS IN BRIEF 26/9
Trade indicators rise after WTO access
Viet Nam's rankings on export and import turnover have risen sharply since its access to WTO, according to the General Department of Customs.
Specifically, WTO figures showed that Viet Nam's export and import turnover respectively ranked the 48th and 43rd in 2002.
However, in 2012, the country's export turnover ranking climbed to 37th among countries and territories around the world, while its import turnover jumped by 9 rankings to 34th place.
The General Department of Customs reported that Viet Nam's total commodity export and import value in 2007 was US$26.52 billion, up 31.3% from 2006.
After six years as a WTO member, Viet Nam's commodity trade in 2012 reached US$228.31 billion, a double increase from the implemented result of 2007. Previously, its commodity imports hit US$200 billion in late 2011./
Monetary policy for 2011-2013 period
The Government has pursued a cautious but flexible monetary policy over the past three years against the background that the global economy was recovering slowly and domestic inflation soared to 13.29% in the first half of 2011.
The policy aims to stabilize macro-economy, control inflation, ensure the safety of banking system, and maintain credit growth under 20%. Credits have been mainly steered to production.
Accordingly, by the end of 2011, total means of payment and credit grew 10% and 12%, respectively and interest rates were regulated in accordance with macro-economic developments.
Enhanced supervision, inspection and strict handling of violations regarding deposit rates helped pull down lending rates, for example, by 0.5-15 to 14.5% or even 13.5% for loans for agricultural production and exports.
The GDP expanded 5.89% while inflation dipped from 22% in October to 20% in November and 18.13% in December.
From the start of 2012, the State Bank of Viet Nam set the target to lower deposit rate to 9-10%/year. In May, the central bank began to impose interest rate cap on short-term loans for priority areas of agriculture, rural development, export-oriented production, supporting industries, small and medium-size enterprises, and high-tech businesses.
By the end of 2012, mobilizing rate decreased by 3-6% and lending rate fell by 5-9% against the previous year’s data. Total means of payment and credit respectively expanded around 20% and 9%, in line with the target of keeping inflation under 6.8%.
The above results pushed the central bank to continue with its monetary policy in favor of production and market.
Key interest rates have gradually lowered to ease difficulties against businesses. Both deposit and lending rates decreased within the band of 2-5%, back to the levels of the 2005-2006 period.
This year, deposit rate has dropped to 7% and the cap on lending rate for five priority areas has fallen to 9%. In the first eight months, credit grew 6.45% in comparison to that at the start of the year, making it possible to realize the whole-year credit growth of 12%.
In short, interest rates decreased sharply since 2011 and credit growth became more stable over the reviewed period.
Public investment to be tightened
The National Assembly Standing Committee (NASC) requires that the draft law on public investment need to support investment restructuring process, strengthen disciplines and resolve management weaknesses on the field.
The NASC on September 23 in Ha Noi debated on the bill during its 21st session.
Due to the lack of synchronous policy system, numerous shortcomings in public investment have arisen including scattered investments and capital allocation, prolonged implementation, inefficiency and wastefulness, causing pressure on budget at all levels.
The NASC suggested the draft law composers should review relevant laws on State budget, investment, construction, bidding law, and land.
The draft law's adjusted scope focuses on regulating the whole process of managing and using public investment sources from the State budget, Government bonds, local bonds, official development assistance capital sources and preferential loans and development investment credits.
Once coming into operation, the law would help to minimize scattered and prolonged capital allocation, Vinh said, adding that under the law, projects without capital would not be allowed to be implemented.
The same day, the NA Standing Committee wrapped up its 21st session during which it prepared the agenda for the 6th working session of the National Assembly next month - the last sitting of 2013.
NA Chairman Nguyen Sinh Hung asked relevant agencies to work closely to finalize documents and reports scheduled to be submitted in time for the upcoming session.
Capital manages prices to stem inflation
The capital would strengthen price management to ensure price stability and curb inflation in the latter months of this year and the forthcoming Lunar New Year, according to a directive issued recently by the municipal People's Committee.
The city would closely monitor prices of essential goods and services such as food, sugar, medicine, petroleum, gas, fertiliser and travel services, and stop unreasonable price hikes.
Drug plan benefits VN firms
Local pharmaceutical producers will have a chance to expand their market share in HCM City thanks to a new programme designed to stabilise prices for essential drugs in the city.
Deputy director Pham Khanh Phong of the city's Health Department said that consumption of locally produced medicines has greatly increased in the city's market.
