Vietnam, Hong Kong boost customs cooperation

Vietnam’s General Department of Customs (GDC) and Hong Kong Customs and Excise (HCE) signed a mutual cooperation and assistance agreement on June 28 in Brussels, Belgium.

The agreement, which was signed during the annual meeting of the World Customs Organisation (WCO), is the 18th cooperative agreement that Vietnam has made with customs agencies over the world.

Speaking at the signing ceremony, GDC General Director Nguyen Ngoc Tuc underlined the significance of the agreement in fostering customs cooperation between Vietnam and Hong Kong, especially in preventing smuggling, trade fraud and violations of customs laws.

The agreement is an important milestone in the cooperation between the two countries and will benefit both sides, he said.

Commissioner of HCE Clement Cheung said that the agreement, the 21st of its kind his agency has signed with foreign partners, is hoped to help bring efficiency and economic benefit to both Hong Kong and Vietnam’s important customs work.

Hong Kong is now a territory of transit for many of Vietnam’s import-export commodities. Two-way trade between the two sides increased from 3.1 billion USD in 2011 to 4.7 billion USD in 2012. The figure was 1.7 billion USD in the first five months of this year.

HCE has a reputation for operating effectively in fighting illegal drug transport and enforcing intellectual property rights at border areas.

During the gathering of the WOC, Tuc participated in working sessions and bilateral meetings with the leaders of several customs agencies to enhance understanding, promote cooperation and seek mutual assistance.

On June 27, the GDC delegation attended the opening session of the WCO’s meeting in Brussels.

Construction sector declines 5.4 percent

Companies in the construction sector in the first five months of this year continued to meet many difficulties, especially in the materials and real-estate area, said the Ministry of Construction.

The total business and production value of the construction sector reached more than 12.6 trillion VND (600 million USD) in May and 57.814 trillion VND (2.75 billion USD) for the first five months of this year, down 5.4 percent year-on-year.

The results meet 35.9 percent of full year targets, the ministry said.

The assembly sector's revenue was 21.25 trillion VND (1 billion USD), down 14.6 percent over the same period last year and 34.2 percent of the whole year target. Many key projects are still behind schedule, especially those involving electricity.

Meanwhile, the value of production in the industrial and construction material was 23 trillion VND (1.1 billion USD), a slight increase of 3.9 percent year-on-year. This was 39 percent of the whole-year target.

The construction material industry continues to face a difficult time in domestic and foreign markets, said the chairman of the Vietnam Construction Materials Association, Tran Van Huynh.

He said that the industry last year faced an over supply when sales plummeted because of the inactive property market. He added that most companies did not operate at full capacity.

"The capacity of cement companies was 80 percent, the pottery sector was under 70 percent, construction glass was under 50 percent and some of other sectors only 15 percent," Huynh said.

In addition, he added, stockpiles of finished goods were at a high level - and coal and power costs have increased.

All of these obstacles have pushed many companies to bankruptcy and small companies have to merge with big companies to avoid losses.

"Massive uncontrolled investment is the main reason causing oversupply," said Huynh, adding that many companies still use out-of-date machines that cannot produce high-quality products with good designs and are harmful to the environment.

To solve the problem, the association has suggested re-planning the industry to balance demand and supply, applying new technologies to improve quality and design of products, using new materials that can save time and money, and using industrial waste and strengthening management.

Construction material production is considered a key industry in Vietnam, contributing 7-8 percent to the national gross domestic product.

Last year, the industry's turnover reached about 190 trillion VND (9.05 billion USD), of which 31 percent was contributed by the cement industry.-

Asset management company established

The State Bank of Viet Nam has decided to establish the Viet Nam Asset Management Company (VAMC), which will come into operation since July 9.

Wholly owned by the State, the company with charter capital of VND 500 billion will be put under the central bank’s management and supervision.

It is responsible for purchasing bad debts of credit organizations in two ways: It can buy bad loans at their book value by issuing special bonds, or at market value by using other sources.

VAMC’s headquarter is located at No. 22, Hang Voi Street, Hoan Kiem District, Ha Noi.

Earlier, PM Nguyen Tan Dung signed Decree 53/2013/ND-CP on establishment of the asset management company to address nearly US$5 billion non-performing loans and promote credit growth in the banking system.

Non-performing loans must meet five conditions: being bad debts as stipulated by SBV; being guaranteed assets; having legal documents; being existing customers; and having a balance that is higher than the level set by SBV’s regulations.