"The city's health sector will continue to mobilise more pharmaceutical companies and pharmacies to join and expand the programme by providing a wider range of pharmaceuticals to the city, especially the outskirts and remote districts," said Lan.
City statistics show that locally manufactured drugs, especially those drugs already in the programme aimed at stabilising prices for essential pharmaceutical products, are increasingly being used for clinical treatment month by month.
Around 13 pharmaceutical companies have joined the programme, providing 392 products from 21 drug categories, which accounts for 50 per cent of the city's demand for essentially needed drugs.
Retail drug distribution networks have increased six fold, from 400 to 2,336 stores, including 1,686 private stores, 107 hospitals and 543 pharmaceutical companies, and account for 55 per cent of the city's retail sales.
Locally produced drugs are between 5-10 per cent cheaper than other similar drug brands on the market, which accounts for the 20 per cent increase in output for companies involved in the programme.
The Deputy Director of the Phu Yen Pharmaceutical Company (Pymepharco), Nguyen Huu Nien, told Nhan Dan (The People) newspaper that the company's drugs that are part of the price stabilisation list have seen increased usage, between 10-20 per cent in the city's hospitals and between 20-30 per cent in district hospitals.
The programme, encouraging Vietnamese to use locally manufactured drugs, was created to inform the public and doctors about the availability of locally produced pharmaceuticals.
The programme was supported by many hospitals, where doctors were encouraged to fill prescription with locally produced drugs for patients with general diseases in an effort to promote the use of drugs manufactured locally, Lan said.
The Ministry of Health launched the programme in March. The programme aims to increase the use of home made drugs in medical treatment to 60 per cent of the country's demand by 2015.
In order to achieve the programme's goal, all pharmaceutical and trading companies will need to meet the Good Manufacture Practice (GMP), Good Store Practice (GSP) and Good Laboratory Practice (GLP) standards by 2015.
These requirements aim to encourage and create favourable conditions for local drug companies to improve the quality of their products and improve competition within the local market.
Can Tho to call off three delayed projects
Can Tho City authorities are set to pull the plug on three projects that have been delayed for long because of their investors' financial shortcomings.
They are the five-star Cai Khe Resort - Hotel project, Con Khuong Eco-tourism Park, an office building at 102 Cach Mang Thang Tam Street, an official from the Department of Planning and Investment told a meeting held on last Friday.
Deputy Chairman of the Cai Rang District People's Committee Le Thanh Tam urged the city administration to take "tougher measures" against projects whose investors have sought several ways for extensions.
Construction Company No 10 has delayed its Tay Do Cutural Park in Cai Rang District four times and has yet to complete clearance of 2,000sq.m of land for the work, he said.
Local residents have also voiced unhappiness about the long delay.
Le Hung Dung, Deputy Chairman of the city People's Committee, said delayed projects that have a large impact on people's lives ought to be scrapped.
ACE Life unveils new universal life product
ACE Life Insurance Company Ltd on Monday launched a new universal life product called Premier Universal Life 2013.
In addition to the basic benefits available in the main plan, customers can also select supplementary benefits like hospitalisation and disability coverage and extra payment for accidental death abroad.
A universal life policy, unlike a term life policy, provides coverage for the whole life of the customer as well as building cash values.
Slow reforms drag bank-risk profiles
A new report by Fitch Ratings says that the major Vietnamese banks' risk profiles will remain vulnerable in view of the country's below-par economic performance, high asset-quality risks, poor transparency and slow pace of banking restructuring, alongside persistent global headwinds.
Stable macro-policies since early 2011 have led to lower volatility in interest rates, exchange rates and inflation. But sustaining a broadly steady backdrop raises the chances of a banking recovery. However, State-led reforms have been slow, in part because authorities probably fear exacerbating problems in a fragile economy.
Fitch forecasts Viet Nam's gross domestic product (GDP) growth to rise modestly to around 5 per cent in 2013 and 5.5 per cent in 2014-15 - low relative to the country's record over the past decade.
Efforts to spur domestic demand have not been effective as banks and borrowers are wary of an uncertain operating environment. Reported loan growth was just 6 per for this year to August.
The agency expects any recovery in the banking system to be gradual, depending on the pace and effectiveness of reforms and regulatory discipline.
The Viet Nam Asset Management Company (VAMC) may not tackle many of the asset-quality issues in the near term because some aspects of its operations are still unclear and regulatory rules to improve asset-quality data transparency have been delayed until June 2014.