Lenders with bad-debt ratios of 3% and above will be required to comply with the Decree or being put under investigation.

The Government’s statistics showed that as of February 8, bad-debt ratio at Vietnamese banks dropped to 6% of total outstanding loans. Credit grew 2.1% in the first four months of the year, after hitting the 9% level in 2012./.

Mekong Delta promotes trade and investment

The Steering Committee for Southwestern region, the Viet Nam Chamber of Commerce and Industry (VCCI) and the People’s Committee of southern Hau Giang province on June 26 hosted a trade and investment promotion seminar for the Mekong Delta Region.

The event lured the attendance of 250 speakers, scientists, experts, provincial leaders, and investors from the Region and Ho Chi Minh City to seek ways to promote economic growth in the region in the coming time.

According to Bui Ngoc Son, Deputy Head of the Steering Committee for Southwestern Region, the Mekong Delta Region has around 40,000 square meters in land area, a population of around 20 million people, a 700-km coast, and a 360,000 square meters exclusive economic zone. It shares a border line of about 340km with Cambodia.

The region gained an average growth rate of 11.7% in the 2001-2010 period. Meanwhile, the economic structure has shifted positively in which the agro-forestry and fishery sector accounts for 38%; industry-construction 27% and service 35%.

The Mekong Delta Region is a granary and a center of fruits and aquatic products, helping the country’s agriculture sector maintain its development.

It has continuously made a trade surplus in exports of its key agricultural commodities over the last 27 years while the country suffered from a trade deficit in the field.

Last year, the region contributed 90% of rice export and provided 70% of fruits volume and 60% of aquatic products for exports.

Doctor Vo Hung Dung, Director of the VCCI in Can Tho assessed the Mekong Delta Region as a promising region that will continue making positive contributions to the national development.

The region had three provinces out of the five winners in the Viet Nam Provincial Competitiveness Index. Local authorities have spared no effort to improve business environment, attract investment and facilitate long-term businesses.

VN Tourism Culture Festival in RoK

The Viet Nam Tourism Culture Festival 2013 will take place in the Republic of Korea from July 1-6.

The Festival will be spotlighted by performances of folk and contemporary dances and songs.

In addition to that, an exhibition themed Viet Nam “Enduring beauty” will introduce images capturing the beauty of Viet Nam, and her people, handicraft products, costumes and cuisines.

A conference to promote and advertise the Vietnamese tourism industry in the Republic of Korea will be included in the Festival.

According to the Korean General Department of Tourism, Viet Nam is highly rated as a potential tourism market.

Currently, 10 direct weekly flights between Viet Nam and the Republic of Korea have contributed to facilitating the two countries’ tourism cooperation and development.

Ho Chi Minh City records 7.9% economic growth in six months

Ho Chi Minh City’s economic growth remained positive during the first six months of this year, with GDP estimated at VND340.7 trillion (US$16 billion), up 8.1% compared to the same period last year.

As reported by the HCMC People’s Committee at its conference yesterday to evaluate the city’s socio-economic situation over the last six months and map out tasks for the remaining months of 2013, the city has implemented a series of measures to overcome the current economic difficulties, enhance business competitiveness, and promote resolving inventory and trade issues.

Over the past months, the city economy has achieved positive results with services rising 8.7% year on year, while industry and construction grew 7.1% and the agricultural sector increased by 4.9%.

Total retail sales of goods and services is estimated at VND289 trillion, up 21.3%, and the city earned US$13.7 billion from exports, a year-on-year increase of 5.5%.

Budget revenues are forecast to reach VND107.7 trillion, equal to 45.17% of the yearly target. Total social investment capital is estimated at VND58 trillion and foreign direct investment reached more than US$491 million, while remittances reached US$1.95 billion.

The city welcomed nearly two million visitors, up 10% from the previous year, and tourism revenue reached VND41 trillion, up 24.4% year on year.

Speaking at the conference, Chairman of the HCMC People’s Committee Le Hoang Quan said that although the city’s economic growth remains positive and industrial production has showed signs of recovering, relevant authorities, agencies and local enterprises should focus on specific policies such as exempting or extending the payment of business taxes so enterprises can reinvest capital in development. Providing priority sectors access to loans should also be continued, especially for agriculture, rural area development, support industries, exports, small and medium-sized businesses, and high-tech enterprises.

Chairman Quan stressed that in the remaining months of 2013, the city authorities should strengthen contacts and dialogues with enterprises in all economic sectors, particularly small and medium-sized businesses, to help them overcome obstacles and create a favourable environment for them to stabilise production and contribute to the city’s economic growth.

11 export commodities post over US$1 billion in revenue

The export revenues earned from 11 commodities exceeded US$1 billion in the first half of 2013, according to latest data.

The highest grossing product was mobile phones with US$9.907 billion, followed by garments and computers, which earned US$7.98 billion and US$4.712 billion, respectively.

Other commodities earning more than US$1 billion include footwear, crude oil, seafood, machinery, transport vehicles, timber products, coffee and rice.

According to the General Statistics Office, 15 countries in the world imported Vietnamese goods worth US$1 billion or more in the six months ending in June.

The United States was still the largest importer of Vietnamese goods with US$8.846 billion, up US$1.276 billion from a year earlier.

Japan and China came second and third, respectively importing goods worth US$5.289 billion and US$4.948 billion from Vietnam.

Other major export markets for Vietnamese goods are the Republic of Korea, Germany and Malaysia.

In the last six months, Vietnam’s total export revenues were estimated at US$62.053 billion, up 16.1% year on year.

Interest rates set to be weapon of choice

Industry insiders are weighing up interest rate instruments to retain market stability.

Banks assumed less disparity between dong and dollar deposits after the dong mobilising cap was scaled down to 7.5 per cent, per year from March 26, 2013 has put pressure on the dong-dollar exchange rate and prompted part of depositors to convert from dong to dollar hoarding.

Thereby, to increase exchange rate stability, the State Bank could consider further reducing the interest rate imposed dollar deposits.

The current cap of dollar deposits is 2 per cent, per year.

According to State Bank Ho Chi Minh City branch deputy director Nguyen Hoang Minh, dollar deposits at city-based banks contracted 8 per cent in April, but the pace was slowing down in May and June.

In fact, banks’ outstanding loan balances in dollars fell sharply after the State Bank enacted Circular 03/2012/TT-NHNN which contained stringent lending requirements to limit clients of foreign currency loans in a bid to reduce demand for foreign exchange and the pressure on the exchange rate.

Circular 03 on foreign currency lending by domestic credit institutions and foreign bank branches for resident borrowers was enacted on March 8, 2012 and came into force from May 2, 2012.

This was evidenced by the fact that by the end of May 2013 while credit in dong hiked 5.48 per cent dollar credit slid 8.41 per cent.

Bank executives then proposed the State Bank extend foreign currency supply to firms especially importers having the demand, particularly in later months of the year.

A Ho Chi Minh City based electro-cryogenic trading firm director said the company often had to borrow dollars outside of banks at high interest rates to feed the high demand for importation during summer since it was illegible to source dollar loans from banks.

The executive at Ut Xi Seafood Processing, based in southern Soc Trang province, said the company often took loans in dollars for lower interest rates at 4-5 per cent, per year against at least 10-12 per cent, per year of dong-denominated loans.

Citibank Vietnam chief executive officer Brett Krause assumed the policy on anti-dolarisation and restricting gold trading in the market had generated upbeat outcomes, but it had affected dollar loan provision to import firms.

“Some of our local customers have shifted into borrowing dollars in foreign markets,” said Krause.

Krause proposed the State Bank consider scaling down current dollar interest rates, arguing that exchange rate volatility in the past two weeks was driven by shorter gap in dong and dollar deposits. Thereby, people would shift into depositing in dollars if the dong mobilising rate continued to fall.

In this regard, State Bank Governor Nguyen Van Binh said the revision of current dollar mobilising cap would take place, but at what time and level need further consideration.

HCM City’s labor demand on the rise

The labor demand in HCMC rose by one-third in the second quarter compared to the previous one, according to the HCMC Center of Forecasting Manpower Needs and Labor Market Information (FALMI).

Tran Anh Tuan, deputy director of FALMI, said enterprises in HCMC need an estimated 30,000 laborers this month alone, with the demand for manual laborers accounting for 40%, skilled workers and those of basic vocational level 15%, workers of intermediate vocational level 20% and college graduates 25%.