Banking consolidation and reform of State-owned enterprises are likely to progress slowly in the medium term.
Vague non-performing loan (NPL) transparency and tough economic conditions still pose impairment risks to major banks. VAMC can remove bad debt from banks, but not losses.
A "true" level of the NPL ratio, which Fitch estimates at 15 per cent relative to the officially-reported 3-4 per cent, and an 80 per cent loss rate, would cut core tier 1 capital adequacy ratio (CAR) of large lenders to about 1 per cent from the reported 10 per cent by June.
This, together with pressure on banks' asset quality and profit generation, underlines the need for fresh capital, which Fitch believes will be hard to acquire, especially for small and medium-sized banks.
Restrictive foreign ownership laws are deterring foreign investment, while there may not be much investor appetite locally because of the uncertain domestic economy.
Downside rating risks could arise if the operating environment becomes even more challenging and threatens banks' solvency, a loss in depositors' confidence occurs, and/or if there is a negative rating action on the country.
Fitch says the outlook is stable, however, as the banks' ratings is in the single ‘B' category in light of the Vietnamese sovereign's stable outlook.
HCM City bid to thaw frozen property market
Developers can change commercial housing projects to social housing or reduce the size of apartments once they build infrastructure, the HCM City administration has said.
Speaking at a meeting held on Monday to discuss the issue, Nguyen Huu Tin, deputy chairman of the HCM City People's Committee, said the changes are permitted to help thaw the property market, but they must dovetail with the city's zoning plans.
Under Government Resolution 2, developers will also be reimbursed the money they paid for land-use rights if they change their projects to social housing.
The city Department of Construction said any reduction in the size of apartments must still ensure they measure at least 45sq.m.
District authorities said the changes should be considered on a case-by-case basis to ensure there is no mass change that would impact infrastructure.
Huynh Thanh Khiet, deputy chairman of the District 2 People's Committee, said his district has studied the issue in recent years and found that if the population increases 1.5-fold, infrastructure has to increase 1.2-1.6 times to keep pace.
He said before allowing a developer to make the change, authorities should consider if local infrastructure is adequate.
The Department of Transport urged the People's Committee not to allow any changes in the city's 930ha central area that has been zoned for space and landscapes.
Developers expressed concern that the city has been slow in permitting changes, which has affected them.
The resolution is only effective until the end of 2014 and so their need is very urgent, the city Real Estate Association said in the developers' support.
It exhorted the People's Committee to allow developers who meet the conditions set under the resolution to make changes to their projects soon.
Tin ordered the Department of Construction to submit to the People's Committee a list of any additional criteria for granting permission for the change.
Priority would be given to housing projects in outlying areas, he said.
The Department of Construction has recommended approval for six projects to downsize apartments.
It has also submitted a list of three commercial housing projects whose developers want to make the switch to social housing.
VN set for landmark merger
Military Bank Securities will seek approval for its merger with another securities firm, VITS, from its shareholders at a meeting on Thursday.
VITS shareholders have already given approval.
If the merger goes through, it will be the first between two securities firms in Viet Nam.
According to MBS vice chairwoman Cao Thi Thuy Nga, the merger is a step in the process of restructuring her company to maximise its advantages.
"The MBS executive board has decided on the VITS deal based on the desire of both companies," Nga, who is also deputy general director of Military Bank, said.
Others factors include the low financial risk of VITS and its small, neat operational model, which would make the integration easier, she said.
While MBS is an affiliate of the Military Bank, VITS is a member of the diverse VIT group whose activities include property, financial investment, and communications.
MB Bank, the biggest shareholder in MBS with a 65 per cent stake, has decided to convert into equity convertible bonds worth VND600 billion (US$28.38 million) issued by the latter to increase its ownership to 75 per cent.
Nga also said if her company's shareholders approve the merger, the new company would be called MBS.
Meanwhile, its recent acquisition of Western Bank served PetroVietnam Finance Company's goal of becoming a commercial bank.
PVFC could have applied to the State Bank of Viet Nam for status change, but chose the merger with Western Bank deciding that would be simpler.
The preparations for the merger began last year, with several PVFC executives moving into high positions at Western Bank and jointly working on the merger plan.
Both companies had high bad debt rates – 4.5 per cent for PVFC and 6.84 per cent for Western Bank – last year.
But Western Bank's debts are mostly backed by assets and borrowers have promised repayment.
The combined bad-debt rate is expected to be 4.2 per cent by the end of this year.