The demand for manual workers continues to rise in the sectors of textile-garment, leather footwear, packaging, sales, services and hotel-restaurant. Specifically, the demand for salespeople accounts for nearly 27% of the total, services nearly 11%, and marketing and PR 6.48%.

New graduates from colleges and universities supplement a large number of laborers to the labor market this month.

However, the imbalance between supply and demand, especially the demand for college graduates, will become more serious. Employers will still focus on recruiting those with skills and qualifications.

According to FALMI, over 50% of new graduates lack practical knowledge, soft skills and thus are unable to find suitable jobs.

Besides, the labor supply in some sectors such as accounting, human resources, construction, finance-banking and management is always higher than the demand. Therefore, there are quite many graduates doing jobs other than their majors or lower than their abilities as they are unable to find suitable jobs.

Unifying financial supervision agencies seems unlikely

Many experts suggest that Vietnam should establish a unified financial supervision body to better monitor the financial system so as to help the country weather the tough times, but such a view met many objections at a seminar in Hanoi on Tuesday.

Speaking at the seminar on the current state and prospects of the financial supervision system, Tran Kim Chung, deputy director of the Central Institute for Economic Management (CIEM), said that it was time to build a unified financial supervision model for Vietnam.

There are currently five agencies in charge of financial supervision, namely the central bank’s Banking Supervision and Inspection Agency, the State Securities Commission, the Insurance Supervisory Authority under the Finance Ministry, the Deposit Insurance of Vietnam, and the National Financial Supervisory Commission.

These agencies have dispersed operations, inadequate supervision mechanisms and have not coordinated with each other to detect defects on the market.

For instance, the model of the Banking Supervision and Inspection Agency is overlapping and inconsistent between central and local operations. Besides, its supervision capability has not kept up with the market, according to Chung.

Meanwhile, the role of the National Financial Supervisory Commission is weak with its function limited to providing consultation, as the commission does not have the authority to fine violations.

Therefore, Chung said that these agencies needed to be unified.

Financial expert Can Van Luc from Bank for Investment and Development of Vietnam (BIDV) echoed Chung’s opinion, saying that a unified financial supervision model is reasonable in the long term.

According to Luc, Vietnam’s financial system has developed rapidly from only two banks and one insurance company before 1988 to 350 financial institutions and 1,000 credit funds like currently.

Besides, around 15 financial groups have been or are being set up. “Who will be in charge of monitoring such groups?” Luc said.

Luc said that Vietnam’s financial supervision system contained many inadequacies such as lack of coordination, unclear responsibility, and poor management and supervision mechanisms.

Despite agreeing on the need for merging existing financial supervision agencies, Luc voiced his concerns over conditions of establishing a unified agency as well as its independence.

However, the opinion of setting up such agency faced many objections at the seminar.

In a paper sent to the seminar, director of the Banking Strategy Institute Nguyen Thi Kim Thanh proposed to maintain inspection activities of agencies although she agreed that the current supervision model was inadequate and its supervision efficiency was low.

According to Thanh, there needs to be mechanisms for coordinating and exchanging information between key agencies such as the State Bank, the Ministry of Finance and the National Financial Supervisory Commission.

Thanh’s proposal was similar to the opinion of Nguyen Huu Nghia, chief inspector of the Banking Supervision and Inspection Agency. Nghia said that prudence must be taken since no one can assure the efficiency of the unified supervision model.

Huyndai Vinashin agrees to build tankers

Huyndai Vinashin (HVS) announced on June 27 that it is building four oil tankers, each with a capacity of 50,000 tonnes, for Italian company D’Amico International Shipping S.A.

This is the first time the factory is building oil tankers to stricter technical requirements.

The tankers must be 183 metres long, 32.2 metres wide, 19.4 metres high and capable of travelling at 14.5 nautical miles per hour. The construction is scheduled to be complete by mid-2014.

After the global recession in 2012, HVS is now taking orders for tens of ships over the next two years on order to help workers back into stable work.

HVS was started in 1999 as a repairer of ships. It shifted to ship-building in 2008.

To date, the factory has handed over as many as 40 cargo ships, varying in size, to ship owners around the world.

Vung Tau halts four projects

Southern Ba Ria-Vung Tau Province has halted ongoing investment in four tourism projects due to serious delays in construction schedules.

They include the Kawasami project, run by the Nam Hai Tourist and Investment Company, the Phuoc Hai project from the Sai Gon Construction Investment Trading Co, Ngoc Hai Resort belonging to the Dai Phat Tai Company and the Long Son project from the Long Son Construction Trading Company.

The projects have not been carried out and the land has been left fallow since the projects received planning approval.

Mega Mall Times City up for grabs

Vingroup announced that the retail space in its Mega Mall in the Times City complex project on Minh Khai Street, Ha Noi, has been up for rent.

This is the group's second Mega Mall, after the Royal City project, which sits on an area of 200,000 square metres and has a supermarket, a shopping centre and restaurants and recreation areas.

To date, Mega Mall Times City has attracted more than 200 retailers in fashion, cosmetics, electronics, household goods and food.

The Times City project started construction at the beginning of 2011 and includes 24 apartments and an enormous parking area.

Ha Noi gets new exhibition centre

A new national exhibition centre will be built on a 126-ha plot in Me Tri Commune in Ha Noi's Tu Liem District, according to the Viet Nam Exhibition and Fair Centre (VEFAC).

It has been revealed that the project will cost US$2 billion.

The project planning is well underway and VEFAC will begin to search for co-investors and secondary investors from the beginning of the third quarter this year.

The current Giang Vo Exhibition Centre will also receive an upgrade to make it a centre for trade, service and culture, on the 6,838-ha site in Ba Dinh District's Giang Vo Street.

BIDV to lend $900m to coal group

The State-owned Viet Nam National Coal and Mineral Industries Group (Vinacomin) will get loans totally worth VND19.3 trillion (US$900 million) over a five-year period.

The coal firm won the agreement with the Bank for Investment and Development of Viet Nam (BIDV) on Thursday.

In another development, BIDV yesterday began to provide preferential loans at an interest rate of 9 per cent.

The beneficiaries of the short-term loans include small- and medium-sized enterprises and rural and agriculture firms, exporters, and supporting industries.

BMW Euro launches new showroom

BMW Euro Auto yesterday launched its new BMW Long Bien centre in the capital city.

Costing an estimated VND100 billion (US$4.7 million), the new BMW Long Bien showroom offers fully fledged service, including an information centre, connectable it with BMW mechanics in Munich.

"The opening of the new showroom is definitely a milestone achievement of BMW Euro Auto," said Horst Herdtle, CEO of BMW Euro Auto.

Jutta Frasch, Germany's Ambassador to Viet Nam, said: "With today's opening of the second centre in the country, BMW is now present in the political as well as in the economic centre of the country, I am convinced that this will lead to a further rise of annual car sales in the years to come."

Blue chip monopolies risk market instability

Big listed companies ruled by a "key man" or family are an unknown quantity and should be treated with caution, investment analysts say.

Director of advisory firm TNK Capital Partners Tran Vinh Du said depending too much on company founders who control up to 90 per cent of shares in the firm created a "key man risk", where the major shareholder made all the play.

This meant such companies could stand or fall on the decisions of a key men, in many cases without recourse to other shareholders or the advice of a third party.

Among many examples of "key man" ownership is Alphanam Investment Co (ALP), an investment arm of Alphanam Group.

The company listed in 2007, but key positions, including chairman and general or deputy general directors, are still held by chairman Nguyen Tuan Hai and his family.

Hai's family also holds up to 90 per cent of the company's shares.

Another example is Pomina Steel Corp (POM), with charter capital of over VND2.42 trillion (US$115.2 million), in which 90 per cent of the shares are owned by Do Duy Thai and his brothers.

And then there's property giant Hoang Anh Gia Lai Corp (HAG), whose chairman, Doan Nguyen Duc, holds 43 per cent of the shares.

Many chairmen argue that these companies have been built on their blood and tears, so they should retain such a high ratio of shareholding.

Andy Ho, managing director and head of investment at VinaCapital, said holding a majority stake is a good way for the founders to protect the company's value.

"As long as they add value to the company and shareholders, such businesses are still well worth investing in," Ho was quoted as saying in the publication Nhip cau dau tu.

However, such a large number of shares held in so few hands has caused some companies to rely heavily on bank loans.

The growth in debt at Pomina Steel Corp, for example, has increased over the years and its short-term borrowing last year jumped by 30 per cent.

According to analysts, some companies became listed to make them look more transparent, to facilitate their borrowing from banks.

Let TNK Capital's Du have the last say. He suggests that such listed companies should modernise their governance models.