Nguyen Dinh Lam, chairman of PWcombank, the new entity, said [unlike PVFC] the new bank could offer payment services.
It has the advantage of being part of the giant PetroVietnam group of companies and their massive financial transactions, and Lam said even a piece of this cake would be enough for the bank's survival.
John Ditty, chairman of auditing and consulting firm KPMG Viet Nam&Cambodia, said the first thing to do in a mergers and acquisitions deal is finding the right target and the factors to look for in a target include management quality, similar strategic vision, and strong growth potential.
Kenneth Atkinson, managing partner of Grant Thornton Viet Nam, said: "M&A can be enormously beneficial for parties on both sides of the deal. Sellers can reap the fruits of their lifetime of hard work, and buyers can gain key strategic advantages that will catapult them to a new level.
Vietcombank recognised by regional magazine
Vietcombank has been awarded the Strongest Bank Balance Sheet Recognition 2013 award by Asian Banker Magazine.
The award takes into account development scale, balance sheet, risk, business quality, and liquidity.
Earlier this month, Vietcombank was named best bank in Viet Nam for 2013 by Finance Asia Magazine.
Local IT firms look to promote their products
A technology and equipment fair will take place in Ha Noi from September 26-29, giving promising firms the ideal platform to promote their products.
Over 260 domestic and international businesses have registered to showcase their products and services at Techmart already, according to the event organiser, the municipal Department of Science and Technology.
The fair is expected to showcase license plate recognition software and smart house systems as well as energy saving equipment designed to promote healthy living.
French IT businesses seek opportunities in Viet Nam
A delegation of French companies will visit Viet Nam on Thursday to explore business opportunities, according to the French Trade Office in Viet Nam (Ubifrance Viet Nam).
Ubifrance said the two-day trip aimed to promote relations between the two countries' information, communication, and technology (ICT) businesses.
Vegetable, fruit exports soar towards goal
Exports of vegetables and fruits for the year up to September 15 shot up by 46.7 per cent year-on-year to US$724 million, according to the customs department.
The Viet Nam Fruit Association (Vinafruit) suggested that Viet Nam is on course to achieve the year's target of $1 billion. Many distributors and supermarkets from Singapore, China, the Middle East, Europe, and the US discovered Viet Nam's potential to export fruits at the 2013 Asia Fruit Logistica in Hong Kong earlier this month.
September trade deficit estimated to hit $300m
The country is estimated to run a trade deficit of US$300 million in September, according to the General Statistics Office (GSO).
Including the September estimate, the country ran a trade deficit of $124 million in the first nine months. In detail, it earned $96.46 billion from exports, up 15.7 per cent against the same period last year, while spending $96.59 billion for imports, up 15.5 per cent.
The office reported that 15 staples gained more than $1 billion in export value. Mobile and components rose $15.14 billion, garments and textiles went up $13.15 billion, electronics, computers and components increased $7.77 billion and seafood went up $4.7 billion.
The major import products were components, equipment and petrol for production.
The General Department of Customs has not yet released the first nine months' import-export figures, which will likely differ from the GSO's. Last month, the GSO estimated that the country ran a trade deficit of $300 million, but customs figures showed that the country actually had a trade surplus of $600 million.
The Customs department has only reported the import-export value for the first half of September. According to the department, the country ran a trade deficit of $374 million on monthly export earnings of $4.92 billion and imports spending of $5.32 billion.
The capital city was estimated to run a trade deficit of $1.16 billion in September, according to the municipal statistics office.
The capital exported $801 million worth of goods this month, decreasing 1.2 per cent month-on-month. It spent $1.96 billion to import goods, an increase of 2.8 per cent.
In the first nine months, the capital reaped $7.405 billion from exports, down 1.5 per cent from the same period last year. It imported $17.230 billion worth of goods, down 3.5 per cent year-on-year, resulting in a trade deficit of $9.825 billion.
The capital's export staples in the first nine months of the year were computer components and peripherals, which earned $1.407 billion, down 1.5 per cent year-on-year; garments and textiles with $895 million, up 14.3 per cent; agricultural products with $789 million, down 4.7 per cent and petroleum with $661 million, down 36.9 per cent.
The city mainly imported petroleum for $4.229 billion, down 17.9 per year-on-year; equipment, machinery, tools and spare parts for $3.842 billion, down 1.3 per cent and steel for $894 million, up 14.2 per cent.
Consumers choose the cheaper option
Online shopping websites and mini-supermarkets offering inexpensive products have become popular with consumers, Lao Dong (the Labour) newspaper reported yesterday.