"They can start by hiring high-level managers or, at least, they should have an independent board member to diversify opinions, "Du said.

VIB granted a VND420bn credit to Texhong

Vietnam International Bank (VIB) and Texhong Yinlong Technology Limited,  a subsidiary of Texhong Textile Group – one of the top 10 largest textile groups headquartered in Hong Kong, have signed a VND420 billion ($20 million) credit agreement to finance the firm’s facility in northern Quang Ninh’s Hai Yen Industrial Park.

In the existing difficult economic context, this credit agreement demonstrates the bank’s financial strength and also indicates VIB’s consistent business policy to accompany foreign invested enterprises in particular and local businesses in general.

“We are proud to be the first local bank selected to provide capital and financial solutions to a foreign invested enterprise with a large investment capital amount in Vietnam. This credit will play an important role in the success of Texhong in Vietnam. In addition, the project will also help to create 5,000 jobs for residents in Quang Ninh and neighbouring provinces,” said Dam Bich Thuy, CEO of VIB.

Texhong Yinlong Technology’s facility is known as the largest foreign invested project in industrial parks and economic zones in Quang Ninh.

“Since 2006, Texhong Group has continuously developed investment projects and Vietnam is a key and highly potential investment market. We choose VIB, a local bank, for this important project as we highly appreciate the capability and reputation of the bank. Besides, VIB also offers flexible and preeminent financial products. Specially, we praise the bank for its specialisation in the FDI customer service that has supported us a lot during the past time,” said Li Ke Dong, CEO of Texhong Yinlong Technology.

Conference introduces Lao investment environment

The Lao Consulate General in Ho Chi Minh City on June 28 held a conference to introduce the Lao market investment and promote trade and tourism in Ho Chi Minh City.

Laos’ investment policy is improved, demonstrating transparency and openness, General Consul Southideth Phommalat said at the event, which was co-organised by the Ho Chi Minh City Investment and Trade Promotion Centre (ITPC).

Vietnamese businesses that plan to invest in Laos should study the country’s laws, policies, administrative procedures, tax and labour management regulations, he added.

On the occasion, the ITPC introduced participants two programmes it plans to carry out in Laos. The centre will organise the Ho Chi Minh City Investment, Trade and Tourism Exhibition 2013 from July 22-26 and a delegation to survey the Lao business environment from July 22-25.

The programmes prioritise businesses operating in the garments, cosmetics, household products, food, electronics and construction materials sectors.

According to ITPC Director Pho Nam Phuong, two-way trade between Vietnam and Laos is estimated to reach 520 million USD in the first half of the year , 11.6 percent more than last year’s figure.-

Regional enterprises head for ASEAN economic community

Small and medium-sized enterprises (SMEs) from Laos, Thailand and Vietnam gathered in Vientiane, Laos on June 28 to discuss orientations towards the ASEAN Economic Community.

Participants heard reports on small and medium-sized enterprises’ operational capacity, national policies for SMEs and their contributions to the nations, especially creating many jobs for unskilled people, contributing to reducing poverty and increasing social welfare.

Reports also highlighted shortcomings and challenges of each country’s businesses in the development process, particularly in capital, technology, human resources, business capacity and trade promotion.

Delegates affirmed that integration in the ASEAN Community by 2015 reflects the determination and efforts of the member countries in creating a highly competitive economic region.

To develop and integrate more deeply, small and medium-sized enterprises should make more efforts to narrow the gap in human resources and technology, as well as strengthen connectivity, cooperation, information and experience sharing, they said.

They also asked each government to provide more financial and technical assistance and create appropriate policies to help SMEs overcome their challenges.

Central farmers rejoice storm-triggered rain

Tropical storm ‘Bebinca’ has caused much damage in the northern and central regions but also brought ease to drought-stricken rice growers in the north-central province of Nghe An and Ha Tinh.

Before the storm, rice fields were parched because of scorching heat in Nghe An Province, where the Irrigation Department had to dam up Cam River in Nghi Loc District to hold salt water back and accumulate water.

Fortunately, downpours from the storm have raised reservoir levels since June 22-24 to provide irrigation water for large rice fields in Nam Dan, Hung Nguyen and Nghi Loc District.

Nguyen Truong Thanh, deputy head of the provincial Department of Irrigation, said that storm-triggered rains saved vast areas of summer autumn rice from being withered and several fields from being abandoned.