Because of the sluggish economy, customers have tightened their budgets and have seen luxury brands as less indispensable.
In Ha Noi, many essential commodities such as fish sauce and detergent are sold VND5,000-15,000 cheaper online and in mini-marts than in big supermarkets. The customers enjoy even more discounts if they buy a large volume.
At big supermarkets in Ha Noi such as Minh Hoa, Intimex and Fivimart, pressures from rental prices, labour costs and many other expenses have caused prices to increase, more than in mini-supermarkets and small grocery stores.
For household appliances, consumers have been buying online more frequently.
Hoang Thinh, a customer from District 3, said that he bought a new camera in a retail shop in District 1's Nguyen Hue Street and a refrigerator on an online website.
He said the prices were more competitive online, sometimes hundreds of thousands of dong cheaper than similar ones in supermarkets.
Nguyen Minh Thu, deputy general director of Thien Hoa Furniture and Electronics Centre, said that online sellers have less to worry about than brick-and-mortar shops because they do not have to pay rentals, salaries for many salespeople and electricity fees.
Thu said, however, that consumers should only buy from reputable online sites.
Many shopping centres and supermarkets in HCM City have been offering discounts of 20-30 per cent, but they have not attracted customers.
Diamond, Vincom, Parkson and Zen Plaza are all quiet. Many customers come just for window shopping, eating and drinking and theatre-going.
Likewise, Vincom, Trang Tien Plaza and Parkson in Ha Noi have few customers despite sales.
Most major brands are offering deep discounts of 50-70 per cent and even those have attracted few buyers.
One customer, Trieu Thi Van of Ha Dong District, said she had often bought clothing from the Mango and Bonia brands but was now purchasing quality made-in-Viet Nam items.
According to a small shop, Minh Trang in HCM City's Binh Thanh District, the prices of Zara or Forever 21 brand dresses made in Viet Nam for export sell for millions of dong at luxury shops or trade centres.
However, at small shops they sell for VND150,000-200,000 each. The products include samples and redundant items or those that have been in storage for at least two years.
Big electronics and household appliance centres are also falling into a "crisis" situation, including Nguyen Kim, Vien Thong A, Cho Lon, and Pico Plaza.
Many household appliance centres have reduced their inventory or have moved to suburban areas to cut down on expenses.
For instance, Nguyen Kim and Media Mart Electronics centres in Ha Noi had to look to open a branch in Ha Dong District instead of Hoan Kiem District in the city centre.
In addition, nearly 15,000sq.m in Grand Plaza trade centre in Ha Noi is empty because there are no renters.
MoIT acts to protect local produce
Domestic enterprises should join forces to apply trade defence measures, according to Dinh Thi My Loan, chairwoman of the Advisory Council on International Trade Remedies under the Viet Nam Chamber of Commerce and Industry.
The Ministry of Industry and Trade imposed a 5 per cent anti-dumping tax on imported vegetable oil, including refined soya and palm oil on September 7 in a pioneering move to protect local producers from unhealthy competition from imported products.
According to the director of the Ministry's Competition Authority, Bach Van Mung, the ministry's decision on imported vegetable oil followed an investigation which found that imports were damaging domestic producers in market share, output, profits and labour.
A representative from BigC Supermarket said that the impact of the import tax on vegetable oil would not be huge because domestic production could meet most local demand.
Experts said that Vietnamese enterprises needed to prepare carefully for potential trade lawsuits that could have negative impacts on Vietnamese enterprises.
The Viet Nam Competition Authority is also examining a proposal from domestic steel producers to apply anti-dumping tax on stainless steel products imported from China, Taiwan, Malaysia and Indonesia.
Gold prices continue on downward trend
Domestic gold prices continued to fall in the opening transactions of the week, in line with declining world gold prices.
Buying and selling prices of SJC gold bars at 5pm yesterday were VND37.42/VND37.62 million per tael (US$1,770/1,779), losing approximately 0.18 per cent against the weekend or 1.78 per cent against the pick of VND38.1 million ($1,802) last Thursday.
Spot world gold fell nearly 1 per cent earlier in the session but the price bounded back to $1,325.71 per ounce (or $1,590.05 per tael), slightly up 0.05 per cent against Friday's session.
One tael is equivalent to 1.2 ounces.
One US dollar yesterday remained unchanged at VND21,140.