Tran Duy Chien, deputy head of the Irrigation Department in the neighboring province of Ha Tinh, said that 28 reservoirs in the province accumulated an extra of nine million cubic meters of water as of June 26.

This is an important water source for residents’ daily activities and rice production.

Heavy rains also raised water level on Ngan Pho, Ngan Sau and Ngan Truoi Rivers supplying water to thousands of hectares of rice in the mountainous districts of Huong Khe, Vu Quang and Huong Son in Ha Tinh Province.

Nguyen Van Hai, head of the Agriculture Department in Huong Son District, said that about 1,500 hectares of summer autumn rice were saved from drought in the district.

Major tyre plant inaugurated in Danang

The Danang Rubber Joint Stock Company inaugurated a major new steel radial tyre plant in the central city’s Lien Chieu Industrial Park on June 29.

The US$141 million, equipped with state-of-the-art production lines and equipment,  is capable of producing 600,000 high-quality tyres a year. It will be the first plant in Southeast Asia to successfully manufacture tyres for heavy-duty trucks used in the mining industry.

The factory is expected to generate jobs for nearly 1,000 local people and contribute US$9.4 million to the State budget.

Addressing the inauguration ceremony, Deputy Prime Minister Nguyen Xuan Phuc praised the company’s efforts in making the plant operational, adding that the opening of the plant shows that the company is making the most of the country’s plentiful rubber resources.

On the occasion, the Da Nang Rubber Joint Stock Company also signed a contract to provide 10,000 products per month for the Singapore-based Stamyord Tyres International Pte. Ltd.

16,000 CBU cars imported in six months

An estimated 16,000 completely built unit (CBU) automobiles worth a total of US$308 million were imported into Vietnam in the first half of this year.

The General Statistics Office (GSO) reported that car imports saw an increase of 17.8 percent in volume and 7.5 percent invalue during the reviewed period.

The strong rebound shows that the import value of CBU cars has been on the rise since earlier this year.

After Rolls-Royce announced their presence in Vietnam, some other foreign manufactures are also preparing to penetrate the market, including Mini and Lexus.

Imported CBU automobiles rose by 3,000 units in the first four months of this year, while their value increased sharply with steady growth from US$48 million in March to US$50 million in April and US$66 million in May.

However, the import value is predicted to drop to US$55 million in June.

Coffee exports drop sharply

Vietnam has exported 1.18 million tonnes of coffee since October 2012, representing a year-on year decrease of 9 percent.

According to the Vietnam Coffee and Cacao Association (Vicofa), the total coffee output in 2013 will drop by 30 percent to about 1.3 million tonnes.

In the first six months of this year, 795,000 tonnes were shipped abroad, which is 24 percent less than the previous six months.

In the reviewed period, Vietnam exported coffee to 30 countries around the world, mainly to the US and Germany, reported Vicofa.

Vicofa has asked the Government to provide local exporters with incentive loans to buy 200,000 – 300,000 tonnes of coffee for reserves as global coffee prices are currently experiencing a sharp decline.

In the Central Highlands, Vietnam’s largest coffee growing area, coffee prices are hovering around VND37,200 – 37,500 per kilogram, much lower than the trade price in the same period last year, which wasVND46,000 per kilo.

Behind the SBV rate adjustments

The State Bank of Vietnam (SBV) has lowered loan interest rates and increased the exchange rate in an effort to stabilise the currency market.

In a press release on June 28, the central bank said the 1% exchange rate hike is part of its plan to ensure the value of the Vietnam Dong, improve international payments and increase foreign currency reserves.

It said that despite the international financial fluctuations since 2012, the exchange rate and foreign currency market in Vietnam have been kept under control, enabling the bank to purchase foreign currencies for national reserves, helping to reduce the hoarding of foreign currencies and the dollarisation of the economy.

It said the rate adjustment will reflect the supply and demand of foreign currencies in the market and create a firm and stable currency market.

Research Director of Capital Dragon Dr Le Anh Tuan said the adjustment is in line with the sharp depreciation of the currencies of emerging economies against the US dollar. Thailand’s Baht depreciated more than 10% and other currencies devalued between 4-10%.

Banking and finance expert Can Van Luc said credit organisations’ increasing demand for US dollars to purchase gold and the public psychology of converting Vietnam Dong into US dollars to deposit in banks has pressurised the central bank to raise the exchange rate.