In order to sustain supply and demand and keep local gold prices in harmony with the world price, the State Bank of Viet Nam reopened gold auctions last week. From March 28 to August, the central bank sold 1.567 million taels or 60.6 tonnes of gold.
However, the disparity between the domestic and local rate remains high, around VND3 million ($141) per tael.
In a report released yesterday, the National Assembly Economics Committee warned that if the disparity persists, gold jewellery smuggling might increase, as gold is seen as safe in the current context of economic difficulties.
Shrimp exporters expect bright future
Shrimp exporters in Viet Nam rejoiced last week when the United States International Trade Commission cancelled anti-subsidy measures on Vietnamese frozen shrimp.
After Viet Nam won the lawsuit, the tax rate, which ranged from 1.15 per cent to 7.88 per cent, was cut to zero and 33 Vietnamese shrimp exporters looked forward to a refund on the taxes they had already paid.
Tran Van Linh General Director of Thuan Phuoc Commercial and Fisheries JSC, called the lawsuit a "miracle".
Despite current domestic economic difficulties, shrimp exports remain competitive in the world market, increasing 70 per cent in the first eight months of 2013 and reaching US$1.7 billion in turnover.
The US was Viet Nam's leading shrimp importer, contributing one quarter of the country's total shrimp export turnover. Viet Nam ranked fifth among shrimp exporters to the US, earning $4.3 billion from the market last year.
Without the anti-dumping and the anti-subsidy taxes, Vietnamese enterprises hope to find more opportunities to develop their market in the US.
Pham Hoang Viet, Deputy General Director of Sao Ta Foodstuff JSC, told local press that now was an extremely good opportunity for Vietnamese shrimp exporters, as other major exporters such as Thailand and Indonesia were suffering from severe losses due to shrimp disease.
This would decrease the supply from those countries and therefore push up the price, Viet said. US importers would find Viet Nam, in contrast, a reliable source of inexpensive products.
However, local exporters remain preoccupied with two big problems: shrimp disease and Chinese traders who try to buy all the shrimp, increasing the price in the local market.
Pham Hai Long, General Director of Saigon Agrex Foodstuff Corporation, said the company could not buy any shrimp from farmers, as they had sold their whole supply to Chinese traders, forcing him to turn down export contracts.
To make the products more competitive, local exporters should carefully check the quality of the shrimp and control diseases, he said.
Additionally, it was necessary to create tax and capital incentives to boost both production and consumption in a sustainable way and deal strictly with traders who intentionally interfered with the market.
The Viet Nam Association of Seafood Exporters and Producers (VASEP) has asked the authorities to develop a sustainable production model and address the problem of bad traders, according to Truong Dinh Hoe, the association's general secretary.
Local banks offload bad debt to VAMC
The Viet Nam Assets Management Company (VAMC) will issue bonds worth VND10 trillion (US$476.1 million) to buy bad debts from Navibank, Sacombank, Agribank and SHB this year.
They are the first banks to sell bad debts to VAMC since the company was set up in July.
The plan will be divided into two phases, the first of which will be from September 21 to October 30 using bonds worth VND10 trillion. The second will be from November 1 to the end of this year with bonds worth of VND20-25 trillion ($952.4-1.2 billion).
According to a VAMC official, the plan was approved by the State Bank of Viet Nam (SBV) last week.
The VAMC leader said the company's operating regulations have been completed and will be issued in the next few days.
VAMC leaders last week worked with a number of joint stock banks and the SBV in the southern region to carry out the SBV's circulars on buying and selling bad debt and refinancing loan of the price of bonds issued by VAMC. They also exchanged to solve difficulties of the banks.
Macro economy not yet stable
Viet Nam's macro economy had been partially stabilised, but this was not yet sustainable, said Deputy Prime Minister Nguyen Xuan Phuc at the midterm review workshop on the 2011-15 socio-economic development plan yesterday.
The international workshop was jointly held by the Party Central Committee's Economic Commission, the National Assembly Economic Committee, the National Economics University and the World Bank.
Speaking at the event, Phuc said Viet Nam had witnessed several indications of macroeconomic stability over the last two years, such as low inflation and trade deficit, reduced interest rates and substantial export growth.
He also noted that macroeconomic stabilisation had yet to be firmly retained. Viet Nam has lagged behind most regional countries in regaining growth momentum following the global economic crisis, he said.
Phuc also warned that many of the country's important goals could overshoot their deadlines. Although people's living standards, especially in remote and rural areas, have improved significantly, urban crime and social conflicts in rural areas have become increasingly pressing issues.
The head of the Party Central Committee's Economic Commission, Vuong Dinh Hue, described 2013 as an important year for Viet Nam, highlighting the need to continue consolidating macroeconomic stability and advancing its recovery on the basis of growth model renovation and economic restructuring in the second-half of the 2011-15 socio-economic development plan.
Hue stressed that opinions collected at the workshop would be discussed with Party, NA and State agencies with a view to adjusting the country's socio-economic policies in the coming time.
Scholars, managers and international experts at the workshop also proposed measures for the implementation of fiscal and monetary policies to fulfill the target of mobilising social investment - which makes up over 30 per cent of the country's GDP - in the next two years.
They also discussed ways to speed up the perfection of the socialism-oriented economy, tackle structural bottlenecks hindering the growth recovery, infrastructure development and effective use of human capital.
Integration poses socio-economic challenges
Viet Nam needs further technical support and advice from donors to better integrate regionally and globally.
Deputy Minister of Industry and Trade Nguyen Cam Tu told a seminar yesterday, citing recent successes as an indication that this was the way to move forward.
After Viet Nam's accession to the World Trade Organisation in 2007, the Australian Agency for International Development (AusAID) and the UK Department for International Development (DFID) funded a technical assistance initiative – the Beyond WTO Programme – to help the country manage economic integration and its transition to a market economy.
The four-year programme, which helped implement 48 projects, strengthened the institutions of the market economy, helped address the social and economic consequences of integration for the rural sector, supported capacity for management and co-ordination of integration as well as supporting implementation of Provincial Action Plan activities.
Deputy minister Tu said the integration process had brought both benefits and challenges to the country's socio-economic development.
Central Institute for Economic Management deputy director Vo Tri Thanh said that accession to WTO demonstrated the close ties between internal reform and the international integration process, as only internal reform could offer conditions for the country to seize the opportunities and minimise the risks posed by integration. These include risks to production, consumers and macro economy.
"Now is the time for Viet Nam to push through new reforms as many Doi moi (Renewal) policies launched 27 years ago are "out of control" and failing to adapt to the current situation," he said, adding that the economy faced problems including its structure, its vulnerability to internal and external shocks, caused both by social and environmental factors.
The new push should target three main pillars: economic restructuring, comprehensive integration and closer links between economic reform and political reform, he said.
Vice head of International Relations under the Government Office Nguyen Thanh Hung said to boost international economic integration, the country aimed to strengthen public-private collaboration, manage negotiations and implement co-operation agreements, as well as facilitate international trade.
These required preparation of human, financial and time resources plus greater engagement from businesses and civil society.
"In the very first stage of negotiations for free trade agreements or other tie-ups, the Government needs to help businesses access information so that they can adapt and keep pace with market moves," he said.
Le Thanh Ha from the Viet Nam Chamber of Commerce and Industry's Legal Affairs Department said poor capacity and the lack of access to international trade policies were the main difficulties for Vietnamese businesses.
Director of Ha Noi National University's Centre for Economics and Policy Research Nguyen Duc Thanh said Viet Nam's WTO accession had not been as successful as expected, partly because reforming activities were not strong enough. Thanh pointed to the slow restructuring of State-owned enterprises and their relatively low investment efficiency.
Australian Ambassador to Viet Nam Hugh Borrowman said challenges ahead for Viet Nam during its integration process included raising income, increasing competitiveness and moving higher up value chains.
Fitch: Vietnamese banks to become stable in 2014
Fitch Ratings forecast that the Vietnamese banking system would be stable in 2014.
In its report titled "2014 Outlook: Vietnamese Banks”, the global rating agency reported that major Vietnamese banks' risk profiles will remain vulnerable in view of the country's below-par economic performance, high asset-quality risks, poor transparency and slow pace of banking restructuring, alongside persistent global headwinds.
Stable macro policies since early 2011 have led to lower volatility in interest rates, exchange rates, and inflation. Sustaining a broadly steady backdrop raises the chances of a banking-sector recovery. However, state-led reforms have been slow; in part because the authorities probably fear exacerbating problems in an already fragile economy.
The Outlook is Stable, however, because the banks' ratings in the single 'B' category already factor in such vulnerabilities, and in light of the Vietnamese sovereign's Stable Outlook.
Fitch forecasts Viet Nam’s GDP growth to rise modestly to around 5.5% in 2014-2015 (2013: 5.0%) - low relative to the country's record over the last decade. Efforts to spur domestic demand have not been effective as banks and borrowers are wary of an uncertain operating environment. Reported loan growth was just 6% in the year to August 2013 (2012: 9%).