The 1% adjustment is appropriate and is part of the SBV’s roadmap for raising the rate by 2-3% this year, Can said.

Banking expert Nguyen Tri Hieu said the central bank’s move is a measure to loosen its monetary policy. However, he forecasts that the depreciation of the Vietnam Dong might be the SBV’s own orientation rather than the result of mounting pressure from the market because imports have not put much pressure on the economy so far this year.

Former SBV governor Cao Sy Kiem agreed with the central bank’s decision, explaining that exports are showing signs of recovery, which is fuelling the demand for foreign currencies. In his opinion, the 1% adjustment will not significantly affect the market.

For an export-driven economy like Vietnam, the bank’s decision will help boost exports, stimulate purchasing power, generate more jobs and reinvigorate stagnant business production, Kiem said.

Similarly, the bank’s decision to lower deposit interest rates does not affect the market because many commercial banks have recently slashed their rates to below 7%.

Experts say the banks currently have large amounts of money in stock, and lower interest rates will not negatively impact their operations.

However, banking expert Nguyen Tri Hieu said whether the interest rate is cut or not is no longer a major business concern at the moment, citing that many businesses still cannot access bank loans. Therefore, he says a lower interest rate will not affect businesses very much.

Former SBV governor Kiem welcomed the decision to lower the interest rate, but said Vietnam’s lending rate is among the highest in the world, which makes it difficult for businesses to earn a profit.

He also welcomed the central bank’s decision to remove the ceiling deposit interest rate, helping narrow the gap between deposit and lending rates.

Once these moves prove to be effective, they will help save ailing businesses, said Kiem.

Pangasisus breeders stricken by price plunge

Several pangasius fish breeders have suffered heavy loss due to price fall in recent days in the Mekong Delta.

A kilogram of pangasius fish fetched only VND18,000-19,000 on June 29, leaving breeders with a loss of VND3,000-3,500.

Despite of the price fall, farmers still find it hard to sell their fish because processing plants have reduced purchase.

Nguyen Van Mach, a breeder in Lai Vung District, Dong Thap Province, said that he had sold 170 tons of fish at a loss of VND600 million (US$28,000). Adding to the woe, they can not receive immediate payment but 1.5-2 months later.

Nguyen Van Dao, director general of Go Dang Seafood Company in the province, said that the pangasius price drop had been caused by abundant supply and low export price.

Not only breeders but also businesses are falling in difficult situation, he added.

According to the Vietnam Association of Seafood Exporters and Processors, pangasius export turnover touched $174 million in May, up 16 percent over the same period last year.

In the first five months this year, the fish export was estimated to reach $709 million, a reduction of 1.5 percent year on year.

Ministry outlines housing support rules

Buyers of low-income houses will soon be able to raise mortgages on their new properties, even when they are not built, according to the Ministry of Construction.

On June 25, the ministry gave the details of the 30 trillion VND (1.42 billion USD) support package set up for the purpose.

In Circular 11/2013 of the State Bank of Vietnam (SBV), issued in May, people who wished to borrow money from the support package for low-income home purchases must meet minimum capital requirements to be eligible for the loans.

This meant home buyers must borrow money, but current regulations did not allow the use of properties yet to be built as mortgage collateral, the ministry said.

So, allowing buildings still in the planning stages to be used as mortgages would make it easier for low-income earners to access bank loans.

Households or individuals having sale and purchase agreements with developers of social housing after January 7 would be eligible for the support package.

Those who sought loans to buy houses of less than 70sq.m at below 15 million VND (715 USD) per square metre must not own a house or must be living in accommodation at with less than 8sq.m per person.

Beneficiaries of the support package must be residing permanently in the province or city in which they wanted to buy. Those with temporary residence status must participate in social insurance for more than one year.

The support package would be available to investors in social housing projects or projects converted from commercial purposes regulated in Government Decree 71/2010/ND-CP and the Construction Ministry's Circular 02/2013/TT-BXD respectively.

The support package also covered investors of housing projects for students and workers in industrial zones.

The distribution of the support package must be completed within 36 months from June 1.

The ministry recently proposed to apply the same preferential loan to commercial apartments of below 90sq.m instead of only 70sq.m as currently regulated.

According to statistics from the Housing and Real Estate Market Management Department, as at the end of May there were 48 commercial housing projects registering to be converted to social housing. In Hanoi alone, there were 21.

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