Fitch expects any recovery in the banking system to be gradual, depending on the pace and effectiveness of reforms, and regulatory discipline.
Four firms in HCM City face thorough inspection after salary theft scam
The HCM City People’s Committee has instructed municipal inspectors to conduct a thorough inspection of four public-service companies whose leaders were found to have embezzled employees' salaries.
Four public-service companies whose leaders were found to have embezzled employees' salaries to face thorough inspection
The results of the recent inspection showed that at HCM City Urban Drainage Company, Public Lighting Company, Saigon Traffic Construction Company and the Green Park Company, the average wage was VND22.2 million per month (USD1,000) while the figure at other state companies was only VND7.3 million. Leaders of these four state-owned public-service firms in HCM City received a salary of VND2.6 billion per year (USD12,809).
The comprehensive inspection will target all these companies’ activities, particularly the use of finance, employees and assets. Any violation will be seriously dealt with.
The companies are also requested to return more than VND6 billion (USD28,571) to the state budget for incorrect salaries and bonus payments in 2011. The returned amount will be used to compensate the firm’s employees who were unfairly treated.
The municipal committee has urged management agencies to judge how much responsibility be attributed to the HCM City Department of Finance and the Department of Labour, Invalids and Social Affair for the salary problems at these companies which have evidently existed for many years, but were only brought to light very recently.
Earlier, HCM City authorities suspended eight leaders of the offending companies for the scam.
Government resolution requests deposit from FDI companies
Prime Minister Nguyen Tan Dung has signed a resolution which includes a regulation requesting foreign direct investment (FDI) firms to make a deposit in order to help prevent a, by now, common situation in which owners of FDI firms flee the country, leaving behind whatever facilities they have and abandoning their employees.
By the end of June this year, Vietnam had 15,067 valid FDI projects with a total registered capital of USD218.8 billion, with USD106.3 billion disbursed as salaries, creating 2 million jobs.
However, due to legal loopholes, a number of FDI companies still use backward technology, causing environmental pollution, plus many have used transfer pricing to avoid taxes, causing the state budget heavy losses.
Recently, owners of many FDI projects have fled, leaving their employees behind. According to the Ministry of Planning and Investment, as of late May this year, as many as 518 FDI company owners had run away. For the most part these companies are from South Korea and China.
Under the recently-signed resolution, licensing agencies have to pay attention to all large-scale projects with potentially big socio-economic impact for their investors’ capital mobilising ability and especially a sanction that makes a deposit necessary to ensure that the project is implemented on schedule.
However, the deposit regulation has drawn some concerns that this will be a disadvantage for Vietnam in luring FDI projects compared to other countries which do not require a deposit.
The government resolution also mentions measures to clarify the legal situation in this area as well as to create investment policies in a uniform manner in order to forecast correctly and provide transparency for investors.
Speaking with a DTiNews reporter, the Minister and Chairman of the Government Office, Vu Duc Dam, said not only FDI companies but also local ones have seen the “absence of investor” syndrome. Last year, the government was instructed to help firms of this kind find other jobs.
To tackle the flight of owners from FDI projects, the government has assigned the Ministry of Planning and Investment to revise the Investment Law of 2005. During the revision process, agencies, ministries and localities are urged to keep a close eye on every FDI enterprise in order to protect the rights of the employees of these companies.
Farmers in Mekong Delta continue to face losses
Farmers in the Mekong Delta have harvested hundreds of thousands of hectares of autumn-winter rice crop, through harsh weather conditions, but still have to face severe losses.
Since the beginning of the year, the country has sold around 4.8 million tons of rice touching revenue of more than US$2 billion. Nevertheless, the quantity of rice in stockpile still remains high.
Pham Hoang Liet, a farmer in Tan Hoa Commune in Chau Thanh District in the Mekong delta province of Hau Giang complained that farmers face many high overhead costs other than the cost of hiring labor at VND4,000,000 (US$190) per hectare.
Thus, they spend an average of VND700,000 (US$33) but are still unsure of sales as most traders only buy rice harvested by combines.
As per a decision made by the government and the Ministry of Agriculture and Rural Development to support farmers who have large paddy fields, warehouse for stockpiling will be given free of charge and farmers will also enjoy exemption of land use tax.
The Ministry has promised to adopt policies to bring traders and farmers closer, to help increase farmers’ incomes.